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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CELL GENESYS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
DELAWARE 94-3061375
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
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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 PER SHARE(1) OFFERING PRICE(1) FEE(2)
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Common Stock, par value $0.001 per
share.............................. 2,589,784 $3.0625 $7,931,214 $2,340
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(1) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act and computed pursuant to Rule 457(c)
under the Securities Act based upon the average of the bid and ask prices of
the Common Stock on September 28, 1998, as reported on the Nasdaq National
Market.
(2) This Registration Statement is being filed to register 2,589,784 additional
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). Accordingly, pursuant to Rule 429(b)
the prospectus filed herewith includes the shares which were previously
registered under 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 SEPTEMBER 30, 1998)
10,618,353 SHARES
CELL GENESYS, INC.
COMMON STOCK
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This Prospectus relates to the public offering, which is not being
underwritten, of up to 10,618,353 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 10,500,000 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 (the "Series B
Preferred Stock") at the election of the registered holders of such Series B
Preferred Stock, or (3) in accordance with Rule 416 under the Securities Act of
1933, as amended (the "Securities Act"), such presently indeterminate number of
additional Shares as may be issuable upon 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, 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 September 29, 1998 the last sale price of the Company's
Common Stock was $3.41 per share.
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THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 5
FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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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.
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THE DATE OF THIS PROSPECTUS IS OCTOBER , 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048 and Chicago Regional Office, Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained by mail at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the site is
http://www.sec.gov. The Common Stock of the Company is listed on the Nasdaq
National Market, and such reports, proxy and information statements and other
information concerning the Company may be inspected at the offices of Nasdaq
Operations, 1735 K Street, NW, Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. The Registration
Statement may be inspected at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning any document filed as an exhibit are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
0-19986) pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998;
(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, as supplemented by a
Supplement to the Joint Proxy Statement dated April 30, 1997 as filed
on May 13, 1997 and Form 8-A filed with the Commission on March 24,
1992 and August 8, 1995; and
(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 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.
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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 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. The Company will require substantial
additional funds to continue existing and planned preclinical studies and
clinical trials and other research and development activities, and to establish
manufacturing and marketing capabilities for any products it may develop. The
Company expects that its existing capital resources, together with payments to
be received under existing collaborative agreements and amounts available under
existing equipment financing facilities, will enable the Company to maintain the
Company's operations at least through 1999. Beyond such time, the Company will
need to raise substantial additional capital to fund its operations.
The Company's future capital requirements will depend on, and could
increase as a result of, many factors, including, but not limited to, the
continuation of the collaboration with Hoechst Marion Roussel, continued
scientific progress in its research and development programs, the magnitude of
such programs, the progress of preclinical and clinical testing, the time and
costs involved in obtaining regulatory approvals, the costs involved in
preparing, filing, prosecuting, maintaining, enforcing and defending patent
claims, competing technological and market developments, changes in
collaborative relationships, the terms of any additional collaborative
arrangements into which the Company may enter, the Company's ability to
establish research, development and commercialization arrangements pertaining to
products other than those covered by existing collaborative arrangements, the
cost of establishing manufacturing facilities, the cost of commercialization
activities, and the demand for the Company's products if and when approved.
There is no assurance that opportunities for in-licensing technologies or for
third party collaborations will continue to be available to the Company on
acceptable terms.
A major portion of the Company's operating revenues are derived from a
collaborative agreement with Hoechst Marion Roussel signed in October 1995.
Under the terms of the agreement, Hoechst Marion Roussel has the ability to
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. The Company's operating
results would be adversely affected should Hoechst Marion Roussel decide not to
continue funding under this arrangement.
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Cell Genesys expects to raise additional funds through additional equity or
debt financings, collaborative relationships, or otherwise. Because of these
long-term capital requirements, the Company may seek to access the public or
private equity markets whenever conditions are favorable, even if it does not
have an immediate need for additional capital at that time. There can be no
assurance that any such additional funding will be available to the Company, or,
if available, that it will be on acceptable terms. Because of the current
difficult environment for raising capital, the Company in September 1998
announced a restructuring to reduce expenses. If additional funds are raised by
issuing equity securities, further dilution to stockholders may result. If
adequate funds are not available, the Company may be required to delay, reduce
the scope of, or eliminate one or more of its research, development and clinical
activities or to seek to obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies, product candidates or products that the Company would
otherwise seek to develop or commercialize itself, any of which could have a
material adverse effect on the Company's business, results of operations,
financial condition or cash flow.
