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As filed with the Securities and Exchange Commission on June 1, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INSITE VISION INCORPORATED
(Exact name of registrant as specified in its charter)
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DELAWARE 2836 94-3015807
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
965 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
(510) 865-8800
(Address, including zip code, and telephone number, including
area code, of the Registrant's principal executive offices)
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S. KUMAR CHANDRASEKARAN, PH.D.
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
INSITE VISION INCORPORATED
965 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
(510) 865-8800
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
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TIMOTHY R. CURRY, ESQ.
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94301
(415) 424-0160
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If 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 AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE REGISTRATION FEE(1)
------------------------------------------ ------------------- ------------------ ------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per share 4,857,097 $3.72 $18,062,329 $4,768.45
========================================== =================== ================== =================== ======================
</TABLE>
(1) Based on the average of the high and low bid prices of our common stock as
reported by The American Stock Exchange on May 30, 2000, estimated solely
for the purpose of calculating the registration fee in accordance with Rule
457(c) under the Securities Act.
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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PROSPECTUS (SUBJECT TO COMPLETION)
DATED JUNE 1, 2000
4,857,097 SHARES
INSITE VISION INCORPORATED
COMMON STOCK
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This Prospectus relates to the public offering, which is not being
underwritten, of 4,857,097 shares of our common stock, which is held by some of
our current stockholders.
The prices at which these selling stockholders may sell their shares
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.
Our common stock is traded on The American Stock Exchange under the
symbol "ISV." On May 30, 2000, the last sale price for our common stock as
quoted on The American Stock Exchange was $3.75 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
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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
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus is _______, 2000
The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE> 3
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 us, 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 our
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 us 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 us and our
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.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by us
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. This Web site is located at
http://www.sec.gov. Our common stock is quoted on The American Stock Exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by us (File No.
0-22332) with the Commission are hereby incorporated herein by reference: (a)
our Annual Report on Form 10-K for the year ended December 31, 1999; (b) our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000; (c) our
Definitive Proxy Statement dated May 1, 2000 filed in connection with our 2000
Annual Meeting of Stockholders to be held June 12, 2000; and (d) the description
of our common stock contained in our 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 us 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 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.
We 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
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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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INSITE VISION INCORPORATED
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."
We are an ophthalmic product development company focused on genetic
research for diagnosis and prognosis of glaucoma and the development of
treatment products for opthalmic diseases using our proprietary DuraSite(R)
technology.
We are focusing our research and development on (i) expansion of the
ISV-900 technology for the prognosis, diagnosis and management of glaucoma, (ii)
providing on-going technical support to Pharmacia & Upjohn for ISV-205 for the
treatment of inflammation and the prevention and treatment of glaucoma, (iii)
ISV-615 for the treatment of diabetic retinopathy and macular degeneration, (iv)
ISV-014, a retinal drug delivery device, and (v) evaluation and development of
several antibiotics not currently used in ophthalmics.
We are collaborating with several academic researchers to develop new
diagnostic tools for both primary congenital glaucoma 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.
Our glaucoma genetics program, which is being carried out in
collaboration with academic researchers, is focused on discovering genes that
are associated with glaucoma, and the mutations on these genes that cause the
disease. This genetic information then may be applied to develop new glaucoma
diagnostic, prognostic and management tools. To date, our academic collaborators
have identified genes associated with primary open-angle glaucoma (the most
prevalent form of the disease in adults), juvenile glaucoma and primary
congenital glaucoma. We have developed a diagnostic/prognostic technology,
ISV-900, which may be capable of identifying multiple glaucoma genetic markers
from a single sample, and have licensed ISV-900 to Pharmacia & Upjohn in
November 1999.
Another result of the glaucoma genetics research has been the
development of the ISV-205 product candidate. This DuraSite formulation contains
a drug that has been shown in cell and organ culture systems to inhibit the
production of a protein that appears to cause glaucoma. In January 1999, we
entered into a transaction that granted Pharmacia & Upjohn an exclusive
worldwide license for ISV-205 for the treatment of glaucoma. In June 1999, we
announced positive results from our Phase II trial of ISV-205. Pharmacia has
assumed continued development of the product with our continued technical
support.
Our 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 and remains in the eye for up to several
hours during which time the active drug ingredient is gradually released. This
increased residence time 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 potential related adverse side
effects. Eyedrops delivered in the DuraSite system contrast to conventional
eyedrops which typically only last a few minutes in the eye, thus requiring
delivery of a highly concentrated burst of drug and frequent administration to
sustain therapeutic levels. DuraSite can be customized to deliver a variety of
compounds with a broad range of molecular weights and other properties.
