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As filed with the Securities and Exchange Commission on January 13, 1997
Registration No. 33-..................
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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
PROTEIN POLYMER TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0311631
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10655 SORRENTO VALLEY ROAD
SAN DIEGO, CALIFORNIA 92121
(619) 558-6064
(ADDRESS, INCLUDING ZIP CODE AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
J. THOMAS PARMETER COPIES TO:
CHAIRMAN & CHIEF EXECUTIVE OFFICER ROBERT A. MILLER, JR., ESQ.
PROTEIN POLYMER TECHNOLOGIES, INC. PAUL, HASTINGS, JANOFSKY & WALKER LLP
10655 SORRENTO VALLEY ROAD 555 S. FLOWER STREET
SAN DIEGO, CALIFORNIA 92121 TWENTY-THIRD FLOOR
(619) 558-6064 LOS ANGELES, CALIFORNIA 90071
(NAME, ADDRESS, INCLUDING ZIP CODE, AND (213) 683-6000
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Title of each Proposed Proposed
class of Maximum Maximum
securities to Amount to be Offering Price Aggregate Amount of
be registered Registered Per Share (1) Offering Price (1) Registration Fee
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Common Stock, $.01 par value 1,904,000 Shares $3.50 $6,664,000.00 $2,020.00
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</TABLE>
(1) Estimate based on sales price of the Registrant's Common Stock as
reported on NASDAQ on January 10, 1997 pursuant to Rule 457(c) promulgated
under the Securities Act of 1933, as amended.
___________________________________________________
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.
<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 LAW OF ANY SUCH STATE.
Subject to Completion, Dated January 13, 1997
PROSPECTUS
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PROTEIN POLYMER TECHNOLOGIES, INC.
_______________
1,904,000 Shares of Common Stock
_______________
This Prospectus relates to the offering of up to an aggregate of
1,904,000 shares (the "Shares") of Common Stock, $.01 par value (the "Common
Stock"), of Protein Polymer Technologies, Inc., a Delaware corporation
("Protein" or the "Company"), which may be offered from time to time by the
persons named in this Prospectus under the caption "Selling Securityholders."
The Shares may be offered for sale from time to time by each Selling
Securityholder acting as principal for its own account or in brokerage
transactions at prevailing market prices or in transactions at negotiated
prices. No representation is made that any Shares will or will not be offered
for sale. The Shares are being offered for the accounts of the Selling
Securityholders. The Company will not receive any proceeds from the sale of the
Shares. It is not possible at the present time to determine the price to the
public in any sale of the Shares by the Selling Securityholders and each Selling
Securityholder reserves the right to accept or reject, in whole or in part, any
proposed purchase of Shares. Accordingly, the public offering price and the
amount of any applicable underwriting discounts and commissions will be
determined at the time of such sale by the Selling Securityholders. All costs,
expenses and fees incurred in connection with the registration of the Shares,
estimated to be approximately $200,000, are being borne by the Company, but all
selling and other expenses incurred by the Selling Securityholders will be borne
by such Selling Securityholders. See "Plan of Distribution."
The Selling Securityholders, and the brokers through whom sales of the
Shares are made, may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended. In addition, any
profits realized by the Selling Securityholders or such brokers on the sale of
the Shares may be deemed to be underwriting commissions.
The shares of Common Stock of the Company are traded on NASDAQ ("NASDAQ")
under the symbol "PPTI." The last reported sales price per share of the Common
Stock as reported by NASDAQ on January 10, 1997 was $3.50.
THE OFFERING INVOLVES A HIGH DEGREE OF RISK. FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SHARES, SEE "RISK FACTORS."
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 January __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Copies of such reports, proxy and information
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549 and at the Commission's regional offices at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such materials can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site at (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
The Company's Common Stock is listed on NASDAQ and reports, proxy and
information statements and other information concerning the Company may be
inspected at the offices of the National Association of Securities Dealers,
Inc., 9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with any amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Shares offered hereby. This Prospectus is part of the
Registration Statement and does not contain all of the information set forth in
the Registration Statement, certain portions of which have been omitted pursuant
to the rules and regulations of the Commission. For further information with
respect to the Company and the offering, reference is made to such Registration
Statement, which may be inspected without charge at the Commission's office in
Washington, D.C., and copies of all or any part thereof may be obtained from
such office after payment of fees prescribed by the Commission.
