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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 12, 2000
REGISTRATION NO. 333-________________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-----------------
GENELABS TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 94-3010150
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
505 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063
(650) 369-9500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
HEATHER CRISS KELLER
GENELABS TECHNOLOGIES, INC.
505 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063
(650) 369-9500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
GREGORY C. SMITH, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
525 UNIVERSITY AVENUE, SUITE 220
PALO ALTO, CA 94301
(650) 470-4500
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 being 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. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class of Amount To Be Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Registered(1) Offering Per Share(1) Aggregate Offering Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, no par value 5,000,000 shares $5.594 $27,970,000 $7,384.08
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933 based upon the
average of the high and low prices of the Registrant's Common Stock as
reported on the Nasdaq National Market on April 11, 2000.
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD TO YOU UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 12, 2000
PROSPECTUS
5,000,000 Shares
GENELABS TECHNOLOGIES, INC.
Common Stock
------------------------
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 also may add, update or change information
contained in this document; and
- you should read this document and any prospectus supplement
carefully before you invest.
Genelabs' common stock is traded on the Nasdaq National Market under the
symbol "GNLB". On April 11, 2000, the last reported sale price for our common
stock on the Nasdaq National Market was $5.4375 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 _____, 2000
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TABLE OF CONTENTS
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Page
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Prospectus Summary................................................... 4
The Company.......................................................... 4
The Offering......................................................... 4
Forward Looking Statements........................................... 4
Risk Factors......................................................... 5
Where You Can Get More Information................................... 10
Use of Proceeds...................................................... 11
Dilution............................................................. 11
Plan of Distribution................................................. 12
Legal Matters........................................................ 12
Experts.............................................................. 12
</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
Genelabs was incorporated in California in 1985. Our executive offices are
located at 505 Penobscot Drive, Redwood City, California 94063, and our
telephone number is (650) 369-9500. Genelabs' worldwide web address is
http://www.genelabs.com. Information contained in our worldwide website should
not be considered to be part of this prospectus.
Genelabs(R) and the Genelabs logo are registered trademarks of Genelabs
Technologies, Inc. This prospectus also includes trade names and trademarks of
companies other than Genelabs.
THE OFFERING
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<S> <C>
Common stock offered in this prospectus..... 5,000,000 shares
Common stock outstanding after the offering. 45,783,994 shares
Use of proceeds For pre-commercialization activities and drug
development and drug discovery activities,
including building a sales and marketing
infrastructure, acquiring commercially saleable
product quantities, further drug development
activities, additional drug discovery research
and other general corporate purposes. See "Use
of Proceeds."
Nasdaq National Market symbol GNLB
</TABLE>
The common stock outstanding after the offering is based on shares outstanding
as of March 31, 2000 and does not include:
~ 3,716,681 shares of common stock issuable upon exercise of options
outstanding as of March 31, 2000 at a weighted average exercise price of
$3.677 per share;
~ 3,333,334 shares of common stock issuable upon conversion of Series A
Convertible Preferred Stock as of March 31, 2000; and
~ 1,354,092 shares of common stock issuable upon exercise of stock options
reserved for grant as of March 31, 2000.
FORWARD LOOKING STATEMENTS
All statements in this prospectus that are not historical are
forward-looking statements. Forward-looking statements involve a number of risks
and uncertainties. These risks and uncertainties include, but are not limited
to, those statements concerning regulatory approval, clinical trials, progress
of drug discovery programs, Genelabs' business plans, anticipated expenditures
and the timing and need for additional funds. Forward-looking statements may be
identified by terminology such as "may," "will," "expects," "anticipates,"
"intends," "plans," "believes," "potential" and similar expressions. Some of the
factors that could cause material differences in actual results of Genelabs'
activities are uncertainty of regulatory approval, the outcome of drug discovery
and product development efforts, manufacturing risks, and intellectual property
rights. These and additional factors and risks are discussed below, especially
under "Risk Factors" beginning on page 5. Shareholders and prospective investors
in Genelabs should carefully consider these risk factors. Genelabs disclaims any
obligation to update these statements for subsequent events.
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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.
