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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1999
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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TRANSKARYOTIC THERAPIES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 04-3027191
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
195 ALBANY STREET
CAMBRIDGE, MASSACHUSETTS 02139
(617) 349-0200
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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RICHARD F SELDEN, M.D., PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TRANSKARYOTIC THERAPIES, INC.
195 ALBANY STREET
CAMBRIDGE, MASSACHUSETTS 02139
(617) 349-0200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
DAVID E. REDLICK, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 526-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS 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. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per share..... 3,300,000 $49.66 $163,878,000 $45,558
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act and based upon the average of the
high and low prices of our Common Stock on the Nasdaq National Market on
November 4, 1999.
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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),
SHALL DETERMINE.
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<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES OR ACCEPT AN OFFER TO BUY THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND WE ARE
NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS (Subject to Completion)
Issued November , 1999
3,300,000 SHARES
TKT
TRANSKARYOTIC THERAPIES, INC.
COMMON STOCK
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This prospectus relates to resales of common stock we issued and sold to the
selling stockholders listed on page 13. We will not receive any of the proceeds
from the sale of the shares by the selling stockholders. All of the shares were
acquired by the selling stockholders from TKT in a private placement we
conducted in October 1999. We have agreed to pay certain expenses in connection
with the shares and to indemnify the selling stockholders against certain
liabilities. The selling stockholders will pay all underwriting discounts and
selling commissions, if any, in connection with the sale of the shares.
Our common stock is traded on the Nasdaq National Market under the symbol
"TKTX." On November 5, 1999, the last reported sale price of our common stock on
the Nasdaq National Market was $50.88 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 2.
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The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
Our principal executive offices are located at 195 Albany Street, Cambridge,
Massachusetts 02139 and our telephone number is (617) 349-0200.
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The date of this prospectus is November , 1999
<PAGE>
TABLE OF CONTENTS
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PAGE
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Who We Are.................................................. 1
Risk Factors................................................ 2
Special Note Regarding Forward-Looking Statements........... 11
Use of Proceeds............................................. 12
Selling Stockholders........................................ 13
Plan of Distribution........................................ 15
Legal Matters............................................... 17
Experts..................................................... 17
Where You Can Find More Information......................... 17
Incorporation of Certain Documents by Reference............. 17
</TABLE>
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We have not authorized anyone to provide you with information different from
that contained or incorporated by reference in this prospectus. The selling
stockholders are offering to sell and seeking offers to buy shares of our common
stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of the shares.
<PAGE>
WHO WE ARE
Transkaryotic Therapies, Inc. is a biopharmaceutical company developing
products based on three technical platforms: Gene-Activated-TM- proteins, Niche
Protein-TM- products, and Gene Therapy. We currently have three products in
clinical development:
- Gene-Activated-TM- erythropoietin, known as GA-EPO-TM-, our first
Gene-Activated protein, in Phase III trials for the treatment of anemia;
- Alpha-galactosidase A, or alpha-gal , a Niche Protein product, in Phase II
trials for the treatment of Fabry disease; and
- Factor VIII gene therapy in Phase I trials for the treatment of hemophilia
A.
We intend to initiate clinical trials of two additional Gene-Activated proteins
and one additional Niche Protein product over the next 12 months.
Our commercialization strategy is designed to leverage the size and
experience of corporate partners for certain products while building a small and
efficient commercial infrastructure for others. Accordingly, we have entered
into collaborations with Hoechst Marion Roussel, Inc. for our first two
Gene-Activated protein products, Sumitomo Pharmaceuticals Co., Ltd., for
alpha-gal in Japan, and Genetics Institute, Inc., for Factor VIII gene therapy
in Europe. We intend to independently market our Niche Protein and Gene Therapy
products, as well as a number of our Gene-Activated products.
We were incorporated in Delaware in 1988. Our principal executive offices
are located at 195 Albany Street, Cambridge, Massachusetts 02139, and our
telephone number is (617) 349-0200.
Transkaryotic-TM-, Transkaryotic Therapy-TM-, Niche Protein-TM-, GA-EPO-TM-,
and Gene-Activated-TM- are our trademarks. Other trademarks used in this
prospectus are the property of their respective owners.
<PAGE>
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISKS, ALONG WITH THE OTHER
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE
YOU DECIDE TO BUY ANY COMMON STOCK. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW
ARE NOT THE ONLY ONES AFFECTING US. ADDITIONAL RISKS AND UNCERTAINTIES MAY ALSO
ADVERSELY AFFECT OUR BUSINESS AND OPERATIONS. IF ANY OF THE FOLLOWING EVENTS
ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION, OR RESULTS OF OPERATIONS
WOULD LIKELY SUFFER, POSSIBLY MATERIALLY.
WE ARE A PARTY TO LITIGATION WITH AMGEN AND KIRIN-AMGEN INVOLVING GA-EPO-TM-
We and HMRI, our collaborator, are defendants in a civil patent infringement
lawsuit brought by Amgen, Inc. in the U.S. District Court for the District of
Massachusetts. Amgen's complaint, which was filed in April 1997, alleged that
GA-EPO and the processes for producing GA-EPO infringe certain of Amgen's U.S.
patents. Amgen's complaint requested that we and HMRI be enjoined from making,
using, or selling GA-EPO and that the District Court award Amgen monetary
damages.
In April 1998, the District Court granted our and HMRI's Motion for Summary
Judgment of Non-Infringement in this case. The District Court based this
decision on the fact that all of our and HMRI's GA-EPO related activities
through that date had been conducted solely for uses reasonably related to the
production of information for submission to the FDA as part of seeking
regulatory approval to market GA-EPO. According to the District Court, these
activities are not acts of patent infringement under the Waxman-Hatch Act. The
District Court did not address the issue of whether our and HMRI's activities
that were challenged by Amgen would infringe Amgen's patents in the future. The
District Court ordered Amgen's remaining claim for declaratory judgment of
future infringement administratively closed, subject to being reopened upon
motion by either party for good cause shown.
In June 1999, we and HMRI filed a motion to reopen the case with the
District Court. The District Court granted this motion. In addition, in
July 1999, we commenced legal proceedings in the U.K. against Kirin-Amgen, Inc.
seeking a declaration that a U.K. patent held by Kirin-Amgen will not be
infringed by the sale of GA-EPO and that numerous claims of the U.K. patent are
invalid.
We can provide no assurance as to the outcome of either the U.S. or U.K.
proceedings. A court decision in Amgen's or Kirin-Amgen's favor, including the
issuance of an injunction against the making, using, or selling of GA-EPO by us
and HMRI in the U.S. or the U.K., or any other conclusion of either litigation
in a manner adverse to us and HMRI, would have a material adverse effect on our
business, financial condition, and results of operations. Moreover, GA-EPO may
be the subject of additional litigation.