Our executive offices are located at 965 Atlantic Avenue, Alameda,
California 94501 and our telephone number is (510) 865-8800. InSite Vision
Limited, a United Kingdom corporation, is our wholly-owned subsidiary.
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InSite, InSite Vision Incorporated, the InSite Vision Incorporated
logo, InSite Vision Limited, DuraSite, AquaSite(TM), MethaSite(TM), PilaSite(R),
BetaSite(R) and ToPreSite(TM) are our trademarks. All other brand names or
trademarks appearing or incorporated by reference in this Prospectus are the
property of their respective holders.
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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 our common stock offered hereby. In addition to the historical
information contained herein, the discussion in this Prospectus contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act that involve risks and uncertainties,
such as statements of our 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. Our 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.
IT IS DIFFICULT TO EVALUATE OUR BUSINESS BECAUSE WE ARE IN AN EARLY STAGE OF
DEVELOPMENT AND OUR TECHNOLOGY IS UNTESTED
We are in an early stage of developing our business. We are currently
only receiving a small amount of royalties from the sale of one of our products,
an over-the-counter, or OTC, dry eye treatment. Before regulatory authorities
will grant us marketing approval, we will need to conduct significant additional
research and development and preclinical and clinical testing. All of our
products are subject to risks that are inherent to products based upon new
technologies. These risks include the risks that our products:
- will be found to be unsafe or ineffective;
- will fail to receive necessary marketing clearance from regulatory
authorities;
- even if safe and effective, will be too difficult to manufacture
or market;
- will be unmarketable due to the proprietary rights of third
parties; or
- will not be able to compete with superior, equivalent or more
cost-effective products offered by competitors.
Therefore, we cannot guarantee that our research and development activities will
result in any commercially viable products.
WE WILL REQUIRE SIGNIFICANT ADDITIONAL FUNDING FOR OUR CAPITAL REQUIREMENTS
We will require substantial additional funding to develop and conduct
testing on our potential products. We will also require additional funding to
manufacture and market any products which we do develop. Our future capital
requirements will depend upon many factors, including:
- the progress of our research and development programs;
- the progress of preclinical and clinical testing;
- our ability to establish additional corporate partnerships to
develop, manufacture and market our potential products;
- the time and cost 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 our existing collaborative and licensing relationships;
and
- the purchase of additional capital equipment.
In addition, as part of the ISV-900 licensing activities, we received a
$5 million up front licensing fee from Pharmacia & Upjohn. The University of
California, or UC, Regents have alleged that they are entitled to receive up to
$2.5 million of this payment under the terms of the August 1994 license
agreement between us and the UC Regents. We dispute this allegation and the
parties are currently discussing a resolution to this conflict. We cannot assure
you that we will be able to settle this dispute on acceptable terms or at all
and our failure to prevail in this negotiation could significantly increase our
future capital requirements and could significantly harm our business
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and financial condition. In addition, any litigation that results from this
dispute, even if successful, could result in substantial cost to, and diversion
of effort by, us and could harm our business and financial condition.
We are currently seeking additional funding through public or private
equity or debt financing, collaborative or other arrangements, and from other
sources. We cannot be certain that we will be able to secure additional funding
from these sources, or that such funding will be on terms acceptable to us. If
we fail to secure additional funding upon acceptable terms, our business will be
harmed.
If we raise additional funds by issuing equity securities, our
stockholders will suffer substantial dilution. However, if we cannot raise
additional funding, we may be required to delay, scale back or eliminate one or
more of our research, discovery or development programs, or scale back or cease
operations altogether. In addition, the failure to raise additional funding may
force us to enter into agreements with third parties on terms which are
disadvantageous to us, which may, among other things, require us to relinquish
rights to our technologies, products or potential products.
WE MAY CONTINUE TO INCUR LOSSES
We have incurred significant operating losses since our inception in
1986. As of March 31, 2000, our accumulated deficit was approximately $85.5
million. Although we achieved profitability in 1999, we expect to incur net
losses for the foreseeable future or until we are able to achieve significant
royalties from sales of our licensed products.
Our ability to achieve significant revenue or profitability depends
upon our ability, alone or with third parties, to successfully develop our
potential products, conduct clinical trials, obtain required regulatory
approvals and successfully manufacture and market our products. We cannot be
certain that we will ever achieve or be able to maintain significant revenue or
profitability.
WE RELY ON THIRD PARTIES TO DEVELOP, MARKET AND SELL OUR PRODUCTS
We have not established a dedicated sales and marketing organization.
