As filed with the Securities and Exchange Commission on August 13, 1997
Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
NEOPATH, INC.
(Exact name of registrant as specified in its charter)
Washington 91-1436093
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8271-154th Avenue N.E.
Redmond, Washington 98052
(425) 869-7284
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ALAN C. NELSON
President and Chief Executive Officer
NeoPath, Inc.
8271-154th Avenue N.E.
Redmond, Washington 98052
(425) 869-7284
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
_____________________
Copies to:
MICHAEL E. STANSBURY
STEPHANIE G. DALEY-WATSON
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, Washington 98101-3099
(206) 583-8888
_____________________
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 any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
_____________________
CALCULATION OF REGISTRATION FEE
Proposed
Maximum
Aggregate Amount of
Title of Each Class Offering Registration
of Securities to Be Registered Price(1) Fee
- -------------------------------------- ----------- ------------
Common Stock, par value $.01 per share $6,896,037 $2,090
(1) Computed in accordance with Rule 457(o) under the Securities Act of
1933.
_____________________
The registrant hereby undertakes to amend 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 this
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
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>
SUBJECT TO COMPLETION, DATED AUGUST 13, 1997
421,132 Shares
NEOPATH, INC.
_____________________
Common Stock
(par value $0.01 per share)
_____________________
All of the 421,132 shares of Common Stock of NeoPath, Inc. ("NeoPath"
or the "Company") offered hereby (the "Shares") may be sold by certain of
the Company's shareholders (the "Selling Shareholders") from time to time
in transactions in the over-the-counter market or otherwise at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or in negotiated transactions. See "Selling Shareholders and
Plan of Distribution." The Company will not receive any of the proceeds
from the sale of the Shares.
The Shares include 97,127 shares issued as a portion of the purchase
price paid by NeoPath on June 23, 1997 for the purchase of the Pathfinder(r)
System from CompuCyte Corporation ("CompuCyte"). This Prospectus has been
prepared so that future sales of the Shares will not be restricted under
the Securities Act of 1933, as amended (the "Securities Act"). In
connection with any sales, the Selling Shareholders and any brokers
participating in such sales may be deemed to be "underwriters" within the
meaning of the Securities Act. See "Selling Shareholders and Plan of
Distribution."
The Common Stock is traded on the Nasdaq National Market ("Nasdaq")
under the symbol "NPTH." On August 11, 1997, the last reported sales price
of the Common Stock on Nasdaq was $16.375 per share.
The shares of Common Stock offered hereby involve a high degree of risk.
See "Risk Factors" beginning on page 4.
_____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________
The date of this Prospectus is _________, 1997.
<PAGE>
AVAILABLE INFORMATION
NeoPath, a Washington corporation, is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such materials can be obtained upon written request
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, NeoPath is
an electronic filer, and the Commission maintains a web site
(http://www.sec.gov) that contains certain reports, proxy statements and
other information regarding registrants that file electronically with the
Commission. Reports and other information concerning the Company can also
be inspected at the National Association of Securities Dealers, Inc.,
Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") under the Securities Act of 1933, as amended. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules
and regulations of the Commission. For further information, reference is
hereby made to the Registration Statement. The Registration Statement and
any amendments thereto, including exhibits filed as a part thereof, also
are available for inspection and copying as set forth above. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS
DELIVERED, UPON WRITTEN OR ORAL REQUEST TO THE SECRETARY, NEOPATH, INC.,
8271-154TH AVENUE N.E., REDMOND, WASHINGTON 98052, TELEPHONE NUMBER
(425) 869-7284.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-25210)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the
Commission on November 30, 1994, including any amendment or
report filed for the purpose of updating such description;
3. The Company's Proxy Statement filed with the Commission on
April 14, 1997; and
4. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997.
All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering of Common Stock
offered hereby shall be deemed incorporated by reference into this
Prospectus and to be a part hereof from the respective dates of filing such
documents. Any statement contained in a document all or a portion of which
is incorporated or deemed to be incorporated by reference 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 shall not
be deemed to constitute a part of this Prospectus except as so modified,
and any statement so superseded shall not be deemed to constitute part of
this Prospectus.
