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As filed with the Securities and Exchange Commission on December 24, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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CELL GENESYS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3061375
(State of incorporation) (I.R.S. Employer Identification No.)
342 LAKESIDE DRIVE
FOSTER CITY, CALIFORNIA 94404
(650) 425-4400
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
KATHLEEN SEREDA GLAUB
SENIOR VICE PRESIDENT AND CHIEF EXECUTIVE OFFICER
CELL GENESYS, INC.
342 LAKESIDE DRIVE
FOSTER CITY, CALIFORNIA 94404
(650) 425-4400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
BARRY E. TAYLOR, ESQ.
TREVOR J. CHAPLICK, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300
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Approximate date of commencement of proposed sale to the public: FROM
TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are to be 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.[ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered(1) Offering Price Per Aggregate Offering Registration Fee
Share(2) Price(2)
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<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per share 8,028,569 $7.96875 $63,977,660 $19,388
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</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement also covers such indeterminate additional shares of
Common Stock as may become issuable as a result of decreases in the
conversion price of the Company's Series B Convertible Preferred Stock and
any future antidilution adjustments in accordance with the terms of
the Series B Convertible Preferred Stock, the underlying shares of Common
Stock of which are included for registration.
(2) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act and computed pursuant to Rule 457(c)
under the Securities Act based upon the average of the high and low prices
of the Common Stock on December 23, 1997, as reported on the Nasdaq National
Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION
8(A), MAY DETERMINE.
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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 THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
PROSPECTUS
(Subject to completion, dated December 24, 1997)
8,028,569 SHARES
CELL GENESYS, INC.
COMMON STOCK
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This Prospectus relates to the public offering, which is not being
underwritten, from time to time by certain stockholders of the Company or by
pledgees, donees, transferees or other successors in interest that receive such
shares as a gift, partnership distribution or other non-sale related transfer
(the "Selling Stockholders") of (i) up to 8,028,569 shares of Common Stock, par
value $0.001 per share (the "Shares"), of Cell Genesys, Inc. ("Cell Genesys" or
the "Company"), and (ii) in accordance with Rule 416 ("Rule 416") under the
Securities Act of 1933, as amended (the "Securities Act"), such presently
indeterminate number of additional Shares as may be issuable upon conversion of
the shares of the Company's Series B Convertible Preferred Stock (the "Series B
Preferred Stock") held by or issuable to certain of the Selling Stockholders,
based upon fluctuations in the conversion price of the Series B Preferred Stock
and any future antidilution adjustments in accordance with the terms of the
Series B Preferred Stock. The Company will receive no part of the proceeds of
such sales. All of the Shares were originally issued by the Company or will be
issued by the Company consisting of: (1) up to 737,902 Shares issued or issuable
upon the exercise by certain of the Selling Stockholders of warrants (the
"Warrants") of Cell Genesys, which warrants were assumed by Cell Genesys as a
result of the merger of a wholly-owned subsidiary of the Company into Somatix
Therapy Corporation ("Somatix"), (2) up to 1,666,667 Shares issued or issuable
upon the conversion of a Convertible Subordinated Promissory Note dated March
26, 1997 (the "Convertible Note"), (3) up to 5,624,000 shares of Common Stock
potentially to be issued from time to time to Selling Stockholders upon
conversion of the Company's outstanding Series B Preferred Stock at the election
of the registered holders of such Series B Preferred Stock, or (4) in accordance
with Rule 416 such presently indeterminate number of additional Shares as may be
issuable upon conversion of outstanding Series B Preferred Stock based on
fluctuations in the conversion price of the Common Stock and any antidilution
adjustments in accordance with the terms of the Series B Preferred Stock. The
Shares were issued or potentially will be issued upon conversion of the Series B
Preferred Stock and Convertible Note and exercise of the Warrants in private
placements pursuant to an exemption from the registration requirements of the
Securities Act, provided by Section 4(2) thereof. The Shares are being
registered by the Company pursuant to registration rights granted to the Selling
Stockholders.
The Selling Stockholders have not advised the Company of any specific
plans for the distribution of the Shares covered by this Prospectus. It is
anticipated, however, that the Shares may be offered by the Selling Stockholders
from time to time in one or more transactions on the Nasdaq National Market, in
privately negotiated transactions at such prices as may be agreed upon, or in a
combination of such methods of sale. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Plan of Distribution." The price at which any of
the Shares may be sold, and the commissions, if any, paid in connection with any
such sale, are unknown and may vary from transaction to transaction. The Company
will pay all expenses incident to the offering and sale of the Shares to the
public other than any commissions and discounts of underwriters, dealers or
agents and any transfer taxes. See "Selling Stockholders" and "Plan of
Distribution."
The Company's Common Stock is listed on the Nasdaq National Market
under the symbol "CEGE." On December 22, 1997 the last sale price of the
Company's Common Stock was $7.938 per share.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON
PAGE 4 FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
The Securities and Exchange Commission (the "Commission") may take the
view that, under certain circumstances, the Selling Stockholders and any
broker-dealers or agents that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of the Securities Act. Commissions, discounts or concessions received by any
such broker-dealer or agent may be deemed to be underwriting commissions under
the Securities Act. The Company and the Selling Stockholders have agreed to
certain indemnification arrangements. See "Plan of Distribution."
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 DECEMBER ___, 1997
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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, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, NW, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048 and Chicago Regional Office, Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained by mail at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the site is
http://www.sec.gov. The Common Stock of the Company is listed on the Nasdaq
National Market, and such reports, proxy and information statements and other
information concerning the Company may be inspected at the offices of Nasdaq
Operations, 1735 K Street, NW, Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. 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 with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. The Registration
Statement may be inspected at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning any document filed as an exhibit are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File
No. 0-19986) pursuant to the Exchange Act are hereby incorporated by reference
in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(2) The amendment on Form 10-K/A to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, filed
with the Commission on April 30, 1997;
(3) The Company's Quarterly Report on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997, and September 30, 1997;
(4) The description of the Company's Common Stock and associated
preferred share purchase rights, contained in its Registration
Statements on Form S-4 filed with the Commission on April 30,
1997, as supplemented by a Supplement to the Joint Proxy
Statement dated April 30, 1997 as filed on May 13, 1997 and
Form 8-A filed with the Commission on March 24, 1992 and
August 8, 1995; and
(5) All other reports filed by the Company pursuant to Sections
13(a) or 15(d) of the Exchange Act since December 31, 1996
All reports and other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Prospectus and prior to the termination of this offering shall be deemed
to be incorporated by reference into this Prospectus, to the extent required,
and to be a part of this Prospectus from the date of filing of such reports and
documents.
Any statement contained in a document incorporated by reference into
this Prospectus 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 also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated by reference into this Prospectus (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to Investor Relations, Cell Genesys, Inc., 342
Lakeside Drive, Foster City, CA 94404, or by telephone at (650) 425-4400.
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THE COMPANY
Cell Genesys is focused on the development and commercialization of
gene therapies to treat major life-threatening diseases, including AIDS and
cancer. The Company's objective is to commercialize both ex vivo and in vivo
gene therapies. The Company's AIDS gene therapy is currently in Phase II
clinical testing. Current studies will evaluate whether the combination of AIDS
gene therapy and antiviral drugs can delay the recurrence of HIV infection,
which has been generally observed in patients who stop their antiviral drug
therapy. These studies will help determine whether the gene therapy can reduce
the requirement for long-term treatment with combinations of three or more
antiviral drugs. The Company anticipates preliminary efficacy data from certain
of these trials in the first half of 1998. In September 1997, the Company
initiated human clinical trials for its T cell gene therapy for colon cancer and
its second generation GVAX (TM) cancer vaccine for melanoma, lung and prostate
cancers. The Company has additional ongoing research programs in other gene
therapy applications, including hemophilia, cardiovascular disease, central
nervous system disorders and other cancer indications, as well as gene delivery,
or vector, technologies. The Company believes that such programs may provide
opportunities for collaborative arrangements with third parties that could also
provide additional funding to the Company.
In the Company's human monoclonal antibody program (being pursued
through its subsidiary, Abgenix, Inc.), the Company has developed transgenic
technology to create strains of mice capable of producing human monoclonal
antibodies. These transgenic mice contain the majority of human antibody genes
and could produce multiple product candidates. The Company believes that fully
human antibodies should avoid the allergic reactions seen with antibodies
containing mouse proteins, which should make them better suited to long-term
therapy and could provide a marketing advantage. The Company is focused on the
development and commercialization of monoclonal antibodies to treat a wide range
of serious diseases, including transplantation-associated conditions,
inflammation, autoimmune disorders and cancer. The Company currently has three
antibody products in development. The Company's most advanced product, ABX-CBL,
is in Phase II trials for treating steroid-resistant graft versus host disease
(GVHD), a frequent, fatal and currently untreatable complication of allogeneic
bone marrow transplants. To date, ABX-CBL has been used in clinical studies with
over 50 patients, with an approximated response rate of 90% in acute
transplantation-associated disorders. A second antibody product, ABX-IL8, is
expected to enter clinical trials in early 1998 for the treatment of moderate to
severe psoriasis.
On May 30, 1997, the Company acquired Somatix Therapy Corporation.
Under the terms of the merger agreement, Somatix became a wholly-owned
subsidiary of Cell Genesys in a tax-free reorganization and stock-for-stock
merger. Somatix stockholders received 0.385 shares of Cell Genesys stock for
each share of Somatix stock. A total of 11,089,706 shares of the Company's
Common Stock were issued to Somatix stockholders. The Company believes the
acquisition will strengthen the Company's position in the field of gene therapy.
The principal executive offices of the Company are located at 342
Lakeside Drive, Foster City, California, 94404, (650) 425-4400.