TABLE OF CONTENTS
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Page
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Available Information....................................... 2
Incorporation by Reference.................................. 3
The Company................................................. 4
Risk Factors................................................ 4
Selling Securityholders..................................... 9
Plan of Distribution........................................ 11
Use of Proceeds............................................. 11
Legal Matters............................................... 11
Experts..................................................... 11
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NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PROTEIN
OR ANY SELLING SECURITYHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER
OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PROTEIN SINCE THE DATE HEREOF.
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INCORPORATION BY REFERENCE
This Prospectus incorporates by reference certain documents which are not
presented herein or delivered herewith. These documents are available upon
request from Gwen Como, Director, Investor Relations, Protein Polymer
Technologies, Inc., 10655 Sorrento Valley Road, San Diego, California 92121,
telephone (619) 558-6064.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a copy of any
and all of the information that has been incorporated herein by reference, other
than exhibits to such information, unless such exhibits are specifically
incorporated herein by reference into the information that this Prospectus
incorporates. Requests for such documents should be directed to the person
indicated in the immediately preceding paragraph.
The following documents, which have been filed with the SEC pursuant to the
Exchange Act, are hereby incorporated by reference herein:
(a) Protein's Annual Report on Form 10-KSB for the year ended December 31,
1995;
(b) Protein's Quarterly Reports on Form 10-QSB for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996;
(c) Protein's Current Report on Form 8-K, as filed with the Commission on
January 7, 1997; and
(d) The description of the Common Stock contained in Protein's
Registration Statement under the Exchange Act on Form 8-A, filed with the
Commission on December 11, 1991, as amended by Form 8 filed on January 17, 1992.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination of
this offering shall be deemed to be incorporated herein by reference and to be a
part hereof from the date of filing of such documents. All information
appearing in this Prospectus or in any document incorporated herein by reference
is not necessarily complete and is qualified in its entirety by the information
and financial statements (including notes thereto) appearing in the documents
incorporated by reference herein and should be read together with such
information and documents. Any statement contained in a document incorporated
or deemed to be incorporated herein by reference 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 that is deemed to
be incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
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THE COMPANY
Protein Polymer Technologies, Inc., a Delaware corporation ("Protein" or
the "Company") is a development-stage biotechnology company engaged in the
research, development and production of proprietary protein-based biomaterial
with targeted applications in biomedical and specialty use markets. Since 1992,
the Company has primarily focused on developing materials technology and
products to be used in the surgical repair of tissue: tissue adhesives and
sealants; wound healing materials; and surgical adhesion barriers. Since 1994,
the Company has concentrated predominately on the development of its surgical
tissue adhesive and sealant technology and drug delivery technology. In
September 1995, the Company established a strategic alliance with Ethicon, Inc.
("Ethicon"), a subsidiary of the Johnson & Johnson Company, as part of its
effort to develop surgical tissue adhesive and sealant technology. The
Company's current products include SmartPlastic(TM) and ProNectin(R) F Cell
Attachment Factor for growing human and animal cells.
The Company was incorporated in Delaware on July 6, 1988. The Company's
principal executive offices are located at 10655 Sorrento Valley Road, San
Diego, California 92121; its telephone number is 619-558-6064.
RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
The following risk factors should be considered carefully in evaluating an
investment in the Shares offered hereby.
DEPENDENCE ON STRATEGIC PARTNERS
In order to reduce the time and costs for developing and commercializing
its potential products, the Company's strategy is to enter into arrangements
with major medical or pharmaceutical companies with broad distribution
capabilities in appropriate markets. There can be no assurance that the Company
will be able to establish such strategic partnerships or licensing arrangements
upon favorable terms and conditions, if at all. Additionally, these
arrangements generally may be subject to termination under various
circumstances, or solely at the discretion of the strategic partner without
prior notice. Termination of such arrangements would have a material adverse
effect on the Company's business and financial condition. Furthermore, this
strategy may lead to multiple alliances regarding different product
opportunities that are active at the same time. There can be no assurance that
the Company will be able to successfully manage such multiple arrangements in
various stages of development.
In September 1995, the Company entered into a licensing and development
agreement, and a supply agreement, with Ethicon, an affiliate of Johnson &
Johnson Company, with respect to its tissue adhesives and sealants program.
Under these agreements, Ethicon receives exclusive worldwide development,
marketing and distribution rights to products produced under the Company's
proprietary technology rights. In exchange, the Company receives research and
development payments and milestone payments, as well as potential manufacturing
and royalty payments. However, there can be no assurance that Ethicon or the
Company will continue to meet their obligations under the terms of the
agreements, that a product will be successfully developed for commercial use or,
if having been so developed, that Ethicon will successfully market the resulting
product. Furthermore, Ethicon has the right to terminate the agreements at any
time.