Pursuant to our agreements with HMRI, HMRI has assumed the cost of the Amgen
and Kirin-Amgen litigations. We are required to reimburse HMRI for our share of
litigation expenses from future royalties, if any, payable by HMRI from the sale
of GA-EPO and in certain other circumstances.
WE MAY BE SUBJECT TO ADDITIONAL LITIGATION RELATING TO OUR INTELLECTUAL PROPERTY
RIGHTS
The biotechnology industry has been characterized by significant litigation
and interference and other proceedings regarding patents, patent applications,
and other intellectual property rights. In addition to the Amgen patent
litigation described under "--We are a party to litigation with Amgen and
Kirin-Amgen involving GA-EPO-TM-" and the patent interference described under
"--We are involved and may become involved in patent litigation or other
intellectual property proceedings relating to our Transkaryotic Therapy-TM-
technology which could result in liability for damages or stop our development
and commercialization efforts," we may become a party to additional patent
litigation and other proceedings in the future.
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Certain of our competitors have filed patent applications and have been
issued patents relating to certain methods of producing therapeutic proteins. We
believe that the risk of our becoming involved in patent litigation is
significant with respect to the therapeutic proteins that we anticipate
producing.
An adverse outcome in any patent litigation or other proceeding involving
patents could subject us to significant liabilities to third parties and require
us to cease using the technology that is at issue or to license the technology
from third parties. We may not be able to obtain any required licenses on
commercially acceptable terms or at all.
The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. Some of our competitors may be able
to sustain these costs more effectively than we can because of their
substantially greater financial resources. Uncertainties resulting from the
initiation and continuation of patent litigation or other proceedings could have
a material adverse effect on our ability to compete in the marketplace.
In addition, hearings have recently been held by Congress with respect to
the Waxmam-Hatch Act. Under the safe harbor provisions of the Waxman-Hatch Act,
activities conducted solely for uses reasonably related to the production of
information for submission to the FDA as part of seeking regulatory approval to
market a product are not acts of patent infringement. If legislation changing
the safe harbor provisions of the Waxman-Hatch Act were introduced in Congress
and enacted, competitors of ours that desire to bring U.S. patent infringement
actions against us might be able to do so at an earlier time than under the
existing law.
WE HAVE NOT GENERATED REVENUES FOR THE SALE OF PRODUCTS
We are at an early stage of development. We have not generated revenues from
the sale of products. We do not expect to derive any revenues from product sales
until 2000, at the earliest. Each of our three product platforms involves new
and rapidly evolving technologies. All of our potential products are in
research, preclinical testing, or clinical development. We will need to conduct
additional development efforts for all of these products prior to seeking
regulatory approval. Preclinical and clinical data on the safety and efficacy of
our potential products are limited. Our potential products may not be
efficacious or may prove to have undesirable or unintended side effects,
toxicities, or other characteristics that may prevent or limit commercial use.
IF OUR CLINICAL TRIALS ARE NOT SUCCESSFUL, WE WILL NOT BE ABLE TO DEVELOP AND
COMMERCIALIZE ANY RELATED PRODUCTS
In order to obtain regulatory approvals for the commercial sale of our
potential products, we and our collaborators will be required to complete
extensive clinical trials in humans to demonstrate the safety and efficacy of
the products. We may not be able to obtain authority from the FDA or other
regulatory agencies to commence or complete these clinical trials.
The results from preclinical testing of a product that is under development
may not be predictive of results that will be obtained in human clinical trials.
In addition, the results of early human clinical trials may not be predictive of
results that will be obtained in larger scale, advanced stage clinical trials.
Furthermore, we, one of our collaborators, or the FDA may suspend clinical
trials at any time if the subjects or patients participating in such trials are
being exposed to unacceptable health risks, or for other reasons.
The rate of completion of clinical trials is dependent in part upon the rate
of enrollment of patients. Patient accrual is a function of many factors,
including the size of the patient population, the proximity of patients to
clinical sites, the eligibility criteria for the study, and the existence of
competitive clinical trials. In particular, the patient population for some of
our Niche Protein products is small. Delays in planned patient enrollment may
result in increased costs and program delays.
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We and our collaborators may not be able successfully to complete any
clinical trial of a potential product within any specified time period. In some
cases, we may not be able to complete the trial at all. Moreover, clinical
trials may not show any potential product to be safe or efficacious. Thus, the
FDA and other regulatory authorities may not approve any of our potential
products for any indication.
Our business, financial condition, or results of operations could be
materially adversely affected if:
- we or our collaborators are unable to complete a clinical trial of one of
our potential products;
- the results of any clinical trial are unfavorable; or
- the time or cost of completing the trial exceeds our expectations.
WE MAY NOT OBTAIN GOVERNMENT APPROVALS; THE APPROVAL PROCESS IS COSTLY AND
LENGTHY
The testing, manufacturing, labeling, advertising, promotion, export, and
marketing, among other things, of our products are subject to extensive
regulation by governmental authorities in the U.S. and other countries. The
regulatory approval process to obtain market approval for a new biologic takes
many years and requires the expenditure of substantial resources. We have had
only limited experience in preparing applications and obtaining regulatory
approvals.
There can be no assurance that submission of an Investigational New Drug
Application will result in FDA authorization to commence clinical trials, or
that once clinical trials have begun, testing will be completed successfully
within any specific time period, if at all, with respect to any of our products.
Furthermore, we or the FDA may suspend clinical trials at any time on various
grounds, including a finding that the subjects or patients are being exposed to
unacceptable health risks. Once trials are complete and an application has been
submitted, the FDA may deny a Biologics License Application if applicable
regulatory criteria are not satisfied, may require additional testing or
information, and/or may require postmarketing testing and surveillance to
monitor the safety or efficacy of a product. The testing and approval process
requires substantial time, effort, and financial resources. We can provide no
assurance that any approval will be granted on a timely basis, if at all.
Because gene therapy is a relatively new technology and products for gene
therapy have not been extensively tested in humans, the regulatory requirements
governing gene therapy products may be more uncertain than for other types of
products. This uncertainty may cause delays in the regulatory process relating
to our gene therapy products, including delays in our initiating clinical trials
of these products. This uncertainty may also increase the cost of obtaining
regulatory approvals of our gene therapy products.
Both before and after approval is obtained, violations of regulatory
requirements may result in various adverse consequences, including the FDA's
delay in approving or refusal to approve a product, withdrawal of an approved
product from the market, and/or the imposition of criminal penalties against the
manufacturer and/or the Biologics License Application holder.
We will also be subject to a variety of foreign regulations governing
clinical trials and the sale of its products. Whether or not we have obtained
FDA approval, the comparable regulatory authorities of foreign countries must
also approve a product prior to the commencement of marketing of the product in
those countries. The approval process varies from country to country and the
time may be longer or shorter than that required for FDA approval.