Therefore, if we are to successfully commercialize our product candidates, we
will be required to enter into arrangements with one or more third parties that
will:
- provide for Phase III clinical testing;
- provide for commercial scale up and manufacture of our potential
products;
- obtain or assist us in other activities associated with obtaining
regulatory approvals for our product candidates; and
- and sell our products, if they are approved.
There can be no assurance that we will be able to enter into such
arrangements on acceptable terms, if at all. If we are not successful in
concluding such arrangements, we may be required to establish our own sales and
marketing organization, although we have no experience in sales, marketing or
distribution. We cannot be certain we would be able to build such a marketing
staff or sales force, or that our sales and marketing efforts will be
cost-effective or successful.
Our strategy for research, development and commercialization of certain
of our products requires us to enter into various arrangements with corporate
and academic collaborators, licensors, licensees and others. Furthermore, we are
dependent on the diligent efforts and subsequent success of these outside
parties in performing their responsibilities.
We are dependent upon British Biotech for the supply of batimastat, the
active drugs incorporated into our ISV-615 product candidate. British Biotech
has discontinued clinical testing of batimastat and informed us that it will no
longer manufacture the product. We and British Biotech are in negotiations on a
new licensing agreement related to batimastat that provides for continued supply
of the drug. If our licensing efforts are unsuccessful we may have no source of
ongoing raw materials for ISV-615. If this turns out to be true, our business
may be harmed.
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We cannot be certain that, even if regulatory approvals are obtained,
our products will be marketed diligently or successfully by our partners, or
that we will be able to conclude arrangements with other companies to support
the commercialization of other products on acceptable terms, if at all.
In addition, we cannot be certain our collaborators will not take the
position that they are free to compete using our technology without compensating
or entering into agreements with us. Furthermore, we cannot be certain our
collaborators will not pursue alternative technologies or develop alternative
products either on their own or in collaboration with others, including our
competitors, as a means for developing treatments for the diseases or disorders
targeted by these collaborative programs.
We plan to market and sell products through arrangements with third
parties with expertise in the ophthalmic drug or diagnostic industries. There
can be no assurance that we will be able to enter into such arrangements on
acceptable terms, if at all. If we are not successful in concluding such
arrangements, we may be required to establish our own sales and marketing
organization, although we have no experience in sales, marketing or
distribution. We cannot be certain we would be able to build such a marketing
staff or sales force, or that our sales and marketing efforts will be
cost-effective or successful. To the extent we have entered into or will enter
into co-marketing, co-promotion or other licensing arrangements for the
marketing and sale of our products, any revenues received by us will be
dependent on the efforts of third parties, such as CIBA Vision, Pharmacia &
Upjohn and Bausch & Lomb. We cannot be certain that these partners will
diligently or successfully market our products or that such efforts will be
successful.
OUR BUSINESS DEPENDS UPON OUR PROPRIETARY RIGHTS, AND THERE IS A RISK OF
INFRINGEMENT
Our success will depend in large part on our ability to obtain patents,
protect trade secrets, obtain and maintain rights to technology developed by
others, and operate without infringing upon the proprietary rights of others. A
substantial number of patents in the field of ophthalmology and genetics 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 ours. We cannot be certain that our
patent applications will be approved, that we will develop additional
proprietary products that are patentable, that any issued patents will provide
us with adequate protection for our inventions or will not be challenged by
others, or that the patents of others will not impair our ability to
commercialize our products. The patent positions of firms in the pharmaceutical
and genetic industries generally are highly uncertain, involve complex legal and
factual questions, and have 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 and genetic patents. Despite our efforts to
protect our proprietary rights, we cannot be certain others will not
independently develop similar products, duplicate any of our products or design
around any of our patents or that third parties from which we have licensed or
otherwise obtained technology will not attempt to terminate or scale back our
rights.
A number of pharmaceutical and biotechnology companies and research and
academic institutions have developed technologies, filed patent applications or
received patents on various technologies that may be related to our business.
Some of these technologies, applications or patents may conflict with our
technologies or patent applications. Such conflicts could limit the scope of the
patents, if any, we may be able to obtain or result in the denial of our patent
applications. In addition, if patents that cover our activities have been or are
issued to other companies, there can be no assurance that we will 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 we do not obtain such licenses, we
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 us or to protect trade secrets or
know-how owned or licensed by us. Such litigation could result in substantial
cost to and diversion of effort by us, all of which may harm our business. We
have also agreed to indemnify our licensees, including Pharmacia, against
infringement claims by third parties related to our technology, which could
result in additional litigation costs and liability, which could harm our
business. In addition, we cannot be certain our efforts to protect or defend our
proprietary rights will be successful or, even if successful, will not result in
substantial cost to us.
