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As filed with the Securities and Exchange Commission on July 23, 1996
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
ADVANCED TISSUE SCIENCES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 14-1701513
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10933 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA 92037
(619) 450-5730
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
ARTHUR J. BENVENUTO
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
ADVANCED TISSUE SCIENCES, INC.
10933 NORTH TORREY PINES ROAD
LA JOLLA, CALIFORNIA 92037
(619) 450-5730
(Name, Address, Including Zip Code, and Telephone Number
Including Area Code, of Agent for Service)
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Copies to:
LAURA B. HUNTER, ESQ.
BROBECK, PHLEGER & HARRISON LLP
4675 MACARTHUR COURT, SUITE 1000
NEWPORT BEACH, CALIFORNIA 92660
(714) 752-7535
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Offering Aggregate Registration
Securities to be Registered Amount to be Registered(1) Price Per Share(2) Offering Price Fee
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<S> <C> <C> <C> <C>
Common Stock, par value 275,000 shares $10.57 $2,906,750 $1,003.00
$.01 per share
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</TABLE>
(1) Represents 275,000 shares issuable upon the exercise of outstanding
warrants.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended,
based on the average of the high and low selling price per share of the
Company's Common Stock on July 22, 1996 as reported on the Nasdaq
National Market.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by the
Company, any Selling Stockholder or by any other person. Neither the delivery of
this Prospectus nor any sale made thereunder shall, under any circumstances,
create any implication that information herein is correct as of any time
subsequent to the date hereof. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the Shares to any person or by anyone
in any jurisdiction in which such offer or solicitation may not lawfully be
made.
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TABLE OF CONTENTS
Page
Available Information................................................... 2
Information Incorporated By Reference................................... 2
Prospectus Summary...................................................... 4
Risk Factors............................................................ 7
Use of Proceeds......................................................... 13
Selling Stockholders.................................................... 13
Distribution or Sale of the Shares...................................... 14
Experts................................................................. 15
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AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected, and copies of
such material may be obtained at prescribed rates, at the Commission's Public
Reference Section, Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549, as
well as at the Commission's Regional Offices at 7 World Trade Center, 13th
Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. The Common Stock of the
Company is traded on the Nasdaq National 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.
Additional information regarding the Company and the Shares offered
hereby is contained in the Registration Statement on Form S-3 and the exhibits
thereto filed with the Commission under the Securities Act. For further
information pertaining to the Company and the Shares, reference is made to the
Registration Statement and the exhibits thereto, which may be inspected without
charge at, and copies thereof may be obtained at prescribed rates from, the
office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a site on the World Wide Web that contains reports,
proxy and information statements and other information regarding the Company.
The address for such site is http://www.sec.gov.
Advanced Tissue Sciences(TM), Skin2(R), Dermagraft(TM),
Dermagraft-TC(TM) and the Company's logo are trademarks of Advanced Tissue
Sciences.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission are hereby
incorporated by reference in this Prospectus: (i) the Annual Report of the
Company on Form 10-K for the fiscal year ended December 31, 1995; (ii) the
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Quarterly Report of the Company on Form 10-Q for the quarter ended March 31,
1996; (iii) the Proxy Statement of the Company dated April 22, 1996 in
connection with the Annual Meeting of Stockholders held on May 22, 1996; (iv)
the Current Report of the Company on Form 8-K dated February 16, 1996; (v) the
Company's Registration Statement on Form 8-A dated July 28, 1992; and (vi) the
Company's Registration Statement on Form 8-A dated January 6, 1995.
All reports and other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Prospectus and prior to the termination of this offering 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 incorporated herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be 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 or all of the foregoing documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to Michael V. Swanson, Vice President, Finance
and Administration, at Advanced Tissue Sciences, Inc., 10933 North Torrey Pines
Road, La Jolla, California 92037 or by telephone at (619) 450-5730.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere, or incorporated by reference, in this Prospectus, including
the information under "Risk Factors." The discussion in this Prospectus,
particularly those relating to strategic alliances and commercialization of the
Company's products, contain certain forward-looking statements involving risks
and uncertainties within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934. No assurance can be given that the Company will
successfully market such products, achieve the milestones required by the Smith
& Nephew Dermagraft Joint Venture or Cartilage Joint Venture necessary to
receive additional funding, or enter into new strategic alliances. These and
other risks are detailed in publicly available filings with the Securities and
Exchange Commission such as the Company's Annual Report on Form 10-K for the
year ended December 31, 1995. The forward-looking statements herein are
qualified in their entirety by reference to the risks and risk factors described
herein and in such reports. The Company's actual results could differ materially
from those projected in the forward-looking statements as a result of the
factors described under "Risk Factors" and elsewhere in this Prospectus and in
such reports.
THE COMPANY
OVERVIEW
Advanced Tissue Sciences is a leading tissue engineering company
engaged in the development of living human tissue products for therapeutic
applications. The Company is primarily focusing its efforts on skin, cartilage
and cardiovascular products. Utilizing principles of cell biology, biochemistry
and polymer science, the Company has developed and is applying its patented core
technology which permits living human cells to be cultured ex vivo in a manner
that allows the cells to develop and assemble into a functioning
three-dimensional tissue. The Company has successfully replicated a variety of
human tissues and has a number of products under various stages of development.