Page 2
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THE COMPANY
The Company develops and markets products that automate the
interpretation of medical images. The Company's initial products include two
automated screening systems that integrate proprietary high-speed image
processing computers, video imaging technology and sophisticated image
interpretation software to capture and analyze thousands of microscopic
images from a Papanicolaou ("Pap") smear slide, as well as the Pathfinder
System recently acquired from CompuCyte. In September 1995, the
United States Food and Drug Administration (the "FDA") cleared for
commercial use the Company's first product, the AutoPap 300 QC Automatic
Pap Screener System (the "AutoPap QC"). In early 1996, the Health Care
Financing Administration officially allowed clinical laboratories to use
the AutoPap QC in the quality control review of Pap smear slides that have
been initially screened by cytologists as normal. This decision allows the
AutoPap QC to be used in meeting federally mandated Pap smear slide
rescreening requirements.
NeoPath is seeking FDA approval of its second product, the AutoPap
Automatic Pap Screener System (the "AutoPap Screener," and, together with
the AutoPap QC, the "AutoPap System"). The Company is in the process of
reviewing the results of the clinical studies that support an amendment to
the Company's Pre-Market Approval ("PMA") supplement for the use of the
AutoPap System as a primary screener of Pap smear slides. The Company plans
to submit the amended PMA supplement to the FDA in 1997. During the first
quarter of 1997, the Ministry of Health and Welfare in Japan approved the
AutoPap System for sale as a Pap smear screening system.
In June 1997, the Company acquired the Pathfinder System product line
from CompuCyte for an aggregate purchase price of $2.5 million in cash
(excluding transaction costs), a $500,000 short-term note payable, and
97,127 shares of the Company's Common Stock. The Pathfinder System is
designed to provide improved productivity and quality assurance in the
clinical cytology laboratory by computerizing the cytotechnologists'
microscopes, thereby helping to eliminate screening errors and facilitating
critical cell identification in applications such as Pap smear screening for
the early detection of cervical cancer. NeoPath intends to sell the
Pathfinder System as a stand-alone product and to evaluate a potential
integration of the technology into the AutoPap System.
The Company's principal offices are located at 8271-154th Avenue N.E.,
Redmond, Washington 98052 and its telephone number is (425) 869-7284.
Page 3
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, prospective
investors should carefully consider the following in evaluating the Company
and its business. This Prospectus contains forward-looking statements that
involve risks and uncertainties. Actual results may differ materially from
the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those
discussed in this section and elsewhere in this Prospectus.
Limited Operating History; History of Losses
The Company has a limited operating history and, prior to 1996, was
focused primarily on product development, obtaining regulatory approvals
and establishing manufacturing capability. NeoPath began recognizing
product revenues in 1996 and reported a total of $3.1 million in revenues
in 1996, with a corresponding net loss of $17.7 million. NeoPath reported
revenues of $4.5 million in the first six months of 1997, with a
corresponding net loss of $12.9 million.
The Company's losses since its inception have resulted in an
accumulated deficit of $77.4 million as of June 30, 1997. The Company does
not anticipate achieving profitability until at least the second half of
1998 as it continues to expand its sales, marketing, and customer service
and support capabilities and continues its research and development
activities (including clinical studies). There can be no assurance that
the Company will achieve profitability or that the Company will not be
required to seek additional capital. There can be no assurance that
adequate funding will be available, if needed, or on terms acceptable by
the Company.
Uncertainty of Market Acceptance; Market Consolidation
The Company's success and growth depend on market acceptance of the
AutoPap System among clinical laboratories, healthcare providers, third-
party healthcare payors and patients, which market acceptance cannot be
assured. The Company's success also depends on customers' acceptance of
NeoPath's fee-per-use and sale programs. Even if the Company's products
were to gain market acceptance, the amount of revenue to be derived by the
Company from the AutoPap System would depend to some extent on the
availability of reimbursement from third-party healthcare payors such as
government and private insurance plans. There can be no assurance that the
medical community or third-party healthcare payors will fully accept an
automated Pap smear rescreening system to supplement or replace current
laboratory Pap smear review practices. Moreover, due in part to a
continued trend toward consolidation of clinical laboratories, the Company
expects that the number of potential domestic customers for its products
will decrease. Due to the relative size of the largest U.S. laboratories,
the Company is likely to have a significant proportion of its sales
concentrated among a relatively small number of customers. These factors
may increase the Company's dependence on sales to the largest clinical
laboratories and the bargaining leverage of those potential customers.
