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FILING PURSUANT TO RULE 424(b)(2)
REGISTRATION STATEMENT NO. 333-90811
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 14, 2000)
765,550 SHARES
ISIS PHARMACEUTICALS, INC.
COMMON STOCK
------------------------
You should read this prospectus supplement and the accompanying prospectus
carefully before you invest. Both documents contain information you should
consider carefully before making your investment decision.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
PLAN OF DISTRIBUTION
Pursuant to this prospectus supplement, we are offering 765,550 shares of
our common stock to Ridgeway Investment Limited at a negotiated price of $10.45
per share. We will not pay any other compensation in conjunction with the sale
of our common stock. See "Plan of Distribution" beginning on page 12.
USE OF PROCEEDS
We will use the proceeds of this offering as described in the prospectus.
See "Use of Proceeds" beginning on page 11.
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MARKET FOR OUR COMMON STOCK
On May 9, 2000, the last reported sale price of our common stock on the
Nasdaq National Market was $10.75 per share. Our common stock is listed on the
Nasdaq National Market under the symbol "ISIP." The common stock sold under this
prospectus supplement will be listed on the Nasdaq National Market after we
notify the Nasdaq National Market that the shares have been issued.
As of May 8, 2000, we had 36,427,022 shares of common stock outstanding.
GENERAL
You should rely only on the information provided or incorporated by
reference in this prospectus supplement and the prospectus. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus supplement is accurate as of any
date other than the date on the front of these documents.
NEITHER THE SECURITIES EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus supplement is May 10, 2000.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Plan of Distribution...................................... S-1
Use of Proceeds........................................... S-1
Market for Our Common Stock............................... S-2
General................................................... S-2
PROSPECTUS
Prospectus Summary........................................ 3
The Company............................................... 3
The Offering.............................................. 4
Risk Factors.............................................. 5
Where You Can Get More Information........................ 10
Use of Proceeds........................................... 11
Dilution.................................................. 12
Plan of Distribution...................................... 12
Legal Matters............................................. 15
Experts................................................... 15
</TABLE>
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PROSPECTUS
4,000,000 Shares
ISIS PHARMACEUTICALS, INC.
Common Stock
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This prospectus will allow us to issue common stock over time. This means:
- we will provide a prospectus supplement each time we issue common stock;
- the prospectus supplement will inform you about the specific terms of
that offering and may also add, update or change information contained in
this document; and
- you should read this document and any prospectus supplement carefully
before you invest.
Isis entered into a common stock purchase agreement with Ridgeway
Investment Limited. Under the purchase agreement, Isis may issue and sell to
Ridgeway, from time to time, shares of its common stock for cash consideration
up to an aggregate of $120 million at a per share purchase price equal to the
average price of the common stock over a period of time less a discount from
4.5% to 5.875%.
Isis' common stock is traded on the Nasdaq National Market under the symbol
"ISIP". On March 7, 2000, the last reported sale price for our common stock on
the Nasdaq National Market was $28.1875 per share.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is March 14, 2000
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary.......................................... 3
The Company................................................. 3
The Offering................................................ 4
Risk Factors................................................ 5
Where You Can Get More Information.......................... 10
Use of Proceeds............................................. 11
Dilution.................................................... 12
Plan of Distribution........................................ 12
Legal Matters............................................... 15
Experts..................................................... 15
</TABLE>
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and consolidated financial statements appearing elsewhere
or incorporated by reference in this prospectus.
THE COMPANY
Isis was incorporated in California in January 1989 and in April 1991
changed its state of incorporation to Delaware. Our executive offices are
located at 2292 Faraday Avenue, Carlsbad, California 92008, and our telephone
number is (760) 931-9200. Isis' world wide web address is http://www.isip.com.
Information contained in our world wide web site should not be considered to be
part of this prospectus.
Isis Pharmaceuticals is a trademark of Isis. Vitravene(TM) is a trademark
of CIBA Vision Corporation. All other brand names or trademarks appearing in
this prospectus are the property of their respective holders.
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THE OFFERING
Common stock offered in this
prospectus...................... 4,000,000 shares
Common stock outstanding after
the offering.................... 35,944,839 shares(1)
Use of proceeds................. For research, drug discovery and development
activities, including preclinical and
clinical studies, production of compounds
for such studies and capital expenditures,
and other general corporate purposes. See
"Use of Proceeds."