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RISK FACTORS
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE
CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE
STATEMENTS CONTAINED IN THIS PROSPECTUS THAT ARE NOT PURELY HISTORICAL ARE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT, INCLUDING WITHOUT LIMITATION,
STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS, ESTIMATES, INTENTIONS
AND STRATEGIES ABOUT THE FUTURE. WORDS SUCH AS "ANTICIPATES," "EXPECTS,"
"INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES," VARIATIONS OF SUCH WORDS
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE
SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO
PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR
FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS, ELSEWHERE IN
THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. THE
COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
POTENTIAL INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS, AS WELL AS
THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS AND IN THE
DOCUMENTS INCORPORATED BY REFERENCE, BEFORE MAKING A DECISION TO INVEST IN THE
SHARES OFFERED HEREBY.
NEED FOR SUBSTANTIAL ADDITIONAL FUNDS. The Company and its subsidiary,
Abgenix, Inc. ("Abgenix"), will require substantial additional funds to continue
existing and planned preclinical and clinical trials and its research and
development activities, and to establish manufacturing and marketing
capabilities for any products it may develop. The Company expects that its
existing capital resources, together with payments to be received under existing
collaborative agreements and amounts available under existing equipment
financing facilities, will enable the Company to maintain the Company's
operations at least into 1999. Beyond such time, the Company will need to raise
substantial additional capital to fund its operations.
Abgenix will also require substantial additional funds. In particular,
as a result of the issuance of certain patents relating to antibody technology,
a $7.5 million milestone payment under the Cross-License and Settlement
Agreement with GenPharm International, Inc. ("GenPharm") became due and payable
in December 1997 and a second $7.5 million milestone payment is due and
payable in November 1998. Abgenix is responsible for fifty percent (i.e., $3.75
million) of each such payment. Abgenix will make the December 1997 milestone
payment to GenPharm either: (i) by payment from existing capital resources, or
(ii) by drawing down on its existing line of credit with Cell Genesys in the
amount of the milestone payment.
The Company's future capital requirements will depend on, and could
increase as a result of, many factors, including, but not limited to, the
continuation of the collaboration with Hoechst Marion Roussel ("HMR"), continued
scientific progress in its research and development programs, the magnitude of
such programs, the progress of preclinical and clinical testing, the time and
costs involved in obtaining regulatory approvals, the costs involved in
preparing, filing, prosecuting, maintaining, enforcing and defending patent
claims, competing technological and market developments, changes in
collaborative relationships, the terms of any additional collaborative
arrangements into which the Company may enter, the Company's ability to
establish research, development and commercialization arrangements pertaining to
products other than those covered by existing collaborative arrangements, the
cost of establishing manufacturing facilities, the cost of commercialization
activities, and the demand for the Company's products if and when approved.
There is no assurance that opportunities for in-licensing technologies or for
third party collaborations will continue to be available to the Company on
acceptable terms.
A major portion of the Company's operating revenues are derived from a
collaborative agreement with HMR signed in October 1995. Under the terms of the
agreement, HMR has the ability to terminate its commitment at any time two years
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<PAGE> 6
after its anniversary date. Also under the agreement, in the fourth quarter, the
parties establish the budget for the next year. The Company has begun
discussions with HMR for the 1998 budget. There is no assurance that HMR will
continue the agreement or that the level of funding will not vary year to year.
The Company's operating results would be adversely affected should HMR decide
not to continue funding under this arrangement.
Cell Genesys expects to raise additional funds through additional
equity or debt financings, collaborative relationships, or otherwise. Because of
these long-term capital requirements, the Company and its subsidiary, Abgenix,
may seek to access the public or private equity markets whenever conditions are
favorable, even if it does not have an immediate need for additional capital at
that time. There can be no assurance that any such additional funding will be
available to the Company, or, if available, that it will be on acceptable terms.
If additional funds are raised by issuing equity securities, further dilution to
stockholders may result. If adequate funds are not available, the Company may be
required to delay, reduce the scope of, or eliminate one or more of its
research, development and clinical activities or to seek to obtain funds through
arrangements with collaborative partners or others that may require the Company
to relinquish rights to certain of its technologies, product candidates or
products that the Company would otherwise seek to develop or commercialize
itself, any of which could have a material adverse effect on the Company's
business, results of operations, financial condition or cash flow.
EARLY STAGE OF DEVELOPMENT; NO DEVELOPED OR APPROVED PRODUCTS. Cell
Genesys' potential gene therapy products are in research and development. No
revenues have been generated from the sale of any of such products, nor are any
such revenues expected for at least the next several years. The products
currently under development by Cell Genesys will require significant additional
research and development efforts, including extensive preclinical and clinical
testing and regulatory approval, prior to commercial use. There can be no
assurance that Cell Genesys' research and development efforts will be successful
or that any commercially successful products will ultimately be developed by
Cell Genesys. Even if developed, these products may not receive regulatory
approval or be successfully introduced and marketed at prices that would permit
Cell Genesys to operate profitably.
TECHNOLOGICAL UNCERTAINTY. Gene therapy is a new technology, and
existing preclinical and clinical data on the safety and efficacy of gene
therapy are limited. Data relating to Cell Genesys' specific gene therapy
approaches are even more limited. The Company's T cell gene therapy for cancer,
GVAX (TM) cancer vaccine and AIDS gene therapy are currently being tested in
Phase I/II and Phase II human clinical trials to determine their safety and
efficacy. None of the other products or therapies under development are in human
clinical trials. The results of preclinical studies do not predict safety or
efficacy in humans. Possible side effects of gene therapy may be serious and
life-threatening. There can be no assurance that unacceptable side effects will
not be discovered during preclinical and clinical testing of Cell Genesys'
potential products or thereafter. There are many reasons that potential products
that appear promising at an early stage of research or development do not result
in commercialization. Although Cell Genesys is testing proposed products or
therapies in human clinical trials, there can be no assurance that Cell Genesys
will be permitted to undertake human clinical trials for any of its other
products or that the results of such testing will demonstrate safety or
efficacy. Even if clinical trials are successful, there is no assurance that
Cell Genesys will obtain regulatory approval for any indication, or that an
approved product can be produced in commercial quantities at reasonable cost, or
be successfully marketed.
PATENTS AND TRADE SECRETS. The patent positions of pharmaceutical and
biotechnology firms, including Cell Genesys, are generally uncertain and involve
complex legal and factual questions. While Cell Genesys is prosecuting patent
applications, it cannot be certain whether any given application will result in
the issuance of a patent or, if any patent is issued, whether it will provide
significant proprietary protection or will be invalidated. Because patent
applications in the United States are confidential until patents are issued and
publication of discoveries in the scientific or patent literature tends to lag
behind actual discoveries by several months, Cell Genesys cannot be certain that
it was the first creator of inventions covered by pending patent applications or
that it was the first to file patent applications for such inventions.
The commercial success of the Company will also depend in part on not
infringing the patents or proprietary rights of others and not breaching
licenses granted to Cell Genesys. The Company may be required to obtain licenses
to third party technology necessary to conduct its business. Any failure by the
Company to license at reasonable cost any technology required to commercialize
its technologies or products may have a material adverse effect on the Company's
business, results of operations, financial condition or cash flow.
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<PAGE> 7
Litigation, which could result in substantial cost to the Company, may
also be necessary to enforce any patents issued to Cell Genesys, or to determine
the scope and validity of other parties' proprietary rights. To determine the
priority of inventions, interference proceedings are frequently declared by the
United States Patent Office that could result in substantial costs to the
Company and may result in an adverse decision as to the priority of Cell
Genesys' inventions. Cell Genesys is currently involved in three separate
interference proceedings with regard to: (i) gene activation technology, (ii) ex
vivo gene therapy, and (iii) chimeric receptor technology. While the Company
believes its position in each interference proceeding is strong, the outcome of
each proceeding cannot be predicted, and an adverse result could have a material
adverse effect on the Company's intellectual property position and its business.
The Company may be involved in other interference proceedings in the future.
Cell Genesys believes that there will continue to be significant litigation in
the industry regarding patent and other intellectual property rights.
Cell Genesys also relies on unpatented trade secrets and improvements,
unpatented know-how and continuing technological innovation to develop and
maintain its competitive position. No assurance can be given that others will
not independently develop substantially equivalent proprietary information and
techniques, or otherwise gain access to the Company's trade secrets or disclose
such technology, or that the Company can meaningfully protect its rights to its
unpatented trade secrets.
Cell Genesys requires its employees and consultants to execute a
confidentiality agreement upon the commencement of an employment or consulting
relationship with it. These agreements provide that all confidential information
developed by or made known to an individual during the course of the employment
or consulting relationship generally must be kept confidential. In the case of
employees, the agreements provide that all inventions conceived by the
individual while employed by Cell Genesys, relating to its business are the
exclusive property of Cell Genesys. These agreements may not provide meaningful
protection for the Company's trade secrets in the event of unauthorized use or
disclosure of such information.
COMPETITION. Competition in the field of gene therapy from other
biotechnology and pharmaceutical companies and from research and academic
institutions is intense and expected to increase. There are numerous competitors
working on products to treat each of the diseases for which Cell Genesys is
seeking to develop therapeutic products. Some competitors are pursuing a product
development strategy competitive with Cell Genesys, particularly with respect to
the Company's human monoclonal antibody program. Certain of these competitive
products are in substantially more advanced stages of product development and
clinical trials. The Company's competitors may develop technologies and products
that are more effective than those being developed by Cell Genesys, or that
would render the Company's technology and products less competitive or obsolete.
