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As filed with the Securities and Exchange Commission on June 21, 2000
Registration No. 333-34630
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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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, ESQ.
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. [ ]
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 JUNE 21, 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 June 20, 2000, the last reported sale price for our common
stock on the Nasdaq National Market was $4.50 per share.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
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........................................................................... 1
Genelabs Technologies, Inc................................................................... 1
The Offering................................................................................. 1
Risk Factors................................................................................. 3
Forward-Looking Statements................................................................... 10
Use of Proceeds.............................................................................. 11
Dilution..................................................................................... 12
Plan of Distribution......................................................................... 13
Legal Matters................................................................................ 13
Experts...................................................................................... 13
Where You Can Get More Information........................................................... 14
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PROSPECTUS SUMMARY
The summary highlights selected information in this prospectus, but it
may not contain all the information that is important to you. To better
understand this offering, you should read the entire prospectus carefully,
including the "Risk Factors" and "Forward-Looking Statements" sections, the
financial statements and the other documents that we incorporate by reference
into this prospectus.
GENELABS TECHNOLOGIES, INC.
Genelabs is engaged in the discovery and development of a new class of
pharmaceutical products that selectively regulate the activation or deactivation
of genes, or gene expression, and in the development of GL701, our proprietary
hormone treatment for systemic lupus erythematosus, or lupus. We have completed
two clinical trials of GL701 for the treatment of lupus in women, and have
recently begun to submit a new drug application for GL701 to the U.S. Food and
Drug Administration, or FDA. We plan to complete submission of the new drug
application by the end of 2000. We intend that significant funding for the
discovery and development of our future products would be provided by revenue
from the sales of GL701, should the FDA approve it.
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. We do not intend for information contained in our
worldwide website to be considered part of this prospectus.
Genelabs(R) and the Genelabs logo are registered trademarks of Genelabs
Technologies, Inc.
THE OFFERING
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Common stock offered in this prospectus............... 5,000,000 shares
Common stock outstanding after the offering........... 45,783,994 shares
Use of proceeds....................................... For activities necessary for the potential
commercial introduction of GL701, including
activities related to the filing of a new drug
application, building a sales and marketing team,
acquiring large product quantities suitable for
commercial sale, evaluation of potential new uses
of GL701, 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;
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- 3,333,334 shares of common stock issuable upon conversion of Series A
Convertible Preferred Stock as of March 31, 2000;
- 1,354,092 shares of common stock issuable upon exercise of stock
options reserved for grant as of March 31, 2000; and
- 638,269 shares of common stock reserved for issuance under the
Genelabs Technologies, Inc. Employee Stock Purchase Plan as of March
31, 2000.
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RISK FACTORS
Please consider the following risk factors carefully in addition to the
other information contained in this prospectus and in any other documents to
which we refer you in this prospectus.
RISKS RELATED TO GENELABS
IF THE FDA DOES NOT APPROVE GL701, GENELABS' DRUG CANDIDATE FOR SYSTEMIC LUPUS
ERYTHEMATOSUS, FOR MARKETING IN THE UNITED STATES, OUR BUSINESS PROSPECTS WILL
SUFFER BECAUSE WE HAVE NO OTHER CURRENT SOURCE OF POTENTIAL REVENUE.
Genelabs has focused its development efforts to date on conducting
clinical trials for an investigational new drug, GL701, for the treatment of
women with systemic lupus erythematosus, or lupus, which is a severe, chronic
and debilitating autoimmune disease that can affect the lungs, heart, kidneys,
skin, joints and nervous system. GL701 is a pharmaceutical formulation
containing highly purified prasterone, the synthetic equivalent of
dehydroepiandrosterone or DHEA, a naturally occurring hormone.
Before we can market GL701 in the United States, the FDA must review and
approve a new drug application submitted by Genelabs incorporating all of the
data from the clinical trials of the drug and other information required, such
as data relating to the toxicity of the drug and manufacturing requirements.
Genelabs recently submitted to the FDA part of its new drug application for
GL701 for lupus, and plans to complete submission of the new drug application by
the end of 2000. Genelabs' business plans depend on FDA approval of GL701 in the
United States. If the FDA does not approve the new drug application in a timely
manner, our business would suffer because we have no other current source of
potential revenue.