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We also depend upon unpatented trade secrets to maintain our
competitive position. We cannot be certain others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to our trade secrets, that such trade secrets will not be disclosed
or that we can effectively protect our rights to unpatented trade secrets. To
the extent that we or our consultants or research collaborators use intellectual
property owned by others in their work for us, disputes also may arise as to the
rights in related or resulting know-how and inventions.
ACQUISITIONS MAY PRESENT RISKS TO OUR BUSINESS
At some point in the future, we may pursue acquisitions of companies,
product lines, technologies or businesses that our management believes are
complementary or otherwise beneficial to us. In the event that such an
acquisition does occur, we cannot be certain how such acquisitions will affect
our business. Future acquisitions may result in substantial dilution to our
stockholders, the incurrence of additional debt and amortization expenses
related to goodwill, research and development and other intangible assets, all
of which could harm our business. In addition, acquisitions would involve
several risks for us, including:
- assimilating employees, operations, technologies and products from
the acquired companies with our existing employees, operation,
technologies and products;
- diverting our management's attention from day-to-day operation of
our business;
- entering markets in which we have no or limited direct experience;
and
- potentially losing key employees from the acquired companies.
WE HAVE NO EXPERIENCE IN COMMERCIAL MANUFACTURING AND WE RELY ON A SOLE SOURCE
FOR CERTAIN RAW MATERIALS
We have no experience manufacturing products for commercial purposes.
We have a pilot facility licensed by the State of California to manufacture
certain of our products for Phase I and Phase II clinical trials. In July 1999,
we terminated our alliance under which Bausch & Lomb agreed to manufacture our
products. Should we encounter delays or difficulties in establishing and
maintaining a relationship with other qualified manufacturers to produce,
package and distribute our finished products, then clinical trials, regulatory
filings, market introduction and subsequent sales of our products will be
harmed.
Contract manufacturers must adhere to Good Manufacturing Practices, or
GMP, regulations which are strictly enforced by the Federal Drug Administration,
or 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 a New Drug Application, or NDA. Certain material manufacturing
changes that occur after approval are also subject to FDA review and clearance
or approval. We cannot be certain the FDA or other regulatory agencies will
approve the process or the facilities by which any of our products may be
manufactured. Our dependence on third parties for manufacture of products may
harm our ability to develop and deliver products on a timely and competitive
basis. Should we be required to manufacture products ourselves, we:
- will be required to expend significant amounts of capital to
install a manufacturing capability;
- will be subject to the regulatory requirements described above;
- will be subject to similar risks regarding delays or difficulties
encountered in manufacturing any such products; and
- will require substantial additional capital.
We cannot be certain we will be able to manufacture any products
successfully or in a cost-effective manner. In addition, certain of the raw
materials we use in formulating our DuraSite drug delivery system are available
from only one source. Any significant interruption in the supply of these raw
materials could delay our clinical trials, product development or product sales
and could harm our business.
OUR PRODUCTS ARE SUBJECT TO GOVERNMENT REGULATIONS AND APPROVAL
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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 our activities.
We cannot be certain the FDA or any other regulatory agency will grant approval
for any products we develop 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 that 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 after we have obtained regulatory approval, later discovery of
previously unknown problems with a product may result in restrictions on the
product, including withdrawal of the product from the market. Moreover, the FDA
has recently reduced previous restrictions on the marketing, sale and
prescription of products for indications other than those specifically approved
by the FDA. Accordingly, even if we receive FDA approval of a product for
certain indicated uses, our competitors, including our collaborators, could
market products for such indications even if such products have not been
specifically approved for such indications. Delay in obtaining or failure to
obtain regulatory approvals would harm our business.
The FDA's policies may change and additional government regulations may
be promulgated which could prevent or delay regulatory approval of our potential
products. Moreover, increased attention to the containment of health care costs
in the U.S. could result in new government regulations that could harm our
business. We cannot predict the likelihood of adverse governmental regulation
that might arise from future legislative or administrative action, either in the
U.S. or abroad. See "Risk Factors -- We face risks from the uncertainties of
pricing and other regulation".
WE COMPETE IN HIGHLY COMPETITIVE MARKETS
Our success depends upon developing and maintaining a competitive
position in the development of products and technologies in our areas of focus.
We have many competitors in the U.S. and abroad, including pharmaceutical,
biotechnology and other companies with varying resources and degrees of
concentration in the ophthalmic market. Our competitors may have existing
products or products under development which may be technically superior to ours
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. Many of our competitors have
substantially greater financial, technical, marketing, manufacturing and human
resources. In addition, they may also succeed in developing technologies and
products that are more effective, safer, less expensive or otherwise more
commercially acceptable than any which we have or will develop. Our competitors
may obtain cost advantages, patent protection or other intellectual property
rights that would block or limit our ability to develop our potential products,
or may obtain regulatory approval for commercialization of their products more
effectively or rapidly than we will. To the extent we decide to manufacture and
market our products by ourselves, we will also compete with respect to
manufacturing efficiency and marketing capabilities, areas in which we have
limited or no experience.