Advanced Tissue Sciences' objective is to redefine tissue repair and
transplantation by developing, manufacturing and marketing human tissue
replacement products produced through tissue engineering. The Company's product
strategy is to utilize its patented core technology to develop multiple products
which address unmet therapeutic needs or offer improved, cost-effective
alternatives to current treatment modalities. By building upon its base of
scientific knowledge through the continued application of its core technology,
the Company believes it will achieve significant synergies in the development,
clinical testing and manufacture of successive tissue products. In addition, the
Company is focusing its development programs on products which are currently
being or are expected to be regulated as medical devices. Medical devices are
generally subject to shorter regulatory approval processes than biologics or
pharmaceuticals. The Company is developing marketing and reimbursement
strategies, establishing a direct sales organization and pursuing strategic
alliances, to market future commercial products.
Leading the Company's product development efforts are therapeutic skin
products that address the burn and diabetic foot ulcer markets. These products,
based on Dermagraft, a three-dimensional living human tissue designed by the
Company as a temporary or permanent replacement for human dermis, were developed
to treat conditions where the dermis (the inner skin layer) has been injured or
destroyed, such as in severe burns and chronic skin ulcers. The dermis is
essential to normal skin function and healing and, unlike the epidermis (the
outer layer of skin), does not regenerate into normal tissue after injury. The
Company has two lead products currently in pivotal clinical trials, a temporary
covering for severe burns ("Dermagraft-TC") and a dermal replacement product
("Dermagraft-Ulcers") for treating diabetic foot ulcers. The Company submitted a
premarket approval ("PMA") application to the United States Food and Drug
Administration (the "FDA") for Dermagraft-TC on March 28, 1996 and expects to
submit a PMA application for Dermagraft-Ulcers to treat diabetic foot ulcers in
late 1996. The FDA has notified the Company that the PMA applications for both
products will receive expedited review.
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RECENT DEVELOPMENTS
DERMAGRAFT-TC. In December 1995, the Company reported that data from
the pivotal clinical trial of Dermagraft-TC achieved statistical significance
(p<0.01) with respect to its primary endpoint, the ability of the Company's
product to adequately prepare the wound beds for successful autografting. Based
on these results, the Company submitted a PMA application to the FDA on March
28, 1996. The FDA has notified the Company that it intends to review the PMA
application for Dermagraft-TC on an expedited basis, potentially accelerating
the regulatory review period.
Dermagraft-TC has been developed as an alternative to human cadaver
skin to treat severely burned patients. Dermagraft-TC, consisting of a dermal
tissue with an ultrathin synthetic covering, acts as a protective cover to help
retain fluids and reduce the risk of infection until a sufficient amount of the
patient's own skin becomes available for grafting. Of the 70,000 burn patients
hospitalized annually in the United States, approximately 13,000 are severely
burned and require skin grafts. The Company's Dermagraft-TC product is initially
intended to address the approximately 1,500 severely burned patients with burns
exceeding 20% body surface area.
DIABETIC FOOT ULCERS. Enrollment in the pivotal clinical trial of
Dermagraft-Ulcers for diabetic foot ulcers in the United States has been
completed. The primary endpoint in the pivotal trial is complete wound closure.
A planned interim analysis of this data showed that the clinical trial was on
track to achieve the primary endpoint. After follow-up and completion of the
trial, all trial data will be evaluated for statistical significance. If the
results of the completed trial are consistent with the results shown at the
interim analysis, the Company expects to submit a PMA application to the FDA in
late 1996. After the interim analysis, the FDA notified the Company that the PMA
application for Dermagraft-Ulcers in the treatment of diabetic foot ulcers will
also receive expedited review. In an earlier pilot trial, the Dermagraft-Ulcers
patients receiving one piece of Dermagraft-Ulcers per week for eight weeks
showed a statistically significant improvement in complete wound closure. In
addition, patients healed in the pilot trial treated with Dermagraft-Ulcers had
no recurrence of their ulcers after being followed for an average of 14 months.
By contrast, published reports have indicated rates of recurrence ranging from
20% to 50% within the first year following healing. The Company has entered into
an agreement with Smith & Nephew plc ("Smith & Nephew") to form a fifty-fifty
joint venture for the worldwide commercialization of Dermagraft-Ulcers for
diabetic foot ulcers, assuming receipt of appropriate regulatory approvals.
Dermagraft-Ulcers is a dermal replacement product grown on a
bioabsorbable scaffold and is designed to provide a healthy, metabolically
active dermal matrix in the ulcer to support wound closure. Approximately
800,000 diabetic foot ulcer patients are treated in the United States each year,
400,000 of which represent the Company's initial target market. Based on data
from outside sources, it is estimated that the total United States market
opportunity for this targeted indication potentially exceeds $1 billion.
OTHER THERAPEUTIC PRODUCTS UNDER DEVELOPMENT
ORTHOPEDICS. The Company has successfully replicated cartilage tissue
ex vivo using the Company's proprietary three-dimensional culture system.
Through a joint venture with Smith & Nephew, the Company is developing several
orthopedic applications of tissue engineered cartilage. The joint venture is
currently in a pivotal preclinical trial for articular resurfacing which, if
successfully completed, is expected to lead to human clinical trials in 1997.