Uncertainty of Product Regulatory Clearance
The manufacture and sale of medical diagnostic devices intended for
commercial use are subject to extensive governmental regulation in the
United States. Similar requirements are imposed by comparable governmental
agencies in certain other countries. The AutoPap QC has been cleared for
commercialization in the United States. Both AutoPap Systems have been
cleared for commercial marketing in Japan, Canada, Australia, New Zealand
and The Netherlands. Before any U.S. commercial sales of the AutoPap
Screener may commence, an FDA submission must be prepared and clearance
granted. The Company is in the process of reviewing the results from
clinical studies of the AutoPap Screener and plans to submit a revised
PMA supplement to the FDA later in 1997. There can be no assurance,
however, that the Company's clinical studies will support a revised
submission, or that the Company will file a PMA supplement in 1997, if at
all. Moreover, the FDA review process can be lengthy and unpredictable.
There can be no assurance that applicable governmental regulatory agencies
in the United States and elsewhere will approve the AutoPap Screener for
commercial use on a timely basis, if at all. If clearance to market is
granted, there can be no assurance that it will cover all the clinical
indications for which the Company seeks clearance or that it will not
contain significant limitations, which may include warnings, precautions or
contraindications, or requests for postmarket studies. Additional
regulatory requirements could be imposed by legislation or regulation. The
Company may also encounter delays or rejections of its regulatory
applications based on changes in applicable regulatory policies or
regulations. Although the FDA has inspected the Company's manufacturing
operations with respect to the AutoPap QC for compliance with Good
Manufacturing Practices ("GMP"), the Company's manufacturing processes
remain subject to GMP regulation and inspection.
Page 4
<PAGE>
Limited Marketing, Sales and Service Experience; Risks Inherent in
International Transactions
The Company intends to market, sell, service and support the AutoPap
System in countries where it has obtained regulatory approval through a
direct sales force in North America and a combination of a direct sales
force and independent distributors in foreign markets. The Company has
limited marketing, sales and service experience, and there can be no
assurance that the Company will be able to recruit and retain skilled
sales, marketing, service or support personnel or foreign distributors, or
that the Company's marketing and sales efforts will be successful. With
regard to international distribution arrangements for the placement of
AutoPap Systems, the Company will depend on the efforts of third parties.
There can be no assurance that such efforts will be successful. In
addition, a number of risks are inherent in international transactions,
including regulatory delays or disapprovals with respect to the Company's
products, government controls, export license requirements, political
instability, price controls, trade restrictions, changes in tariffs or
difficulties with foreign distributors.
Sole or Limited Source of Supply; Governmental Regulation of Manufacturing
The Company purchases all components for the AutoPap System from
outside vendors. A major component of the AutoPap System, the slide tray
motion system, is supplied by a sole-source vendor. Certain other
components, such as the video cameras, are currently supplied by a single
vendor, and components provided by additional or replacement suppliers
would require some modification to be incorporated into the AutoPap System.
The establishment of additional or replacement sources of supply for many
AutoPap System components cannot be accomplished quickly, and substitution
of components could require regulatory approval, the receipt of which
cannot be assured. Accordingly, a vendor's inability to supply acceptable
components in a timely manner and in the quantity required could delay the
Company's manufacture of, or cause the Company to cease manufacturing, its
products. Any such delay or cessation could have a material adverse effect
on the Company.
Manufacturers of medical diagnostic devices are subject to strict
federal regulations regarding validation and the quality of manufacturing,
including periodic FDA inspections of the manufacturing facilities of
diagnostic device manufacturers to determine compliance with GMP
regulations. The Company's manufacturing operations, including any
expansion of such operations, will continue to be required to comply with
these and all other applicable regulations, and with applicable regulations
imposed by other governments. The Company's failure to comply with GMP
regulations could result in civil or criminal penalties or enforcement
proceedings being imposed on the Company, including the recall of a product
or a "cease distribution" order requiring the Company to stop placing its
products in service or selling its products, as the case may be. Similar
results could occur if the Company were to violate foreign regulations.
There can be no assurance that the Company will be able to attain or
maintain compliance with GMP requirements. Failure to maintain compliance
with the applicable manufacturing requirements of various regulatory
agencies would have a material adverse effect on the Company.
