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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
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)
<TABLE>
<S> <C>
DELAWARE 94-3061375
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
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)
MATTHEW J. PFEFFER
CHIEF FINANCIAL 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)
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
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. [ ]
CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE(3)
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Common Stock, par value $0.001 per
share.............................. 4,689,784 $2.71875 $12,750,350 $3,761
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</TABLE>
(1) This Registration Statement (No. 333-65077) is being filed to register
4,689,784 shares of Common Stock pursuant to Rule 413. The Registrant
previously registered 8,028,569 shares of Common Stock pursuant to a
Registration Statement on Form S-3 (No. 333-43277), which was declared
effective on January 16, 1998. Pursuant to Rule 429(b), the prospectus filed
herewith includes the 4,689,784 shares registered hereby (No. 333-65077) and
the 8,028,569 shares registered previously (No. 333-43277).
(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.
(3) The amount of the Registration Fee shown pertains to the 4,689,784 shares of
Common Stock being registered pursuant to this Registration Statement (No.
333-65077). The Registration Fee was paid by the Registrant in connection
with the initial filing of this Registration Statement on September 30, 1998
($2,340) and Amendment No. 1 filed on October 15, 1998 ($1,421). The amount
shown does not include the Registration Fee of $19,388 paid by the
Registrant in connection with the registration of 8,028,569 shares of Common
Stock pursuant to the prior Registration Statement (No. 333-43277).
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 REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
(SUBJECT TO COMPLETION, DATED NOVEMBER , 1998)
12,718,353 SHARES
CELL GENESYS, INC.
COMMON STOCK
------------------------
This Prospectus relates to the public offering, which is not being
underwritten, of up to 12,718,353 shares of Common Stock, par value $0.001 per
share (the "Shares"), of Cell Genesys, Inc. ("Cell Genesys" or the "Company"),
which may be offered 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"). 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 118,353 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 12,600,000 shares of Common Stock to
be issued from time to time to Selling Stockholders upon conversion of the
Company's outstanding Series B Convertible Preferred Stock which were issued on
November 14, 1997 (the "Series B Preferred Stock") at the election of the
registered holders of such Series B Preferred Stock, or (3) the Company's
estimate of the number of additional Shares as may be issuable upon payment of
share dividends on the Series B Preferred Stock or upon conversion of
outstanding Series B Preferred Stock based on fluctuations in the conversion
price of the Common Stock. The Shares were issued or will be issued upon
conversion of the Series B Preferred Stock and exercise of the Warrants in
private placements pursuant to an exemption from the registration requirements
of the Securities Act of 1933, as amended (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 November 19, 1998 the last sale price of the Company's
Common Stock was $4.9063 per share.
------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 5
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."
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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 NOVEMBER , 1998
<PAGE> 3
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 public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. 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 (File No. 000-19986) for the
fiscal year ended December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1998 (File No. 000-19986), June 30, 1998 (File No. 000-19986)
and September 30, 1998 (File No. 000-19986)
(3) 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 (File No. 333-26131),
as supplemented by a Supplement to the Joint Proxy Statement dated
April 30, 1997 as filed on May 13, 1997 (File No. 000-19986) and Form
8-A filed with the Commission on March 24, 1992 and August 8, 1995
(File No. 000-19986); and
(4) All other reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Exchange Act since December 31, 1997.
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
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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. In
September 1997, the Company initiated human clinical trials for its T cell (an
immune system cell responsible for cellular immunity) 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 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.
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. We will need substantial additional
funds to do existing and planned preclinical and clinical trials to continue
research and development activities, and to establish manufacturing and
marketing capabilities for any products we may develop. We expect that our
existing capital resources, together with payments to be received under existing
collaborative agreements and amounts available under existing equipment
financing facilities, will enable us to maintain our operations at least through
1999, provided that the Company is not subject to redemption obligations in
respect of its outstanding Series B Preferred Stock. Beyond 1999, we will need
to raise substantial additional capital to fund our operations.
Our future capital requirements will depend on, and could increase as a
result of, many factors such as:
- continuation of the collaboration with Hoechst Marion Roussel
- continued scientific progress of research and development programs
- magnitude of such programs
- progress of preclinical and clinical testing
- time and costs involved in obtaining regulatory approvals
- costs involved in preparing, filing, prosecuting, maintaining, enforcing
and defending patent claims
- competing technological and market developments
- changes in collaborative relationships
- terms of any additional collaborative arrangements into which we may
enter
- our ability to establish research, development and commercialization
arrangements pertaining to products other than those covered by existing
collaborative arrangements
- cost of establishing manufacturing facilities
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- cost of commercialization activities
- demand for our products, if and when approved
- potential redemption obligations in connection with conversion of the
Series B Convertible Preferred Stock. See "-- Shares Eligible for Future
Sale, Dilution" and "-- Possibility of Redemption."