Nasdaq National Market symbol... ISIP
- -------------------------
(1) Based on shares outstanding as of March 7, 2000. Does not include 9,588,423
shares of common stock issuable upon exercise of outstanding options or
1,015,000 shares of common stock issuable upon exercise of outstanding
warrants as of March 7, 2000.
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RISK FACTORS
Please consider the following risk factors carefully in addition to the
other information contained in this prospectus and in any other documents
incorporated by reference into this prospectus from our other SEC filings.
OUR BUSINESS WILL SUFFER IF WE FAIL TO OBTAIN REGULATORY APPROVAL FOR OUR
PRODUCTS.
We must conduct time-consuming, extensive and costly clinical trials, in
compliance with U.S. Food and Drug Administration regulations, to show the
safety and efficacy of each of our drug candidates, as well as the optimum
dosage for each, before the FDA can approve a drug candidate for sale. We cannot
guarantee that we will be able to obtain necessary regulatory approvals on a
timely basis, if at all, for any of our products under development. Delays in
receiving these approvals, failure by us or our partners to receive these
approvals at all or failure to comply with existing or future regulatory
requirements could have a material adverse effect on our business, financial
condition and results of operations.
While limited trials of our products have to date produced favorable
results, significant additional trials may be required, and we may not be able
to demonstrate that our drug candidates are safe or effective. We have only
introduced one commercial product, Vitravene. We cannot guarantee that any of
our other product candidates will obtain required government approvals or that
we can successfully commercialize any products. We expect to have ongoing
discussions with the FDA and foreign regulatory agencies with respect to all of
our drugs in clinical development.
OUR BUSINESS WILL SUFFER IF OUR PRODUCTS ARE NOT USED BY DOCTORS TO TREAT
PATIENTS.
We cannot guarantee that any of our products in development, if approved
for marketing, will be used by doctors to treat patients. We currently have one
product, Vitravene, a treatment for CMV retinitis in AIDS patients, which
addresses a small commercial market with significant competition. We delivered
our first commercial shipment of Vitravene to our partner CIBA Vision in 1998,
earning product revenue of $560,000.
The degree of market acceptance for any of our products depends upon a
number of factors, including:
- the receipt and scope of regulatory approvals,
- the establishment and demonstration in the medical and patient community
of the clinical efficacy and safety of our product candidates and their
potential advantages over competitive products, and
- reimbursement policies of government and third-party payors.
In addition, we cannot guarantee that physicians, patients, patient
advocates, payors or the medical community in general will accept and use any
products that we may develop.
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OUR BUSINESS WILL SUFFER IF ANY OF OUR COLLABORATIVE PARTNERS FAIL TO DEVELOP,
FUND OR SELL ANY OF OUR PRODUCTS UNDER DEVELOPMENT.
If any collaborative partner fails to develop or sell any product in which
we have rights, our business may be negatively affected. While we believe that
our collaborative partners will have sufficient motivation to continue their
funding, development and commercialization activities, we cannot be sure that
any of these collaborations will be continued or result in commercialized
products. The failure of a corporate partner to continue funding any particular
program could delay or stop the development or commercialization of any products
resulting from such program.
Collaborative partners may be pursuing other technologies or developing
other drug candidates either on their own or in collaboration with others,
including our competitors, to develop treatments for the same diseases targeted
by our own collaborative programs.
We also may wish to rely on additional collaborative arrangements to
develop and commercialize our products in the future. However, we may not be
able to negotiate acceptable collaborative arrangements in the future, and, even
if successfully negotiated, the collaborative arrangements themselves may not be
successful.
OUR BUSINESS COULD SUFFER IF THE RESULTS OF FURTHER CLINICAL TESTING INDICATE
THAT ANY OF OUR PRODUCTS UNDER DEVELOPMENT ARE NOT SUITABLE FOR COMMERCIAL USE.
Drug discovery and development involves inherent risks, including the risk
that molecular targets prove unsuccessful and the risk that compounds that
demonstrate attractive activity in preclinical studies do not demonstrate
similar activity in human beings or have undesirable side effects. Most of our
resources are dedicated to applying molecular biology and medicinal chemistry to
the discovery and development of drug candidates based upon antisense
technology, a novel drug discovery tool in designing drugs that work at the
genetic level to block the production of disease-causing proteins.
WE HAVE INCURRED LOSSES AND OUR BUSINESS WILL SUFFER IF WE FAIL TO ACHIEVE
PROFITABILITY IN THE FUTURE.