Competition
Competition in the medical device industry is intense, and the
industry is characterized by rapid product development and technological
change. The AutoPap System competes with existing manual methods of
screening Pap smears through human review as well as with certain semi-
automated systems. To compete effectively, the AutoPap System must
demonstrate comparable or better accuracy relative to human review of Pap
smears. The Company is currently aware of two direct competitors:
AutoCyte, Inc., which has focused on the development of a semi-automated
system to prepare and analyze monolayer Pap smears (a potential alternative
to conventional Pap smears), and Neuromedical Systems, Inc. ("NSI"), which
is engaged in marketing a device for the semi-automated rescreening of
conventional Pap smears. In addition to direct competition, the Company
faces indirect competition through companies that manufacture thin layer
slide preparation systems and devices that automate various aspects of
cytology. In May 1996, Cytyc, Inc. received PMA approval from the FDA to
market its ThinPrep System for cervical cancer screening as a replacement
for the conventional Pap smear method.
The Company believes that the AutoPap QC, and, subject to the
Company's obtaining requisite regulatory approvals, the AutoPap Screener,
will compete on the bases of accuracy and effectiveness, cost (including
both charges by the Company to the laboratory and the laboratory's labor
and overhead costs for its cytotechnologists), convenience to the
laboratory, perception among influential cytopathologists and laboratories,
and processing speed and reliability.
There can be no assurance that the Company's competitors will not
develop new technologies and products that will compete with, or will prove
to be more effective than, the AutoPap System. Furthermore, although the
Company is currently
Page 5
<PAGE>
aware of only two direct competitors, there can be no assurance that
others will not purchase or develop technologies that would compete with
the AutoPap System or render it obsolete. Competitors may manufacture,
market and sell their products or services more successfully than the
Company, which could have an adverse effect on the Company's business and
results of operation.
Dependence on Reimbursement; Potential Effect of Healthcare Reform
Various third-party healthcare payors in the United States, including
Medicare, Medicaid, managed care organizations and private insurance
companies, such as Blue Cross/Blue Shield, are increasingly sensitive to
containing healthcare costs and have identified new technology as being a
primary factor in increased healthcare costs. There can be no assurance
that third-party healthcare payors will provide reimbursement for
procedures performed by the AutoPap System or that such reimbursement will
be obtained in a timely manner or will be adequate. If Pap tests conducted
using the AutoPap System are not approved for adequate levels of
reimbursement, the Company's ability to commercialize the AutoPap System
would be adversely affected. In addition, there can be no assurance that
future healthcare legislation or other changes in the administration or
interpretation of government healthcare or third-party reimbursement
programs will not have a material adverse effect on the Company. Foreign
countries have various healthcare reimbursement systems, and there can be
no assurance that third-party reimbursement will be made available for the
AutoPap System under any foreign reimbursement system.
Dependence on Single Product Line
To date, the Company has concentrated its efforts primarily on
development of the AutoPap System and has performed only limited research
on other applications of its core technology. NeoPath's acquisition of the
Pathfinder System provides a further source for Company revenues. However,
the Company will continue to depend primarily on the successful development
and marketing of the AutoPap System to generate revenues. There can be no
assurance that the AutoPap System will be successfully commercialized.
Product Liability
The commercial screening of Pap smears has been characterized by
significant malpractice litigation. As a result, the Company faces risk of
exposure to product liability, errors and omissions or other claims if use
of the AutoPap System or other products that may be developed by the
Company is alleged to have resulted in a false-negative diagnosis.
Although the Company currently has product liability insurance, the medical
device industry has experienced increasing difficulty in obtaining and
maintaining reasonable product liability coverage, and substantial
increases in insurance premium costs in many cases have rendered coverage
economically impractical. There can be no assurance that product liability
insurance will continue to be available to the Company when needed at a
reasonable cost, that insurance coverage obtained by the Company will be
adequate or that any product liability claim would not have a material
adverse effect on the Company.