WE ARE DEPENDENT UPON KEY EMPLOYEES
We are highly dependent on Dr. Chandrasekaran and other principal
members of our 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
our success. Competition for skilled individuals in the biotechnology business
is highly intense, and we cannot be certain we will be able to continue to
attract and retain personnel necessary for the development of our business. The
loss of key personnel or the failure to recruit additional personnel or to
develop needed expertise could harm our business.
10
<PAGE> 12
OUR INSURANCE COVERAGE MAY NOT ADEQUATELY COVER OUR POTENTIAL PRODUCT LIABILITY
EXPOSURE
We are exposed to potential product liability risks inherent in the
development, testing, manufacturing, marketing and sale of human therapeutic
products. Product liability insurance for the pharmaceutical industry is
generally expensive. We cannot be certain that our present product liability
insurance coverage is adequate. Such existing coverage will not be adequate as
we further develop our products, and we cannot be certain that adequate
insurance coverage against potential claims will be available in sufficient
amounts or at a reasonable cost.
WE FACE RISKS FROM THE UNCERTAINTIES OF PRICING AND OTHER REGULATION
Our business may be harmed 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 we expect there will continue to be, a number of
federal and state proposals to implement similar government control. While we
cannot predict whether any such legislative or regulatory proposals or reforms
will be adopted, the announcement of such proposals or reforms could harm our
business, including our ability to raise capital or form collaborations. The
adoption of such proposals or reforms could further harm our business.
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 we succeed in bringing one or more products to
the market, we cannot be certain that reimbursement from third party payers will
be available or will be sufficient to allow us to sell our products on a
competitive or profitable basis.
WE USE HAZARDOUS MATERIALS WHICH MAY POSE ENVIRONMENTAL RISKS
Our research, development and manufacturing processes involve the
controlled use of small amounts of radioactive and other hazardous materials. We
are 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 we believe that our safety procedures for
handling and disposing of such materials comply with the standards prescribed by
laws and regulations, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. In the event of such an accident,
we could be held liable for any damages that result, and any such liability
could exceed our resources. Moreover, we may be required to incur significant
costs to comply with environmental laws and regulations, especially to the
extent that we manufacture our own products.
OUR OFFICERS AND DIRECTORS WILL BE ABLE TO EXERT SIGNIFICANT CONTROL ON INSITE
As of March 31, 2000, our management and principal stockholders
together beneficially owned approximately 19% of our outstanding shares of
common stock. As a result, these stockholders, acting together, may be able to
effectively control all matters requiring approval by our stockholders,
including the election of a majority of our directors and the approval of
business combinations.
THE PRICE OF OUR COMMON STOCK IS VOLATILE
The market prices for securities of biopharmaceutical and biotechnology
companies, including ours, 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 InSite, our 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 us or others and
general market conditions, may have a significant effect on the market price of
our common stock. We have not paid any cash dividends on our common stock, and
we do not anticipate paying any dividends in the foreseeable future.
11
<PAGE> 13
WE HAVE ADOPTED CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of our 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 InSite. Such
provisions could limit the price that certain investors might be willing to pay
in the future for shares of our common stock. The 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 Redeemable Preferred Stock.
Furthermore, the 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 our
outstanding voting stock. Certain provisions of Delaware law applicable to us
could also delay or make more difficult a merger, tender offer or proxy contest
involving us, 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.
WE HAVE CONVERTIBLE, REDEEMABLE SECURITIES THAT MAY RESULT IN DILUTION FOR
COMMON STOCKHOLDERS
Sales of shares of common stock issuable upon conversion of our Series
A Convertible Redeemable Preferred Stock 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 our common stock.
As of March 31, 2000, warrants for 70 shares of Series A Convertible
Redeemable Preferred Stock were issued and outstanding. The actual number of
shares of common stock issuable upon exercise and conversion of the warrants for
outstanding Series A Convertible Redeemable Preferred Stock will equal:
(i) the aggregate stated value of the Series A Convertible
Redeemable Preferred Stock 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 $2.127 or the
product of the average of the lowest closing bid prices for our common
stock for any 5 trading days during the 22 consecutive trading day
period immediately preceding the date of conversion, subject to
adjustment in accordance with the terms of the Certificate of
Designations, Preferences and Rights for the Series A Convertible
Redeemable Preferred Stock, multiplied by a conversion percentage equal
to 82.5%.