There is no assurance that opportunities for in-licensing technologies or
for third party collaborations will continue to be available to us on acceptable
terms.
A major portion of our operating revenues come from a collaborative
agreement with Hoechst Marion Roussel signed in October 1995. Under the terms of
the agreement, Hoechst Marion Roussel can terminate its commitment at any time
two years after its anniversary date. Hoechst Marion Roussel is funding clinical
development for this program in 1998. There is no assurance that Hoechst Marion
Roussel will continue the agreement or that the level of funding will not vary
year to year. Our operating results would be adversely affected if Hoechst
Marion Roussel decides not to continue funding under this arrangement.
We expect to raise additional funds through additional equity or debt
financings, collaborative relationships, or otherwise. Because of our long-term
capital requirements, we may seek to access the public or private equity markets
whenever conditions are favorable, even if we do 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 us, or, if available, that it will be on acceptable terms. If we
raise additional funds by issuing equity securities, stockholders will incur
immediate dilution. If adequate funds are not available, we may be required to
delay, reduce the scope of, or eliminate one or more of our research,
development and clinical activities or we may need to seek funds through
arrangements with collaborative partners or others that require us to relinquish
rights to certain of our technologies, product candidates or products that we
would otherwise seek to develop or commercialize ourselves. Either of these
events could have a material adverse effect on our business, results of
operations, financial condition or cash flow.
Early Stage of Development; No Developed or Approved Products. All of our
potential gene therapy products are in research and development. We have not
sold any products or generated any revenues from the sale of products. We do not
expect to generate any such revenues for at least the next several years. Our
products currently under development 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 our research and development efforts will be successful or that
any of our future products will ultimately be commercially successful. Even if
developed, our products may not receive regulatory approval or be successfully
introduced and marketed at prices that would permit us to operate profitably.
Operating Loss and Accumulated Deficit. We have incurred net losses since
our inception. At September 30, 1998, our accumulated deficit was approximately
$185.9 million. We incurred net losses of $22.5 million for the nine months
ended September 30, 1998. Such losses have resulted principally from expenses of
research and development programs and to a lesser extent, from general and
administrative expenses. In 1997, we incurred losses of $86.2 million, including
$78.9 million related to the acquisition of Somatix and $15 million related to
the cross license and settlement agreement with GenPharm. During the first six
months of 1998 while Abgenix was a consolidated subsidiary, we attributed
Abgenix losses totaling $4.2 million to the minority stockholders. Under the
equity method of accounting, we recorded $1.3 million loss in equity of Abgenix
during the three months ended September 30, 1998. We expect to incur substantial
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. We expect that losses will fluctuate from quarter to
quarter and that such fluctuations may be substantial. There can be no assurance
that we will successfully develop, commercialize, manufacture or market any
products. We cannot guarantee that we will ever achieve or sustain product
revenues or profitability.
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Technological Uncertainty. Gene therapy is a new technology. Existing
preclinical and clinical data on the safety and efficacy of gene therapy are
limited. Data relating to our specific gene therapy approaches are even more
limited. Our 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 our
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 we are testing proposed products or therapies in
human clinical trials, there can be no assurance that we will be permitted to
undertake human clinical trials for any of our other products. Also, the results
of such testing might not demonstrate safety or efficacy. Even if clinical
trials are successful, there is no assurance that we will obtain regulatory
approval for any indication, that an approved product can be produced in
commercial quantities at reasonable cost or that such a product will 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. Although we are prosecuting patent
applications, we 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. Also, patent
applications in the United States are confidential until patents are issued.
Publication of discoveries in scientific or patent literature tends to lag
behind actual discoveries by several months. Accordingly, we cannot be certain
that we were the first creator of inventions covered by pending patent
applications or that we were the first to file patent applications for such
inventions.
Our commercial success will also depend in part on not infringing the
patents or proprietary rights of others and not breaching licenses granted to
us. We will be required to obtain licenses to certain third party technology and
genes necessary to conduct our business. Any failure to license at reasonable
cost any technology or genes required to commercialize our technologies or
products may have a material adverse effect on our business, results of
operations, financial condition or cash flow.
Litigation, which could result in substantial cost to us, may also be
necessary to enforce any patents issued to us, or to determine the scope and
validity of other parties' proprietary rights. To determine the priority of
inventions, the United States Patent Office frequently declares interference
proceedings. Such proceedings could result in an adverse decision as to the
priority of our inventions.
We are currently involved in three separate interference proceedings with
regard to:
(i) gene activation technology
(ii) ex vivo gene therapy
(iii) chimeric receptor technology
While we believe our position in each interference proceeding is strong,
the outcome of each proceeding cannot be predicted. An adverse result could have
a material adverse effect on our intellectual property position and our
business. We may be involved in other interference proceedings in the future. We
believe that there will continue to be significant litigation in the industry
regarding patent and other intellectual property rights.