Pilot preclinical trials of tissue engineered meniscus have shown successful
repair of meniscus defects in subjects followed for up to one year. There are
over 1.2 million arthroscopic procedures for repair of the knee performed
annually in the United States, including procedures involving articular
cartilage, meniscus and ligament.
CARDIOVASCULAR. Through the use of its tissue engineering technology,
Advanced Tissue Sciences is working on developing cardiovascular products that
will grow and repair normally. Over the past year, the Company has made
substantial progress in developing dynamic bioreactors for growing tissue
engineered heart valves and blood vessels. In the United States, over 900,000
Americans die each year from cardiovascular disease, and over 60,000 prosthetic
heart valves are implanted and over 430,000 vascular graft procedures are
performed in the United States.
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PATENTED CORE TECHNOLOGY
The Company has developed a patented core technology that combines the
principles of cell biology, biochemistry and polymer science to create a
three-dimensional living support stroma ex vivo. Products engineered by the
Company based on its core technology produce a completely human stromal tissue
that, in turn, supports the growth of organ cells into functional tissue.
Advanced Tissue Sciences has been issued United States and European patents
covering its core technology and numerous patents related to applications of
such technology.
Advanced Tissue Sciences was incorporated in Delaware in 1987. The
Company maintains its executive offices at 10933 North Torrey Pines Road, La
Jolla, California 92037, and its telephone number at that address is (619)
450-5730.
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RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully before purchasing the
Common Stock offered hereby.
UNCERTAINTIES OF CLINICAL TRIALS
The Company is required to obtain approval from the FDA prior to
marketing its therapeutic products in the United States and the approval of
foreign regulatory authorities to commercialize its products in other countries.
To obtain such approvals, the Company is required to prove the safety and
efficacy of its products through extensive preclinical studies and clinical
trials. The Company is in various stages of such testing. The Company's lead
products, Dermagraft-TC, a temporary covering for severe burns and
Dermagraft-Ulcers for diabetic foot ulcers, are in pivotal human clinical trials
in the United States and in the United States and France, respectively.
Enrollment in the pivotal clinical trials of Dermagraft-TC and for diabetic foot
ulcers in both the United States and France is complete. The completion of these
trials, or any other of the Company's clinical trials, is dependent upon many
factors. Delays may result in increased trial costs and delays in FDA
submissions which could have a material adverse effect on the Company.
A number of companies in the biotechnology and pharmaceutical
industries have suffered significant setbacks in clinical trials, even after
showing promising results in earlier studies or trials. Although the Company has
obtained favorable results to date in preclinical studies and clinical trials of
certain of its products, such results may not be predictive of results that will
ultimately be obtained in or throughout such clinical trials. In a previously
conducted pivotal clinical trial, the Company encountered an efficacy issue for
a Dermagraft product to treat venous ulcers. An interim analysis of that trial
indicated there was no statistically significant difference in complete healing
between the control group patients and those treated with a single dose of the
Dermagraft product. Analysis of follow-up data from patients in the trial did,
however, show a statistically significant difference in the recurrence rate of
Dermagraft-treated patients versus control patients. To date, the Company has
elected not to pursue the use of Dermagraft-Ulcers as a treatment to reduce the
recurrence of venous ulcers, although it may do so in the future. There can be
no assurance that the Company will not encounter problems in its clinical trials
that will cause the Company to delay or suspend its clinical trials, that the
clinical trials of its products will be completed at all, that such testing will
ultimately demonstrate the safety or efficacy of such products or that any
products will receive regulatory approval on a timely basis, if at all. If any
such problems occur, the Company could be materially and adversely affected.
ABSENCE OF PROFITABLE OPERATIONS; NEED FOR ADDITIONAL FUNDS
To date, the Company has experienced significant operating losses in
funding the research, development and testing of its products and expects to
continue to incur substantial operating losses. The Company has incurred
cumulative net operating losses of $123.7 million through March 31, 1996
(including an approximately $21.4 million non-recurring charge related to an
acquisition in September 1992). Losses are expected to increase as a result of
the expenses associated with scaling up and validating manufacturing processes
and equipment, establishing sales and marketing capabilities and funding
additional research, development and testing. The Company's ability to achieve
profitability depends in part upon its ability, either independently or in
collaboration with others, to complete the development and obtain required
regulatory approvals of, and to successfully manufacture and market, products.
There can be no assurance that the Company will ever achieve a profitable level
of operations or that profitability, if achieved, can be sustained on an ongoing
basis.
The further development of the Company's technology and products as
well as the scale up of the Company's manufacturing capabilities and the
establishment of necessary sales, marketing and distribution capabilities will
require the commitment of substantial funds, the amount of which will depend on
many factors, such as the schedule and progress of preclinical and clinical
trials and the timing and cost of obtaining regulatory approvals. The Company
may ultimately need to raise additional funds to support its long-term product
development and commercialization programs. The Company could acquire such
additional funding through collaborative arrangements, the extension of existing
arrangements, additional public or private offerings of debt or equity
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securities or other means. There can be no assurance that adequate funds will be
available under existing or future arrangements when such funds are needed or,
if available, on terms acceptable to the Company. Insufficient funds may require
the Company to delay, scale back or eliminate certain of its research and
product development programs or to license third parties the right to
commercialize products or technologies that the Company would otherwise
commercialize itself.