Many of these competitors have substantially greater financial resources and
larger research and development staffs than Cell Genesys. In addition, many of
these competitors may have significantly greater experience than Cell Genesys in
developing products, in undertaking preclinical testing and human clinical
trials of new pharmaceutical products, in obtaining United States Food and Drug
Administration (the "FDA") and other regulatory approvals of products, and in
manufacturing and marketing such products. Accordingly, Cell Genesys'
competitors may succeed in obtaining patent protection, receiving FDA approval
or commercializing products more rapidly than Cell Genesys. There can be no
assurance that the Company will be able to obtain certain biological materials
necessary to support its research, development or manufacturing of any of its
planned therapies. If the Company is permitted to commence commercial sales of
products, it will also be competing with respect to marketing capabilities and
manufacturing efficiency, areas in which it has limited or no experience. It is
anticipated that the Company will build additional clinical scale and commercial
scale manufacturing facilities to the extent that contract facilities are not
available in order to commercialize its products. It is also anticipated that
the Company will secure funding for these and other product development
activities through its partners and future potential partners. Cell Genesys also
competes with universities and other research institutions in the development of
products, technologies and processes. In many instances, Cell Genesys competes
with other commercial entities in acquiring products or technology from
universities.
Cell Genesys expects that competition among products approved for sale
will be based, among other things, on product efficacy, safety, reliability,
availability, price, patent, position, and sales, marketing and distribution
capabilities. Cell Genesys' competitive positions also depend upon its ability
to attract and retain qualified personnel, obtain patent protection or otherwise
develop proprietary products or processes and secure sufficient capital
resources for the often substantial period between product conception and
commercial sales.
-6-
<PAGE> 8
The levels of revenues and profitability of biotechnology and
pharmaceutical companies such as the Company may be affected by the continuing
efforts of governmental and third-party payers to contain or reduce the costs of
health care through various means. In the United States there have been, and
Cell Genesys expects that there will continue to be, a number of federal and
state proposals to control health care costs. Cell Genesys cannot predict the
effect health care reforms may have on its business, and no assurance can be
given that any such reforms will not have a material adverse effect on the
Company's business, results of operations, financial condition or cash flow. In
the United States and elsewhere, sales of therapeutic products are dependent in
part on the availability of reimbursements to the consumer from third party
payers, such as government and private insurance plans. If the Company succeeds
in bringing one or more products to the market, there can be no assurance that
these products will be considered cost effective and that reimbursement to the
consumer will be available or will be sufficient to allow the Company to sell
its products on a competitive basis.
OPERATING LOSS AND ACCUMULATED DEFICIT. Cell Genesys has incurred net
losses since its inception. At September 30, 1997, Cell Genesys' accumulated
deficit was approximately $170.9 million. Such losses have resulted principally
from expenses incurred in its research and development programs, the acquisition
of Somatix and other new technologies, and to a lesser extent, from general and
administrative expenses. For the nine months ended September 30, 1997, Cell
Genesys incurred losses of $114.8 million, including $78.9 million related to
the acquisition of Somatix and $18.8 million related to the Cross-License and
Settlement Agreement with GenPharm. The Company expects to incur substantial and
increasing losses for at least the next several years due primarily to the
expansion of research and development programs, including preclinical studies,
clinical trials and manufacturing. Cell Genesys expects that losses will
fluctuate from quarter to quarter and that such fluctuations may be substantial.
There can be no assurance that the Company will successfully develop,
commercialize, manufacture or market its products or ever achieve or sustain
product revenues or profitability.
VOLATILITY OF STOCK PRICE. The market prices for securities of
biopharmaceutical and biotechnology companies (including Cell Genesys) have
historically been highly volatile, and the market has from time to time
experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. Factors such as fluctuations in
Cell Genesys' operating results, announcements of technological innovations or
new therapeutic products by Cell Genesys or its competitors, governmental
regulation, developments in patent or other proprietary rights, public concern
as to the safety of products developed by the Company or other biotechnology and
pharmaceutical companies, and general market conditions may have a significant
effect on the market price of the Cell Genesys' Common Stock.
GOVERNMENT REGULATION. Regulation by governmental authorities in the
United States and foreign countries is a significant factor in the manufacture
and marketing of Cell Genesys' proposed products and its research and
development activities. All of Cell Genesys' products will require regulatory
approval by governmental agencies prior to commercialization. In particular,
human therapeutic products must undergo rigorous preclinical and clinical
testing and other premarket approval procedures by the FDA and similar
authorities in foreign countries. Since certain of Cell Genesys' potential
products involve the application of new technologies, regulatory approvals may
take longer than for products produced using more conventional methods. Various
federal and, in some cases, state statutes and regulations also govern or
influence the manufacturing, safety, labeling, storage, record keeping and
marketing of such products. The lengthy process of seeking these approvals, and
the subsequent compliance with applicable federal statutes and regulations,
requires the expenditure of substantial resources. Any failure by Cell Genesys
or its collaborators or licensees to obtain, or any delay in obtaining,
regulatory approvals could adversely affect the marketing of any products
developed by Cell Genesys, and its ability to receive product or royalty
revenue.
In responding to a new drug application, or a product license
application, the FDA may grant marketing approvals, request additional
information or further research, or deny the application if it determines that
the application does not satisfy its regulatory approval criteria. Approvals may
not be granted on a timely basis, if at all, or if granted may not cover all the
clinical indications for which Cell Genesys is seeking approval or may contain
significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use.
In addition to laws and regulations enforced by the FDA, Cell Genesys
is also subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other present and potential future federal,
state or local laws and regulations. Cell Genesys' research and development
involves the controlled use of hazardous materials, chemicals, viruses and
various radioactive compounds. Although Cell Genesys believes its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from
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<PAGE> 9
these materials cannot be completely eliminated. In the event of such an
accident, Cell Genesys could be held liable for any damages that result and any
such liability could exceed the resources of the Company.
The manufacturing facilities of Cell Genesys are subject to licensing
requirements of the California Department of Health Services. While not subject
to license by the FDA, such facilities are subject to inspection by the FDA as
well as by the California Department of Health Services. A separate license from
the FDA is required for commercial manufacture of any product. Failure to
maintain such licenses or to meet the inspection criteria of the FDA and the
California Department of Health Services would result in disruption to the
manufacturing processes of the Company and would have a material adverse effect
on the Company's business, results of operations, financial condition and cash
flow.
For marketing outside the United States, Cell Genesys is subject to
foreign regulatory requirements governing human clinical trials and marketing
approval for drugs and devices. The requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursement vary greatly from
country to country. Failure to comply with such regulatory requirements or
obtain such approvals could impair the Company's ability to develop these
markets and have a material adverse effect on the Company's business, results of
operations, financial condition or cash flow.
COMMERCIALIZATION; LACK OF MARKETING EXPERIENCE. It is anticipated that
the Company will rely on sales and marketing expertise of potential corporate
partners for its initial products. Cell Genesys does not have any experience in
sales, marketing or distribution of biopharmaceutical products. The decision to
market future products directly or through corporate partners will be based on a
number of factors including market size and concentration, the size and
expertise of the partner's sales force in a particular market and the Company's
overall strategic objectives. Cell Genesys is currently engaged in various
stages of discussions with potential partners. There can be no assurance that
Cell Genesys will be able to establish such relationships, if at all, on
acceptable terms and conditions.
PRODUCT LIABILITIES AND INSURANCE. Clinical trials or marketing of any
of Cell Genesys' potential products may expose the Company to liability claims
resulting from the use of such products. These claims might be made directly by
consumers, health care providers or by others selling such products. Cell
Genesys currently maintains its product liability insurance with respect to its
clinical trials. There can be no assurance that the Company will be able to
maintain such insurance or, if maintained, that sufficient coverage can be
acquired at a reasonable cost. An inability to maintain insurance at acceptable
cost or at all could prevent or inhibit the clinical testing or
commercialization of products developed by the Company. A product liability
claim or recall could have a material adverse effect on the Company's business,
results of operations, financial condition and cash flow.
HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS. Cell Genesys' research and
development activities involve the controlled use of hazardous materials,
chemicals, viruses and various radioactive compounds. Cell Genesys is subject to
federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of such materials and certain waste products.
Although Cell Genesys believes that its safety procedures for handling and
disposing of such materials comply with the standards prescribed by such laws
and regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident, the
Company could be held liable for any damages that result and any such liability
could exceed the resources of the Company. The Company may be required to incur
significant costs to comply with environmental laws and regulations in the
future. The Company's operations, business or assets may be materially adversely
affected by current or future environmental laws or regulations.
REIMBURSEMENT. In both domestic and foreign markets, sales of the
Company's potential products will depend in part upon coverage and reimbursement
from third-party payers, including health care organizations, government
agencies, private health care insurers and other health care payers such as
health maintenance organizations, self-insured employee plans and the Blue
Cross/Blue Shield plans. There is considerable pressure to reduce the cost of
drug products. In particular, reimbursement from government agencies and
insurers and large health organizations may become more restricted in the
future. Cell Genesys' potential products represent a new mode of therapy and,
while the cost-benefit ratio of the products may be favorable, Cell Genesys
expects that the costs associated with the Company's products will be
substantial. There can be no assurance that the Company's proposed products, if
successfully developed, will be considered cost-effective by third-party payers,
that insurance coverage will be available or, if available, that such
third-party payers' reimbursement policies will not adversely affect the
Company's ability to sell its products on a profitable basis. In addition, there
can be no assurance that insurance coverage will be provided by such third-party
payers at all or without substantial
-8-
<PAGE> 10
delay or, if such coverage is provided, that the approved reimbursement will
provide sufficient funds to enable the Company to become profitable.
UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS. The future
revenues and profitability of and availability of capital for biotechnology
companies may be materially adversely affected by the continuing efforts of
governmental and third-party payers to contain or reduce the costs of health
care through various means. For example, in certain foreign markets, pricing or
profitability of prescription pharmaceuticals is subject to government control.