We also rely on unpatented trade secrets and improvements, unpatented
know-how and continuing technological innovation to develop and maintain our
competitive position. No assurance can be given that others will not
independently develop similar or better proprietary information and techniques
and disclose it. Also, there can be no assurance that others will not gain
access to our trade secrets, or that we can meaningfully protect our rights to
our unpatented trade secrets.
We require our employees and consultants to execute a confidentiality
agreement upon the commencement of an employment or consulting relationship with
us. These agreements provide that all confidential information developed by or
made known to an individual during the course of the employment or consulting
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relationship generally must be kept confidential. In the case of employees, the
agreements provide that all inventions conceived by the individual while
employed by us, relating to our business are our exclusive property. These
agreements may not provide meaningful protection for our 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 we are seeking to
develop therapeutic products.
Our primary competitors are as follows for the primary products we are
working on:
<TABLE>
<CAPTION>
PRODUCT AREA PRIMARY COMPETITORS
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- HIV Chiron (Viagene), Novartis (GTI), SyStemix, Targeted
Genetics and Vical
- Prostate Introgen and Vical
Cancer
- Melanoma Chiron, GeneMedicine, Novartis, Targeted Genetics,
Transkaryotic Therapy and Vical
- Lung Cancer Introgen and Megabios
- Colon Cancer GenVec and Vical
</TABLE>
Some competitors are pursuing a product development strategy competitive
with ours, particularly with respect to our human monoclonal antibody program.
Certain of these competitive products are in substantially more advanced stages
of product development and clinical trials. Our competitors may develop
technologies and products that are more effective than ours, or that would
render our technology and products less competitive or obsolete. Many of these
competitors have substantially greater financial resources and larger research
and development staffs than we do. In addition, many of these competitors may
have significantly greater experience than we do 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, our competitors may obtain patent protection, or FDA
approval and may commercialize products more rapidly than we do. There can be no
assurance that we will be able to obtain certain biological materials necessary
to support our research, development or manufacturing of any of our planned
therapies. If we are permitted to commence commercial sales of products, we will
also be competing with respect to marketing capabilities and manufacturing
efficiency, areas in which we have limited or no experience. We expect to build
additional clinical scale and commercial scale manufacturing facilities if
contract facilities are not available in order to commercialize our products. We
also expect to secure funding for these and other product development activities
through our partners and future potential partners. We also compete with
universities and other research institutions in the development of products,
technologies and processes. In many instances, we compete with other commercial
entities in acquiring products or technology from universities.
We expect that competition among products approved for sale will be based,
among other things, on:
- product efficacy
- safety
- reliability
- availability
- price
- patent
- position
- sales
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- marketing
- distribution capabilities
Our competitive positions also depend upon our ability to attract and
retain qualified personnel, obtain patent protection or otherwise develop
proprietary products or processes and secure sufficient funding for the often
substantial period between product conception and commercial sales.
The continuing efforts of governmental and third-party payers to contain or
reduce the costs of health care through various means may affect the revenues
and profitability of biotechnology and pharmaceutical companies like ours. In
the United States there have been, and we expect there to continue to be, a
number of federal and state proposals to control health care costs. We cannot
predict the effect health care reforms may have on our business. It is possible
that such reforms will have a material adverse effect on our business, results
of operations, financial condition or cash flow. In the United States and
elsewhere, sales of therapeutic products depend in part on the availability of
reimbursements to consumer from third party payers, such as government and
private insurance plans. If we succeed in bringing one or more products to the
market, our products might not be considered cost effective. In such event,
third party payers might not reimburse the consumer sufficiently to allow us to
sell our products on a competitive basis.
Volatility Of Stock Price. The market prices for securities of
biopharmaceutical and biotechnology companies (including Cell Genesys) have
historically been highly volatile. The market has from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. The following factors, as well as those
identified under "-- Shares Eligible for Future Sale; Dilution" below, may
affect our stock price:
- fluctuations in our operating results
- announcements of technological innovations or new therapeutic products by
us or our competitors
- governmental regulation
- developments in patent or other proprietary rights
- public concern as to the safety of products developed by us or other
biotechnology and pharmaceutical companies
- general market conditions
Government Regulation. Regulation by governmental authorities in the United
States and foreign countries is a significant factor in the manufacture and
marketing of our proposed products and our research and development activities.
All of our 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 our 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 us or our collaborators or licensees to obtain, or any delay in
obtaining regulatory approvals could adversely affect the marketing of our
products and our 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 we are seeking approval. Also, an approval might contain
significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use.
9
<PAGE> 11
In addition to laws and regulations enforced by the FDA, we are also
subject to regulation under:
- Occupational Safety and Health Act
- Environmental Protection Act
- Toxic Substances Control Act
- Resource Conservation and Recovery Act
- Other present and potential future federal, state or local laws and
regulations
Our research and development involves the controlled use of hazardous
materials, chemicals, viruses and various radioactive compounds. Although we
believe our safety procedures for handling and disposing of such materials
comply with the standards prescribed by state and federal regulations, we cannot
completely eliminate the risk of accidental contamination or injury from these
materials. In the event of such an accident, we could be held liable for any
damages that result and any such liability could exceed our resources.
