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FILING PURSUANT TO RULE 424(b)(2)
REGISTRATION STATEMENT NO. 333-38844
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 8, 2000)
406,088 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 406,088 shares of
our common stock to Acqua Wellington North American Equities Fund Limited at a
negotiated price of $9.8501 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 November 6, 2000, the last reported sale price of our common stock on
the Nasdaq National Market was $11.50 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 November 6, 2000, we had 39,013,173 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 November 8, 2000.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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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>
S-3
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PROSPECTUS
4,000,000 Shares
ISIS PHARMACEUTICALS, INC.
Common Stock
-------------------------
This prospectus will allow us to issue common stock over time. This means:
- we will provide this prospectus and 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 was entitled to 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 August 21, 2000, the last reported sale price for our common stock on
the Nasdaq National Market was $12.25 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 September 8, 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.................... 42,479,623 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 August 21, 2000. Does not include:
- 8,071,829 shares of common stock issuable upon exercise of outstanding
options, as of August 21, 2000,
- 1,029,881 shares of common stock issuable upon exercise of outstanding
warrants as of August 21, 2000, or
- shares of Series A and Series B Convertible Preferred Stock which may
convert into shares of common stock.
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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.
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.
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. No commercial shipments of Vitravene were
made in 1999, and no product revenue was earned.
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.
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
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partners will have sufficient motivation to continue their funding, development
and commercialization activities for our potential products, 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 of our
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 June 30, 2000, our accumulated losses were approximately $290 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 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 earned thereon, will be adequate to satisfy our capital
needs for at least the next three
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years. 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.
We expect that will need to raise additional funds to finance our research
and development and other operating activities in the future. Additional funds
will need to be raised 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 COSTS THAT ENABLE US TO CHARGE COMPETITIVE
PRICES TO BUYERS.
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.
To establish 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.
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
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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 have to 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.
It is possible that we may 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. These
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 this 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.
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. We may not be able to attract and retain skilled and
experienced scientific personnel on acceptable terms,
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because of intense competition for experienced scientists among many
pharmaceutical and health care companies, universities and non-profit research
institutions.
OUR STOCK PRICE IS LIKELY TO CONTINUE TO BE HIGHLY VOLATILE.
The market price of our common stock, like that 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 $3.875 to $39 per share. The
market price of our stock 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 our 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 our stockholders.
PURCHASERS MAY EXPERIENCE SIGNIFICANT DILUTION FROM OUR SALE OF SHARES TO
RIDGEWAY UNDER THE PURCHASE AGREEMENT AND TO OTHER PURCHASERS IN THIS OFFERING.
The sale of 4,000,000 shares of our common stock to Ridgeway under the
purchase agreement and to other purchasers under this prospectus will have a
dilutive effect on these purchasers. Net tangible book value dilution per share
represents the difference in the amount per share paid by purchasers of our
common stock in this offering and our pro-forma net tangible book value per
share immediately after completion of this offering. After giving effect to our
sale of 4,000,000 shares of common stock in this offering at an assumed offering
price of $11.58 per share, and the application of the net proceeds from this
sale, our pro-forma net tangible book value at June 30, 2000 would have been
$2.46 per share, an immediate dilution in net tangible book value to these
purchasers of $9.12 per share. To the extent that subsequent purchasers of our
shares from Ridgeway, or other underwriters, pay more than $11.58 per share,
these purchasers will experience additional dilution.
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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 with the SEC
after the date of this prospectus 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, 1999;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, and June
30, 2000;
- Proxy Statement for the 2000 Annual Meeting of Stockholders;
- Current Reports on Form 8-K dated as of 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: Chief Financial Officer
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 these
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 our 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, we made a
practice of using lease financing for equipment purchases and we intend 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 for at least the next three years.
Proceeds of this offering, if any, may also be used to acquire companies or
products that complement our business. We are not planning or negotiating any
such transactions as of the date of this prospectus.
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DILUTION
Our net tangible book value was $57,872,000, or approximately $1.51 per
share of common stock at June 30, 2000. Net tangible book value per share
represents the amount of our tangible assets less total liabilities, divided by
38,375,000 shares of common stock outstanding at June 30, 2000.
Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of our 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 $11.58 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 June 30, 2000 would have been $104,077,000
or $2.46 per share, an immediate increase in net tangible book value of $.95 per
share to existing stockholders and an immediate dilution in net tangible book
value of $9.12 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..................... $11.58
Net tangible book value per share at June 30, 2000.......... $1.51
Increase per share attributable to new investors............ $ .95
-----
Pro forma net tangible book value per share after
offering.................................................. $ 2.46
------
Net tangible book value dilution per share to new
investors................................................. $ 9.12
------
</TABLE>
To the extent that outstanding options and warrants are exercised or the
outstanding Series A and B preferred stock is converted into the Company's
common stock, 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
this prospectus and 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 our common stock.
Effective December 6, 1999, we entered into a common stock purchase
agreement with Ridgeway Investment Limited. Pursuant to the purchase agreement,
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
5.5% 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, which expires January 1, 2001. 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. During the period from January 1, 2000 through August 1,
2000, Isis presented draw down notices and received call notices under the
purchase agreement for and has sold an aggregate of 1,997,879 shares of common
stock to Ridgeway pursuant to the purchase agreement.
There are a maximum of four remaining draw down requests available to us
under the purchase agreement which, based on the closing price of the Company's
common stock on August 21, 2000, would result in a maximum aggregate amount of
draw downs available under the purchase agreement of $16,000,000, and
corresponding available calls by Ridgeway, for an aggregate amount of
$32,000,000.
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.
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.
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For purposes of this offering, 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 and its resales of those shares
into the market. 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 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, Ridgeway:
- 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, the purchase agreement with Ridgeway prohibits Ridgeway from
engaging in short sales of our common stock during the term of the purchase
agreement.
Ridgeway will provide a copy of this prospectus as well as a prospectus
supplement 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
$145,000.
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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 is the beneficial owner of options to purchase 81,500
shares of Isis common stock. As of October 20, 2000, Mr. Bryce will be vested as
to options to purchase 32,697 shares of Isis common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K, for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus. Our consolidated 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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