Currently, the product development efforts are behind the schedule
anticipated in the Ethicon agreements due to delays in meeting a certain
specific milestone. The original agreements provided that, if this milestone
was not met by a certain date, the agreements would automatically terminate and
all rights would revert back to the Company. Recently this termination date was
extended until December 14, 1997, and to partially offset expenses, an
additional payment to the Company of $300,000 was made by Ethicon as part of the
extension agreement. Although the Company believes that its relationship with
Ethicon is good, and sufficient scientific progress can be made to achieve the
milestone, no assurances can be made regarding Ethicon's acceptance of the
milestone and
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continuation of the agreements. If the agreements with Ethicon are terminated,
the Company would be materially adversely affected.
TECHNOLOGICAL AND COMMERCIAL UNCERTAINTIES
The Company's technological strategy of designing and producing unique
biocompatible materials based on genetically engineered proteins is commercially
unproven. The process of developing products and achieving regulatory approvals
is time consuming and prone to delays. Except for limited sales of ProNectin(R)
F, the Company has not completed the development of any product or generated any
revenues from product sales. The Company's success will depend upon its ability
to allocate sufficient resources to products with the most commercial potential,
and to design and produce biocompatible materials with the intended chemical,
biological and functional properties needed for commercial acceptance.
The commercial viability of the Company's products will also depend on the
success of its research and development activities; its ability to secure
strategic alliances appropriate to a product's development, marketing and
distribution requirements; and its ability to manufacture its products in
sufficient quantity under regulated conditions to meet product demand. The
product candidates the Company is currently pursuing will require substantial
further development, testing and regulatory approvals; there can be no assurance
that these efforts will result in commercially acceptable products. Further,
there can be no assurance that such products can be produced in commercial
quantities at reasonable costs, can be effectively marketed in a timely fashion,
will have significant benefits compared to competitive products on the market at
the time of product introduction, or will be accepted for use by the target
markets.
HISTORY OF OPERATING LOSSES; FUTURE CAPITAL REQUIREMENTS
The Company has incurred operating losses since its inception in 1988, and
will continue to do so for at least several more years. As of September 30,
1996, the Company's accumulated deficit was approximately $18,385,000. Any
currently anticipated contract revenues derived from collaborative agreements
with strategic partners will, alone, be insufficient for the Company to offset
continuing operating losses. Unless the Company realizes significant revenues
from the commercial sale of products, it will need to fund its operating losses
from additional public or private securities offerings. Further, the costs of
research and development activities, establishment and scale-up of appropriate
manufacturing capabilities, product testing, regulatory compliance,
establishment of marketing activities, patent prosecution and other factors may
result in increased operating losses over the next several years. The timing of
these increased costs, and possible offsetting contract revenues, is highly
uncertain and may produce financial results that fluctuate significantly from
period to period.
The Company believes that its current capital resources will be sufficient
to fund its operating losses through December 1998. There can be no assurance
that the Company will be able to raise sufficient additional funds before the
end of this period, if at all, or that such financing will be available on
acceptable terms. If adequate funds are not available, the Company will be
required to significantly curtail its operating plans and relinquish rights to
major portions of the Company's technology or products.
COMPETITION AND TECHNOLOGICAL CHANGE
The areas of business in which the Company engages and proposes to engage
are characterized by rapidly evolving technology and intense competition. The
anticipated commercial uses of the Company's biomaterials are primarily end-use
products for medical applications that require other components as part of a
system. End-use products using or incorporating the Company's biomaterials
would compete with other products that rely on the use
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of alternative materials or components. Technologies which compete with those
of the Company are, therefore, diverse, complex and numerous.
Competition in the biomedical and surgical repair markets is particularly
significant. The Company's competitors in those markets include major
pharmaceutical, surgical product, chemical and specialized biopolymer companies,
many of which have financial, technical, research and development and marketing
resources significantly greater than those of the Company. Academic
institutions and other public and private research organizations are also
conducting research and seeking patent protection, and may commercialize
products on their own or through joint ventures. Most of the Company's
competitors depend on technology other than protein engineering for developing
products. However, the Company believes that research into similar protein
engineering technology is currently being conducted by DuPont and several
university laboratories.