RISKS RELATED TO GENELABS
REGULATORY APPROVALS ARE UNCERTAIN
The production and marketing of our products is subject to rigorous
requirements by the FDA, formally known as the U.S. Food and Drug
Administration, and also by comparable agencies in other countries and by state
regulatory authorities. The process of conducting clinical trials and obtaining
regulatory approval for a product typically takes a number of years and involves
substantial expenditures. In addition, product approvals may be withdrawn or
limited for non-compliance with regulatory standards or the occurrence of
unforeseen problems following initial marketing. We may encounter significant
delays or excessive costs in our efforts to secure and maintain necessary
approvals or licenses. Future federal, state, local or foreign legislative or
administrative acts could also prevent or delay regulatory approval of our
products. We cannot assure you that we will be able to obtain or maintain the
necessary approvals for manufacturing or marketing our products for proposed
indications or that the data we obtain in clinical trials will be sufficient to
establish the safety and efficacy of our products. In particular, we cannot
assure you that the FDA will view the results of our Phase III trials of GL701
as sufficient to serve as the basis for approval of a New Drug Application,
referred to as an NDA.
Even if we obtain regulatory approval for GL701, identification of
certain side effects after it is on the market or the occurrence of
manufacturing problems could cause subsequent withdrawal of approval or require
reformulation, additional testing, and changes in labeling of the product. Our
inability to obtain or maintain requisite governmental approvals, the
identification of side effects or other factors could delay or preclude us from
further developing or marketing GL701, which would have a material adverse
effect on our business, financial condition and results of operations.
We have obtained orphan drug status for GL701 for the treatment of
systemic lupus erythematosus, a disease which we refer to as SLE or lupus.
Orphan drug status may, under present regulations, entitle us to seven years of
U.S. marketing exclusivity provided that we are the first to sponsor an approved
new drug application for such indication. While the marketing exclusivity of an
orphan drug would prevent other sponsors from obtaining approval of the same
compound for the same indication, it would not prevent the same compound from
being approved for a different use. We cannot assure you that the scope of
protection or the level of exclusivity that is currently afforded by orphan drug
status will remain in effect in the future.
We are also subject to other regulations under numerous federal, state
and local laws regarding, among other things, occupational safety, laboratory
practices, the use and handling of radioisotopes and hazardous chemicals,
prevention of illness and injury, environmental protection and hazardous
substance control. Failure to comply with such regulations could have a material
adverse effect on our business, financial condition and results of operations.
MARKET ACCEPTANCE OF GL701 IS UNCERTAIN
A number of factors may affect the rate and depth of market acceptance
of GL701 for SLE. Among these factors are the availability of third-party
reimbursement, the price of GL701 relative to other drugs for SLE treatment, the
perception by physicians and other members of the health care community of the
efficacy and safety of GL701, and the effectiveness of our sales and marketing
efforts. In addition, side effects or unfavorable publicity concerning GL701 or
other drugs on the market could have a material adverse effect on our ability to
obtain physician, patient or third-party payor acceptance.
GL701 contains highly purified prasterone, the synthetic equivalent of
DHEA, as the active ingredient. Products containing synthetic forms of DHEA are
currently being marketed by others as dietary supplements. DHEA is an androgenic
hormone produced by the body and is not a component of the diet. Our position is
that this hormone should be classified as a drug and be subject to regulation
and approval by the FDA. We have submitted documentation to the FDA
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requesting clarification of DHEA's status as a drug and removal from the market
as a dietary supplement. We have also submitted documentation to the Drug
Enforcement Administration, or DEA, requesting clarification of DHEA's status as
an anabolic steroid. However, to date the FDA and DEA have taken no action to
limit or regulate the sale of these products, and we cannot assure you that the
FDA or DEA will be willing to do so in the future. In the event that GL701
receives FDA approval, the concurrent sale of these products could adversely
affect the market for or the selling price of GL701.
WE HAVE LIMITED SALES, MARKETING AND DISTRIBUTION CAPABILITIES AND EXPERIENCE
We have only limited sales, marketing and distribution capabilities, and
have never commercially introduced a product to the market. If we successfully
develop any new products, including GL701, we must develop a marketing and sales
force with technical expertise and supporting distribution capability in order
to market the product directly, or we must rely on larger pharmaceutical
companies to market our products. We expect to incur significant expenses in
developing, training, maintaining and managing our sales organization. The cost
of establishing and maintaining the sales force may exceed GL701 product
revenues and our direct marketing and sales efforts may not be successful.
