<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 8, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
COR THERAPEUTICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 94-3060271
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
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256 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CA 94080
(650) 244-6800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
VAUGHN M. KAILIAN, PRESIDENT
COR THERAPEUTICS, INC.
256 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CA 94080
(650) 244-6800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO: COPIES TO:
ROBERT L. JONES, ESQ. ALAN K. AUSTIN, ESQ.
COOLEY GODWARD LLP ELIZABETH R. FLINT, ESQ.
FIVE PALO ALTO SQUARE WILSON SONSINI GOODRICH & ROSATI, P.C.
PALO ALTO, CA 94306 650 PAGE MILL ROAD
(650) 843-5000 PALO ALTO, CA 94304
(650)493-9300
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Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
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. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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==========================================================================================================
PROPOSED PROPOSED
TITLE OF SHARES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------
Common Stock, par value $.0001
per share................... 2,875,000 shares $15.2813 $43,933,738 $13,314
==========================================================================================================
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(1) Includes 375,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(2) 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 Company's Common Stock as reported on the
Nasdaq National Market on September 3, 1997.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act 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.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1997
LOGO
2,500,000 SHARES
COMMON STOCK
All of the 2,500,000 shares of Common Stock offered hereby are being sold
by COR Therapeutics, Inc. ("COR" or the "Company"). On September 5 , 1997, the
last reported sale price of the Company's Common Stock, as reported on the
Nasdaq National Market, was $15.44 per share. See "Price Range of Common Stock."
The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "CORR."
--------------------------------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
--------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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===============================================================================================
PRICE TO PROCEEDS TO
PUBLIC UNDERWRITING COMPANY(2)
DISCOUNTS AND
COMMISSIONS(1)
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Per Share.............................. $ $ $
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Total(3)............................... $ $ $
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(1) See "Underwriting" for indemnification arrangements with the Underwriters.
(2) Before deducting expenses payable by the Company estimated at $325,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 375,000 shares of Common Stock, solely to cover
over-allotments, if any. See "Underwriting." If such over-allotment option
is exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, and Proceeds to Company would be $ , $ , and
$ , respectively.
--------------------------------------------------------
The Common Stock is offered by the Underwriters, as stated herein, subject
to receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of such shares will be made
through the offices of Robertson, Stephens & Company LLC ("Robertson, Stephens &
Company"), San Francisco, California, on or about , 1997.
ROBERTSON, STEPHENS & COMPANY HAMBRECHT & QUIST
The date of this Prospectus is , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Suite 1400, Northwest Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661; and 13th Floor, Seven World Trade
Center, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Company's
Common Stock is quoted for trading on the Nasdaq National Market and reports,
proxy statements and other information concerning the Company may also be
inspected at the offices of the National Association of Securities Dealers, 1735
K Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996; the Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997; the Company's proxy statement for its annual
meeting of stockholders held on May 20, 1997 (other than the portions thereof
not deemed filed with the Commission); the description of the Company's Common
Stock set forth in its Registration Statement on Form 8-A filed with the
Commission; and the description of the Company's preferred share purchase rights
set forth in its Report on Form 10-K for the fiscal year ended December 31,
1995, filed by the Company with the Commission are hereby incorporated by
reference in this Prospectus, except as superseded or modified herein.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the shares offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in any
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as modified or superseded, to constitute
a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been or
may be incorporated by reference herein (other than exhibits to such documents
which are not specifically incorporated by reference into such documents). Such
requests should be directed to the Secretary at the Company's principal
executive offices at 256 East Grand Avenue, South San Francisco, California
94080, telephone (650) 244-6800.
2
<PAGE> 4
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THE REGISTERED SHARES OF COMMON STOCK OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED HEREBY TO OR FROM ANY PERSON IN ANY JURISDICTION IN WHICH IT
IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
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PAGE
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Available Information................................................................. 2
Incorporation of Certain Documents by Reference....................................... 2
Summary............................................................................... 4
Risk Factors.......................................................................... 6
Use of Proceeds....................................................................... 16
Dividend Policy....................................................................... 16
Price Range of Common Stock........................................................... 17
Capitalization........................................................................ 18
Dilution.............................................................................. 19
Selected Financial Data............................................................... 20
Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 21
Business.............................................................................. 25
Management............................................................................ 47
Underwriting.......................................................................... 49
Legal Matters......................................................................... 50
Experts............................................................................... 50
Additional Information................................................................ 50
Index to Financial Statements......................................................... F-1
Report of Independent Auditors........................................................ F-2
</TABLE>
------------------------
The Company's executive offices are located at 256 East Grand Avenue, South
San Francisco, California 94080. The Company's telephone number is (650)
244-6800.
COR(TM) and INTEGRILIN(TM) are trademarks of the Company.
------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND THE
IMPOSITION OF PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN
THE COMMON STOCK OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH
RULE 103 OF REGULATION M UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."
3
<PAGE> 5
SUMMARY
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" and elsewhere in this Prospectus.
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere in this Prospectus, including
information under "Risk Factors."
THE COMPANY
COR is focused on the discovery, development and commercialization of novel
pharmaceutical products to establish a new standard of care for the treatment
and prevention of severe cardiovascular diseases. The Company believes its
understanding of the molecular and cellular biology of these diseases has
created opportunities for new therapeutic approaches where current therapies are
inadequate. The Company has created a portfolio of cardiovascular product
candidates by combining its expertise with advanced drug discovery techniques.
The Company's lead product candidate, INTEGRILIN (eptifibatide), is a small
synthetic peptide that prevents platelet aggregation and is intended for
parenteral (injectable) administration in patients with certain acute
cardiovascular indications. INTEGRILIN is being developed for the treatment of
acute ischemic coronary syndromes ("AICS"), a leading cause of hospitalization
in the United States. Over two million diagnoses of AICS were reported in the
United States in 1995.
In August 1997, the Company announced the results of the 10,948 patient
PURSUIT Phase III clinical trial, which were presented by clinical investigators
at the European Society of Cardiology's annual meeting. This trial included over
700 clinical sites in 28 countries, including 280 hospitals in the United
States. The PURSUIT trial was designed to determine the effect of INTEGRILIN as
an adjunct to current medical and interventional strategies in the treatment of
unstable angina and non-Q-wave myocardial infarction, the major diseases of
AICS.
In the PURSUIT trial, treatment with INTEGRILIN reduced the occurrence of
death or heart attack in patients with unstable angina or non-Q-wave myocardial
infarction ("NQMI"). The primary efficacy endpoint of the trial was the
prevention of death or myocardial infarction ("MI") within 30 days following
randomization. The occurrence of such adverse events was measured by both a
Clinical Events Committee ("CEC") and by the individual clinical investigators
in the trial. Treatment with INTEGRILIN produced a statistically significant
reduction in the incidence of death or MI from 15.7% to 14.2% (p=0.04) within 30
days, which represents 15 fewer adverse events per 1,000 patients, as measured
by the CEC. The trial, as assessed by the clinical investigators, also showed
positive results, with a reduction in the incidence of adverse events from 10.0%
to 8.0% (p=0.0007) within 30 days, which represents 20 fewer adverse events per
1,000 patients.
Prior to completing the PURSUIT trial, COR studied INTEGRILIN in the
treatment of elective and urgent coronary angioplasty in the IMPACT II trial,
which was completed in 1995. Based on the data from this trial, COR submitted a
New Drug Application ("NDA") for INTEGRILIN as an adjunct to percutaneous
transluminal coronary angioplasty ("PTCA"). The application was reviewed by the
Cardiovascular and Renal Drugs Advisory Committee (the "Advisory Committee") of
the Food and Drug Administration ("FDA") in February 1997. Although the Advisory
Committee stated that the trial had shown positive results, it was determined by
the FDA that the trial, as a single study, was insufficient for approval of
INTEGRILIN. Based on the positive data from the PURSUIT trial, the Company
currently plans to file an amendment to its NDA prior to the end of 1997 to seek
marketing approval for unstable angina and NQMI.
Schering-Plough Corporation ("Schering") is the Company's worldwide partner
for INTEGRILIN in all indications. Schering is responsible for regulatory
approvals outside the United States and Canada and has advised the Company of
its intention to file for marketing approval for INTEGRILIN for certain European
countries. The collaboration provides that COR and Schering will co-promote
INTEGRILIN in the United States and Canada and share any resulting profits. In
Europe and the rest of the world, Schering will promote INTEGRILIN, and COR will
receive a royalty on any sales.
4
<PAGE> 6
In addition to INTEGRILIN, the Company is pursuing several other
cardiovascular products and programs. The Company's oral GP IIb-IIIa inhibitor
product candidate is in Phase I clinical trials and may have applicability in a
broad range of indications, including AICS and stroke. The Company is pursuing
several approaches for the treatment of venous and arterial thrombosis, has
identified compounds targeted at the factor Xa/prothrombinase complex and has
chosen a lead candidate for preclinical development. In addition, COR
collaborates with Kyowa Hakko Kogyo Co. ("Kyowa Hakko") in a growth factor
inhibitor program to evaluate for preclinical development for the prevention of
restenosis following angioplasty. The Company has several other research
programs underway, including a thrombin receptor inhibitor program that is the
subject of a collaboration with Ortho Pharmaceutical Corporation, a subsidiary
of Johnson & Johnson ("Ortho").
THE OFFERING
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Common Stock Offered by the Company........... 2,500,000 shares
Common Stock Outstanding after the Offering... 22,611,009 shares(1)
Use of Proceeds............................... Commercialization of INTEGRILIN, continued
clinical development of INTEGRILIN, contin-
ued clinical development of other product
candidates and the purchase of capital
equipment and facility expansion. See "Use of
Proceeds."
Nasdaq National Market Symbol................. CORR
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SUMMARY FINANCIAL DATA
(in thousands, except per share data)
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SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------- ---------------------
1994 1995 1996 1996 1997
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STATEMENT OF OPERATIONS DATA:
Total revenues........................ $ 522 $31,850 $ 18,755 $ 7,324 $ 12,905
Total expenses........................ 44,774 43,421 58,094 29,773 30,442
Net loss.............................. (39,537) (7,531) (36,546) (20,854) (16,637)
Net loss per share.................... $ (2.07) $ (0.39) $ (1.86) $ (1.07) $ (0.83)
======== ======= ======== ======== ========
Shares used in computing net loss per
share............................... 19,091 19,360 19,636 19,505 20,063
</TABLE>
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JUNE 30, 1997
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ACTUAL AS ADJUSTED(2)
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BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments................. $ 38,518 $ 74,468
Total assets...................................................... 54,812 90,762
Long-term obligations............................................. 2,890 2,890
Accumulated deficit............................................... (144,695) (144,695)
Stockholders' equity.............................................. 34,324 70,274
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- ---------------
(1) Based on the number of shares of Common Stock outstanding as of June 30,
1997. Excludes options to purchase 4,372,383 shares of Common Stock
outstanding at June 30, 1997, of which options to purchase 2,400,603 shares
of Common Stock were vested and immediately exercisable.
(2) Adjusted to reflect the sale of 2,500,000 shares of Common Stock by the
Company at an assumed public offering price of $15.44 per share and the
application of the estimated net proceeds therefrom. See "Use of Proceeds"
and "Capitalization."
Except as otherwise indicated, the information contained in this Prospectus
assumes no exercise of the Underwriters' over-allotment option.
5
<PAGE> 7
RISK FACTORS
In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Common Stock offered hereby.
UNCERTAINTY RELATED TO REGULATORY APPROVAL OF INTEGRILIN
In order to commercialize any of its products under development, the
Company must demonstrate with substantial evidence through clinical trials and
to the FDA's satisfaction that the product is safe and effective for use in the
indications for which approval is requested. The Company's most advanced product
candidate in clinical development is INTEGRILIN. The Company submitted an NDA to
the FDA in April 1996 seeking approval to market INTEGRILIN as an adjunct to
treatment to prevent acute cardiac ischemic complications in patients undergoing
PTCA. In February 1997, the Advisory Committee considered the data from the
Company's IMPACT II trial of INTEGRILIN in PTCA and concluded that these results
were not sufficient to grant approval for marketing on the basis of the IMPACT
II trial alone. The Company subsequently received a "not approvable" letter from
the FDA identifying clinical and technical issues that need to be resolved
before approval of INTEGRILIN can be granted.
In April 1996, at about the same time as the Company filed its NDA,
Schering, the Company's worldwide partner for INTEGRILIN, applied to the
European Medicines Evaluation Agency (the "EMEA"), the central regulatory agency
for several European countries, for European marketing approval of INTEGRILIN.
In April 1997, Schering withdrew such application. There can be no assurance
that Schering will resubmit its application for marketing approval in Europe or,
if resubmitted, that such application will be approved.
In August 1997, the Company announced the results of its recently completed
PURSUIT trial for INTEGRILIN. On the basis of these additional clinical trial
results, the Company intends to amend its NDA filing in the last quarter of 1997
to seek FDA approval of INTEGRILIN for the treatment of unstable angina and
NQMI. The Company may also submit data from the PURSUIT trial to seek FDA
approval of INTEGRILIN for use in PTCA. The two Phase III clinical trials
conducted to date for INTEGRILIN were conducted with respect to different
indications and significantly different dosing regimens of the drug. As a
result, there is no assurance that the FDA or other regulatory agencies will
view the data from one trial as supportive of the data from the other trial for
approval of INTEGRILIN for any indication, based on the IMPACT II and PURSUIT
trials. Moreover, there can be no assurance that the clinical data, including
the PURSUIT data, when analyzed by regulatory authorities will be interpreted in
the same manner as the Company. Generally, the FDA has required two positive
pivotal trials prior to the approval of a new drug. There can be no assurance
that the FDA will not require additional clinical trials for marketing approval
for INTEGRILIN.
In addition, the Company is collecting additional follow-up data on the
patients in the PURSUIT trial and will provide this data to the FDA. There can
be no assurance that any of the benefits achieved at the 30-day primary endpoint
of the trial will be sustained in the six-month follow-up or that this data will
not have an adverse impact on regulatory review of INTEGRILIN.
There is no assurance that INTEGRILIN will receive marketing approval in
any country on a timely basis, or at all. The failure of the Company to obtain
marketing approval for INTEGRILIN in the United States on the basis of the data
from the IMPACT II and PURSUIT trials, any significant delay in the obtaining of
such approval, or the imposition of highly restrictive conditions on any such
approval, would have a material, adverse effect on the Company's business,
financial condition and results of operations.
6
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NO ASSURANCE OF MARKET ACCEPTANCE OF INTEGRILIN
Even if the requisite regulatory approvals for INTEGRILIN are obtained,
there is no assurance that such product would be accepted in the United States
or foreign markets. A number of factors may affect the rate and overall market
acceptance of INTEGRILIN, including the perception by physicians and other
members of the health care community of the safety and efficacy of INTEGRILIN on
an absolute basis or in comparison to other drugs, the price of INTEGRILIN
relative to other drugs or competing treatment modalities, the availability of
third-party reimbursement, and the effectiveness of the sales and marketing
efforts by the Company and Schering relative to the sales and marketing efforts
of competitors. In addition, side effects or unfavorable publicity concerning
INTEGRILIN or comparable drugs on the market could have an adverse effect on the
Company's ability to obtain physician, patient or third-party payor acceptance.
INTEGRILIN is a small synthetic peptide that blocks the platelet receptor
GP IIb-IIIa to inhibit platelet aggregation. INTEGRILIN may compete with
abciximab, a monoclonal antibody GP IIb-IIIa inhibitor developed by Centocor,
Inc. and marketed by Eli Lilly and Company ("Lilly"), which was introduced to
the market in the United States and Europe in 1995. The extent of such
competition will depend upon indications for which each agent is ultimately
approved and other indications for which physicians may prescribe these agents.
In addition, other companies also have GP IIb-IIIa inhibitors under development,
including Merck, which completed multiple Phase III trials of its own GP
IIb-IIIa inhibitor and has announced its intention to seek marketing approval of
such product. There can be no assurance that INTEGRILIN, if approved by the FDA,
will obtain market acceptance for any indication.
LACK OF MARKETING AND SALES EXPERIENCE
The Company currently does not have marketing, sales or distribution
experience. The Company's strategy is to market and sell INTEGRILIN directly in
the United States and Canada. Therefore, the Company must develop a substantial
sales force with technical expertise. The Company does not have any experience
in developing, training or managing a sales force. The Company will incur
substantial additional expenses in developing, training and managing such an
organization. There can be no assurance that the Company will be able to build
such a sales force for INTEGRILIN, that the cost of establishing such a sales
force will not exceed any product revenues, or that the Company's direct
marketing and sales efforts will be successful. In addition, the Company
competes with many other companies that currently have extensive and well-funded
marketing and sales operations. There can be no assurance that the Company's
marketing and sales efforts will compete successfully against such other
companies. See "Business -- Marketing and Sales Strategy."
INTENSE COMPETITION
Due to the incidence and severity of cardiovascular diseases, the market
for therapeutic products that address such diseases is large, and competition is
intense and expected to increase. The Company's most significant competitors are
major pharmaceutical companies and more established biotechnology companies,
which have significant resources and expertise in research and development,
manufacturing, testing, obtaining regulatory approvals and marketing. Emerging
pharmaceutical and biotechnology companies may also prove to be significant
competitors, particularly through collaboration arrangements with large
pharmaceutical companies. Many of these competitors have cardiovascular products
approved or in development, and operate large, well-funded cardiovascular
research and development programs. Furthermore, academic institutions,
governmental agencies, and other public and private research organizations
conduct research in the cardiovascular field, seek patent protection for their
discoveries and establish collaboration arrangements for product and clinical
development and marketing. In addition, these companies and institutions compete
with the Company in recruiting and retaining highly qualified scientific and
management personnel.
7
<PAGE> 9
The Company is aware of products in research or development by its
competitors that address all of the diseases and disorders being targeted by the
Company, and any of these products may compete with potential products being
developed by the Company, depending upon the indication for which each such
product is ultimately approved and other indications for which physicians may
prescribe these agents. In particular, many of the Company's competitors have
programs specifically designed to develop parenteral and oral GP IIb-IIIa
inhibitors. One of these companies has a monoclonal antibody-based parenteral GP
IIb-IIIa inhibitor, abciximab, that has received regulatory approval. This
product, introduced in 1995 and developed by Centocor, Inc., is being marketed
by Lilly. In addition to abciximab, at least one other parenteral GP IIb-IIIa
antagonist, tirofiban, is being studied in clinical trials by Merck. Merck has
completed multiple Phase III trials of this inhibitor and has announced its
intention to seek marketing approval. Orally available GP IIb-IIIa inhibitors
are also being developed by a number of pharmaceutical companies, with agents at
various stages of development. There can be no assurance that these competitors
will not succeed in developing products or technologies that are more effective
than those being developed by the Company or that would render the Company's
technology obsolete or noncompetitive.
Any product which the Company succeeds in developing and for which it gains
regulatory approval must then compete for market acceptance and market share.
For certain of the Company's potential products, an important competitive factor
will be the timing of market introduction of competitive products. Accordingly,
important competitive factors will be the relative speed with which companies
can develop products, complete the clinical testing and approval processes and
supply commercial quantities of the product to the market. With respect to
clinical testing, competition may also delay progress by limiting the number of
clinical investigators and patients available to test the Company's potential
products. In addition to these factors, competition is based on product
efficacy, safety, the timing and scope of regulatory approvals, availability of
supply, marketing and sales capability, reimbursement coverage, price and patent
position. See "Business -- Competition."
UNCERTAINTIES RELATED TO CLINICAL TRIALS
Before obtaining required regulatory approvals for the commercial sale of
any of the Company's potential products under development, the Company must
demonstrate through preclinical testing and clinical trials and, to the FDA's
satisfaction, that each product is safe and effective for use in indications for
which approval is requested. The results from preclinical testing and early
clinical trials may not be predictive of results obtained in large clinical
trials. Companies in the pharmaceutical and biotechnology industries have
suffered significant setbacks in various stages of clinical trials, even in
advanced clinical trials after promising results had been obtained in earlier
trials.
The development of safe and effective products is highly uncertain and
subject to numerous risks. Product candidates that may appear to be promising in
development may not reach the market for a number of reasons. Product candidates
may be found ineffective or cause harmful side effects during clinical trials,
may take longer to progress through clinical trials than had been anticipated,
may fail to receive necessary regulatory approvals, may prove impracticable to
manufacture in commercial quantities at reasonable cost and with acceptable
quality or may fail to achieve market acceptance. Completion of research,
preclinical testing and clinical trials may take several years, and the length
of time varies substantially with the type, complexity, novelty and intended use
of the product. In addition, data obtained from preclinical and clinical
activities are susceptible to varying interpretations, which could delay, limit
or prevent regulatory approval. Delays or rejections may be encountered based
upon many factors, including changes in regulatory policy during the period of
product development. No assurance can be given that any of the Company's
development programs will be successfully completed, that any regulatory
applications to conduct clinical trials will be approved by the FDA or other
regulatory authorities or that clinical trials will commence as planned.
All of the Company's potential products are subject to extensive regulation
and will require approval from the FDA and other regulatory agencies prior to
commercial sale. The cost to the Company of conducting clinical trials for any
potential product can vary dramatically based on a
8
<PAGE> 10
number of factors, including the order and timing of clinical indications
pursued and the extent of development and financial support, if any, from
corporate partners. Because of the intense competition in the cardiovascular
market, the Company may have difficulty obtaining sufficient patient populations
or clinician support to conduct its clinical trials as planned and may have to
expend substantial additional funds to obtain access to such resources, or delay
or modify its plans significantly. See "Business -- Competition" and
"-- Government Regulation."
NEED FOR FUTURE FUNDING; UNCERTAINTY OF ACCESS TO CAPITAL
The Company's operations to date have consumed substantial and increasing
amounts of cash. The negative cash flow from operations is expected to continue
in the foreseeable future. The development of the Company's technology and
proposed products will require a commitment of substantial funds to conduct the
costly and time-consuming research, preclinical testing and clinical trials
necessary to develop and optimize such technology and proposed products, to
establish manufacturing, marketing and sales capabilities and to bring any such
products to market. The Company's future capital requirements will depend upon
many factors, including continued scientific progress in the research and
development of the Company's technology and drug programs, the size and
complexity of these programs, the ability of the Company to establish and
maintain collaborative arrangements, progress with preclinical testing and
clinical trials, the time and costs involved in obtaining regulatory approvals,
the cost involved in preparing, filing, prosecuting, maintaining and enforcing
patent claims or trade secrets, and product commercialization activities.
The Company anticipates that its existing capital resources, together with
the net proceeds from this offering, and interest earned thereon, will enable it
to maintain its current and planned operations at least through 1999. The
Company will seek additional funding through collaboration arrangements and
public or private financings, including equity financings. No assurance can be
given that such additional funding will be available on favorable terms, if at
all. In such event, the Company may need to delay or curtail its research and
development activities to a significant extent. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
UNCERTAINTY OF FUTURE PROFITABILITY; ACCUMULATED DEFICIT
The Company had an accumulated deficit as of June 30, 1997 of $144,695,000.
The Company expects to incur operating losses for the next several years. These
losses may increase as the Company expands its research and development and
commercialization activities, and such losses may fluctuate significantly from
quarter to quarter. There can be no assurance that the Company will ever
successfully develop, receive regulatory approval for, commercialize,
manufacture, market or sell any product or achieve or sustain significant
revenues from product sales or profitable operations.
DEPENDENCE ON COLLABORATIVE RELATIONSHIPS
The Company has established collaboration arrangements with Schering, Ortho
and Kyowa Hakko. While the Company believes its agreements with these companies
provide incentives to all parties, there can be no assurance that the
relationships will be successful or will result in products. Although under its
current arrangements, the Company and its collaborators will work exclusively
with each other within a defined field for a defined period, there can be no
assurance that a collaborator or collaborators will not terminate its agreement
with the Company or pursue alternative products, therapeutic approaches or
technologies as a means of developing treatments for the diseases targeted by
the Company or a collaboration. For these or other reasons, such as a change in
a collaborator's strategic direction, even if a collaborator continues its
contributions to the arrangement, it may nevertheless determine not to actively
pursue the development or commercialization of any resulting products. In such
event, the Company's ability to pursue such potential products could be severely
limited.
9
<PAGE> 11
Under the Company's agreement with Schering, the parties have agreed to
jointly develop and market INTEGRILIN. Schering is obligated, among other
things, to fund a significant portion of the clinical development of INTEGRILIN
and to be primarily responsible for regulatory filings outside the United States
and Canada. In addition, Schering is responsible for worldwide distribution,
co-promotion in the United States and Canada, and all marketing and sales
efforts in the rest of the world, except to the extent COR exercises its
co-promotion rights in Europe. The Company recognized $11,705,000, $18,635,000
and $11,750,000 in contract revenue under its collaboration with Schering,
representing substantially all of the Company's contract revenues in the
six-month period ended June 30, 1997 and the years ended 1996 and 1995,
respectively. In addition, Schering has agreed to pay the Company additional
milestone payments of up to an additional $80 million. If Schering were to
breach or terminate its agreement with the Company, fail to pay milestone
payments or its share of collaborative costs, or otherwise fail to conduct its
collaborative activities in a timely manner, the Company would be required to
devote substantial additional resources to the development and commercialization
of INTEGRILIN or obtain capabilities or funding through alternative sources,
which would result in a significant delay of these activities.
The Company evaluates, on an ongoing basis, potential collaboration
agreements with other companies. Any such arrangements may limit the Company's
flexibility in pursuing alternatives for the commercialization of its products.
There can be no assurance that the Company will establish any additional
collaboration arrangements or that, if established, such relationships will be
successful. See "Business -- Collaboration Agreements."
UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend in part on its ability to obtain patent
protection for its product candidates both in the United States and in other
countries. The Company has filed, or has licensed exclusively, a series of
related patent applications with respect to each of its product candidates. The
Company intends to file additional applications as appropriate. No assurance can
be given that patents will issue from any applications filed by the Company or
that, if patents do issue, the claims allowed will be sufficiently broad to
protect the Company's technology. In addition, no assurance can be given that
any patents issued to the Company will not be challenged, invalidated or
circumvented or that the rights granted thereunder will provide competitive
advantages to the Company.
The Company's success will also depend in part upon its ability to develop
commercially viable products without infringing patents or proprietary rights of
others. A number of pharmaceutical, biotechnology and other companies,
universities and research institutions have filed patent applications or
received patents in the cardiovascular field. Some of these applications are
competitive with the Company's applications or conflict in certain respects with
claims made under applications that cover one or more of the Company's programs.
Such conflicts could result in a significant reduction of the coverage of the
Company's patents, if issued, which could materially adversely affect the
Company's prospects. In addition, if patents are issued to other companies that
contain competitive or conflicting claims, no assurance can be given that the
Company would be able to obtain licenses to these patents at a reasonable cost
or develop or obtain alternative technology. Failure by the Company to obtain a
license to any technology that it may require to commercialize its products
would have a material adverse effect on the Company.
The Company also relies on trade secrets and proprietary know-how. The
Company has been and will continue to be required to disclose its trade secrets
and proprietary know-how not only to employees and consultants but also to
actual or potential corporate partners, collaborators and contract
manufacturers, many of which may be competitors of the Company. Although the
Company seeks to protect its trade secrets and proprietary know-how, in part by
entering into confidentiality agreements with such persons, there can be no
assurance that these agreements will not be breached, that the Company would
have adequate remedies for any breach, or that the Company's trade secrets will
not otherwise become known or be independently discovered by competitors.
10
<PAGE> 12
Litigation, which could result in substantial cost to and diversion of
effort by the Company, may be necessary to enforce any patents issued to the
Company, to protect trade secrets or know-how owned by the Company or to
determine the scope and validity of the proprietary rights of others. In
addition, the Company may have to participate in interference proceedings
declared by the United States Patent and Trademark Office (the "USPTO") to
determine the priority of inventions, which could result in substantial cost to
the Company. See "Business -- Patents, Proprietary Rights and Licenses."
GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVALS
The production and marketing of the Company's products and its ongoing
research and development activities are subject to extensive regulation by
numerous government authorities in the United States and other countries. Prior
to marketing in the United States, any product developed by the Company must
undergo rigorous preclinical testing and clinical trails and an extensive
regulatory approval process implemented by the FDA under the Food, Drug and
Cosmetic Act, as amended (the "FDC Act"). Satisfaction of such regulatory
requirements, which includes demonstrating that the product is both safe and
effective, typically takes several years or more depending upon the type,
complexity and novelty of the product, and requires the expenditure of
substantial resources. Preclinical studies must be conducted in compliance with
the FDA's Good Laboratory Practice ("GLP") regulations. Clinical testing must
meet requirements for Institutional Review Board ("IRB") oversight and informed
consent, as well as FDA prior review, oversight and Good Clinical Practice
("GCP") regulations. The Company has limited experience in conducting and
managing the clinical trials necessary to obtain regulatory approval.
Furthermore, the Company or the FDA may suspend clinical trials at any time if
either believes that the subjects participating in such trials are being exposed
to unacceptable health risks.
The steps ordinarily required before a drug may be marketed in the United
States include (a) preclinical testing and clinical trials; (b) the submission
to the FDA of an IND, which must become effective before clinical trials may
commence; (c) adequate and well-controlled clinical trials to establish the
safety and efficacy of the drug; (d) the submission to the FDA of an NDA; and
(e) FDA approval of the application, including approval of all product
labelling.
Preclinical testing includes laboratory evaluation of product chemistry,
formulation and stability, as well as animal studies to assess the potential
safety and efficacy of each product. The results of the preclinical tests are
submitted to the FDA as part of an IND and are reviewed by the FDA before the
commencement of clinical trials. Unless the FDA objects to an IND, the IND will
become effective 30 days following its receipt by the FDA. There can be no
assurance that submission of an IND will result in FDA authorization to commence
clinical trials or that the lack of an objection means that the FDA will
ultimately approve an application for marketing approval.
Before receiving FDA approval to market a product in accordance with the
above procedures, the Company will have to demonstrate that the product is safe
and effective. Data obtained from preclinical testing and clinical trials are
susceptible to varying interpretations which could delay, limit or prevent
regulatory approvals. In addition, delays or rejections may be encountered based
upon additional government regulation from future legislation or administrative
action or changes in FDA policy during the period of product development,
clinical trials and FDA regulatory review. Similar delays may also be
encountered in foreign countries. There can be no assurance that even after such
time and expenditures, regulatory approval will be obtained for any products
developed by the Company. If regulatory approval of a product is granted, such
approval will be limited to those specific segments of the population for which
the product is effective, as demonstrated through clinical trials. Furthermore,
approval may entail ongoing requirements for post-marketing studies. There can
be no assurance that any product developed by the Company alone or in
conjunction with others will prove to be safe and efficacious in clinical trials
and will meet all of the applicable regulatory requirements needed to receive or
maintain marketing approval.