Early Stage of Development; No Developed or Approved Products. Cell
Genesys' potential gene therapy products are in research and development. No
revenues have been generated from the sale of any of such products, nor are any
such revenues expected for at least the next several years. The products
currently under development by Cell Genesys will require significant additional
research and development efforts, including extensive preclinical and clinical
testing and regulatory approval, prior to commercial use. There can be no
assurance that Cell Genesys' research and development efforts will be successful
or that any commercially successful products will ultimately be developed by
Cell Genesys. Even if developed, these products may not receive regulatory
approval or be successfully introduced and marketed at prices that would permit
Cell Genesys to operate profitably.
Operating Loss and Accumulated Deficit. Cell Genesys has incurred net
losses since its inception. At June 30, 1998, Cell Genesys' accumulated deficit
was approximately $195.6 million and incurred net losses of $16.0 million for
the six months ended June 30, 1998. Such losses have resulted principally from
expenses incurred in its research and development programs, and to a lesser
extent, from general and administrative expenses. In 1997, Cell Genesys incurred
losses of $123.5 million, including $78.8 million related to the acquisition of
Somatix and $22.5 million related to the Cross-License and Settlement Agreement
with GenPharm. The Company expects 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. Cell
Genesys expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial. There can be no assurance that the Company will
successfully develop, commercialize, manufacture or market its products or ever
achieve or sustain product revenues or profitability.
Technological Uncertainty. Gene therapy is a new technology, and existing
preclinical and clinical data on the safety and efficacy of gene therapy are
limited. Data relating to Cell Genesys' specific gene therapy approaches are
even more limited. The Company's T cell gene therapy for cancer, GVAX(TM) cancer
vaccine and AIDS gene therapy are currently being tested in Phase I/II and Phase
II human clinical trials to determine their safety and efficacy. None of the
other products or therapies under development are in human clinical trials. The
results of preclinical studies do not predict safety or efficacy in humans.
Possible side effects of gene therapy may be serious and life-threatening. There
can be no assurance that unacceptable side effects will not be discovered during
preclinical and clinical testing of Cell Genesys' potential products or
thereafter. There are many reasons that potential products that appear promising
at an early stage of research or development do not result in commercialization.
Although Cell Genesys is testing proposed products or therapies in human
clinical trials, there can be no assurance that Cell Genesys will be permitted
to undertake human clinical trials for any of its other products or that the
results of such testing will demonstrate safety or efficacy. Even if clinical
trials are successful, there is no assurance that Cell Genesys will obtain
regulatory approval for any indication, or that an approved product can be
produced in commercial quantities at reasonable cost, or be successfully
marketed.
Patents and Trade Secrets. The patent positions of pharmaceutical and
biotechnology firms, including Cell Genesys, are generally uncertain and involve
complex legal and factual questions. While Cell Genesys is prosecuting patent
applications, it cannot be certain whether any given application will result in
the issuance of
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a patent or, if any patent is issued, whether it will provide significant
proprietary protection or will be invalidated. Because patent applications in
the United States are confidential until patents are issued and publication of
discoveries in the scientific or patent literature tends to lag behind actual
discoveries by several months, Cell Genesys cannot be certain that it was the
first creator of inventions covered by pending patent applications or that it
was the first to file patent applications for such inventions.
The commercial success of the Company will also depend in part on not
infringing the patents or proprietary rights of others and not breaching
licenses granted to Cell Genesys. The Company will be required to obtain
licenses to certain third party technology and genes necessary to conduct its
business. Any failure by the Company to license at reasonable cost any
technology or genes required to commercialize its technologies or products may
have a material adverse effect on the Company's business, results of operations,
financial condition or cash flow.
Litigation, which could result in substantial cost to the Company, may also
be necessary to enforce any patents issued to Cell Genesys, or to determine the
scope and validity of other parties' proprietary rights. To determine the
priority of inventions, interference proceedings are frequently declared by the
United States Patent Office that could result in substantial costs to the
Company and may result in an adverse decision as to the priority of Cell
Genesys' inventions. Cell Genesys is currently involved in three separate
interference proceedings with regard to: (i) gene activation technology, (ii) ex
vivo gene therapy, and (iii) chimeric receptor technology. While the Company
believes its position in each interference proceeding is strong, the outcome of
each proceeding cannot be predicted, and an adverse result could have a material
adverse effect on the Company's intellectual property position and its business.