STAGE OF PRODUCT DEVELOPMENT
Although two of the Company's products are in advanced stages of
pivotal clinical trials, the remainder of the Company's other products are at
earlier stages of research, development and testing. These products will require
significant additional research and development, including extensive preclinical
and clinical testing, and regulatory approvals prior to commercialization. All
of the Company's products are subject to the risks of failure inherent in the
development of products based on innovative technologies. Such risks include the
possibilities that any or all of these products are found to be unsafe or
ineffective or otherwise fail to receive necessary regulatory approvals, that
products are uneconomical to market, that third parties may hold proprietary
rights that preclude the Company from marketing its products, or that the
Company's products fail to achieve market acceptance in light of competing
technologies and products. The Company continually reviews its product
development activities in an effort to allocate its resources to those products
the Company believes have the greatest commercial potential. Factors considered
by the Company in determining the products to pursue include projected markets
and need, potential for regulatory approval and reimbursement under the existing
health care system as well as anticipated health care reforms, technical
feasibility, expected and known product attributes and estimated costs to bring
the product to market. Based on these and other factors which the Company
considers relevant, the Company may from time to time reallocate its resources
among its product development activities. Additions of products under
development or changes to products being pursued can substantially and rapidly
change the Company's funding requirements.
LIMITED MANUFACTURING AND MARKETING EXPERIENCE
Although the Company has had the manufacturing capacity to produce
sufficient quantities of Dermagraft to support its ongoing clinical trials, the
Company must develop the capability of manufacturing its products in commercial
quantities, in compliance with regulatory requirements and at acceptable costs.
While the Company has clinical scale manufacturing experience producing its
Dermagraft products, it has no commercial scale manufacturing experience with
these specific products. The Company has constructed and is in the process of
developing and validating commercial scale manufacturing for its Dermagraft-TC
and Dermagraft-Ulcers products. The facility and processes have and will
continue to undergo rigorous validation tests and there can be no assurance that
the Company will be able to obtain the necessary regulatory approvals for its
manufacturing operations on a timely basis or at all. Although the Company
believes it unlikely, it cannot be certain that process changes during scale up
will not require the Company to undertake additional clinical trials which would
require additional expenditures and cause delays in commercial production. In
addition, the Company's manufacturing facility must be registered with and
licensed by various regulatory authorities, including the California Department
of Health and Human Services, and comply with the good manufacturing practices
("GMPs") requirements prescribed by the FDA. Any significant delays in the
completion of validation or regulatory inspection of the facility or
manufacturing processes could have a material adverse effect on the ability of
the Company to ultimately market its products on a timely and profitable basis,
and on the Company's ability to conduct its business.
The Company has no direct experience marketing or obtaining third-party
reimbursement for its products. The Company will have to establish an effective
internal sales and marketing organization and/or rely on corporate partners or
licensees, or on arrangements with others to market its products domestically
and internationally. There can be no assurance that the Company will be
successful in these efforts or that any of its products, if approved, will gain
market acceptance.
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GOVERNMENT REGULATION
The Company's preclinical studies and clinical trials and the
manufacturing and marketing of its products are subject to extensive, costly and
rigorous regulation by various governmental authorities in the United States and
other countries. The process of obtaining required regulatory approvals from the
FDA and other regulatory authorities often takes many years, is expensive and
can vary significantly based on the type, complexity and novelty of the product.
There can be no assurance that any products developed by the Company,
independently or in collaboration with others, will meet applicable regulatory
criteria to receive the required approvals for manufacturing and marketing.
Delays in obtaining United States or foreign approvals could result in
substantial additional costs to the Company and adversely affect the Company's
competitive position.
The Dermagraft-TC and Dermagraft-Ulcers products are currently in
pivotal clinical trials. The Company submitted a PMA application to the FDA for
the Dermagraft-TC product on March 28, 1996, and expects to submit a PMA
application for the Dermagraft-Ulcers product in late 1996, based upon the
results of the respective trials. There can be no assurance that the Company
will submit the PMA application for Dermagraft-Ulcers in this time frame, if at
all, or that FDA will conclude that the trial results support a finding of
safety and efficacy for any of its products. In addition, even though the
Company has been informed by the FDA that the Company's Dermagraft-TC and
Dermagraft-Ulcers products will receive expedited PMA review from the agency,
there can be no assurance that such status will accelerate the review process,
or that such status will not be rescinded by the FDA if products of other
companies that have already received FDA approval, or which receive FDA approval
prior to the Company receiving its approval, are deemed by the FDA to perform
substantially the same functions or to provide comparable benefits. There can be
no assurance that the FDA will approve either the Dermagraft-TC or
Dermagraft-Ulcers PMA applications in a timely fashion, if at all. Moreover,
even if such approvals are obtained, post-approval regulation of the Company's
products could result in the withdrawal, suspension or limitation of approvals
or limit the further marketing of the Company's products.