WE FACE SIGNIFICANT COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING,
DEVELOPING, OR COMMERCIALIZING PRODUCTS BEFORE OR MORE SUCCESSFULLY THAN WE DO
The biotechnology industry is highly competitive and characterized by rapid
and significant technological change. Our competitors include pharmaceutical
companies, biotechnology firms, universities, and other research institutions.
Many of these competitors have substantially greater
4
<PAGE>
financial and other resources than we do and are conducting extensive research
and development activities on technologies and products similar to or
competitive with ours.
We may be unable to develop technologies and products that are more
clinically efficacious or cost-effective than products developed by our
competitors. Even if we obtain marketing approval for our product candidates,
many of our competitors have more extensive and established sales, marketing,
and distribution capabilities than we do. Litigation with third parties,
including our present litigation with Amgen, could delay our time to market for
certain products and enable our competitors to more quickly and effectively
penetrate certain markets.
Under our gene activation program, we are developing fully human versions of
proteins that are currently marketed. For instance, in the case of GA-EPO,
erythropoietin is marketed by Amgen and Johnson & Johnson in the U.S.; F.
Hoffmann-La Roche Ltd. (Boehringer Mannheim GmbH) and Johnson and Johnson
(Janssen-Cilag) in Europe; and Sankyo Company Ltd., Chugai Pharmaceutical
Co., Ltd., and Kirin Brewery Co. in Japan.
Many of the protein products against which our Gene-Activated protein
products would compete have well-known brand names, have been promoted
extensively, and have achieved market acceptance by third party payors,
hospitals, physicians, and patients. Many of the companies that produce these
protein products have patents covering the techniques used to produce these
products, which have served as effective barriers to entry in the protein
therapeutics market. As with Amgen and its erythropoietin product, these
companies may seek to block our entry into the market by asserting that our
Gene-Activated protein products infringe their patents. Many of these companies
are also seeking to develop and commercialize new or potentially improved
versions of their proteins.
We believe that the primary competition with respect to our Niche Protein
product program is from biotechnology and smaller pharmaceutical companies. In
particular, we believe that our major competition with respect to Fabry disease
and Gaucher disease is Genzyme Corporation. Genzyme is conducting late stage
clinical trials of a protein product for the treatment of Fabry disease and has
marketed a product for the treatment of Gaucher disease since 1991. Genzyme owns
or controls issued patents related to the production of protein products to
treat Fabry disease and Gaucher disease. The markets for some of our potential
Niche Protein products are quite small. As a result, if competitive products
exist, we may not be able successfully to commercialize our products.
Our gene therapy system will have to compete with other gene therapy
systems, as well as with conventional methods of treating targeted diseases and
conditions. In addition, new non-gene therapy treatments may be developed in the
future. A number of companies, including major biotechnology and pharmaceutical
companies, as well as development stage companies, are actively involved in this
field.
COMPETITORS' PRODUCTS MAY RECEIVE ORPHAN DRUG EXCLUSIVITY AND THEREBY PRECLUDE
US FROM MARKETING OUR NICHE PROTEIN-TM- PRODUCTS AND WE MAY NOT BE ABLE TO
OBTAIN ORPHAN DRUG EXCLUSIVITY FOR OUR NICHE PROTEIN-TM-PRODUCTS
If a product which has an orphan drug designation from the FDA subsequently
receives the first marketing approval for the indication for which it has such
designation, the product is entitled to orphan drug exclusivity, i.e., the FDA
may not approve any other applications to market the same product for the same
indication, except in limited circumstances, for a period of seven years.
Obtaining orphan drug designations and orphan drug exclusivity for our Niche
Protein products may be critical to our success in this area. We may not be able
to obtain orphan drug designation or exclusivity for any of our potential
products or be able to maintain such designation or exclusivity for any of these
products. For example, if a competitive product is shown to be clinically
superior to our product, any orphan drug exclusivity we have obtained will not
apply to our product.
Our competitors may also seek orphan drug designations and obtain orphan
drug exclusivity for products competitive with our products before we obtain
marketing approval. We are aware that
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Genzyme is conducting late stage clinical trials of a protein product for the
treatment of Fabry disease for which it has an orphan drug designation. If
Genzyme's Fabry disease product receives marketing approval before our Fabry
disease product, it is likely that we would not be permitted to market our
product in the U.S. unless our product is shown to be clinically superior to
their product.
WE ARE DEPENDENT ON HMRI AND OTHER CORPORATE COLLABORATORS TO DEVELOP, CONDUCT
CLINICAL TRIALS, OBTAIN REGULATORY APPROVALS FOR, AND MANUFACTURE, MARKET, AND
SELL OUR PRINCIPAL PRODUCTS
We are parties to collaborative agreements with third parties relating to
certain of our principal products. We are relying on HMRI to develop, conduct
clinical trials, obtain regulatory approvals for, and manufacture, market, and
sell GA-EPO and a second, undisclosed Gene-Activated Protein, we refer to as
GA-II; Sumitomo to develop and commercialize alpha-gal for Fabry disease in
Japan and other Asian countries; and Genetics Institute to develop and
commercialize Factor VIII gene therapy for hemophilia A in Europe. Our
collaborators may not devote the resources necessary or may otherwise be unable
to complete development and commercialization of these potential products. Our
existing collaborations are subject to termination without cause on short notice
under certain circumstances.
Our existing collaborations and any future collaborative arrangements with
third parties may not be scientifically or commercially successful. Factors that
may affect the success of our collaborations include the following:
- our collaborators may be pursuing alternative technologies or developing
alternative products, either on their own or in collaboration with others,
that may be competitive with the product as to which they are
collaborating with us, which could affect our collaborative partners'
commitment to the collaboration with us;
- reductions in marketing or sales efforts or a discontinuation of marketing
or sales of our products by our collaborators would reduce our revenues,
which will be based on a percentage of net sales by the collaborator;
- our collaborators may terminate their collaborations with us, which could
make it difficult for us to attract new collaborators or adversely affect
the perception of us in the business and financial communities; and
- our collaborators may pursue higher priority programs or change the focus
of their development programs, which could affect the collaborator's
commitment to us. Pharmaceutical companies have historically re-evaluated
their development priorities following mergers and consolidations. This
could occur following the closing of the pending merger between HMRI and
Rhone-Poulenc SA, which is expected to occur by the end of 1999.