Our manufacturing facilities 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 disrupt our manufacturing processes and have
a material adverse effect on our business, results of operations, financial
condition and cash flow.
For marketing outside the United States, we are 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 our ability to develop these markets and have a material
adverse effect on our business, results of operations, financial condition or
cash flow.
Commercialization; Lack of Marketing Experience. We expect to rely on sales
and marketing expertise of potential corporate partners for our initial
products. We do 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
- size and expertise of the partner's sales force in a particular market
- Company's overall strategic objectives
We are currently engaged in various stages of discussions with potential
partners. There can be no assurance that we 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
our potential products may expose us 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. We currently maintain product
liability insurance with respect to each of our clinical trials. There can be no
assurance that we will be able to maintain such insurance or 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 our products. A product liability claim or
recall could have a material adverse effect on our business, results of
operations, financial condition and cash flow.
Hazardous Materials; Environmental Matters. Our research and development
activities involve the controlled use of hazardous materials, chemicals, viruses
and various radioactive compounds. We are 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 we believe that
our safety procedures for handling and disposing of such materials comply with
the standards prescribed by such laws and regulations, we cannot
10
<PAGE> 12
completely eliminate the risk of accidental contamination or injury from these
materials. In the event of such an accident, we could be held liable for any
damages that result, and any such liability could exceed our resources. We may
be required to incur significant costs to comply with environmental laws and
regulations in the future. Our business may be materially adversely affected by
current or future environmental laws or regulations.
Reimbursement. In both domestic and foreign markets, sales of our 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
- 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. Our potential products
represent a new mode of therapy and, while the cost-benefit ratio of the
products may be favorable, we expect that the costs associated with our products
will be substantial. There can be no assurance that our proposed products, if
successfully developed, will be considered cost-effective by third-party payers.
There can be no assurance that insurance coverage will be provided by such
third-party payers at all or without substantial delay. Even if such coverage is
provided, the approved reimbursement might not provide sufficient funds to
enable us to become profitable.
Uncertainty Of Pharmaceutical Pricing and Related Matters. The continuing
efforts of governmental and third-party payers to contain or reduce the costs of
healthcare through various means may have a material adverse effect on the
future revenues and profitability of biotechnology companies. 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 we expect that there will continue to be, a number of federal and
state proposals to implement similar government control. While we cannot predict
whether the government will adopt any such legislative or regulatory proposals,
the announcement or adoption of such proposals could have a material adverse
effect on our business, results of operations, financial condition and cash
flow.
Dependence Upon Key Personnel and Collaborative Relationships. We rely and
will continue to rely on our key management and scientific staff. The loss of
key personnel or the failure to recruit necessary additional qualified personnel
could have a material adverse effect on our 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 our activities. There is no assurance that
we will be able to continue to attract and retain the qualified personnel
necessary for the development of our business. We will need to recruit new
experts in the areas of clinical testing, manufacturing, marketing and
distribution and develop additional expertise in our existing personnel. If we
do not succeed in recruiting such personnel or developing such expertise, our
business could suffer significantly.
We have 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. The study is now in Phase
II testing. We also have clinical trial arrangements with:
- University of California, San Francisco
- San Francisco General Hospital
- University of Colorado Health Sciences Center
- Massachusetts General Hospital
- University of California, Los Angeles
11
<PAGE> 13
- ViRx, Inc.
- Aids Research Community Consortium
Covering our patient-specific configuration of its AIDS gene therapy, these
trials are also now in Phase II testing. The termination of these relationships
would hinder the progress of these clinical trials.
In addition, we have several clinical trial arrangements under our
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. If any of these relationships are terminated, the clinical trials
might not be completed and the results might not be evaluated.
We rely 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. These scientific
collaborators are not our employees. As a result, we have limited control over
their activities and can expect that only limited amounts of their time will be
dedicated to our activities. Our agreements with these collaborators, as well as
those with our scientific consultants, provide that any rights we obtain as a
result of their research efforts 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 us. For these reasons, there can be no assurance that
inventions or processes discovered by our scientific collaborators or
consultants will become our property.