The Company's Dermagraft and cartilage products are subject to
regulation as medical devices. The Company's other tissue replacement products,
currently in various stages of development, could be regulated either as medical
devices or as biologic products. Even though the FDA has classified human tissue
engineered products such as those manufactured by the Company as medical
devices, application of the Federal Food, Drug, and Cosmetic Act (the "FDC Act")
to human tissue in its original form has been accomplished one tissue type at a
time. Certain of the Company's potential products are not currently regulated by
the FDA, but may ultimately be regulated either as a medical device or a
biologic. Accordingly, while regulation of the Company's additional potential
tissue replacement products as medical devices is possible, it is impossible to
determine with certainty under which regulatory scheme they will be placed by
the FDA. Legislative and regulatory initiatives concerning the regulation of
tissue and organ transplants are ongoing and could possibly affect the future
regulation of the Company's tissue engineered products. It is not possible at
the present time to predict accurately either the time frame for such action, or
the ultimate effect that such initiatives could have, if any, on the products
under development by the Company.
The Company has constructed and is in the process of developing and
validating commercial scale manufacturing for its Dermagraft-TC and
Dermagraft-Ulcers products. The facility must be registered, inspected, and
licensed by various regulatory authorities, including the California Department
of Health and Human Services, and must comply with FDA's GMP requirements. There
can be no assurance that the facility will be found to comply with GMPs and
other requirements and that necessary regulatory approvals will be obtained on a
timely basis, if at all.
DEPENDENCE ON CERTAIN SUPPLIERS
The mesh framework used by the Company in its Dermagraft-Ulcers and
Dermagraft-Burns (designed as a dermal replacement to be placed below an
autograft) products is supplied by only one FDA-approved manufacturer. The
synthetic mesh framework used by the Company in its Dermagraft-TC product is
likewise available from a single FDA-approved manufacturing source. Although the
Company has not experienced difficulty acquiring these materials for the
manufacture of its Dermagraft products for clinical trials, no assurance can be
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given that interruptions in supplies will not occur in the future or that the
Company would not have to obtain substitute vendors for these materials, which
would require additional regulatory submissions. Any significant supply
interruption could adversely affect the Company's clinical trials as well as its
product development and marketing programs. In addition, an uncorrected impurity
or supplier's variation in a raw material, either unknown to the Company or
incompatible with the Company's manufacturing process, could have a material
adverse effect on the Company's ability to manufacture its products.
TECHNOLOGICAL CHANGE AND COMPETITION
The markets for the Company's products are characterized by rapid,
unpredictable and significant technological change. Competition in the Company's
industry is intense. The Company's competitors include universities, research
institutions and pharmaceutical, chemical, medical device and biotechnology
companies. Many of these companies have greater financial resources, research
and development capabilities and more experience in conducting clinical trials,
obtaining regulatory approvals, manufacturing and marketing than the Company.
Accordingly, these competitors may succeed in developing, obtaining regulatory
approval for and some have commercialized their products more rapidly than the
Company. A number of companies are developing and have commercialized dermal
replacement and other products, including various types of wound healing
treatments employing a variety of approaches that are in competition with the
Company's Dermagraft products. The Company also knows of other companies that
are undertaking research and development of tissue engineered products, some of
which are patented. There can be no assurance that developments by the Company's
competitors or potential competitors will not render the Company's technology or
proposed applications of its technology non-competitive, uneconomical or
obsolete.
PATENTS AND PROTECTION OF PROPRIETARY TECHNOLOGY
The Company's ability to compete effectively with other companies will
depend, in part, on its ability to maintain the proprietary nature of its
technology, products and manufacturing processes. The Company relies on patents,
trade secrets and know-how to maintain its competitive position. The Company has
been issued one United States patent and a European patent covering its core
technology and has been issued other United States and foreign patents related
to this technology. In addition, many other United States and foreign patent
applications have been filed. The issued United States patents include patents
covering the Dermagraft-Ulcers and Dermagraft-TC products. The Company also has
licenses or licensing rights to certain other United States and foreign patents
and patent applications.
There can be no assurance that any existing or future patent
applications by the Company will result in issued patents or that any current or
future issued or licensed patents, trade secrets or know-how will afford
protection against competitors with similar technologies or processes, or that
any patents issued will not be infringed upon or designed around by others. In
addition, there can be no assurance that others will not independently develop
proprietary technologies and processes which are the same as or substantially
equivalent to those of the Company. The Company could also incur substantial
costs in defending itself in suits brought against it on such patents or in
bringing suits to protect the Company's patents or patents licensed by the
Company against infringement. Additionally, the Company protects its proprietary
technology and processes in part by confidentiality agreements with its
collaborative partners, employees and consultants. There can be no assurance
that these agreements will not be breached, that the Company will have adequate
remedies for any breach, or that the Company's trade secrets will not otherwise
become known or independently discovered by competitors.
UNCERTAINTIES REGARDING HEALTH CARE REIMBURSEMENT AND REFORM
The Company's ability to commercialize products successfully may depend
in part on the extent to which reimbursement for the costs of such products and
related treatments will be available from government health administration
authorities, private health insurers and other organizations. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products, and there can be no assurance that adequate third party coverage will
be available for the Company to maintain price levels sufficient for realization
of an appropriate return on its investment in developing new products.