WE MAY NOT BE ABLE TO OBTAIN PATENT PROTECTION FOR OUR DISCOVERIES
Our success will depend in large part on our ability to obtain patent
protection for our processes and products in the U.S. and other countries. The
patent situation in the field of biotechnology generally is highly uncertain and
involves complex legal and scientific questions. We may not be issued patents
relating to our technology. Even if issued, patents may be challenged,
invalidated, or circumvented. Our patents also may not afford us protection
against competitors with similar technology. Because patent applications in the
U.S. are maintained in secrecy until patents issue, third parties may have filed
or maintained patent applications for technology used by us or covered by our
pending patent applications without our being aware of these applications.
We may not hold proprietary rights to certain product patents, process
patents, and use patents related to our products or their methods of
manufacture. In some cases, these patents may be owned or controlled by third
parties. As a result, we may be required to obtain licenses under third party
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patents to market certain of our potential products. If licenses are not
available to us on acceptable terms, we will not be able to market these
products.
We also rely upon unpatented proprietary technology, processes, and
know-how. We seek to protect this information in part by confidentiality
agreements with our employees, consultants, and other third party contractors.
These agreements may be breached, and we may not have adequate remedies for any
such breach. In addition, our trade secrets may otherwise become known or be
independently developed by competitors.
WE MAY LOSE IMPORTANT LICENSE RIGHTS IN SOME CIRCUMSTANCES
We are a party to a number of patent licenses that are important to our
business and expect to enter into additional patent licenses in the future.
These licenses impose various commercialization, sublicensing, royalty,
insurance, and other obligations on us. If we fail to comply with these
obligations, the licensor will have the right to terminate the license.
WE ARE INVOLVED AND MAY BECOME INVOLVED IN PATENT LITIGATION OR OTHER
INTELLECTUAL PROPERTY PROCEEDINGS RELATING TO OUR TRANSKARYOTIC THERAPY-TM-
TECHNOLOGY WHICH COULD RESULT IN LIABILITY FOR DAMAGES OR STOP OUR DEVELOPMENT
AND COMMERCIALIZATION EFFORTS
We are a party to a proceeding before the U.S. Patent and Trademark Office
to determine the patentability of our gene therapy technology. The participants
in the interference are TKT, Genetic Therapy, Inc., which is a wholly-owned
subsidiary of Novartis AG, Syntex (U.S.A.), which is a wholly-owned subsidiary
of Roche Holdings, Inc., and Somatix Therapy Corporation, which has been merged
into Cell Genesys, Inc. This proceeding will also determine which of the parties
first developed this technology. If the technology is patentable, the party that
first developed the technology will be awarded the U.S. patent rights.
The process to resolve an interference can take many years. We may not
prevail in this interference. Even if we do prevail, the decision in this
proceeding may not enable us meaningfully to protect our proprietary position in
the field of EX VIVO gene therapy.
If we do not prevail in this proceeding, a consent order issued by the
Federal Trade Commission in March 1997 may be relevant to us. The Federal Trade
Commission entered this consent order to resolve anti-competitive concerns
raised by the merger of Ciba-Geigy Limited and Sandoz Limited into Novartis AG.
As part of the consent order, the constituent entities of Novartis are required
to provide all gene therapy researchers and developers with nonexclusive,
royalty-bearing licenses to the Novartis patent which is involved in the
interference proceeding described above. In addition, we have entered into an
agreement with Cell Genesys under which we would be permitted to market our
non-viral gene therapy products pursuant to a royalty-free license agreement if
Cell Genesys wins the interference. Thus, we believe that we may only be
materially adversely affected if Syntex prevails in this proceeding.
EVEN IF WE OBTAIN MARKETING APPROVAL, OUR PRODUCTS WILL BE SUBJECT TO ONGOING
REGULATORY REVIEW
If regulatory approval of a product is granted, such approval may be subject
to limitations on the indicated uses for which the product may be marketed or
contain requirements for costly post-marketing follow-up studies. As to products
for which we obtain marketing approval, we, the manufacturer of the product if
other than us, and the manufacturing facilities will be subject to continual
review and periodic inspections by the FDA and other regulatory authorities. The
subsequent discovery of previously unknown problems with the product,
manufacturer, or facility may result in restrictions on the product or
manufacturer, including withdrawal of the product from the market.
If we fail to comply with applicable regulatory requirements, we may be
subject to fines, suspension or withdrawal of regulatory approvals, product
recalls, seizure of products, operating restrictions, and criminal prosecution.
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THE MARKET MAY NOT BE RECEPTIVE TO OUR PRODUCTS UPON THEIR INTRODUCTION
The commercial success of our products that are approved for marketing by
the FDA and other regulatory authorities will depend upon their acceptance by
the medical community and third party payors as clinically useful,
cost-effective, and safe. Each of our technology programs is new. As a result,
it may be difficult for us to achieve market acceptance of our products,
particularly for the first products for which we obtain marketing approval.
Other factors that we believe will materially affect market acceptance of
our products include:
- the timing of the receipt of marketing approvals and the countries in
which such approvals are obtained;
- the safety and efficacy of the product as compared to competitive
products; and
- the cost-effectiveness of the product and the ability to receive third
party reimbursement.
WE HAVE NOT BEEN PROFITABLE AND MAY REQUIRE ADDITIONAL FUNDING
We have experienced significant operating losses since our inception in
1988. At September 30, 1999, we had an accumulated deficit of approximately
$104.8 million. We expect that we will continue to incur substantial losses into
2001 and that our cumulative losses will increase until then as our research and
development, sales and marketing, and manufacturing efforts expand. We expect
that the losses that we incur will fluctuate from quarter to quarter and that
these fluctuations may be substantial. To date, we have not received revenues
from the sale of products.
We will require substantial funds to conduct research and development,
including preclinical testing and clinical trials of our potential products, and
to manufacture and market any products that are approved for commercial sale.
Our future capital requirements will depend on many factors, including the
following:
- continued progress in our research and development programs, as well as
the magnitude of these programs;
- the scope and results of our clinical trials;
- the time and costs involved in obtaining regulatory approvals;
- the cost of manufacturing activities;
- the cost of commercialization activities;
- the cost of our additional facilities requirements;
- our ability to establish and maintain collaborative arrangements;
- the timing, receipt, and amount of milestone and other payments from
collaborators;
- the timing, receipt, and amount of sales and royalties from our potential
products in the market;
- the costs involved in preparing, filing, prosecuting, maintaining, and
enforcing patent claims and other patent-related costs, including
litigation costs and the costs of obtaining any required licenses to
technologies; and
- the cost of obtaining and maintaining licenses to use patented
technologies.
We may seek additional funding through collaborative arrangements and public
or private financings. Additional financing may not be available to us on
acceptable terms or at all.
If we raise additional funds by issuing equity securities, further dilution
to our then existing stockholders will result. In addition, the terms of the
financing may adversely affect the holdings or the rights of such stockholders.