Dependence on Patents and Proprietary Rights; Risk of Third-Party Claims of
Infringement
NeoPath relies on a combination of patents, trade secrets and
confidentiality agreements to protect its proprietary technology, rights
and know-how. Including patents acquired pursuant to the Pathfinder System
acquisition, the Company holds 30 U.S. patents and has 33 additional U.S.
patents pending. There can be no assurance that pending patent
applications will ultimately issue as patents or, if patents do issue, that
the claims allowed will be sufficiently broad to protect what the Company
believes to be its proprietary rights. In addition, there can be no
assurance that issued patents or pending applications will not be
challenged or circumvented by competitors, or that the rights granted
thereunder will provide competitive advantages to the Company. There can
be no assurance that the obligations of employees of the Company and third
parties with whom the Company has entered into confidentiality agreements
to maintain the confidentiality of trade secrets and proprietary
information will effectively prevent disclosure of the Company's
confidential information or provide meaningful protection for the Company's
confidential information if there is unauthorized use or disclosure, or
that the Company's trade secrets or proprietary information will not be
independently developed by NeoPath's competitors.
On July 15, 1996, NSI filed a lawsuit against the Company in the United
States District Court for the Southern District of New York. The complaint
alleges patent infringement, unfair competition, false advertising, and
related claims.
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<PAGE>
On September 5, 1996, the Company filed its answer and counterclaims.
The Company believes it has a strong position in this action and is
defending itself vigorously.
On March 31, 1997, the Company filed a patent infringement lawsuit
against NSI in the United States District Court for the Western District of
Washington. The complaint alleges patent infringement and seeks
preliminary and permanent injunctions against NSI.
There can be no assurance as to the outcome of this litigation.
Dependence on Key Personnel
The Company is highly dependent on the principal members of its
management and scientific staff, the loss of whose services might impede
achievement of its strategic or research and development objectives. The
Company's success will depend on its ability to retain key employees and to
attract additional qualified employees. Competition among medical device
companies for highly skilled scientific and management personnel is
intense, and the failure to recruit such personnel or the loss of existing
personnel could have a material adverse effect on the Company. The Company
does not carry key person life insurance on its executives or other key
personnel.
Highly Volatile Stock Price; Potential Fluctuations in Future Quarterly
Results
The market price of shares of the Company's Common Stock, like that of
the common stock of many other medical device companies, may be highly
volatile. Factors such as the results of the Company's sales and marketing
programs, clinical trials by the Company or its competitors, concerns as to
the safety or efficacy of the Company's products or its competitors,
announcements of technological innovations or new products by the Company
or its competitors, governmental regulation, healthcare legislation,
developments in patent or other proprietary rights of the Company or its
competitors, fluctuations in the Company's operating results, and general
market and economic conditions are likely to have a significant impact on
the future price of the Common Stock.
The Company expects that its operating results may fluctuate
significantly from quarter to quarter in the future and will depend on a
number of factors, many of which are outside of the Company's control.
These factors include: the rate and extent of market acceptance of the
AutoPap System; the timing of approvals for payment reimbursement; the
timing of regulatory approvals for the AutoPap Screener; the mixture of fee-
per-use and sale contracts; the rate and size of expenditures incurred as
NeoPath expands its domestic and foreign marketing and sales programs and
continues its research and development efforts; the timing of domestic and
foreign regulatory approvals; and the introduction and market acceptance of
competing products or technologies.
Page 7
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DIVIDEND POLICY
NeoPath has never paid cash dividends on the Common Stock. The
Company does not intend to pay cash dividends on the Common Stock in the
foreseeable future.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
June 30, 1997:
June 30, 1997
(in thousands,
except share data)
Cash, cash equivalents and securities available-for-sale $43,139
=======
Obligations under capital leases, less current portion $ 142
Shareholders' equity:
Preferred Stock, $.01 par value;
10,000,000 shares authorized; none
issued and outstanding --
Common Stock, $.01 par value;
40,000,000 shares authorized; 14,341,764 shares
outstanding (1) 140,841
Accumulated deficit (77,395)
-------
Total shareholders' equity 63,446
-------
Total capitalization $63,588
=======
__________________
(1) Excludes 48,563 contingent shares of Common Stock issued in the
Pathfinder System acquisition. Also excludes 2,305,396 shares of Common
Stock reserved for issuance upon exercise of options under the Company's
stock option plans, of which options to purchase 1,836,338 shares were
outstanding as of June 30, 1997.
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SELLING SHAREHOLDERS AND PLAN OF DISTRIBUTION
The Shares of Common Stock offered hereby have been registered
pursuant to the Company's agreement with CompuCyte that it would register
the shares of Common Stock issued to it in connection with the acquisition
of the Pathfinder System product line and would keep such registration
effective as specified in such agreement, as well as the Company's
agreement with certain warrantholders to register the shares underlying
such warrants in specified circumstances. The Shares have been registered
to remove their restricted status under the Securities Act. Pursuant to
this registration, the Selling Shareholders may choose to sell all or any of
the Shares from time to time in transactions in the over-the-counter market
or otherwise at prices and on terms then prevailing at the time of sale, at
prices related to the then-current market price or in negotiated
transactions. The Company may suspend the use of this Prospectus for sales
of Shares under certain circumstances.