11
<PAGE> 13
Outside the United States, the Company's ability to market a product is
contingent upon receiving marketing authorization from the appropriate
regulatory authorities. The requirements governing the conduct of clinical
trials, marketing authorization, pricing and reimbursement vary widely from
country to country. At present, foreign marketing authorizations are applied for
at a national level, although within the European Union (the "EU"), procedures
are available to companies wishing to market a product in more than one EU
member state. If the regulatory authorities are satisfied that adequate evidence
of safety, quality and efficacy has been presented, a marketing authorization
will be granted. This foreign regulatory approval process includes all of the
risks associated with FDA approval set forth above.
In addition, among the conditions for FDA approval of a pharmaceutical
product, is the requirement that the manufacturer's (either the Company's own or
a third-party manufacturer's) quality control and manufacturing procedures
conform to current Good Manufacturing Procedures ("cGMP") which must be followed
at all times. The FDA enforces cGMP requirements through periodic unannounced
inspections. There can be no assurance that the FDA will determine that the
facilities and manufacturing procedures of the Company or any third-party
manufacturer of the Company's products candidates will conform to cGMP
requirements. Additionally, the Company or its third-party manufacturers must
pass a preapproval inspection of manufacturing facilities by the FDA before
obtaining marketing approval. Failure to comply with applicable regulatory
requirements may result in penalties such as restrictions on a product's
marketing or withdrawal of a product from the market.
The FDA's policies may change and additional governmental regulations may
be promulgated which could prevent or delay regulatory approval of the Company's
potential products. The Company is unable to predict the likelihood of adverse
governmental regulation which might arise from future legislation or
administrative action, either in the United States or abroad. Furthermore, the
Company or the FDA may suspend clinical trials at any time if it believes that
the subjects participating in such trials are being exposed to unacceptable
health risks. There can be no assurance that the Company will not encounter
problems in clinical trials which will cause the Company or the FDA to delay or
suspend clinical trials. See "Business -- Government Regulation."
RISK OF RELIANCE ON THIRD-PARTY MANUFACTURERS
The Company currently does not have the capacity to manufacture its
potential products, is dependent on contract manufacturers or collaboration
partners for the production of its potential products for preclinical research
and clinical trial purposes and expects to be dependent on such manufacturers or
collaboration partners for commercial production. In the event that the Company
is unable to obtain contract manufacturing, or obtain such manufacturing on
commercially acceptable terms, it may not be able to commercialize its products
as planned. The Company's dependence upon third parties for the manufacture of
its potential products may adversely affect the Company's profit margins, if
any, and its ability to develop and manufacture products on a timely and
competitive basis. The primary factors the Company will consider in making this
determination include the availability and cost of third-party sources, the
expertise required to manufacture the product and the anticipated manufacturing
volume. The Company has no experience, however, in manufacturing pharmaceutical
or other products or in conducting manufacturing testing programs required to
obtain FDA and other regulatory approvals, and there can be no assurance that
the Company will successfully develop such capabilities. Production of
INTEGRILIN, both for future clinical trials and for commercialization, is done
through contract manufacturers. The Company has established long-term supply
arrangements with a bulk product supplier and with a supplier for the filling
and final packaging of INTEGRILIN. There can be no assurance that an agreement
with alternative contract manufacturers can be reached, if required, on a timely
basis, or at all. Moreover, any contract manufacturers that the Company may use
must adhere to cGMP. If these facilities cannot pass a pre-approval plant
inspection, the likelihood of the FDA's premarket approval of INTEGRILIN will be
adversely affected. Certain material manufacturing changes that may occur after
approval are also subject to FDA review and approval.
12
<PAGE> 14
There can be no assurance that the FDA or other regulatory agencies will approve
the processes or the facilities by which any of the Company's products may be
manufactured. In addition, if the facilities cannot pass regular post-approval
FDA inspections, manufacturing and distribution may be disrupted, recalls of
distributed products may be necessary, and other sanctions could be applied.
The Company may need expanded capacity to meet market demand, if any. If
this were to occur, there is no assurance that such capacity could be expanded
in a timely manner, or at all.
For the Company's potential products which are at an early stage of
development, the Company expects that it will need to improve or modify its
existing process technologies and manufacturing capabilities. The Company cannot
quantify the time or expense that may ultimately be required to improve or
modify its existing process technologies, but it is possible that such time or
expense could be substantial. Moreover, there can be no assurance that the
Company will be able to implement any of these improvements or modifications
successfully.
The production of the Company's compounds is based in part on technology
that the Company believes to be proprietary. Contract manufacturers may utilize
their own technology, the technology of the Company or that of a third-party
manufacturer. Successful technology transfer is needed to ensure success with
potential secondary suppliers. There can be no assurance that such manufacturers
will abide by any limitations or confidentiality restrictions in licenses with
the Company. In addition, any such manufacturer may develop process technology
related to the manufacture of the Company's compounds that such manufacturer
owns either independently or jointly with the Company. This would increase the
Company's reliance on such manufacturer or require the Company to obtain a
license from such manufacturer in order to have its products manufactured. There
can be no assurance that any such license would be available on terms acceptable
to the Company, if at all. There can be no assurance that the arrangements with
third-party manufacturers will be successful. In connection with the
commercialization of its products, the Company may establish multiple
third-party manufacturing sources on commercially reasonable terms for its
products. There can be no assurance that the Company will be able to establish
such sources, or, if such sources are established, that the sources will be
successful. See "Business -- Process Development and Manufacturing."
UNCERTAINTY RELATED TO PHARMACEUTICAL PRICING AND REIMBURSEMENT
In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations. In
addition, other third-party payors are increasingly challenging the price and
cost effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products. In
many major markets outside the United States, pricing approval is required
before sales can commence. There can be no assurance as to what price can be
obtained or whether government-approved prices, once established, may not be
reduced in subsequent years. There can be no assurance that the Company's
proposed products will be considered cost effective or that adequate third-party
reimbursement will be available to enable the Company to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. Legislation and regulations affecting the pricing of
pharmaceuticals may change before the Company's proposed products are approved
for marketing. Adoption of such legislation could further limit reimbursement
for medical products. If adequate coverage and reimbursement levels are not
provided by the government and third-party payors for the Company's potential
products, the market acceptance of these products would be adversely affected,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
RISK OF PRODUCT LIABILITY; UNCERTAINTY OF AVAILABILITY OF INSURANCE
The testing, marketing and sale of human pharmaceutical products expose the
Company to significant and unpredictable risks of product liability claims in
the event that the use of its technology
13
<PAGE> 15
or products is alleged to have resulted in adverse effects. Such risks will
exist even with respect to any products that receive regulatory approval for
commercial sale. While the Company has obtained liability insurance for its
products in clinical trials, there can be no assurance that it will be
sufficient to satisfy any liability that may arise. There can be no assurance
that adequate insurance coverage will be available in the future at acceptable
cost, if at all, or that a product liability claim would not adversely affect
the business or financial condition of the Company.
VOLATILITY OF COMMON STOCK PRICE
The market prices for securities of pharmaceutical and biotechnology
companies, including the Company, have historically been highly volatile. The
market has from time to time experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Factors such as fluctuations in the Company's operating results,
announcements of technological innovations or new therapeutic products by the
Company or its competitors, announcements regarding collaborative agreements,
governmental regulation, clinical trial results, developments in patent or other
proprietary rights, public concern as to the safety of drugs developed by the
Company or others, comments made by securities analysts and general market
conditions may have a significant effect on the market price of the Common
Stock. In particular, the realization of any of the risks described in these
"Risk Factors" could have a significant and adverse impact on the market price.
See "Price Range of Common Stock."
NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND CONSULTANTS
The Company is highly dependent on the principal members of its scientific
and management staff. In addition, the Company relies on consultants to assist
the Company in formulating its research and development strategy. Attracting and
retaining qualified personnel and consultants will be critical to the Company's
success. To pursue its product development and marketing plans, the Company will
be required to hire additional qualified scientific personnel to perform
research and development, as well as personnel with expertise in conducting
clinical trials, government regulation, manufacturing, marketing and sales.
Expansion in the areas of product development, marketing and sales is also
expected to require the addition of management personnel and the development of
additional expertise by existing management personnel. The Company faces
competition for qualified individuals from numerous pharmaceutical and
biotechnology companies, universities and other research institutions. There can
be no assurance that the Company will be able to attract and retain such
individuals.
In addition, a portion of the Company's research and development is
conducted under sponsored research programs with several universities and
research institutions. The Company depends on the availability of a principal
investigator for each such program, and the Company cannot assure that these
individuals or their research staffs will be available to conduct research and
development for the Company. In addition, the Company's academic collaborators
are not employees of the Company. As a result, the Company has limited control
over their activities and can expect that only limited amounts of their time
will be dedicated to Company activities. The Company's academic collaborators
may have relationships with other commercial entities, some of which could
compete with the Company.
RISKS ASSOCIATED WITH HAZARDOUS MATERIALS
The Company's research and development involves the controlled use of
hazardous materials, chemicals and various radioactive substances. Although the
Company believes that its safety procedures for handling and disposing of such
materials comply with the standards prescribed by state and federal regulations,
the risk of accidental contamination or injury from these materials cannot be
completely eliminated. In the event of such an accident, the Company could be
held liable for any damages that result and any such liability could exceed the
resources of the Company and could have a material adverse effect on the
Company's business, financial condition and results of operations.
14
<PAGE> 16
DILUTION; ABSENCE OF DIVIDENDS
The public offering price is substantially higher than the net tangible
book value per share of the Company's Common Stock. Investors purchasing shares
of Common Stock in this offering will therefore incur immediate, substantial
dilution of approximately $12.33 per share. In addition, investors purchasing
shares of Common Stock in this offering will incur additional dilution to the
extent outstanding options and warrants are exercised. See "Dilution." The
Company has not paid any dividends on its Common Stock since inception and does
not anticipate paying any cash dividends in the foreseeable future. See
"Dividend Policy."
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company's Board of Directors has the authority to issue up to 5,000,000
shares of Preferred Stock and to determine the price, rights, preferences and
privileges of those shares without any further vote or action by the Company's
stockholders. 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. While the Company has no present intention to
issue shares of Preferred Stock, such issuance, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of the Company. In addition,
the Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which prohibits the Company from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
The application of Section 203 could have the effect of delaying or preventing a
change of control of the Company. The Company's Restated Certificate of
Incorporation (the "Restated Certificate") provides for staggered terms for the
members of the Board of Directors. In January 1995, the Company's Board of
Directors adopted a Preferred Share Purchase Rights Plan, commonly referred to
as a "poison pill." In addition, the Company's Restated Certificate does not
permit cumulative voting. The Restated Certificate also includes a "Fair Price
Provision" that requires the approval of the holders of 66 2/3% of the Company's
voting stock as a condition to a merger or certain other business transactions
with, or proposed by, a holder of 15% or more of the Company's voting stock,
except where disinterested Board or stockholder approval is obtained or certain
minimum price criteria and other procedural requirements are met. These
provisions, and other provisions of the Restated Certificate, the Company's
bylaws and Delaware corporate law, may have the effect of deterring hostile
takeovers or delaying or preventing changes in control or management of the
Company, including transactions in which stockholders might otherwise receive a
premium for their shares over then current market prices.
15
<PAGE> 17
USE OF PROCEEDS
The estimated net proceeds to the Company from the sale of the 2,500,000
shares of Common Stock offered hereby are estimated to be $36.0 million ($41.4
million if the Underwriters' over-allotment option is exercised in full), at an
assumed public offering price of $15.44 per share, after deducting the estimated
offering expenses payable by the Company.
The Company anticipates using approximately $15 million of the net proceeds
of this offering for the commercialization of INTEGRILIN, approximately $5
million for the continued clinical development of INTEGRILIN, approximately $5
million for the continued development of the oral IIb-IIIa and Factor Xa product
candidates and approximately $5 million to purchase capital equipment and
improve and expand its facilities. The Company has not yet determined the
allocation of the remaining balance of the net proceeds among its programs. The
Company may also use a portion of its available cash or proceeds from this
offering to acquire technologies or products complementary to its business,
although no such acquisitions are currently being planned. The amounts and
timing of the Company's actual expenditures for the purposes described above
will depend on a number of factors, including the progress of the Company's
research and development, the scope and results of preclinical studies and
clinical trials, the cost, timing and outcomes of regulatory reviews, the rate
of technological advances, determinations as to the commercial potential of the
Company's product candidates, the commercial performance of any of the Company's
products that receive marketing approval, administrative and legal expenses, the
status of competitive products, the establishment of manufacturing capacity or
third-party manufacturing arrangements, the establishment of additional sales
and marketing capabilities, the establishment of collaborative arrangements with
other companies and the availability of other financing. The Company will
require substantial additional funds to conduct its operations in the future.
The Company anticipates that its existing capital resources, together with
the net proceeds of this offering, and the interest thereon, will enable it to
maintain its current and planned operations at least through 1999. The Company's
requirements may vary depending on numerous factors, including those described
above. Pending the use of proceeds, the Company intends to invest the net
proceeds of this offering in short-term, investment-grade, interest-bearing
securities. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock. The Company
presently intends to retain earnings, if any, for use in the operation and
expansion of its business, and therefore does not anticipate paying any cash
dividends in the foreseeable future.
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<PAGE> 18
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "CORR." The following table sets forth, for the calendar periods
indicated, the range of high and low sale prices per share of the Company's
Common Stock on the Nasdaq National Market. These prices represent quotations
among dealers without adjustments for retail mark-ups, mark-downs or
commissions.
<TABLE>
<S> <C> <C>
1995 HIGH LOW
----- -----
First Quarter................................................... $13 7/8 $9 1/2
Second Quarter.................................................. 19 1/2 8 1/8
Third Quarter................................................... 13 5/8 8 5/8
Fourth Quarter.................................................. 12 1/2 7 3/4
1996
First Quarter................................................... 12 1/2 8 3/8
Second Quarter.................................................. 11 7/8 8 1/2
Third Quarter................................................... 11 1/2 7
Fourth Quarter.................................................. 11 5/8 8 3/4
1997
First Quarter................................................... 13 7/8 8 3/8
Second Quarter.................................................. 11 7 3/8
Third Quarter (through September 4)............................. 17 1/2 8 3/8
</TABLE>
As of September 5, 1997, there were approximately 360 holders of record of
the Company's Common Stock. On September 5, 1997, the last reported sale price
on the Nasdaq National Market for the Company's Common Stock was $15.44 per
share.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997, and as adjusted to reflect the sale of the 2,500,000 shares of Common
Stock offered hereby at an assumed public offering price of $15.44 per share and
the application of the estimated net proceeds therefrom, after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company.
<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED
--------- -----------
(in thousands)
<S> <C> <C>
Current portion of long-term debt and capital lease obligations........ $ 2,576 $ 2,576
========= =========
Long-term debt and capital lease obligations........................... $ 2,890 $ 2,890
Stockholders' equity:
Preferred Stock, $.001 par value, 5,000,000 shares authorized; no
shares issued and outstanding..................................... -- --
Common Stock, $.0001 par value, 40,000,000 shares authorized; issued
and outstanding: 20,111,019 shares actual; 22,611,019 shares as
adjusted(1)....................................................... 2 2
Additional paid-in capital, deferred compensation and unrealized
gains on short-term investments................................... 179,017 214,967
Accumulated deficit.................................................. (144,695) (144,695)
--------- ---------
Total stockholders' equity................................... 34,324 70,274
--------- ---------
Total capitalization.................................... $ 37,214 $ 73,164
========= =========
</TABLE>
- ---------------
(1) Excludes options to purchase 4,372,383 shares of Common Stock outstanding at
June 30, 1997, at a weighted average exercise price of $9.71, of which
options to purchase 2,400,603 shares of Common Stock were vested and
immediately exercisable.
18
<PAGE> 20
DILUTION
The net tangible book value of the Company at June 30, 1997 was
$34,324,000, or $1.71 per share of Common Stock. Net tangible book value per
share is determined by dividing the net tangible book value (tangible assets
less total liabilities) by the number of shares of Common Stock outstanding at
that date. After giving effect to the receipt of the estimated net proceeds from
the sale by the Company of the 2,500,000 shares of Common Stock offered hereby
at an assumed public offering price of $15.44 per share and the receipt of the
net proceeds therefrom, the pro forma net tangible book value of the Company as
of June 30, 1997 would have been $70,274,000, or $3.11 per share. This
represents an immediate increase in the net tangible book value of $1.40 per
share to existing stockholders and an immediate dilution in net tangible book
value of $12.33 per share to new investors purchasing shares at the assumed
public offering price. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed public offering price per share............................. $15.44
Net tangible book value before offering........................... $1.71
Increase attributable to new investors............................ 1.40
-----
Pro forma net tangible book value after offering.................... 3.11
----
Dilution to new investors........................................... $12.33
====
</TABLE>
The following table summarizes, on a pro forma basis, as of June 30, 1997,
the difference between the number of shares of Common Stock purchased from the
Company, the total consideration paid and the average price per share paid by
existing stockholders and by the new investors purchasing shares in this
offering and before deducting underwriting discounts and estimated offering
expenses:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........... 20,111,009 88.9% $189,691,000 83.1% $ 9.43
New investors................... 2,500,000 11.1 38,600,000 16.9 15.44
---------- ----- ----------- -----
Total...................... 22,611,009 100.0% $228,291,000 100.0%
========== ===== =========== =====
</TABLE>
The foregoing table excludes (i) 4,372,383 shares of Common Stock issuable
upon exercise of options outstanding as of June 30, 1997, at a weighted average
exercise price of approximately $9.71 per share, and (ii) an aggregate of
1,578,649 shares reserved for future grants or purchases pursuant to the
Company's 1988 Employee Stock Option Plan, 1988 Consultant Stock Option Plan,
1991 Equity Incentive Plan, 1991 Stock Purchase Plan and 1994 Non-Employee
Director's Stock Option Plan.
19
<PAGE> 21
SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and Notes thereto included elsewhere in
the Prospectus. The statement of operations data for the years ended December
31, 1994, 1995 and 1996, and the balance sheet data at December 31, 1995 and
1996, are derived from the financial statements of the Company included
elsewhere in this Prospectus which have been audited by Ernst & Young LLP,
independent auditors, whose report thereon is included elsewhere in this
Prospectus. The statement of operations data for the years ended December 31,
1992 and 1993, and the balance sheet data as of December 31, 1992, 1993 and
1994, are derived from audited financial statements not included herein.
Financial data as of June 30, 1997 and for the six-month periods ended June 30,
1996 and 1997 are derived from unaudited financial statements included elsewhere
herein, and, in the opinion of management, include all adjustments, consisting
only of normal recurring adjustments, that the Company considers necessary for a
fair presentation of its financial position and results of operations for such
periods. The results for the interim periods are not necessarily indicative of
results to be expected for any future period. The Company has not declared or
paid cash dividends on its Common Stock since inception and does not intend to
pay any cash dividends in the foreseeable future.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- --------- -------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues................... $ 1,667 $ 2,545 $ 522 $ 31,850 $ 18,755 $ 7,324 $ 12,905
Expenses:
Research and development....... 10,615 20,932 40,185 37,392 50,791 26,050 25,846
Marketing, general and
administrative............... 3,577 4,453 4,589 6,029 7,303 3,723 4,596
-------- -------- -------- -------- --------- -------- ---------
Total expenses................... 14,192 25,385 44,774 43,421 58,094 29,773 30,442
-------- -------- -------- -------- --------- -------- ---------
Loss from operations............. (12,525) (22,840) (44,252) (11,571) (39,339) (22,449) (17,537)
Interest income, net............. 2,321 3,172 4,715 4,040 2,793 1,595 900
-------- -------- -------- -------- --------- -------- ---------
Net loss......................... $(10,204) $(19,668) $(39,537) $ (7,531) $ (36,546) $(20,854) $ (16,637)
======== ======== ======== ======== ========= ======== =========
Net loss per share............... $ (0.86) $ (1.27) $ (2.07) $ (0.39) $ (1.86) $ (1.07) $ (0.83)
======== ======== ======== ======== ========= ======== =========
Shares used in computing net loss
per share...................... 11,816 15,480 19,091 19,360 19,636 19,505 20,063
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-
term investments............... $ 49,097 $122,197 $ 94,432 $ 84,834 $ 53,134 $ 38,518
Total assets..................... 53,841 130,356 106,367 100,906 71,245 54,812
Long-term obligations............ 826 3,108 4,699 4,574 3,365 2,890
Total liabilities................ 5,247 11,192 19,636 18,669 20,803 20,488
Accumulated deficit.............. (24,776) (44,444) (83,981) (91,512) (128,058) (144,695)
Stockholders' equity............. 48,594 119,164 86,731 82,237 50,442 34,324
</TABLE>
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth under "Risk Factors" and elsewhere in
this Prospectus.
OVERVIEW
Since its inception, the Company has focused on the discovery and
development of novel pharmaceutical products for the treatment and prevention of
severe cardiovascular diseases. The Company has not generated any product
revenues. The Company has been unprofitable since inception and has an
accumulated deficit of $144,695,000 during the period from inception to June 30,
1997. The Company's principal sources of working capital have been primarily
public equity financings and proceeds from collaboration research and
development agreements, as well as private equity financings, grant revenues,
interest income and property and equipment financings.
In April 1996, COR filed an NDA for marketing approval of INTEGRILIN in the
United States with the FDA for use in helping to prevent acute ischemic
complications in patients undergoing PTCA. In February 1997, the Advisory
Committee considered the data from the Company's IMPACT II trial of INTEGRILIN
in PTCA and concluded that while such trial had shown positive results, those
results were not sufficient to grant approval for marketing on the basis of the
IMPACT II trial alone. The Company subsequently received a "not approvable"
letter from the FDA identifying clinical and technical issues that need to be
resolved before approval of INTEGRILIN can be granted, including the FDA's
conclusion that these results were not sufficient to grant approval for
marketing on the basis of the IMPACT II trial alone. The FDA generally requires
two positive clinical trials prior to the approval of a new drug. The Company's
original NDA remains open, and the Company has notified the FDA that the Company
intends to file an amendment addressing the issues cited by the FDA.
Based on the positive results from the PURSUIT trial, the Company intends
to amend its NDA filing in the last quarter of 1997 to seek FDA approval of
INTEGRILIN for the treatment of unstable angina and NQMI. The Company may also
submit data from the PURSUIT trial to seek FDA approval of INTEGRILIN for use in
PTCA.
In April 1996, Schering filed an application for marketing approval of
INTEGRILIN in Europe. This application was withdrawn in April 1997. The Company
has been advised that Schering will resubmit its application for marketing
approval in Europe on the basis of the PURSUIT data. The timing of that
resubmission is uncertain.
There is no assurance that INTEGRILIN will receive marketing approval in
any country on a timely basis, or at all. The failure of the Company to obtain
marketing approval for INTEGRILIN in the United States on the basis of the data
from the IMPACT II and PURSUIT trials, or any significant delay in the obtaining
of such approval, or the imposition of highly restrictive conditions on any such
approval, would have a material, adverse effect on the Company's business,
financial condition and results of operations.
In addition to its collaboration agreement with Schering, the Company has
collaboration agreements with Ortho and Kyowa Hakko. In 1996, Ortho exercised
its option to extend the research term and has advised the Company that the
extension will be until December 1998. Collaborative research under an agreement
with Lilly ended in April 1996 and in late 1996, the Company and Lilly amended
the agreement related to the transfer of certain rights and aspects of the
collaboration that continue after completion of the collaborative research.
21
<PAGE> 23
RESULTS OF OPERATIONS
Six Months Ended June 30, 1997 and 1996
Total revenues increased 76% for the six months ended June 30, 1997 as
compared to the corresponding period in 1996, primarily due to receipt in 1997
of a milestone payment of $3,000,000 related to the completion of enrollment in
the PURSUIT trial, as well as the timing of recognition of contract revenues
under the Company's collaborative agreements with Schering and Ortho.
Research and development expenses decreased 1% for the six months ended
June 30, 1997 as compared to the corresponding period in 1996, primarily due to
the timing of activity and expenses associated with the PURSUIT trial. The
Company expects research and development expenses to continue to increase over
the next several years, although the timing of certain of these expenses may
depend on the timing and phase of, and indications pursued in, clinical trials
of potential products, including INTEGRILIN.
Marketing, general and administrative expenses increased 23% for the six
months ended June 30, 1997 as compared to the corresponding period in 1996,
primarily due to pre-commercial activities associated with INTEGRILIN, as well
as increases in staffing and administrative expenses related to general
corporate activities. The Company expects marketing, general and administrative
expenses to continue to increase significantly over the next several years.
Interest income decreased 37% for the six months ended June 30, 1997 as
compared to the corresponding period in 1996, primarily due to lower cash and
investment balances. Interest expense decreased 10% for the six months ended
June 30, 1997 as compared to the corresponding period in 1996, primarily due to
the overall decrease in the average balance of debt outstanding.
The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any other
interim period or for a full fiscal year.
Fiscal Years Ended December 31, 1996, 1995 and 1994
Total revenues have fluctuated significantly during the three years ended
December 31, 1996. Total revenues decreased to $18,755,000 in 1996 from
$31,850,000 in 1995. Revenues for 1995 included $19,500,000 of a one-time
license fee relating to the Company's agreement with Schering. Contract revenues
in 1996 and 1995 resulted primarily from research and development activities
associated with the agreement with Schering, including safety-related milestone
payments pertaining to the conduct of clinical studies of INTEGRILIN of
$9,000,000 and $6,000,000, respectively. Contract revenues in 1996 also included
a milestone payment of $3,000,000 from Schering in connection with the European
regulatory filing of INTEGRILIN. Contract revenues of $522,000 in 1994 were
recognized in connection with the Company's collaboration with Ortho. Contract
revenues fluctuate based on the timing and performance requirements of the
contracts. The Company expects contract revenues to continue to fluctuate in the
future.
Research and development expenses were $50,791,000 in 1996 as compared to
$37,392,000 in 1995 and $40,185,000 in 1994. The increase in 1996 as compared to
1995 resulted from the continuing activities of the PURSUIT trial, as well as
from higher staffing levels and increased research activities. Research and
development expenses decreased in 1995 as compared to 1994 primarily due to the
timing of costs associated with the IMPACT II trial, as well as, to a lesser
extent, additional Phase II clinical trials for INTEGRILIN. The Company expects
that research and development expenses may increase over the next several years,
although the timing of certain of these expenses may depend on the timing and
phase of, and indications pursued in, clinical trials of potential products,
including INTEGRILIN.
Marketing, general and administrative expenses increased by $1,274,000, or
21%, in 1996 as compared to 1995 and $1,440,000, or 31%, in 1995 as compared to
1994, primarily due to increases in staffing and administrative expenses related
to general corporate activities. The Company expects
22
<PAGE> 24
marketing, general and administrative costs to continue to increase
significantly over the next several years.
Interest income decreased by $1,324,000 in 1996 as compared to 1995 and by
$312,000 in 1995 as compared to 1994, primarily due to decreased average cash
and investment balances in 1996 as compared to 1995, and in 1995 as compared to
1994. Interest expense decreased by $77,000 in 1996 as compared to 1995 and
increased by $363,000 in 1995 as compared to 1994, reflecting the change in the
average balance of property and equipment financings outstanding.
The Company incurred a net operating loss of $36,546,000 in 1996 and,
accordingly, no provision for federal or state income taxes was recorded. At
December 31, 1996, COR had federal net operating tax loss carryforwards of
approximately $119,000,000. The Company's ability to use its net operating loss
carryforwards may be subject to an annual limitation in future periods. The
Company believes, however, that this limitation will not have a material impact
on its future operating results.
LIQUIDITY AND CAPITAL RESOURCES
The Company had available cash, cash equivalents and short-term investments
of $38,518,000 at June 30, 1997. Cash in excess of immediate requirements is
invested according to the Company's investment policy, which provides guidelines
with regard to liquidity and return and, wherever possible, seeks to minimize
the potential effects of concentration and credit risk. At June 30, 1997, the
Company had approximately $400,000 available under a capital lease line. The
Company has funded its operations to date primarily through public equity
financings and proceeds from collaboration research and development agreements,
as well as private equity financings, grant revenues, interest income and
property and equipment financings.
Net cash used for operating activities and additions to capital equipment
increased to $35,413,000 in 1996 from $12,850,000 in 1995, reflecting the
receipt in 1995 of a $20,000,000 one-time license fee in connection with the
Company's collaboration agreement with Schering. Net cash used for operating
activities and additions to capital equipment decreased to $14,195,000 in the
six months ended June 30, 1997 from $21,087,000 in the six months ended June 30,
1996, primarily due to the timing of recognition of milestone and contract
revenues related to the agreement with Schering, partially offset by increased
expenses. The Company anticipates that its expenditures for operating activities
and additions to capital equipment will increase in future periods. The timing
of these expenditures may vary from period to period depending on the timing and
phase of, and indications pursued in, clinical trials of potential products,
including INTEGRILIN. Cash provided by financing activities of $3,927,000,
$1,091,000 and $10,715,000 in 1996, 1995 and 1994, respectively, resulted
primarily from the issuance of Common Stock pursuant to the collaboration
agreement with Ortho and the net effect of property and equipment financing.
Cash used by financing activities of $376,000 in the six months ended June 30,
1997 resulted from principal payments on long-term obligations, partially offset
by proceeds from equipment financing and the issuance of Common Stock pursuant
to the Company's stock option and stock purchase plans.
The Company expects its cash requirements will increase in future years due
to increased marketing, sales, general and administrative activities. The
Company anticipates that its existing capital resources and interest thereon
will enable it to maintain its operations at least through June 30, 1998 and,
when combined with the proceeds of this offering, and interest earned thereon
will enable it to maintain its current and planned operations at least through
1999. However, the Company's capital requirements may change depending on
numerous factors including, but not limited to, the progress of the Company's
research and development programs, the scope and results of preclinical and
clinical studies, the number and nature of the indications the Company pursues
in clinical studies, the timing of regulatory approvals, technological advances,
determinations as to the commercial potential of the Company's products and the
status of competitive products. In addition, expenditures may be dependent on
the establishment and maintenance of collaboration relationships with other
companies, the availability of financing and other factors. The Company will
need to raise substantial additional
23
<PAGE> 25
funds in the future, and there can be no assurance that such funds will be
available on favorable terms, if at all. In such event, the Company may need to
delay or curtail its research and development activities to a significant
extent.
The Company's business is subject to significant risks including, but not
limited to, the success of its research and development activities, the results
of its clinical trials, the length and expense of seeking regulatory approval,
the costs of developing, training and managing a marketing and sales force, and
the introduction of competitive products or treatment modalities. In addition,
the Company's product candidates may be difficult to manufacture on a large
scale, be uneconomical to market or be precluded from commercialization by
proprietary rights of third parties. Additional expenses, delays and losses of
opportunities that may arise out of these and other risks could have a material
adverse effect on the Company's business, financial condition and results of
operations.