If we are unable to obtain funding on a timely basis, we may be required to
significantly curtail one or more of our research or development programs. We
also could be required to seek funds through arrangements with collaborators or
others that may require us to relinquish
8
<PAGE>
rights to certain of our technologies, product candidates, or products which we
would otherwise pursue on our own.
WE HAVE LIMITED MANUFACTURING CAPABILITIES AND WILL DEPEND ON THIRD PARTY
MANUFACTURERS
We have limited manufacturing experience and no commercial scale
manufacturing capabilities. In order to continue to develop products, apply for
regulatory approvals, and, ultimately, commercialize any products, we will need
to develop, contract for, or otherwise arrange for the necessary manufacturing
capabilities.
We expect to manufacture certain of our products in our own manufacturing
facilities. We will require substantial additional funds and need to recruit
qualified personnel in order to build or lease and operate any manufacturing
facilities.
We currently rely upon third parties to produce material for preclinical
testing and clinical trial purposes. We expect to continue to do so in the
future. We also expect to rely upon third parties for the commercial production
of certain of our products if we succeed in obtaining necessary regulatory
approvals. There are a limited number of such third party manufacturers capable
of manufacturing for us. If we are unable to obtain or maintain contract
manufacturing of these products, or to do so on commercially reasonable terms,
we may not be able to complete development of these products or market them. To
the extent that we enter into manufacturing arrangements with third parties, we
are dependent upon these third parties to perform their obligations in a timely
manner and in accordance with applicable government regulations.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE AND CAPABILITIES
We have limited sales and marketing experience and capabilities. In order to
market our products, we will need to develop this experience and these
capabilities or rely upon third parties, such as our corporate collaborators, to
perform these functions. If we rely on third parties to sell, market, or
distribute our products, our success will be dependent upon the efforts of these
third parties in performing these functions. In many instances, we may have
little or no control over the activities of these third parties in selling,
marketing, and distributing our products. If we choose to conduct these
activities directly, as we plan to do with respect to some of our potential
products, we may not be able to recruit and maintain an effective sales force.
OUR SUCCESS IS DEPENDENT UPON THE RETENTION AND HIRING OF KEY PERSONNEL
Our success is highly dependent on the retention of principal members of our
scientific and administrative staff. Furthermore, our future growth will require
hiring a significant number of qualified scientific and administrative
personnel. Accordingly, recruiting and retaining such personnel in the future
will be critical to our success. There is intense competition from other
companies and research and academic institutions for qualified personnel in the
areas of our activities, and there can be no assurance that we will be able to
continue to attract and retain, on acceptable terms, the qualified personnel
necessary for the continued development of our business.
WE MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS AND MAY NOT BE ABLE TO OBTAIN
ADEQUATE PRODUCT LIABILITY INSURANCE
Our business exposes us to the risk of product liability claims that is
inherent in the testing, manufacturing, and marketing of human therapeutic
products. Although we have clinical trial liability insurance, we do not
currently have any product liability insurance. We may not be able to obtain or
maintain such insurance on acceptable terms or at all. Moreover, any insurance
that we do obtain may not provide adequate protection against potential
liabilities. If we are unable to obtain insurance at acceptable cost or
otherwise protect against potential product liability claims, we will be exposed
to significant liabilities, which may materially and adversely affect our
business and financial condition. These liabilities could prevent or interfere
with our product commercialization efforts.
9
<PAGE>
IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT BY THIRD PARTY PAYORS
FOR OUR FUTURE PRODUCTS, WE MAY NOT BE ABLE TO SUCCESSFULLY COMMERCIALIZE OUR
PRODUCTS IN CERTAIN MARKETS
The availability of reimbursement by governmental and other third party
payors affects the market for any pharmaceutical product. These third party
payors continually attempt to contain or reduce the costs of health care by
challenging the prices charged for medical products and services. In certain
foreign countries, particularly the countries of the European Union, the pricing
of prescription pharmaceuticals is subject to governmental control.
Proposals have been considered periodically by the Health Care Financing
Administration of the United States Department of Health and Human Services to
reduce the reimbursement rate with respect to erythropoietin. Adoption by the
Health Care Financing Administration of any such proposal might have an adverse
effect on the pricing of GA-EPO.
In both the U.S. and certain foreign jurisdictions, there have been a number
of legislative and regulatory proposals to change the health care system.
Further proposals are likely. The potential for adoption of these proposals may
affect our ability to raise capital, obtain additional collaborative partners,
and market our products.
If we or our collaborators obtain marketing approvals for our products, we
expect to experience pricing pressure due to the trend toward managed health
care, the increasing influence of health maintenance organizations, and
additional legislative proposals. We may not be able to sell our products
profitably if reimbursement is unavailable or limited in scope or amount.
OUR OFFICERS AND DIRECTORS EXERCISE SIGNIFICANT CONTROL OVER TKT
Our executive officers, directors, and entities affiliated with them, in the
aggregate, beneficially own approximately 24% of our outstanding common stock.
These stockholders may be able to exercise substantial influence over all
matters requiring approval by our stockholders, including the election of
directors and approval of significant corporate transactions. This concentration
of ownership may also have the effect of delaying or preventing a change in
control of our company.
WE HAVE ANTITAKEOVER DEFENSES THAT COULD DELAY OR PREVENT AN ACQUISITION AND
COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK
Provisions of our Certificate of Incorporation, our Bylaws, and Delaware law
may have the effect of deterring hostile takeovers or delaying or preventing
changes in control or our management, including transactions in which our
stockholders might otherwise receive a premium for their shares over then
current market prices. In addition, these provisions may limit the ability of
stockholders to approve transactions that they may deem to be in their best
interest.
OUR STOCK PRICE COULD BE VOLATILE, WHICH COULD CAUSE YOU TO LOSE PART OR ALL OF
YOUR INVESTMENT
The market price of our common stock, like that of the common stock of many
other development stage biotechnology companies, may be highly volatile. Factors
such as announcements of technological innovations or new commercial products by
us or our competitors, disclosure of results of clinical testing or regulatory
proceedings, governmental regulation and approvals, developments in patent or
other proprietary rights, public concern as to the safety of products developed
by us, our financial results, and general market conditions may have a
significant effect on the market price of our common stock. In addition, the
stock market has experienced extreme price and volume fluctuations. This
volatility has significantly affected the market prices of securities of many
biotechnology and pharmaceutical companies for reasons frequently unrelated to
or disproportionate to the operating performance of the specific companies.
These broad market fluctuations may adversely affect the market price of our
common stock.
10
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. You can identify
these forward-looking statements by our use of the words "believes,"
"anticipates," "plans," "expects," "intends," and similar expressions, whether
in the negative or affirmative. We cannot guarantee that we actually will
achieve the plans, intentions, or expectations discussed in these
forward-looking statements. Our actual results could differ materially. We have
included important factors in the cautionary statements contained or
incorporated in this prospectus, particularly under the heading "Risk Factors,"
that we believe could cause or actual results to differ materially from the
forward-looking statements that we make. We do not intend to update information
contained in any forward-looking statement we make.