For a complete description of the relative rights, preferences, privileges,
powers and restrictions of the Series A Convertible Redeemable Preferred Stock,
see the Certificate of Designations, Preferences and Rights attached as Exhibit
4.1 to the Registration Statement on Form S-3 filed with the Securities and
Exchange Commission on September 29, 1997. 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. Investors in common stock could therefore experience a dilution upon
conversion of the Series A Convertible Redeemable Preferred Stock. In addition,
in the event that the holder of the warrant for Series A Convertible Redeemable
Preferred Stock is unable to convert any such securities into common stock, the
holder may cause us to redeem in cash any such Series A Convertible Redeemable
Preferred Stock that cannot be so converted. In the event that we fail to so
redeem such shares, the holder of the Series A Convertible Redeemable Preferred
Stock is entitled to additional remedies as set forth in the Certificate of
Designations, Preferences and Rights.
12
<PAGE> 14
SELLING STOCKHOLDERS
The following table sets forth certain information, as of the date
hereof, with respect to the number of shares of our common stock owned by each
of the Selling Stockholders. The Shares being 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." None of the Selling Stockholders has had a material
relationship with us within the past three years other than as a result of the
ownership of the shares or other of our securities. Because the Selling
Stockholders may offer all or some of the Shares which they hold pursuant to the
offering contemplated by this Prospectus, and because there are currently no
agreements, arrangements or understandings with respect to the sale of any of
the Shares of which we are aware, no estimate can be given as to the amount of
shares of our common stock that will be held by the Selling Stockholders after
completion of this offering. Except as indicated in the notes to the table
below, no Selling Stockholder beneficially owns 1% or more of the outstanding
shares of our common stock.
The Shares being offered hereby by the Selling Stockholders were
purchased, or may be acquired through the exercise of warrants acquired, in a
private placement of our securities pursuant to a Stock and Warrant Purchase
Agreement, dated as of May 1, 2000 (the "Agreement"). As part of the Agreement,
accredited investors acquired 3,349,722 shares of our common stock. For every
one hundred shares of our common stock purchased by an investor, the investor
also received a warrant to acquire an additional 35 shares of our common stock.
The warrants will be exercisable commencing November 1, 2000 and will be reduced
on a share-for-share basis to the extent that an investor sells our common stock
or other of our securities during the six month period between May 1, 2000 and
November 1, 2000. Furthermore, we may redeem the warrants for a price of $0.01
per warrant if the weighted average closing price per share of our common stock
has been at least $8.35 for ten consecutive trading days. The shares issued
under the Agreement were offered through a placement agent, AmeriCal Securities,
Inc., for which services we paid to the placement agent a fee of $926,514.43 and
a warrant to acquire 334,972 shares of our common stock. This Prospectus covers
the resale by the Selling Stockholders of up to 4,857,097 Shares, which includes
the number of shares of our common stock underlying the warrants issued pursuant
to the Agreement and to the placement agent.
Each Selling Stockholder that purchased Shares pursuant to the
Agreement represented to us that it was acquiring the Shares for investment and
with no present intention of distributing the Shares. Pursuant to the Selling
Stockholders' registration rights set forth in the Agreement, we have 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 American Stock Exchange or in privately-negotiated
transactions and have 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 earlier of May 1, 2002 or the date on which the
Shares are no longer required to be registered for the sale thereof by the
Selling Stockholders.