The Company may be involved in other interference proceedings in the future.
Cell Genesys believes that there will continue to be significant litigation in
the industry regarding patent and other intellectual property rights.
Cell Genesys also relies on unpatented trade secrets and improvements,
unpatented know-how and continuing technological innovation to develop and
maintain its competitive position. No assurance can be given that others will
not independently develop substantially equivalent proprietary information and
techniques, or otherwise gain access to the Company's trade secrets or disclose
such technology, or that the Company can meaningfully protect its rights to its
unpatented trade secrets.
Cell Genesys requires its employees and consultants to execute a
confidentiality agreement upon the commencement of an employment or consulting
relationship with it. These agreements provide that all confidential information
developed by or made known to an individual during the course of the employment
or consulting relationship generally must be kept confidential. In the case of
employees, the agreements provide that all inventions conceived by the
individual while employed by Cell Genesys, relating to its business are the
exclusive property of Cell Genesys. These agreements may not provide meaningful
protection for the Company's trade secrets in the event of unauthorized use or
disclosure of such information.
Competition. Competition in the field of gene therapy from other
biotechnology and pharmaceutical companies and from research and academic
institutions is intense and expected to increase. There are numerous competitors
working on products to treat each of the diseases for which Cell Genesys is
seeking to develop therapeutic products. Some competitors are pursuing a product
development strategy competitive with Cell Genesys, particularly with respect to
the Company's human monoclonal antibody program. Certain of these competitive
products are in substantially more advanced stages of product development and
clinical trials. The Company's competitors may develop technologies and products
that are more effective than those being developed by Cell Genesys, or that
would render the Company's technology and products less competitive or obsolete.
Many of these competitors have substantially greater financial resources and
larger research and development staffs than Cell Genesys. In addition, many of
these competitors may have significantly greater experience than Cell Genesys in
developing products, in undertaking preclinical testing and human clinical
trials of new pharmaceutical products, in obtaining United States Food and Drug
Administration (the "FDA") and other regulatory approvals of products, and in
manufacturing and marketing such products. Accordingly, Cell Genesys'
competitors may succeed in obtaining patent protection, receiving FDA approval
or commercializing products more rapidly than Cell Genesys. There can be no
assurance that the Company will be able to obtain certain biological materials
necessary to support its research, development
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or manufacturing of any of its planned therapies. If the Company is permitted to
commence commercial sales of products, it will also be competing with respect to
marketing capabilities and manufacturing efficiency, areas in which it has
limited or no experience. It is anticipated that the Company will build
additional clinical scale and commercial scale manufacturing facilities to the
extent that contract facilities are not available in order to commercialize its
products. It is also anticipated that the Company will secure funding for these
and other product development activities through its partners and future
potential partners. Cell Genesys also competes with universities and other
research institutions in the development of products, technologies and
processes. In many instances, Cell Genesys competes with other commercial
entities in acquiring products or technology from universities.
Cell Genesys expects that competition among products approved for sale will
be based, among other things, on product efficacy, safety, reliability,
availability, price, patent, position, and sales, marketing and distribution
capabilities. Cell Genesys' competitive positions also depend upon its ability
to attract and retain qualified personnel, obtain patent protection or otherwise
develop proprietary products or processes and secure sufficient capital
resources for the often substantial period between product conception and
commercial sales.
The levels of revenues and profitability of biotechnology and
pharmaceutical companies such as the Company may be affected by the continuing
efforts of governmental and third-party payers to contain or reduce the costs of
health care through various means. In the United States there have been, and
Cell Genesys expects that there will continue to be, a number of federal and
state proposals to control health care costs. Cell Genesys cannot predict the
effect health care reforms may have on its business, and no assurance can be
given that any such reforms will not have a material adverse effect on the
Company's business, results of operations, financial condition or cash flow. In
the United States and elsewhere, sales of therapeutic products are dependent in
part on the availability of reimbursements to the consumer from third party
payers, such as government and private insurance plans. If the Company succeeds
in bringing one or more products to the market, there can be no assurance that
these products will be considered cost effective and that reimbursement to the
consumer will be available or will be sufficient to allow the Company to sell
its products on a competitive basis.