The primary competitive factors in the biomedical and surgical repair
products market are performance, cost, safety, reliability, convenience and
commercial production capabilities. The Company believes that its ability to
compete in this market will be enhanced by its issued patent claims, the breadth
of its other pending patent applications, its early entry into its field and its
experience in protein engineering. However, the Company currently does not have
the resources to compete commercially without the use of collaborative
agreements with third parties. The Company's product technology competes for
corporate development and marketing partnership opportunities with numerous
other biotechnology companies, research institutes, academic institutions and
established pharmaceutical companies. There can be no assurance that the
Company's competitors will not succeed in developing products based on the
Company's technology or other technologies that are more effective than any
which are being developed by the Company, or which would render the Company's
technology and products obsolete and non-competitive.
MANUFACTURING UNCERTAINTIES
To date, the Company has manufactured limited amounts of its biomedical
products for internal testing and, in certain cases, evaluation and testing by
corporate partners and other third parties. The development and
commercialization of certain biomedical products will require the Company,
pursuant to applicable governmental regulations, to upgrade its manufacturing
facilities and to obtain manufacturing approvals from the United States Food and
Drug Administration (the "FDA"). The Company is currently upgrading its
production methods to achieve "Good Laboratory Practice" compliance necessary
for producing materials used to generate preclinical data that is reviewed by
the FDA.
The Company is currently considering alternative methods for increased
production of its biomedical and other product candidates for clinical
requirements under Good Manufacturing Practice ("GMP") conditions. For example,
the Company may upgrade and expand its existing facility; however, there can be
no assurance that, if desired, the Company could adequately develop, fund,
implement and manage such a manufacturing facility. Alternatively, the Company
may establish external contract manufacturing arrangements; however, there can
be no assurance that such arrangements, if desired, could be entered into or
maintained on acceptable terms, if at all, or would comply with applicable
governmental regulations.
The Company has not yet developed a process to manufacture its product
candidates on a commercial scale. There can be no assurance that a process can
be developed by the Company or any other party at a cost or in quantities
necessary to become commercially viable. Alternative methods may be needed for
producing commercial quantities of products, if any. The actual method, or
combination of methods, that the Company may ultimately pursue will depend on a
number of factors, including availability, needed quantities, cost and
governmental regulations. There is no assurance that the Company will
successfully assess the ability of such production methods or establish contract
manufacturing arrangements to meet its commercial objectives, or that such
methods and arrangements would not adversely affect the Company's margins or its
ability to compete in the marketplace.
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UNCERTAINTY OF REGULATORY COMPLIANCE AND APPROVALS
Regulation by governmental authorities in the United States and other
countries is a significant factor affecting the success of products resulting
from biotechnological research. The Company's current operations and products
are, and anticipated products and operations will be, subject to substantial
regulation by a variety of local, state, federal and foreign agencies,
particularly those products and operations related to biomedical applications.
Currently, the Company's activities are subject to regulation primarily under
the Occupational Safety and Health Act, which requires the Company to provide a
"material data safety sheet" to its customers setting forth certain information
regarding the Company's products.
Pre-clinical and clinical testing and pre-market approval from the FDA is
required for new medical devices, drugs or vaccines, a generally costly and
time-consuming process. If the Company does not directly produce and sell
medical devices, drugs or vaccines, it may not be directly affected by these
regulations. However, the Company's anticipated customers and corporate
partners would be required to obtain such approvals. Additionally, the Company
may be required to file and maintain with the FDA a "Master File" containing
information regarding the Company's products. There can be no assurance that
the Company's customers and corporate partners will be able to obtain or
maintain the necessary approvals from the FDA or that the Company will be able
to maintain a Master File in accordance with FDA regulations. In either case,
the Company's anticipated business could be adversely affected.
Because the Company intends for its biomaterials to be used as medical
devices, it may be required to conform its operations to the FDA's GMP
regulations. GMP regulatory requirements are rigorous, and there can be no
assurance that GMP status could be obtained in a timely manner and without the
expenditure of substantial resources, if at all. The Company may also be
required to register its facility with the FDA as an establishment involved in
the manufacture of medical devices.
The Company's research, development and production activities are, or may
be, subject to various federal and state laws and regulations relating to
environmental quality and the use, discharge, storage, transportation and
disposal of toxic and hazardous substances. The Company's future activities are
expected to be subject to regulation under the Toxic Substances Control Act,
which requires the Company to obtain pre-manufacturing approval for any new
"chemical material" the Company produces for commercial use that does not fall
within the FDA's regulatory jurisdiction.