Other countries have similar regulatory requirements. Genelabs has not
conducted any clinical trials for GL701 for lupus in other countries. Genelabs
plans to enter into collaborations or licensing agreements regarding marketing
GL701 in other countries with pharmaceutical companies with resources greater
than Genelabs. If Genelabs does not enter into these agreements, Genelabs may
not be able to sell, or might face delays related to commercial introduction of,
GL701 in other countries, because Genelabs lacks the necessary resources.
GENELABS' RESEARCH PROGRAMS ARE IN AN EARLY STAGE AND MAY NOT SUCCESSFULLY
PRODUCE COMMERCIAL PRODUCTS.
Genelabs' research is in an early stage. Our research focuses on the
discovery of pharmaceutical products that selectively regulate gene expression
and separately, pharmaceutical products that treat viral infections. Gene
expression controls the functions of all cells, tissues and organs. Selective
regulation of gene expression using a DNA-binding drug means specifically
"turning on" or "turning off" a gene, affecting its function. To date, Genelabs'
research programs have not produced a compound that has progressed into clinical
trials. Genelabs' product candidates, other than GL701, are in an early stage of
research. The goal of the research is to discover novel chemical compounds that
bind directly to DNA or RNA, the fundamental matter in genes, and develop them
into drugs. Genelabs, or others working in this area, may never achieve this
goal.
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If Genelabs discovers compounds that have the potential to be drugs that
regulate gene expression or that show potential as antiviral drugs, public
information about this research breakthrough may lead other companies with
greater resources to focus more efforts on these types of compounds. Genelabs
has limited human and financial resources. Creation of the type of compounds
Genelabs seeks to discover requires sophisticated and expensive lab equipment
and facilities, a team of scientists with advanced scientific degrees in many
disciplines such as chemistry, biochemistry and biology, and time and effort.
Large pharmaceutical companies have access to the latest equipment and have many
more personnel available to focus on solving a particular research problem, such
as selective regulation of gene expression. Therefore, even if our research
programs are successful, we have a competitive disadvantage.
IF WE CANNOT OBTAIN ADDITIONAL FUNDS, WE WILL BE NOT BE ABLE TO CARRY OUT OUR
BUSINESS PLAN, AND WE WILL NOT BE ABLE TO INTRODUCE GL701 TO THE MARKET.
We have incurred losses in each year since our inception and have
accumulated approximately $146 million in net losses through March 31, 2000,
including a net loss of $12.8 million in 1999 and $2.8 million for the first
quarter of 2000. We anticipate realizing a net loss at least through 2001, and
we may not be profitable after that time. Our revenues may not be sufficient to
fund operations or we may not achieve profitability or positive cash flow in the
near future or at all. At March 31, 2000, we had commitments from known sources
of funding, primarily through a grant from the Defense Advance Research Project
Agency, or DARPA, for the balance of the fiscal year of approximately $4
million, which, combined with existing cash balances, we believe is sufficient
to sustain our operations through the end of the fiscal year. Beyond the current
year, known sources of funding, primarily from royalties, are approximately $1
million per year, which is not sufficient to sustain current operations.
Excluding costs attributable to GL701, we spend approximately $10 million per
year on our research programs and other operations. In addition, we anticipate
requiring at least $10 million to commercially launch GL701. Because we have
limited funds, we will need to obtain additional funds to sustain our continuing
operations and research and development activities.
In order to have the necessary resources to commercially launch GL701,
we plan to sell additional equity. This type of financing would dilute existing
shareholders. If we do not complete financing arrangements currently
contemplated, we may have to seek other sources of capital, such as strategic
alliances, which may require us to grant third parties rights to our
intellectual property assets. We may also need to change our operating plans.
Longer-term, we plan to fund our operations principally from revenue from sales
of GL701. However, GL701 may never receive FDA approval, and if it does, we may
never generate revenue from sales of GL701. Although we are currently pursuing
foreign GL701 licensing agreements, we may fail to enter into license agreements
on acceptable terms, if at all. We also may be unable to find buyers willing to
purchase our equity or to license our products or technology on commercially
favorable terms, if at all. The unavailability of additional funds would harm
our business by delaying or preventing the development, testing, regulatory
approval, manufacturing or marketing of our products and technologies.