Volatility of Stock Price. The market prices for securities of
biopharmaceutical and biotechnology companies (including Cell Genesys) have
historically been highly volatile, and the market has from time to time
experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. Factors such as fluctuations in
Cell Genesys' operating results, announcements of technological innovations or
new therapeutic products by Cell Genesys or its competitors, governmental
regulation, developments in patent or other proprietary rights, public concern
as to the safety of products developed by the Company or other biotechnology and
pharmaceutical companies, and general market conditions may have a significant
effect on the market price of the Cell Genesys' Common Stock.
Government Regulation. Regulation by governmental authorities in the United
States and foreign countries is a significant factor in the manufacture and
marketing of Cell Genesys' proposed products and its research and development
activities. All of Cell Genesys' products will require regulatory approval by
governmental agencies prior to commercialization. In particular, human
therapeutic products must undergo rigorous preclinical and clinical testing and
other premarket approval procedures by the FDA and similar authorities in
foreign countries. Since certain of Cell Genesys' potential products involve the
application of new technologies, regulatory approvals may take longer than for
products produced using more conventional methods. Various federal and, in some
cases, state statutes and regulations also govern or influence the
manufacturing, safety, labeling, storage, record keeping and marketing of such
products. The lengthy process of seeking these approvals, and the subsequent
compliance with applicable federal statutes and regulations, requires the
expenditure of substantial resources. Any failure by Cell Genesys or its
collaborators or licensees to obtain, or any delay in obtaining, regulatory
approvals could adversely affect the marketing of any products developed by Cell
Genesys, and its ability to receive product or royalty revenue.
In responding to a new drug application, or a product license application,
the FDA may grant marketing approvals, request additional information or further
research, or deny the application if it determines that the application does not
satisfy its regulatory approval criteria. Approvals may not be granted on a
timely basis, if
8
<PAGE> 10
at all, or if granted may not cover all the clinical indications for which Cell
Genesys is seeking approval or may contain significant limitations in the form
of warnings, precautions or contraindications with respect to conditions of use.
In addition to laws and regulations enforced by the FDA, Cell Genesys is
also subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other present and potential future federal,
state or local laws and regulations. Cell Genesys' research and development
involves the controlled use of hazardous materials, chemicals, viruses and
various radioactive compounds. Although Cell Genesys believes its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, Cell Genesys could be held liable for any damages
that result and any such liability could exceed the resources of the Company.
The manufacturing facilities of Cell Genesys are subject to licensing
requirements of the California Department of Health Services. While not subject
to license by the FDA, such facilities are subject to inspection by the FDA as
well as by the California Department of Health Services. A separate license from
the FDA is required for commercial manufacture of any product. Failure to
maintain such licenses or to meet the inspection criteria of the FDA and the
California Department of Health Services would result in disruption to the
manufacturing processes of the Company and would have a material adverse effect
on the Company's business, results of operations, financial condition and cash
flow.
For marketing outside the United States, Cell Genesys is subject to foreign
regulatory requirements governing human clinical trials and marketing approval
for drugs and devices. The requirements governing the conduct of clinical
trials, product licensing, pricing and reimbursement vary greatly from country
to country. Failure to comply with such regulatory requirements or obtain such
approvals could impair the Company's ability to develop these markets and have a
material adverse effect on the Company's business, results of operations,
financial condition or cash flow.
Commercialization; Lack of Marketing Experience. It is anticipated that the
Company will rely on sales and marketing expertise of potential corporate
partners for its initial products. Cell Genesys does not have any experience in
sales, marketing or distribution of biopharmaceutical products. The decision to
market future products directly or through corporate partners will be based on a
number of factors including market size and concentration, the size and
expertise of the partner's sales force in a particular market and the Company's
overall strategic objectives. Cell Genesys is currently engaged in various
stages of discussions with potential partners. There can be no assurance that
Cell Genesys will be able to establish such relationships, if at all, on
acceptable terms and conditions.