The Shares may be sold in one or more of the following transactions:
(a) block trades in which the broker or dealer so engaged will attempt to
sell the Shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction, (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus, and (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers. In effecting sales,
brokers and dealers engaged by the Selling Shareholders may arrange for
other brokers or dealers to participate. Brokers or dealers will receive
commissions or discounts from the Selling Shareholders in amounts to be
negotiated (and, if such broker-dealer acts as agent for the purchase of
such shares, from such purchaser). Broker-dealers may agree with the
Selling Shareholders to sell a specified number of Shares at a stipulated
price per Share, and, to the extent such broker-dealer is unable to do so
acting as agent for the Selling Shareholders, to purchase as principal any
unsold Shares at the price required to fulfill the broker-dealer commitment
to the Selling Shareholders. Broker-dealers who acquire Shares as
principal may thereafter resell such Shares from time to time in
transactions (which may involve crosses and block transactions and sales to
and through other broker-dealers, including transactions of the nature
described above) in the over-the-counter market or otherwise at prices and
on terms then prevailing at the time of sale, at prices then related to the
then-current market price or in negotiated transactions and, in connection
with such resales, may pay to or receive from the purchasers of such Shares
commissions as described above.
The Company has agreed to indemnify the Selling Shareholders against
certain liabilities, including liabilities under the Securities Act.
The following table sets forth as of July 25, 1997, Selling
Shareholders' beneficial ownership of the Company's Common Stock. The
Company believes that the beneficial owners of the Common Stock listed
below, based on information furnished by such owners, have sole voting and
investment power with respect to such shares.
Shares
That Percent
Shares May Be of Class
Beneficially Sold After
Name of Shareholder Owned Hereunder Offering
- -------------------------------------- ---------- -------- --------
CompuCyte Corporation 97,127 97,127 *
New Enterprise Associates III, L.P. (1) 7,094 7,094 *
New Enterprise Associates V, L.P.(1)(2) 107,501 100,001 *
Ronald A. Everson 16,734 8,400 *
Roy M. Svee 13,584 5,250 *
Lloyd A. Amundson 2,769 2,769 *
Invemed Associates, Inc.(3) 266,239 120,864 *
Cristina H. Kepner(3) 51,819 13,334 *
Elwood D. and Virginia Howse, Jr. 15,866 3,106 *
Elwood D. Howse, Jr. 385 385 *
Caril G. and Ruby Nelson 4,584 4,584 *
Page 9
<PAGE>
Mellon Bank, N.A., Master Trustee for
Bell Atlantic Master Pension Trust 2,386 2,386 *
Dean E. Sanders 2,308 2,308 *
Henry Platt 33,473 16,668 *
Anthony G. Orphanos 7,000 7,000 *
Samuel N. Stroum 477 477 *
Delos V. Steenson 2,308 2,308 *
Michael E. Chorley 1,154 1,154 *
Lawrence W. and Joan R. Carlsen 5,321 5,321 *
Vicki Sue Nelson 167 167 *
The Silverado Fund I, Limited
Partnership(4) 6,668 6,668 *
Dana G. Howse 940 461 *
Robin Howse Dullea 798 391 *
L. Denison Howse 940 461 *
Carolyn J. Terry Gallagher 807 145 *
Thomas J. and Barbara D. Cable 40,640 5,385 *
Paul A. Downey 11,667 4,167 *
George E. Thompson 5,382 2,691 *
Norma L. Gallagher 178 60 *
--------- --------- ------
706,316 421,132 2.9%
======== ========= ======
- -------------------------------------------------------------
* Less than one percent.
(1) C. Richard Kramlich is a former director of the Company. The
general partner of New Enterprise Associates III, L.P. is NEA Partners
III, Limited Partnership, the general partners of which are C. Richard
Kramlich, Cornelius Bond, Jr., Charles W. Newhall III and Arthur J.