IF GL701 DOES NOT GAIN SUFFICIENT MARKET ACCEPTANCE, OUR BUSINESS WILL SUFFER
BECAUSE WE WOULD NOT RECEIVE ANTICIPATED REVENUE NECESSARY TO COVER COSTS FOR
MANUFACTURING AND MARKETING GL701 AND WE WOULD NOT HAVE ADDITIONAL FUNDS FOR
INVESTMENT IN OUR RESEARCH PROGRAMS.
A number of factors may affect the market acceptance of GL701 for lupus,
including:
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- availability and level of reimbursement by insurance companies or
government programs such as Medicaid;
- the price of GL701 relative to other drugs for lupus treatment;
- the perception by patients, physicians and other members of the health
care community of the effectiveness and safety of GL701 for the
treatment of lupus;
- the effectiveness of our sales and marketing efforts;
- side effects; and
- unfavorable publicity concerning GL701 or other drugs on the market.
In addition, if regulatory authorities fail to restrict the sale of DHEA
without a prescription, the market may not accept GL701. Dietary supplement
manufacturers such as Schiff, Natrol and Nature's Plus market products
containing DHEA as dietary supplements, available without a prescription where
vitamins and herbal supplements are sold. GL701 contains highly purified
prasterone, the synthetic equivalent of DHEA, as the active ingredient. The body
produces DHEA, an androgenic hormone or steroid hormone that develops and
maintains masculine characteristics, which is not a component of the diet. While
we have consistently maintained that a governmental entity should regulate DHEA
as a drug and as a controlled substance, neither the FDA nor the Drug
Enforcement Agency, or DEA, has taken any action to date to limit or regulate
the sale of DHEA. The FDA and DEA may not wish to regulate DHEA in the future.
We have submitted documentation to the FDA 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 DEA requesting clarification of DHEA's
status as an anabolic steroid, a steroid that promotes the storage of protein
and growth of tissue. If DEA agrees that DHEA is an anabolic steroid, DHEA may
no longer be publicly available as a dietary supplement. In the event that GL701
receives FDA approval, the concurrent sale of these dietary supplement products
could adversely affect or significantly limit the market for or the selling
price of GL701.
BECAUSE WE HAVE LIMITED SALES, MARKETING AND DISTRIBUTION CAPABILITIES AND
EXPERIENCE, WE MAY NOT SUCCESSFULLY INTRODUCE GL701 TO THE MARKET.
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 establish 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. Because revenue from sales of GL701 will form
a large part of our business, successful marketing, promotion and distribution
for this product is critical to our success. 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 marketing and sales efforts may not be
successful.
OUR OUTSIDE SUPPLIERS AND MANUFACTURERS FOR GL701 ARE SUBJECT TO REGULATION,
INCLUDING BY THE FDA, AND IF THEY DO NOT MEET THEIR COMMITMENTS, WE WOULD HAVE
TO FIND SUBSTITUTE SUPPLIERS OR MANUFACTURERS WHICH COULD DELAY SUPPLY OF
PRODUCT TO THE MARKET.
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Regulatory requirements applicable to pharmaceutical products tend to
make the substitution of suppliers and manufacturers costly and time consuming.
We rely on suppliers of prasterone, the active ingredient in GL701, for
production of GL701. The disqualification of these suppliers through their
failure to comply with regulatory requirements could negatively impact our
business because of delays and costs in obtaining and qualifying alternate
suppliers. In addition, currently we have a single manufacturer, Schering
Plough, to supply GL701 capsules and packaging for clinical trials and
commercial sales. We have no internal manufacturing capabilities for
pharmaceutical products and are entirely dependent on Schering Plough to
manufacture GL701. If Schering Plough does not meet FDA requirements or fails to
manufacture GL701 capsules and packaging as required for our needs, we may not
be able to ship product in a timely manner, if at all. This failure could
negatively impact our relationships with customers and would harm sales of
GL701. The following could harm our ability to manufacture and market GL701:
- the unavailability of adequate quantities of the active ingredient for
commercial sale;
- the loss of a supplier's or manufacturer's regulatory approval;
- the inability to develop alternative sources in a timely manner or at
all;
- an interruption in supply of finished product; and
- competing demands on the contract manufacturer's capacity, for
example, shifting a manufacturing priority to a more profitable
product for another customer.
IF WE ARE UNABLE TO OBTAIN PATENTS OR PROTECT OUR INTELLECTUAL PROPERTY RIGHTS,
WE WOULD LOSE COMPETITIVE ADVANTAGE.