Product Liabilities and Insurance. Clinical trials or marketing of any of
Cell Genesys' potential products may expose the Company to liability claims
resulting from the use of such products. These claims might be made directly by
consumers, health care providers or by others selling such products. Cell
Genesys currently maintains product liability insurance with respect to its
clinical trials. There can be no assurance that the Company will be able to
maintain such insurance or, if maintained, that sufficient coverage can be
acquired at a reasonable cost. An inability to maintain insurance at acceptable
cost or at all could prevent or inhibit the clinical testing or
commercialization of products developed by the Company. A product liability
claim or recall could have a material adverse effect on the Company's business,
results of operations, financial condition and cash flow.
Hazardous Materials; Environmental Matters. Cell Genesys' research and
development activities involve the controlled use of hazardous materials,
chemicals, viruses and various radioactive compounds. Cell Genesys is subject to
federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of such materials and certain waste products.
Although Cell Genesys believes that its safety procedures for handling and
disposing of such materials comply with the standards prescribed by such laws
and regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident, the
Company could be held liable for any damages that result and any such liability
could exceed the resources of the Company. The Company may be required to incur
9
<PAGE> 11
significant costs to comply with environmental laws and regulations in the
future. The Company's operations, business or assets may be materially adversely
affected by current or future environmental laws or regulations.
Reimbursement. In both domestic and foreign markets, sales of the Company's
potential products will depend in part upon coverage and reimbursement from
third-party payers, including health care organizations, government agencies,
private health care insurers and other health care payers such as health
maintenance organizations, self-insured employee plans and the Blue Cross/Blue
Shield plans. There is considerable pressure to reduce the cost of drug
products. In particular, reimbursement from government agencies and insurers and
large health organizations may become more restricted in the future. Cell
Genesys' potential products represent a new mode of therapy and, while the
cost-benefit ratio of the products may be favorable, Cell Genesys expects that
the costs associated with the Company's products will be substantial. There can
be no assurance that the Company's proposed products, if successfully developed,
will be considered cost-effective by third-party payers, that insurance coverage
will be available or, if available, that such third-party payers' reimbursement
policies will not adversely affect the Company's ability to sell its products on
a profitable basis. In addition, there can be no assurance that insurance
coverage will be provided by such third-party payers at all or without
substantial delay or, if such coverage is provided, that the approved
reimbursement will provide sufficient funds to enable the Company to become
profitable.
Uncertainty of Pharmaceutical Pricing and Related Matters. The future
revenues and profitability of and availability of capital for biotechnology
companies may be materially adversely affected by the continuing efforts of
governmental and third-party payers to contain or reduce the costs of healthcare
through various means. For example, in certain foreign markets, pricing or
profitability of prescription pharmaceuticals is subject to government control.
In the United States, there have been, and Cell Genesys expects that there will
continue to be, a number of federal and state proposals to implement similar
government control. While Cell Genesys cannot predict whether any such
legislative or regulatory proposals will be adopted, the announcement or
adoption of such proposals could have a material adverse effect on the Company's
business, results of operations, financial condition and cash flow.
Dependence upon Key Personnel and Collaborative Relationships. Cell
Genesys' success is highly dependent on the retention of principal members of
management and scientific staff and the recruitment of additional qualified
personnel. The loss of key personnel or the failure to recruit necessary
additional qualified personnel could have a material adverse effect on the
Company's business, results of operations, financial condition or cash flow.
There is intense competition from other companies, research and academic
institutions and other organizations for qualified personnel in the areas of
Cell Genesys' activities. There is no assurance that the Company will be able to
continue to attract and retain the qualified personnel necessary for the
development of its business. These activities are expected to require the
addition of new personnel with expertise in the areas of clinical testing,
manufacturing, marketing and distribution and the development of additional
expertise by existing personnel. The failure to acquire such personnel or
develop such expertise could have a material adverse effect on the Company's
business, results of operations, financial condition and cash flow.
Cell Genesys has clinical trial arrangements with the National Institutes
of Allergy and Infectious Diseases covering the initial proof-of-principle study
for AIDS gene therapy being conducted in identical twin pairs now in Phase II
testing. Cell Genesys also has clinical trial arrangements with the University
of California, San Francisco, San Francisco General Hospital, the University of
Colorado Health Sciences Center, Massachusetts General Hospital, the University
of California, Los Angeles, ViRx, Inc. and the Aids Research Community
Consortium covering Cell Genesys' patient-specific configuration of its AIDS
gene therapy also now in Phase II testing. If these relationships were
terminated, progress of clinical testing would be adversely affected.