11
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the selling
stockholders.
The selling stockholders will pay any underwriting discounts and commissions
and expenses incurred by them for brokerage, accounting, tax, legal services, or
other expenses incurred by the selling stockholders in disposing of their
shares. We will bear all other costs, fees, and expenses incurred in effecting
the registration of the shares covered by this prospectus, including, without
limitation, all registration and filing fees, Nasdaq listing fees, fees and
expenses of our counsel, fees of our accountants, and blue sky fees and
expenses.
12
<PAGE>
SELLING STOCKHOLDERS
We issued the shares of common stock covered by this prospectus in a private
placement. None of the selling stockholders has held a position or office with,
or has otherwise had a material relationship with us or any of our subsidiaries
within the past three years. The following table sets forth, to our knowledge,
certain information about the selling stockholders as of November 5, 1999.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NUMBER OF SHARES OF OF SHARES
SHARES OF PERCENTAGE OF COMMON COMMON
COMMON SHARES OF NUMBER OF STOCK STOCK
STOCK COMMON SHARES OF BENEFICIALLY BENEFICIALLY
BENEFICIALLY STOCK COMMON OWNED OWNED
OWNED BENEFICIALLY STOCK AFTER AFTER
NAME OF SELLING PRIOR TO OWNED PRIOR OFFERED OFFERING OFFERING
STOCKHOLDERS OFFERING(1) TO OFFERING(1) HEREBY (1)(2) (1)(2)
- -------------------------------------- ------------ -------------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Barrie Ramsay Zesiger................. 3,000 * 3,000 0 *
Bay Star Capital(3)................... 75,000 * 75,000 0 *
City of Milford Pension & Retirement
Fund................................ 17,000 * 17,000 0 *
City of Stamford Firemen's Pension
Fund................................ 11,000 * 11,000 0 *
DCF Partners LP....................... 35,000 * 35,000 0 *
Dean Witter Foundation................ 7,000 * 7,000 0 *
Deutsche
Vermogensbild-ungsesellschaft....... 300,000 1.3% 300,000 0 *
Domenec J. Mizio...................... 5,000 * 5,000 0 *
DWS Investment GmbH................... 170,000 * 100,000 70,000 *
Essex Investment Management (4)....... 197,500 * 195,000 2,500 *
HBL Charitable Unitrust............... 2,000 * 2,000 0 *
Helen Hunt............................ 2,000 * 2,000 0 *
Invesco (5)........................... 320,000 1.4% 320,000 0 *
Janus Global Life Sciences Fund....... 200,000 * 200,000 0 *
Jeanne L. Morency..................... 1,000 * 1,000 0 *
Marcaurd Cook & Cie. S.A.............. 15,000 * 15,000 0 *
Metzler Investment GmbH............... 50,000 * 50,000 0 *
Murray Capital LLC.................... 2,000 * 2,000 0 *
MVI Medical Ventures Investments
Ltd................................. 25,000 * 13,000 12,000 *
NeoMed Fund........................... 24,000 * 10,000 14,000 *
New Horizons Fund..................... 150,000 * 150,000 0 *
Norwalk Employees' Pension Plan....... 13,000 * 13,000 0 *
Oppenheimer Enterprise Fund........... 70,000 * 70,000 0 *
Pictet & Cie.......................... 75,000 * 75,000 0 *
Prudential Health Sciences Fund....... 61,700 * 25,000 36,700 *
Public Employee Retirement System of
Idaho............................... 57,000 * 57,000 0 *
Roanoke College....................... 6,000 * 6,000 0 *
Small Cap World Fund, Inc............. 250,000 1.1% 250,000 0 *
State of Oregon PERS/ZCG.............. 155,000 * 155,000 0 *
Susan Uris Halpem..................... 5,000 * 5,000 0 *
The Growth of America................. 1,000,000 4.4% 1,000,000 0 *
The Jennifer Altman Foundation........ 5,000 * 5,000 0 *
Trellus Partners, L.P................. 30,000 * 30,000 0 *
Veritas SG Investment Trust GmbH...... 140,500 * 87,000 53,500 *
Wells Family LLC...................... 6,000 * 6,000 0 *
Wolfson Investment Partners LP........ 3,000 * 3,000 0 *
</TABLE>
13
<PAGE>
- ------------------------
(1) Except as otherwise indicated, the number of shares beneficially owned is
determined under rules promulgated by the SEC, and the information is not
necessarily indicative of beneficial ownership for any other purpose. The
selling stockholder has sole voting power and investment power with respect
to all shares listed as owned by the selling stockholder.
(2) We do not know when or in what amounts the selling stockholder may offer
shares for sale. The selling stockholder may not sell any or all of the
shares offered by this prospectus. Because the selling stockholder may offer
all or some of the shares pursuant to this offering, and because there are
currently no agreements, arrangements or understandings with respect to the
sale of any of the shares that will be held by the selling stockholder after
completion of the offering, we cannot estimate the number of the shares that
will be held by the selling stockholder after completion of the offering.
However, for purposes of this table, we have assumed that, after completion
of the offering, none of the shares covered by this prospectus will be held
by the selling stockholder.
(3) Includes 50,000 shares owned by Bay Star Capital, LP and 25,000 shares owned
by Bay Star International Ltd. The managing members of the general partner
of Bay Star Capital, LP are also the managing members of the investment
manager of Bay Star International Ltd..
(4) Includes 127,850 shares owned by Essex Performance Fund, Limited Partners
and 57,150 shares owned by The New Discovery Fund Limited. The managing
members of The New Discovery Fund Limited are also the managing members of
the investment manager of Essex Performance Fund, Limited Partners.
(5) Includes 166,000 shares owned by Invesco Global Health Sciences Fund, 53,000
shares owned by AIM Global Health Sciences Class Fund, and 101,000 shares
owned by AIM Global Health Sciences Fund. Invesco Funds Group is the
investment advisor for all three funds.
14
<PAGE>
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time to
time by the selling stockholders. The term "selling stockholders" includes
pledgees, donees, transferees or other successors in interest selling shares
received after the date of this prospectus from the selling stockholders as a
pledge, gift or other non-sale related transfer. To the extent required, we may
amend and supplement this prospectus from time to time to describe a specific
plan of distribution.
The selling stockholders will act independently of TKT in making decisions
with respect to the timing, manner and size of each sale. The selling
stockholders may make these sales at prices and under terms then prevailing or
at prices related to the then current market price. The selling stockholders may
also make sales in negotiated transactions, including pursuant to one or more of
the following methods:
- purchases by a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
- an over-the-counter distribution in accordance with the rules of the
Nasdaq National Market; and
- in privately negotiated transactions.