WE ARE DEPENDENT ON OUTSIDE MANUFACTURING AND SUPPLIER SOURCES
We have no internal manufacturing capabilities for pharmaceutical
products and are entirely dependent on contract manufacturers to manufacture
clinical and, if successfully developed, commercial-scale quantities of GL701
pursuant to supply agreements. We cannot assure you that these third party
manufacturers will meet or continue to meet FDA or product specification
standards or that our manufacturing requirements can be met in a consistent and
timely manner. In addition, we may be unable to obtain sufficient contract
manufacturing capacity due to competing demands on the contract manufacturer's
capacity or other reasons. In the event of any interruption of supply from the
contract manufacturer due to regulatory reasons, significant batch failures,
capacity constraints or other causes, we cannot assure you that we could make
alternative manufacturing arrangements on a timely basis, if at all. Such an
interruption would have a material adverse effect on our business, financial
condition and results of operations. Our submission of an NDA will be subject to
the establishment of a commercial formulation and manufacturing process. As
manufacturing process development and formulation activities are ongoing
throughout the development process, we may encounter difficulties at any time
that could result in delays in clinical trials, regulatory submissions and
commercialization of our products, or cause potential negative financial and
competitive consequences.
We rely on certain suppliers of key raw materials to provide an adequate
supply of such materials for production of finished products by a third party
manufacturer. In particular, the active ingredient for GL701 currently is
supplied to us by a limited number of sources. In addition, currently we have a
single manufacturer to supply the finished product. The disqualification or loss
of this manufacturer or one of these suppliers could have a material adverse
effect on us because of difficulties and costs in obtaining and qualifying
alternate suppliers. Regulatory requirements applicable to pharmaceutical
products tend to make the substitution of suppliers costly and time consuming.
The unavailability of adequate commercial quantities, the loss of a supplier's
regulatory approval, the inability to develop alternative sources or an
interruption in supply could impair our ability to manufacture and market our
products. If we are unable to renew or extend an agreement with a manufacturer
or supplier, if an existing agreement is terminated, or if a third party
manufacturer or supplier otherwise cannot meet our needs for a product, we may
not be able to obtain an alternative source of manufacture or supply. This could
have a material adverse effect on our business, financial condition and results
of operations.
CLINICAL TRIAL RESULTS ARE UNPREDICTABLE
Before obtaining regulatory approvals for the commercial sale of any of
our products under development, we must demonstrate through preclinical studies
and clinical trials that the product is safe and efficacious for use in each
target indication. The results from preclinical studies and initial clinical
trials of products under development by us may not be predictive of results that
will be obtained in large-scale testing. We cannot ensure that clinical trials
will demonstrate the safety and efficacy of any products or will result in
marketable products. The safety and efficacy of a therapeutic product under
development by us, such as GL701, must be supported by extensive data from
clinical trials. Many bio-pharmaceutical companies have suffered significant
setbacks in advanced clinical trials, even after obtaining promising results in
earlier trials. We cannot assure you that any additional clinical trials
conducted for GL701 will support other
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potential uses of the product or be sufficient to support additional label
indications or continuing development of the drug candidate.
RESEARCH PROGRAMS WILL REQUIRE ADDITIONAL FUNDS
We have incurred losses in each year since our inception and have
accumulated approximately $143 million in net losses through December 31, 1999,
including a net loss of $12.8 million in 1999. We anticipate realizing a net
loss at least until 2001, and profitability thereafter is subject to significant
uncertainty. We cannot assure you that revenues will be sufficient to fund
operations or that we will achieve profitability or positive cash flow.
Additional financing will be required to fund our continuing operations and
research and development activities. This financing may dilute existing
shareholders or provide certain rights to our assets. Our fund raising strategy
is to sell additional equity in order to have the necessary resources to
commercially launch GL701. If financing arrangements contemplated by management
are not completed, we may have to seek other sources of capital or reevaluate
our operating plans. Longer-term, we plan to fund our operations principally
from revenue from sales of GL701, should it receive FDA approval. However, we
cannot assure you that we will ever be able to generate revenue from sales of
GL701. We are currently pursuing foreign GL701 licensing agreements, but cannot
assure you that license agreements can be obtained on acceptable terms, if at
all. We cannot assure you that we will be able to find buyers willing to
purchase our equity or license our products or technology on commercially
favorable terms, if at all.