Government and other third party payors are increasingly
10
<PAGE> 11
attempting to contain health care costs by limiting both coverage and the level
of reimbursement for new products approved for marketing by the FDA, and by
refusing, in some cases, to provide any coverage for uses of approved products
for indications for which the FDA has not granted marketing approval. Recent
initiatives to reduce the federal deficit and to reform health care delivery are
increasing these cost containment efforts. As managed care organizations
continue to expand as a means of containing health care costs, the Company
believes there may be attempts by such organizations to restrict the use or
delay authorization to use new products, such as those being developed by the
Company, pending completion of cost/benefit analyses of such products by those
managed care organizations. If adequate coverage and reimbursement levels are
not provided by government and other third party payors for uses of the
Company's products, the market acceptance of these products could be adversely
affected.
UNCERTAINTY OF COLLABORATIVE ARRANGEMENTS AND STRATEGIC ALLIANCES
The Company's strategy for the development, clinical testing,
manufacture and commercialization of certain of its tissue replacement products
includes entering into various collaborations with corporate partners,
licensors, licensees and others. These collaborations provide access to
technologies, technical expertise and financial and other resources that might
otherwise be unavailable to the Company. The Company has entered into
collaborations with various institutions related to the development and
commercialization of its tissue engineered products. Although the Company
believes that its partners in these collaborations have an economic motivation
to succeed in performing their contractual responsibilities, the amount and
timing of resources to be devoted to these activities are not within the control
of the Company. Moreover, the collaboration agreements generally provide that
they may be terminated by the collaborator prior to their expiration under
circumstances that may also be outside the control of the Company. In addition,
there can be no assurance that these collaborators will pay any additional
option or license fees to the Company or that they will develop or market any
products under the agreements. For example, in early 1996 St. Jude Medical,
Inc., which had previously worked with the Company on a collaboration effort
related to heart valves, elected not to enter into a licensing agreement even
though the feasibility studies conducted by the parties were successful.
Finally, if the Company's collaboration agreements are terminated prior to their
expiration or if the other parties to such agreements fail to adequately
perform, there can be no assurance that submission of products for regulatory
approval will not be delayed or that the Company's ability to deliver products
on a timely basis will not be impaired.
Furthermore, there can be no assurance that the Company will be able to
negotiate additional collaborative arrangements in the future on acceptable
terms, if at all, or that such collaborative arrangements will be successful. To
the extent that the Company chooses not to or is unable to establish such
arrangements, it would experience increased capital requirements to undertake
research, development and marketing of its proposed products at its own expense.
In addition, the Company may encounter significant delays in introducing its
proposed products into certain markets or find that the development, manufacture
or sale of its proposed products in such markets is adversely affected by the
absence of such collaborative agreements.
DEPENDENCE ON KEY PERSONNEL
The Company's success will depend in large part upon its ability to
attract and retain qualified scientific, management, marketing and sales
personnel as well as the continued contributions of its existing senior
management, and scientific and technical personnel. The Company faces strong
competition for such personnel and there can be no assurance that the Company
will be able to attract or retain such individuals. In particular, the loss of
the services of either Arthur J. Benvenuto, the Company's Chairman and Chief
Executive Officer, or Dr. Gail K. Naughton, its President and Chief Operating
Officer, would have a material adverse effect on the Company. The Company has
obtained key man life insurance on the lives of each of Mr. Benvenuto and Dr.
Naughton in the amount of $3 million, $2.5 million of which is payable to the
Company.
PRODUCT LIABILITY CLAIMS AND INSURANCE
The use of any of the Company's products, whether for commercial
applications or during clinical trials, exposes the Company to an inherent risk
of product liability claims in the event such products cause injury, disease or
result in adverse effects. Such liability might result from claims made directly
by health care institutions,
11
<PAGE> 12
contract laboratories or others selling or using such products. The Company
currently maintains product liability insurance coverage; however, there can be
no assurance that the level or breadth of any insurance coverage will be
sufficient to fully cover potential claims. Such insurance is becoming
increasingly expensive and difficult to obtain. There can be no assurance that
adequate insurance coverage will be available in the future at an acceptable
cost, if at all, or in sufficient amounts to protect the Company against such
liability. The obligation to pay any product liability claim in excess of
whatever insurance the Company is able to acquire could have a material adverse
effect on the business, financial condition and future prospects of the Company.
HAZARDOUS MATERIALS
The Company's research and development activities and operations
involve the controlled use of small quantities of radioactive compounds,
chemical solvents and other hazardous materials. In addition, the Company's
business involves the growth of human tissue samples. Although the Company
believes that its safety procedures for handling and disposing of such materials
comply with the standards prescribed by federal, state and local 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 liability could have a material
adverse effect on the Company.