24
<PAGE> 26
BUSINESS
OVERVIEW
COR is focused on the discovery, development and commercialization of novel
pharmaceutical products to establish a new standard of care for the treatment
and prevention of severe cardiovascular diseases. The Company believes its
understanding of the molecular and cellular biology of these diseases has
created opportunities for new therapeutic approaches where current therapies are
inadequate. The Company has created a portfolio of cardiovascular product
candidates by combining its expertise with advanced drug discovery techniques.
The Company's lead product candidate, INTEGRILIN, is a small synthetic
peptide that prevents platelet aggregation and is intended for parenteral
(injectable) administration in patients with certain acute cardiovascular
indications. INTEGRILIN is being developed for the treatment of AICS, a leading
cause of hospitalization in the United States. Over two million diagnoses of
AICS were reported in the United States in 1995.
In August 1997, the Company announced the results of the 10,948 patient
PURSUIT Phase III clinical trial, which were presented by clinical investigators
at the European Society of Cardiology's annual meeting. This trial included over
700 clinical sites in 28 countries, including 280 hospitals in the United
States. The PURSUIT trial was designed to determine the effect of INTEGRILIN as
an adjunct to current medical and interventional strategies in the treatment of
unstable angina and NQMI, the major diseases of AICS.
In the PURSUIT trial, treatment with INTEGRILIN reduced the occurrence of
death or heart attack in patients with unstable angina or NQMI. The primary
efficacy endpoint of the trial was the prevention of death or MI within 30 days
following randomization. The occurrence of such adverse events was measured by
both a CEC and by the individual clinical investigators in the trial. Treatment
with INTEGRILIN produced a statistically significant reduction in the incidence
of death or MI from 15.7% to 14.2% (p=0.04) within 30 days, which represents 15
fewer adverse events per 1,000 patients, as measured by the CEC. The trial, as
assessed by the clinical investigators, also showed positive results, with a
reduction in the incidence of adverse events from 10.0% to 8.0% (p=0.0007)
within 30 days, which represents 20 fewer adverse events per 1,000 patients.
Prior to completing the PURSUIT trial, COR studied INTEGRILIN in the
treatment of elective and urgent coronary angioplasty in the IMPACT II trial,
which was completed in 1995. Based on the data from this trial, COR submitted an
NDA for INTEGRILIN as an adjunct to PTCA. The application was reviewed by the
Advisory Committee of the FDA in February 1997. Although the Advisory Committee
stated that the trial had shown positive results, it was determined by the FDA
that the trial, as a single study, was insufficient for approval of INTEGRILIN.
Based on the positive data from the PURSUIT trial, the Company currently plans
to file an amendment to its NDA prior to the end of 1997 to seek marketing
approval for unstable angina and NQMI.
In addition to the INTEGRILIN product for acute care, the Company is
conducting Phase I clinical trials for an oral platelet aggregation inhibitor.
The potential indications for this chronic product can later include the
prevention of acute ischemic coronary syndromes and stroke.
COR has also identified the factor Xa/prothrombinase complex as a target
for parenteral and small molecule inhibitors and currently has a lead compound
for this target in preclinical development. The Company believes that this
compound offer the possibility for a safe and potentially more efficacious
approach to arterial and venous thrombosis than is presently available.
Additionally, COR is evaluating leads for its growth factor inhibition program.
BACKGROUND
Despite decades of extensive research and development and significant
advances in treatment, cardiovascular diseases are the leading cause of death in
the United States, resulting in approximately one million deaths annually from
heart attacks, strokes and related diseases. Coronary artery disease,
25
<PAGE> 27
the form of cardiovascular disease responsible for the greatest number of
deaths, affects over 13 million people in the United States. Cerebrovascular
disease, including stroke, affects another approximately three million people in
the United States per year. Although there have been advances in cardiovascular
medicine over the last decade, the actual number of deaths attributable to
coronary artery disease and cerebrovascular disease continues to climb. This is
related to the aging of the United States population and the progression of
these diseases from early precursor conditions to more serious manifestations.
Complex and interrelated biological processes cause these diseases. Acute and
chronic consequences include myocardial infarction, stroke and death.
Atherosclerosis, or hardening of the arteries, contributes to a majority of
cardiovascular deaths. Atherosclerosis is a degenerative process that can occur
over decades in which vessels become increasingly less elastic and progressively
narrowed due to the formation of plaque (fatty substances lining the artery).
This process is caused by aging as well as genetic predisposition and is
exacerbated by dietary and environmental factors. It is estimated that 32
million people in the United States have some form of atherosclerosis.
A significant consequence of atherosclerosis is ischemia, or the impairment
of a vessel's ability to supply oxygen to the heart, brain and other organs. In
advanced cases of atherosclerosis, ruptures may occur in the plaque that has
built up inside the vessel wall, increasing the tendency of the blood to form a
thrombus. A thrombus is a plug that forms in the artery at the site of vascular
injury to protect the blood vessel wall. It is composed primarily of an
aggregation of small cells known as platelets, stabilized by a clot composed of
the protein fibrin. This condition, known as arterial thrombosis, may completely
occlude an atherosclerotic artery, leading to acute myocardial infarction
("AMI") if the occlusion occurs in an artery supplying the heart, or stroke if
it occurs in an artery supplying the brain.
The extent of the occlusion caused by thrombosis in the arteries supplying
the heart determines the clinical manifestations of coronary thrombosis. These
manifestations may range from prolonged episodes of severe chest pain or
discomfort unresponsive to standard antianginal therapies (unstable angina) to
limited or extensive damage to heart muscle (acute myocardial infarction) to
sudden death. Collectively, this spectrum of conditions is referred to as acute
ischemic coronary syndromes. Likewise, thrombosis in the arteries supplying the
brain can lead to partial occlusion causing a transient reduction in oxygen
supply known as a transient ischemic attack ("TIA") or total arterial occlusion
resulting in stroke. It is known that less severe manifestations of coronary and
cerebral arterial thrombosis often rapidly evolve into more serious conditions,
making all thrombotic events life-threatening and necessitating aggressive
clinical management.
One such management technique for coronary arterial occlusion, percutaneous
transluminal coronary angioplasty, involves the dilation of the atherosclerotic
artery with a balloon catheter or other mechanical device. Angioplasty is
generally successful in immediately increasing blood flow through the obstructed
artery. It, however, can also stimulate coronary arterial thrombosis by damaging
the blood vessel wall, resulting in reocclusion of the coronary artery, known as
abrupt closure, and increasing the likelihood of complications which could lead
to myocardial infarction or death. Longer term, proliferation of cells within
the blood vessel wall often leads to renarrowing of the blood vessel, known as
restenosis.
26
<PAGE> 28
Thrombosis occurs not only in arteries, which supply oxygen-rich blood to
the heart and other organs, but also in veins, which return blood from organs to
the heart. A thrombus in a vein is composed primarily of a fibrin clot and, to a
lesser extent, an aggregation of platelets and entrapped red blood cells. Unlike
in the arterial circulation, the risks of thrombosis in the veins are not
generally related to occlusion of the vessel but to the breaking-off of the
thrombus from its attachment site, known as embolization. Venous emboli can
travel through the venous circulation to the heart and ultimately to the lungs
where they block blood supply to the lungs and cause death of lung tissue, known
as pulmonary embolism. In the United States, approximately 50,000 people die
each year due to pulmonary embolism. Patients at high risk of deep vein
thrombosis include those undergoing orthopedic surgery or any surgical procedure
in which the patient is anesthetized for longer than thirty minutes. Patients
with chronic conditions that place them at risk of deep vein thrombosis include
those with congestive heart failure in whom venous circulation tends to be
sluggish, cigarette smokers who may have damaged blood vessel walls, and trauma
and burn patients.
BUSINESS STRATEGY
- Maintain Cardiovascular Disease Focus. Cardiovascular disease is the
leading cause of death in the United States. The Company believes that by
combining its extensive knowledge of the molecular and cellular biology
of cardiovascular diseases, together with advanced drug discovery
techniques, it can develop new therapeutics to address large, unmet
market opportunities.
- Maximize Value of Strategic Collaborations. The Company will continue to
seek out and enter into strategic collaborations that provide: (i) access
to new and strategic cardiovascular therapeutics and technologies, (ii)
attractive financial terms to offset internal development expenses, and
(iii) broadened and more efficient marketing, sales and distribution
capabilities.
- Build a Dedicated Sales Force to Effectively Address the Cardiovascular
Market. Due to the specialized and concentrated nature of the
cardiovascular market, the Company believes it can effectively address
this market with a dedicated sales force. The Company intends to build a
dedicated sales force to sell INTEGRILIN and other product candidates,
whether developed internally or in-licensed.
- Continue to Build Relationships with Leading Clinicians and
Scientists. The Company has conducted its clinical trials at premier
academic and clinical centers under the supervision of many of the
world's leading cardiologists. The Company builds strong relationships
with prominent scientists and clinical cardiologists by sponsoring and
conducting research, providing for increased exposure to its product
candidates in the medical community.
27
<PAGE> 29
PROGRAMS AND PRODUCT CANDIDATES
The following table summarizes COR's primary programs and product
candidates. This table is qualified in its entirety by reference to the more
detailed descriptions appearing elsewhere in this Prospectus.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SELECTED PROGRAMS AND
PRODUCT CANDIDATES STATUS PRIMARY THERAPEUTIC INDICATIONS
----------------------------- ---------------------- ----------------------------------
<S> <C> <C>
GP IIB-IIIA INHIBITOR PROGRAM
INTEGRILIN(1) Regulatory Review(2) Acute ischemic complications
following coronary angioplasty
Phase III Completed Unstable angina/non-Q-wave MI
Phase II Acute myocardial infarction (ST
segment elevation)
Oral Phase I Prevention of acute ischemic
coronary syndromes and stroke
FACTOR XA INHIBITOR PROGRAM
Parenteral/Subcutaneous Preclinical Prevention and treatment of venous
Development thromboembolism
Oral Research Prevention and treatment of venous
thromboembolism
GROWTH FACTOR RECEPTOR
ANTAGONIST PROGRAM(3)
Parenteral Preclinical Restenosis; prevention of
Development neovascularization, e.g., diabetic
retinopathy
Oral Research Restenosis; prevention of
neovascularization, e.g., diabetic
retinopathy
THROMBIN RECEPTOR INHIBITOR Research Acute and chronic ischemic
PROGRAM(4) coronary syndromes, restenosis and
stroke prevention
PLATELET ADP RECEPTOR PROGRAM Research Acute and chronic ischemic
coronary syndromes, restenosis and
stroke prevention
MYOCARDIAL SIGNAL Research Congestive heart failure; ischemic
TRANSDUCTION PROGRAM coronary disease
INTEGRIN SIGNALING PROGRAM Research Multiple
</TABLE>
-------------------
(1) INTEGRILIN is subject to a collaborative agreement with Schering. See
"-- Collaboration Agreements."
(2) The Company intends to file an amendment to its NDA with the FDA which
will include data from its PURSUIT trial. See "-- INTEGRILIN Product
Candidate."
(3) This program is being pursued in collaboration with Kyowa Hakko. See
"-- Collaboration Agreements."
(4) This program is being pursued in collaboration with Ortho. See
"-- Collaboration Agreements."
- --------------------------------------------------------------------------------
28
<PAGE> 30
ARTERIAL THROMBOSIS
Biology
Thrombosis in arteries is a complex process involving the coordinated
activities of: (i) receptors located on cells; (ii) proteins in the blood and
vessel walls that bind to these receptors; and (iii) enzymes that regulate
fibrin clot formation. Blood contains a variety of proteins and cells, including
small cells known as platelets, which are primarily responsible for the control
of bleeding. Platelets normally circulate in an inactivated state but, in
response to vascular injury, initiate a series of events to control bleeding.
Platelet activation can cause aggregation, the formation of large platelet
aggregates. The platelet receptor that mediates aggregation is glycoprotein GP
IIb-IIIa.
The role of platelet aggregation and its resultant arterial thrombosis in
acute ischemic coronary syndromes and acute cerebrovascular diseases is
well-accepted. Typically, platelet activation by any of several platelet
agonists at the site of vascular injury is followed by activation and the
expression of the platelet receptor GP IIb-IIIa. Regardless of which of the
platelet agonists may have resulted in platelet activation, the "final common
pathway" to platelet aggregation results in activation and expression of
platelet receptor GP IIb-IIIa. GP IIb-IIIa mediates platelet aggregation by
binding fibrinogen. Fibrinogen, a precursor to fibrin, then cross-links
platelets forming bridges causing an aggregation of platelets and thrombus
formation.
The Company believes that the antagonists directed at GP IIb-IIIa should
offer the most extensive inhibition of platelet aggregation and arterial
thrombus formation in the treatment of acute ischemic coronary syndromes and
stroke. Vascular occlusion is a major cause of cardiovascular mortality and
presents clinically in the forms of unstable angina, acute myocardial
infarction, stroke and reocclusion following PTCA or thrombolysis. As a result,
a GP IIb-IIIa inhibitor administered intravenously for rapid saturation of the
platelet receptors may be effective in the treatment of these life-threatening
events.
Disease and Markets -- Acute Care
Acute Ischemic Coronary Syndromes. Acute ischemic coronary syndromes is a
medical term encompassing the diseases of unstable angina and acute myocardial
infarction, which includes both ST segment elevation MI (an EKG marker of
significant injury to the heart) and non-Q-wave myocardial infarction. Over two
million diagnoses of acute ischemic coronary syndromes were reported in the
United States in 1995, including over 1.3 million cases of unstable angina and
over 700,000 diagnoses of myocardial infarction. These patients are currently
treated with a variety of drug regimens and medical procedures. The Company's
programs and product candidates are designed to improve the treatment of these
patients in conjunction with existing therapies and, to the extent possible,
without limiting the other choices available to the treating physician. Nearly
500,000 patients die each year due to coronary artery disease.
The acute ischemic syndromes of unstable angina and myocardial infarction
represent a clinical continuum, sharing the common pathophysiology of plaque
fissure or rupture. Patients may present at the emergency room of the hospital
with different clinical features reflecting differences in the
pathophysiological state. Patients suffering from total occlusion of a proximal
coronary artery who are having an ST segment elevation MI will typically develop
a Q-wave MI. These patients are treated with thrombolytic therapy or direct
angioplasty. In contrast, patients with prolonged or repeated shorter episodes
of angina at rest, without ST segment elevation, may be classified as unstable
angina or NQMI. At the time of presentation in the hospital, the latter two
groups often cannot be distinguished. These diseases are described below:
- Unstable Angina. Unstable angina is believed to be caused by transient
blockage of a coronary artery as a result of thrombosis and/or spasm
characterized by unpredictable episodes of chest pain, particularly
episodes that occur while the patient is at rest. Patients presenting
with unstable angina may or may not have been symptomatic with a previous
history of stable angina
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(chest pain upon exertion). Unstable angina requires hospitalization as
the syndrome is often the precursor of acute myocardial infarction.
- Acute Myocardial Infarction (Heart Attack). Patients with sustained
blockage of a coronary artery as a result of thrombosis have inadequate
blood supply to the heart and damage to heart tissue, causing acute
myocardial infarction. In the United States, approximately 1.5 million
people suffer from AMIs annually, approximately 700,000 of whom are
hospitalized for treatment. AMI patients may be experiencing a Q-wave MI
or an NQMI as follows:
Myocardial Infarction with ST Segment Elevation. Patients presenting
with prolonged chest pain and ST segment elevation in the
electrocardiogram will typically evolve to having a Q-wave MI if
untreated. These patients are frequently treated with thrombolytic
therapy or primary angioplasty.
Non-Q-wave Myocardial Infarction. Patients presenting with prolonged
chest pain without ST segment elevation or development of Q-waves in the
electrocardiogram may still be experiencing an MI. Some of the patients
initially presenting with suspected unstable angina will in retrospect
be diagnosed as having had an MI based upon analysis of myocardial
enzymes. These patients are not eligible for thrombolitic therapy.
The primary objective of the treatment of unstable angina and non-Q-wave MI
(collectively, "UA/NQMI") is the prevention of progression to acute myocardial
infarction or death through the restoration of blood flow through the coronary
artery. Management beyond initial stabilization often differs by institution. In
most institutions with catheterization laboratories, patients undergo coronary
angiography to assess the degree and location of blockages of the coronary
arteries. In institutions without catheterization laboratories, patients whose
vital signs and electrocardiograms have normalized may be discharged with
chronic antianginal medications for outpatient follow-up. Less stable patients
are transferred to tertiary institutions for catheterization. In the United
States, Canada and Western Europe, the Company estimates that approximately
20 - 35% of UA/NQMI patients undergo PTCA to restore blood flow through the
coronary artery and 10 - 20% undergo coronary artery bypass graft ("CABG")
surgery. The utilization of PTCA and CABG procedures, as well as the utilization
of aspirin and heparin, for the treatment of patients experiencing UA/NQMI
varies from country to country, reflecting differences in local clinical
practice.
Acute Ischemic Complications of Angioplasty. Approximately 480,000
angioplasties were performed in the United States in 1995. In addition to the
angioplasties performed in unstable angina and AMI patients, angioplasties are
also performed electively on patients with coronary artery disease to improve
coronary blood flow, relieve angina and prevent subsequent acute events.
Angioplasty and other invasive medical procedures intended to treat
atherosclerotic patients create the risk of acute ischemic complications such as
abrupt closure (complete occlusion, typically within 24 hours of the procedure)
of the treated artery as a result of sudden thrombosis. Studies indicate that
approximately 10-12% of angioplasty patients die, suffer heart attack or require
revascularization within 30 days of the procedure.
Thrombosis of Cerebrovascular Arteries. Thrombosis in cerebral arteries
that deliver blood to the brain has analogous consequences to vascular
occlusions in coronary arteries that feed the heart. Therapeutics developed to
treat these conditions may have implications for both acute and chronic care for
stroke patients.
- Transient Ischemic Attacks. TIA is believed to be a thromboembolic event
resulting from atherosclerotic involvements of a cerebral artery; 96,000
people were hospitalized in the United States in 1995 with TIA.
- Ischemic Stroke. TIA frequently precedes an ischemic stroke. Stroke is an
acute neurologic disease commonly caused by prolonged cerebral artery
occlusion, usually as a result of a thromboembolic event. Approximately
433,000 people were diagnosed in United States hospitals
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having suffered an ischemic stroke in 1995. Stroke is the leading cause
of serious disability in the United States.
INTEGRILIN Product Candidate
Product Overview. The Company's first product candidate targeted for
commercialization is INTEGRILIN, a small synthetic peptide that prevents
platelet aggregation. The mechanism of action of INTEGRILIN is to block the
platelet receptor GP IIb-IIIa, thereby preventing the crosslinking of activated
platelets via fibrinogen bridges. The Company believes that INTEGRILIN prevents
acute thrombus formation and associated complications.
INTEGRILIN was developed specifically to address the needs of patients
suffering from acute ischemic coronary syndromes (encompassing unstable angina,
non-Q-wave MI and ST segment elevation MI) as well as complications following
angioplasty and stroke. INTEGRILIN is delivered by intravenous (injectable)
administration in acute care settings. The Company believes that clinical trials
have demonstrated that INTEGRILIN is safe and effective as a fast-acting,
rapidly reversible antithrombotic.
INTEGRILIN is designed to satisfy four key criteria. First, the product is
specifically targeted to inhibit GP IIb-IIIa to avoid complications that could
result from disruption of cellular interactions that may be mediated by other
closely related adhesion receptors. Second, because the cardiovascular disorders
that the Company is targeting with this product are acute in nature, the product
is designed to be potent and to act rapidly upon administration. Third, in order
to avoid prolonged impairment of normal hemostasis, the effects of the product
are readily reversible after administration is discontinued. Fourth, the product
is designed to be safe for repeat use considering that many patients with acute
ischemic coronary syndromes and stroke are treated more than once in an acute
care setting.
In April 1995, the Company entered into a collaboration agreement with
Schering to develop and commercialize INTEGRILIN on a worldwide basis. Schering
has certain rights to pursue regulatory approval of INTEGRILIN outside of the
United States. See "Collaboration Agreements -- Schering."
INTEGRILIN has been studied in two randomized, double-blind, placebo
controlled Phase III clinical trials, the PURSUIT trial (adjunct therapy in the
treatment of unstable angina) and the IMPACT II trial (adjunct therapy in the
treatment of patients undergoing angioplasty). The two Phase III clinical trials
conducted to date for INTEGRILIN were conducted with respect to different
indications and with different doses of the drugs. As discussed below, the
Company believes that these trials produced positive results and, on that basis,
the Company intends to seek regulatory approval of the drug in the United
States.
UA/NQMI is an urgent cardiac condition necessitating aggressive management,
due to the potential for thrombosis to progress rapidly and cause MI or death.
Notwithstanding current medical care, the Company estimates that approximately
one in six patients experiencing UA/NQMI will proceed to death or repeat
myocardial infarction within 30 days.
PURSUIT Trial -- Unstable Angina and Non-Q-Wave MI. The PURSUIT clinical
trial enrolled 10,948 patients with UA/NQMI in over 700 clinical sites in 28
countries, including over 280 hospitals in the United States. The PURSUIT trial
was the largest clinical study ever conducted in patients with unstable angina
or non-Q-wave MI. Importantly, the population studied represented a broad,
global distribution of patients and practice strategies, from small primary care
hospitals to large tertiary care referral-based institutions. The trial was
designed to allow patients to be managed in accordance with standard medical
practice of the clinical site, thereby allowing the study of INTEGRILIN in the
context of different practice patterns including the varied administration of
concommitant drugs.
Patients with acute coronary syndromes who were not experiencing an MI with
ST segment elevation were randomized to placebo treatment or drug treatment.
While all patients were treated in accordance with local clinical practice, most
patients received aspirin and heparin. Patients were
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eligible to receive treatments for up to 72 hours. The primary endpoint of death
and myocardial infarction was measured at 96 hours and seven days, as well as at
30 days.
The occurrence of such events was measured on the basis of determinations
by both the clinical investigators and the Clinical Events Committee. The CEC
studied all available data, including enzyme levels evidencing damage to heart
muscle tissue which provided evidence of "silent" heart attacks, some of which
may not have been observed by the investigators. On the basis of determinations
by the CEC, the occurrence of death or MI within 30 days in patients randomized
to INTEGRILIN was 14.2% compared to a rate in the placebo group of 15.7% (p =
0.04). On the basis of determinations by the individual clinical investigators,
the INTEGRILIN group experienced such events at a rate of 8.0% compared to the
placebo rate of 10.0% (p = 0.0007). The CEC also measured the occurrence of
death or large MI (defined as particularly large increases in enzyme levels),
where the event rate was reduced to 7.3% in the INTEGRILIN group from 8.5% in
the placebo group (p = 0.03). The occurrence of a Q-wave MI was reduced to 1.1%
in the INTEGRILIN group from 1.7% in the placebo group (p = 0.02). Importantly,
the absolute reduction of death or myocardial infarction per 1,000 patients was
demonstrated at both 96 hours (p = 0.011) and at seven days (p = 0.016) and
maintained to 30 days post-randomization.
The statistical results varied considerably by geographic region. In the
United States and Canada, which experienced the highest rate of coronary
interventions and CABG and concomitant use of heparin and aspirin, the rate of
death or MI in the INTEGRILIN group was reduced to 11.7% from 15.0% in the
placebo group (p = 0.003). In Western Europe, the trends were also favorable for
INTEGRILIN, although less dramatic. In Eastern Europe and Latin America
(including Mexico), the trends as determined by the CEC were unfavorable, but
the reports by the clinical investigators in these regions remained positive and
were almost as favorable for the drug as the investigator reports in the rest of
the world. The Company believes that these regional variations reflect
differences in patient population, laboratory procedures and clinical practice,
including the use of concomitant medications and the application of
interventional strategies.
In addition, the Company is collecting follow-up data on the patients in
the PURSUIT trial and will provide this data to the FDA. There can be no
assurance that any of the benefits achieved at the 30-day primary endpoint of
the trial will be sustained in the six-month follow-up or that this data will
not have an adverse impact on the regulatory review of INTEGRILIN.
There was a significant increase in both major and minor bleeding in the
INTEGRILIN-treated patients. The incidence of major bleeding in those patients
receiving drug was 10.6% and the incidence in the placebo group was 9.1% (p =
0.01). The occurrence of stroke and thrombocytopenia, a life-threatening
condition associated with very low platelet counts, was essentially the same in
the placebo and the study group, and there was no additional risk incurred by
INTEGRILIN-treated patients undergoing CABG surgery. Based in part on these
results, the Company believes that the overall safety profile of INTEGRILIN in
the PURSUIT trial was favorable.
IMPACT II -- Adjunct Therapy In Coronary Angioplasty. In 1995, the Company
completed IMPACT II, a Phase III clinical trial designed to evaluate the safety
and efficacy of INTEGRILIN in reducing the acute complications of both elective
and urgent coronary angioplasty. This study enrolled 4,010 patients at 82
hospitals in the United States. The trial evaluated two different infusion rates
with a common bolus of INTEGRILIN.
Based on an analysis of all patients who received INTEGRILIN or placebo,
INTEGRILIN at the lower infusion rate reduced the composite endpoint of death,
myocardial infarction and emergency revascularization by 31% at 24 hours (p =
0.006) and 22% at 30 days (p = 0.035), although the effect was less pronounced
at the higher infusion rate. The reduction in the clinical endpoint at all time
points was primarily due to a reduction in the clinically more serious
components of the endpoint: death and myocardial infarction. The benefit of the
reduction in death and myocardial infarction was sustained and similar at six
months. The safety data related to INTEGRILIN were favorable.
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Acute Myocardial Infarction -- ST Segment Elevation MI. The Company has
conducted Phase II clinical trials of INTEGRILIN with the thrombolytics tPA and
streptokinase for the treatment of ST segment MI. A pilot clinical study with
full dose tPA and varying doses of INTEGRILIN showed benefit of combined therapy
without a significant increase in major bleeding. A pilot clinical study with
full dose streptokinase and varying doses of INTEGRILIN showed a significant
increase in major bleeding at the higher doses of INTEGRILIN and resulted in the
discontinuation of the highest dosing arm of the study. The Company intends to
conduct further Phase II trials to elucidate dosing regimens that produce the
best results in terms of both efficacy and safety.
Regulatory Status
In April 1996, COR filed an NDA for marketing approval of INTEGRILIN in the
United States with the FDA for use in helping to prevent acute ischemic
complications in patients undergoing PTCA. In February 1997, the Advisory
Committee considered the data from the Company's IMPACT II trial of INTEGRILIN
in PTCA and concluded that while such trial had shown positive results, those
results alone were not sufficient to grant marketing approval. The Company
subsequently received a "not approvable" letter from the FDA identifying
clinical and technical issues that need to be resolved before approval of
INTEGRILIN can be granted, including the FDA's conclusion that these results
were not sufficient to grant approval for marketing on the basis of the IMPACT
II trial alone. The FDA generally requires two positive clinical trials prior to
the approval of a new drug. The FDA recently published draft guidelines for
public comment, whereby studies in related conditions can support each other
allowing initial approval of several uses or allowing additional claims based on
a single adequate and well-controlled study. Each study would support the
other's claims. There can be no assurance that these guidelines will be adopted
as proposed or be followed by the FDA in reviewing the Company's NDA. The
Company's original NDA remains open, and the Company has notified the FDA that
the Company intends to file an amendment addressing the issues cited by the FDA.
Based on the positive results from the PURSUIT trial, the Company intends
to amend its NDA filing by the end of 1997 to seek FDA approval of INTEGRILIN
for the treatment of unstable angina and NQMI. The Company may also submit data
from the PURSUIT trial to seek FDA approval of INTEGRILIN for use in PTCA. The
two Phase III clinical trials conducted to date for INTEGRILIN were conducted
with respect to different indications and with significantly different dosing
regimens of the drug. As a result, there is no assurance that the FDA or other
regulatory agencies will view the data from one trial as supportive of the data
from the other trial for approval of INTEGRILIN for any indication, based on the
IMPACT II and PURSUIT trials.
In April 1996, Schering filed an application for marketing approval of
INTEGRILIN in Europe. This application was withdrawn in April 1997. The Company
has been advised that Schering will resubmit its application for marketing
approval in Europe on the basis of the PURSUIT data. The timing of that
resubmission is uncertain.
There is no assurance that marketing approval for INTEGRILIN can be
obtained on the basis of the clinical trials conducted to date, can be obtained
if additional trials are conducted, or if obtained will not be substantially
delayed. If INTEGRILIN is approved for marketing in one indication, there is no
assurance it will prove effective or be approved for marketing in any
indication. The failure of the Company to obtain marketing approval for
INTEGRILIN or a significant delay in obtaining such approval would have a
material adverse effect on the Company.
Disease and Markets -- Chronic Care
There are over 32 million people in the United States with evidence of
atherosclerosis. Many of these patients are at risk of suffering an acute
ischemic coronary or cerebrovascular event and are therefore potential
candidates for preventative therapies. In particular, the Company believes that
those that have survived an acute event are likely candidates for chronic care
treatments. With almost 500,000 deaths annually in the United States alone from
unstable angina, non-Q-wave MI and
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ST segment elevation MI, significant unmet clinical needs exist in the
management of acute cardiac events resulting from arterial thrombosis. In
addition, the acute events related to cerebrovascular arterial thrombosis,
including transient ischemic attacks and stroke, impact over 500,000 people in
the United States each year and result in death for up to one-third of these
patients. The Company believes that its product candidates can address this
market and be used on a prophylactic basis.
Oral GP IIb-IIIa Inhibitor Product Candidate
Aspirin is commonly prescribed for long-term prophylaxis in patients who
are at risk for stroke or AMI or who have suffered a stroke or AMI. As a
relatively weak inhibitor of platelet function, this agent is not an optimal
therapeutic for reducing ischemic cardiovascular events. The Company believes
that oral agents which block platelet aggregation by binding to the platelet
receptor GP IIb-IIIa may have substantial benefit. An oral GP IIb-IIIa inhibitor
could be a clinically beneficial agent for patients who have been treated with
INTEGRILIN.
The Company believes that the likely criteria of a successful drug in this
category will be (i) high-affinity inhibition of GP IIb-IIIa, (ii) specificity
for GP IIb-IIIa relative to other integrins, (iii) an acceptable level of
bioavailability, (iv) acceptable half-life, and (v) an acceptable safety
profile.
Multiple chemical classes of small molecule GP IIb-IIIa inhibitors were
identified which included compounds that have been found to be orally active in
a variety of animal models. A product candidate was chosen by the Company for
preclinical development, and a sufficient quantity of this compound has been
synthesized to support the Company's initial clinical development program. The
Company filed an IND for this compound in late 1996 and initiated Phase I
clinical trials in February 1997. In addition to its clinical development
program, the Company is continuing its efforts to identify additional orally
active GP IIb-IIIa inhibitor compounds. Based upon the preclinical and Phase I
clinical data available, the Company plans to continue its clinical program for
the oral GP IIb-IIIa product candidate. If this compound is successfully
developed and marketed, it will be subject to a royalty payable to Lilly. See
"Collaboration Agreements -- Relationship with Lilly."