Because of the nature of the business of drug discovery and development,
our expenses have exceeded our revenues since Isis was founded in January 1989.
As of December 31, 1999, our accumulated losses were approximately $257 million.
Most of the losses have resulted from costs incurred in connection with our
research and development programs and from general and administrative costs
associated with our growth and operations. These costs have exceeded our
revenues, most of which have come from collaborative arrangements, interest
income and research grants. Our current product revenues are derived solely from
sales of Vitravene. This product has limited sales potential relative to most
pharmaceutical products. We expect to incur additional operating losses over the
next several years and we expect losses to increase as our preclinical testing
and clinical trial efforts continue to expand. We cannot guarantee that we will
successfully develop, receive regulatory approval for, commercialize,
manufacture, market or sell any additional products, or achieve or sustain
future profitability.
OUR BUSINESS WILL SUFFER IF WE FAIL TO OBTAIN TIMELY FUNDING.
Based on our current operating plan, we believe that our available cash and
existing sources of revenue and credit, together with the proceeds of this
offering and interest
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earned thereon, will be adequate to satisfy our capital needs until at least the
end of 2000. We expect that we will need substantial additional funding in the
future. Our future capital requirements will depend on many factors, such as the
following:
- continued scientific progress in our research, drug discovery and
development programs;
- the size of these programs and progress with preclinical and clinical
trials;
- the time and costs involved in obtaining regulatory approvals;
- the market acceptance of Vitravene;
- the costs involved in filing, prosecuting and enforcing patent claims;
- competing technological and market developments, including the
introduction of new therapies that address our markets; and
- changes in existing collaborative relationships and our ability to
establish and maintain additional collaborative arrangements.
If we are unable to raise the total amount of proceeds covered by this
prospectus, we will need to raise additional funds to finance our research and
development and other operating activities. If we find that we do not have
enough money, additional funds will need to be raised, including through public
or private financing. Additional financing may not be available, or, if
available, may not be on acceptable terms. If additional funds are raised by
issuing equity securities, the shares of existing stockholders will be subject
to further dilution and share prices may decline. If adequate funds are not
available, we may be required to cut back on one or more of our research, drug
discovery or development programs or obtain funds through arrangements with
collaborative partners or others. These arrangements may require us to give up
rights to certain of our technologies, product candidates or products.
OUR BUSINESS WILL SUFFER IF WE CANNOT MANUFACTURE OUR PRODUCTS OR HAVE A THIRD
PARTY MANUFACTURE OUR PRODUCTS AT LOW COSTS SO AS TO ENABLE US TO CHARGE
COMPETITIVE PRICES TO BUYERS.
To establish additional commercial manufacturing capability on a large
scale, we must improve our manufacturing processes and reduce our product costs.
The manufacture of sufficient quantities of new drugs is typically a
time-consuming and complex process. Pharmaceutical products based on chemically
modified oligonucleotides have never been manufactured on a large commercial
scale. There are a limited number of suppliers for certain capital equipment and
raw materials that we use to manufacture our drugs, and some of these suppliers
will need to increase their scale of production to meet our projected needs for
commercial manufacturing. We may not be able to manufacture at a cost or in
quantities necessary to make commercially successful products.
In 1998, we entered into an antisense oligonucleotide manufacturing
collaboration with Avecia Life Science Molecules of Manchester, England,
pursuant to which Avecia LSM will supply a portion of our requirements of drugs
for clinical trials. As of the date of this prospectus, we have not received any
supply of drugs under this arrangement, and we cannot guarantee that Avecia LSM
will prove to be an acceptable alternative supplier.
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OUR BUSINESS WILL SUFFER IF WE FAIL TO COMPETE EFFECTIVELY WITH OUR COMPETITORS.
Our competitors are engaged in all areas of drug discovery in the United
States and other countries, are numerous, and include, among others, major
pharmaceutical and chemical companies, specialized biopharmaceutical firms,
universities and other research institutions. Our competitors may succeed in
developing other new therapeutic drug candidates that are more effective than
any drug candidates that we have been developing. These competitive developments
could make our technology and products obsolete or non-competitive before we
have had enough time to recover our research, development or commercialization
expenses.
Many of our competitors have substantially greater financial, technical and
human resources than we do. In addition, many of these competitors have
significantly greater experience than we do in conducting preclinical testing
and human clinical trials of new pharmaceutical products and in obtaining FDA
and other regulatory approvals of products for use in health care. Accordingly,
our competitors may succeed in obtaining regulatory approval for products
earlier than we do. We will also compete with respect to manufacturing
efficiency and marketing capabilities, areas in which we have limited or no
experience.