In addition, the Company has several clinical trial arrangements under its
GVAX(TM) program, including with The Johns Hopkins University covering a Phase I
clinical trial to treat prostate cancer patients and with the Dana Farber Cancer
Institute covering two Phase I clinical trials to treat lung cancer and melanoma
patients. In the event that any of these relationships are terminated, the
completion and evaluation of clinical trials could be adversely affected.
10
<PAGE> 12
In addition, the Company has several clinical trial arrangements under its
T cell gene therapy program for cancer, including with University of California,
San Francisco, Stanford University and PRN Research, Inc. In the event that any
of these relationships are terminated, the completion and evaluation of clinical
trials could be adversely affected.
The Company will depend, in part, on the continued availability of outside
scientific collaborators performing research. These relationships generally may
be terminated at any time by the collaborator, typically by giving 30 days'
notice. The Company's scientific collaborators are not employees of Cell
Genesys. As a result, the Company has limited control over their activities and
can expect that only limited amounts of their time will be dedicated to the
Company's activities. The Company's agreements with these collaborators, as well
as those with the Company's scientific consultants provide that any rights the
Company obtains as a result of the research efforts of these individuals will be
subject to the rights of the research institutions in such work. In addition,
some of these collaborators have consulting or other advisory arrangements with
other entities that may conflict with their obligations to the Company. For
these reasons, there can be no assurance that inventions or processes discovered
by the Company's scientific collaborators or consultants will become the
property of the Company.
Shares Eligible for Future Sale; Dilution. Substantially all of the
Company's shares are eligible for sale in the public market. The issuance of
Common Stock upon conversion of the Series B Preferred Stock and Convertible
Note and upon exercise of the Warrants, as well as future sales of such Common
Stock or of shares of Common Stock by existing stockholders, or the perception
that such sales could occur, could adversely affect the market price of the
Common Stock. Conversion of the Series B Preferred Stock and the Convertible
Note and exercise of the Warrants for shares of Common Stock could adversely
affect the market price of the Common Stock. In addition, investors could
experience substantial dilution upon conversion of the Series B Preferred Stock
into Common Stock 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 Company's Common Stock immediately prior to
conversion. Specifically, the shares of the 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, 100% of the average of certain specified
trading prices during the 10 trading days preceding such date of conversion (the
"Floating Conversion Price"). The market prices for securities of
biopharmaceutical and biotechnology companies (including Cell Genesys) have
historically been highly volatile, and the market has from time to time
experienced significant price and volume limitations that are unrelated to the
operating performance of particular companies. See "Volatility of Stock Price."
The market prices for securities generally has recently experienced severe
volatility and substantial downturns, and in such context the price of the
Company's Common Stock recently has declined substantially. Notwithstanding the
foregoing, the Company is not obligated to issue more shares of Common Stock
upon conversion in excess of 19.99% of the outstanding shares of Common Stock on
November 14, 1997 (i.e., 5,624,000 shares) (the "Share Limit") absent
stockholder approval or pursuant to the grant of an exemption by the Nasdaq
Stock Market under its rules and regulations from the requirement to obtain
stockholder approval for certain share issuances in excess of 20% of the
outstanding capital stock ("Approval or Exemption for Excess Share Limit
Issuances"). Until such time as the Company obtains Approval or Exemption for
Excess Share Limit Issuances, the Company would not be required to issue shares
of Common Stock in excess of the Share Limit pursuant to requests for conversion
of the Series B Preferred Stock, but in such event, may become subject to
certain redemption obligations, and the amount of such obligations could become
material as a result of a decline in the Company's Common Stock below
approximately $3.70 per share. See "Description of Capital Stock" for a
description of the redemption rights of the holders of Series B Preferred Stock.
Impact of the Year 2000. The Company is now in the final stages of a
comprehensive review of its information technology ("IT") and non-IT equipment
and systems to assess potential problems from the inability of such equipment
and systems to properly recognize the year 2000. To date, no material problems
have been found and steps have been taken to replace a limited number of older
systems that might be affected. It is anticipated that this evaluation will be
complete and affected equipment taken out of service by early 1999. The cost of
this program has not been and is not expected to be material. The Company is
also in the process of contacting key suppliers, collaborators and clinical
sites in an effort to assess whether the
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<PAGE> 13
Company may experience any significant exposure to year 2000 problems arising
out of its dependence on such third parties and/or the uninterrupted flow of
information or data therefrom. So far, no material problems have been identified
or are anticipated. This effort is also ongoing, but should also be completed in
early 1999.