Venous Thrombosis
Biology
The composition of a thrombus in a vein differs from that of a thrombus in
an artery. Arterial thrombosis occurs in rapidly flowing blood and tends to be
initiated by platelets. By contrast, a thrombus in a vein is composed primarily
of fibrin and red blood cells in addition to platelets. Fibrin is generated by
thrombin synthesized as a result of restricted blood flow through veins.
The Company is pursuing several approaches for the treatment of venous
thrombosis. These approaches are designed to inhibit thrombin synthesis or to
inhibit other elements of the coagulation process that lead to thrombin
generation. The Company's programs in this area focus on identifying agents to
inhibit the activity of the prothrombinase complex, the enzyme responsible for
production of thrombin. Interrupting the activity of this complex may arrest
coagulation, thrombosis and other potentially pathological conditions caused by
thrombin. One of the critical components of the prothrombinase complex, factor
Xa, is the enzyme responsible for converting prothrombin into active thrombin.
The Company believes that compounds identified through such approaches may also
have applications in the treatment of acute arterial thrombosis and restenosis
and plans to evaluate certain of these compounds for such applications.
Disease and Markets -- Acute and Chronic Care
Deep Vein Thrombosis and Pulmonary Embolism. Over 270,000 hospitalized
patients in the United States are diagnosed with deep vein thrombosis and
pulmonary embolism annually. Thrombosis, primarily in the pelvic and leg veins,
can occur after surgery (particularly joint replacement surgery), injury,
immobilization or increased intra-abdominal pressure. Over 330,000 hip and knee
replacements
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were performed in the United States in 1995. Fragments of blood clots from veins
can embolize (or migrate) to pulmonary arteries, leading to impaired
oxygenation, acute right heart failure or pulmonary infarction. Left untreated,
approximately 25% of patients with pulmonary embolism die. Estimates for the
number of patients in the United States who are candidates for prophylaxis
against deep vein thrombosis and pulmonary embolism exceed two million annually.
Factor Xa Inhibitor Program
The Company has identified the factor Xa/prothrombinase complex as a target
for small molecule inhibitors. The prothrombinaise complex catalyzes the
conversion of prothrombin to thrombin. The Company believes that this mechanism
of action, specific factor Xa blockade, offers the possibility for a safer and
potentially more efficacious approach to arterial and venous thrombosis than is
presently available with agents that inhibit both thrombin activity and
generation (heparin and low molecular weight heparin). COR scientists have
discovered multiple chemical classes of novel small molecule inhibitors with
high potency and specificity which have been shown to block both arterial and
venous thrombosis in various animal models. In these models, the bleeding risk
of these inhibitors compared favorably with agents such as low molecular weight
heparin and heparin. A clinical need exists in the prophylaxis of venous
thrombosis. This is particularly true in the setting of hip and knee replacement
surgery where there remains a greater than 15% incidence of deep vein thrombosis
despite current therapy of either heparin in combination with coumadin or low
molecular weight heparin. A lead compound that can be administered either
intravenously or subcutaneously is currently in preclinical development at COR.
The Company plans to file an IND on this compound and begin its clinical trial
program in 1998.
In addition to its preclinical development compound, the Company is
continuing research to identify orally active factor Xa inhibitors and has
identified potential lead candidates. The development of either parenteral or
orally active inhibitors in this class may have application in both the venous
and arterial markets and may offer significant clinical advantages over
presently available agents such as heparin or coumadin.
Restenosis
Biology
Interventional procedures such as angioplasty disrupt the endothelial cell
lining of an artery and further damage the arterial wall. This injury exposes
atherosclerotic plaque and healthy arterial tissue to the flowing blood, causing
thrombosis at the site of injury. Platelets that have adhered at this site, as
well as white cells that are attracted to the site of injury, secrete growth
factors that promote cell growth and injury healing. Smooth muscle cell
migration into the intima mediated by growth factors such as platelet-derived
growth factor ("PDGF") is thought to play an important role in the intimal
proliferation that follows vascular injury such as that induced by balloon
angioplasty. Restenosis is a complex process of mechanical factors including
vasoconstriction and remodeling of the arterial wall which can also contribute
to lumen narrowing. Restenosis can occur when smooth muscle cells migrate from
the inner layers of the cell wall to the injured surface of the artery and
rapidly proliferate, causing the artery to narrow.
Multiple growth factors induce the migration and/or proliferation of smooth
muscle cells. Experiments in animal models have demonstrated that three such
potential factors in mediating the growth and migration of smooth muscle cells
are PDGF, fibroblast growth factor ("FGF") and thrombin, and that antibodies
that block the action of PDGF and FGF can specifically inhibit the vascular
response to injury. Independent studies have demonstrated that the
growth-promoting effects of PDGF and FGF are mediated by receptors located on
smooth muscle cells. Studies have also demonstrated in animal models that
induced injury to arteries can significantly increase the number of PDGF
receptors on smooth muscle cells in the blood vessel wall. The Company has
exclusively licensed certain patent rights to PDGF and FGF receptors from the
Regents of the University of
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California, although there can be no assurance that these licenses will provide
effective protection against competitors. See "Patents, Proprietary Rights and
Licenses."
Disease and Markets
Approximately 480,000 coronary angioplasty procedures were performed in the
United States in 1995. These procedures are generally successful in immediately
increasing blood flow, but may not have prolonged efficacy. Independent studies
indicate that up to 30% of coronary angioplasty patients suffer a significant
renarrowing of the vessel within three to six months of the procedure.
Restenosis rates have declined recently with the rapid acceptance of coronary
stenting to accompany coronary angioplasty, perhaps by preventing the mechanical
factors which promote restenosis. Interventional cardiologists are expected to
continue to embrace this relatively new procedure. Since the occurrence of
restenosis is unpredictable, whether or not coronary stents are deployed, the
Company believes that if an effective treatment for restenosis were available,
it might be utilized on a prophylactic basis in substantially all coronary
angioplasty procedures. Moreover, coronary stenting is still complicated by the
occurrence of restenosis, particularly in smaller vessels. Recent studies have
suggested that the principal mechanism of restenosis in stented coronary
arteries is neointimal proliferation rather than remodeling and/or constriction
of the stented vessel.
Growth Factor Receptor Antagonist Program
The Company's growth factor inhibitor program is directed toward the
discovery of protein and small molecule inhibitors of certain growth factor
receptor inhibitors in the tyrosine kinase family. In November 1992, the Company
entered into a collaboration agreement with Kyowa Hakko focused on the discovery
and development of small molecule pharmaceuticals, primarily for the prevention
of restenosis following angioplasty. The collaboration targets certain growth
factor receptors. In late 1995, this collaborative research program was extended
through November 1997. The Company and Kyowa Hakko have identified multiple
classes of small molecule agents that specifically block the tyrosine kinase
activity of the target receptors and are long acting and bioavailable. COR and
Kyowa Hakko are evaluating lead compounds in animal models and are pursuing the
preclinical development of a specific protein growth factor inhibitor. In 1996,
the program was expanded to include the development of certain identified
protein factor inhibitors. Potential clinical indications include restenosis, as
well as the prevention of neo-vascularization such as that seen in diabetic
retinopathy. See "Collaboration Agreements -- Relationship with Kyowa Hakko."
Thrombin Receptor Inhibitor Program
The Company's thrombin receptor inhibitor program is directed toward the
discovery of agents for the treatment of arterial thrombosis and restenosis and
may also address certain non-cardiovascular diseases. Thrombin is an enzyme that
has multiple effects on cells and proteins within the vasculature and is the
most potent activator of platelets. Thrombin mediates cellular events through
interactions with at least one protease activated G protein-linked receptor
found on platelets, as well as on most vascular cells, including smooth muscle
and endothelial cells. In December 1993, the Company and Ortho entered into a
worldwide collaboration to research, develop and commercialize thrombin receptor
agonists and antagonists. In 1996, Ortho exercised its option to extend the
research term and has advised the Company that the extension will be until
December 1998. The Company and Ortho have investigated a variety of approaches
to identify compounds that agonize or antagonize the thrombic receptor, have
identified lead compounds and are evaluating these compounds. The Company has an
exclusive, worldwide license from the Regents of the University of California to
certain patent rights relating to the thrombin receptor. See "Collaboration
Agreements -- Relationship with Ortho."
In addition to the collaboration with Ortho, the Company is investigating a
novel member of the class of protease-activated G protein-linked receptors to
which it has obtained exclusive worldwide rights. See "Patents, Proprietary
Rights and Licenses."
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Platelet ADP Receptor Program
A specific receptor exists for ADP on the surface of platelets that plays a
key role in promoting platelet activation and aggregation. COR has successfully
identified a lead compound of novel structure that specifically binds to this
receptor and blocks ADP-induced platelet aggregation. Chemical modification of
this compound is now underway in an attempt to develop oral, long-acting
inhibitors of this platelet activation pathway. Such a molecule might provide a
safe and effective means for preventing acute and chronic arterial diseases.
Myocardial Signal Transduction Program
The Company has initiated a research program directed toward the unmet
clinical needs of patients with heart failure. Heart failure is viewed as a
progressive disease typically initiated by a singular insult such as myocardial
infarction. Thereafter, cardiac dilatation representing dysfunction of the
remaining normal myocardium ensues. COR is focusing on particular molecular
targets in a specific signaling pathway as a site for intervention. This program
may also have application in the treatment of acute and chronic coronary
syndromes.
Integrin Signaling Program
The Company has initiated a research program to discover mechanisms of
integrin signal transduction. This effort is being conducted in collaboration
with investigators at the Scripps Research Foundation. Integrins play a key role
in modulating not only cell migration and shape but also growth and
differentiation, thus placing them at a central location in a variety of disease
processes. The Company believes that inhibitors of these integrin signaling
pathways may be useful for the treatment or prevention of a wide variety of
disorders including thrombosis, inflammation, atherosclerosis and tumor
metastasis.
Non-cardiovascular Research Applications
The Company's research has resulted in the identification of compounds with
potential non-cardiovascular applications. The Company believes certain of its
growth factor inhibitors may have applications in treating certain other
disorders which involve cell proliferation, such as cancer, glomerulonephritis,
and pulmonary fibrosis. The Company has identified other compounds with
potential applications in the areas of wound healing, tumor metastasis and
osteoporosis. The Company intends to pursue such opportunities and seek
collaboration partners to develop and commercialize any potential product
opportunities where appropriate.
DRUG DISCOVERY CAPABILITIES
To achieve its drug discovery objectives, the Company has established
advanced capabilities in several key technology areas:
Cardiovascular Biology
The Company's scientists and advisors have contributed to a number of the
key advances in the scientific understanding of thrombosis, restenosis and heart
failure. The Company has applied this expertise in its choice of specific
disease targets and in the creation of its drug discovery strategies. Thus far,
the Company's major focus has been on thrombosis, the process underlying the
syndromes of acute myocardial infarction, unstable angina and restenosis, the
process of vascular smooth muscle cell proliferation following PTCA or other
vascular interventional procedures. COR scientists have targeted several of the
potential mechanisms which regulate intravascular thrombosis or restenosis,
including the platelet, the coagulation factor cascade, and the vascular wall.
COR's approach has been to understand the pathophysiology of the disease process
itself, and then to identify and characterize molecular targets for which an
agonist or antagonist might have a positive therapeutic impact.
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High Throughput Screening
The Company has applied its biological expertise to develop a variety of
novel molecular assays suitable for high throughput screening. For each high
throughput screening assay developed, numerous secondary assays for confirming
in vitro activity and specificity are also developed. The Company's screening
library consists of compounds either developed internally or purchased from
commercial and academic groups. The Company uses computer-based algorithms to
model molecular diversity in order to maximize the overall diversity of its
compound library. High throughput screening using multiple proprietary assays
against the Company's molecular targets is currently ongoing at the Company.
Medicinal Chemistry
The Company has established small organic molecule synthesis capabilities.
These capabilities use both structure-based design principles and traditional
analog synthetic approaches directed at small molecules discovered through
screening of organic molecule libraries in COR's proprietary assays. The Company
has recently initiated a combinatorial chemistry program. The Company believes
it has developed particular expertise in the ability to develop small molecule
organic compounds that mimic the activity of peptide leads using structure-based
design approaches. This capability enables the Company to more effectively
generate compounds with appropriate pharmaceutical properties, such as oral
bioavailability and a prolonged half-life.
Animal Model Studies
The Company has established an important internal capability in the area of
animal models. The Company uses a variety of animal models, including
proprietary internally developed models, that are relevant to the Company's
disease targets. In addition, the Company works closely with outside consultants
and laboratories in other areas, such as the development of knock-out and
transgenic models, and the evaluation of compounds in primate models. Using
internal and external capabilities, compounds with therapeutic potential can be
rapidly evaluated in multiple complementary models to assess their activity.
COLLABORATION AGREEMENTS
The Company evaluates, on an ongoing basis, potential collaborations with
other companies where such relationships may complement and expand the Company's
research, development, sales or marketing capabilities.
Relationship with Schering
In April 1995, the Company entered into a collaboration agreement with
Schering to develop and commercialize INTEGRILIN on a worldwide basis. Schering
paid the Company a $20 million licensing fee upon signing the agreement.
Schering has agreed to pay the Company milestone payments of up to an additional
$80 million if specified development goals are achieved.
Under the agreement, decisions regarding the ongoing development and
marketing of INTEGRILIN are generally subject to the oversight of a Joint
Steering Committee with equal membership from the two companies, although
certain development decisions are allocated specifically to COR, and in those
markets where Schering has exclusive marketing rights, Schering has
decision-making authority with respect to marketing issues. Schering
participates in and shares the costs of developing INTEGRILIN. The parties work
closely with each other in connection with regulatory matters, although COR
retains primary responsibility for filings in the United States and Canada,
while Schering has primary responsibility for such filings elsewhere in the
world.
Both parties will have the right to co-promote INTEGRILIN in the United
States and Canada and share profits, if any, in these countries. In Europe,
Schering has the right to launch the product as an
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exclusive licensee on a royalty-bearing basis for a period of time to be
determined as provided in the agreement. Following this initial period, COR has
the right to co-promote the product in Europe and share profits. In all
co-promotion territories, the exact profit-sharing ratio between the companies
will depend on the amount of sales effort contributed by each company. Outside
of the United States, Canada and Europe, Schering is the exclusive licensee on a
royalty-bearing basis. As part of this collaboration, Schering has granted an
option to the Company to co-promote in the United States an existing Schering
cardiovascular product for a limited period of time, as a mechanism to help
defray the costs of developing a new sales force and to help integrate the COR
and Schering sales forces. Under the terms of the agreement, both parties have
certain rights to terminate for breach. In addition, Schering has the right to
terminate the agreement in the event that an initial regulatory approval is not
received by December 31, 2004 in at least one of the specified major countries.
Relationship with Ortho
In December 1993, the Company entered into a collaboration agreement with
Ortho, focusing on the joint discovery, development and commercialization of
novel pharmaceuticals that may result from collaborative research on the
thrombin receptor. The Company and Ortho each provided specified levels of
internal resources to the collaborative research over the initial three-year
research term. In 1996, Ortho exercised its option to extend the research term
and has advised the Company that the extension will be until December 1998. In
connection with the extension of the agreement, Ortho made a one time payment to
the Company of $2.4 million in 1996 for research to be performed during the
remaining term of the contract.
If products arise from this collaboration, Ortho will make development
milestone payments to the Company. In addition, the Company and Ortho may each
(i) participate in development of products under the collaboration and share
equally in the development costs on a worldwide basis, (ii) participate equally
in the commercialization of co-developed products (with the Company's rights of
commercialization to be limited to specified countries, including the major
countries of Europe, and in North America, Japan and Australia), and (iii) share
equally in profits or losses from any co-developed products in those countries
where the parties jointly commercialize the products. If either party decides
not to participate in the development of a product under the collaboration, or
does not participate in the commercialization of such product in one or more
countries, that party would receive royalties based on product sales.
In connection with the collaboration with Ortho, in January 1994, the
Company sold to Johnson & Johnson Development Corporation ("JJDC"), a subsidiary
of Johnson & Johnson, 533,333 shares of Common Stock at $15.00 per share, for an
aggregate purchase price of $8 million, in a private placement. In September
1996, Ortho exercised its option to extend the term of the agreement, and
pursuant to the terms of the original agreement, the Company sold JJDC an
additional 399,106 shares of Common Stock at $10.02 per share for an aggregate
purchase price of $4 million, also in a private placement.
Relationship with Kyowa Hakko
In November 1992, the Company entered into a collaboration agreement with
Kyowa Hakko focused on the discovery and development of small molecule
pharmaceuticals, primarily for the prevention of restenosis following
angioplasty. The collaboration targets a defined class of growth factor
inhibitors. In late 1995, this collaborative research program was extended for a
period of time continuing through November 1997. In December 1996, the
collaboration was expanded to include the development of certain identified
protein growth factor inhibitors. Both companies have committed significant
internal resources to all phases of research. The Company has exclusive
development and marketing rights in the United States for any products resulting
from the collaboration, and Kyowa Hakko has exclusive development and marketing
rights in Asia for any such products. The two companies have agreed to develop
and commercialize jointly any such products on a shared economic basis in the
rest of the world. The agreement further provides that Kyowa Hakko will have the
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exclusive right to develop and commercialize small molecule products for
indications related solely to a single, defined non-cardiovascular disease
indication outside of the United States.
In addition, under the terms of the agreement, Kyowa Hakko has certain
rights to supply bulk material for the manufacture of any products resulting
from the collaboration, and the Company has agreed to purchase its requirements
for such material from Kyowa Hakko. If Kyowa Hakko is unable to provide the
Company with adequate supplies of any material, the Company is entitled to seek
alternate suppliers. However, there can be no assurance that alternative supply
arrangements can be established on a timely or commercially reasonable basis, if
at all.
Relationship with Lilly
In May 1991, the Company entered into a collaborative research agreement
with Lilly in the field of platelet aggregation inhibitors. This agreement was
modified in May 1993 and the research term expired at the end of April 1996. The
research collaboration with Lilly did not include INTEGRILIN. Under this
collaboration, two compounds were designated for development. A lead parenteral
product had entered Phase II clinical trials and a lead oral compound had
entered preclinical development in anticipation of the filing of an IND. In
1995, Lilly advised the Company of its desire, based on a review of its product
development portfolio, to discontinue its participation in the development of
these compounds. Under the terms of a November 1996 amendment, the Company now
has the exclusive worldwide right to develop and commercialize several defined
classes of compounds, including the two compounds referenced above, subject to a
royalty to Lilly. Under the original agreement and the amendment between the
parties, COR and Lilly have shared rights with respect to all other compounds
which were the subject of the collaborative research.
Research Collaborations
The Company is actively engaged in collaborations with consultants at a
number of universities and medical centers in a number of areas including
integrin signaling, myocardial signal transduction, animal models of thrombosis,
thrombolysis and restenosis, molecular biology of growth factor receptors and
x-ray crystallography.
While the Company believes its agreements with its ongoing collaborators
provide incentives to all parties, there can be no assurance that the
relationships will be successful. Although under its current arrangements the
Company and its collaborators will work exclusively with each other within a
defined field for a defined period, there can be no assurance that a
collaborator or collaborators will not terminate its agreement with the Company
or pursue alternative products, therapeutic approaches or technologies as a
means of developing treatments for the diseases targeted by the Company. Even if
a collaborator continues its participation in its program with the Company, it
may nevertheless determine not to actively pursue the development or
commercialization of any particular product or product opportunity. In such
event, the Company's ability to pursue such potential products could be severely
limited.
COMPETITION
Due to the incidence and severity of cardiovascular diseases, the market
for therapeutic products that address such diseases is large, and competition is
intense and expected to increase. The Company's most significant competitors are
major pharmaceutical companies and more established biotechnology companies,
which have significant resources and expertise in research and development,
manufacturing, testing, obtaining regulatory approvals and marketing. Emerging
pharmaceutical and biotechnology companies may also prove to be significant
competitors, particularly through collaboration arrangements with large
pharmaceutical companies. Many of these competitors have cardiovascular products
approved or in development, and operate large, well-funded cardiovascular
research and development programs. Furthermore, academic institutions,
governmental agencies, and other public and private research organizations
conduct research, seek patent protection and establish
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collaboration arrangements for product and clinical development and marketing in
the cardiovascular disease field and other areas being targeted by the Company.
In addition, these companies and institutions compete with the Company in
recruiting and retaining highly qualified scientific and management personnel.
The Company is aware of products in research or development by its
competitors that address all of the diseases and disorders being targeted by the
Company, and any of these products may compete with potential products being
developed by the Company, depending upon the indication for which each such
product is approved. In particular, many of the Company's competitors have
programs specifically designed to develop parenteral and oral GP IIb-IIIa
inhibitors. One of these companies has a monoclonal antibody-based parenteral GP
IIb-IIIa inhibitor, abciximab, that has received regulatory approval, was
introduced in 1995 and is being developed by Centocor, Inc. and marketed by
Lilly. In addition to abciximab, at least one other parenteral GP IIb-IIIa
antagonist, tirofiban, is being studied in clinical trials by Merck. Merck has
completed multiple Phase III trials of this inhibitor and has announced its
intention to seek marketing approval. Orally available GP IIb-IIIa inhibitors
are being developed by a number of pharmaceutical companies with agents at
various stages of development. The Company believes these compounds are not
likely to represent direct competition for injectable products as they are being
designed for chronic therapies and are expected to be dosed to have a lesser
anti-platelet effect and to be designed to have a long biological half life.
There can be no assurance that these competitors will not succeed in developing
products or technologies that are more effective than those being developed by
the Company or that would render the Company's technology obsolete or
noncompetitive.
Any product which the Company succeeds in developing and for which it gains
regulatory approval must then compete for market acceptance and market share.
For certain of the Company's potential products, an important competitive factor
will be the timing of market introduction of competitive products. Accordingly,
important competitive factors will be the relative speed with which companies
can develop products, complete the clinical testing and approval processes and
supply commercial quantities of the product to the market. With respect to
clinical testing, competition may also delay progress by limiting the number of
clinical investigators and patients available to test the Company's potential
products.
In addition to the above factors, competition is based on product efficacy,
safety, the timing and scope of regulatory approvals, availability of supply,
marketing and sales capability, reimbursement coverage, price and patent
position.
MARKETING AND SALES STRATEGY
The Company's strategy is to market products for which it obtains approval
either directly or through co-promotion arrangements or other licensing
arrangements with pharmaceutical or biotechnology companies. The Company's
products under development are targeted towards the acute care as well as the
chronic care markets. The Company intends to retain selected North American and
European marketing rights for products where appropriate.
COR and Schering will launch, market and co-promote INTEGRILIN in the
United States and Canada, if approved. Schering has the right to launch
INTEGRILIN in Europe and would pay the Company royalties for a specified initial
period, after which the Company would have the right to co-promote and share any
resulting profits. Schering, through its Key Pharmaceuticals Division ("Key
Pharmaceuticals"), markets to the cardiology community with established
products. The Company believes Schering's commercial presence with the clinical
cardiologist will provide support to the commercialization of INTEGRILIN.
The primary target customer groups for INTEGRILIN will be interventional
cardiologists, clinical cardiologists and emergency room physicians. In
addition, hospital pharmacy directors and formulary members will be important as
well as nurses and nonmedical audiences who affect buying decisions. See
"-- Collaboration Agreements -- Relationship with Schering."
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COR intends to hire its own marketing and sales organization for the launch
of INTEGRILIN in the United States and Canada. COR and Key Pharmaceuticals will
focus on hospitals as well as office-based cardiologists in the United States
and Canada. The Company believes that the combined sales forces will be able to
effectively address this market. The direct sales force selling effort will be
supplemented by educational, advertising and promotional programs.
The Company has not developed a specific commercialization plan with
respect to other potential products. Implementation will depend in large part on
the market potential of any product candidates, as well as on the Company's
financial resources. The Company may establish co-promotion, corporate partner
or other arrangements for the marketing and sale of certain of its products and
in certain geographic markets. There can be no assurance that the Company will
be successful in establishing such arrangements, or that these arrangements will
result in the successful marketing and sales of the Company's products, if any.
Sales of the Company's products in development will be dependent in part on
the availability of reimbursement from third-party payors, such as government
and private insurance plans. The Company plans to meet with administrators of
these plans to discuss the potential medical benefits and cost-effectiveness of
its products. The Company believes this approach may assist in obtaining
reimbursement authorization for its products from these third-party payors.
There can be no assurance that the Company will be able to establish its own
marketing and sales force for INTEGRILIN or its other potential products, or
that any such sales force, if established, would be successful.
PROCESS DEVELOPMENT AND MANUFACTURING
The Company relies primarily on third-parties for the manufacture of
INTEGRILIN and other product candidates for preclinical and clinical purposes.
Currently, the Company has no manufacturing facilities for either the commercial
production of bulk drug substances or the manufacture of final dosage forms. The
Company believes that all of its existing compounds can be produced using
established manufacturing methods, including cell culture, fermentation or
traditional pharmaceutical synthesis. The Company has established a quality
control program, including a set of standard operating procedures, intended to
ensure that the Company's compounds are manufactured in accordance with cGMP,
the requirements of the California State Board of Pharmacy and other applicable
regulations. See "-- Government Regulation."
Production of INTEGRILIN, both for future clinical trials and for possible
commercialization, will be done through contract manufacturers. The Company
believes that material that has been produced by contract manufacturers has been
done in conformity with applicable regulatory requirements. The Company believes
the contracted supply of INTEGRILIN is sufficient to conduct future clinical
trials and initial commercial launch as currently planned. The Company is
working with its vendors on capacity forecasts and planning, with the objective
of assuring adequate supply. The Company has established long-term supply
arrangements with a bulk product supplier and with a supplier for the filling
and final packaging of INTEGRILIN. In addition, the Company has qualified a
second manufacturer of bulk product and has transferred the necessary process
technology to that manufacturer. The Company's manufacturing plans include the
addition of capacity both with its existing suppliers and with secondary
manufacturers of bulk and finished product. There can be no assurance that
agreements with alternative contract manufacturers can be reached if required,
on a timely basis, or at all.
The manufacture of the Company's compounds is based in part on technology
that the Company believes to be proprietary. Contract manufacturers may utilize
their own technology, the technology of the Company or that of third parties.
Successful technology transfer is needed to ensure success with potential
secondary suppliers. There can be no assurance that such manufacturers will
abide by any limitations or confidentiality restrictions in licenses with the
Company. In addition, any such
manufacturer may develop process technology related to the manufacture of the
Company's compounds that such manufacturer owns either independently or jointly
with the Company. This would
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increase the Company's reliance on such manufacturer or require the Company to
obtain a license from such manufacturer in order to have its products
manufactured. There can be no assurance that any such license would be available
on terms acceptable to the Company, if at all. There can be no assurance that
the arrangements with third-party manufacturers will be successful. In
connection with the commercialization of its products, the Company may establish
multiple third-party manufacturing sources on commercially reasonable terms for
its products. There can be no assurance that the Company will be able to
establish such sources, or, if such sources are established, that the sources
will be successful.
PATENTS, PROPRIETARY RIGHTS AND LICENSES
The Company's policy is to file patent applications to protect technology,
inventions and improvements that are important to the development of its
business. The Company also relies upon trade secrets, know-how, continuing
technological innovations and licensing opportunities to develop and maintain
its competitive position. The Company plans to prosecute and defend its patent
applications aggressively, including any patents that may issue, as well as its
proprietary technology. The Company has filed, or has licensed exclusively, a
series of related patent applications with respect to each of its product
candidates in development.
The Company's success will depend in part on its ability to obtain patent
protection for its product candidates both in the United States and in other
countries. The Company has patents or has filed applications for patents
covering many of its products (including INTEGRILIN) and processes, including
patent applications covering various aspects of the Company's platelet
aggregation inhibitor, growth factor receptor and venous thrombosis programs, as
well as other programs. Many of the patents or applications include composition
of matter claims relating to a number of the Company's compounds.
The patent positions of pharmaceutical and biotechnology firms, including
the Company, are uncertain and involve complex legal and factual questions. In
addition, the coverage claimed in a patent application can be significantly
reduced before the patent is issued. Consequently, the Company does not know
whether any of its applications will result in the issuance of patents or, if
any patents are issued, whether they will provide significant proprietary
protection or will be circumvented or invalidated. Since patent applications in
the United States are maintained in secrecy until patents issue, and since
publication of discoveries in the scientific or patent literature often lags
behind actual discoveries, the Company cannot be certain that it was the first
creator of inventions covered by its pending patent applications or that it was
the first to file patent applications for such inventions. Moreover, the Company
may have to participate in interference proceedings declared by the USPTO to
determine priority of invention, which could result in substantial cost to the
Company, even if the eventual outcome is favorable to the Company. There can be
no assurance that the Company's patents, if issued, would be held valid by a
court of competent jurisdiction. An adverse outcome could subject the Company to
significant liabilities to third parties, require disputed rights to be licensed
from third parties or require the Company to cease using such technology.
The development of therapeutic products for cardiovascular applications is
intensely competitive. A number of pharmaceutical companies, biotechnology
companies, universities and research institutions have filed patent applications
or received patents in this field. Some of these applications are competitive
with the Company's applications, or conflict in certain respects with claims
made under applications that cover one or more of the Company's programs. Such
conflict could result in a significant reduction of the coverage of the
Company's patents, if issued, which could materially adversely affect the
Company's prospects. In addition, if patents are issued to other companies that
contain competitive or conflicting claims and such claims are ultimately
determined to be valid, no assurance can be given that the Company would be able
to obtain licenses to these patents at a reasonable cost, or develop or obtain
alternative technology.
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The Company also relies upon trade secret protection for its confidential
and proprietary information. No assurance can be given that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology, or that the Company can meaningfully protect its trade secrets.
It is the Company's policy to require its employees, consultants, outside
scientific collaborators, sponsored researchers and other advisors to execute
confidentiality agreements upon the commencement of employment or consulting
relationships with the Company. These agreements provide that all confidential
information developed or made known to the individual during the course of the
individual's relationship with the Company is to be kept confidential and not
disclosed to third parties except in specific circumstances. In the case of
employees, the agreements provide that all inventions conceived by the
individual shall be the exclusive property of the Company. There can be no
assurance, however, that these agreements will provide meaningful protection or
adequate remedies for the Company's trade secrets in the event of unauthorized
use or disclosure of such information.
The Company has obtained licenses from a number of universities, companies
and research institutions to technologies, processes and compounds that it
believes may be important to the development of its products. These agreements
require the Company to pay license maintenance fees and, upon commercial
introduction of certain products, pay royalties. These include an exclusive
license agreement with the Regents of the University of California which may be
canceled or converted to a non-exclusive license if specified milestones are not
achieved. There can be no assurance that any of these licenses will provide
effective protection against the Company's competitors.