In the United States, there have been, and Cell Genesys expects that there will
continue to be, a number of federal and state proposals to implement similar
government control. While Cell Genesys cannot predict whether any such
legislative or regulatory proposals will be adopted, the announcement or
adoption of such proposals could have a material adverse effect on the Company's
business, results of operations, financial condition and cash flow.
DEPENDENCE UPON KEY PERSONNEL AND COLLABORATIVE RELATIONSHIPS. Cell
Genesys' success is highly dependent on the retention of principal members of
management and scientific staff and the recruitment of additional qualified
personnel. The loss of key personnel or the failure to recruit necessary
additional qualified personnel could have a material adverse effect on the
Company's business, results of operations, financial condition or cash flow.
There is intense competition from other companies, research and academic
institutions and other organizations for qualified personnel in the areas of
Cell Genesys' activities. There is no assurance that the Company will be able to
continue to attract and retain the qualified personnel necessary for the
development of its business. These activities are expected to require the
addition of new personnel with expertise in the areas of clinical testing,
manufacturing, marketing and distribution and the development of additional
expertise by existing personnel. The failure to acquire such personnel or
develop such expertise could have a material adverse effect on the Company's
business, results of operations, financial condition and cash flow.
Cell Genesys has clinical trial arrangements with the National
Institutes of Allergy and Infectious Diseases covering the initial
proof-of-principle study for AIDS gene therapy being conducted in identical twin
pairs now in Phase II testing. Cell Genesys also has clinical trial arrangements
with the University of California, San Francisco, San Francisco General
Hospital, the University of Colorado Health Sciences Center, Massachusetts
General Hospital, the University of California, Los Angeles, ViRx, Inc. and the
Aids Research Community Consortium covering Cell Genesys' patient-specific
configuration of its AIDS gene therapy also now in Phase II testing. If these
relationships were terminated, progress of clinical testing would be adversely
affected.
In addition, the Company has several clinical trial arrangements under
its GVAX (TM) program, including with The Johns Hopkins University covering a
Phase I clinical trial to treat prostate cancer patients and with the Dana
Farber Cancer Institute covering two Phase I clinical trials to treat lung
cancer and melanoma patients. In the event that any of these relationships are
terminated, the completion and evaluation of clinical trials could be adversely
affected.
The Company will depend, in part, on the continued availability of
outside scientific collaborators performing research. These relationships
generally may be terminated at any time by the collaborator, typically by giving
30 days' notice. The Company's scientific collaborators are not employees of
Cell Genesys. As a result, the Company has limited control over their activities
and can expect that only limited amounts of their time will be dedicated to the
Company's activities. The Company's agreements with these collaborators, as well
as those with the Company's scientific consultants provide that any rights the
Company obtains as a result of the research efforts of these individuals will be
subject to the rights of the research institutions in such work. In addition,
some of these collaborators have consulting or other advisory arrangements with
other entities that may conflict with their obligations to the Company. For
these reasons, there can be no assurance that inventions or processes discovered
by the Company's scientific collaborators or consultants will become the
property of the Company.
SHARES ELIGIBLE FOR FUTURE SALE; DILUTION. Substantially all of the
Company's shares are eligible for sale in the public market. The issuance of
Common Stock upon conversion of the Series B Preferred Stock and Convertible
Note and upon exercise of the Warrants, as well as future sales of such Common
Stock or of shares of Common Stock by existing stockholders, or the perception
that such sales could occur, could adversely affect the market price of the
Common Stock. The Common Stock issuable upon conversion of the Series B
Preferred Stock and the Convertible Note and upon exercise of the Warrants are
being registered hereunder. Conversion of the Series B Preferred Stock and the
Convertible Note and exercise of the Warrants for shares of Common Stock could
adversely affect the market price of the Common Stock. In addition, investors
could experience substantial dilution upon conversion of the Series B Preferred
Stock into Common Stock
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<PAGE> 11
as a result of either (i) a decline in the market price of the Company's Common
Stock immediately prior to conversion, or (ii) an event triggering the
antidilution rights of any outstanding shares of Series B Preferred Stock. See
"Description of Capital Stock."
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. All proceeds from the sale of the Shares will be for the account of the
Selling Stockholders, as described below. See "Selling Stockholders" and "Plan
of Distribution" described below.
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<PAGE> 12
SELLING STOCKHOLDERS
The following table sets forth as of the date of this Prospectus, the
name of each of the Selling Stockholders, the number of shares of Common Stock
that each such Selling Stockholder beneficially owns as of December 16, 1997,
the number of shares of Common Stock beneficially owned by each Selling
Stockholder that may be offered for sale from time to time by this Prospectus,
and the number of shares of Common Stock to be held by each such Selling
Stockholder assuming the sale of all the Common Stock offered hereby.
The Company has agreed to initially register 5,624,000 Shares, which
are potentially issuable upon conversion of the Series B Preferred Stock, for
resale by the Selling Stockholders holding Series B Preferred Stock. The number
of Shares shown in the following table as being offered by the Selling
Stockholders holding Series B Preferred Stock does not include such presently
indeterminate number of shares of Common Stock as may be issuable upon
conversion of the Series B Preferred Stock pursuant to the provisions thereof
regarding determination of the applicable conversion price which may fluctuate
and certain antidilution provisions which shares of Common Stock are, in
accordance with Rule 416 under the Securities Act, included in the Registration
Statement on Form S-3 of which this Prospectus forms a part.
The Shares being offered by the Selling Stockholders were acquired from
the Company (i) following conversion of the Series B Preferred Stock acquired
from the Company in a private placement transaction pursuant to the Securities
Purchase Agreement dated November 13, 1997 (the "Securities Purchase
Agreement"), (ii) upon exercise of the Warrants which were assumed by Cell
Genesys in connection with the acquisition of Somatix, or (iii) following the
conversion of the Convertible Note. For a description of such securities, see
"Description of Capital Stock."
Each Selling Stockholder that purchased the Series B Preferred Stock
pursuant to the Securities Purchase Agreement represented to the Company that it
would acquire the Shares for investment and with no present intention of
distributing any such Shares except pursuant to this Prospectus. Pursuant to its
obligation under the Securities Purchase Agreement, the Company filed with the
Commission, under the Securities Act, a Registration Statement on Form S-3, of
which this Prospectus forms a part, with respect to the resale of the Shares
from time to time on the Nasdaq National Market or in privately-negotiated
transactions and has agreed to use its best efforts to keep such Registration
Statement effective until the earlier of (i) the date all holders may sell all
of the Shares freely pursuant to Rule 144 without compliance with the
registration requirement of the Securities Act, or (ii) the date all of the
Shares have been sold and no shares of Series B Preferred Stock are outstanding.
Except as indicated, none of the Selling Stockholders has held any
position or office or had a material relationship with the Company or any of its
affiliates within the past three years other than as a result of the ownership
of the Company's Common Stock. The Company may amend or supplement this
Prospectus from time to time to update the disclosure set forth herein.
<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially
Shares of Owned After
Preferred Shares Beneficially Shares Offering(1)(2)(4)
Stock Owned Prior to Being ---------------------
Selling Stockholder Owned Offering(1)(2) Offered(3) Number Percent
- --------------------------------------- --------- ------------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
WARRANT HOLDERS
Aberlyn Capital Management L.P. (5) ... - 4,812 4,812 -- --
Aeneas Venture Corporation (5) ........ - 799,075 80,850 718,225 2.5
Berman, Martin (5) .................... - 6,620 6,620 -- --
Betje Partners, L.P. (5) .............. - 25,919 8,624 17,295 *
Birch, Robert S. (5) .................. - 16,197 5,390 10,807 *
Fawer, Mark (5) ....................... - 10,153 10,153 -- --
Feinberg, Larry N.(5) ................. - 5,975 5,975 -- --
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially
Shares of Owned After
Preferred Shares Beneficially Shares Offering(1)(2)(4)
Stock Owned Prior to Being ---------------------
Selling Stockholder Owned Offering(1)(2) Offered(4) Number Percent
- --------------------------------------- --------- ------------------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Financing For Science International(5) - 7,434 7,434 -- --
Kingsley & Co. (5) .................... - 13,475 13,475 -- --
Legg Mason Special Investment Trust, .. - 58,587 58,587 -- --
Inc. (5)
Merrill Lynch, Pierce, Fenner & Smith . - 20,355 20,355 -- --
Inc. (5)
Morgens, Waterfall, Vintidiadis ....... - 53,458 17,787 35,671 *
Investments (5)
Oracle Institutional Partners, L.P. (5) - 3,018 3,018 -- --
Oracle Partners, L.P. (5) ............. - 75,460 75,460 -- --
Phoenix Partners, L.P. (5) ............ - 82,616 27,489 55,127 *
Quasar International Partners, C.V. (5) - 11,642 11,642 -- --
Rosenfeld, Steven (5) ................. - 14,515 14,515 -- --
Sam Oracle Fund, Inc. (5) ............. - 19,766 19,766 -- --
SBSF Biotechnology Fund, L.P. (5) ..... - 121,494 40,425 81,069 *
Shenk, Susan (5) ...................... - 16,550 16,550 -- --
TBD Ltd. (5) .......................... - 33,101 33,101 -- --
Warburg Pincus Emerging Growth ........ - 80,850 80,850 -- --
Fund (5)
Weisbrod, Stuart T. (5) ............... - 1,466 1,466 -- --
Westcoat & Co. (5) .................... - 146,608 146,608 -- --
WHI Somatix Partners (5) .............. - 26,950 26,950 -- --
---- --------- ---------- --------- -----
Subtotal ........................ -- 1,656,096 737,902 918,194
SERIES B PREFERRED STOCKHOLDERS
AG Super Fund International Partners, 25 31,023 70,300 -- --
L.P. (6)
Colonial Penn Life Insurance ........ 50 62,047 140,600 -- --
Company (6)
GAM Arbitrage Investments, Inc. (6) . 25 31,023 70,300 -- --
Halifax Fund, L.P. (6) .............. 500 620,469 1,406,000 -- --
Heracles Fund (6) ................... 175 217,164 492,100 -- --
Leonardo, L.P. (6) .................. 365 452,942 1,026,380 -- --
Nelson Partners (6)(7) .............. 247 306,511 694,564 -- --
Olympus Securities, Ltd. (6)(7) ..... 303 376,004 852,036 -- --
Ramius Fund, Ltd. (6) ............... 85 105,480 239,020 -- --
Raphael, L.P. (6) ................... 50 62,047 140,600 -- --
Themis Partners L.P. (6) ............ 175 217,164 492,100 -- --
------ --------- ---------- --------- -----
Subtotal 2,000 2,481,874 5,624,000 -- --
NOTE HOLDER
Medarex, Inc. (8).................... - 1,666,667 1,666,667 -- --
------ --------- ---------- --------- -----
Total.......................... 2,000 5,804,637 8,028,569 918,194
====== ========= ========== =========
</TABLE>
- ------------------
* Less than one percent.