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.
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 September 30, 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. The Company filed a registration statement on Form S-3, of which
this Prospectus forms a part, with respect to 2,589,784 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 which shares of Common Stock are, in
accordance with Rule 416 under the Securities Act, included in the Registration
Statement on Form S-3 of which this Prospectus forms a part. 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.
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<PAGE> 14
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 -- --
SERIES B PREFERRED STOCKHOLDERS
AG Super Fund International Partners,
L.P.(6).............................. 25 131,250 -- --
Colonial Penn Life Insurance
Company(6)........................... 50 262,500 -- --
GAM Arbitrage Investments, Inc.(6)..... 25 131,250 -- --
Halifax Fund, L.P.(6).................. 500 2,625,000 -- --
Heracles Fund(6)....................... 175 918,750 -- --
Leonardo, L.P.(6)...................... 365 1,916,250 -- --
Nelson Partners(6)(7).................. 247 1,296,750 -- --
Olympus Securities, Ltd.(6)(7)......... 303 1,590,750 -- --
Ramius Fund, Ltd.(6)................... 85 446,250 -- --
Raphael, L.P.(6)....................... 50 262,500 -- --
Themis Partners L.P.(6)................ 175 918,750 -- --
----- --------- ---------- ----- -----
Subtotal............................. 2,000 10,500,000 -- --
----- --------- ---------- ----- -----
Total........................ 2,000 10,618,353 --
===== ========= ========== ===== =====
</TABLE>
- ---------------
* Less than one percent.
(1) Based upon 28,468,745 shares of Common Stock outstanding as of September 30,
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 $ (representing the average of the
two lowest closing bid prices for the Common Stock during the 10 consecutive
trading days ending on , 1998), with respect to
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<PAGE> 15
the stated value of the Series B Preferred Stock plus an accretion of 5% per
year, based upon certain conversion price provisions of the Series B
Preferred Stock (which conversion price could fluctuate from time to time
based on changes in the market price of the Common Stock). This Prospectus
also covers the resale of such presently indeterminate number of additional
shares as may be issuable upon conversion of the Series B Preferred Stock
based upon fluctuations in the conversion price of the Series B Preferred
Stock and certain antidilution provisions. As described in footnote 6 below,
the actual number of shares of Common Stock issuable upon conversion of the
Series B Preferred Stock depends, subject to certain limitations, upon the
lower of (i) the Fixed Conversion Price (as defined pursuant to the
provisions of the Series B Preferred Stock) which is currently $11.02, and
(ii) the average of the two lowest closing bid prices during the ten
consecutive trading days immediately prior to conversion and may be less
than or greater than the number of shares shown as beneficially owned by the
Selling Stockholders or otherwise covered by this Prospectus.
(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) Pursuant to a Registration Statement on Form S-3 filed on December 24, 1998,
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 10,500,000 shares of Common Stock listed as being offered by
the Series B Preferred Stockholders, this registration statement registers
an aggregate of 2,589,784 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"). The total number of Shares being
offered by the holders of Series B Preferred Stock assumes the sale of all
of the Shares offered hereby and represents the Minimum Registrable Shares
based on an assumed conversion price of $3.00.
(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
14
<PAGE> 16
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) 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.
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.
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<PAGE> 17
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.
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 shares of Common Stock outstanding
held of record by approximately 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
16
<PAGE> 18
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 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, 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
17
<PAGE> 19
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 Floating Conversion
Price and the Conversion Rate. 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. 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.
18
<PAGE> 20
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.
19
<PAGE> 21
- ------------------------------------------------------
- ------------------------------------------------------
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....................... 12
Selling Stockholders.................. 12
Plan of Distribution.................. 15
Description of Capital Stock.......... 16
Legal Matters......................... 18
Experts............................... 19
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
CELL GENESYS, INC.