Shares Eligible For Future Sale; Dilution. Substantially all the
outstanding shares of Cell Genesys Common Stock are eligible for sale in the
public market. The following factors, as well as others such as those identified
above under "-- Volatility of Stock Price," could cause a decline in the market
price of our Common Stock:
- issuance of Common Stock upon conversion of the Series B Preferred Stock
- issuance of Common Stock upon exercise of warrants
- future sales of such Common Stock or other shares of Common Stock by
existing stockholders
- the perception that such issuances or sales could occur
- severe fluctuations in price and volume in the stock market in general
which are unrelated to our operating performance
Conversion of the Series B Preferred Stock or exercise of the warrants
would result in issuance of additional shares of Common Stock. This would cause
dilution of existing investors. The number of shares of Common Stock issued, and
therefore the amount of dilution of existing investors, would increase as a
result of either (i) an event triggering the antidilution rights of any
outstanding shares of Series B Preferred Stock, or (ii) a decline in the market
price of the Common Stock immediately prior to conversion of the Series B
Preferred Stock.
The holders of the Series B Preferred Stock may choose at any time to
convert their shares into shares of Common Stock. In such event, the number of
shares of Common Stock issued would be based on a conversion price of $11.02 per
share or, if lower, the average of certain specified trading prices during the
10 trading days preceding such date of conversion (the "Floating Conversion
Price"). The market price of the Common Stock has recently traded below $11.02
per share and consequently the conversion rate of the Series B Preferred Stock
is currently based on the market price. The greater in decline in the market
price, the greater the number of shares issuable upon conversion of the Series B
Preferred Stock.
Potential Redemption Obligation. If the holders of the Series B Preferred
Stock elected to convert their shares, we would not be required to issue more
than 5,624,000 shares of Common Stock (which is 19.99% of the outstanding shares
of Common Stock on November 14, 1997, or the "Share Limit"), unless we first
obtained stockholder approval or an exemption from the Nasdaq Stock Market from
the requirement to obtain stockholder approval. If we did not obtain stockholder
approval or the Nasdaq exemption, we would not be
12
<PAGE> 14
required to issue shares of Common Stock in excess of the Share Limit pursuant
to requests for conversion of the Series B Preferred Stock. However, in such
event, the holders of the Series B Preferred Stock could require us to redeem
certain shares of Series B Preferred Stock, and the amount of these redemption
obligations could become material if the Common Stock price declined below
approximately $3.70 per share. Since the Common Stock has recently traded at a
price below $3.70 per share and we have not obtained stockholder approval or the
Nasdaq exemption, we could become subject to a material redemption obligation if
the number of shares of Common Stock issuable upon conversion of the Series B
Preferred Stock exceeds the Share Limit. The amount of the redemption obligation
will increase as the Common Stock price decreases because we are limited in the
number of shares we can issue upon conversion. Consequently, volatility in the
price of the Common Stock could magnify the amount of any redemption obligation.
IMPACT OF THE YEAR 2000
The Company has undertaken various initiatives to ensure that its
information technology (IT) and non-IT systems are Year 2000 compliant. Based on
its assessment efforts to date, the Company has not identified any systems
currently in use which require replacement as a result of its Year 2000
initiatives. The Company currently anticipates that its Year 2000
identification, assessment, remediation, testing and contingency planning
efforts, which began in late 1997, will be complete by the end of the second
quarter of 1999. To date, no material costs have been incurred in the Company's
Year 2000 project plan and none are currently anticipated.
The following is a breakdown by phase of the progress the Company has made
to date on its Year 2000 project plan:
<TABLE>
<CAPTION>
PHASE TIME FRAME PERCENT COMPLETE
----- ----------- ----------------
<S> <C> <C>
Initial identification and assessment....................... Q4 -- 1998 90%
Remediation................................................. Q4 -- 1998 90%
Testing..................................................... Q1 -- 1999 70%
Contingency planning........................................ Q2 -- 1999 50%
</TABLE>
The Company is reliant upon its vendors and collaborative partners to
provide Year 2000 compliant systems sufficiently before December 31, 1999. The
Company has surveyed all of its major vendors, collaborative partners and other
third party interests to determine whether their systems are Year 2000
compliant. While no problems have yet come to our attention, we cannot guarantee
that all of the Company's key suppliers and partners will achieve Year 2000
compliance in a timely manner. The failure of the Company's vendors and partners
to successfully address the Year 2000 issue could have a material adverse effect
on the Company's ability to successfully address its Year 2000 issue. Such
failures could materially affect the Company's results of operations, liquidity
and financial condition. Due to the general uncertainty of the Year 2000
readiness of third parties, the Company is unable to determine at this time
whether the consequences of Year 2000 failures will have a material impact on
the Company's results of operations, liquidity and financial condition.
The costs of the Company's Year 2000 project plan, the dates on which the
Company believes it will complete each phase of its Year 2000 project plan and
the process for contingency planning are based on management's best estimates,
which are derived from assumptions regarding future events, including the
continued availability of certain resources, third party remediation plans and
other factors. There can be no assurance that these estimates and plans will
prove to be accurate, and actual results could differ materially from those
currently anticipated.
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.
13
<PAGE> 15
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 October 31, 1998, 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 initially registered 8,028,569 Shares for resale by the Selling
Stockholders
(No. 333-43277). The Company filed a registration statement on Form S-3 (No.