The unavailability of additional funds through the above-described
potential financing sources will delay or prevent the development, testing,
regulatory approval, manufacturing or marketing of some or all of our products
and technologies and would have a material adverse effect on our business,
financial condition and results of operations.
WE ARE IN AN EARLY STAGE OF DEVELOPMENT
Our product candidates have never been sold commercially and our drug
discovery technologies are at an early stage of development. Our technologies,
including the DNA and RNA-binding technologies, have not been proven to have a
therapeutic effect and are still under development. We cannot assure you that
these technologies or any of our product candidates resulting therefrom will be
successfully developed.
Our drug discovery technologies will require substantial additional
research and development efforts prior to any commercial use, including
extensive preclinical testing and clinical trials as well as potentially lengthy
regulatory approval. We cannot assure you that any of these products or
technologies will be successfully developed, prove to be safe and efficacious at
each stage of clinical trials, meet applicable regulatory standards, be capable
of being produced in commercial quantities at reasonable costs or be
successfully marketed.
WE DEPEND ON KEY EMPLOYEES FOR THE EXECUTION OF OUR BUSINESS PLAN
Our success depends on the services of key employees in executive and
research and development positions. The loss of the services of key executives
or other employees could have a material adverse impact on our ability to
execute our business plan.
COMPETITION IN BIOTECHNOLOGY IS INTENSE
Competition is intense in the human healthcare industry, particularly in
the application of biotechnology, and the level of competition is expected to
increase in the future. In seeking to develop proprietary pharmaceutical
products and technologies, we face competition from a number of major
pharmaceutical companies as well as emerging biotechnology companies. Many of
these competitors have substantially greater financial and other resources,
larger research and development staffs and more extensive manufacturing and
marketing capabilities than us. In addition, many of our competitors have
significantly greater resources and more experience than us in preclinical
testing and in conducting human clinical trials of potential pharmaceutical
products and in obtaining FDA and other regulatory approvals. These factors may
enable these competitors to develop products competitive with or superior to
those we plan to develop. Such competitive products could enter the marketplace
before our products.
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A significant amount of research in biotechnology is performed at
universities and nonprofit research organizations. These entities are becoming
more active in seeking patent protection and licensing revenues for their
discoveries. The competition among large pharmaceutical companies and smaller
biotechnology companies to acquire technologies from these entities also is
intensifying. These institutions also compete with us to recruit scientific
personnel and to establish proprietary technology positions.
PATENT AND TRADE SECRET PROTECTION IS UNCERTAIN
The biotechnology, pharmaceutical and diagnostic industries are subject
to conflicting patent rights of various parties. The patent positions of all
companies in these industries, including Genelabs, are uncertain and involve
complex legal and factual issues. A patent application may be rejected or the
claims may be significantly altered or narrowed before a patent issues. As a
consequence, we do not know whether any of our patent applications will result
in the issuance of patents. We cannot assure you that our patents will
effectively protect our technologies. The priority of patent applications is
determined under complex and sometimes conflicting U.S. and international laws.
Therefore, we cannot assure you that our patent applications would have priority
over competitors' patent applications, if any. Should the priority of a patent
application come into question, we may have to participate in interference
proceedings to determine priority of invention, which could result in
substantial costs, even if the eventual outcome is favorable. Additionally, we
may have to participate in opposition proceedings in European and other
countries prior to the granting of a patent. The biotechnology industry is very
competitive and other companies may own patents and applications and other
proprietary rights relating to products or technology similar to our
technologies. We cannot assure you that any patents we own or control will
protect us against infringement litigation or afford commercially significant
protection of our technology. The patent laws of foreign countries differ from
those of the U.S. and the degree of protection, if any, afforded by foreign
patents may be different.
If another company were to successfully bring legal action against us
claiming patent or other intellectual property right infringements, we could be
liable for damages and prevented from using or selling such products or
technologies. We might also be required to obtain a license to use, manufacture
or sell the affected product or technology. We cannot assure you that we will
prevail in any dispute regarding our intellectual property or that we will be
able to obtain an acceptable license. Any litigation, whether or not resolved in
favor of us, could be expensive and time-consuming, could consume substantial
management resources and could have a material adverse effect on our business,
financial condition and results of operations.