The Company believes it is currently in compliance with such laws and
regulations applicable to its current operations. Although the Company intends
to use its best efforts to comply with all laws and regulations in the future,
there can be no assurance that the Company will be able to fully comply with
such laws, or that full compliance will not require substantial capital
expenditures. There can be no assurance that future approvals will be sought or
obtained, and the failure to obtain or maintain these approvals, or any
substantial delay in obtaining these approvals, would likely have an adverse
effect on the Company's operations.
DEPENDENCE ON KEY EMPLOYEES
As of January 6, 1997, the Company had 26 full-time employees and one part-
time employee, of whom four hold Ph.D. degrees in the chemical or biological
sciences. The success of the Company will depend largely upon the efforts of
its scientists and certain of its executive officers. The loss of services of
any one of these individuals would have a material adverse effect on the
Company's business opportunities and prospects. The recruitment and retention
of additional qualified management and scientific personnel is also critical to
the Company's success. There can be no assurance that the Company will be able
to attract and retain required personnel on acceptable terms, due to the
competition for such experienced personnel from other biotechnology,
pharmaceutical and chemical companies, universities and non-profit research
institutions. The Company does not
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maintain "key-man" or similar life insurance policies with respect to such
persons to compensate the Company in the event of their deaths.
PRODUCT LIABILITY
Product liability claims may be asserted with respect to the Company's
technology or products either directly or through the Company's strategic
partners. The Company currently has no product liability insurance. Although
the Company may seek insurance against the risk of product liability in the
future, there can be no assurance that acceptable levels of insurance coverage
with appropriate terms will be obtainable, or that the assertion of a product
liability claim would not materially adversely affect the business or financial
condition of the Company.
PATENTS AND TRADE SECRETS
The Company's success will depend, in part, on its ability to obtain patent
or other protection for its technology and product candidates. The Company
seeks to obtain such protection through patents, maintenance of trade secrets
and contractual agreements. The success of the Company will also depend in part
on the Company not infringing patents issued to competitors or other proprietary
rights of third parties.
To date, four United States patents have been issued to the Company; two
additional patents have been allowed and thirteen additional patent applications
are pending. The patent position of biotechnology companies is highly uncertain
and involves complex legal, scientific and factual questions. There can be no
assurance that patents will issue from any of the Company's pending patent
applications or that, if patents do issue, the claims allowed will be
sufficiently broad to protect the Company's technology and product candidates.
In addition, there can be no assurance that any patents previously or
subsequently issued to the Company will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide any proprietary
protection or competitive advantage to the Company.
Competitors may have filed patent applications or may have obtained patents
and other proprietary rights relating to products or processes similar to and
competitive with those of the Company. The scope and validity of such patents,
the extent to which the Company may be required to obtain licenses under these
patents or other proprietary rights, and the cost and availability of such
licenses are presently unknown. No assurance can be made that any licenses
required under any patents or proprietary rights will be made available to the
Company on acceptable terms, if at all. Further, the Company may enter into
collaborative research and development arrangements with strategic partners
which may result in the development of new technologies or products. There is
no assurance that disputes will not arise in the future with respect to the
ownership of rights to any technology or products that may be so developed.
The Company also seeks to protect its intellectual property in part by
confidentiality agreements with its employees and consultants. There can be no
assurance that these agreements will not be breached, that the Company will have
an adequate remedy for any breach, or that the Company's trade secrets will not
otherwise become known or independently discovered by competitors.
DIVIDEND POLICY
The Company has never paid dividends on its common stock, and given its
continuing loss situation, does not anticipate paying any cash dividends on the
common stock in the foreseeable future. Additionally, the holders of the
Company's Series D Preferred stock have certain preferences which entitle them
to cumulative dividends prior to the payment of any cash dividends on the
Company's common stock.
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VOLATILITY OF TRADING PRICE
There has been significant volatility in market prices of securities of
biotechnology companies, and the trading price of the Shares could be subject to
wide fluctuations. Factors such as announcements of technological innovations
and new commercial products by the Company's competitors, adverse results in
product testing, litigation, governmental regulation or adverse patent or
proprietary rights developments could have a significant adverse impact on the
market price of the Company's common stock.
INVESTMENT COMPANY ACT CONSIDERATIONS
The Company believes that it is primarily engaged in business other than
investing, reinvesting, owning, holding or trading in securities. The Company
invests its cash in cash equivalents and short-term investments of high quality,
following the investment guidelines approved by the Board of Directors.
However, there can be no assurance that the Company may not be required to
comply with the registration requirements of the Investment Company Act of 1940.