GOVERNMENT REGULATION
The production and marketing of the Company's products and its ongoing
research and development activities are subject to extensive regulation by
numerous government authorities in the United States and other countries. Prior
to marketing in the United States, any product developed by the Company must
undergo rigorous preclinical testing and clinical trails and an extensive
regulatory approval process implemented by the FDA under the FDC Act.
Satisfaction of such regulatory requirements, which includes demonstrating that
the product is both safe and effective, typically takes several years or more
depending upon the type, complexity and novelty of the product, and requires the
expenditure of substantial resources. Preclinical studies must be conducted in
compliance with GLP regulations. Clinical testing must meet requirements for IRB
oversight and informed consent, as well as FDA prior review, oversight and GCP
regulations. The Company has limited experience in conducting and managing the
clinical trials necessary to obtain regulatory approval. Furthermore, the
Company or the FDA may suspend clinical trials at any time if either believes
that the subjects participating in such trials are being exposed to unacceptable
health risks.
The steps ordinarily required before a drug may be marketed in the United
States include (a) preclinical testing and clinical trials; (b) the submission
to the FDA of an IND, which must become effective before clinical trials may
commence; (c) adequate and well-controlled clinical trials to establish the
safety and efficacy of the drug; (d) the submission to the FDA of an NDA; and
(e) FDA approval of the applications, including approval of all product
labelling.
Preclinical testing includes laboratory evaluation of product chemistry,
formulation and stability, as well as animal studies to assess the potential
safety and efficacy of each product. The results of the preclinical tests are
submitted to the FDA as part of an IND and are reviewed by the FDA before the
commencement of clinical trials. Unless the FDA objects to an IND, the IND will
become effective 30 days following its receipt by the FDA. There can be no
assurance that submission of an IND will result in FDA authorization to commence
clinical trials or that the lack of an objection means that the FDA will
ultimately approve an application for marketing approval.
Before receiving FDA approval to market a product in accordance with the
above procedures, the Company will have to demonstrate that the product is safe
and effective. Data obtained from
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preclinical testing and clinical trials are susceptible to varying
interpretations which could delay, limit or prevent regulatory approvals. In
addition, delays or rejections may be encountered based upon additional
government regulation from future legislation or administrative action or
changes in FDA policy during the period of product development, clinical trials
and FDA regulatory review. Similar delays may also be encountered in foreign
countries. There can be no assurance that even after such time and expenditures,
regulatory approval will be obtained for any products developed by the Company.
If regulatory approval of a product is granted, such approval will be limited to
those specific segments of the population for which the product is effective, as
demonstrated through clinical trials. Furthermore, approval may entail ongoing
requirements for post-marketing studies. There can be no assurance that any
product developed by the Company alone or in conjunction with others will prove
to be safe and efficacious in clinical trials and will meet all of the
applicable regulatory requirements needed to receive or maintain marketing
approval.
Outside the United States, the Company's ability to market a product is
contingent upon receiving marketing authorization from the appropriate
regulatory authorities. The requirements governing the conduct of clinical
trials, marketing authorization, pricing and reimbursement vary widely from
country to country. At present, foreign marketing authorizations are applied for
at a national level, although within the EU, procedures are available to
companies wishing to market a product in more than one EU member state. If the
regulatory authorities are satisfied that adequate evidence of safety, quality
and efficacy has been presented, a marketing authorization will be granted. This
foreign regulatory approval process includes all of the risks associated with
FDA approval set forth above.
In addition, among the conditions for FDA approval of a pharmaceutical
product is the requirement that the manufacturer's (either the Company's own or
a third-party manufacturer's) quality control and manufacturing procedures
conform to cGMP which must be followed at all times. The FDA enforces cGMP
requirements through periodic unannounced inspections. There can be no assurance
that the FDA will determine that the facilities and manufacturing procedures of
the Company or any third-party manufacturer of the Company's products candidates
will conform to cGMP requirements. Additionally, the Company or its third-party
manufacturers must pass a preapproval inspection of manufacturing facilities by
the FDA before obtaining marketing approval. Failure to comply with applicable
regulatory requirements may result in penalties such as restrictions on a
product's marketing or withdrawal of a product from the market.
The FDA's policies may change and additional governmental regulations may
be promulgated which could prevent or delay regulatory approval of the Company's
potential products. The Company is unable to predict the likelihood of adverse
governmental regulation which might arise from future legislation or
administrative action, either in the United States or abroad. Furthermore, the
Company or the FDA may suspend clinical trials at any time if it believes that
the subjects participating in such trials are being exposed to unacceptable
health risks. There can be no assurance that the Company will not encounter
problems in clinical trials which will cause the Company or the FDA to delay or
suspend clinical trials.
PHARMACEUTICAL PRICING AND REIMBURSEMENT
In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations. In
addition, other third-party payors are increasingly challenging the price and
cost effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products. In
many major markets outside the United States, pricing approval is required
before sales can commence. There can be no assurance as to what price can be
obtained or whether government-approved prices, once established, may not be
reduced in subsequent years. There can be no assurance that the Company's
proposed products will be considered cost effective or that adequate third-party
reimbursement will be available to enable the Company to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. Legislation
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and regulations affecting the pricing of pharmaceuticals may change before the
Company's proposed products are approved for marketing. Adoption of such
legislation could further limit reimbursement for medical products. If adequate
coverage and reimbursement levels are not provided by the government and
third-party payors for the Company's potential products, the market acceptance
of these products would be adversely affected, which would have a material
adverse effect on the Company's business, financial condition and results of
operations.
INSURANCE
The testing, marketing and sale of human pharmaceuticals expose the Company
to significant and unpredictable risks of product liability claims in the event
that the use of its technology or products is alleged to have resulted in
adverse effects. Such risks will exist even with respect to any products that
receive regulatory approval for commercial sale. While the Company has obtained
liability insurance for its clinical trials for INTEGRILIN and other product
candidates in clinical trials, there can be no assurance that it will be
sufficient to satisfy any liability that may arise. There can be no assurance
that adequate insurance coverage will be available in the future at acceptable
cost, if at all, or that a product liability claim would not adversely affect
the business or financial condition of the Company.
EMPLOYEES
As of September 1, 1997, the Company had 160 full-time employees, of whom
118 were in research and development and 42 were in marketing, general and
administrative areas.
All employees are located at the Company's facility in South San Francisco,
California. None of the Company's employees is represented by a collective
bargaining agreement. The Company considers its employee relations to be good.
The Company's policy is to enter into confidentiality agreements with its
employees and consultants.
FACILITIES
The Company leases and occupies facilities consisting of approximately
100,000 square feet of laboratory and office space located in South San
Francisco, California. The Company's lease expires in 1999 and contains
provisions for one five-year renewal option. The Company expects it will require
additional laboratory and office space as it expands its operations. The Company
believes that additional space will be available on commercially acceptable
terms.
The Company currently has no production facilities.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The names of COR's directors and executive officers as of September 1, 1997
and certain information about them is set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------- --- -----------------------------------
<S> <C> <C>
Vaughn M. Kailian....................... 53 President, Chief Executive Officer
and Director
Laura A. Brege.......................... 40 Vice President, Finance and Chief
Financial Officer
R. Lee Douglas, Jr. .................... 46 Vice President, Corporate
Development and Secretary
Charles J. Homcy, M.D. ................. 49 Executive Vice President, Research
and Development
Mark D. Perrin.......................... 41 Executive Vice President,
Commercial Operations
Shaun R. Coughlin, M.D., Ph.D. ......... 43 Director
James T. Doluisio, Ph.D. ............... 61 Director
Jerry T. Jackson(1)(2).................. 56 Director
Ernest Mario, Ph.D.(2).................. 59 Director
Robert R. Momsen(1)(2).................. 50 Director
Lloyd Hollingsworth Smith, Jr., M.D. ... 73 Director
William H. Younger, Jr.(1).............. 47 Director
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Vaughn M. Kailian has served as President, Chief Executive Officer and a
director of the Company since March 1990. From 1967 to 1990, Mr. Kailian was
employed by Marion Merrell Dow, Inc., a pharmaceutical company, and its
predecessor companies, in various general management, product development,
marketing and sales positions. Mr. Kailian served as Corporate Vice President of
Global Commercial Development, Marion Merrell Dow, Inc.; President and General
Manager, Merrell Dow USA; Vice President, Marketing and Sales, Merrell Dow USA;
and Vice President, Marketing and Sales of Merrell Dow, Europe, Africa. Mr.
Kailian holds a B.A. from Tufts University.
Laura A. Brege has served as Vice President, Finance and Chief Financial
Officer of the Company since January 1992. During 1991, Mrs. Brege was Vice
President, Finance and Chief Financial Officer of Computer Aided Service, Inc.,
a manufacturer and marketer of computer systems. From 1988 to 1990, she was Vice
President, Finance and Chief Financial Officer of Flextronics, Inc., an
electronics manufacturer. From 1982 to 1988, Mrs. Brege held various financial
positions at The Cooper Companies, Inc., a multinational pharmaceutical and
medical products company, last serving as Treasurer. She holds a B.S. from Ohio
University and an M.B.A. from the University of Chicago.
R. Lee Douglas, Jr. has served as Vice President, Corporate Development of
the Company since March 1990, Chief Financial Officer from June 1990 to December
1991 and as Treasurer from March 1988 to May 1991. He became Secretary in May
1991. From the Company's inception until March 1990, Mr. Douglas served as
President and a director of the Company. He holds a B.A. from the University of
North Carolina at Charlotte and two masters degrees from Harvard University,
including an M.B.A.
Charles J. Homcy, M.D. has served as Executive Vice President, Research and
Development of the Company since March 1995. From 1994 until he joined the
Company, Dr. Homcy was President of the Medical Research Division of American
Cyanamid Company-Lederle Laboratories, a pharmaceutical company (now a division
of Wyeth-Ayerst Laboratories). From 1990 until 1994, Dr. Homcy was
47
<PAGE> 49
Executive Director of the Cardiovascular and Central Nervous System Research
Section at Lederle Laboratories, a pharmaceutical company. From 1991 to 1995,
Dr. Homcy also served as an attending physician at The Presbyterian Hospital,
College of Physicians and Surgeons, at Columbia University in New York. From
1979 to 1990, he was an attending physician at Massachusetts General Hospital
and an Associate Professor of Medicine at Harvard Medical School. He received
his B.A. and M.D. degrees from the Johns Hopkins University in Baltimore.
Mark D. Perrin joined the Company as Executive Vice President, Commercial
Operations in November 1995. From 1992 until he joined the Company, Mr. Perrin
was Vice President, Marketing and Sales, of Burroughs Wellcome Company, a
pharmaceutical company. From 1979 to 1992, Mr. Perrin held various sales and
marketing positions at American Cyanamid Company-Lederle Laboratories, a
pharmaceutical company (now a division of Wyeth-Ayerst Laboratories), last
serving as Vice President and General Manager of Lederle Pharmaceuticals. He
received his B.S. from Fordham University and a Masters of Management from
Northwestern University.
Shaun R. Coughlin, M.D., Ph.D. has been a director of the Company since
September 1994. Dr. Coughlin is a Professor of Medicine at the University of
California, San Francisco ("UCSF"), and Director of the Cardiovascular Research
Institute at UCSF, where he was an Associate Professor of Medicine from 1992
through 1996. Dr. Coughlin has acted as a consultant to the Company since its
inception. Dr. Coughlin is also a member of the editorial boards of Trends in
Cardiovascular Medicine and Molecular Medicine.
James T. Doluisio has been a director of the Company since January 1994.
Dr. Doluisio has been Dean and Hoechst-Roussel Professor of Pharmacy at the
University of Texas at Austin since 1973. From 1990 to 1995, Dr. Doluisio served
as Chairman of the United States Pharmacopeial Convention Board of Trustees.
From 1967 to 1973, Dr. Doluisio was Professor and Assistant Dean of the College
of Pharmacy at the University of Kentucky.
Jerry T. Jackson has been a director of the Company since March 1995. Mr.
Jackson was employed by Merck & Co., Inc., a pharmaceutical company, from 1965
until his retirement in 1995. From 1993 until his retirement, he served as
Executive Vice President of Merck & Co., Inc. In 1994 Mr. Jackson had
responsibility for Merck's International Human Health, Worldwide Human Vaccines,
the AgVet Division, Astra/Merck U.S. Operations, as well as worldwide marketing.
During 1993, he also was President of the Worldwide Human Health Division. Mr.
Jackson served as Senior Vice President of Merck & Co., Inc. from 1991 to 1992,
and previously was President of Merck Sharp & Dohme International. Mr. Jackson
is also a director of SunPharm Corporation, Molecular Biosystems, Inc. and
Transcend Therapeutics, Inc.
Ernest Mario, Ph.D. has been a director of the Company since September
1995. Dr. Mario has been CoChairman and Chief Executive Officer of ALZA
Corporation since July 1993. From 1989 to 1993, he was President, Deputy
Chairman and Chief Executive Officer of Glaxo Holdings in London. Prior to 1989,
Dr. Mario served as President of Glaxo, Inc. in the United States. Dr. Mario is
also chairman of Pharmaceutical Product Development, Inc. and a director of ATL
Ultrasound, Inc. and Catalytica, Inc.
Robert R. Momsen has been a director of the Company since April 1989. Since
1982, Mr. Momsen has been a general partner of InterWest Partners, a venture
capital management firm. Mr. Momsen is also a director of Arthrocare, Inc.,
Coulter Pharmaceutical, Inc., Innovasive Devices, Inc., Progenitor, Inc. and
Inteq, Inc.
Lloyd Hollingsworth Smith, Jr., M.D. has been a director of the Company
since January 1993. Dr. Smith has been Associate Dean of the School of Medicine
at UCSF since 1985. From 1964 to 1985, he was a Professor of Medicine and
Chairman of the UCSF Department of Medicine.
William H. Younger, Jr. has been director of the Company since March 1988.
He has been a general partner of Sutter Hill Ventures, a venture capital
management company, since 1983. Mr. Younger is also a director of Celeritek,
Inc., Forte Software, Inc. and Oacis Healthcare Holdings Corp.
48
<PAGE> 50
UNDERWRITING
The Underwriters named below, acting through their representatives,
Robertson, Stephens & Company LLC and Hambrecht & Quist LLC (the
"Representatives"), have severally agreed, subject to the terms and conditions
of the Underwriting Agreement, to purchase from the Company the numbers of
shares of Common Stock set forth opposite their names below. The Underwriters
are committed to purchase and pay for all such shares if any are purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Robertson, Stephens & Company LLC.........................................
Hambrecht & Quist LLC.....................................................
---------
Total...........................................................
=========
</TABLE>
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public at the price to the public set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession of not more than $ per share, of which $ may
be reallowed to other dealers. After the public offering, the public offering
price, concession and reallowance to dealers may be reduced by the
Representatives. No such reduction shall change the amount of proceeds to be
received by the Company as set forth on the cover page of this Prospectus.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the same price per share as the Company
will receive for the 2,500,000 shares that the Underwriters have agreed to
purchase. To the extent that the Underwriters exercise such option, each of the
Underwriters will have a firm commitment to purchase approximately the same
percentage of such additional shares that the number of shares of Common Stock
to be purchased by it shown in the above table represents as a percentage of the
2,500,000 shares offered hereby. If purchased, such additional shares will be
sold by the Underwriters on the same terms as those on which the 2,500,000
shares are being sold.
The Underwriting Agreement contains covenants of indemnity among the
Underwriters and the Company against certain civil liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
representations and warranties contained in the Underwriting Agreement.
Each executive officer of the Company has agreed with the Representatives
that for the 30 days after the date of this Prospectus (the "Lock-Up Period")
each will not offer to sell, contract to sell, or otherwise sell, dispose of,
loan, pledge or grant any rights with respect to any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock, or any securities
convertible into or exchangeable for shares of Common Stock owned as of the date
of this Prospectus or thereafter acquired directly by such holder with respect
to which each has or hereinafter acquires the power of disposition, without the
prior written consent of Robertson, Stephens & Company LLC. However, Robertson,
Stephens & Company LLC may, in its sole discretion at any time or from time to
time, without notice, release all or any portion of the securities subject to
the lock-up agreements. Approximately 170,373 shares of the Company's Common
Stock are subject to the lock-up agreements. In addition, the Company has agreed
that for a period of 90 days after the date of this Prospectus, it will not,
without the prior written consent of Robertson, Stephens & Company LLC, issue,
sell, contract to sell or otherwise dispose of any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock or any securities
convertible into, exercisable for or exchangeable for shares of Common Stock,
other than the issuance of Common Stock upon the exercise of
49
<PAGE> 51
outstanding options and warrants and under the Company's existing employee stock
purchase plan, the Company's issuance of options under existing employee stock
option plans and certain other conditions.
The offering price for the Common Stock has been determined by negotiations
among the Company and the Representatives of the Underwriters, based largely
upon the market price for the Common Stock as reported on the Nasdaq National
Market.
The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority in excess of 5% of the number of shares of
Common Stock offered hereby.
The Representatives have advised the Company that, pursuant to Regulation M
under the Securities Act, certain persons participating in the offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Common Stock at a level above
that which might otherwise prevail in the open market. A "stabilizing bid" is a
bid for or the purchase of the Common Stock on behalf of the Underwriters for
the purpose of fixing or maintaining the price of the Common Stock. A "syndicate
covering transaction" is the bid for or the purchase of the Common Stock on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting the Representatives to reclaim the selling concession otherwise
accruing to an Underwriter or syndicate member in connection with the offering
if the Common Stock originally sold by such Underwriter or syndicate member is
purchased by the Representatives in a syndicate covering transaction and has
therefore not been effectively placed by such Underwriter or syndicate member.
The Representatives have advised the Company that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon the
Company by Cooley Godward LLP, Palo Alto, California. Certain legal matters will
be passed upon for the Underwriters by Wilson Sonsini Goodrich & Rosati, P.C.,
Palo Alto, California.
EXPERTS
The financial statements of COR Therapeutics, Inc. as of December 31, 1996
and 1995, and for each of the three years in the period ended December 31, 1996,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
A Registration Statement on Form S-3, including amendments thereto,
relating to Common Stock offered hereby has been filed by the Company with the
Securities and Exchange Commission. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents of
any contract or other document referred to are not necessarily complete and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
such Registration Statement, exhibits and schedules. A copy of the Registration
Statement may be inspected by anyone without charge at the Commission's
principal office located at 450 Fifth Street, N.W., Washington, D.C. 20549, the
New York Regional Office located at 7 World Trade Center, 13th Floor, New York,
New
50
<PAGE> 52
York 10048, and the Chicago Regional Office located at Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois, 60661-2511, and copies of
all or any part thereof may be obtained from the Public Reference Branch of the
Commission upon the payment of certain fees prescribed by the Commission. The
Commission maintains a World-Wide Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's Web site is
http://www.sec.gov.
51
<PAGE> 53
COR THERAPEUTICS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Balance Sheets........................................................................ F-3
Statement of Operations............................................................... F-4
Statement of Stockholders' Equity..................................................... F-5
Statement of Cash Flows............................................................... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 54
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
COR Therapeutics, Inc.
We have audited the accompanying balance sheets of COR Therapeutics, Inc.
as of December 31, 1996 and 1995, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of COR Therapeutics, Inc. at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Palo Alto, California
January 23, 1997
F-2
<PAGE> 55
COR THERAPEUTICS, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- JUNE 30,
1996 1995 1997
--------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 2,615 $ 5,463 $ 7,144
Short-term investments................................. 50,519 79,371 31,374
Contract receivables................................... 7,644 4,374 5,941
Other current assets................................... 3,420 3,621 4,535
--------- -------- ---------
Total current assets........................... 64,198 92,829 48,994
Property and equipment, net.............................. 7,047 8,077 5,818
--------- -------- ---------
$ 71,245 $100,906 $ 54,812
========= ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 1,398 $ 1,555 $ 3,028
Accrued compensation................................... 1,495 1,928 1,702
Accrued development costs.............................. 7,830 5,759 4,870
Deferred revenue....................................... 2,900 500 3,781
Other accrued liabilities.............................. 994 1,986 1,641
Long-term debt -- current portion...................... 1,157 1,321 865
Capital lease obligations -- current portion........... 1,664 1,046 1,711
--------- -------- ---------
Total current liabilities...................... 17,438 14,095 17,598
Long-term debt -- noncurrent portion..................... 644 1,801 316
Capital lease obligations -- noncurrent portion.......... 2,721 2,773 2,574
Commitments
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized.......................................... -- -- --
Common stock, $.0001 par value; 40,000,000 shares
authorized; 20,009,918, 19,428,749 and 20,111,009
shares at December 31, 1996 and 1995 and June 30,
1997, respectively.................................. 2 2 2
Additional paid-in capital............................. 178,680 173,728 179,591
Deferred compensation.................................. (249) (262) (596)
Unrealized gains on short-term investments............. 67 281 22
Accumulated deficit.................................... (128,058) (91,512) (144,695)
--------- -------- ---------
Total stockholders' equity..................... 50,442 82,237 34,324
--------- -------- ---------
$ 71,245 $100,906 $ 54,812
========= ======== =========
</TABLE>
See accompanying notes.
F-3
<PAGE> 56
COR THERAPEUTICS, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
---------------------------------- -----------------------
1996 1995 1994 1997 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues
License fee..................... $ -- $ 19,500 $ -- $ -- $ --
Contract revenues............... 18,755 12,350 522 12,905 7,324
-------- -------- -------- -------- --------
Total revenues.......... 18,755 31,850 522 12,905 7,324
Expenses
Research and development........ 50,791 37,392 40,185 25,846 26,050
Marketing, general and
administrative............... 7,303 6,029 4,589 4,596 3,723
-------- -------- -------- -------- --------
Total expenses.......... 58,094 43,421 44,774 30,442 29,773
-------- -------- -------- -------- --------
Loss from operations.............. (39,339) (11,571) (44,252) (17,537) (22,449)
Interest income................... 3,552 4,876 5,188 1,248 1,980
Interest expense.................. (759) (836) (473) (348) (385)
-------- -------- -------- -------- --------
Net loss.......................... $(36,546) $ (7,531) $(39,537) $(16,637) $(20,854)
======== ======== ======== ======== ========
Net loss per share................ $ (1.86) $ (0.39) $ (2.07) $ (0.83) $ (1.07)
======== ======== ======== ======== ========
Shares used in computing net loss
per share....................... 19,636 19,360 19,091 20,063 19,505
======== ======== ======== ======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 57
COR THERAPEUTICS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
AND THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNREALIZED GAINS
(LOSSES) ON TOTAL
COMMON ADDITIONAL PAID- DEFERRED SHORT-TERM ACCUMULATED STOCKHOLDERS'
STOCK IN CAPITAL COMPENSATION INVESTMENTS DEFICIT EQUITY
------ ---------------- ------------ ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31,1993.......... $2 $164,086 $ (480) $ -- $ (44,444) $ 119,164
Issuance of 533,333 shares of common
stock, net of issuance costs........ -- 7,977 -- -- -- 7,977
Issuance of 179,039 shares of common
stock upon exercise of stock options
and pursuant to the Employee Stock
Purchase Plan....................... -- 669 -- -- -- 669
Deferred compensation related to stock
awards of 12,900 shares of common
stock, net of amortization.......... -- 211 (113) -- -- 98
Amortization of deferred compensation
related to grant of stock options... -- -- 240 -- -- 240
Unrealized losses on available
for-sale short-term investments..... -- -- -- (1,880) -- (1,880)
Net loss.............................. -- -- -- -- (39,537) (39,537)
--
-------- ----- --------- --------
Balances at December 31, 1994......... 2 172,943 (353) (1,880) (83,981) 86,731
Issuance of 169,838 shares of common
stock upon exercise of stock options
and pursuant to the Employee Stock
Purchase Plan....................... -- 531 -- -- -- 531
Deferred compensation related to stock
awards of 23,292 shares of common
stock, net of amortization.......... -- 254 (89) -- -- 165
Amortization of deferred compensation
related to grant of stock options... -- -- 180 -- -- 180
Unrealized gains on available-for-sale
short-term investments.............. -- -- -- 2,161 -- 2,161
Net loss.............................. -- -- -- -- (7,531) (7,531)
--
-------- ----- --------- --------
Balances at December 31, 1995......... 2 173,728 (262) 281 (91,512) 82,237
Issuance of 156,876 shares of common
stock, net, upon exercise of stock
options and pursuant to the Employee
Stock Purchase Plan................. -- 682 -- -- -- 682
Deferred compensation related to stock
awards of 25,187 shares of common
stock, net of cancellations and
amortization........................ -- 270 13 -- -- 283
Unrealized losses on
available-for-sale short-term
investments......................... -- -- -- (214) -- (214)
Issuance of 399,106 shares of common
stock............................... -- 4,000 -- -- -- 4,000
Net loss.............................. -- -- -- -- (36,546) (36,546)
--
-------- ----- --------- --------
Balances at December 31, 1996......... 2 178,680 (249) 67 (128,058) 50,442
Issuance of 72,795 shares of common
stock, net, upon exercise of stock
options and pursuant to the Employee
Stock Purchase Plan (unaudited)..... -- 472 -- -- -- 472
Deferred compensation related to stock
awards of 28,296 shares of common
stock, and options for 18,000
shares, net of cancellations and
amortization (unaudited)............ -- 439 (347) -- -- 92
Unrealized losses on available
for-sale short-term investments
(unaudited)......................... -- -- -- (45) -- (45)
Net loss (unaudited).................. -- -- -- -- (16,637) (16,637)
--
-------- ----- --------- --------
Balances at June 30, 1997
(unaudited)......................... $2 $179,591 $ (596) $ 22 $(144,695) $ 34,324
== ======== ===== ========= ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 58
COR THERAPEUTICS, INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1996 1995 1994 1997 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows provided by (used in) operating
activities:
Net loss.................................. $(36,546) $ (7,531) $(39,537) $(16,637) $(20,854)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization.......... 3,593 3,546 2,119 1,840 2,105
Amortization of deferred
compensation......................... 283 345 338 92 77
Changes in assets and liabilities:
Contract receivables................. (3,270) (4,374) -- 1,703 598
Other current assets................. 201 (601) (1,155) (1,115) 816
Accounts payable..................... (157) 188 726 1,630 (260)
Accrued compensation................. (433) 716 290 335 (159)
Accrued development costs............ 2,071 (3,155) 5,173 (2,960) (744)
Deferred revenue..................... 2,400 500 -- 881 --
Other accrued liabilities............ (992) 224 186 647 (763)
-------- -------- -------- -------- --------
Total adjustments................. 3,696 (2,611) 7,677 3,053 1,670
-------- -------- -------- -------- --------
Net cash used in operating
activities...................... (32,850) (10,142) (31,860) (13,584) (19,184)
-------- -------- -------- -------- --------
Cash flows provided by (used in) investing
activities:
Purchases of short-term investments....... (39,725) (81,594) (55,504) (17,569) (15,369)
Sales of short-term investments........... 48,963 70,178 47,675 33,669 25,726
Maturities of short-term investments...... 19,400 26,000 20,000 3,000 7,500
Additions to property and equipment....... (2,563) (2,708) (4,740) (611) (1,903)
-------- -------- -------- -------- --------
Net cash provided by investing
activities........................... 26,075 11,876 7,431 18,489 15,954
-------- -------- -------- -------- --------
Cash flows provided by (used in) financing
activities:
Proceeds from long-term debt.............. -- -- 2,239 -- --
Principal payments on long-term debt...... (1,321) (1,199) (946) (620) (642)
Proceeds from capital lease obligations... 1,854 2,463 1,134 701 1,167
Principal payments under capital lease
obligations............................ (1,288) (704) (358) (801) (420)
Issuance of common stock.................. 4,682 531 8,646 344 368
-------- -------- -------- -------- --------
Net cash provided by (used in)
financing activities................. 3,927 1,091 10,715 (376) 473
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents............................... (2,848) 2,825 (13,714) 4,529 (2,757)
Cash and cash equivalents at beginning of
the period................................ 5,463 2,638 16,352 2,615 5,463
-------- -------- -------- -------- --------
Cash and cash equivalents at end of the
period.................................... $ 2,615 $ 5,463 $ 2,638 $ 7,144 $ 2,706
======== ======== ======== ======== ========
Supplemental schedule of non-cash financing
activities:
Cash paid during the period for
interest............................... $ 759 $ 836 $ 473 $ 348 $ 385
======== ======== ======== ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 59
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
COR Therapeutics, Inc. (the "Company") was incorporated in Delaware on
February 4, 1988. The Company was organized to engage in the discovery,
development and commercialization of novel pharmaceutical products for the
treatment and prevention of severe cardiovascular diseases.
Interim Financial Information
The financial information at and subsequent to June 30, 1997, and for the
six months ended June 30, 1997 and 1996, is unaudited but includes all
adjustments (consisting only of normal recurring adjustments) which the Company
considers necessary for a fair presentation of the financial position at such
date and of the operating results and cash flows for those periods. Results of
the 1997 period are not necessarily indicative of results expected for the
entire year.
Cash, investments and credit risk
Cash and cash equivalents consist of cash held in United States banks, time
deposits and other highly liquid investments with maturities of 90 days or less.
Cash equivalents are readily convertible into cash and have insignificant
interest rate risk. The Company's investment policy stipulates that a
diversified portfolio be maintained and invested in a manner appropriate for the
Company's primary business operations. The policy defines investment objectives
to provide optimal investment return within constraints to optimize safety and
liquidity.
Securities available-for-sale
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance sheet
date. Debt securities have been classified as available-for-sale.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses reported in a separate component of stockholders' equity. The
amortized cost of debt securities in this category is adjusted for amortization
of premiums and accretion of discounts to maturity. Such amortization is
included in interest income. Realized gains and losses and declines in value
judged to be other than temporary on available-for-sale securities are included
in interest income. The cost of securities sold is based on the specific
identification method. Interest and dividends on securities classified as
available for sale are included in interest income.
F-7
<PAGE> 60
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
Property and equipment
Property and equipment is stated at cost and depreciated over the estimated
useful lives of the assets, generally three to four years, using the
straight-line method. Assets under capitalized leases are amortized over the
shorter of the lease term or life of the asset. Property and equipment consists
of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Machinery and equipment................................ $ 10,379 $ 8,699
Office furniture and fixtures.......................... 738 706
Leasehold improvements................................. 9,753 8,902
-------- --------
20,870 18,307
Less accumulated depreciation and amortization......... (13,823) (10,230)
-------- --------
Property and equipment, net............................ $ 7,047 $ 8,077
======== ========
</TABLE>
Revenues
Revenues consist of license fees and contract revenues, including grants.
Grant and contract revenues are recorded as earned based on the performance
requirements of the contracts, while related costs are expensed as incurred.
Payments received in advance are recorded as deferred revenue until earned. For
the years ended December 31, 1996, 1995 and 1994, grant-related revenues were
approximately $85,000, $100,000 and $22,000, respectively, and grant-related
costs, which are included in research and development expenses, were
approximately $174,000, $165,000 and $43,000, respectively.