OUR BUSINESS WILL SUFFER IF WE ARE UNABLE TO PROTECT OUR PATENTS OR OUR
PROPRIETARY RIGHTS.
Our success depends to a significant degree upon our ability to develop
proprietary products. However, we cannot assure you that patents will be granted
on any of our patent applications in the United States or in other countries. We
also cannot assure you that the scope of any of our issued patents will be
sufficiently broad to offer meaningful protection. In addition, our issued
patents or patents licensed to us could potentially be successfully challenged,
invalidated or circumvented so that our patent rights would not create an
effective competitive barrier.
INTELLECTUAL PROPERTY LITIGATION COULD HARM OUR BUSINESS.
To date, we have not experienced any patent or other intellectual property
litigation. However, we cannot guarantee that we will not have to defend our
intellectual property rights in the future. In the event of an intellectual
property dispute, we may be forced to litigate or otherwise defend our
intellectual property assets. Such disputes could involve litigation or
proceedings declared by the U.S. Patent and Trademark Office or the
International Trade Commission. Intellectual property litigation can be
extremely expensive, and such expense, as well as the consequences should we not
prevail, could seriously harm our business.
If a third party claimed an intellectual property right to technology we
use, we might be forced to discontinue an important product or product line,
alter our products and processes, pay license fees or cease certain activities.
Although we might under those circumstances attempt to obtain a license to such
intellectual property, we may not be able to do so on favorable terms, if at
all.
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THE LOSS OF KEY PERSONNEL, OR THE INABILITY TO ATTRACT AND RETAIN HIGHLY SKILLED
PERSONNEL, COULD ADVERSELY AFFECT OUR BUSINESS.
We are dependent on the principal members of our management and scientific
staff. We do not have employment agreements with any of our management. The loss
of our management and key scientific employees might slow the achievement of
important research and development goals. It is also critical to our success to
recruit and retain qualified scientific personnel to perform research and
development work. Although we believe we will be successful in attracting and
retaining skilled and experienced scientific personnel, we may not be able to do
so on acceptable terms, because of stiff competition for experienced scientists
among many pharmaceutical and health care companies, universities and non-profit
research institutions.
OUR STOCK PRICE MAY CONTINUE TO BE HIGHLY VOLATILE.
The market price of our common stock, like that of the securities of many
other biopharmaceutical companies, has been and is likely to continue to be
highly volatile. During the twelve months preceding the date of this prospectus,
the market price of our common stock has ranged from $4 to $39. The market price
can be affected by many factors, including, for example, fluctuation in our
operating results, announcements of technological innovations or new drug
products being developed by us or our competitors, governmental regulation,
regulatory approval, developments in patent or other proprietary rights, public
concern regarding the safety of our drugs and general market conditions.
PROVISIONS IN OUR CERTIFICATE OF INCORPORATION AND DELAWARE LAW MAY PREVENT
STOCKHOLDERS FROM RECEIVING A PREMIUM FOR THEIR SHARES.
Our certificate of incorporation provides for classified terms for the
members of the board of directors. Our certificate also includes a provision
that requires at least 66 2/3% of our voting stockholders to approve a merger or
certain other business transactions with, or proposed by, 15% or more of our
voting stockholders, except in cases where certain directors approve the
transaction or certain minimum price criteria and other procedural requirements
are met.
Our certificate of incorporation also requires that any action required or
permitted to be taken by our stockholders must be taken at a duly called annual
or special meeting of stockholders and may not be taken by written consent. In
addition, special meetings of our stockholders may be called only by the board
of directors, the chairman of the board or the president, or by any holder of
10% or more of our outstanding common stock. These provisions may discourage
certain types of transactions in which our stockholders might otherwise receive
a premium for their shares over then current market prices, and may limit the
ability of our stockholders to approve transactions that they think may be in
their best interests. In addition, the board of directors has the authority to
fix the rights and preferences of and issue shares of preferred stock, which may
have the effect of delaying or preventing a change in control of Isis without
action by the stockholders.