Such registration requirements would have a material adverse effect upon the
Company.
SELLING SECURITYHOLDERS
The Shares offered hereby were sold to the Selling Securityholders on
January 6, 1997 pursuant to a private placement by the Company of Common Stock
for a purchase price of $2.50 per share. In the Securities Purchase Agreement
dated as of January 6, 1997 (the "Purchase Agreement") pursuant to which the
Shares were purchased from the Company by the Selling Securityholders, the
Company agreed to file the Registration Statement (of which this Prospectus is a
part) within one week of the closing of such purchase. The Company has agreed
to use its best efforts to cause such Registration Statement to become effective
under the Securities Act, and to maintain such effectiveness until the earlier
to occur of the date on which all the Shares (i) are sold, or (ii) may be sold
pursuant to Rule 144 promulgated under the Securities Act.
The following table sets forth as of January 6, 1997, and upon completion
of the offering described in this Prospectus, information with regard to the
beneficial ownership of the Company's Common Stock by the Selling
Securityholders. The Selling Securityholders may not have a present intention
of selling the Shares and may offer no Shares for sale or less than the number
of the Shares indicated.
-9-
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares to Shares Beneficially
Owned Before Offering /1//2/ be Offered /3/ Owned After Offering /4/
------------------------------------ ------------------- ----------------------------
Name and Address Number Percentage Number Percentage
- ---------------- ------ ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
The Aries Trust/5/ 266,667 2.93% 266,667 0 *
The Aries Domestic Fund, L.P./5/ 133,333 1.46% 133,333 0 *
Biotechnology Value Fund, L.P. /6/ 340,000 3.73% 340,000 0 *
Biotechnology Value Fund, Ltd. /6/ 70,000 * 70,000 0 *
Biotechnology Venture 240,000 2.63% 240,000 0 *
Partners, L.P. /6/
Four Partners 300,000 3.29% 300,000 0 *
Edward M. Giles IRA #3 20,000 * 20,000 0 *
Investment 10 L.L.C. /6/ 30,000 * 30,000 0 *
Johnson & Johnson Development 920,480 10.10% 400,000 520,480 5.71%
Corporation /7/
Vertical Fund Associates, L.P. 100,000 1.10% 100,000 0 *
Anthony G. Viscogliosi 4,000 * 4,000 0 *
</TABLE>
__________________________________
* Amount represents less than 1% of the Common Stock. As of January 6, 1997,
the Company had 9,112,228 shares of Common Stock outstanding.
/1/ The persons named in the above table have sole voting and investment power
with respect to all shares beneficially owned by them, subject to community
property laws where applicable, unless otherwise noted. Information with
respect to beneficial ownership is based upon the Company's stock records
and data supplied to the Company by the Selling Securityholders.
/2/ Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes, generally, voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants exercisable within 60 days are deemed
outstanding for computing the percentage of the person holding such options
or warrants but are not deemed outstanding for computing the percentage of
any other person. Except as indicated by footnote, and subject to joint
ownership with spouses and community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
/3/ The Selling Securityholders may offer less than the amount of Shares
indicated. No representation is made that any Shares will or will not be
offered for sale.
/4/ This assumes that all Shares owned by the Selling Securityholders which are
offered hereby are sold. The Selling Securityholders reserve the right to
accept or reject, in whole or in part, any proposed purchase of Shares.
/5/ The investment manager of The Aries Trust, and the general partner of The
Aries Domestic Fund, L.P., is Paramount Capital Asset Management, Inc.
("Paramount"). As a result, Paramount may be deemed to hold beneficial
ownership of all 400,000 Shares. Paramount disclaims such beneficial
ownership.
/6/ The ultimate investment decisions for each of these Selling Securityholders
are made by the same individual, Mark N. Lampert, through one or more
investment advisors. As a result, Mr. Lampert or such advisors may be
deemed to hold beneficial ownership of all 680,000 Shares. Mr. Lampert and
such advisors disclaim such beneficial ownership.
/7/ Excludes shares of Common Stock issuable upon conversion of 27,317 shares
of the Company's Series D Preferred Stock because such shares of Common
Stock are not yet deemed "beneficially owned" in accordance with the rules
set forth in footnote 2 above. Generally, such shares of Series D Preferred
Stock are not convertible until September 14, 1997. The number of shares of
Common Stock receivable upon conversion of each share of Series D Preferred
Stock is equal to $100 divided by the lesser of (i) $3.75, or (ii) the
market price at the time of conversion. Johnson & Johnson Development
Corporation ("JJDC") has shared voting and investment power with respect to
all shares of Common Stock with its parent company, Johnson & Johnson.