The Shares covered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY NUMBER OF SHARES
NAME OF SELLING STOCKHOLDER OWNED (1)(2) BEING OFFERED (3)
-------------------------------------- ---------------- ----------------
<S> <C> <C>
Piping & Co. (Capital Research and
Management Company) (4) 1,235,250 1,235,250
Band & Co. 194,011 194,011
Apollo Medical Partners (5) 405,000 405,000
Brandon Fradd 135,000 135,000
Bernard McDermott, Jr. 64,670 64,670
Bernard McDermott, Jr. - Roth IRA 64,670 64,670
Joyce McDermott - Roth IRA 64,670 64,670
Active Site Partners 64,670 64,670
A. Salam Qureishi 64,670 64,670
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY NUMBER OF SHARES
NAME OF SELLING STOCKHOLDER OWNED (1)(2) BEING OFFERED
-------------------------------------- ---------------- ----------------
<S> <C> <C>
Charles Duck, Jr. 32,335 32,335
Michael K. Yap 16,168 16,168
Nancy & Chris Berg JTWROS 32,335 32,335
The Leonard and Dena Oppenheim Revocable 64,670 64,670
Trust dated Jan. 6, 2000
Claire Engelberg 24,251 24,251
Marc Adam Gelman & Ingrid E. Gelman 24,251 24,251
John Hillsman 16,168 16,168
Joseph Feinstein 16,168 16,168
Jacob Feinstein Trust 16,168 16,168
Richard F. Gaston 32,335 32,335
Winston T. Van 129,341 129,341
Dr. Leonard H. Cohen - IRA Rollover 16,168 16,168
Victor Breeze LTD. 64,670 64,670
John Chuang 16,168 16,168
Nelson Capital Corporation 145,508 145,508
Hofund Holdings Limited 80,838 80,838
Clarion Partners, L.P. 109,940 109,940
Clarion Offshore Fund 51,736 51,736
Clarion Capital Corporation 161,676 161,676
Permed U.S. Opportunities Limited 80,838 80,838
Daniel S. Calder 16,168 16,168
Patriot Group 19,401 19,401
Allan Fishbein, M.D. 32,335 32,335
Redwood Regional Medical Group 16,168 16,168
Charles Engelberg 32,335 32,335
Marksman Partners, L.P. 48,503 48,503
Kenneth S. Yamamoto MD Target Benefit 16,168 16,168
Pension Plan
Herbert C.V. Feinstein 16,168 16,168
Kronos Inc. 32,335 32,335
Jessica H. Pell 32,335 32,335
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY NUMBER OF SHARES
NAME OF SELLING STOCKHOLDER OWNED (1)(2) BEING OFFERED
-------------------------------------- ---------------- ----------------
<S> <C> <C>
Candice N. Pell 32,335 32,335
Kahan Family Trust 40,419 40,419
Veron International Ltd. 242,514 242,514
Petros Capital 270,000 270,000
Baum Revocable Trust Dated 3/6/87 16,168 16,168
Stephen Yost 16,168 16,168
Sanford J. Colin - IRA Rollover 24,251 24,251
Sanford Colin 24,251 24,251
Joseph N. Katz - IRA Rollover 48,503 48,503
Daniel Katz - IRA Rollover 48,503 48,503
Kevin Chessen 16,168 16,168
Richard A. Bordow 19,401 19,401
Michael Powers 21,017 21,017
James R. Christensen 16,168 16,168
AmeriCal Securities, Inc. (6)(7) 334,972 334,972
Total...................................... 4,857,097 4,857,097
</TABLE>
---------------
(1) 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; provided, however, that the
shares underlying warrants (as described in footnote 2 below) are not
exercisable within 60 days, will not be exercisable until November 1, 2000
and will not be beneficially owned within the rules of the Securities and
Exchange Commission until September 2, 2000.
(2) Represents issued and outstanding shares of our common stock (74.074% of
the shares listed as beneficially owned) and shares underlying
unexercised warrants to acquire our common stock at price per share of
$5.64 (25.926% of the shares listed as beneficially owned).
(3) This Registration Statement shall also cover any additional shares of our
common stock which become issuable in connection with the Shares registered
for sale hereby by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of our
outstanding shares of common stock.
(4) Based on 24,625,907 shares of our common stock outstanding as of May 30,
2000, the beneficial ownership of Piping & Co. (Capital Research)
represented approximately 3.72% of our outstanding shares of common stock.
Shares of our common stock subject to warrants currently exercisable or
exercisable within 60 days of May 30, 2000 are deemed outstanding for
computing the percentage of the person holding such warrant but are not
deemed outstanding for computing the percentage of any other person.
(5) Based on 24,625,907 shares of our common stock outstanding as of May 30,
2000, the beneficial ownership of Apollo Medical Partners represented
approximately 1.22 of our outstanding shares of common stock. Shares of
our common stock subject to warrants currently exercisable or exercisable
within 60 days of May 30, 2000 are deemed outstanding for computing the
percentage of the person holding such warrant but are not deemed
outstanding for computing the percentage of any other person.
(6) Based on 24,625,907 shares of our common stock outstanding as of May 30,
2000, the beneficial ownership of AmeriCal Securities represented
approximately 1.34% of our outstanding shares of common stock. Shares of
our common stock subject to warrants currently exercisable or exercisable
within 60 days of May 30, 2000 are deemed outstanding for computing the
percentage of the person holding such warrant but are not deemed
outstanding for computing the percentage of any other person.
(7) AmeriCal Securities acted as placement agent for the issuance of the
securities being offered hereby and received as part of its compensation a
warrant to acquire 334,972 Shares at an exercise price per share of $5.01.
15
<PAGE> 17
PLAN OF DISTRIBUTION
The Shares are being offered on behalf of the Selling Stockholders, and
we 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 American Stock Exchange; (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 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 we nor any Selling Stockholder can presently estimate
the amount of such compensation. We know 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.