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WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, D.C., New York, NY and Chicago, IL. You can request copies
of these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the public reference rooms. Our SEC filings are also available at the SEC's
Web site at "http://www.sec.gov". In addition, you can read and copy our SEC
filings at the office of the National Association of Securities Dealers, Inc. at
1735 K Street, Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
- Annual Report on Form 10-K for the year ended December 31, 1998, as
amended on June 8, 1999 and June 14, 1999;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999;
- Proxy Statement for the 1999 Annual Meeting of Stockholders;
- Current Reports on Form 8-K dated as of April 20, 1999, as amended on
June 8, 1999 and June 16, 1999, and dated as of September 2, 1999 and
January 28, 2000; and
- Isis' registration statement on Form 8-A filed on April 2, 1991, which
includes a description of our common stock.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address or telephone number:
Isis Pharmaceuticals, Inc.
Attn: Vice President of Finance
2292 Faraday Avenue
Carlsbad, CA 92008
Telephone Number (760) 931-9200
This prospectus is part of a larger registration statement we filed with
the SEC. You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of the document.
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USE OF PROCEEDS
We cannot guarantee that we will receive any proceeds in connection with
this offering.
Companies in the biopharmaceutical industry generally expend significant
capital resources in product research and development. We anticipate that we
will be required to raise substantial additional capital over a period of
several years in order to finance our research and development programs.
Additional capital may be raised through additional public or private
financings, as well as collaborative relationships, borrowings and other
available sources.
We intend to use the net proceeds of this offering, if any, for our
research, drug discovery and development programs and for other general
corporate purposes. Expenses to be funded with the offering proceeds include
costs of preclinical and clinical studies, the production of compounds for such
studies and capital expenditures. We have not identified precisely the amounts
we plan to spend on each research, drug discovery and development program or the
timing of such expenditures. Isis, however, currently plans that the proceeds,
if any, will be used to support our planned research and development efforts,
including Phase III clinical trials of ISIS 3521 in non-small cell lung cancer,
and other drugs in Isis' clinical programs. The remaining proceeds, if any, will
be used for general corporate purposes. The amounts actually expended for each
purpose may vary significantly depending upon numerous factors, including the
amount and timing of the proceeds from this offering, progress of our research,
drug discovery and development programs, the results of preclinical and clinical
studies, the timing of regulatory approvals, technological advances,
determinations as to commercial potential of our compounds and the status of
competitive products. In addition, expenditures will also depend upon the
establishment of collaborative research arrangements with other companies, the
availability of other financing and other factors.
Other methods of financing our operations, including the acquisition of
tenant improvements and capital equipment, such as mortgage or lease financing,
may be used by us if available on attractive terms. In the past, Isis has made a
practice of using lease financing for equipment purchases and intends to
continue to do so in the future to the extent the terms of this type of
financing remain commercially attractive. To the extent this type of financing
is used, proceeds of this offering will be reallocated to working capital.
Based upon our current operating plan, we believe that our available cash
and existing sources of revenue and credit, together with the proceeds of this
offering, if any, and interest earned thereon, will be adequate to satisfy our
capital needs until at least the end of 2000.
Proceeds of this offering, if any, may also be used to acquire companies or
products that complement the business of Isis. We are not planning or
negotiating any such transactions as of the date of this prospectus.
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DILUTION
The net tangible deficit of Isis at December 31, 1999 was $11,147,000 or
approximately $.35 per share of common stock. Net tangible deficit per share
represents the amount of our tangible assets less total liabilities, divided by
31,613,000 shares of common stock.
Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of common stock in the
offering made hereby and the pro forma net tangible book value per share of
common stock immediately after completion of the offering. After giving effect
to the sale of 4,000,000 shares of common stock in this offering at an assumed
offering price of $28.00 per share and the application of the estimated net
proceeds therefrom (after deducting estimated offering expenses) the pro forma
net tangible book value of Isis as of December 31, 1999 would have been
$64,653,000 or $1.82 per share, an immediate increase in net tangible book value
of $2.17 per share to existing stockholders and an immediate dilution in net
tangible book value of $26.18 per share to purchasers of common stock in the
offering, as illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed public offering price per share..................... $28.00
Net tangible book value per share at December 31, 1999...... $ (.35)
Increase per share attributable to new investors............ $ 2.17
------
Pro forma net tangible book value per share after
offering.................................................. $ 1.82
------
Net tangible book value dilution per share to new
investors................................................. $26.18
------
</TABLE>
To the extent that outstanding options and warrants are exercised, there
will be further dilution to new investors.