Marks. The general partner of New Enterprise Associates V, L.P. is
NEA Partners V, Limited Partnership, the general partners of which are
Messrs. Kramlich, Newhall and Marks, Thomas C. McConnell and Nancy L.
Dorman. Mr. Kramlich shares voting and investment power with such
other general partners and disclaims beneficial ownership of shares in
which he has no pecuniary interest.
(2) Includes 7,500 shares issuable upon exercise of stock options.
(3) Includes 11,333 shares issuable upon exercise of stock options
that are exercisable within 60 days granted to Cristina H. Kepner,
warrants to purchase 93,037 shares of the Company's Common Stock
issued to Invemed Associates, Inc. and warrants to purchase 16,418
shares of the Company's Common Stock issued to Ms. Kepner.
Ms. Kepner, a director of the Company and member of its compensation
committee, is an officer and director of Invemed Associates, Inc.
Ms. Kepner disclaims beneficial ownership of the shares held by
Invemed Associates, Inc.
(4) C. Richard Kramlich is a former director of the Company. The
general partner of The Silverado Fund I, Limited Partnership is NEA
Silverado Partners, Limited Partnership, the general partners of which
are Messrs. Kramlich, Bosnal, Newhall and Marks. Mr. Kramlich shares
voting and investment power with such other general partners and
disclaims beneficial ownership of shares in which he has no pecuniary
interest.
Page 10
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered
hereby have been passed upon for the Company by Perkins Coie, Seattle,
Washington.
EXPERTS
The financial statements and related financial statement schedule of
the Company appearing or incorporated by reference in the Company's Annual
Report (Form 10-K) for the year ended December 31, 1996, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their reports
thereon included or incorporated by reference therein and incorporated
herein by reference. Such financial statements and related financial
statement schedule are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting
and auditing.
Page 11
<PAGE>
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 in connection with the offering herein contained and, if
given or made, such information or representations must not be relied upon
as having been authorized by the Company. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
Shares offered hereby in any jurisdiction to any person to whom it is
unlawful to make an offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has been no change in the affairs of the
Company since the date hereof.
____________________
Page
Available Information 2
Incorporation of Certain Documents
by Reference 2
The Company 3
Risk Factors 4
Dividend Policy 8
Capitalization 8
Selling Shareholders and Plan
of Distribution 9
Legal Matters 11
Experts 11
NeoPath, Inc.
421,132 Shares of
Common Stock
P R O S P E C T U S
__________, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
registrant in connection with the sale of Common Stock being registered.
All amounts are estimates except the SEC registration fee.
SEC registration fee $2,090
Legal fees and expenses 5,000
Accounting fees and expenses 4,000
Blue sky fees and expenses 2,000
Miscellaneous fees and expenses 10,000
-------
Total $23,090
=======
Item 15. Indemnification of Directors and Officers
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances
for liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 10 of the registrant's Bylaws provides for
indemnification of the registrant's directors, officers, employees and
agents to the maximum extent permitted by Washington law. Certain of the
directors of the registrant, who are affiliated with principal shareholders
of the registrant, also may be indemnified by such shareholders against
liability they may incur in their capacity as a director of the registrant,
including pursuant to a liability insurance policy for such purpose.
Section 23B.08.320 of the Washington Business Corporation Act
authorizes a corporation to limit a director's liability to the corporation
or its shareholders for monetary damages for acts or omissions as a
director, except in certain circumstances involving intentional misconduct,
knowing violations of law or illegal distributions, or any transaction from
which the director personally received a benefit in money, property or
services to which the director is not legally entitled. Article 8 of the
registrant's Articles of Incorporation contains provisions implementing, to
the fullest extent permitted by Washington law, such limitations on a
director's liability to the registrant and its shareholders.
The registrant has entered into an indemnification agreement with each
of its executive officers and directors in which the registrant agrees to
hold harmless and indemnify the officer or director to the fullest extent
permitted by Washington law. The registrant agrees to indemnify the
officer or director against any and all losses, claims, damages,
liabilities or expenses incurred in connection with any actual, pending or
threatened action, suit, claim or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal, in which
the officer or director is, was or becomes involved by reason of the fact
that the officer or director is or was a director, officer, employee,
trustee or agent of the registrant or any related registrant, partnership
or enterprise, including service with respect to an employee benefit plan,
whether the basis of such proceeding is alleged action (or inaction) by the
officer or director in an official capacity. No indemnity pursuant to the
indemnification agreements shall be provided by the registrant on account
of any suit in which a final, unappealable judgment is rendered against the
officer or director for an accounting of profits made from the purchase or
sale by the officer or director of securities of the registrant in
violation of the provisions of Section 16(b) of the Exchange Act, and
amendments thereto, or for damages that have been paid directly to the
officer or director by an insurance carrier under a policy of directors'
and officers' liability insurance maintained by the registrant.