JJDC's affiliate, Ethicon, Inc., is a party to a series of agreements
related to the development of tissue adhesives and sealants. See "Risk
Factors -- Dependence on Strategic Partners."
-10-
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Securityholders. Such sales may be made on one or more exchanges or in the
over-the-counter market (including NASDAQ) or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The Shares may be sold by each of the Selling
Securityholders acting as principal for its own account or in ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, broker-dealers engaged by the Selling Securityholders may
arrange for other broker-dealers to participate in the resales.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Securityholders in amounts to
be negotiated in connection with the sale. Such broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. In addition, any securities covered by
this Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus.
The Selling Securityholders may agree to indemnify any broker-dealer or
agent that participates in transactions involving sales of the Shares against
certain liabilities, including liabilities arising under the Securities Act.
The Company has agreed to indemnify the Selling Securityholders against certain
liabilities in connection with the offering of the Shares, including liabilities
arising under the Securities Act.
It is not possible at the present time to determine the price to the public
in any sale of the Common Stock by the Selling Securityholders. Accordingly,
the public offering price and the amount of any applicable underwriting
discounts and commissions will be determined at the time of such sale by the
Selling Securityholders. The aggregate proceeds to the Selling Securityholders
from the sale of the Common Stock will be the purchase price of the Common Stock
sold less all applicable commissions and underwriters' discounts, if any. The
Company will pay substantially all the expenses incident to the registration,
offering and sale of the Common Stock to the public by Selling Securityholders
(currently estimated to be $200,000), other than fees, discounts and commissions
of underwriters, dealers or agents, if any, and transfer taxes.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered by the Selling Securityholders pursuant to this Prospectus.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed
upon by Paul, Hastings, Janofsky & Walker LLP, Los Angeles, California.
EXPERTS
The financial statements of Protein Polymer Technologies, Inc. appearing in
Protein Polymer Technologies, Inc.'s Annual Report (Form 10-KSB) 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 financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
-11-
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
- --------
The fees and expenses payable by the Company in connection with the sale of
the shares of Common Stock being registered are estimated as follows:
<TABLE>
<CAPTION>
Amount
------
<S> <C>
SEC Filing Fee................................. $ 2,020
Legal Fees and Expenses........................ 70,000*
Accounting Fees................................ 20,000*
Consulting Fees................................ 100,000
Printing Expenses.............................. 5,000*
Miscellaneous.................................. 2,980*
-------
Total................................ $200,000
=======
</TABLE>
_________
* Estimated
Item 15. Indemnification of Directors and Officers.
- --------
The Bylaws of the Company provide generally for indemnification of
officers, directors, agents and employees of the Company to the extent
authorized by the Delaware General Corporation Law. Pursuant to Section 145 of
the Delaware General Corporation Law, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are,
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. With respect to suits by or in the right of a
corporation, however, indemnification is not available if such person is
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless the court determines that indemnification is
appropriate. In addition, a corporation has the power to purchase and maintain
insurance for such persons. The statute also expressly provides that the power
to indemnify authorized thereby is not exclusive of any rights granted under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
As permitted by Section 102 of the Delaware General Corporation Law, the
Company's stockholders have approved and incorporated provisions into the
Company's Certificate of Incorporation eliminating a director's personal
liability for monetary damages to the Company and its stockholders arising from
a breach of a director's fiduciary duty, except for liability under Section 174
of the Delaware General Corporation Law or liability for any breach of the
director's duty of loyalty to the Company or its stockholders, for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law or for any transaction in which the director derived an
improper personal benefit.
II-1
<PAGE>
The Company has entered into indemnification agreements with each of its
directors and executive officers. These agreements provide substantially
broader indemnity rights than those provided under the Delaware General
Corporation Law and the Company's Bylaws. The indemnification agreements are
not intended to deny or otherwise limit third-party or derivative suits against
the Company or its directors or officers, but to the extent a director or
officer were entitled to indemnity or contribution under the indemnification
agreement, the financial burden of a third-party suit would be borne by the
Company, and the Company would not benefit from derivative recoveries against
the director or officer. Such recoveries would accrue to the benefit of the
Company but would be offset by the Company's obligations to the director or
officer under the indemnification agreement.