In connection with distributions of the shares or otherwise, the selling
stockholders may:
- enter into hedging transactions with broker-dealers or other financial
institutions, which may in turn engage in short sales of the shares in the
course of hedging the positions they assume;
- sell the shares short and redeliver the shares to close out such short
positions;
- enter into option or other transactions with broker-dealers or other
financial institutions which require the delivery to them of shares
offered by this prospectus, which they may in turn resell; and
- pledge shares to a broker-dealer or other financial institution, which,
upon a default, they may in turn resell.
In addition, the selling stockholders may sell any shares that qualify for
sale pursuant to Rule 144 under Rule 144 rather than pursuant to this
prospectus.
In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers to participate. Broker-dealers
or agents may receive commissions, discounts or concessions from the selling
stockholders, in amounts to be negotiated immediately prior to the sale.
In offering the shares covered by this prospectus, the selling stockholders,
and any broker-dealers and any other participating broker-dealers who execute
sales for the selling stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with these sales. Any profits
realized by the selling stockholders and the compensation of such broker-dealer
may be deemed to be underwriting discounts and commissions.
In order to comply with the securities laws of certain states, the shares
must be sold in those states only through registered or licensed brokers or
dealers. In addition, in certain states the shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
15
<PAGE>
We have advised the selling stockholders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling stockholders and their affiliates. In
addition, we will make copies of this prospectus available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of shares is made, if required, we will
distribute a prospectus supplement that will set forth:
- the number of shares being offered;
- the terms of the offering, including the name of any underwriter, dealer
or agent;
- the purchase price paid by any underwriter;
- any discount, commission and other underwriter compensation;
- any discount, commission or concession allowed or reallowed or paid to any
dealer; and
- the proposed selling price to the public.
We have agreed to indemnify the selling stockholders against certain
liabilities, including certain liabilities under the Securities Act.
We have agreed with the selling stockholders to keep the Registration
Statement of which this prospectus constitutes a part effective until the
earlier of (i) such time as all of the shares covered by this prospectus have
been disposed of pursuant to the Registration Statement, (ii) November 2, 2001
or (iii) such time as all of the shares covered by this prospectus can be sold
within any given three-month period without regard to the trading volume of our
common stock pursuant to Rule 144 promulgated under the Securities Act.
16
<PAGE>
LEGAL MATTERS
The validity of the shares offered by this prospectus has been passed upon
by Hale and Dorr LLP.
EXPERTS
Our consolidated financial statements as of December 31, 1998 and 1997 and
for each of the three years in the period ended December 31, 1998 incorporated
by reference in this prospectus have been audited by Ernst & Young, LLP,
independent accountants, as stated in their report dated February 5, 1999.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the SEC for the
stock we are offering by this prospectus. This prospectus does not include all
of the information contained in the registration statement. You should refer to
the registration statement and its exhibits for additional information. Whenever
we make reference in this prospectus to any of our contracts, agreements or
other documents, the references are not necessarily complete and you should
refer to the exhibits attached to the registration statement for copies of the
actual contract, agreement or other document.
We file annual, quarterly, and special reports, proxy statements, and other
information with the SEC. You can read our SEC filings, including the
registration statement, over the Internet at the SEC's web site at
HTTP://WWW.SEC.GOV. You may also read and copy any document we file with the SEC
at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C.
20549. You may also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference facilities.
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell shares of common stock and
seeking offers to buy shares of common stock only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or any sale of the common stock.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information we file
with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus, and information that we file with the SEC in the future and
incorporate by reference will automatically update and may supersede the
information contained in this prospectus. We incorporate by reference the
documents listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the sale of all
the shares covered by this prospectus.
The following documents that we have filed with the SEC are incorporated
herein by reference:
- our Annual Report on Form 10-K for the year ended December 31, 1998;
- our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999
and June 30, 1999;
- our Current Report on Form 8-K for November 5, 1999;
- all of our filings pursuant to the Exchange Act after the date of filing
the initial registration statement and prior to effectiveness of the
registration statement; and
17
<PAGE>
- the description of our common stock contained in our Registration
Statement on Form 8-A, including any amendments or reports filed for the
purpose of updating that description.
You may request a copy of these documents, at no cost, by writing to:
Transkaryotic Therapies, Inc.
195 Albany Street
Cambridge, Massachusetts 02139
Attention: Corporate Communications
Telephone: (617) 349-0200
18
<PAGE>
[BACK COVER PAGE OF PROSPECTUS]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred by us in
connection with the sale and distribution of the securities being registered
hereby, all of which will be borne by us. All amounts shown are estimates except
the Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $45,558
Accounting fees and expenses................................ 5,000
Legal fees and expenses..................................... 5,000
Blue Sky expenses and counsel fees.......................... 3,500
Printing and engraving expenses............................. 5,000
Miscellaneous expenses...................................... 5,942
-------
Total expenses.............................................. $70,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of our Amended and Restated Certificate of Incorporation
provides that no director of our company shall be personally liable for any
monetary damages for any breach of fiduciary duty as a director, except to the
extent that the Delaware General Corporation Law prohibits the elimination or
limitation of liability of directors for breach of fiduciary duty.
Article VIII of our Restated Certificate of Incorporation provides that a
director or officer of our company (a) shall be indemnified by us against all
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement incurred in connection with any litigation or other legal proceeding
(other than an action by or in the right of our company) brought against him by
virtue of his position as a director or officer of our company if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of our company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful and
(b) shall be indemnified by our company against all expenses (including
attorneys' fees) and amounts paid in settlement incurred in connection with any
action by or in the right of our company brought against him by virtue of his
position as a director or officer of our company if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of our company, except that no indemnification shall be made with
respect to any matter as to which such person shall have been adjudged to be
liable to us, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. Notwithstanding the foregoing, to the extent that a director or
officer has been successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is required to be
indemnified by us against all expenses (including attorneys' fees) incurred in
connection therewith. Expenses shall be advanced to a director or officer at his
request, provided that he undertakes to repay the amount advanced if it is
ultimately determined that he is not entitled to indemnification for such
expenses.
Indemnification is required to be made unless we determine that the
applicable standard of conduct required for indemnification has not been met. In
the event of a determination by us that the director or officer did not meet the
applicable standard of conduct required for indemnification, or if we fail to
make an indemnification payment within 60 days after such payment is claimed by
such person, such person is permitted to petition the court to make an
independent determination as to whether such person is entitled to
indemnification. As a condition precedent to the right of indemnification, the
director or officer must give us notice of the action for which indemnity is
sought and we have the right to participate in such action or assume the defense
thereof.