GL701 is a pharmaceutical formulation designed for oral administration
that contains DHEA as the active ingredient. DHEA is a compound that has been in
the public domain for many years, and even though we have obtained U.S. patents
relating to the use of DHEA to treat SLE and reduce steroid dosage in lupus
patients, the compound itself cannot be patented.
There may be intellectual property owned by third parties that is
important to our drug discovery programs or for other indications for GL701 of
which we are not currently aware. Furthermore, in the future others may obtain
patents or develop proprietary rights necessary or useful for the operation of
our business. Certain of these potentially competing patents or rights may be
sufficiently broad to prevent or delay us from practicing our technology, and we
may need to obtain licenses under these patents.
We also rely on unpatented proprietary technology including trade
secrets, know-how and continuing technological innovation to enhance and develop
our competitive position. We seek to protect these types of information through
a policy of having our employees, consultants and advisors execute
confidentiality and assignment of invention agreements. We cannot assure you
that these agreements will not be breached or that we will have adequate legal
recourse in case of such breach. It is possible that others will independently
develop the same or similar proprietary information, and we cannot assure you
that we will be able to protect our rights in unpatented proprietary technology.
Furthermore, we cannot assure you that others have not obtained or will not
obtain patent protection that will preclude us from using our unpatented
proprietary technology.
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OFFERING RISKS
OUR STOCK PRICE IS VOLATILE
The market price of our common stock, like the stock prices of many
publicly traded biopharmaceutical companies, has been and will probably continue
to be highly volatile. A variety of events can impact the stock price. Several
of the events concerning us that can impact the price are discussed in this Risk
Factors section. Numerous events occurring outside of our control may also
impact the price of our common stock. Securities class action lawsuits have been
brought against other companies following periods of volatility in the market
price of their common stock. This type of litigation, if brought against us,
could result in substantial costs and diversion of management's time, which
could materially affect our business plan, financial condition and results of
operations.
OUR UNDESIGNATED PREFERRED STOCK MAY INHIBIT POTENTIAL ACQUISITION BIDS; THIS
MAY ADVERSELY AFFECT THE MARKET PRICE FOR OUR COMMON STOCK AND THE VOTING RIGHTS
OF THE HOLDERS OF COMMON STOCK
Our Articles of Incorporation provides our Board of Directors with the
authority to issue up to 5,000,000 shares of undesignated preferred stock and to
determine the rights, preferences, privileges and restrictions of these shares
without further vote or action by the shareholders. As of the date of this
prospectus, the board of directors still has authority to designate and issue up
to 5,000,000 shares of preferred stock. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
shares of preferred stock may delay or prevent a change in control transaction
without further action by our shareholders. As a result, the market price of our
common stock may be adversely affected. The issuance of preferred stock may also
result in the loss of voting control by others.
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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 1-800-732-0330 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, 1999;
- All other reports we have filed pursuant to Sections 13(a) or 15(d)
of the Exchange Act since December 31, 1999;
- The description of the common stock contained in a registration
statement filed under the Exchange Act, and any amendments or
reports filed with the SEC for the purpose of updating such
description.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address or telephone number:
Genelabs Technologies, Inc.
Attn: Investor Relations
505 Penobscot Drive
Redwood City, CA 94063
Telephone: (650) 369-9500
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
substantial capital over a period of several years will be required to fund our
research and development programs. In the long term, we plan to fund our
operations principally from revenue from sales of GL701, should it receive FDA
approval. However, we cannot assure you that we will ever be able to generate
revenue from sales of GL701. 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
pre-commercialization activities, our drug development and drug discovery
programs and for other general corporate purposes. Genelabs currently plans that
the proceeds, if any, will be used for building the sales and marketing
infrastructure necessary for the commercial introduction of GL701, acquiring
commercially saleable quantities of GL701, further development activities
primarily regarding GL701, additional drug discovery research and general and
administrative purposes. However, we have not identified precisely the amounts
we plan to spend on each individual research, drug discovery and development
program or the timing of such expenditures. The amounts actually expended for
each purpose may vary significantly depending upon numerous factors, including
the status and timing of regulatory approvals, determinations as to the
commercial potential of GL701, the amount and timing of the proceeds from this
offering and the progress of our research, drug discovery and development
programs. In addition, expenditures will also depend upon the establishment of
marketing and collaborative research arrangements with other companies, the
availability of other financing and other factors.