Agency or court proceedings could invalidate our current patents, or
patents that issue on pending applications. Our business would suffer if we do
not successfully defend or enforce our patents, which would result in loss of
proprietary protection for our technologies and products. Patent litigation may
be necessary to enforce patents to determine the scope and validity of our
proprietary rights or the proprietary rights of another.
The active ingredient in GL701 is prasterone, more commonly known as
dehydroepiandrosterone or DHEA. DHEA is a compound that has been in the public
domain for many years. It is not possible to obtain patent protection for the
chemical compound anywhere in the world. Genelabs licensed two United States
patents covering uses of DHEA in treating lupus from Stanford University in
1993. The Stanford patents expire in 2015 and the license expires when the
patents expire. In addition, Genelabs has filed patent applications covering
additional uses for GL701 and various pharmaceutical formulations and intends to
file additional applications as appropriate. Genelabs has filed patent
applications covering compounds from its drug discovery programs, however, no
patents are currently issued. Nine patents have issued covering Genelabs' drug
discovery technologies and methods related to selective regulation of gene
expression and the control of viral infections, and have expiration dates
ranging from 2011 to 2015 and a number of patent applications are pending.
If another company successfully brings legal action against us claiming
our activities violate, or infringe, their patents, a court may require us to
pay significant damages and prevent us from using or selling products or
technologies covered by those patents. Others could independently develop the
same
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or similar discoveries and may have priority over any patent applications
Genelabs has filed on these discoveries. Prosecuting patent priority proceedings
and defending litigation claims can be very expensive and time-consuming for
management. In addition, intellectual property that is important for advancing
our drug discovery efforts or for uses for the active ingredient in GL701 owned
by others might exist that we do not currently know about now or in the future.
We might not obtain licenses to a necessary product or technology on
commercially reasonable terms, or at all, and therefore, we may not pursue
research, development or commercialization of promising products.
INDUSTRY RISKS
OUR ACTIVITIES INVOLVE HAZARDOUS MATERIALS AND IMPROPER HANDLING OF THESE
MATERIALS BY OUR EMPLOYEES OR AGENTS COULD EXPOSE US TO SIGNIFICANT LEGAL AND
FINANCIAL PENALTIES.
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. Our organic
chemists use solvents, such as chloroform, isopropyl alcohol and ethanol, acids
such as hydrochloric acid and flammable gases under pressure such as hydrogen.
We use the following radioactive compounds in small quantities under license
from the State of California, including Carbon(14), Cesium(137), Chromium(51),
Hydrogen(3), Iodine(125), Nuclide, Phosphorus(32), Phosphorus(33) and
Sulfur(35). We also handle chemical, medical and radioactive waste, byproducts
of our research, through licensed contractors. As a consequence, we are subject
to numerous environmental and safety laws and regulations, including those
governing laboratory procedures, exposure to blood-borne pathogens and the
handling of biohazardous materials, which are bacteria, fungi, parasites,
viruses and blood and tissue products. Federal, state and local governments may
adopt additional laws and regulations affecting us in the future. We may incur
substantial costs to comply with, and substantial fines or penalties if we
violate, current or future laws or regulations.
Although we believe that our safety procedures for using, handling,
storing and disposing of hazardous materials comply with the standards
prescribed by state and federal regulations, we cannot eliminate the risk of
accidental contamination or injury from these materials. In the event of an
accident, state or federal authorities may curtail our use of these materials
and we could be liable for any civil damages that result, the cost of which
could be substantial. Further, any failure by us to control the use, disposal,
removal or storage of, or to adequately restrict the discharge of, or assist in
the cleanup of, hazardous chemicals or hazardous, infectious or toxic substances
could subject us to significant liabilities, including joint and several
liability under state or federal statutes. While we believe that the amount of
insurance we carry is sufficient for typical risks regarding our handling of
these materials, it may not be sufficient to cover extraordinary or
unanticipated events. Additionally, an accident could damage, or force us to
shut down, our research and manufacturing facilities and operations.
WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN SUFFICIENT INSURANCE ON COMMERCIALLY
REASONABLE TERMS OR WITH ADEQUATE COVERAGE AGAINST POTENTIAL LIABILITIES IN
ORDER TO PROTECT OURSELVES AGAINST PRODUCT LIABILITY CLAIMS.