We 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. We have also
agreed to indemnify certain of the Selling Stockholders and certain related
persons against certain liabilities, including liabilities under the Securities
Act.
We have undertaken to keep a registration statement of which this
Prospectus constitutes a part effective until the earlier of May 1, 2002 or the
date on which the Shares are no longer required to be registered for the sale
thereof by the Selling Stockholders. After such period, if we choose not to
maintain the effectiveness of the registration statement of which this
Prospectus constitutes a part, the securities offered hereby may not be sold,
pledged, transferred or assigned, except in a transaction which exempt under the
provisions of the Securities Act or pursuant to an effective registration
statement under the Securities Act.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
us by Brobeck, Phleger & Harrison LLP, Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report (Form 10-K) for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
16
<PAGE> 18
================================================================================
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. INFORMATION CONTAINED ON INSITE VISION'S WEB SITE
DOES NOT CONSTITUTE PART OF THIS PROSPECTUS. 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. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF THE COMMON STOCK.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.............................2
Incorporation of Certain Documents by
Reference.........................................2
InSite Vision Incorporated........................4
Risk Factors......................................6
Selling Stockholders.............................13
Plan of Distribution.............................16
Legal Matters....................................16
Experts..........................................16
</TABLE>
4,857,097 SHARES
INSITE VISION
INCORPORATED
COMMON STOCK
---------------
PROSPECTUS
---------------
_____, 2000
================================================================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses expected to be
incurred by the Registrant in connection with the sale and distribution of the
securities being registered hereby. All amounts are estimated except the
Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee............................. $ 4,768
Accounting fees and expenses........................ 5,000
Legal fees and expenses............................. 10,000
Printing and engraving expenses..................... 1,500
Miscellaneous fees and expenses..................... 3,732
-------
Total....................................... $25,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
actually and reasonably incurred in connection with the defense or settlement of
such action or suit 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
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
such other court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Certificate of Incorporation provides that the
Registrant's directors shall not be liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except to the
extent that exculpation from liabilities is not permitted under the DGCL as in
effect at the time such liability is determined. The Registrant has entered into
indemnification agreements with all of its officers and directors, as permitted
by the DGCL.
ITEM 16 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
II-1
<PAGE> 20
The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
-------- --------------------------------------------------------------------
<S> <C>
5.1* Opinion of Brobeck, Phleger & Harrison LLP.
10.1* Form of Stock and Warrant Purchase Agreement, dated May 1, 2000, by
and among Registrant and the Purchasers.
23.1* Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Brobeck, Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5.1).
24.1* Power of Attorney (included in Part II of this Registration
Statement under the caption "Signatures").
</TABLE>
--------------------
* Filed herewith.
(b) Financial Statement Schedules
No financial statement schedules are included because they are not
required or the required information is included in the financial statements or
notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that (i) and (ii)
do not apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by (i) and
(ii) is contained in periodic reports filed with or furnished to the Commission
by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
Insofar as indemnification for liabilities arising under the
Securities Act 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
Securities Act and is, therefore, unenforceable. In the event that a claim for
II-2
<PAGE> 21
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, 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-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, InSite
Vision Incorporated certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Alameda, State of California, on the 31st day of
May, 2000.
INSITE VISION INCORPORATED
By /S/ Kumar Chandrasekaran, Ph.D.
-------------------------------
S. Kumar Chandrasekaran, Ph.D.
Chairman of the Board, President,
Chief Executive Officer and Chief
Financial Officer
(on behalf of the registrant and
as Principal Executive and
Financial Officer)
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint jointly and severally, S. Kumar
Chandrasekaran as his or her true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign the Registration
Statement filed herewith and any and all amendments to said Registration
Statement (including post-effective amendments and registration statements filed
pursuant to Rule 462 and otherwise), and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the persons whose signatures
appear below, which persons have signed such Registration Statement in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- -----
<S> <C> <C>
/s/ S. Kumar Chandrasekaran, Ph.D. Chairman of the Board, President, May 31, 2000
------------------------------------------ Chief Executive Officer and
S. Kumar Chandrasekaran, Ph.D. Chief Financial Officer
/s/ Mitchell H. Friedlaender, M.D. Director May 31, 2000
-------------------------------------------
Mitchell H. Friedlaender, M.D.
/s/ John L. Mattana Director May 31, 2000
-------------------------------------------
John L. Mattana
/s/ Jon S. Saxe Director May 31, 2000
-------------------------------------------
Jon S. Saxe
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- -----
<S> <C> <C>
/s/ Anders P. Wiklund Director May 31, 2000
-------------------------------------------
Anders P. Wiklund
</TABLE>