10,618,353 SHARES
OF
COMMON STOCK
------------------------
PROSPECTUS
------------------------
OCTOBER , 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 22
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........................................ $ 2,340
NASDAQ National Market listing fee.......................... 17,500
Legal fees and expenses..................................... 15,000
Accounting fees and expenses................................ 5,000
Miscellaneous expenses...................................... 3,500
-------
Total............................................. $43,340
=======
</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> 23
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) Convertible Note Purchase Agreement dated March 26, 1997
between the Company and GenPharm International, Inc.
10.5(2) Convertible Subordinated Promissory Note dated March 26,
1997 between the Company and GenPharm International, Inc.
10.6(3) Amended and Restated Agreement and Plan of Merger and
Reorganization dated as of January 12, 1997, as amended and
restated as of March 27, 1997, among Cell Genesys, Inc., S
Merger Corp. and Somatix Therapy Corporation.
10.7(4) 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 Annual Report on Form 10-K/A, as
amended, for the fiscal year ended December 31, 1996, filed with the
Commission on April 30, 1997.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-4, filed with the Commission on April 30, 1997.
(4) 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> 24
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> 25
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> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Foster City, California, on this 30th day of
September 1998.
CELL GENESYS, INC.
By: /s/ MATTHEW J. PFEFFER
------------------------------------
Matthew J. Pfeffer,
Vice President and Chief Financial
Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Stephen
A. Sherwin, M.D. and Matthew J. Pfeffer, jointly and severally, as
attorneys-in-fact, each with the power of substitution, for him or her in any
and all capacities, to sign any amendment to this Registration Statement and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact or
any of them, or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons 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, September 30, 1998
- ----------------------------------------------------- President and
Stephen A. Sherwin, M.D. Chief Executive Officer
(Principal Executive
Officer)
/s/ MATTHEW J. PFEFFER Chief Financial Officer September 30, 1998
- ----------------------------------------------------- (Principal Financial and
Matthew J. Pfeffer Accounting Officer)
/s/ DAVID W. CARTER Director September 30, 1998
- -----------------------------------------------------
David W. Carter
/s/ JAMES M. GOWER Director September 30, 1998
- -----------------------------------------------------
James M. Gower
/s/ RAJU S. KUCHERLAPATI, PH.D. Director September 30, 1998
- -----------------------------------------------------
Raju S. Kucherlapati, Ph.D.
/s/ JOSEPH E. MAROUN Director September 30, 1998
- -----------------------------------------------------
Joseph E. Maroun
</TABLE>
II-5
<PAGE> 27
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN T. POTTS, JR., M.D. Director September 30, 1998
- -----------------------------------------------------
John T. Potts, Jr., M.D.
/s/ EUGENE L. STEP Director September 30, 1998
- -----------------------------------------------------
Eugene L. Step
/s/ INDER M. VERMA, PH.D. Director September 30, 1998
- -----------------------------------------------------
Inder M. Verma, Ph.D.
</TABLE>
II-6
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<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) Convertible Note Purchase Agreement dated March 26, 1997
between the Company and GenPharm International, Inc.
10.5(2) Convertible Subordinated Promissory Note dated March 26,
1997 between the Company and GenPharm International, Inc.
10.6(3) Amended and Restated Agreement and Plan of Merger and
Reorganization dated as of January 12, 1997, as amended and
restated as of March 27, 1997, among Cell Genesys, Inc., S
Merger Corp. and Somatix Therapy Corporation.
10.7(4) 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 Annual Report on Form 10-K/A, as
amended, for the fiscal year ended December 31, 1996, filed with the
Commission on April 30, 1997.
(3) Incorporated by reference to the Company's Registration Statement on Form
S-4, filed with the Commission on April 30, 1997.
(4) Incorporated by reference to the Company's Registration Statement on Form
S-3 (No. 333-43277) filed with the Commission on December 24, 1997.
<PAGE> 1
EXHIBIT 5.1
September 30, 1998
Cell Genesys, Inc.
342 Lakeside Drive
Foster City, CA 94404
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about the date hereof (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of up to 2,589,784 shares of your Common
Stock (the "Shares"). All of the Shares are issued and outstanding and may be
offered for sale for the benefit of the selling stockholders named in the
Registration Statement. 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 are validly issued, fully paid and
non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
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<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Cell Genesys, Inc.
for the registration of 2,589,784 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
Palo Alto, California
September 30, 1998