Our business exposes us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of human therapeutic
products. We may become subject to product liability claims if someone alleges
that the use of our products, such as GL701 for lupus, if approved, injured
subjects or patients. This risk exists for products tested in human clinical
trials as well as products that are sold commercially. Although we currently
have clinical trial liability insurance, we may not be able to
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maintain this type of insurance for any of our clinical trials or in a
sufficient amount. In addition, product liability insurance is becoming
increasingly expensive. As a result, we may not be able to obtain or maintain
product liability insurance in the future on acceptable terms or with adequate
coverage against potential liabilities which could harm our business by
requiring us to use our resources to pay potential claims.
OFFERING RISKS
BECAUSE OUR STOCK IS VOLATILE, THE VALUE OF YOUR INVESTMENT MAY SUBSTANTIALLY
DECREASE.
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. Between January 1, 2000 and June 20, 2000, the closing
price of our common stock fluctuated between $14.31 and $2.81 per share. In
addition to the factors discussed in this Risk Factors section, a variety of
events can impact the stock price, including:
- the success of GL701, including regulatory approval, successful
commercial launch and market acceptance;
- the low percentage of institutional ownership of our stock,
contributing to lack of stability for our stock price; and
- our ability to raise additional funds, given the limited financial
resources currently available to us.
In addition, numerous events occurring outside of our control may also
impact the price of our common stock, including market conditions related to the
biopharmaceutical industry. Other companies have defended themselves against
securities class action lawsuits following periods of volatility in the market
price of their common stock. If a party brings this type of litigation against
us, it could result in substantial costs and diversion of management's time.
THE CONVERSION OF OUR OUTSTANDING PREFERRED STOCK MAY RESULT IN DILUTION TO
INVESTORS, AND SUBSTANTIAL SALES OF THE STOCK COULD DEPRESS THE TRADING PRICE OF
OUR COMMON STOCK.
In May 1995, we sold 10,000 shares of series A convertible preferred
stock to two corporate investors for $10 million. Through August 15, 2000, the
investors have the right to convert all of their preferred shares into either
(1) Genelabs common stock at the fair market value of the common stock at the
time of conversion or $3.00 per share, whichever is lower, or (2) 49.99% of
Genelabs' diagnostics business, if they purchase the remainder of this business
at its then fair market value. They will not be able to convert their shares
into more than 49.99% of Genelabs' common stock after the conversion. The
investors have one vote for each share of common stock into which their
preferred stock could convert at the time of voting. We expect that this
preferred stock will be converted into common stock, which may substantially
increase the number of shares of common stock outstanding and could result in
further dilution to investors. Sale of these shares in the public market could
depress the trading price of our common stock.
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.
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Our Articles of Incorporation provide 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. If we issue preferred stock, such action
may adversely affect holders of our common stock by diluting their holdings. The
issuance may delay or prevent a change in control transaction without further
action by our shareholders or result in a loss of their voting control. As a
result, our common stock price may decrease.
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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 statements concerning
regulatory approval, clinical trials, progress of drug discovery programs,
Genelabs' business plans, anticipated expenditures and the timing and need for
additional funds. You may identify forward-looking statements by terminology
such as "may," "will," "expects," "anticipates," "intends," "plans," "believes,"
"potential" and similar expressions. 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;
- market acceptance;
- manufacturing risks; and
- intellectual property rights.
These and additional factors and risks are discussed in additional
detail in this prospectus, especially under "Risk Factors" beginning on page 3.
You should carefully consider these forward- looking statements. We will not
update these forward-looking statements, whether as a result of new information,
future events or otherwise. You should, however, review additional disclosures
we make in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
Annual Reports on Form 10-K filed with the SEC.
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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 long period of time 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 may be unable to generate revenue from sales of GL701.