PLAN OF DISTRIBUTION
We may offer the common stock:
- directly to purchasers;
- to or through underwriters;
- through dealers, agents or institutional investors; or
- through a combination of such methods.
Regardless of the method used to sell the common stock, we will provide a
prospectus supplement that will disclose:
- the identity of any underwriters, dealers or agents who purchase the
common stock;
- the material terms of the distribution, including the number of shares
sold and the consideration paid;
- the amount of any compensation, discounts or commissions to be received
by the underwriters, dealers or agents;
- the terms of any indemnification provisions, including indemnification
from liabilities under the federal securities laws; and
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- the nature of any transaction by an underwriter, dealer or agent during
the offering that is intended to stabilize or maintain the market price
of the common stock.
In November 1999, we entered into a common stock purchase agreement with
Ridgeway. Pursuant to the purchases agreement, for January 1, 2000, Isis may,
from time to time and at its sole discretion, present Ridgeway with draw down
requests to sell up to $5,000,000, or such other amount mutually agreed upon by
the parties, worth of shares of Isis' common stock. Isis will issue and sell the
shares to Ridgeway at a per share purchase price equal to the average price of
Isis' common stock over a period of time less a discount from 4.5% to 5.875%
subject to a minimum price as set forth in the purchase agreement. Isis may
present Ridgeway with up to 12 draw down notices during the term of the purchase
agreement.
Upon the receipt of a draw down request, Ridgeway may exercise a call
option to purchase up to an additional $5,000,000, or such other amount mutually
agreed upon by the parties, worth of shares of Isis' common stock for a purchase
price equal to the average price of the common stock over a period specified in
the purchase agreement less a discount from 4.5% to 5.75% subject to a minimum
price as set forth in the purchase agreement.
Isis will pay Ridgeway a fee equal to .25% of each draw down amount and
each call option amount.
Ridgeway and its pledgees, donees, transferees and other subsequent owners,
may offer their shares at various times in one or more of the following
transactions:
- in the over-the-counter market; or
- in privately negotiated transactions
at prevailing market prices at the time of sale, at prices related to those
prevailing market prices, at negotiated prices or at fixed prices.
Ridgeway may also sell its shares under Rule 144 instead of under this
prospectus, if Rule 144 is available for those sales.
The transactions in the shares may be effected by one or more of the
following methods:
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- purchases by a broker or dealer as principal, and the resale by that
broker or dealer for its account under this prospectus, including resale
to another broker or dealer;
- block trades in which the broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal in order to facilitate the transaction; or
- negotiated transactions between selling stockholders and purchasers
without a broker or dealer.
Ridgeway is an "underwriter" within the meaning of the Securities Act in
connection with its sale of the shares purchased under the purchase agreement
with Isis. Broker-dealers or other persons acting on behalf of parties that
participate in the distribution of the shares may also be deemed to be
underwriters. Any commissions or profits they receive
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on the resale of the shares may be deemed to be underwriting discounts and
commissions under the Securities Act.
During the time Ridgeway is engaged in distributing shares covered by this
prospectus, Ridgeway will comply with the requirements of the Securities Act and
Rule 10b-5 and Regulation M under the Exchange Act. Under those rules and
regulations, they:
- may not engage in any stabilization activity in connection with our
securities;
- must furnish each broker which offers shares of common stock covered by
this prospectus with the number of copies of this prospectus which are
required by each broker; and
- may not bid for or purchase any of our securities or attempt to induce
any person to purchase any of our securities other than as permitted
under the Exchange Act.
In addition, Ridgeway will provide a copy of this prospectus to any
purchaser in connection with the resale of any shares purchased by Ridgeway
under the purchase agreement with Isis.
In the purchase agreement with Ridgeway, we agreed to indemnify and hold
harmless Ridgeway and each person who controls Ridgeway against certain
liabilities, including liabilities under the Securities Act, which may be based
upon, among other things, any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact contained
in any prospectus or prospectus supplement, unless made or omitted in reliance
upon written information provided to us by Ridgeway.
We will bear the expenses incident to the registration of the shares, other
than selling discounts and commissions. These expenses are estimated to be
$85,000.
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LEGAL MATTERS
The validity of the issuance of the common stock offered in this prospectus
will be passed upon for Isis by Grantland E. Bryce, Vice President and General
Counsel of Isis. Mr. Bryce does not beneficially own any shares of common stock
as of the date of this prospectus.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K, as amended, for the year
ended December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given upon their authority as experts in accounting and auditing.
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