(1) Based upon 28,168,459 shares of Common Stock outstanding as of
December 16, 1997. Except as otherwise noted herein, the number and
percentage of shares beneficially owned is determined in accordance
with Rule 13d-3 of
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<PAGE> 14
the Exchange Act, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rule, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and also any shares which the individual
has the right to acquire within 60 days of the date of this Prospectus
through the exercise of any stock option or other right. Unless otherwise
indicated in the footnotes, each person has sole voting and investment power
(or shares such powers with his or her spouse) with respect to the shares
shown as beneficially owned.
(2) The number of Shares shown as beneficially owned prior to the offering by
the Selling Stockholders holding Series B Preferred Stock represents shares
of Common Stock issuable to the Selling Stockholders assuming conversion, as
of December 16, 1997, of all shares of Series B Preferred Stock issued
calculated using an assumed conversion price of $8.09375 (representing the
average of the two lowest closing bid prices for the Common Stock during the
10 consecutive trading days ending on December 15, 1997), with respect to
the stated value of the Series B Preferred Stock plus an accretion of 5% per
year, based upon certain conversion price provisions of the Series B
Preferred Stock (which conversion price could fluctuate from time to time
based on changes in the market price of the Common Stock). This Prospectus
also covers the resale of such presently indeterminate number of additional
shares as may be issuable upon conversion of the Series B Preferred Stock
based upon fluctuations in the conversion price of the Series B Preferred
Stock and certain antidilution provisions. As described in footnote 6 below,
the actual number of shares of Common Stock issuable upon conversion of the
Series B Preferred Stock depends, subject to certain limitations, upon the
lower of (i) the Fixed Conversion Price (as defined pursuant to the
provisions of the Series B Preferred Stock) which is currently $11.02, and
(ii) the average of the two lowest closing bid prices during the ten
consecutive trading days immediately prior to conversion, and may be less
than or greater than the number of shares shown as beneficially owned by the
Selling Stockholders or otherwise covered by this Prospectus. The number of
Shares shown as beneficially owned does not include shares of Common Stock
issuable upon the conversion of (a) up to 1,000 shares of Series B Preferred
Stock which, beginning on November 9, 1998 and subject to certain
conditions, the Company may cause the holders of Series B Preferred Stock to
purchase and (b) a number of shares of Series B Preferred Stock which,
beginning on November 1998 and subject to certain conditions, the initial
purchasers of Series B Preferred Stock have the right to acquire from the
Company.
(3) The number of shares of Common Stock registered pursuant to the Registration
Statement on behalf of the Selling Stockholders holding Series B Preferred
Stock and the number of Shares offered hereby by such holders have been
determined by agreement between the Company and such Selling Stockholders.
Because the number of shares that will ultimately be issued upon conversion
of the Series B Preferred Stock is dependent, subject to certain
limitations, upon the average of certain closing bid prices of the Common
Stock prior to conversion as described in footnote 6 below and certain
antidilution adjustments, such number of shares (and therefore the number of
Shares offered hereby) cannot be determined at this time. The number of
Shares being offered by the Selling Stockholders owning Series B Preferred
Stock, in accordance with Rule 416, also includes such presently
indeterminate number of additional Shares as may be issuable upon conversion
of the shares of the Company's Series B Preferred Stock held by or issuable
to certain of the Selling Stockholders, based upon fluctuations in the
conversion price of the Series B Preferred Stock and any future antidilution
adjustments in accordance with the terms of the Series B Preferred Stock.
(5) Shares offered pursuant to this registration statement consist entirely of
shares of Cell Genesys Common Stock issued or issuable upon exercise of
outstanding Warrants.
(6) Each share of Series B Preferred Stock is convertible into that number of
shares of Common Stock equal to (i) the share's stated value of $10,000,
plus a premium in the amount of 5% per annum accruing from the date of
issuance through the date of conversion, divided by (ii) the conversion
price equal to the lesser of (A) the Fixed Conversion Price (as defined
pursuant to the provisions of the Series B Preferred Stock), and (B) a
floating conversion price equal to 100% (subject to downward adjustment upon
certain events, including if the Common Stock is not quoted on certain
markets) of the average of the two lowest closing bid prices for the Common
Stock over 10 trading days preceding the conversion date. The initial Fixed
Conversion Price for the 2,000 shares of Series B Preferred Stock issued on
November 14, 1997 is $11.02.
In accordance with the rights and restrictions of the Series B Preferred
Stock, unless waived by the Selling Stockholder upon 61 days prior written
notice, no Selling Stockholder may convert the Series B Preferred Stock to
the extent that the shares to be received by such holder upon such
conversion would cause such holder to beneficially own (other than Shares of
Common Stock so owned through ownership of Series B Preferred Stock) more
than 4.99% of the outstanding shares of Common Stock. In addition, pursuant
to the regulations of the National Association of Securities Dealers, Inc.,
in the absence of stockholder approval, the aggregate number of shares of
Common Stock issuable to the Selling Stockholders at a discount from market
price upon conversion of the Series B Preferred Stock may not equal or
exceed 20% of the outstanding shares of Common Stock on November 14, 1997
(i.e., 5,628,850 shares). If stockholder approval is not obtained to issue
shares of Common Stock to the Selling Stockholders in excess of such amount,
none of the Selling Stockholders will be entitled to acquire more than its
proportionate share of such maximum amount. Any Series B Preferred Stock
which may not be converted because of such limitation must be redeemed by
the Company. For a complete description of the rights, preferences and
restrictions of the Series B Preferred Stock, see "Description of Capital
Stock".
(7) Citadel Limited Partnership is the managing general partner of Nelson
Partners ("Nelson") and the trading manager of Olympus Securities, Ltd.
("Olympus") and consequently has voting control and investment discretion
over
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<PAGE> 15
securities held by both Nelson and Olympus. The ownership information for
Nelson does not include the Shares owned by Olympus and the ownership
information for Olympus does not include the Shares owned by Nelson.
(8) Shares offered pursuant to this registration statement consist entirely of
shares issuable upon conversion of the Convertible Note, based on the
Company's estimate of the maximum number of shares of Common Stock likely
issuable upon conversion.
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold from time
to time by the Selling Stockholders. The Selling Stockholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Stockholders may sell the Shares being
offered hereby on the Nasdaq National Market, or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price or
at negotiated prices. The Shares may be sold by one or more of the following
means of distribution: (a) a block trade in which the broker-dealer so engaged
will attempt to sell Shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its own account
pursuant to this Prospectus; (c) an over-the-counter distribution in accordance
with the rules of the Nasdaq National Market; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; (e) in
privately negotiated transactions; (f) to cover short sales; and (g) a
combination of any of the foregoing. To the extent required, this Prospectus may
be amended and supplemented from time to time to describe a specific plan of
distribution. In connection with distributions of the Shares or otherwise, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of the
Company's Common Stock in the course of hedging the positions they assume with
Selling Stockholders. The Selling Stockholders may also sell the Company's
Common Stock short and redeliver the shares to close out such short positions.
The Selling Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of Shares offered hereby,
which Shares such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Stockholders may also pledge Shares to a broker-dealer
or other financial institution, and, upon a default, such broker-dealer or other
financial institution, may effect sales of the pledged Shares pursuant to this
Prospectus (as supplemented or amended to reflect such transaction). In
addition, any Shares that qualify for sale pursuant to Rule 144 may be sold
under Rule 144 rather than pursuant to this Prospectus.
In effecting sales, brokers, dealers or agents engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
Selling Stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commissions, discounts or concessions may be deemed to be
underwriting discounts or commissions under the Securities Act. The Company will
pay all expenses incident to the offering and sale of the Shares to the public
other than any commissions and discounts of underwriters, dealers or agents and
any transfer taxes.
In order to comply with the securities laws of certain states, if
applicable, the Shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and there has been compliance thereof.
The Company has advised the Selling Stockholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of Shares in the market and to the activities of the Selling Stockholders
and their affiliates. In addition, the Company will make copies of this
Prospectus available to the Selling Stockholders and has informed them of the
need for delivery of copies of this Prospectus to purchasers at or prior to the
time of any sale of the Shares offered hereby. The Selling Stockholders may
indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under
the Securities Act.
At the time a particular offer of Shares is made, if required, a
Prospectus Supplement will be distributed that will set forth the number of
Shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission and other item constituting
-14-
<PAGE> 16
compensation, any discount, commission or concession allowed or reallowed or
paid to any dealer, and the proposed selling price to the public.