Net loss per share
Net loss per share is computed using the weighted average number of shares
of common stock outstanding. Common equivalent shares from stock options are
excluded from the computation as their effect is antidilutive.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Accounting for stock-based compensation
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock options because, as
discussed in Note 6 below, the alternative fair value accounting provided for
under Financial Accounting Standards Board Statement No. 123, "Accounting for
Stock-Based Compensation," requires use of option valuation models that were not
developed for use in valuing employee stock options. Under APB 25, because the
exercise price of the Company's stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
F-8
<PAGE> 61
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
Reclassification
The Company has reclassified certain prior year balances to conform to
current year presentation.
2. COLLABORATION AGREEMENTS
Collaboration agreement with Schering-Plough Corporation
In April 1995, the Company entered into a collaboration agreement with
Schering Corporation and Schering-Plough Corporation (collectively "Schering"),
to develop and commercialize INTEGRILIN on a worldwide basis. Under the terms of
the agreement, COR received a one-time license fee of $20,000,000 in 1995. The
Company recorded $3,000,000 of such milestone payments in 1996. The Company
recorded an additional $3,000,000 of such milestone payments in the six-month
period ended June 30, 1997. In addition, contract revenues in 1996 and 1995
included safety-related milestone payments pertaining to the conduct of clinical
studies of INTEGRILIN of $9,000,000 and $6,000,000, respectively. Schering
participates in and shares the costs of developing INTEGRILIN. Both parties have
the right to co-promote and share profits, if any, in the United States and
Canada. Schering has the right to launch INTEGRILIN in Europe and would pay the
Company royalties for a specified initial period, after which the Company would
have the right to co-promote and share profits, if any. Schering also will
assist the Company in developing, training and providing experience for a United
States cardiovascular sales force. Under the terms of the agreement, both
parties have certain rights to terminate. Until 30 days after certain key data
are received from the PURSUIT trial, Schering may elect to terminate the
agreement. In the event of such termination: (i) COR would reacquire all rights
to all INTEGRILIN products subject to a royalty to Schering, (ii) Schering would
be relieved of its obligation to pay development costs incurred after June 30,
1997 except for certain specified development costs where Schering will have the
continuing obligation to pay ongoing costs incurred by COR (subject to the
obligation of COR to repay certain of such costs under certain circumstances),
and (iii) Schering could exercise an option to obtain certain rights to a
specified COR research program. COR recognized $18,635,000 in contract revenue
in 1996 and $11,750,000 in 1995 under this agreement with Schering, representing
99% and 95% of total contract revenues in 1996 and 1995, respectively. In
addition, the Company recognized $11,705,000 in contract revenues from Schering
during the six-month period ended June 30, 1997, representing 91% of total
contract revenues for the six-month period ended June 30, 1997. Expenses
incurred under the agreement, including Company-sponsored development costs,
were approximately $29,950,000 in 1996 and $11,400,000 in 1995. In addition,
expenses incurred under the agreement were $17,899,000 in the six-month period
ended June 30, 1997.
Collaboration agreement with Ortho Pharmaceutical Corporation
In December 1993, the Company and Ortho Pharmaceutical Corporation, a
subsidiary of Johnson & Johnson ("Ortho"), entered into a collaboration
agreement focusing on the joint development and commercialization of novel
pharmaceuticals that may result from certain collaboration research. The Company
and Ortho each provided a significant level of specified internal resources to
the collaboration research over the initial three-year research term. In late
1996, Ortho exercised its option to extend the research term for one or two
years.
If products result from the research, Ortho will make development milestone
payments to the Company. Both the Company and Ortho may participate in
development of products under the collaboration, share equally in the
development costs, participate in the commercialization of co-developed products
and share equally in worldwide profits or losses from such co-developed
products.
F-9
<PAGE> 62
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
If either party decides not to participate in the development of a product under
the collaboration, that party would receive royalties based on product sales.
In connection with the collaboration with Ortho, in January 1994, the
Company sold to Johnson & Johnson Development Corporation, a subsidiary of
Johnson & Johnson ("JJDC"), 533,333 shares of common stock at $15.00 per share
for an aggregate purchase price of $8,000,000 in a private placement. In October
1996, Ortho exercised its option to extend the term of the agreement, and
pursuant to the terms of the original agreement, the Company sold JJDC an
additional 399,106 shares of common stock at $10.02 per share for an aggregate
purchase price of $4,000,000, also in a private placement. In connection with
the extension of the agreement, Ortho paid the Company $2,400,000 in 1996 for
research to be performed during the remaining term of the contract.
The Company recognized $35,000, $500,000 and $500,000 in revenues under
this agreement during the years ended December 31, 1996, 1995 and 1994,
respectively, representing approximately 1%, 2% and 96% of total revenue in
those years. The Company recognized $1,200,000 in revenues under this agreement
during the six-month period ended June 30, 1997, representing 9% of total
revenue for the period.
Collaboration agreement with Kyowa Hakko Kogyo Co., Ltd.
In 1992, the Company entered into a collaboration agreement with Kyowa
Hakko Kogyo Co., Ltd., ("Kyowa Hakko"), a Japanese pharmaceutical company.
During the three-year research phase of the agreement, the Company and Kyowa
Hakko collaborated on the discovery and development of potential leads and
committed significant internal resources to all phases of research. The
companies have also agreed to share specific future development and
commercialization rights and responsibilities. In November 1995, this agreement
was extended for another two years.
Collaboration agreement with Eli Lilly and Company
Collaborative research under a collaboration agreement with Eli Lilly and
Company ("Lilly") ended by the terms of the agreement in April 1996. Under the
terms of a November 1996 amendment, the Company now has the exclusive right to
develop and commercialize certain compounds, subject to a royalty to Lilly. In
addition, under the terms of the amendment, the Company has the exclusive right
to research, develop and commercialize certain potential oral compounds, also
subject to a royalty to Lilly. Under the original agreement and the amendment
between the parties, COR and Lilly have shared rights with respect to all other
compounds which were the subject of the collaborative research.
3. FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Short-term investments: Available-for-sale securities consist of
marketable debt securities and are carried at fair value, with the
unrealized gains and losses reported in a separate component of
stockholders' equity. The fair values are based on quoted market prices.
F-10
<PAGE> 63
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
At December 31, 1996, available-for-sale securities, which include cash
equivalents with an amortized cost and estimated fair value of $2,053,000, were
as follows:
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Government Securities.... $29,411 $ 63 $(12) $ 29,462
Corporate Debt Securities..... 23,094 38 (22) 23,110
------- ---- ---- -------
$52,505 $101 $(34) $ 52,572
======= ==== ==== =======
</TABLE>
During the year ended December 31, 1996, the Company sold
available-for-sale investments with a fair value of $48,963,000, resulting in
gross realized gains of $38,000 and gross realized losses of $232,000.
The amortized cost and estimated fair value of available-for-sale
securities held as available for sale at December 31, 1996, by contractual
maturity, were as follows:
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less............................... $15,171 $ 15,196
Due after one year through three years................ 37,334 37,376
------- -------
$52,505 $ 52,572
======= =======
</TABLE>
At December 31, 1995, available-for-sale securities, which include cash
equivalents with an amortized cost and estimated fair value of $5,987,000, were
as follows:
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Government Securities.... $36,299 $324 $ -- $ 36,623
Corporate Debt Securities..... 48,778 121 (164) 48,735
------- ---- ----- -------
$85,077 $445 $ (164) $ 85,358
======= ==== ===== =======
</TABLE>
During the year ended December 31, 1995, the Company sold
available-for-sale investments with a fair value of $70,178,000, resulting in
gross realized gains of $283,000 and gross realized losses of $584,000.
Long and short-term debt: The carrying amounts of the Company's borrowings
under its secured debt agreements approximate their fair value. The fair values
of the Company's debt are estimated using discounted cash flow analysis, based
on the Company's current incremental borrowing rates for similar types of
borrowing arrangements.
4. LONG-TERM DEBT
Long-term debt consists of various secured obligations relating to the
purchase of property and equipment. Such notes are secured by the underlying
property and equipment and bear interest at approximately 10.5% to 13.5% per
annum and are payable in monthly installments over 48 months.
At December 31, 1996, the aggregate long-term debt maturities were
$1,157,000 and $644,000 in 1997 and 1998, respectively.
F-11
<PAGE> 64
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
5. LEASE OBLIGATIONS
The Company leases office and laboratory facilities and equipment. Rent
expense for operating leases was approximately $1,212,000 in 1996, $1,012,000 in
1995 and $859,000 in 1994. Future minimum lease payments under noncancelable
leases at December 31, 1996 were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
(IN THOUSANDS)
<S> <C> <C>
1997.................................................... $ 2,062 $ 1,022
1998.................................................... 1,668 1,037
1999.................................................... 1,068 864
2000.................................................... 322 --
------- ------
Total minimum lease payments............................ 5,120 $ 2,923
======
Less amount representing interest....................... (735)
-------
Present value of future lease payments.................. 4,385
Less current portion.................................... (1,664)
-------
Noncurrent portion of capital lease obligations......... $ 2,721
=======
</TABLE>
At December 31, 1996, approximately $1,100,000 was available to the Company
under equipment financing lease lines which expire in July 1997.
At December 31, 1996 and 1995, the aggregate cost of property and equipment
under capital leases totaled $5,035,000 and $5,855,000, with accumulated
amortization of $2,777,000 and $2,437,000, respectively.
6. STOCKHOLDERS' EQUITY
Stock option plans
During 1988, the Company adopted an Employee Stock Option Plan and a
Consultant Stock Option Plan (the "1988 Plans"). In 1991, the 1988 Plans were
terminated and the Board of Directors adopted the 1991 Equity Incentive Plan
(the "1991 Plan"). Under the 1988 Plans and the 1991 Plan, incentive and
non-qualified options were granted to employees and consultants at exercise
prices not less than the fair market value of the Company's common stock on the
date of grant. All options granted under the 1988 Plans and the 1991 Plan become
exercisable pursuant to the applicable terms of the grant.
In 1991, the Board of Directors adopted the 1991 Equity Incentive Plan
under which stock options and stock awards may be granted to employees or
consultants of the Company. Options generally vest over 60 months and are
exercisable to the extent vested. As of December 31, 1996, options to purchase
approximately 2,152,720 shares were vested and exercisable, aggregating
approximately $18,199,000 (options to purchase 923,000 shares aggregating,
approximately $11,805,000 in 1995) under these Plans. As of June 30, 1997,
options to purchase 2,329,354 shares were vested and exercisable under these
plans, aggregating approximately $20,395,000.
In 1994, the Board of Directors adopted the 1994 Non-Employee Directors'
Stock Option Plan (the "Directors' Plan"), which provides for the
non-discretionary grant of non-qualified options to those members of the Board
of Directors who are neither employees nor consultants to the Company. An
aggregate of 200,000 shares of common stock was authorized for issuance under
the Directors' Plan.
F-12
<PAGE> 65
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
Options granted under the Directors' Plan vest over a period of 60 months. At
December 31, 1996, 58,749 shares were vested and exercisable (33,749 shares at
December 31, 1995) and 75,000 remained available for future grant under the
Directors' Plan. No options were granted under this Plan in 1996. At June 30,
1997, 71,249 shares were vested and exercisable and 75,000 remained available
for future grant under the Directors' Plan. No options were granted under the
Directors' Plan in 1997.
Activity under these plans is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
OPTIONS -------------------------------------------------------------
AVAILABLE WEIGHTED
FOR NUMBER OF AVERAGE PRICE PER
GRANT SHARES EXERCISE PRICE SHARE AGGREGATE
--------- --------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at 12/31/93........ 376,105 2,296,631 $ 7.01 $.10-$16.25 $16,136,000
Stock awards............... (12,900) -- -- -- --
Additional shares
authorized............... 800,000 -- -- -- --
Options granted............ (492,200) 492,200 13.07 9.75-15.88 6,613,000
Options forfeited.......... 42,384 (56,510) 10.36 .30-15.00 (593,000)
Options exercised.......... -- (128,892) 1.33 .10-13.25 (175,000)
--------- --------- ------ ------------ -----------
Balance at 12/31/94........ 713,389 2,603,429 8.39 .10-16.25 21,981,000
Stock awards............... (23,292) -- -- -- --
Additional shares
authorized............... 500,000 -- -- -- --
Options granted............ (993,500) 993,500 12.27 9.19-15.38 12,190,000
Options forfeited.......... 53,275 (73,226) 10.28 .30-15.88 (753,000)
Options exercised.......... -- (110,612) 0.35 .10-9.75 (41,000)
--------- --------- ------ ------------ -----------
Balance at 12/31/95........ 249,872 3,413,091 9.68 .10-16.25 33,377,000
Stock awards............... (25,678) -- -- -- --
Additional shares
authorized............... 1,500,000 -- -- -- --
Options granted............ (857,000) 857,000 9.22 8.56-11.38 7,901,000
Options forfeited.......... 303,856 (303,856) 13.28 5.25-15.88 (4,072,000)
Options exercised.......... -- (77,600) 0.41 .10-8.25 (37,000)
--------- --------- ------ ------------ -----------
Balance at 12/31/96........ 1,171,050 3,888,635 9.45 .10-16.25 37,169,000
Stock awards............... (27,808) -- -- -- --
Additional shares
authorized............... 600,000 -- -- -- --
Options granted............ (588,000) 588,000 10.62 9.06-12.50 6,245,000
Options forfeited.......... 67,851 (67,934) 11.45 8.25-14.50 (778,000)
Options exercised.......... -- (36,318) 5.12 .10-11.00 (186,000)
--------- --------- ------ ------------ -----------
Balance at 6/30/97......... 1,223,093 4,372,383 $ 9.71 $.10-$14.50 $42,450,000
========= ========= ====== ============ ===========
</TABLE>
The Company recorded $270,000, $254,000 and $211,000 in deferred
compensation for stock awards of 25,678, 23,292 and 12,900 shares of common
stock for the years ended December 31, 1996, 1995 and 1994, respectively. The
weighted average fair market value of these stock awards on the date of grant
was $8.56 in 1996 and $12.38 in 1995. The Company recorded $268,000 in deferred
compensation for stock awards of 27,808 shares of common stock for the six month
period ended June 30, 1997 for which the weighted average fair market value on
the date of grant was $8.31 per share.
F-13
<PAGE> 66
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
Stock purchase plan
In 1991, the Board of Directors adopted the 1991 Employee Stock Purchase
Plan (the "SPP") providing for the issuance of up to 25,000 shares of common
stock pursuant to the SPP. Essentially all employees may participate and
contribute up to 15% of compensation to purchase common stock at 85% of its fair
market value at certain specified dates. During 1996, 1995, 1993, an additional
300,000, 200,000 and 75,000 shares of common stock were authorized,
respectively, for issuance pursuant to the SPP. During the three years ended
December 31, 1996, 1995 and 1994, 80,276 shares, 59,226 shares and 50,147 shares
of common stock, respectively, were issued pursuant to the SPP, at prices
ranging between $7.28 and $12.75. During the six-month period ended June 30,
1997, 36,477 shares of common stock were issued pursuant to the SPP, at prices
ranging between $7.28 and $8.55.
Pro forma valuation of options
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options (see Note 1). Under
APB 25, because the exercise price of the Company's stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
Pro forma information regarding net loss and loss per share is required by
Statement 123, and has been determined as if the Company had accounted for its
employee stock options granted after December 31, 1994 under the fair value
method of that Statement. The fair value of these options was estimated at the
date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions for 1996 and 1995, respectively; risk-free interest
rates of 6.63% and 6.06%; no dividends paid; volatility factors of the expected
market price of the Company's common stock of 0.79 and 0.73; and a
weighted-average expected life of the option of 5 years. The effects of applying
FAS 123 for the recognition of compensation expense and provision of pro forma
disclosures in 1996 and 1995 are not likely to be representative of the effects
on reported and pro forma net income in future years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing model does not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the option's vesting period. The Company's
pro forma information follows (in thousands except for the earnings per share
information):
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Pro forma net loss................... $(40,967) $(10,585)
Pro forma loss per share............. $ (2.09) $ (0.55)
</TABLE>
F-14
<PAGE> 67
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
The following table summarizes information about stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
-------------------------------------- OPTIONS EXERCISABLE
WEIGHTED ------------------------------------
RANGE OF NUMBER OF OPTIONS AVERAGE WEIGHTED NUMBER OF OPTIONS WEIGHTED
EXERCISE OUTSTANDING AS OF REMAINING AVERAGE EXERCISABLE AS OF AVERAGE
PRICES DECEMBER 31, 1996 CONTRACTUAL LIFE EXERCISE PRICE DECEMBER 31, 1996 EXERCISE PRICE
- ------------- ----------------- ---------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
$ 0.00 -- $ 5.25 746,216 3.06 $ 0.68 746,216 $ 0.68
$ 8.56 -- $ 9.91 819,768 8.92 9.06 125,260 9.38
$10.00 -- $12.00 1,056,868 7.36 11.26 559,891 11.49
$12.06 -- $14.50 815,584 7.53 12.82 404,683 13.00
$14.75 -- $16.25 450,200 6.47 15.28 316,670 15.24
--------- ---------
3,888,635 6.82 $ 9.45 2,152,720 $ 8.46
========= =========
</TABLE>
The weighted-average fair values of options granted during the years ended
December 31, 1996 and 1995 were $6.87 and $9.70 per share, respectively.
Common shares reserved for future issuance
As of June 30, 1997, 5,951,032 shares of common stock were reserved for
future issuance under the option and stock purchase plans.
7. INCOME TAXES
At December 31, 1996, the Company had available net operating loss
carryforwards for federal income tax purposes of approximately $119,000,000. The
tax loss carryforwards, if not utilized to offset taxable income in future
periods, expire between the years 2003 and 2011.
Significant components of the Company's deferred tax assets and liabilities
for federal income taxes as of December 31, 1996, 1995 and 1994, were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards....... $ 40,800,000 $ 30,200,000 $ 28,000,000
Capitalized research and development... 6,900,000 5,600,000 4,900,000
Research and development credits
(expiring between 2003 and 2011).... 5,700,000 4,600,000 4,200,000
Other, net............................. 4,500,000 4,400,000 2,300,000
------------ ------------ ------------
Net deferred tax assets................ 57,900,000 44,800,000 39,400,000
Valuation allowance for deferred tax
assets.............................. (57,900,000) (44,800,000) (39,400,000)
------------ ------------ ------------
Deferred tax assets............ $ -- $ -- $ --
============ ============ ============
</TABLE>
The valuation allowance for deferred tax assets increased by $20,850,000
during the year ended December 31, 1994. Approximately $1,700,000 of the
valuation allowance for deferred tax assets relates to benefits of stock option
deductions which, when recognized, will be allocated directly to contributed
capital.
F-15
<PAGE> 68
COR THERAPEUTICS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PERTAINING TO JUNE 30, 1997 AND THE
SIX-MONTHS ENDED JUNE 30, 1997 AND 1996 IS UNAUDITED)
Because of "change of ownership" provisions of the Tax Reform Act of 1986,
the Company's net operating loss and credit carryforwards may be subject to an
annual limitation regarding utilization against taxable income in future
periods.
8. SUBSEQUENT EVENTS
On September 4, 1997 the Board of Directors of the Company authorized the
sale of up to 2,875,000 shares of common stock in a public offering.
F-16
<PAGE> 69
LOGO
<PAGE> 70
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Company in connection with the sale of
the Common Stock being registered. All the amounts shown are estimates except
for the registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC Registration fee...................................................... $ 13,340
NASD filing fee/Nasdaq listing fee........................................ 22,203
Blue sky qualification fees and expenses.................................. 5,000
Printing and engraving expenses........................................... 110,000
Legal fees and expenses................................................... 100,000
Accounting fees and expenses.............................................. 60,000
Transfer agent and Registrar fees......................................... 2,000
Miscellaneous............................................................. 12,457
--------
Total........................................................... $325,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Registrant's Bylaws also
provide that the Registrant will indemnify its directors and executive officers
and may indemnify its other officers, employees and agents to the fullest extent
permitted by Delaware law.
The Registrant's Certificate of Incorporation provides for the elimination
of liability for monetary damages for breach of the directors' fiduciary duty of
care to the Registrant and its stockholders. These provisions do not eliminate
the directors' duty of care and, in appropriate circumstances, equitable
remedies such an injunctive or other forms of non-monetary relief will remain
available under Delaware law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement, will provide for indemnification by the Underwriters and their
controlling persons, on the one hand, and of the Registrant and its controlling
persons on the other hand, for certain liabilities arising under the Securities
Act or otherwise.
ITEM 16. EXHIBITS
(a) EXHIBITS
<TABLE>
<CAPTION>
NUMBER
- -----------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1(10) Restated Certificate of Incorporation of the Registrant.
3.2(2) By-laws of the Registrant.
4.1 Reference is made to Exhibits 3.1 and 3.2.
</TABLE>
II-1
<PAGE> 71
<TABLE>
<CAPTION>
NUMBER
- -----------------
<C> <S>
4.2(2) Information, Registration Rights and Right of First Refusal Agreement among
the Registrant and other parties named therein, as amended as of May 15,
1991.
4.3(2) Side by Side Agreement among the Registrant and the other parties named
therein.
4.4(10) Registrant's Preferred Share Purchase Rights Agreement, dated as of January
23, 1995, between the Registrant and Chemical Trust Company of California.
5.1 Opinion of Cooley Godward LLC.
*10.1(2) Form of Indemnification Agreement between the Registrant and its directors,
executive officers, and officers.
*10.2(2) Registrant's 1988 Employee Stock Option Plan and related agreements.
*10.3(2) Registrant's 1988 Consultant Stock Option Plan and related agreements.
++10.7(2) Research, Option and License Agreement between the Registrant and Eli Lilly
and Company, dated May 1, 1991.
10.8(2) Lease Agreement, dated September 23, 1988, as amended August 30, 1989 and
Lease Rider, dated September 23, 1988, between the Registrant and NC Land
Associates Limited Partnership.
*10.17(1) Forms of option agreements used under the Registrant's 1991 Equity
Incentive Plan.
*10.18(3) Form of offering document used under the Registrant's 1991 Employee Stock
Purchase Plan.
*10.20(5) Consulting Agreement, dated January 1, 1993, between the Registrant and
Lloyd Hollingsworth Smith, Jr.
++10.21(5) Collaboration Research Agreement between the Registrant and Kyowa Hakko
Kyogo, Co., Ltd.
++10.22(6) Collaboration Agreement between Eli Lilly and Company and the Registrant,
dated May 28, 1993.
++10.23(4) Exclusive License between the Registrant and the Regents of the University
of California, dated June 10, 1992.
++10.24(7) Collaboration Agreement between Ortho Pharmaceutical Corporation and the
Registrant, dated December 21, 1993.
*10.26(12) Registrant's 1994 Non-employee Directors' Stock Option Plan, as amended.
10.27(8) Put and Stock Purchase Agreement between the Registrant and Johnson and
Johnson Development Corporation, dated December 21, 1993.
10.28(9) Consulting Agreement, dated March 17, 1988 as amended effective September
28, 1994 between the Registrant and Shaun R. Coughlin.
*10.29(12) Registrant's 1991 Stock Purchase Plan, as amended.
*10.30(12) Registrant's 1991 Equity Incentive Plan, as amended.
++10.32(10) Collaboration Agreement between Schering-Plough Corporation and the
Registrant, dated April 10, 1995.
++10.34(11) Amendment No. 4 to Collaboration Agreement between the Registrant and Kyowa
Hakko Kyogo, Co., Ltd., dated November 10, 1995.
++10.35(12) Amendment No. 1 to Collaboration Agreement between Ortho Pharmaceutical
Corporation and the Registrant, dated September 27, 1996.
++10.36(12) Amendment No. 1 to Collaboration Agreement between Eli Lilly and Company
and the Registrant, dated November 1996.
++10.37(I)(12) Amendment No. 1 to Collaboration Agreement between the Registrant and Kyowa
Hakko Kyogo, Co., Ltd, dated May 9, 1994.
</TABLE>
II-2
<PAGE> 72
<TABLE>
<CAPTION>
NUMBER
- -----------------
<C> <S>
++10.37(ii)(12) Amendment No. 2 to Collaboration Agreement between the Registrant and Kyowa
Hakko Kyogo, Co., Ltd, dated July 13, 1995.
++10.37(iii)(12) Amendment No. 3 to Collaboration Agreement between the Registrant and Kyowa
Hakko Kyogo, Co., Ltd, dated August 1, 1995.
++10.37(iv)(12) Amendment No. 5 to Collaboration Agreement between the Registrant and Kyowa
Hakko Kyogo, Co., Ltd, dated December 17, 1996.
*10.38(12) Description of Registrant's 1996 Incentive Pay Plan.
11.1 Statement Re: Computation of Net Loss per Share.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney, Reference is made to the signature page.
</TABLE>
- ---------------
* Indicates management contracts or compensatory plans or arrangements filed
pursuant to Item 601(b)(10) of Regulation S-K.
++ Confidential treatment granted.
(1) Filed as an exhibit to the Registrant's Registration Statement on Form S-8
(Reg. No. 33-42912) and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(Reg. No. 33-40627) or amendments thereto and incorporated herein by
reference.
(3) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(Reg. No. 33-43181) or amendments thereto and incorporated herein by
reference.
(4) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992 and incorporated by reference herein.
(5) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992 and incorporated by reference herein.
(6) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the year ended June 30, 1993 and incorporated by reference herein.
(7) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993 and incorporated by reference herein.
(8) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994 and incorporated by reference herein.
(9) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994 and incorporated by reference herein.
(10) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995 and incorporated by reference herein.
(11) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 and incorporated by reference herein.
(12) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated by reference herein.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
II-3
<PAGE> 73
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 of otherwise, the
Registrant has been advised that in opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against policy as expressed in the Securities Act and
will governed by the final adjudication of such issue.
The undersigned Registrant undertakes that: (1) for purposes of determining
liability under the Securities Act, 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, and
(2) for the purpose of determining any liability under the Securities Act, 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-4
<PAGE> 74
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 South San Francisco, County of San Mateo, State of
California, on the 5th day of September, 1997.
COR THERAPEUTICS, INC.
By /s/ VAUGHN M. KAILIAN
------------------------------------
Vaughn M. Kailian
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Vaughn M. Kailian, Laura A. Brege and R.
Lee Douglas, Jr., and each of them, as 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 in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, thereby ratifying and
confirming our signatures as they may be signed by each said attorney-in-fact to
any and all amendments to said Registration Statement, or any related
registration statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and 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
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, and any of them, or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, 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
- ----------------------------------------------- -------------------------- ------------------
<C> <S> <C>
/s/ VAUGHN M. KAILIAN President, Chief Executive September 5, 1997
- ----------------------------------------------- Officer and Director
Vaughn M. Kailian (Principal Executive
Officer)
/s/ LAURA A. BREGE Vice President, Finance September 5, 1997
- ----------------------------------------------- and Chief Financial
Laura A. Brege Officer (Principal
Financial Officer)
/s/ PETER S. RODDY Director, Finance and September 5, 1997
- ----------------------------------------------- Controller (Principal
Peter S. Roddy Accounting Officer)
/s/ SHAUN R. COUGHLIN, M.D., PH.D. Director September 5, 1997
- -----------------------------------------------
Shaun R. Coughlin, M.D., Ph.D.
/s/ JAMES T. DOLUISIO, PH.D. Director September 5, 1997
- -----------------------------------------------
James T. Doluisio, Ph.D.
</TABLE>
II-5
<PAGE> 75
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ----------------------------------------------- -------------------------- ------------------
<C> <S> <C>
/s/ JERRY T. JACKSON Director September 5, 1997
- -----------------------------------------------
Jerry T. Jackson
/s/ ERNEST MARIO, Ph.D. Director September 5, 1997
- -----------------------------------------------
Ernest Mario, Ph.D.
/s/ ROBERT R. MOMSEN Director September 5, 1997
- -----------------------------------------------
Robert R. Momsen
/s/ LLOYD HOLLINGSWORTH SMITH, JR, M.D. Director September 5, 1997
- -----------------------------------------------
Lloyd Hollingsworth Smith, Jr., M.D.
/s/ WILLIAM H. YOUNGER, JR. Director September 5, 1997
- -----------------------------------------------
William H. Younger, Jr.
</TABLE>
II-6
<PAGE> 76
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
- ----------------- ----------------------------------------------------------------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement...................................
3.1(10) Restated Certificate of Incorporation of the Registrant..........
3.2(2) By-laws of the Registrant........................................
4.1 Reference is made to Exhibits 3.1 and 3.2........................
4.2(2) Information, Registration Rights and Right of First Refusal
Agreement among the Registrant and other parties named therein,
as amended as of May 15, 1991....................................
4.3(2) Side by Side Agreement among the Registrant and the other parties
named therein....................................................
4.4(10) Registrant's Preferred Share Purchase Rights Agreement, dated as
of January 23, 1995, between the Registrant and Chemical Trust
Company of California............................................
5.1 Opinion of Cooley Godward LLC....................................
*10.1(2) Form of Indemnification Agreement between the Registrant and its
directors, executive officers, and officers......................
*10.2(2) Registrant's 1988 Employee Stock Option Plan and related
agreements.......................................................
*10.3(2) Registrant's 1988 Consultant Stock Option Plan and related
agreements.......................................................
++10.7(2) Research, Option and License Agreement between the Registrant and
Eli Lilly and Company, dated May 1, 1991.........................
10.8(2) Lease Agreement, dated September 23, 1988, as amended August 30,
1989 and Lease Rider, dated September 23, 1988, between the
Registrant and NC Land Associates Limited Partnership............
*10.17(1) Forms of option agreements used under the Registrant's 1991
Equity Incentive Plan............................................
*10.18(3) Form of offering document used under the Registrant's 1991
Employee Stock Purchase Plan.....................................
*10.20(5) Consulting Agreement, dated January 1, 1993, between the
Registrant and Lloyd Hollingsworth Smith, Jr.....................
++10.21(5) Collaboration Research Agreement between the Registrant and Kyowa
Hakko Kyogo, Co., Ltd............................................
++10.22(6) Collaboration Agreement between Eli Lilly and Company and the
Registrant, dated May 28, 1993...................................
++10.23(4) Exclusive License between the Registrant and the Regents of the
University of California, dated June 10, 1992....................
++10.24(7) Collaboration Agreement between Ortho Pharmaceutical Corporation
and the Registrant, dated December 21, 1993......................
*10.26(12) Registrant's 1994 Non-employee Directors' Stock Option Plan, as
amended..........................................................
10.27(8) Put and Stock Purchase Agreement between the Registrant and
Johnson and Johnson Development Corporation, dated December 21,
1993.............................................................
10.28(9) Consulting Agreement, dated March 17, 1988 as amended effective
September 28, 1994 between the Registrant and Shaun R.
Coughlin.........................................................