ANTI-TAKEOVER PROVISIONS
The Company's Restated Certificate of Incorporation (the "Certificate")
includes provisions that may discourage or prevent certain types of transactions
involving an actual or potential change in control of the Company, including
transactions in which the stockholders might otherwise receive a premium for
their shares over then-current market prices. The Certificate, for example,
authorizes the Board of Directors (the "Board") to issue shares of Preferred
Stock without stockholder approval on such terms as the Board may determine. 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 Stock that may be issued
in the future. Moreover, such issuance may make it more difficult for a third
party to acquire, or may discourage a third party from acquiring, a majority of
the voting stock of the Company. Further, pursuant to the terms of a stockholder
rights plan adopted in January 1995, the Company has distributed a dividend of
one right for each outstanding share of Common Stock. The rights will cause
substantial dilution of the ownership of a person or group that attempts to
acquire the Company on terms not approved by the Board and may have the effect
of deterring hostile takeover attempts.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock, like that of the
securities of other biotechnology companies, has fluctuated significantly in
recent years and is likely to fluctuate in the future. From time to time the
market for securities of biotechnology companies has in fact experienced
significant price and volume fluctuations that are unrelated to the operating
performance of such companies. In addition, announcements by the Company or
others regarding scientific discoveries, technological innovations, commercial
products, patents or proprietary rights, the progress of clinical trials or
government regulation, public concern as to the safety of devices or drugs, the
issuance of securities analysts' reports and general market conditions may all
have a significant effect on the market price of the Common Stock. Fluctuations
in financial performance from period to period also may have a significant
impact on the market price of the Common Stock.
POTENTIAL ADVERSE EFFECTS OF SHARES ELIGIBLE FOR FUTURE SALE
The issuance of freely tradable Common Stock upon the exercise of stock
options and warrants, as well as future sales of Common Stock by existing
stockholders, or the perception that sales could occur, could adversely affect
the market price of the Common Stock.
12
<PAGE> 13
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
Shares by the Selling Stockholders. See "Selling Stockholders."
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders. Except as indicated,
none of the Selling Stockholders has had a material relationship with the
Company within the past three years other than as a result of the ownership of
the Shares or other securities of the Company. Because the Selling Stockholders
may offer all or some of the Shares which they hold, or have the right to
acquire, 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, no estimate can be given as to the amount of
Shares that will be held by the Selling Stockholders after completion of this
offering. See "Distribution or Sale of the Shares." The Shares offered by this
Prospectus may be offered from time to time by the Selling Stockholders named
below:
<TABLE>
<CAPTION>
Number of
Number of Shares Percent of
Shares Beneficially Registered Outstanding
Name of Selling Stockholder Owned(1) for Sale Hereby Shares
- --------------------------- --------------------- --------------- -----------
<S> <C> <C> <C>
Ramius Hatteras Partners, L.P. 175,000 175,000 *
J. P. Morgan Ventures Corporation 100,000 100,000 *
-------
TOTAL 275,000
=======
</TABLE>
- ---------------------
* Less than 1% as of June 30, 1996.
(1) All shares of Common Stock of the Company shown as beneficially owned
are issuable upon the exercise of outstanding warrants.
The Shares issuable to Ramius Hatteras Partners, L.P. and available for
sale pursuant to this Prospectus were acquired under that certain Investment
Agreement dated February 9, 1996 (the "Investment Agreement"), at an initial
exercise price per share of $10.50. The Shares issuable to J. P. Morgan Ventures
Corporation and available for sale pursuant to this Prospectus were acquired in
connection with certain financial advisory services under a Letter Agreement
dated March 26, 1996 (the "Letter Agreement") and related Common Stock Warrant
dated April 1, 1996 (the "Warrant Agreement") at an initial exercise price of
$10.50. Assuming the exercise of all the warrants, the Company will receive
aggregate proceeds of approximately $2,887,500.
At the time of issuance, each Selling Stockholder represented to the
Company that it was acquiring the warrants and underlying Shares from the
Company without any present intention of effecting a distribution of those
Shares. However, in accordance with the Investment Agreement and the Warrant
Agreement entered into with the Selling Stockholders, the Company agreed to
effect a shelf registration (of which this Prospectus is a part) of the Shares
to permit the Selling Stockholders to effect sales of such Shares from time to
time in the market or in privately-negotiated transactions. The Company will
prepare and file such amendments and supplements to the registration statement
as may be necessary in accordance with the rules and regulations of the
Securities Act to keep it effective until all of such Shares have been sold
pursuant to the registration statement or until registration of the Shares is no
long required by reason of Rule 144 under the Securities Act or other rules of
similar effect.
The Company has agreed to bear certain expenses (other than broker
discounts and commissions, if any, and expenses of counsel and other advisors to
certain of the Selling Stockholders) in connection with the registration of the
Shares.
13
<PAGE> 14
DISTRIBUTION OR SALE OF THE SHARES
The Shares offered hereby are being offered directly by the Selling
Stockholders. The Company will not receive any proceeds from the sale of any of
the Shares by the Selling Stockholders. The sale of the Shares may be effected
by the Selling Stockholders from time to time in transactions in the
over-the-counter market, on the Nasdaq National Market, in negotiated
transactions, or a combination of such methods of sale, at fixed prices which
may be changed, at market prices prevailing at the time of sale, at prices
related to 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 and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with by the Company and the Selling
Stockholders.
The Selling Stockholders and any broker-dealers, agents or underwriters
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 Selling Stockholder Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to the Common Stock of the Company for
a period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Stockholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
The Company has agreed to register the Shares under the Securities Act
and to indemnify and hold certain Selling Stockholders harmless against certain
liabilities under the Securities Act that could arise in connection with the
sale by the Selling Stockholders of the Shares.
14
<PAGE> 15
EXPERTS
The consolidated financial statements of Advanced Tissue Sciences, Inc.
appearing in the Company's Annual Report (Form 10-K) for the year ended December
31, 1995, 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 such report given upon the authority of such firm as experts in
accounting and auditing.