The sale of Shares by the Selling Stockholders is subject to compliance
by the Selling Stockholders with certain contractual restrictions with the
Company. There can be no assurance that the Selling Stockholders will sell all
or any of the Shares.
The Company has agreed to indemnify the Selling Stockholders and any
person controlling a Selling Stockholder against certain liabilities, including
liabilities under the Securities Act. The Selling Stockholders have agreed to
indemnify the Company and certain related persons against certain liabilities,
including liabilities under the Securities Act.
The Company has agreed with certain of the Selling Stockholders to keep
the Registration Statement of which this Prospectus constitutes a part effective
until all the Shares are sold by the Selling Stockholders or all unsold Shares
are freely tradable subject to compliance with Rule 144 of the Securities Act.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 75,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock. As of December
16, 1997, there were approximately 28,168,459 shares of Common Stock outstanding
held of record by approximately 1,096 holders and 2,000 shares of Preferred
Stock outstanding held of record by approximately 11 holders.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders, except that, in the election of
directors, the holders are entitled to cumulative voting. Subject to preferences
of outstanding Preferred Stock, the holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared from time to time by
the board of directors out of funds legally available for that purpose. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities, subject to prior distribution rights of Preferred Stock, if any,
then outstanding. The Common Stock has no preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable, and the shares of Common Stock offered hereby will be
fully paid and non-assessable.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue the undesignated Preferred Stock in one or more series,
to fix the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued shares of undesignated Preferred Stock and to
fix the number of shares constituting any series and the designation of such
series. The purpose of authorizing the board of directors of Cell Genesys to
determine such rights and preferences is to eliminate delays associated with a
stockholder vote on specific issuances. The issuance of Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting power
of holders of Cell Genesys Common Stock and, under certain circumstances, make
it more difficult for a third party to gain control of Cell Genesys.
The Company is authorized to issue 5,000,000 shares of undesignated
Preferred Stock, of which (i) 200,000 shares have been designated as Series A
Participating Preferred Stock (the "Series A Preferred Stock"), none of which is
issued and outstanding, and (ii) 4,000 shares have been designated Series B
Convertible Preferred Stock (the "Series B Preferred Stock"), of which 2,000
shares are issued and outstanding. The Series A Preferred Stock was designated
in connection with the adoption of a preferred shares rights agreement dated
July 28, 1995 and is described in the Company's Registration Statement on Form
8-A pursuant to which such preferred shares rights agreement is filed as an
exhibit thereto.
-15-
<PAGE> 17
In the event of a liquidation, dissolution or winding up of the Company, the
holders of Series B Preferred Stock are entitled to receive in cash out of the
assets of the Company in preference to the Series A Preferred Stock, any other
series of Preferred Stock ranking junior to the Series B Preferred Stock and to
the holders of Common Stock in an amount equal to $10,000 per share plus the
aggregate amount of accumulated premium of 5% per annum. Payment must be made in
full to holders of the Series B Preferred Stock, and thereafter, any remaining
assets may be distributed ratably among the holders of Common Stock.
The 2,000 shares of Series B Preferred Stock issued on November 14,
1997 are convertible into shares of Common Stock of the Company based on a
conversion price of $11.02 per share or, if lower, 100% of the average of
certain specified trading prices during the 10 trading days preceding such date
of conversion (the "Floating Conversion Price"); provided that, subject to
certain limitations, the Floating Conversion Price for the shares of Series B
Preferred Stock issued on November 14, 1997 shall not be less than (i) $6.612
during the period between 90 days and 180 days after the issuance date, and (ii)
$4.41 during the period between 181 days and 270 days from the issuance date.
Each holder may not convert the Series B Preferred Stock issued on November 14,
1997 until 90 days after issuance, and thereafter (i) up to 25% may be converted
during the period between 90 days and 135 days from issuance, (ii) up to 50% may
be converted during the period between 135 days and 180 days from issuance,
(iii) up to 75% may be converted during the period between 180 and 225 days from
issuance, and (iv) the entire balance outstanding may be converted after 225
days from issuance; provided that, a holder will not be permitted at anytime to
convert an amount of Series B Preferred Stock which would result in the holder
beneficially owning (other than shares of Common Stock owned through ownership
of Series B Preferred Stock) more than 4.9% of the then outstanding capital
stock of the Company absent 61 day prior written waiver by such holder. Subject
to certain conditions, the Company may elect any time after three years from the
issue date to require conversion of some or all of the Series B Preferred Stock
if the last reported sale price of the Company's Common Stock is at least $27.55
per share for a period of 20 consecutive trading days prior to such election.
Any outstanding balance of Series B Preferred Stock is subject to mandatory
conversion five years from the date of issuance, subject to extension of such
conversion date upon certain events. Subject to certain conditions, the Company
has a right on one occasion to require the holders of the Series B Preferred
Stock to purchase up to an additional 1,000 shares of Series B Preferred Stock
at a purchase price of $10,000 per share during the period between 360 days and
540 days following the original issuance date.
The holders of the Series B Preferred Stock are entitled to certain
rights, subject to certain limitations, including (i) a right of first refusal
for one year from the date of issuance to purchase a pro rata portion of any
issuance of equity or convertible securities of the Company, (ii) a right to
purchase during the period beginning one year from and ending four years
following the date of original issuance, at the same original issue price up to
50% of the number of shares of Series B Preferred Stock held on November 14,
1997 (iii) certain price-based antidilution rights triggered upon certain events
which would require the Company to issue additional shares of Common Stock upon
conversion of the Series B Preferred Stock, and (iv) a right to require the
Company to redeem some or all of the outstanding shares of Series B Preferred
Stock upon certain events including a change of control or sale of all or
substantially all of the Company's assets, a failure by the Company to timely
file and maintain the effectiveness of a registration statement for the sale of
the shares of Common Stock issuable upon conversion of the Series B Preferred
Stock, an inability to issue shares of Common Stock upon conversion of the
Series B Preferred Stock or a delisting of the Company's Common Stock on the
Nasdaq National Market. A failure to timely register and maintain an effective
registration statement would also result in certain adjustments to the
conversion rate of the Series B Preferred Stock which could have the effect of
increasing the number of shares of Common Stock issuable upon conversion. The
holders of the Series B Preferred Stock have no voting rights, except as
otherwise required under Delaware law or as expressly provided to approve
certain subsequent issuances of Series B Preferred Stock or to change the
rights, preferences or privileges of the Series B Preferred Stock. The Shares
issuable upon conversion of the Series B Preferred Stock are being registered on
a Registration Statement on Form S-3 of which this Prospectus forms a part
pursuant to certain registration rights granted to holders of the Series B
Preferred Stock.
CONVERTIBLE NOTE
On March 26, 1997, as consideration for a cross-license and settlement
agreement, the Company issued a Convertible Subordinated Promissory Note (the
"Convertible Note") in the principal amount of $15 million to GenPharm
International, Inc., pursuant to the Convertible Note Purchase Agreement (the
"Note Purchase Agreement") of the same date. The Convertible Note bears interest
at a rate of 7% per annum, payable semi-annually, beginning on September 30,
1997. The Convertible Note matures on September 30, 1998. The principal and
-16-
<PAGE> 18
unpaid accrued interest under the Convertible Note is convertible into shares of
the Company's Common Stock at a conversion price of: (i) $9.00 per share, or
(ii) at the Company's option, 115% of the average closing price of the Company's
Common Stock as reported on the Nasdaq National Market during the 30 trading
days immediately preceding February 28, 1998. The Convertible Note is redeemable
at the Company's option at any time after August 31, 1997, if the closing price
of the Company's Common Stock is at least 130% of the conversion price on at
least 20 of the 30 trading days immediately preceding the date of notice of
redemption. The Note Purchase Agreement contains certain restrictive covenants
that limit the amount of additional debt the Company may incur in excess of $15
million. On October 21, 1997, GenPharm International, Inc. was acquired by
Medarex, Inc. The Shares issuable upon conversion of the Convertible Note are
being registered on a Registration Statement of which this Prospectus forms a
part pursuant to certain registration rights granted to the holder of the
Convertible Note.
WARRANTS
As of December 1, 1997, the Company had outstanding a warrant to
purchase 750,000 shares of Common Stock at $13.00 per share, with an expiration
date of October 9, 2000. Such warrant was issued pursuant to the Stock Purchase
Agreement between the Company and Hoechst Marion Roussel, Inc. on October 9,
1995 (the "HMR Warrant"). In addition, the Company had outstanding Warrants to
purchase: (i) 624,362 shares of Common Stock at $10.39 per share, with an
expiration date of June 28, 1998; (ii) 36,023 shares of Common Stock at $3.01
per share, with an expiration date of February 28, 1999; (iii) 9,000 shares of
Common Stock at $5.04 per share, with an expiration date of February 28, 1999;
(iv) 56,271 shares of Common Stock at $0.03 per share, with an expiration date
of November 23, 1999; (v) 4,812 shares of Common Stock at $18.18 per share, with
an expiration date of May 24, 1999; and (vi) 7,434 shares of Common Stock at
$18.33 per share, with an expiration date of December 31, 1999. Except for the
HMR Warrant, all such Warrants were assumed by the Company in connection with
the acquisition of Somatix on May 30, 1997 and the Shares issuable uponexercise
of such Warrants are being registered on a Registration Statement on Form S-3 of
which this Prospectus forms a part pursuant to certain registration rights
granted to the holders of such Warrants. Certain of theWarrants are subject to a
net exercise provision by which the holder may exercise the Warrant by
surrendering Shares in lieu of paying the cash exercise price.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California,
counsel to the Company.