333-65077), of which this Prospectus forms a part, with respect to 4,689,784
additional shares of Common Stock which are issuable upon conversion of the
Series B Preferred Stock based on the Floating Conversion Price of the 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. Such number also does
not include such presently indeterminate number of shares of Common Stock as may
be issued to the Selling Stockholders holding Series B Preferred Stock in
connection with the payment of share dividends.
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"), or (ii) upon exercise of the Warrants which were assumed by Cell
Genesys in connection with the acquisition of Somatix. 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 SHARES OF COMMON
BENEFICIALLY STOCK BENEFICIALLY
SHARES OF OWNED OWNED AFTER
PREFERRED PRIOR TO SHARES OFFERING(1)(2)(4)
STOCK OFFERING BEING -------------------
SELLING STOCKHOLDER OWNED (1)(2) OFFERED(4) NUMBER PERCENT
------------------- --------- ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C>
WARRANT HOLDERS
Aberlyn Capital Management L.P.(5).... -- 9,625 9,625 -- --
Berman, Martin(5)..................... -- 6,620 6,620 -- --
Fawer, Mark(5)........................ -- 10,153 10,153 -- --
Financing For Science
International(5).................... -- 7,434 7,434 -- --
Merrill Lynch, Pierce, Fenner & Smith
Inc.(5)............................. -- 20,355 20,355 -- --
Rosenfeld, Steven(5).................. -- 14,515 14,515 -- --
Shenk, Susan(5)....................... -- 16,550 16,550 -- --
TBD Ltd.(5)........................... -- 33,101 33,101 -- --
----- ---------- ---------- ----- -----
Subtotal............................ -- 118,353 118,353 -- --
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
SHARES SHARES OF COMMON
BENEFICIALLY STOCK BENEFICIALLY
SHARES OF OWNED OWNED AFTER
PREFERRED PRIOR TO SHARES OFFERING(1)(2)(4)
STOCK OFFERING BEING -------------------
SELLING STOCKHOLDER OWNED (1)(2) OFFERED(4) NUMBER PERCENT
------------------- --------- ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C>
SERIES B PREFERRED STOCKHOLDERS
AG Super Fund International Partners,
L.P.(6)............................. 25 157,500 157,500 -- --
Colonial Penn Life Insurance
Company(6).......................... 50 315,000 315,000 -- --
GAM Arbitrage Investments, Inc.(6).... 25 157,500 157,500 -- --
Halifax Fund, L.P.(6)(7).............. 500 3,150,000 3,150,000 -- --
Heracles Fund(6)...................... 175 1,102,500 1,102,500 -- --
Leonardo, L.P.(6)(8).................. 365 2,299,500 2,299,500 -- --
Nelson Partners(6)(7)................. 247 1,556,100 1,556,100 -- --
Olympus Securities, Ltd.(6)(9)........ 303 1,908,900 1,908,900 -- --
Ramius Fund, Ltd.(6)(8)............... 85 535,500 535,500 -- --
Raphael, L.P.(6)(8)................... 50 315,000 315,000 -- --
Themis Partners L.P.(6)............... 175 1,102,500 1,102,500 -- --
----- ---------- ---------- ----- -----
Subtotal............................ 2,000 12,600,000 12,600,000 -- --
----- ---------- ---------- ----- -----
Total....................... 2,000 12,718,353 12,718,353 --
===== ========== ========== ===== =====
</TABLE>
- ---------------
(1) Based upon 28,468,745 shares of Common Stock outstanding as of October 31,
1998. Except as otherwise noted herein, the number and percentage of shares
beneficially owned is determined in accordance with Rule 13d-3 of 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 September 30, 1998, of all shares of Series B Preferred Stock calculated
using an assumed conversion price of $2.50. Pursuant to a Registration
Statement on Form S-3 filed on December 24, 1997, the Company registered
8,028,569 shares of which it is allocating 7,910,216 shares to be issuable
to holders of Series B Preferred Stock upon conversion thereof. Of the
12,600,000 shares of Common Stock listed as being offered by the Series B
Preferred Stockholders, this registration statement registers an aggregate
of 4,689,784 additional shares of Common Stock on behalf of the holders of
Series B Preferred Stock which have not previously been registered. Pursuant
to the terms of the Registration Rights Agreement dated November 14, 1997
(the "Registration Rights Agreement"), the Company is required to register
for resale that number of shares of Common Stock which are equal to at least
150% of the number of shares of Common Stock issuable upon conversion of the
outstanding number of shares of Series B Preferred Stock (the "Minimum
Registrable Shares"), which is equal to the product of (i) 150% and (ii) the
quotient obtained by dividing (x) the sum of the aggregate principal amount
of the Series B Preferred Stock ($20,000,000) and the stated annual accrual
of five percent of such principal amount ($1,000,000) by (y) the conversion
price per share assumed for purposes of this registration statement to be
$2.50. 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
15
<PAGE> 17
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.