Page II-1
<PAGE>
Item 16. Exhibits
5.1 Opinion of Perkins Coie, counsel to the registrant,
regarding the legality of the Common Stock
23.1 Consent of Ernst & Young LLP, independent auditors
(contained on page II-4)
23.2 Consent of Perkins Coie (contained in Exhibit 5.1)
24.1 Power of attorney (contained on Page II-3)
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.
(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 that remain unsold at the
termination of the offering.
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 15(d) of the Securities Exchange Act of 1934, as amended
(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 in the initial bona fide offering thereof.
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 of 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.
Page II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunder duly authorized, in the City of Redmond, State of Washington, on
the 13 day of August, 1997.
NEOPATH, INC.
/s/ Alan C. Nelson
------------------
By:Alan C. Nelson
President, Chief Executive Officer
and Director
Each person whose individual signature appears below hereby authorizes
Alan C. Nelson or William L. Scott or either of them, as attorneys-in-fact
with full power of substitution, to execute in the name and on the behalf
of each person, individually and in each capacity stated below, and to
file, any and all amendments to this Registration Statement, including any
and all post-effective amendments, and any related Rule 462(b) Registration
Statement and any amendment thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on the 13 day of August, 1997.
Signature Title
/s/ Alan C. Nelson President, Chief Executive
------------------- Officer and Director
Alan C. Nelson (Principal Executive
Officer)
/s/ Walter L. Robb Chairman of the Board
-------------------
Walter L. Robb
/s/ William L. Scott Vice President, Chief
--------------------- Financial Officer and
William L. Scott Director (Principal
Financial Officer)
/s/ Robert C. Bateman Corporate Controller and
--------------------- Treasurer
Robert C. Bateman (Principal Accounting
Officer)
/s/ Alan D. Frazier Director
-------------------
Alan D. Frazier
/s/ Cristina H. Kepner Director
----------------------
Cristina H. Kepner
/s/ David A. Thompson Director
---------------------
David A. Thompson
/s/ Gail R. Wilensky Director
--------------------
Gail R. Wilensky
Page II-3
<PAGE>
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 NeoPath,
Inc. for the registration of 421,132 shares of its Common Stock and to the
incorporation by reference therein of our reports dated January 24, 1997,
with respect to the financial statements of NeoPath, Inc. incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31,
1996 and the related financial statement schedule included therein, filed
with the Securities and Exchange Commission.
Ernst & Young LLP
Seattle, Washington
August 11, 1997
Page II-4
<PAGE>
EXHIBIT INDEX
Exhibit
Number
5.1 Opinion of Perkins Coie, counsel to the
registrant, regarding the legality of the Common
Stock
23.1 Consent of Ernst & Young LLP, independent
auditors (contained on page II-4)
23.2 Consent of Perkins Coie (contained in
Exhibit 5.1)
24.1 Power of attorney (contained on Page II-3)
Page II-5
<PAGE>
PERKINS COIE
A Law Partnership Including Professional Corporations
1201 Third Avenue, 40th Floor Seattle, Washington 98101-3099
Telephone: (206) 583-8888 Facsimile: (206) 583-8500
Exhibit 5.1
August 12, 1997
Board of Directors
NeoPath, Inc.
8271-154th Avenue N.E.
Redmond, WA 98052
Re: Registration of 421,132 Shares of Common Stock
Dear Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a
registration statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), which you are
filing with the Securities and Exchange Commission with respect to
421,132 currently issued and outstanding shares (the "Shares") of Common
Stock, $.01 par value per share, of NeoPath, Inc. (the "Company"). We have
examined the Registration Statement and such documents and records of the
Company and other documents as we have deemed necessary for the
purpose of this opinion.
Based upon the foregoing, we are of the opinion that the Shares are
duly authorized, validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under the heading
"Legal Matters." In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7
of the Securities Act.
Sincerely,
PERKINS COIE