EXPERTS
The consolidated financial statements of Cell Genesys appearing in its
Annual Report on Form 10-K/A for the year ended December 31, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
-17-
<PAGE> 19
================================================================================
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE BY THIS
PROSPECTUS TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING
STOCKHOLDER OR BY ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SHARES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE OF OR OFFER TO SELL THE SHARES MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information ............................................... 2
Incorporation of Certain
Documents By Reference ............................................ 2
The Company ......................................................... 3
Risk Factors ........................................................ 4
Use of Proceeds ..................................................... 9
Selling Stockholders ................................................ 9
Plan of Distribution ................................................ 12
Description of Capital Stock ........................................ 13
Legal Matters ....................................................... 15
Experts ............................................................. 15
</TABLE>
CELL GENESYS, INC.
8,028,569 SHARES
OF
COMMON STOCK
PROSPECTUS
December ___, 1997
================================================================================
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company will pay all expenses incident to the offering and sale to
the public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission ("SEC") registration fee
and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC registration fee ............. $19,388
NASDAQ National Market listing fee 17,500
Legal fees and expenses .......... 15,000
Accounting fees and expenses ..... 5,000
Miscellaneous expenses ........... 3,112
-------
Total ................... $60,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation has the power to indemnify a director, officer,
employee or agent of the corporation and certain other persons serving at the
request of the corporation in related capacities against amounts paid and
expenses incurred in connection with an action or proceeding to which he or she
is or is threatened to be made a party by reason of such position, if such
person has acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation, and, in any
criminal proceeding, if such person had no reasonable cause to believe his or
her conduct was unlawful; provided that, in the case of actions brought by or in
the right of the corporation, no indemnification may be made with respect to any
matter as to which such person has been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
The Registrant's Certificate of Incorporation provides that no director
will be personally liable to the Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for authorizing the
payment of a dividend or repurchase of stock or (iv) for any transaction in
which the director derived an improper personal benefit.
The Registrant's by-laws provide that the Registrant must indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Registrant) by reason of the fact that he or she is or was a
director or officer of the Registrant, or that such director or officer is or
was serving at the request of the Registrant as a director, officer, employee or
agent of another corporation, partnership, joint venture trust or other
enterprise (collectively "Agent"), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Registrant, which approval may not be unreasonably withheld)
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, will not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Registrant, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
II-1
<PAGE> 21
The Registrant's by-laws provide further that the Registrant must
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Registrant to procure a judgment in its favor by reason of the fact that he or
she is or was an Agent against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Registrant, provided that no indemnification may be made in respect of any
claim, issue or matter as to which such person has been adjudged to be liable to
the Registrant unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court deems proper.
Pursuant to its by-laws, the Registrant has the power to purchase and
maintain a directors and officers liability policy to insure its officers and
directors against certain liabilities.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 16. EXHIBITS.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1(1) Securities Purchase Agreement dated as of November 13, 1997,
by and among Cell Genesys, Inc. and the investors listed
thereon.
10.2(1) Registration Rights Agreement dated as of November 13, 1997,
by and among Cell Genesys, Inc. and the investors listed
thereon.
10.3(1) Certificate of Designations, Preferences and Rights of
Series B Convertible Preferred Stock of Cell Genesys, Inc.,
filed with the Office of the Secretary of State of the State
of Delaware on November 13, 1997.
10.4(2) Convertible Note Purchase Agreement dated March 26, 1997
between the Company and GenPharm International, Inc.
10.5(2) Convertible Subordinated Promissory Note dated March 26,
1997 between the Company and GenPharm International, Inc.
10.6(3) Amended and Restated Agreement and Plan of Merger and
Reorganization dated as of January 12, 1997, as amended and
restated as of March 27, 1997, among Cell Genesys, Inc., S
Merger Corp. and Somatix Therapy Corporation.
10.7 Form of Warrant for the purchase of shares of common stock
of Somatix Therapy Corporation.
23.1 Consent of Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-4).
------------------
(1) Incorporated by reference to the Company's Report on Form
8-K filed with the Commission on November 21, 1997.
(2) Incorporated by reference to the Company's Annual Report on
Form 10-K/A, as amended, for the fiscal year ended December
31, 1996, filed with the Commission on April 30, 1997.
(3) Incorporated by reference to the Company's Registration
Statement on Form S-4, filed with the Commission on April
30, 1997.
II-2
<PAGE> 22
ITEM 17. UNDERTAKINGS.
A. UNDERTAKING PURSUANT TO RULE 415.
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) Securities Act of 1933 (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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs A(l)(i) and A(l)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in the Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of this offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT
DOCUMENTS BY REFERENCE.
The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 23
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION.
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 SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE> 24
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 Foster City, California, on this 23rd day of December
1997.
CELL GENESYS, INC.
By: /s/ KATHLEEN SEREDA GLAUB
Kathleen Sereda Glaub,
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Stephen A. Sherwin, M.D. and Kathleen Sereda Glaub, jointly and severally, as
attorneys-in-fact, each with the power of substitution, for him or her in any
and all capacities, to sign any amendment to this Registration Statement and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact or
any of them, or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on the
23rd day of December 1997 in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------------ ---------------------------------------------- -----------------
<S> <C> <C>
/s/ STEPHEN A. SHERWIN, M.D. Chairman of the Board, President and Chief December 23, 1997
- ------------------------------------ Executive Officer (Principal Executive Officer)
Stephen A. Sherwin, M.D.
/s/ KATHLEEN SEREDA GLAUB Senior Vice President and Chief Financial December 23, 1997
- ------------------------------------ Officer (Principal Financial and Accounting
Kathleen Sereda Glaub Officer)
/s/ DAVID W. CARTER Director December 23, 1997
- ------------------------------------
David W. Carter
/s/ JAMES M. GOWER Director December 23, 1997
- ------------------------------------
James M. Gower
/s/ RAJU S. KUCHERLAPATI, PH.D. Director December 23, 1997
- ------------------------------------
Raju S. Kucherlapati, Ph.D.
/s/ JOSEPH E. MAROUN Director December 23, 1997
- ------------------------------------
Joseph E. Maroun
/s/ JOHN T. POTTS, JR., M.D. Director December 23, 1997
- ------------------------------------
John T. Potts, Jr., M.D.
/s/ THOMAS E. SHENK, PH.D. Director December 23, 1997
- ------------------------------------
Thomas E. Shenk, Ph.D.
/s/ EUGENE L. STEP Director December 23, 1997
- ------------------------------------
Eugene L. Step
/s/ INDER M. VERMA, PH.D. Director December 23, 1997
- ------------------------------------
Inder M. Verma, Ph.D.
</TABLE>
II-5
<PAGE> 25
INDEX TO EXHIBITS
Exhibit
Number Description
- --------------------------------------------------------------------------------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1(1) Securities Purchase Agreement dated as of November 13, 1997, by and
among Cell Genesys, Inc. and the investors listed thereon.
10.2(1) Registration Rights Agreement dated as of November 13, 1997, by and
among Cell Genesys, Inc. and the investors listed thereon.
10.3(1) Certificate of Designations, Preferences and Rights of Series B
Convertible Preferred Stock of Cell Genesys, Inc., filed with the
Office of the Secretary of State of the State of Delaware on
November 13, 1997.
10.4(2) Convertible Note Purchase Agreement dated March 26, 1997 between the
Company and GenPharm International, Inc. 10.5(2) Convertible
Subordinated Promissory Note dated March 26, 1997 between the
Company and GenPharm International, Inc.
10.6(3) Amended and Restated Agreement and Plan of Merger and Reorganization
dated as of January 12, 1997, as amended and restated as of March
27, 1997, among Cell Genesys, Inc., S Merger Corp. and Somatix
Therapy Corporation.
10.7 Form of Warrant for the purchase of shares of common stock of
Somatix Therapy Corporation.
23.1 Consent of Independent Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-4).
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(1) Incorporated by reference to the Company's Report on Form 8-K filed
with the Commission on November 21, 1997.
(2) Incorporated by reference to the Company's Annual Report on Form
10-K/A, as amended, for the fiscal year ended December 31, 1996, filed
with the Commission on April 30, 1997.
(3) Incorporated by reference to the Company's Registration Statement on
Form S-4, filed with the Commission on April 30, 1997.
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<PAGE> 1
Exhibit 5.1
December 23, 1997
Cell Genesys, Inc.
342 Lakeside Drive
Foster City, CA 94404
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on or about the date hereof (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of up to 8,028,569 shares of your Common
Stock (the "Shares"). We understand that the Shares are to be sold from time to
time in the over-the-counter-market at prevailing prices or as otherwise
described in the Registration Statement. As your legal counsel, we have also
examined the proceedings taken by you in connection with the issuance of the
Shares.
It is our opinion that the Shares upon conversion of the Series B
Convertible Preferred Stock or the Convertible Subordinated Promissory Note
dated March 26, 1997 or upon exercise of the Warrants, as applicable, as
referenced in the Registration Statement, are validly issued, fully paid and
non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
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<PAGE> 1
Exhibit 10.7
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
SOMATIX THERAPY CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
Void after June ___, 1998
THIS CERTIFIES THAT, for value received, _______________________
("Holder") is entitled to purchase, on the terms hereof, _________________
(_______________) shares of Common Stock (as adjusted pursuant to Section 4
hereof, the "Shares") of Somatix Therapy Corporation, a Delaware corporation
(the "Company"), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, the term "Common Stock" shall mean the
Company's presently authorized Common Stock, par value $.01 per share, and any
stock into or for which such Common Stock may hereafter be converted or
exchanged. The term "Warrant" as used herein shall include this Warrant, and any
warrants delivered in substitution or exchange therefor as provided herein.
The following terms shall apply to this Warrant:
1. Term of Warrant. Subject to the terms and conditions set forth
herein, the term of this Warrant shall commence, this Warrant shall be
exercisable for the Shares, commencing August ___, 1995 and expiring at 5:00
p.m. Pacific Daylight Time on June ___, 1998.