II-1
<PAGE>
Article VIII of our Restated Certificate of Incorporation further provides
that the indemnification provided therein is not exclusive, and provides that in
the event that the Delaware General Corporation Law is amended to expand the
indemnification permitted to directors or officers we must indemnify those
persons to the fullest extent permitted by such law as so amended.
Article VIII, Section 8 of our By-Laws provides that we shall indemnify any
and all of our directors or officers to the fullest extent permitted by the
Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee, or agent
of the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
We maintain a general liability insurance policy which covers certain
liabilities of directors and officers of our company arising out of claims based
on acts or omissions in their capacities as directors or officers.
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<S> <C>
4.1(1) Amended and Restated Certificate of Incorporation of our
company.
4.2(1) Amended and Restated By-Laws of our company.
4.3(2) Specimen stock certificate for shares of common stock of our
company.
5 Opinion of Hale and Dorr LLP.
23.1 Consent of Hale and Dorr LLP, included in Exhibit 5 filed
herewith.
23.2 Consent of Ernst & Young, LLP.
24 Power of Attorney (See page II-4 of this Registration
Statement).
</TABLE>
- ------------------------
(1) Incorporated by reference to our Quarterly Report on Form 10-Q for the
period ended September 30, 1996.
(2) Incorporated by reference to our Registration Statement on Form S-1 (File
No. 333-10845).
ITEM 17. UNDERTAKINGS.
Our company, the undersigned registrant, hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
II-2
<PAGE>
registered) and any derivation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the registration
statement is on Form S-3, Form S-8 or Form F-3, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 and 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purposes of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial BONA FIDE offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
We hereby undertake that, for purposes of determining any liability under
the Securities Act, each filing of our Annual Report pursuant to Section 13(a)
or 15(d) of 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 this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein and
the offering of such securities at the 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 our company
pursuant to the indemnification provisions described herein, or otherwise, we
have been advised that in the opinion of the 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 us of expenses incurred or paid by a
director, officer, or controlling person of our company 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, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Transkaryotic
Therapies, Inc. 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 Cambridge, Commonwealth of Massachusetts, on
this 5th day of November, 1999.
<TABLE>
<S> <C> <C>
TRANSKARYOTIC THERAPIES, INC.
By: /s/ RICHARD F SELDEN
-----------------------------------------
Richard F Selden
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
We, the undersigned officers and directors of Transkaryotic
Therapies, Inc., hereby severally constitute Richard F Selden, Daniel E.
Geffken, and David E. Redlick, and each of them singly, our true and lawful
attorneys with full power to any of them, and to each of them singly, to sign
for us and in our names in the capacities indicated below the Registration
Statement on Form S-3 filed herewith and any and all pre-effective and
post-effective amendments to said Registration Statement and generally to do all
such things in our name and behalf in our capacities as officers and directors
to enable Transkaryotic Therapies, Inc., to comply with the provisions of the
Securities Act and all requirements of the Securities and Exchange Commission,
hereby ratifying and confirming our signatures as they may be signed by our said
attorneys, or any of them, to said Registration Statement and any and all
amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ RICHARD F SELDEN President, Chief Executive
- ---------------------------------- Officer, Treasurer and Director November 5, 1999
Richard F Selden (Principal Executive Officer)
Vice President, Finance and
/s/ DANIEL E. GEFFKEN Chief Financial Officer
- ---------------------------------- (Principal Financial and November 5, 1999
Daniel E. Geffken Accounting Officer)
/s/ WILLIAM R. MILLER
- ---------------------------------- Director November 5, 1999
William R. Miller
/s/ RODMAN W. MOORHEAD, III
- ---------------------------------- Director November 5, 1999
Rodman W. Moorhead, III
/s/ JAMES E. THOMAS
- ---------------------------------- Director November 5, 1999
James E. Thomas
</TABLE>
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<PAGE>
EXHIBIT 5
[Hale and Dorn LLP Letterhead]
November 5, 1999
Transkaryotic Therapies, Inc.
195 Albany Street
Cambridge, MA 02139
Re: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
This opinion is furnished to you in connection with a Registration
Statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), for the registration of an aggregate of
3,300,000 shares of Common Stock, $0.01 par value per share (the "Shares"), of
Transkaryotic Therapies, Inc., a Delaware corporation (the "Company"), of which
all 3,300,000 Shares will be sold by certain stockholders of the Company (the
"Selling Stockholders").
We are acting as counsel for the Company in connection with the sale by
the Selling Stockholders of the Shares. We have examined signed copies of the
Registration Statement as filed with the Commission. We have also examined and
relied upon minutes of meetings of the stockholders and the Board of Directors
of the Company as provided to us by the Company, stock record books of the
Company as provided to us by the Company, the Certificate of Incorporation and
By-Laws of the Company, each as restated and/or amended to date, and such other
documents as we have deemed necessary for purposes of rendering the opinions
hereinafter set forth.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as copies, the authenticity of the originals of such latter documents and the
legal
<PAGE>
competence of all signatories to such documents.
Our opinion below, insofar as it relates to the Selling Stockholders'
shares being fully paid, is based solely on a certificate of the Vice President,
Finance and Chief Financial Officer of the Company.
We assume that the appropriate action will be taken, prior to the offer
and sale of the Shares to register and qualify the Shares for sale under all
applicable state securities or "blue sky" laws.
We express no opinion herein as to the laws of any state or
jurisdiction other than the state laws of the Commonwealth of Massachusetts, the
Delaware General Corporation Law and statute and the federal laws of the United
States of America. To the extent that any other laws govern the matters as to
which we are opining herein, we have assumed that such laws are identical to the
state laws of the Commonwealth of Massachusetts, and we are expressing no
opinion herein as to whether such assumption is reasonable or correct.
Based upon and subject to the foregoing, we are of the opinion that the
Shares to be sold by the Selling Stockholders have been duly authorized and are
validly issued, fully paid and nonassessable.
It is understood that this opinion is to be used only in connection
with the offer and sale of the Shares while the Registration Statement is in
effect.
Please note that we are opining only as to the matters expressly set
forth herein, and no opinion should be inferred as to any other matters. This
opinion is based upon currently existing statutes, rules, regulations and
judicial decisions, and we disclaim any obligation to advise you of any change
in any of these sources of law or subsequent legal or factual developments which
might affect any matters or opinions set forth herein.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act and to the use of our
name therein and in the related Prospectus under the caption "Legal Matters." In
giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ HALE AND DORR LLP
HALE AND DORR LLP
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-XXXXX) and related Prospectus of
Transkaryotic Therapies, Inc. for the registration of 3,300,000 shares of its
common stock and to the incorporation by reference therein of our report
dated February 5, 1999, with respect to the consolidated financial statements
of Transkaryotic Therapies, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1998, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
---------------------------------------
Boston, Massachusetts
November 3, 1999