Based upon our current operating plan, we believe that our available
cash and existing sources of revenue, 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 middle of 2001.
DILUTION
The net tangible book value of Genelabs at March 31, 2000 was $4,849,000
or approximately $0.12 per share of common stock. Net tangible book value per
share represents the amount of our tangible assets less total liabilities,
divided by 40,783,994 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 5,000,000 shares of common stock in this offering at an assumed
offering price of $5.44 per share and the application of the estimated net
proceeds therefrom (after deducting estimated offering expenses) the pro forma
net tangible book value of Genelabs as of December 31, 1999 would have been
$31,949,000 or $0.70 per share, an immediate increase in net tangible book value
of $0.58 per share to existing stockholders and an immediate dilution in net
tangible book value of $4.74 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......................... $5.44
Net tangible book value per share at December 31, 1999.......... $0.12
Increase per share attributable to new investors................ $0.58
-----
Pro forma net tangible book value per share after offering...... $0.70
-----
Net tangible book value dilution per share to new investors..... $4.74
=====
</TABLE>
To the extent that outstanding options are exercised, there will be
further dilution to new investors.
11
<PAGE> 12
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, agents or investors 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
- 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.
LEGAL MATTERS
The validity of the issuance of the common stock offered in this
prospectus will be passed upon for Genelabs by Skadden, Arps, Slate, Meagher &
Flom LLP, Palo Alto, California.
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 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.
12
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by Genelabs in
connection with the sale of the 5,000,000 shares of common stock being
registered. All the amounts shown are estimates except for the registration fee.
<TABLE>
<S> <C>
SEC registration fee .................................. $ 7,384
Legal fees and expenses ............................... $ 50,000
Accounting fees and expenses .......................... $ 15,000
Nasdaq fees for newly issued shares ................... $ 17,500
Printing and engraving expenses ....................... $ 5,000
Miscellaneous ......................................... $ 5,116
--------
Total ............................................. $100,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under Section 317 of the California General Corporation Law (the
"CGCL"), the Registrant is in certain circumstances permitted to indemnify its
directors and officers against certain expenses (including attorneys' fees),
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with threatened, pending or completed civil, criminal,
administrative or investigative actions, suits or proceedings (other than an
action by or in the right of the Registrant), in which such persons were or are
parties, or are threatened to be made parties, by reason of the fact that they
were or are directors or officers of the Registrant, if such persons acted in
good faith and in a manner they reasonably believed to be in the best interests
of the Registrant, and with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. In addition, the
Registrant is in certain circumstances permitted to indemnify its directors and
officers against certain expenses incurred in connection with the defense or
settlement of a threatened, pending or completed action by or in the right of
the Registrant, and against amounts paid in settlement of any such action, if
such persons acted in good faith and in a manner they believed to be in the best
interests of the Registrant and its shareholders provided that the specified
court approval is obtained.
As permitted by Section 317 of the CGCL, the Articles of Incorporation
and By-Laws of the Registrant provide that the Registrant is authorized to
provide indemnification for its directors and officers for breach of their duty
to the Registrant and its shareholders through bylaw provisions or through
agreements with the directors and officers, or both, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL. The Registrant's
By-laws provide for indemnification of its directors and officers to the maximum
extent permitted by Section 317 of the CGCL except that indemnification is not
available for proceedings initiated by an indemnitee unless such proceeding was
authorized by Registrant's Board of Directors. In addition, agreements entered
into by the Registrant with its directors and its executive officers require the
Registrant to indemnify such persons against expenses, judgments, fines,
settlements and other amounts reasonably incurred in connection with any
proceeding to which any such person may be made a party by reason of the fact
that such person was an agent of the Registrant (including judgments, fines and
settlements in or of a derivative action, unless indemnification is otherwise
prohibited by law), provided such person acted in good faith and in a manner he
reasonably believed to be in the best interests of the Registrant and, in the
case of a criminal proceeding, had no reason to believe his conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
II-1
<PAGE> 14
At present, there is no pending litigation or proceeding involving a
director or officer of Genelabs as to which indemnification is being sought, nor
is Genelabs aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
Genelabs has an insurance policy covering the officers and directors of
Genelabs with respect to certain liabilities, including liabilities arising
under the Securities Act or otherwise.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
4.1 Amended and Restated Articles of Incorporation.(1)
4.2 By-laws.(2)
4.3 Certificate of Determination of Preferences of Series A Convertible Preferred
Stock of Genelabs Technologies, Inc.(3)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.(4)
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP. Reference is made to
Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
(1) Incorporated herein by reference to Exhibit 3.01 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991.