Additionally, we may raise capital 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
activities necessary for the potential commercial introduction of GL701, our
drug development and drug discovery programs and for other general corporate
purposes. Genelabs currently plans to use the proceeds, if any, for activities
relating to our filing of a new drug application for GL701, building our sales
and marketing team necessary for the commercial introduction of GL701, acquiring
large quantities of GL701 for commercial sale, evaluation of potential new uses
of GL701, additional drug discovery research and general and administrative
purposes. Although we have not identified precisely the amounts we plan to spend
on each individual research drug discovery and development program or the timing
of the expenditures, we currently anticipate that we would use approximately the
first $10 million raised in this offering primarily for the potential commercial
introduction of GL701, and investigation of other potential uses of GL701. We
currently expect to use any additional funds raised in excess of this amount for
additional drug discovery research and general and administrative purposes. 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, assuming at least $10 million in net proceeds, will be adequate to
satisfy our capital needs until at least the middle of 2001. However, if we
cannot raise any funds through this offering or through other means such as a
private placement of unregistered securities, collaborative or licensing
arrangements or research grants, we believe that our available cash and sources
of revenue will be adequate to meet our capital needs through the end of 2000.
11
<PAGE> 15
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
this offering 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 $4.50 per share and the application of the estimated net proceeds from
the offering (after deducting estimated offering expenses), and assuming no
conversion of our preferred stock, the pro forma net tangible book value of
Genelabs as of March 31, 2000, would have been $27,249,000 or $0.60 per share,
an immediate increase in net tangible book value of $0.48 per share to existing
stockholders and an immediate dilution in net tangible book value of $3.90 per
share to purchasers of common stock in the offering, as illustrated in the
following table:
<TABLE>
<CAPTION>
<S> <C> <C>
Assumed public offering price per share....................................... $4.50
Net tangible book value per share at March 31, 2000........................... $0.12
Increase per share attributable to new investors.............................. $0.48
------------
Pro forma net tangible book value per share after offering.................... $0.60
-----------
Net tangible book value dilution per share to new investors................... $3.90
-----------
</TABLE>
To the extent that outstanding options are exercised or our outstanding
preferred stock is converted, there may be further dilution to new investors.
12
<PAGE> 16
PLAN OF DISTRIBUTION
We may offer the common stock:
- directly to purchasers;
- through underwriters;
- through dealers, agents or institutional investors; or
- through a combination of these 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 amount paid;
- the amount of any compensation, discounts or commissions to be
received by the underwriters, dealers or agents;
- the terms of any reimbursement provisions, including reimbursement for
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 has been 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/A 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.
13
<PAGE> 17
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, as amended, for the year ended December
31, 1999;
- Quarterly Report on Form 10-Q for the three months ended March 31,
2000;
- Proxy Statement for the 2000 Annual Meeting of Shareholders; and
- The description of the common stock contained in our Registration
Statement on Form S-1 as originally filed with the SEC under the
Securities Act on April 29, 1991, as amended.
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.
14
<PAGE> 18
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>
<CAPTION>
<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 Bylaws 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
Bylaws 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
II-1
<PAGE> 19
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.
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 Amended and Restated Bylaws.(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.
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.(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) Previously filed.
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:
II-2
<PAGE> 20
(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
(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.
(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) or 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;
II-3
<PAGE> 21
(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-4
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the city of Redwood City, State of
California, on the 21st day of June, 2000.
GENELABS TECHNOLOGIES, INC.
By: /s/ JAMES A.D. SMITH
-------------------------------------
JAMES A.D. SMITH
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- --------- ----------
<S> <C> <C>
Principal Executive Officer:
/s/ JAMES A.D. SMITH President, Chief Executive June 21, 2000
--------------------------- Officer and Director
James A. D. Smith
Principal Financial Officer:
*
Vice President, Chief Financial June 21, 2000
Richard A. Waldron Officer
---------------------------
Principal Accounting Officer:
*
--------------------------- Vice President, Finance June 21, 2000
Matthew M. Loar
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
*
<S> <C> <C>
-------------------------
Irene A. Chow Chairman of the Board of June 21, 2000
Directors
*
-------------------------
J. Richard Crout Director June 21, 2000
*
-------------------------
Thomas E. Dewey, Jr. Director June 21, 2000
*
-------------------------
Arthur Gray, Jr. Director June 21, 2000
-------------------------
H. H. Haight Director
*
-------------------------
Alan Y. Kwan Director June 21, 2000
-------------------------
Nina K. Wang Director
</TABLE>
<PAGE> 24
*
By: /s/ James A. D. Smith
-------------------------
James A. D. Smith
Attorney-in-Fact
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
4.1 Amended and Restated Articles of Incorporation.(1)
4.2 Amended and Restated Bylaws.(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.
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.(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) Previously filed.