2. Exercise Price; Number of Shares. The exercise price per share
("Exercise Price") at which this Warrant may be exercised shall be Four Dollars
($4.00), as adjusted from time to time pursuant to Section 4 hereof. The number
of shares of Common Stock for which this Warrant is initially exercisable is
____________________ (____________________) shares of Common Stock, which number
is subject to adjustment pursuant to Section 4 of this Warrant.
3. Exercise of Warrant.
3.1. Method of Exercise. Subject to the terms of Section 1
hereof, the purchase rights represented by this Warrant are exercisable by
Holder during the term hereof, in whole or in part and from time to time, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit A duly executed) at the principal office of the Company and by payment
to the Company, by check or wire transfer of an amount equal to the then
applicable Exercise Price multiplied by the number of Shares then being
purchased or exercise of the right to credit the Exercise Price against the fair
market value of the Shares
II-8
<PAGE> 2
at the time of exercise (the "Net Exercise Right") pursuant to Section 3.2. In
the event of any exercise of the rights represented by this Warrant,
certificates for the Shares so purchased shall be delivered to Holder hereof as
soon as possible and, unless this Warrant has been fully exercised or expired, a
new Warrant representing the portion of the Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
Holder hereof as soon as possible.
3.2. Net Exercise Right. If the Company shall receive written
notice from Holder at the time of exercise of this Warrant that Holder elects to
exercise Holder's Net Exercise Right, the Company shall deliver to the Holder
(without payment by the Holder of any exercise price or any cash or other
consideration) that number of shares of fully paid and nonassessable Common
Stock equal to the quotient obtained by dividing (x) the value of this Warrant
(or the specified portion hereof) on the date of exercise, which value shall be
determined by subtracting (1) the aggregate Exercise Price of the Shares
immediately prior to the exercise of this Warrant from (2) the aggregate fair
market value of the Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the date of exercise by (y) the fair market value
of one share of Common Stock on the date of exercise. For purposes of this
Section 3.2, "fair market value" of a share of Common Stock shall mean the
closing price of the Common Stock on the business day prior to the date of
exercise as reported by the Nasdaq National Market or such other principal
exchange or quotation system on which the Common Stock is then traded, or in the
event that the Common Stock is not then traded on an exchange or quotation
system, then as determined in good faith by the Board of Directors. No
fractional shares shall be issuable upon exercise of the Net Exercise Right,
and, if the number of shares to be issued determined in accordance with the
foregoing formula is other than a whole number, the Company shall pay to the
Holder an amount in cash equal to the fair market value of the resulting
fractional share on the date of exercise. For purposes of Section 3 of this
Warrant, shares issued pursuant to the Net Exercise Right shall be treated as if
they were issued upon the exercise of this Warrant.
4. Certain Adjustments.
4.1. Adjustments for Splits, Subdivisions, Recapitalizations
and other Combinations. In case the Company shall (i) pay a dividend in Common
Stock or make a distribution in the form of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, (iv) issue by
reclassification of its Common Stock other securities of the Company, or (v)
take any other action, the effect of which is to reclassify or reorganize the
outstanding shares of Common Stock into a different number of shares or class of
securities, the number of shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be entitled
to receive the kind and number of shares or other securities of the Company
which it would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had the Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made with respect to this Section 4.1 shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event. Whenever the number of Shares
purchasable upon the exercise of this Warrant is adjusted, as herein provided,
the Exercise Price payable upon the exercise of this Warrant shall be adjusted
by multiplying such Exercise Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Shares purchasable upon
the exercise of the Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of Warrant shares so purchasable immediately
thereafter. Except as provided above, no adjustment in respect of any dividends
or distributions out of earnings shall be made during the term of this Warrant
or upon the exercise of this Warrant.
II-9
<PAGE> 3
4.2. Mergers, Consolidations or Sale of Assets. If at any time
there shall be a capital reorganization (other than a combination or subdivision
of Shares otherwise provided for herein), or a merger or consolidation of the
Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that the Holder shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified in this
Warrant and upon payment of the purchase price, the number of shares of stock or
other securities or property of the Company or the successor corporation
resulting from such reorganization, merger, consolidation or sale, to which a
holder of Common Stock deliverable upon exercise of this Warrant would have been
entitled under the provisions of the agreement in such reorganization, merger,
consolidation or sale if this Warrant had been exercised immediately before that
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the reorganization, merger,
consolidation or sale to the end that the provisions of this Warrant (including
adjustment of the purchase price then in effect and the number of the Shares)
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant; provided, however, that the aggregate purchase price shall not be
adjusted.
4.3. Certificate as to Adjustments. In the case of each
adjustment or readjustment of the purchase price pursuant to this Section 4, the
Company will promptly compute such adjustment or readjustment in accordance with
the terms hereof and cause a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based to be delivered to the Holder of this Warrant. The Company
will, upon the written request at any time of the Holder of this Warrant,
furnish or cause to be furnished to such Holder a certificate setting forth:
(a) Such adjustments and readjustments;
(b) The purchase price at the time in effect;
and
(c) The number of Shares and the amount, if
any, of other property at the time receivable upon the exercise of the Warrant.
4.4. Notice of Record Date. In the event of any taking by the
Company of a record of its stockholders for the purpose of determining
stockholders who are entitled to receive payment of any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire any
share of any class or any other securities or property, or to receive any other
right, or for the purpose of determining stockholders who are entitled to vote
in connection with any proposed merger or consolidation of the Company with or
into any other corporation, or any proposed sale, lease or conveyance of all or
substantially all of the assets of the Company, or any proposed liquidation,
dissolution or winding up of the Company, the Company shall mail a notice to
Holder, at least ten (10) days prior to the date specified therein, the date on
which any such record is to be taken for the purpose of such dividend,
distribution, right or other event, and the amount and character of such
dividend, distribution, right or other event.
5. Fractional Stock. No fractional shares shall be issued in connection
with any exercise of this Warrant. In lieu of the issuance of such fractional
share, the Company shall make a cash payment equal to the then fair market value
of such fractional share as determined in good faith by the Company's Board of
Directors.
II-10
<PAGE> 4
6. Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the exercise of this Warrant, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
the exercise of this Warrant.
7. Restrictions on Transfer. Unless the issuance of the Shares has been
registered under the Securities Act of 1933, as amended (the "1933 Act"):
(a) this Warrant and any Shares may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except: (i) to a person who, in
the opinion of counsel to the Company, is a person to whom this Warrant or the
Shares may legally be transferred without registration and without the delivery
of a current prospectus under the 1933 Act with respect thereto and then only
against receipt of an agreement of such person to comply with the provisions of
this Section 6 with respect to any resale or other disposition of such
securities; or (ii) to any person upon the delivery of a prospectus then meeting
the requirements of the 1933 Act relating to such securities and the offering
thereof for such sale or disposition, and thereafter to all successive
assignees;
(b) upon exercise of any of the Warrants and the issuance of
any of the Shares prior to the time a registration statement registering the
Shares issuable upon exercise hereof is declared effective by the Securities and
Exchange Commission, all certificates representing such shares shall bear on the
face thereof substantially the following legend, insofar as is consistent with
California law, as well as any other legends necessary to comply with applicable
state and federal laws for the issuance of such shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER
THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN
ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND
IN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER ANY
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED, EXCEPT IN A TRANSACTION WHICH IS
EXEMPT UNDER PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT; AND
IN THE CASE OF AN EXEMPTION; ONLY IF THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION
DOES NOT REQUIRE REGISTRATION OF ANY SUCH SECURITIES.
8. Rights as Stockholders; Information. Holder shall not be entitled to
vote or receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon Holder any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders or at any meeting thereof, or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until this Warrant shall
have been exercised and the Shares purchasable upon the exercise hereof shall
have become deliverable, as provided herein.
II-11
<PAGE> 5
9. Transfers and Exchanges. Subject to the terms and conditions of the
applicable Federal and state securities laws, this Warrant is transferable in
whole or in part by the Holder. All new warrants issued in connection with
transfers or exchanges shall be identical in form and provision to this Warrant
except as to the number of shares.
10. Successors and Assigns. The terms and provisions of this Warrant
shall be binding upon the Company and the Holder and their respective successors
and assigns.
11. Amendments. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the same is sought.
12. Registration Rights. Upon exercise of this Warrant, the Holder
shall have and be entitled to exercise the rights of registration as provided in
that certain Purchase Agreement dated of even date herewith between the Company
and Holder.
13. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.
14. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a legal holiday.
15. Governing Law. The terms and conditions of this Warrant shall be
governed by and construed in accordance with California law as such laws are
applied to agreements which are entered into solely between California residents
and are to be performed entirely within that state.
Dated:_________________ SOMATIX THERAPY CORPORATION
By:_________________________________
Its:________________________________
Dated:_________________ HOLDER
By:_________________________________
Name:_______________________________
Its:________________________________
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<PAGE> 6
EXHIBIT A
NOTICE OF EXERCISE
To: Somatix Therapy Corporation
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of Somatix Therapy Corporation pursuant to the terms of the
attached Warrant, and
______ tenders herewith payment of the purchase price of such shares
in full.
______ exercises Holder's Net Exercise Right
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
____________________________________
(Name)
____________________________________
____________________________________
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
HOLDER
By:_________________________________
Name:_______________________________
Its:________________________________
Dated:_______________
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<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-3 of Cell Genesys, Inc. for the
registration of 8,028,569 shares of its common stock and to the incorporation by
reference therein of our report dated January 27, 1997 with respect to the
consolidated financial statements of Cell Genesys, Inc. in its Annual Report on
Form 10-K/A, as amended, for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG, L.L.P.
Palo Alto, California
December 23, 1997
II-14