The above discussion of the Company's Bylaws, Certificate of Incorporation
and indemnification agreements and of Section 145 of the Delaware General
Corporation Law is not intended to be exhaustive and is qualified in its
entirety by such Bylaws, Certificate of Incorporation, indemnification
agreements and statute.
Item 16. Exhibits.
- --------
5 Opinion of counsel as to legality of securities being registered.
23.1 Consent of independent public accountants.
23.2 Consent of counsel (included in Exhibit 5).
24.1 Power of Attorney (included herein on the signature page).
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 of 1933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of this 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 this
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this registration
statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
-------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this 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; and
II-2
<PAGE>
(3) To remove from registration by means of post-effective amendment
any of the securities 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 this 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.
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 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.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
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 San Diego, State of California, on January 8, 1997.
PROTEIN POLYMER TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ J. Thomas Parmeter
----------------------------
J. Thomas Parmeter
President & Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints J. Thomas Parmeter and Aron P. Stern, and
each of them, his true and lawful attorney-in-fact and agent, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration Statement
and any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent or his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ J. Thomas Parmeter Chairman of the Board, President and January 8, 1997
- -------------------------- Chief Executive Officer
J. Thomas Parmeter (Principal Executive Officer)
/s/ Aron P. Stern Vice President-Finance and Chief January 8, 1997
- -------------------------- Financial Officer (Principal
Aron P. Stern Financial and Accounting Officer)
/s/ Edward E. David Director January 8, 1997
- --------------------------
Edward E. David
/s/ George R. Walker Director January 8, 1997
- --------------------------
George R. Walker
/s/ Brent R. Nicklas Director January 8, 1997
- -----------------------
Brent R. Nicklas
/s/ Russell T. Stern Director January 8, 1997
- --------------------------
Russell T. Stern
/s/ Bertram I. Rowland Director January 8, 1997
- --------------------------
Bertram I. Rowland
/s/ Philip J. Davis Director January 8, 1997
- --------------------------
Philip J. Davis
/s/ Edward J. Hartnett Director January 8, 1997
- --------------------------
Edward J. Hartnett
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Sequential Page No.
- ----------- ----------- -------------------
<S> <C> <C>
5 Opinion of counsel as to legality of securities 19
being registered.
23.1 Consent of independent public accountants. 21
23.2 Consent of counsel (included in Exhibit 5). __
24.1 Power of Attorney (included herein on __
the signature page).
</TABLE>
<PAGE>
EXHIBIT 5
---------
Paul, Hastings, Janofsky & Walker
555 S. Flower Street
Twenty-Third Floor
Los Angeles, California 90071
Telephone (213) 683-6000
Facsimile (213) 627-0705
January 8, 1997
Protein Polymer Technologies, Inc.
10655 Sorrento Valley Road
San Diego, California 92121
Ladies and Gentlemen:
We are furnishing this opinion of counsel to Protein Polymer
Technologies, Inc., a Delaware corporation (the "Company"), for filing as
Exhibit 5 to the Registration Statement on Form S-3 (the "Registration
Statement") to be filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the resale
of up to 1,904,000 shares (the "Shares") of its Common Stock, $.01 par value.
We have examined the Certificate of Incorporation and Bylaws, each as
amended to date, of the Company, and the originals, or copies certified or
otherwise identified, of records of corporate action of the Company as furnished
to us by the Company, certificates of public officials and of representatives of
the Company, and such other instruments and documents as we deemed necessary, as
a basis for the opinions hereinafter expressed. In such examination we have
assumed the genuineness of all signatures, the authenticity of all corporate
records and other documents submitted to us and the conformity to original
documents submitted to us as certified or photostatic copies.
Based upon our examination as aforesaid, and in reliance upon our
examination of such questions of law as we deem relevant under the
circumstances, we are of the opinion that the Shares, when purchased as
described in the Registration Statement, will be validly issued, fully paid and
nonassessable.
<PAGE>
Protein Polymer Technologies, Inc.
January 8, 1997
Page 2
We express no opinion with respect to the applicability or effect of
the laws of any jurisdiction other than the Delaware General Corporation Law as
in effect on the date hereof.
We hereby consent to the filing of this opinion of counsel as Exhibit
5 to the Registration Statement.
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker
<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 Protein Polymer
Technologies, Inc. for the registration of 1,904,000 shares of its common stock
and to the incorporation by reference therein of our report dated February 1,
1996, with respect to the financial statements of Protein Polymer Technologies,
Inc. included in its Annual Report (Form 10-KSB) for the year ended December 31,
1995, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
San Diego, California
January 10, 1997