(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, such number of
shares (and therefore the number of Shares offered hereby) cannot be
determined at this time.
(4) Assumes the sale of all of the Shares beneficially owned by the Selling
Stockholders.
(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 (i) the Fixed Conversion Price (as defined
pursuant to the provisions of the Series B Preferred Stock), and (ii) 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, 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 own
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 Approval or Exemption for Excess Share
Limit Issuances, 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 the Share Limit (i.e.,
5,624,000 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. The number of shares being offered hereby assumes the Company
is entitled to issue shares in excess of the Share Limit. See footnote 4
for greater detail. For a complete description of the rights, preferences
and restrictions of the Series B Preferred Stock, see "Description of
Capital Stock."
(7) The Palladin Group, L.P. is the investment manager of Halifax Fund, L.P. and
consequently has voting control and investment discretion. The Palladin
Group L.P. disclaims beneficial ownership of the Shares held by Halifax
Fund, L.P.
(8) Angelo, Gordon & Co., L.P. is a general partner of Leonardo, L.P., a general
partner of Raphael, L.P., a general partner of AG Super Fund International
Partners, L.P., the Investment Advisor of GAM Arbitrage Investments, Inc.,
the Investment Advisor of Ramius Fund, Ltd., (collectively, the "Angelo
Gordon Entities") and consequently has voting control and investment
discretion over securities held by Angelo Gordon Entities. The ownership for
each of the Angelo Gordon Entities does not include the ownership
information for the other Angelo Gordon Entities.
(9) 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 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.
16
<PAGE> 18
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; and (e)
in privately negotiated transactions. 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 compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
17
<PAGE> 19
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 September 30,
1998, there were approximately 28,468,745 shares of Common Stock outstanding
held of record by approximately 1,062 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. The holders of Series B Preferred Stock are entitled to receive
dividends in kind in preference to the Common Stock at a rate of $500 per share
per annum, and such amounts are included in the balance of Series B Preferred
Stock subject to conversion into Common Stock. In the event of a liquidation,
dissolution or winding up of the
18
<PAGE> 20
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 dividends in kind per share. 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 shares of Series B Preferred Stock are convertible into shares of
Common Stock of the Company based on a conversion price of $11.02 per share or,
if lower, the Floating Conversion Price; 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 owning more than 4.9% of the then outstanding capital
stock of the Company absent express waiver by such holder. In addition, the
Company is not obligated to issue more shares of Common Stock upon conversion in
excess of the Share Limit (i.e., 5,624,000 shares) absent Approval or Exemption
for Excess Share Limit Issuances. 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, enumerated in the Securities Purchase
Agreement, 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 at the
same original issue price up to 50% of the number of shares of Series B
Preferred Stock held during the period beginning one year from and ending four
years following the date of original issuance, and (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. The holders of the Series B Preferred Stock are also entitled
to a right to require the Company to (i) redeem 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 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, a delisting of the Company's Common Stock, or the notice to any holder by
the Company of an intention not to comply with a proper request for conversion
of Series B Preferred Stock into Common Stock, and (ii) redeem such number of
shares of Series B Preferred Stock for which the Company is unable to issue
Common Stock registered for resale under a registration statement pursuant to a
request for conversion because the Company does not have a sufficient number of
shares of authorized Common Stock, is prohibited under the rules of the Nasdaq
Stock Market from issuing shares in excess of the Share Limit, or fails to have
a sufficient number of shares of Common Stock registered for resale under an
effective registration statement. The redemption price for each share of Series
B Preferred Stock is the greater of (i) the sum of (x) $12,000 plus (y) the
product of $500 and the quotient of elapsed days from issuance divided by 365
(the "Dividend-in-kind Amount") and (ii) the product of the (x) closing bid
price on the conversion date or on the date immediately preceding certain events
of redemption, as applicable, and (y) the Conversion Rate (the "Redemption Price
Formula"). The "Conversion Rate" for purposes of redemption is a formula based
on the quotient of (i) the sum of the Dividend-in-kind Amount and $10,000, and
(ii) the Floating Conversion Price. In the event the Company does not obtain
Approval or Exemption for Excess Share Limit Issuances, the Company would be
obligated to redeem that number of shares of Preferred Stock for which holders
requested conversion of shares of Common Stock in excess of the Share Limit, and
such number of redeemable shares would increase by any decrease in the price of
the Company's Common Stock below approximately $3.70 per share. Until such time
as the Company obtains Approval or Exemption for Excess Share Limit Issuances,
the Company may become subject to the foregoing redemption obligations, and the
amount of such obligation could become material as a result of a decline in the
Company's Common Stock below approximately $3.70 per share. Since the
19
<PAGE> 21
Redemption Price Formula is based on the closing bid price of the Common Stock
on the conversion date or the date immediately preceding the redemption date, as
applicable, volatility in the price of the Company's Common Stock could magnify
the amount of any redemption obligation, and such amount could be material as a
result of such volatility. The Company may also be subject to an obligation to
pay the holders of Series B Preferred Stock certain monetary penalties as a
result of certain of the foregoing described events.