(2) Incorporated herein by reference to Exhibit 3.02 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998.
(3) Incorporated herein by reference to Exhibit 10.37 to Registrant's Form
10-Q for the quarter ended June 30, 1995.
(4) To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made pursuant to this registration statement, a post-effective amendment
to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(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 Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
II-2
<PAGE> 15
(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)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement is on
Form S-3, Form S-8 or Form F-3, and the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to
Sections 13 or 15(d) of 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 of 1933, 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 the offering;
(4) That for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) of Section 15(d) of the Securities Exchange Act
of 1934 (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;
(5) For the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of the registration statement in reliance upon
Rule 430A and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of the registration statement as of the time it
was declared effective;
(6) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus 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;
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the provisions described in Item 15 or
otherwise, the Registrant has been advised 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. 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-3
<PAGE> 16
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 Redwood City, State of California, on the 12th day of
April, 2000.
GENELABS TECHNOLOGIES, INC.
By: /s/ JAMES A.D. SMITH
--------------------------------------------
James A. D. Smith
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Irene A. Chow and James A.D. Smith, and
each of them, his or her true and lawful attorneys-in-fact and agents with full
power of substitution, for him or her and in his or her name, place and stead,
in any and all capacities, to sign any and all amendments to this Registration
Statement on Form S-3, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, 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 and about the premises, 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 and agents or any of them, or his,
her or their 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 report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ JAMES A.D. SMITH President, Chief Executive Officer April 12, 2000
- --------------------------------------- Officer and Director
James A.D. Smith
/s/ RICHARD A. WALDRON Vice President, April 12, 2000
- --------------------------------------- Chief Financial Officer
Richard A. Waldron
/s/ MATTHEW M. LOAR Vice President, Finance April 12, 2000
- ---------------------------------------
Matthew M. Loar
/s/ IRENE A. CHOW Chairman of the Board of Directors April 12, 2000
- ---------------------------------------
Irene A. Chow
/s/ J. RICHARD CROUT Director April 12, 2000
- ---------------------------------------
J. Richard Crout
/s/ THOMAS E. DEWEY, JR. Director April 12, 2000
- ---------------------------------------
Thomas E. Dewey, Jr.
Director
- ---------------------------------------
Frank L. Douglas
/s/ ARTHUR GRAY, JR. Director April 12, 2000
- ---------------------------------------
Arthur Gray, Jr.
Director
- ---------------------------------------
H. H. Haight
/s/ ALAN Y. KWAN Director April 12, 2000
- ---------------------------------------
Alan Y. Kwan
Director
- ---------------------------------------
Nina K. Wang
</TABLE>
II-4
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
4.1 Amended and Restated Articles of Incorporation.(1)
4.2 By-laws.(2)
4.3 Certificate of Determination of Preferences of Series A Convertible
Preferred Stock of Genelabs Technologies, Inc.(3)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP. (4)
23.1 Consent of Ernst & Young LLP, Independent Auditors. Reference is
made to page II-7.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP. Reference is
made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
(1) Incorporated herein by reference to Exhibit 3.01 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1991.
(2) Incorporated herein by reference to Exhibit 3.02 to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998.
(3) Incorporated herein by reference to Exhibit 10.37 to Registrant's Form
10-Q for the quarter ended June 30, 1995.
(4) To be filed by amendment.
II-5
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, 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 Genelabs
Technologies, Inc. for the registration of 5,000,000 shares of its common stock
and to the incorporation by reference therein of our report dated February 10,
2000 with respect to the consolidated financial statements of Genelabs
Technologies, Inc. included in its Annual Report on Form 10-K for the year ended
December 31, 1999, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
April 11, 2000