15
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with
the sale or the distribution of the securities being registered, other than
underwriting discounts and commissions and finder's fees. All of the amounts
shown are estimates except for the Securities and Exchange Commission
registration fee and Nasdaq fee.
Securities and Exchange Commission registration fee............. $ 1,003.00
Nasdaq additional listing fee.................................... 5,500.00
Accounting fees and expenses..................................... 15,000.00
----------
Legal fees and expenses.......................................... 10,000.00
----------
Miscellaneous.................................................... 8,497.00
----------
Total................................................... $40,000.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware Corporation Law, the Company has
broad powers to indemnify its directors and officers against liability they may
incur in such capacities, including liabilities under the Securities Act. The
Company's Bylaws (the "Bylaws") provide that the Company will indemnify its
directors and may indemnify its officers, employees and other agents to the full
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence by indemnified parties,
and requires the Company to advance litigation expenses in the case of
stockholder derivative actions or other actions if the director agrees to repay
advances if it is ultimately determined that the director is not entitled to
indemnification.
The Company has entered into indemnification agreements with each of
its directors and officers which provide the directors and officers with
indemnification rights. One significant difference between the indemnification
rights provided under the Company's Bylaws and those provided under the
indemnification agreements is that, under the Bylaws as construed in accordance
with Delaware law, amounts may be paid as indemnity only if independent
determinations are made in each specific case that under the circumstances the
individual claiming indemnity meets certain specified standards of conduct.
Under the indemnification agreements, a determination that a director or officer
has met these standards is not required for such indemnity, although the
agreements exclude indemnity for conduct which is adjudged to be knowingly
fraudulent, deliberately dishonest or to constitute willful misconduct. The
Company also currently maintains policies of insurance under which its directors
and officers are insured, within the limits and subject to the limitations of
the policies, against certain expenses in connection with the defense of
actions, suits or proceedings, and certain liabilities which might be imposed as
a result of such actions, suits or proceedings, to which they are parties by
reason of being or having been such directors or officers.
The Company's Certificate of Incorporation provides that, pursuant to
Delaware law, its directors shall not be liable for monetary damages for breach
of the director's fiduciary duty of care to the Company and its stockholders.
This provision in the Certificate of Incorporation does not eliminate the duty
of care, and in appropriate circumstances, equitable remedies such as injunction
or other forms of non-monetary relief will remain available under Delaware law.
In addition, each director will continue to be subject to liability for breach
of the director's duty of loyalty to the Company for acts or omissions not in
good faith or involving intentional misconduct, or knowing violations of law, or
actions lending to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision does not affect a director's responsibilities
under any other law, such as the federal securities laws or state or federal
environmental laws.
II-1
<PAGE> 17
ITEM 16. EXHIBITS.
Exhibit No.
- -----------
4.1* Investment Agreement dated as of February 9, 1996 between Ramius
Hatteras Partners, L.P. and the Company. Incorporated by reference as
Exhibit 4.1 to the Current Report on Form 8-K dated February 9, 1996.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney. Reference is made to page II-4.
- -----------------------
* Previously filed and incorporated by reference.
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, Form S-8 or Form F-3,
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 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.
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 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-2
<PAGE> 18
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 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.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of La Jolla, State of California, on July 23, 1996.
ADVANCED TISSUE SCIENCES, INC.
By: /s/ ARTHUR J. BENVENUTO
------------------------
Arthur J. Benvenuto
Chairman of the Board of Directors
and Chief Executive Officer
We, the undersigned officers and directors of Advanced Tissue Sciences,
Inc. do hereby constitute and appoint Arthur J. Benvenuto and Michael V. Swanson
our true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby, ratifying and confirming all that each of said attorneys-in-fact
and agents, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ARTHUR J. BENVENUTO Chairman of the Board of Directors and July 23, 1996
- --------------------------------- Chief Executive Officer (principal
Arthur J. Benvenuto executive officer)
/s/ DR. GAIL K. NAUGHTON Director, President and Chief Operating July 23, 1996
- --------------------------------- Officer
Dr. Gail K. Naughton
/s/ MICHAEL V. SWANSON Vice President, Finance and July 23, 1996
- --------------------------------- Administration (principal financial and
Michael V. Swanson accounting officer)
/s/ JEROME E. GROOPMAN, M.D. Director July 23, 1996
- ---------------------------------
Jerome E. Groopman, M.D.
/s/ JACK L. HECKEL Director July 23, 1996
- ---------------------------------
Jack L. Heckel
/s/ DAVID S. TAPPAN, JR. Director July 23, 1996
- ---------------------------------
David S. Tappan, Jr.
/s/ WILLIAM B. WALSH, M.D. Director July 23, 1996
- ---------------------------------
William B. Walsh, M.D.
/s/ DR. GAIL R. WILENSKY Director July 23, 1996
- ---------------------------------
Dr. Gail R. Wilensky
</TABLE>
II-4
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Advanced Tissue
Sciences, Inc. for the registration of 275,000 shares of its common stock and
to the incorporation by reference therein of our report dated February 22,
1996, with respect to the consolidated financial statements of Advanced Tissue
Sciences, Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
July 18, 1996