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. See "Risk Factors -- Shares
Eligible for Future Sale; Dilution." 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
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 under the Registration Rights Agreement.
WARRANTS
As of September 30, 1998, 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) 36,023 shares of Common Stock at $3.01 per share, with an
expiration date of February 28, 1999; (ii) 9,000 shares of Common Stock at $5.04
per share, with an expiration date of February 28, 1999; (iii) 56,271 shares of
Common Stock at $0.03 per share, with an expiration date of November 23, 1999;
(iv) 4,812 shares of Common Stock at $18.18 per share, with an expiration date
of May 24, 1999; and (v) 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. The Shares issuable upon exercise of the Warrants
listed in the table under "Selling Stockholders" above 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 the Warrants 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 for the year ended December 31, 1997, 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.
20
<PAGE> 22
- ------------------------------------------------------
- ------------------------------------------------------
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........................... 4
Risk Factors.......................... 5
Use of Proceeds....................... 13
Selling Stockholders.................. 13
Plan of Distribution.................. 17
Description of Capital Stock.......... 18
Legal Matters......................... 20
Experts............................... 20
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
CELL GENESYS, INC.
12,718,353 SHARES
OF
COMMON STOCK
------------------------
PROSPECTUS
------------------------
NOVEMBER , 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 23
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........................................ $ 3,761
NASDAQ National Market listing fee.......................... 17,500
Legal fees and expenses..................................... 15,000
Accounting fees and expenses................................ 5,000
Miscellaneous expenses...................................... 3,500
-------
Total............................................. $44,761
=======
</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> 24
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.
<TABLE>
<S> <C>
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) 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.
10.5(3) 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-5).
</TABLE>
- ---------------
(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 Registration Statement on Form
S-4, filed with the Commission on April 30, 1997.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-3 (No. 333-43277) filed with the Commission on December 24, 1997.
II-2
<PAGE> 25
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> 26
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> 27
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 Amendment No. 2 to
the 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 November 1998.
CELL GENESYS, INC.
By: /s/ MATTHEW J. PFEFFER
------------------------------------
Matthew J. Pfeffer,
Chief Financial Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEPHEN A. SHERWIN, M.D.* Chairman of the Board, November 23, 1998
- ----------------------------------------------------- President and
Stephen A. Sherwin, M.D. Chief Executive Officer
(Principal Executive
Officer)
/s/ MATTHEW J. PFEFFER Chief Financial Officer November 23, 1998
- ----------------------------------------------------- (Principal Financial and
Matthew J. Pfeffer Accounting Officer)
/s/ DAVID W. CARTER* Director November 23, 1998
- -----------------------------------------------------
David W. Carter
/s/ JAMES M. GOWER* Director November 23, 1998
- -----------------------------------------------------
James M. Gower
/s/ RAJU S. KUCHERLAPATI, PH.D.* Director November 23, 1998
- -----------------------------------------------------
Raju S. Kucherlapati, Ph.D.
/s/ JOSEPH E. MAROUN* Director November 23, 1998
- -----------------------------------------------------
Joseph E. Maroun
/s/ JOHN T. POTTS, JR., M.D.* Director November 23, 1998
- -----------------------------------------------------
John T. Potts, Jr., M.D.
</TABLE>
II-5
<PAGE> 28
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ EUGENE L. STEP* Director November 23, 1998
- -----------------------------------------------------
Eugene L. Step
/s/ INDER M. VERMA, PH.D.* Director November 23, 1998
- -----------------------------------------------------
Inder M. Verma, Ph.D.
*By: /s/ MATTHEW J. PFEFFER
----------------------------------------
Matthew J. Pfeffer
Attorney-in-Fact
</TABLE>
II-6
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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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) 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.
10.5(3) 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-5).
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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 Registration Statement on Form
S-4, filed with the Commission on April 30, 1997.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-3 (No. 333-43277) filed with the Commission on December 24, 1997.
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EXHIBIT 5.1
November 23, 1998
Cell Genesys, Inc.
342 Lakeside Drive
Foster City, CA 94404
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined Amendment No. 2 to 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 4,689,784 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 upon exercise of the Warrants, as applicable, as
referenced to 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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Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement (Form S-3) and related Prospectus of Cell
Genesys, Inc. for the registration of 4,689,784 shares of its common stock and
to the incorporation by reference therein of our report dated January 28, 1998,
with respect to the consolidated financial statements of Cell Genesys, Inc. in
its Annual Report (Form 10-K) for the year ended December 31, 1997, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
November 23, 1998