*10.29(12) Registrant's 1991 Stock Purchase Plan, as amended................
</TABLE>
<PAGE> 77
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
- ----------------- ----------------------------------------------------------------- ------------
<C> <S> <C>
*10.30(12) Registrant's 1991 Equity Incentive Plan, as amended..............
++10.32(10) Collaboration Agreement between Schering-Plough Corporation and
the Registrant, dated April 10, 1995.............................
++10.34(11) Amendment No. 4 to Collaboration Agreement between the Registrant
and Kyowa Hakko Kyogo, Co., Ltd., dated November 10, 1995........
++10.35(12) Amendment No. 1 to Collaboration Agreement between Ortho
Pharmaceutical Corporation and the Registrant, dated September
27, 1996.........................................................
++10.36(12) Amendment No. 1 to Collaboration Agreement between Eli Lilly and
Company and the Registrant, dated November 1996..................
++10.37(I)(12) Amendment No. 1 to Collaboration Agreement between the Registrant
and Kyowa Hakko Kyogo, Co., Ltd, dated May 9, 1994...............
++10.37(ii)(12) Amendment No. 2 to Collaboration Agreement between the Registrant
and Kyowa Hakko Kyogo, Co., Ltd, dated July 13, 1995.............
++10.37(iii)(12) Amendment No. 3 to Collaboration Agreement between the Registrant
and Kyowa Hakko Kyogo, Co., Ltd, dated August 1, 1995............
++10.37(iv)(12) Amendment No. 5 to Collaboration Agreement between the Registrant
and Kyowa Hakko Kyogo, Co., Ltd, dated December 17, 1996.........
*10.38(12) Description of Registrant's 1996 Incentive Pay Plan..............
11.1 Statement Re: Computation of Net Loss Share......................
23.1 Consent of Ernst & Young LLP, Independent Auditors...............
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1..............................................................
24.1 Power of Attorney, Reference is made to the signature page.......
</TABLE>
- ---------------
* Indicates management contracts or compensatory plans or arrangements filed
pursuant to Item 601(b)(10) of Regulation S-K.
++ Confidential treatment granted.
(1) Filed as an exhibit to the Registrant's Registration Statement on Form S-8
(Reg. No. 33-42912) and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(Reg. No. 33-40627) or amendments thereto and incorporated herein by
reference.
(3) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(Reg. No. 33-43181) or amendments thereto and incorporated herein by
reference.
(4) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992 and incorporated by reference herein.
(5) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
period ended December 31, 1992 and incorporated by reference herein.
(6) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the period ended June 30, 1993 and incorporated by reference herein.
(7) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
period ended December 31, 1993 and incorporated by reference herein.
(8) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the period ended March 31, 1994 and incorporated by reference herein.
<PAGE> 78
(9) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
period ended December 31, 1994 and incorporated by reference herein.
(10) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the period ended June 30, 1995 and incorporated by reference herein.
(11) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
period ended December 31, 1995 and incorporated by reference herein.
(12) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
period ended December 31, 1996 and incorporated by reference herein.
<PAGE> 1
2,500,000 SHARES*
COR THERAPEUTICS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
September ___, 1997
ROBERTSON, STEPHENS & COMPANY LLC
HAMBRECHT & QUIST LLC
As Representatives of the several Underwriters
c/o Robertson, Stephens & Company, L.P.
555 California Street
Suite 2600
San Francisco, California 94104
Ladies/Gentlemen:
COR Therapeutics, Inc., a Delaware corporation (the "Company"), addresses
you as the Representatives of each of the persons, firms and corporations listed
in Schedule A hereto (herein collectively called the "Underwriters") and hereby
confirms its agreement with the several Underwriters as follows:
1. Description of Shares. The Company proposes to issue and sell 2,500,000
shares of its authorized and unissued Common Stock to the several Underwriters.
The 2,500,000 shares to be sold to the several Underwriters hereunder are
hereinafter referred to as the "Firm Shares." The Company also proposes to grant
to the Underwriters an option to purchase up to 375,000 shares of the Company's
Common Stock (the "Option Shares"), as provided in Section 7 hereof. As used in
this Agreement, the term "Shares" shall include the Firm Shares and the Option
Shares. All shares of Common Stock of the Company to be outstanding after giving
effect to the sales contemplated hereby, including the Shares, are hereinafter
referred to as "Common Stock."
2. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to and agrees with each
Underwriter that:
(a) The Company and the transactions contemplated by this Agreement
meet the requirements for using Form S-3 under the Securities Act of 1933, as
amended (the "Act"). A registration statement on Form S-3 (File No. 333-______)
with respect to the Shares, including a prospectus subject to completion, has
been prepared by the Company in conformity with the requirements of the Act, and
the applicable rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Act and has been
filed with the Commission; such amendments to such registration
- --------
* Plus an option to purchase up to 375,000 shares from the Company to cover
over-allotments, if any.
-1-
<PAGE> 2
statement, such amended prospectuses subject to completion and such abbreviated
registration statements pursuant to Rule 462(b) of the rules and Regulations as
may have been required prior to the date hereof have been similarly prepared and
filed with the Commission; and the Company will file such additional amendments
to such registration statement, such amended prospectuses subject to completion
and such abbreviated registration statements as may hereafter be required.
Copies of such registration statement and amendments of each related preliminary
prospectus subject to completion (the "Preliminary Prospectuses"), including all
documents incorporated by reference therein, and of any abbreviated registration
statement pursuant to Rule 462(b) of the Rules and Regulations, have been
delivered to you.
If the registration statement relating to the Shares has been
declared effective under the Act by the Commission, the Company will prepare and
promptly file with the Commission the information omitted from the registration
statement pursuant to Rule 430A(a) or, if Robertson Stephens & Company LLC, on
behalf of the several Underwriters, shall agree to the utilization of Rule 434
of the Rules and Regulations, the information required to be included in any
term sheet filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and
Regulations pursuant to subparagraph (1), (4) or (7) of Rule 424(b) of the Rules
and Regulations or as part of a post-effective amendment to the registration
statement (including a final form of prospectus). If the registration statement
relating to the Shares has not been declared effective under the Act by the
Commission, the Company will prepare and promptly file an amendment to the
registration statement, including a final form of prospectus, or, if Robertson
Stephens & Company LLC, on behalf of the several Underwriters, shall agree to
the utilization of Rule 434 of the Rules and Regulations, the information
required to be included in any term sheet filed pursuant to Rule 434(b) or (c),
as applicable, of the Rules and Regulations. The term "Registration Statement"
as used in this Agreement shall mean such registration statement, including
financial statements, schedules and exhibits, in the form in which it became or
becomes, as the case may be, effective (including, if the Company omitted
information from the registration statement pursuant to Rule 430A(a) or files a
term sheet pursuant to Rule 434 of the Rules and Regulations, the information
deemed to be a part of the registration statement at the time it became
effective pursuant to Rule 430A(b) or Rule 434(d) of the Rules and Regulations)
and, in the event of any amendment thereto or the filing of any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and Regulations
relating thereto after the effective date of such registration statement, shall
also mean (from and after the effectiveness of such amendment or the filing of
such abbreviated registration statement) such registration statement as so
amended, together with any such abbreviated registration statement. The term
"Prospectus" as used in this Agreement shall mean the prospectus relating to the
Shares as included in such Registration Statement at the time it becomes
effective (including, if the Company omitted information from the Registration
Statement pursuant to Rule 430A(a) of the Rules and Regulations, the information
deemed to be a part of the Registration Statement at the time it became
effective pursuant to Rule 430A(b) of the Rules and Regulations); provided,
however, that if in reliance on Rule 434 of the Rules and Regulations and with
the consent of Robertson Stephens & Company LLC, on behalf of the several
Underwriters, the Company shall have provided to the Underwriters a term sheet
pursuant to Rule 434(b) or (c), as applicable, prior to the time that a
confirmation is sent or given for purposes of Section 2(10)(a) of the Act, the
term "Prospectus" shall mean the "prospectus subject to completion" (as defined
in Rule 434(g) of the Rules and Regulations) last provided to the Underwriters
by the Company and circulated by the Underwriters to all prospective purchasers
of the Shares (including the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 434(d) of the Rules
and Regulations). Notwithstanding the foregoing, if any revised prospectus shall
be provided to the Underwriters by the Company for use in connection with the
offering of the Shares that differs from the prospectus referred to in the
immediately preceding sentence (whether or not such revised prospectus is
required to be filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations), the term "Prospectus" shall refer to such revised prospectus
from and after the time it is first provided to the Underwriters for such use.
If in reliance on Rule 434 of the Rules and Regulations and with the consent of
-2-
<PAGE> 3
Robertson Stephens & Company LLC, on behalf of the several Underwriters, the
Company shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the Prospectus and the term
sheet, together, will not be materially different from the prospectus in the
Registration Statement. Any reference to the Registration Statement or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date
of the Registration Statement or the Prospectus, as the case may be, and any
reference to any amendment or supplement to the Registration Statement or the
Prospectus shall be deemed to refer to and include any documents filed after
such date under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") which, upon filing, are incorporated by reference therein, as required by
paragraph (b) of Item 12 of Form S-3. As used herein, the term "Incorporated
Documents" means the documents which at the time are incorporated by reference
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or instituted proceedings for that
purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date (hereinafter
defined) and on any later date on which Option Shares are to be purchased, (i)
the Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, (ii) the Registration Statement, and any amendments or supplements
thereto, did not and will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (iii) the Prospectus, and any
amendments or supplements thereto, did not and will not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties contained in this subparagraph (b) shall apply to information
contained in or omitted from the Registration Statement or Prospectus, or any
amendment or supplement thereto, in reliance upon, and in conformity with,
written information relating to any Underwriter furnished to the Company by such
Underwriter specifically for use in the preparation thereof.
The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder; any further
Incorporated Documents so filed will, when they are filed, conform in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein necessary in order to make the statements
therein not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
(c) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate and other)
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<PAGE> 4
to own, lease and operate its properties and conduct its business as described
in the Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company; no proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification;
the Company is in possession of and operating in compliance with all
authorizations, licenses, consents, orders, certificates and permits from state,
federal and other regulatory authorities which are material to the conduct of
its business, all of which are valid and in full force and effect; the Company
is not in violation of its charter or bylaws or, except as set forth in the
Prospectus, in material default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material bond,
debenture, note or other evidence of indebtedness or in any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which it or
its properties may be bound; and the Company is not in violation of any material
law, order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency, domestic or foreign, of which it has
knowledge. The Company does not own or control, directly or indirectly, any
corporation, association or other entity.
(d) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement on the part of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles; the performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a material breach or
violation of any of the terms and provisions of, or constitute a material
default under, (i) any material bond, debenture, note or other evidence of
indebtedness, or under any lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which the
Company is a party or by which it or its properties may be bound, (ii) the
charter or bylaws of the Company, or (iii) any material law, order, rule,
regulation, writ, injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or over its properties. No consent, approval, authorization or order of
or qualification with any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or over its properties
is required for the execution and delivery of this Agreement and the
consummation by the Company of the transactions herein contemplated, except such
as may be required under the Act and the Exchange Act, which will have been
obtained prior to the Closing Date (as defined in Section 3) and except such as
may be required under state or other securities or Blue Sky laws.
(e) Except as disclosed in the Prospectus, there is not any pending
or, to the Company's knowledge, threatened action, suit, claim or proceeding
against the Company or any of its officers, or any of its properties, assets or
rights before any court, government or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or over its officers or properties
or otherwise which (i) might result in any material adverse change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company or might materially and adversely affect its
properties, assets or rights, or (ii) might prevent consummation of the
transactions contemplated hereby, or (iii) is required to be disclosed in the
Registration Statement or Prospectus and is not so disclosed; and there are no
agreements, contracts, leases or documents of the Company which would be
required to be described in the Prospectus or the Registration Statement or be
filed as exhibits to the Registration Statement or any Incorporated Document by
the Act or the
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<PAGE> 5
Exchange Act or by the Rules and Regulations which have not been accurately
described in all material respects in the Prospectus and/or filed as exhibits to
the Registration Statement or any Incorporated Document. The contracts so
described in the Prospectus are in full force and effect on the date hereof; and
neither the Company, nor to the best of the Company's knowledge, any other party
is in breach of or default under any of such contracts.
(f) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding capital
stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus (and
such statements correctly state the substance of the instruments defining the
capitalization of the Company); the Firm Shares and the Option Shares have been
duly authorized for issuance and sale to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company against payment therefor
in accordance with the terms of this Agreement, will be duly and validly issued
and fully paid and nonassessable, and will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest; and no
preemptive right, co-sale right, registration right, right of first refusal or
other similar right of stockholders exists with respect to any of the Firm
Shares or Option Shares or the issuance and sale thereof other than those that
have been expressly waived prior to the date hereof and those that will
automatically expire upon and will not apply to the consummation of the
transactions contemplated on the Closing Date (as defined in Section 3). No
further approval or authorization of any stockholder, the Board of Directors of
the Company or any other party or parties is required for the issuance and sale
or transfer of the Shares except as may be required under the Act, the Exchange
Act or under state or other securities or Blue Sky laws. Except as disclosed in
the Prospectus and the financial statements of the Company, and the related
notes thereto, included in or incorporated by reference into the Prospectus, the
Company has no outstanding options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations, other than options issued under existing plans of the Company and
rights to purchase Common Stock of the Company under its stock purchase plan
after June 30, 1997 and in the ordinary course of business. The description of
the Company's stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted and exercised thereunder, set forth in
the Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(g) Ernst & Young LLP, which has examined the financial statements
of the Company, together with the related schedules and notes, as of December
31, 1996 and 1995 and for each of the years in the three (3) years ended
December 31, 1996 filed with the Commission as a part of or incorporated by
reference into the Registration Statement, which are included in or incorporated
by reference into the Prospectus, are independent accountants within the meaning
of the Act and the Rules and Regulations; the audited financial statements of
the Company, together with the related schedules and notes, and the unaudited
financial information, forming part of the Registration Statement and
Prospectus, fairly present the financial position and the results of operations
of the Company at the respective dates and for the respective periods to which
they apply; and all audited financial statements of the Company, together with
the related schedules and notes, and the unaudited financial information, filed
with the Commission as part of or incorporated by reference into the
Registration Statement, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
except as may be otherwise stated therein. The selected and summary financial
and statistical data included in or incorporated by reference into the
Registration
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<PAGE> 6
Statement present fairly the information shown therein and have been compiled on
a basis consistent with the audited financial statements presented therein. No
other financial statements or schedules are required to be included in or
incorporated by reference into the Registration Statement.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (i) any
material adverse change in the condition (financial or otherwise), earnings,
operations, business or, to the Company's knowledge, business prospects of the
Company, (ii) any transaction that is material to the Company, except
transactions entered into in the ordinary course of business, (iii) any
obligation, direct or contingent, that is material to the Company, incurred by
the Company, except obligations incurred in the ordinary course of business,
(iv) any change in the capital stock or outstanding indebtedness of the Company
that is material to the Company, (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, or (vi) any loss or
damage (whether or not insured) to the property of the Company which has been
sustained which has a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company.
(i) Except as set forth in the Registration Statement and
Prospectus, (i) the Company has good and marketable title to all properties and
assets described in the Registration Statement and Prospectus as owned by it,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than such as would not have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company, (ii) the agreements to which the Company is a
party described in the Registration Statement and Prospectus are valid
agreements, enforceable by the Company, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles and, to the best of the Company's knowledge, the
other contracting party or parties thereto are not in material breach or
material default under any of such agreements, and (iii) the Company has valid
and enforceable leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. The Company owns or leases all such properties as
are necessary to its operations as now conducted or as proposed to be conducted.
(j) The Company has timely filed all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes shown thereon as
due, and there is no tax deficiency that has been or, to the best of the
Company's knowledge, might be asserted against the Company that might have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company; and all tax
liabilities are adequately provided for on the books of the Company.
(k) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts generally deemed
adequate for its business and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism, and all other risks
customarily insured against, all of which insurance is in full force and effect;
the Company has not been refused any insurance coverage sought or applied for;
and the Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company.
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<PAGE> 7
(l) To the best of the Company's knowledge, no labor disturbance by
the employees of the Company exists or is imminent; and the Company is not aware
of any existing or imminent labor disturbance by the employees of any of its
principal suppliers, customers, manufacturers, partners or collaborators that
might be expected to result in a material adverse change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company. No collective bargaining agreement exists with any of the
Company's employees and, to the best of the Company's knowledge, no such
agreement is imminent.
(m) The Company owns or possesses adequate rights to use all patent
applications (all of which are set forth in Exhibit 1 attached hereto), patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names and copyrights which are necessary to conduct its business as described in
the Registration Statement and Prospectus; no patents, patent rights, trade
secrets, trademarks, service marks, trade names or copyrights that would have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company have expired or
terminated, and no patents, patent rights, trademarks, service marks, trade
names and copyrights necessary to conduct its business as described in the
Registration Statement and Prospectus will expire or terminate prior to four
years from the date of this Agreement. The Company has not received any notice
of, and has no knowledge of, any infringement of, conflict with or challenge to
the validity, enforceability or ownership of asserted rights of the Company by
others with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights; and the Company
has not received any notice of, and has no knowledge of, any infringement of, or
challenge to the validity, enforceability or ownership of asserted rights of
others with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
might have a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company.
(n) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on The Nasdaq National Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from The Nasdaq National Market, nor has the Company received any
notification that the Commission of the National Association of Securities
Dealers, Inc. ("NASD") is contemplating terminating such registration or
listing.
(o) The Company has been advised concerning the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to conduct,
its affairs in such a manner as to ensure that it will not become an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the 1940 Act and such rules and regulations.
(p) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, or any date on which Option Shares are to be
purchased, as the case may be, and (ii) completion of the distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares other than any Preliminary Prospectuses, the Prospectus, the Registration
Statement and other materials, if any, permitted by the Act.
(q) The Company has not at any time during the last five (5) years
(i) made any unlawful contribution to any candidate for foreign office or failed
to disclose fully any contribution in violation of law, or (ii) made any payment
to any federal or state governmental officer or official, or other person
charged with
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<PAGE> 8
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof.
(r) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(s) Each officer of the Company has agreed in writing that such
person will not, for a period of 30 days from the date of the Prospectus (the
"Lock-up Period"), offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, or (ii) with the prior written consent of Robertson
Stephens & Company LLC. The foregoing restriction has been expressly agreed to
preclude the holder of the Securities from engaging in any hedging or other
transaction that is designed to or reasonably expected to lead to or result in a
Disposition of Securities during the respective Lock-up Period, even if such
Securities would be disposed of by someone other than such holder. Such
prohibited hedging or other transactions would include, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a broad-based
market basket or index) that includes, relates to or derives any significant
part of its value from Securities. Furthermore, such person has also agreed and
consented to the entry of stop transfer instructions with the Company's transfer
agent against the transfer of the Securities held by such person except in
compliance with this restriction. The Company has provided to counsel for the
Underwriters a complete and accurate list of all securityholders of the Company
and the number and type of securities held by each securityholder.
The Company has provided to counsel for the Underwriters true, accurate
and complete copies of all of the agreements pursuant to which its officers and
Johnson & Johnson Development Corporation ("Johnson") have agreed to such
restrictions or other restrictions limiting the sale of equity securities of the
Company (the "Lock-up Agreements") presently in effect or effected hereby. The
Company hereby represents and warrants that it will not release any of its
officers or Johnson from any Lock-up Agreements currently existing or hereafter
effected without the prior written consent of Robertson Stephens & Company LLC.
(t) The Company is in compliance with all rules, laws and
regulations relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental Laws")
which are applicable to its business. The Company has received no notice from
any governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the Registration
Statement and the Prospectus. To its knowledge, the Company has not conducted
any activity which would require it to make material capital expenditures to
comply with Environmental Laws. No property which is owned, leased or occupied
by the Company has been designated as a Superfund site pursuant to the
Comprehensive Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. ss. 9601, et seq.), or otherwise designated as a contaminated site under
applicable state or local law.
(u) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in
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<PAGE> 9
conformity with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(v) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them in
excess of $60,000 in the aggregate, except as disclosed in, or incorporated by
reference into, the Registration Statement and the Prospectus.
(w) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or with
any person or affiliate located in Cuba.
3. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $____ per share, the
respective number of Firm Shares as hereinafter set forth. The obligation of
each Underwriter to the Company shall be to purchase from the Company that
number of Firm Shares which is set forth opposite the name of such Underwriter
in Schedule A hereto (subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made against
payment of the purchase price therefor by the several Underwriters by wire
transfer of same-day funds paid to an account designated by the Company in
writing at the offices of Cooley Godward LLP, Five Palo Alto Square, 3000 El
Camino Real, Palo Alto, California 94306-2155 (or at such other place as may be
agreed upon among the Representatives and the Company), at 7:00 A.M., San
Francisco time (a) on the third (3rd) full business day following the first day
that Shares are traded, (b) if this Agreement is executed and delivered after
1:30 P.M., San Francisco time, the fourth (4th) full business day following the
day that this Agreement is executed and delivered or (c) at such other time and
date not later than seven (7) full business days following the first day that
Shares are traded as the Representatives and the Company may determine (or at
such time and date to which payment and delivery shall have been postponed
pursuant to Section 10 hereof), such time and date of payment and delivery being
herein called the "Closing Date;" provided, however, that if the Company has not
made available to the Representatives copies of the Prospectus within the time
provided in Section 4(d) hereof, the Representatives may, in their sole
discretion, postpone the Closing Date until no later than two (2) full business
days following delivery of copies of the Prospectus to the Representatives. The
certificates for the Firm Shares to be so delivered will be made available to
you at such office or such other location including, without limitation, in New
York City, as you may reasonably request for checking at least one (1) full
business day prior to the Closing Date and will be in such names and
denominations as you may request, such request to be made at least two (2) full
business days prior to the Closing Date. If the Representatives so elect,
delivery of the Firm Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the Representatives.
It is understood that you, individually and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the Closing
Date for the Firm
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<PAGE> 10
Shares to be purchased by such Underwriter or Underwriters. Any such payment by
you shall not relieve any such Underwriter or Underwriters of any of its or
their obligations hereunder.
After the Registration Statement becomes effective, the several
Underwriters intend to offer the Firm Shares to the public as set forth in the
Prospectus.
The information set forth in the last paragraph on the front cover
page of the Prospectus (insofar as such information relates to the
Underwriters), on the inside front cover concerning stabilization and
over-allotment by the Underwriters, and under the first, second, seventh and
eight paragraphs under the caption "Underwriting" in any Preliminary Prospectus
and in the Prospectus constitutes the only information furnished by the
Underwriters to the Company for inclusion in any Preliminary Prospectus, the
Prospectus or the Registration Statement, and you, on behalf of the respective
Underwriters, represent and warrant to the Company that the statements made
therein do not include any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
4. Further Agreements of the Company.
The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as possible; the
Company will notify you, promptly after it shall receive notice thereof, of the
time when the Registration Statement, any subsequent amendment to the
Registration Statement or any abbreviated registration statement has become
effective or any supplement to the Prospectus has been filed; if the Company
omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a) of the Rules and
Regulations, the Company will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (1) or (4) of Rule
424(b) of the Rules and Regulations or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is declared
effective by the Commission; if the Company files a term sheet pursuant to Rule
434 of the Rules and Regulations, the Company will provide evidence satisfactory
to you that the Prospectus and term sheet meeting the requirements of Rule
434(b) or (c), as applicable, of the Rules and Regulations, have been filed,
within the time period prescribed, with the Commission pursuant to subparagraph
(7) of Rule 424(b) of the Rules and Regulations; if for any reason the filing of
the final form of Prospectus is required under Rule 424(b)(3) of the Rules and
Regulations, it will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed with the Commission within the time
period prescribed; it will notify you promptly of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; promptly upon your request, it will
prepare and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel for the
several Underwriters ("Underwriters' Counsel"), may be necessary or advisable in
connection with the distribution of the Shares by the Underwriters; it will
promptly prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions, if, at
any time when a prospectus relating to the Shares is required to be
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<PAGE> 11
delivered under the Act, any event shall have occurred as a result of which the
Prospectus or any other prospectus relating to the Shares as then in effect
would include any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; in case any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement in connection with the sale of
the Shares, it will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration Statement and such
prospectus or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act; and it will file no amendment or
supplement to the Registration Statement or Prospectus which shall not
previously have been submitted to you in a reasonable time prior to the proposed
filing thereof or to which you shall reasonably object in writing, subject,
however, to compliance with the Act and the Rules and Regulations and the
provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
(c) The Company will use its best efforts to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you may
designate and to continue such qualifications in effect for so long as may be
required for purposes of the distribution of the Shares, except that the Company
shall not be required in connection therewith or as a condition thereof to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Shares shall have been qualified as above provided,
the Company will make and file such statements and reports in each year as are
or may be required by the laws of such jurisdiction.
(d) The Company will furnish to you, as soon as available, and, in
the case of the Prospectus and any term sheet or abbreviated term sheet under
Rule 434, in no event later than the first (1st) full business day following the
first day that Shares are traded, copies of the Registration Statement (three of
which will be signed and which will include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such documents,
including any prospectus prepared to permit compliance with Section 10(a)(3) of
the Act, all in such quantities as you may from time to time reasonably request.
Notwithstanding the foregoing, if Robertson Stephens & Company LLC, on behalf of
the several Underwriters, shall agree to the utilization of Rule 434 of the
Rules and Regulations, the Company shall provide to you copies of a Preliminary
Prospectus updated in all respects through the date specified by you in such
quantities as you may from time to time reasonably request.
(e) During a period of four (4) years after the date hereof, the
Company will furnish to its stockholders as soon as practicable after the end of
each respective period, annual reports (including financial statements audited
by independent certified public accountants), and will furnish to you and the
other several Underwriters hereunder, upon request (i) statements of operations
of the Company for each of the first three (3) quarters in the form furnished to
the Company's stockholders, (ii) a balance sheet of the Company as of the end of
such fiscal year, together with statements of operations, of stockholders'
equity, and of cash flows of the Company for such fiscal year, accompanied by a
copy of the certificate or report thereon of independent certified public
accountants, in the form furnished to the Company's stockholders, (iii) as soon
as they are available, copies of all reports (financial or other) mailed to
stockholders, (iv) as soon as they are available, copies of all
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<PAGE> 12
reports and financial statements furnished to or filed with the Commission, any
securities exchange or the National Association of Securities Dealers, Inc.
("NASD"), (v) every material press release and every material news item or
article in respect of the Company or its affairs which was generally released by
the Company to stockholders or prepared and released by the Company, and (vi)
any additional information of a public nature concerning the Company, or its
business which you may reasonably request. During such four (4) year period, if
the Company shall have active subsidiaries, the foregoing financial statements
shall be on a consolidated basis to the extent that the accounts of the Company
and its subsidiaries are consolidated, and shall be accompanied by similar
financial statements for any significant subsidiary which is not so
consolidated.
(f) The Company will apply the net proceeds from the sale of the
Shares being sold by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(g) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.
(h) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, or if the Company shall
terminate this Agreement pursuant to Section 11(a) hereof, or if the
Underwriters shall terminate this Agreement pursuant to Section 11(b)(i), the
Company will reimburse the several Underwriters for all reasonable out-of-pocket
expenses (including fees and disbursements of Underwriters' Counsel) incurred by
the Underwriters in investigating or preparing to market or marketing the
Shares.
(i) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of and
disseminate a press release or other public statement if, in the opinion of
counsel to the Company, such statement is required, responding to or commenting
on such rumor, publication or event.
(j) During a period of ninety (90) days from the effective date of
the Registration Statement, the Company will not, without the prior written
consent of Robertson Stephens & Company LLC, effect the Disposition of, directly
or indirectly, any Securities other than (i) the sale of the Firm Shares and the
Option Shares hereunder and the Company's issuance of options or Common Stock
under the Company's presently authorized employee benefit plans (the "Option
Plans"); (ii) pursuant to equipment or lease financing activities entered into
in the ordinary course of the Company's business; or (iii) to a strategic
partner of the Company in conjunction with an agreement involving a technical,
manufacturing and/or marketing collaboration, provided that the Company shall
give you prior written notice of any such collaboration during such ninety day
period.
5. Expenses.
(a) The Company agrees with each Underwriter that:
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(i) The Company will pay and bear all costs and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses, the Prospectus and the Incorporated Documents and any amendments
or supplements thereto; the printing of this Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreement, the Preliminary Blue Sky Survey and
any Supplemental Blue Sky Survey, the Underwriters' Questionnaire and Power of
Attorney, and any instruments related to any of the foregoing; the issuance and
delivery of the Shares hereunder to the several Underwriters, including transfer
taxes, if any, the cost of all certificates representing the Shares and Transfer
Agents' and Registrars' fees; the fees and disbursements of counsel for the
Company; all fees and other charges of the Company's independent public
accountants; the cost of furnishing to the several Underwriters copies of the
Registration Statement (including appropriate exhibits), Preliminary Prospectus,
the Prospectus and the Incorporated Documents and any amendments or supplements
to any of the foregoing; NASD filing fees and the cost of qualifying the Shares
under the laws of such jurisdictions as you may designate (including filing fees
and reasonable and customary fees and disbursements of Underwriters' Counsel in
connection with such NASD filings and Blue Sky qualifications); and all other
expenses directly incurred by the Company in connection with the performance of
its obligations hereunder.
(ii) In addition to its other obligations under Section 8(a)
hereof, the Company agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding described in
Section 8(a) hereof (other than a claim, action, investigation, inquiry or other
proceeding initiated by or on behalf of the Underwriters), it will reimburse the
Underwriters on a monthly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
obligation to reimburse the Underwriters for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Underwriters shall promptly return
such payment to the Company together with interest, compounded daily, determined
on the basis of the prime rate (or other commercial lending rate for borrowers
of the highest credit standing) listed from time to time in The Wall Street
Journal which represents the base rate on corporate loans posted by a
substantial majority of the nation's 30 largest banks (the "Prime Rate"). Any
such interim reimbursement payments which are not made to the Underwriters
within thirty (30) days of a request for reimbursement, shall bear interest at
the Prime Rate from the date of such request.
(b) In addition to their other obligations under Section 8(b)
hereof, the Underwriters severally and not jointly agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding described in Section 8(b) hereof, they will reimburse the
Company on a monthly basis for all reasonable legal or other expenses incurred
in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company shall
promptly return such payment to the Underwriters together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within thirty (30) days
of a request for reimbursement shall bear interest at the Prime Rate from the
date of such request.
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<PAGE> 14
(c) It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in Sections 5(a)(ii) and
5(b) hereof, including the amounts of any requested reimbursement payments, the
method of determining such amounts and the basis on which such amounts shall be
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Any such arbitration will be limited to the operation of
the interim reimbursement provisions contained in Sections 5(a)(ii) and 5(b)
hereof and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for expenses which is created by the provisions of
Sections 8(a)and 8(b) hereof or the obligation to contribute to expenses which
is created by the provisions of Section 8(d) hereof.
6. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Shares as provided herein, shall be
subject to the accuracy, as of the date hereof and the Closing Date and any
later date on which Option Shares are to be purchased, as the case may be, of
the representations and warranties of the Company herein, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 2:00 P.M., San Francisco time, on the date following the date of this
Agreement, or such later date as shall be consented to in writing by you; and no
stop order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus, and
the registration, authorization, issue, sale and delivery of the Shares, shall
have been reasonably satisfactory to Underwriters' Counsel, and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this subsection.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, or any later date on which Option Shares are to be
purchased, as the case may be, there shall not have been any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that makes
it, in your sole judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus.
(d) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, the
following opinion of Cooley Godward LLP, counsel for the Company, dated the
Closing Date or such later date on which Option Shares are to be purchased
addressed to the Underwriters and with reproduced copies or signed counterparts
thereof for each of the Underwriters, to the effect that:
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<PAGE> 15
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation;
(ii) The Company has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus;
(iii) To such counsel's knowledge, the Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction, if any, in which the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where the
failure to be so qualified or be in good standing would not have a material
adverse effect on the financial condition, earnings, operations or business of
the Company. To such counsel's knowledge, the Company does not own or control,
directly or indirectly, any corporation, association or other entity;
(iv) The authorized, issued and outstanding capital stock of
the Company was as set forth in the Prospectus under the caption
"Capitalization" as of the date stated therein, the issued and outstanding
shares of capital stock of the Company have been duly and validly issued and are
fully paid and nonassessable, and, to such counsel's knowledge, will not have
been issued in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right;
(v) The Firm Shares or the Option Shares, as the case may be,
to be issued by the Company pursuant to the terms of this Agreement have been
duly authorized and, upon issuance and delivery against payment therefor in
accordance with the terms hereof, will be duly and validly issued and fully paid
and nonassessable, and to such counsel's knowledge, will not have been issued in
violation of or subject to any preemptive right, co-sale right, registration
right, right of first refusal or other similar right.
(vi) The Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold by it hereunder;
(vii) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
by you, is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification and contribution
provisions may be limited by applicable law and except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and limitations on equitable remedies;
(viii)The Registration Statement has become effective under
the Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or threatened under the
Act;
(ix) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements and
supporting schedules, and other financial information and statistical
information derived therefrom as to which such counsel need not express any
opinion), as of the effective date of the Registration Statement, complied as to
form in all material respects with the requirements of the Act and the
applicable Rules and Regulations; and each of the Incorporated Documents, to the
extent that such Incorporated Documents are deemed filed with the Commission and
incorporated by reference into the
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<PAGE> 16
Registration Statement, complies as to form in all material respects with the
requirements of the Act and the Exchange Act and the applicable Rules and
Regulations;
(x) The terms and conditions of the capital stock of the
Company conform in all material respects to the description thereof contained
in, or incorporated by reference into, the Registration Statement and
Prospectus; and the form of stock certificate evidencing the Common Stock and
incorporated by reference as an exhibit to the Registration Statement complies
with Delaware law;
(xi) The descriptions in the Registration Statement and the
Prospectus of contracts are accurate and fairly present the information with
respect thereto required to be presented by the Act or the applicable Rules and
Regulations;
(xii) To such counsel's knowledge, there are no agreements,
contracts, leases or documents to which the Company is a party of a character
required under the Act and the applicable Rules and Regulations to be described
or referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement or any Incorporated Document which are not
described or referred to therein or filed as required; to such counsel's
knowledge, the statements contained in the Registration Statement and Prospectus
under the caption "Business--Collaborative Agreements," insofar as such
statements constitute matters of law, are a fair and accurate summary of the
matters set forth therein, to the extent required under the Act and applicable
Rules and Regulations;
(xiii)The performance of this Agreement and the consummation
of the transactions herein contemplated (other than performance of the Company's
indemnification and contribution obligations hereunder, concerning which no
opinion need be expressed) will not (a) result in any violation of the
Company'scharter or bylaws or (b) to such counsel's knowledge, result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any material bond, debenture, note or other evidence of
indebtedness, or any material lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument, filed or
incorporated by reference as an exhibit to the Registration Statement, or any
applicable material statute, rule or regulation known to such counsel (other
than state securities or Blue Sky laws as to which such counsel need not express
an opinion) or, to such counsel's knowledge, any material order, writ or decree
of any court, government or governmental agency or body having jurisdiction over
the Company, or over any of its properties or operations;
(xiv) No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body having
jurisdiction over the Company, or over any of its properties or operations is
necessary in connection with the consummation by the Company of the transactions
herein contemplated, except such as have been obtained under the Act and the
Exchange Act or such as may be required under state or other securities or Blue
Sky laws in connection with the purchase and the distribution of the Shares by
the Underwriters;
(xv) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened against the Company of a
character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Rules and Regulations, other than those described
therein;
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<PAGE> 17
(xvi) To such counsel's knowledge, the Company is not
presently (a) in material violation of its certificate of incorporation or
bylaws, or (b) subject to any material order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company, or over any of
its properties or operations (except the United States Food and Drug
Administration, which order, writ or decree is discussed in the Registration
Statement);
(xvii)To such counsel's knowledge, all holders of securities
of the Company having rights known to such counsel to registration of such
shares of Common Stock or other securities, because of the filing of the
Registration Statement by the Company have, with respect to the offering
contemplated thereby, waived such rights or such rights have expired by reason
of lapse of time following notification of the Company's intent to file the
Registration Statement;
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives of the
Company, the Representatives, Underwriters' Counsel and the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and Prospectus and related matters were discussed,
and although they have not verified, and are not passing upon, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, nothing has come to the attention of such counsel
that leads such counsel to believe that, at the time the Registration Statement
became effective and the effective date of a Post-Effective Amendment, the
Registration Statement and any amendment or supplement thereto (other than the
financial statements including supporting schedules, and other financial
information and statistical information derived therefrom) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or as
of its date and at the Closing Date or any later date on which the Option Shares
are to be purchased, the Prospectus and any amendment or supplement thereto
(except as aforesaid) contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or the States of California and
Delaware upon opinions of local counsel, and as to questions of fact upon
representations or certificates of officers of the Company and of government
officials, in which case their opinion is to state that they are so relying and
that they have no knowledge of any material misstatement or inaccuracy in any
such opinion, representation or certificate. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you, as
Representatives of the Underwriters, and to Underwriters' Counsel.
(e) You shall have received on the Closing Date and on any later
date on which Option Shares are purchased, the following opinions regarding the
patent applications listed in the Patent Portfolio attached hereto as Exhibit 1
(the "Patent Portfolio") of Cooley Godward LLP as to the Patent Portfolio dated
the Closing Date or such later date on which Option Shares are purchased,
addressed to the Underwriters and with reproduced copies or signed counterparts
thereof for each of the Underwriters, stating that such counsel has reviewed the
Patent Portfolio and to the effect that:
(i) To such counsel's knowledge, the Company is licensed to
use, or owns, each patent application described in the Prospectus, as listed in
the Patent Portfolio;
(ii) To such counsel's knowledge, except as otherwise
described in Exhibit 1 attached to such opinion, no third party has any rights
to the patent applications listed in the Patent Portfolio;
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<PAGE> 18
(iii) The Company's United States patent applications listed
in the Patent Portfolio have been prepared and filed in the United States Patent
and Trademark Office (the "USPTO") in a form and with accompanying papers that
are acceptable to the USPTO for the purposes of according each such application
a filing date and serial number, and of placing each such application in
condition for eventual examination on the merits as to patentability. For each
such United States application an Official Filing Receipt has been received from
the USPTO. As to each of such applications, such counsel is not aware of any
material defect of form in preparation or filing; and the patent applications in
the Patent Portfolio are being diligently pursued;
(iv) The statements contained in the Registration Statement
and Prospectus under the captions "Risk Factors--Uncertainty of Protection of
Patents and Proprietary Rights" and "Business--Patents, Proprietary Rights and
Licenses" as they pertain to the Patent Portfolio and United States patent
rights, insofar as such statements constitute matters of law, are a fair and
accurate summary of the matters set forth therein;
(v) To such counsel's knowledge, the Company has received no
notice of any infringement of, conflict with or misappropriation by a third
party of any claim for which patent applications have been filed with respect to
the Patent Portfolio or notice of any unresolved infringement of, conflict with
or proceedings against or misappropriation by the Company of any patents, trade
secrets, trademarks, trade names, copyrights or other proprietary rights of a
third party, which, either individually or in the aggregate, would have a
material adverse affect on the Company;
(vi) To such counsel's knowledge, the Company or its licensor
is the sole assignee for each patent application listed in the Patent Portfolio.
Except as otherwise noted in the Patent Portfolio attached hereto, for each of
the United States patent applications, the assignments by the named inventors
have been submitted to the USPTO and those assignments have been recorded in the
Patent Office's title records;
(vii) To such counsel's knowledge, as to each of the Company's
foreign patent applications listed in the Patent Portfolio, the applications
have either (a) except as noted in the Patent Portfolio attached hereto, been
submitted to patent firms in the respective foreign countries with instructions
to file the applications in the patent offices of those countries naming the
Company as the applicant of record, or (b) as to certain Patent Cooperation
Treaty applications, been submitted directly to the relevant receiving office
naming the Company as the applicant of record. To such counsel's knowledge and
except as noted in the Patent Portfolio, as to each of such applications, the
Company has not received notice from any foreign filing authority of any
material defect of form in preparation or filing.
Counsel rendering the foregoing opinion may rely as to questions of
fact upon representations or certificates of officers of the Company and of
government officials, in which case their opinion is to state that they are so
doing and that they have no knowledge of any material misstatement or inaccuracy
in such representations or certificates. Copies of any representation or
certificate so relied upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(f) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, an opinion
of Wilson Sonsini Goodrich & Rosati in form and substance satisfactory to you,
with respect to the sufficiency of all such corporate proceedings and other
legal matters relating to this Agreement and the transactions contemplated
hereby as you may reasonably require, and the Company shall have furnished to
such counsel such documents as they may have requested for the purpose of
enabling them to pass upon such matters.
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<PAGE> 19
(g) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, a letter
from Ernst & Young LLP addressed to the Underwriters, dated the Closing Date or
such later date on which Option Shares are to be purchased, as the case may be,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Act and the applicable published Rules
and Regulations and based upon the procedures described in such letter delivered
to you concurrently with the execution of this Agreement (herein called the
"Original Letter"), but carried out to a date not more than five (5) business
days prior to the Closing Date or such later date on which Option Shares are to
be purchased, as the case may be, (i) confirming, to the extent true, that the
statements and conclusions set forth in the Original Letter are accurate as of
the Closing Date or such later date on which Option Shares are to be purchased,
as the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of such letter, or to reflect the availability of more recent financial
statements, data or information. The letter shall not disclose any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that makes
it, in your sole judgment, impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. The Original
Letter from Ernst & Young LLP shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations, (ii) set forth their opinion with
respect to their examination of the balance sheets of the Company as of December
31, 1995 and 1996, and related statements of operations, stockholders' equity,
and cash flows for the twelve (12) months ended December 31, 1994, 1995 and
1996, (iii) state that Ernst & Young, LLP has performed the procedure set out in
Statement on Auditing Standards No. 71 ("SAS 71") for a review of interim
financial information and providing the report of Ernst & Young LLP as described
in SAS 71 in the financial statements for each of the quarters in the six month
periods ending June 30, 1997 and 1996 (the "Unaudited Financial Statements"),
(iv) state that in the course of such review, nothing came to their attention
that leads them to believe that any material modifications need be made to any
of the Unaudited Financial Statements in order for them to be in compliance with
generally accepted accounting principles consistently applied across the periods
presented and, (v) address other matters agreed upon by Ernst & Young, LLP and
you. In addition, you shall have received from Ernst & Young LLP, a letter
addressed to the Company and made available to you for the use of the
Underwriters stating that their review of the Company's system of internal
accounting controls, to the extent they deemed necessary in establishing the
scope of their examination of the Company's financial statements as of December
31, 1996, did not disclose any weaknesses in internal controls that they
considered to be material weaknesses.
(h) You shall have received on the Closing Date and on any later
date on which Option Shares are to be purchased, as the case may be, a
certificate of the Company, dated the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, signed by the Chief
Executive Officer and Chief Financial Officer and Vice President, Corporate
Development, of the Company, to the effect that, and you shall be satisfied
that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or any
later date on which Option Shares are to be purchased, as the case may be, and
the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date or any later date on which Option Shares are to be purchased, as the case
may be;
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<PAGE> 20
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contained all material information required to be included therein by
the Act and the Rules and Regulations and in all material respects conformed to
the requirements of the Act and the Rules and Regulations, the Registration
Statement, and any amendment or supplement thereto, did not and does not include
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (unless cured by a Post-Effective Amendment), the Prospectus, and any
amendment or supplement thereto, did not and does not include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth;
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (a) any material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company, (b) any
transaction that is materially detrimental to the Company, except transactions
entered into in the ordinary course of business, (c) any obligation, direct or
contingent, that is material to the Company incurred by the Company, except
obligations incurred in the ordinary course of business, (d) any change in the
capital stock or outstanding indebtedness of the Company that is material to the
Company, (e) any dividend or distribution of any kind declared, paid or made on
the capital stock of the Company, or (f) any loss or damage (whether or not
insured) to the property of the Company which has been sustained which has a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company; and
(v) All material patents and patent applications are listed in
Exhibit 1 attached hereto.
(i) You shall have received on the Closing Date and on any later
date on which Option Shares are purchased, as the case may be, a certificate
from the Company's Vice President, Finance and Chief Financial Officer to the
effect that:
(i) To his knowledge, the Company is conducting its business
in compliance with all of the applicable laws, rules and regulations of the U.S.
Food and Drug Administration and the California Department of Health, except for
such violations that would not singly or in the aggregate have a material
adverse effect on the Company's business, properties, assets, rights,
operations, financial condition or prospects;
(ii) The description of laws, rules and regulations at
"Business -- Government Regulation" and "Risk Factors -- Government Regulation;
No Assurance of Regulatory Approval" in the Registration Statement and the Final
Prospectus are accurate and fairly present the information necessary to be
disclosed in the Registration Statement in order to make the statements therein
not misleading.
(j) The Company shall have obtained and delivered to you an
agreement from each officer of the Company as of the date of this Agreement that
such person will not, during the Lock-up Period (as defined in Section 2(s)
hereof), effect a Disposition of any Securities now owned or hereafter acquired
directly by such
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<PAGE> 21
person or with respect to which such person has or hereafter acquires the power
of disposition, otherwise than (i) as a bona fide gift or gifts, provided the
donee or donees thereof agree in writing to be bound by this restriction, or
(ii) with the prior written consent of Robertson Stephens & Company LLC. The
foregoing restriction shall have been expressly agreed to preclude the holder of
the Securities from engaging in any hedging or other transaction that is
designed to or reasonably expected to lead to or result in a Disposition of
Securities during their respective Lock-up Period, even if such Securities would
be disposed of by someone other than the such holder. Such prohibited hedging or
other transactions would including, without limitation, any short sale (whether
or not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any Securities or
with respect to any security (other than a broad-based market basket or index)
that includes, relates to or derives any significant part of its value from
Securities. Furthermore, such person will have also agreed and consented to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of the Securities held by such person, except in compliance with
this restriction.
(k) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company) as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
7. Option Shares.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares
only, a nontransferable option to purchase up to an aggregate of 375,000 Option
Shares at the purchase price per share for the Firm Shares set forth in Section
3 hereof. Such option may be exercised by the Representatives on behalf of the
several Underwriters on one (1) or more occasions in whole or in part during the
period of thirty (30) days after the date on which the Firm Shares are initially
offered to the public, by giving written notice to the Company. The number of
Option Shares to be purchased by each Underwriter upon the exercise of such
option shall be the same proportion of the total number of Option Shares to be
purchased by the several Underwriters pursuant to the exercise of such option as
the number of Firm Shares purchased by such Underwriter (set forth in Schedule A
hereto) bears to the total number of Firm Shares purchased by the several
Underwriters (set forth in Schedule A hereto), adjusted by the Representatives
in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to
be purchased by the several Underwriters pursuant to the exercise of the option
granted by this Section 7 shall be made against payment of the purchase price
therefor by the several Underwriters by wire transfer of same-day funds paid to
an account designated by the Company in writing. Such delivery and payment shall
take place at the offices of Cooley Godward LLP, Five Palo Alto Square, 3000 El
Camino Real, Palo Alto, California 94306-2155, or at such other place as may be
agreed upon among the Representatives and the Company (i) on the Closing Date,
if written notice of the exercise of such option is received by the Company at
least two (2) full business days prior to the Closing Date, or (ii) on a date
which shall not be later than the third (3rd) full business day following the
date
-21-
<PAGE> 22
the Company receives written notice of the exercise of such option, if such
notice is received by the Company less than two (2) full business days prior to
the Closing Date.
The certificates for the Option Shares to be so delivered will
be made available to you at such office or such other location including,
without limitation, in New York City, as you may reasonably request for checking
at least one (1) full business day prior to the date of payment and delivery and
will be in such names and denominations as you may request, such request to be
made at least two (2) full business days prior to such date of payment and
delivery. If the Representatives so elect, delivery of the Option Shares may be
made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by you prior to the date of
payment and delivery for the Option Shares to be purchased by such Underwriter
or Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section 7(a) hereof,
the obligations of the several Underwriters to purchase such Option Shares will
be subject (as of the date hereof and as of the date of payment and delivery for
such Option Shares) to the accuracy of and compliance with the representations,
warranties and agreements of the Company herein, to the accuracy of the
statements of the Company and officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, to the conditions set forth in Section 6 hereof, and to the condition
that all proceedings taken at or prior to the payment date in connection with
the sale and transfer of such Option Shares shall be satisfactory in form and
substance to you and to Underwriters' Counsel, and you shall have been furnished
with all such documents, certificates and opinions as you may request in order
to evidence the accuracy and completeness of any of the representations,
warranties or statements, the performance of any of the covenants or agreements
of the Company or the satisfaction of any of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject (including, without
limitation, in its capacity as an Underwriter or as a "qualified independent
underwriter" within the meaning of Schedule E of the Bylaws of the NASD), under
the Act, the Exchange Act or otherwise, specifically including, but not limited
to, losses, claims, damages or liabilities (or actions in respect thereof)
arising out of or based upon (i) any breach of any representation, warranty,
agreement or covenant of the Company herein contained, (ii) any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any untrue
statement or alleged untrue statement of any material fact contained in any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and agrees to
reimburse each Underwriter for any legal or other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to
-22-
<PAGE> 23
the extent that any such loss, claim, damage, liability or action arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, such Preliminary Prospectus
or the Prospectus, or any such amendment or supplement thereto, in reliance
upon, and in conformity with, written information relating to any Underwriter
furnished to the Company by such Underwriter, directly or through you,
specifically for use in the preparation thereof and, provided further, that the
indemnity agreement provided in this Section 8(a) with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any losses, claims, damages, liabilities or actions
based upon any untrue statement or alleged untrue statement of material fact or
omission or alleged omission to state therein a material fact purchased Shares,
if a copy of the Prospectus in which such untrue statement or alleged untrue
statement or omission or alleged omission was corrected had not been sent or
given to such person within the time required by the Act and the Rules and
Regulations, unless such failure is the result of noncompliance by the Company
with Section 4(d) hereof.
The indemnity agreement in this Section 8(a) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
person, if any, who controls any Underwriter within the meaning of the Act or
the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company against any losses, claims, damages or
liabilities, joint or several, to which the Company may become subject under the
Act, the Exchange Act or otherwise, specifically including, but not limited to,
losses, claims, damages or liabilities (or actions in respect thereof) arising
out of or based upon (i) any breach of any representation, warranty, agreement
or covenant of such Underwriter herein contained, (ii) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (iii) any untrue
statement or alleged untrue statement of any material fact contained in any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, in the case of subparagraphs (ii) and (iii) of this
Section 8(b) to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter, directly or through you, specifically for use in the preparation
thereof, and agrees to reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action.
The indemnity agreement in this Section 8(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of, each
officer of the Company who signed the Registration Statement and each director
of the Company, and each person, if any, who controls the Company within the
meaning of the Act or the Exchange Act. This indemnity agreement shall be in
addition to any liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought against
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<PAGE> 24
any indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it shall elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of the indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (together with appropriate
local counsel) approved by the indemnifying party representing all the
indemnified parties under Section 8(a) or 8(b) hereof who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. In no event shall any
indemnifying party be liable in respect of any amounts paid in settlement of any
action unless the indemnifying party shall have approved the terms of such
settlement in writing; provided that such consent shall not be unreasonably
withheld. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnification could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on all claims that are the subject matter of such
proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 8
but it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, all the parties hereto shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Underwriters
severally and not jointly are responsible pro rata for the portion represented
by the percentage that the underwriting discount bears to the initial public
offering price, and the Company is responsible for the remaining portion,
provided, however, that (i) no Underwriter shall be required to contribute any
amount in excess of the amount by which the underwriting discount applicable to
the Shares purchased by such Underwriter exceeds the amount of damages which
such Underwriter was otherwise required to pay and (ii) no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. The contribution agreement in this Section 8(d)
shall extend upon the same terms and conditions to, and shall inure to the
benefit of, each person, if any, who controls any Underwriter, the Company
within the meaning of the Act or the Exchange Act and each officer of the
Company who signed the Registration Statement and each director of the Company.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including,
-24-
<PAGE> 25
without limitation, the provisions of this Section 8, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 8 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Act and the Exchange Act.
9. Representations, Warranties, Covenants and Agreements to Survive
Delivery. All representations, warranties, covenants and agreements of the
Company and the Underwriters herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in Section 8
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter within the meaning of the Act or the Exchange Act, or by or on
behalf of the Company or any of its officers, directors or controlling persons
within the meaning of the Act or the Exchange Act, and shall survive the
delivery of the Shares to the several Underwriters hereunder or termination of
this Agreement.
10. Substitution of Underwriters. If any Underwriter or Underwriters shall
fail to take up and pay for the number of Firm Shares agreed by such Underwriter
or Underwriters to be purchased hereunder upon tender of such Firm Shares in
accordance with the terms hereof, and if the aggregate number of Firm Shares
which such defaulting Underwriter or Underwriters so agreed but failed to
purchase does not exceed 10% of the Firm Shares, the remaining Underwriters
shall be obligated, severally in proportion to their respective commitments
hereunder, to take up and pay for the Firm Shares of such defaulting Underwriter
or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four (24) hours to allow the several Underwriters the privilege of
substituting within twenty-four (24) hours (including non-business hours)
another underwriter or underwriters (which may include any nondefaulting
Underwriter) satisfactory to the Company. If no such underwriter or underwriters
shall have been substituted as aforesaid by such postponed Closing Date, the
Closing Date may, at the option of the Company, be postponed for a further
twenty-four (24) hours, if necessary, to allow the Company the privilege of
finding another underwriter or underwriters, satisfactory to you, to purchase
the Firm Shares which the defaulting Underwriter or Underwriters so agreed but
failed to purchase. If it shall be arranged for the remaining Underwriters or
substituted underwriter or underwriters to take up the Firm Shares of the
defaulting Underwriter or Underwriters as provided in this Section 10, (i) the
Company shall have the right to postpone the time of delivery for a period of
not more than seven (7) full business days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement, supplements to the Prospectus
or other such documents which may thereby be made necessary, and (ii) the
respective number of Firm Shares to be purchased by the remaining Underwriters
and substituted underwriter or underwriters shall be taken as the basis of their
underwriting obligation. If the remaining Underwriters shall not take up and pay
for all such Firm Shares so agreed to be purchased by the defaulting Underwriter
or Underwriters or substitute another underwriter or underwriters as aforesaid
and the Company shall not find or shall not elect to seek another underwriter or
underwriters for such Firm Shares as aforesaid, then this Agreement shall
terminate.
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<PAGE> 26
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section 10, neither the Company shall be liable to
any Underwriter (except as provided in Sections 5 and 8 hereof) nor shall any
Underwriter (other than an Underwriter who shall have failed, otherwise than for
some reason permitted under this Agreement, to purchase the number of Firm
Shares agreed by such Underwriter to be purchased hereunder, which Underwriter
shall remain liable to the Company and the other Underwriters for damages, if
any, resulting from such default) be liable to the Company (except to the extent
provided in Sections 5 and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section 10.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier of (i) 6:30
A.M., San Francisco time, on the first full business day following the effective
date of the Registration Statement, or (ii) the time of the public offering of
any of the Shares by the Underwriters after the Registration Statement becomes
effective. The time of the public offering shall mean the time of the release by
you, for publication, of the first newspaper advertisement relating to the
Shares, or the time at which the Shares are first generally offered by the
Underwriters to the public by letter, telephone, telegram or telecopy, whichever
shall first occur. By giving notice as set forth in Section 12 before the time
this Agreement becomes effective, you, as Representatives of the several
Underwriters, or the Company, may prevent this Agreement from becoming effective
without liability of any party to any other party, except that the Company shall
remain obligated to pay costs and expenses to the extent provided in Sections
4(i), 5 and 8 hereof.
(b) You, as Representatives of the several Underwriters, shall have
the right to terminate this Agreement by giving notice as hereinafter specified
at any time on or prior to the Closing Date or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, (i) if the Company
shall have failed, refused or been unable to perform any agreement on its part
to be performed, or because any other condition to the Underwriters' obligations
hereunder required to be fulfilled is not fulfilled, including, without
limitation, any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company from that set forth in
the Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse, or (ii) if additional material governmental restrictions,
not in force and effect on the date hereof, shall have been imposed upon trading
in securities generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock Exchange or
in the over the counter market by the NASD, or trading in securities generally
shall have been suspended on either such exchange or in the over the counter
market by the NASD, or if a banking moratorium shall have been declared by
federal, New York or California authorities, or (iii) if the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as to interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured, or (iv) if there shall have been a material adverse change in the
general political or economic conditions or financial markets as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Shares, or (v) if there shall have been an
outbreak or escalation of hostilities or of any other insurrection or armed
conflict or the declaration by the United States of a national emergency which,
in the reasonable opinion of the Representatives, makes it impracticable or
inadvisable to proceed with the public offering of the Shares as contemplated by
the Prospectus. In the event of termination pursuant to subparagraph (i) above,
the Company shall remain obligated to pay costs and expenses pursuant to
Sections 4(i),
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<PAGE> 27
<PAGE> 28
5 and 8 hereof. Any termination pursuant to any of subparagraphs (ii) through
(v) above shall be without liability of any party to any other party except as
provided in Sections 5 and 8 hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone, telecopy or telegram, in each case confirmed by
letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone, telecopy or
telegram, in each case, confirmed by letter.
12. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall be
mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to you c/o Robertson, Stephens & Company LLC, 555
California Street, Suite 2600, San Francisco, California 94104, telecopier
number (415) 781-0278, Attention: General Counsel with a copy to Wilson Sonsini
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California, 94303-1050,
telecopier number (650) 493-6811, Attention: Alan K. Austin; if sent to the
Company, such notice shall be mailed, delivered, telegraphed (and confirmed by
letter) or telecopied (and confirmed by letter) to COR Therapeutics, Inc., 256
East Grand Avenue, Suite 80, South San Francisco, California 94080, telecopier
number (415) 244-9208, Attention: Vaughn M. Kailian, with a copy to Cooley
Godward LLP, Five Palo Alto Square, Palo Alto, California, 94306, telecopier
number (650) 857-0663, Attention Robert L. Jones.
13. Parties. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters and the Company and its executors, administrators,
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person or entity, other than the
parties hereto and their respective executors, administrators, successors and
assigns, and the controlling persons within the meaning of the Act or the
Exchange Act, and officers and directors referred to in Section 8 hereof, any
legal or equitable right, remedy or claim in respect of this Agreement or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective executors, administrators, successors and
assigns and said controlling persons and said officers and directors, and for
the benefit of no other person or entity. No purchaser of any of the Shares from
any Underwriter shall be construed a successor or assign by reason merely of
such purchase.
In all dealings with the Company under this Agreement, you shall act on
behalf of each of the several Underwriters, and the Company shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of each
of the several Underwriters as if the same shall have been made or given in
writing by you.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
15. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original.
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<PAGE> 29
If the foregoing correctly sets forth the understanding among the Company
and the several Underwriters, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
the Company and the several Underwriters.
Very truly yours,
COR THERAPEUTICS, INC.
By
-----------------------------------
Accepted as of the date first above written:
ROBERTSON, STEPHENS & COMPANY LLC
HAMBRECHT & QUIST LLC
On their behalf and on behalf of each
of the several Underwriters named in
Schedule A hereto.
ROBERTSON, STEPHENS & COMPANY LLC
By ROBERTSON, STEPHENS & COMPANY GROUP, L.L.C.
By
-------------------------------------------
Authorized Signatory
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<PAGE> 30
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES
TO BE
UNDERWRITERS PURCHASED
- -------------------------------------------------------------------- ------------
<S> <C>
Robertson, Stephens & Company LLC. .................................
Hambrecht & Quist LLC...............................................
---------
Total ........................................................ 2,500,000
=========
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
September 5, 1999
ROBERT L. JONES
650 843-5034
[email protected]
COR Therapeutics, Inc.
256 East Grand Avenue
South San Francisco, CA 94080
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by COR Therapeutics, Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission"), covering an underwritten public
offering of up to 2,875,000 shares of the Company's Common Stock (including
375,000 shares of the Company's Common Stock for which the underwriters have
been granted an over-allotment option) (the "Common Stock").
In connection with this opinion, we have (i) examined and relied upon the
Registration Statement, and related Prospectus, the Company's Restated
Certificate of Incorporation, as amended and Restated Bylaws, and the originals
or copies certified to our satisfaction, of such records, documents,
certificates, memoranda and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below and (ii)
assumed that the Common Stock will be sold by the Underwriters at a price
established by the Pricing Committee of the Board of Directors.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Common Stock, when sold in accordance with the Registration Statement
and related Prospectus, will be validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ ROBERT L. JONES
- -----------------------
<PAGE> 1
EXHIBIT 11.1
COR THERAPEUTICS, INC.
STATEMENT RE: COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
----------------------------- -----------------------
1996 1995 1994 1997 1996
-------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Primary and fully diluted average common
shares outstanding during the period... 19,636 19,360 19,091 20,063 19,505
Net loss................................. $(36,546) $(7,531) $(39,537) $(16,637) $(20,854)
======== ======= ======== ======== ========
Net loss per share....................... $ (1.86) $ (0.39) $ (2.07) $ (0.83) $ (1.07)
======== ======= ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated January 23,
1997, in the Registration Statement (Form S-3) and related Prospectus of COR
Therapeutics, Inc. for the registration of 2,875,000 shares of its Common Stock.
ERNST & YOUNG LLP
Palo Alto, California
September 5, 1997
