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As filed with the Securities and Exchange Commission on July 1, 1999
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------
GERON CORPORATION
(Exact Name of Registrant as specified in its charter)
DELAWARE 75-2287752
(State of incorporation) (I.R.S. Employer Identification No.)
230 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 473-7700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
RONALD W. EASTMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GERON CORPORATION
230 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 473-7700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
JOSHUA L. GREEN
LAURA A. GORDON
SCOTT S. RING
VENTURE LAW GROUP
A PROFESSIONAL CORPORATION
2800 SAND HILL ROAD
MENLO PARK, CALIFORNIA 94025
(650) 854-4488
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT UNTIL THE DATE THAT IS THREE YEARS FOLLOWING THE EFFECTIVE
DATE OF THIS REGISTRATION STATEMENT OR UNTIL AN EARLIER TIME THAT ALL
OF THE SHARES REGISTERED HEREIN HAVE BEEN SOLD.
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If the only securities being registered on this Form are to be 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]
<PAGE> 2
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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TITLE OF EACH CLASS OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(3) FEE(4)
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Common stock, $0.001 par value 3,850,000 shares $10.78 $41,986,753 $11,673
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(1) Geron is filing this registration statement under rule 429 of the Securities
Act. Of the 3,850,000 shares listed above, 1,925,000 of these shares have
already been registered pursuant to a Registration Statement on Form S-3
(File No. 333-70355) initially filed on January 8, 1999 and declared
effective by the Securities and Exchange Commission on May 4, 1999 (the
"Original Registration Statement"). The 1,925,000 shares of common stock
registered pursuant to the Original Registration Statement consist of shares
issuable upon conversion of $7,500,000 of series A zero coupon convertible
debentures and series A warrants exercisable to purchase 625,000 shares of
common stock. This registration statement also covers an additional
1,925,000 shares, which shares may be offered by selling stockholders upon
conversion of $7,500,000 of series B zero coupon convertible debentures and
series B warrants exercisable to purchase an additional 625,000 shares of
common stock. For purposes of estimating the number of shares of common
stock to be included in this registration statement, Geron calculated 140%
of the number of shares of common stock issuable upon conversion of the
debentures and exercise of the warrants (based upon an assumed conversion
price for the series A and series B zero coupon convertible debentures of
$10.00 and an exercise price for the series A and series B warrants of
$12.00). In addition to the shares set forth in the table, the amount to be
registered includes an indeterminate number of shares issuable upon
conversion of the series A and series B zero coupon convertible debentures
and exercise of the series A and series B warrants, as this amount may be
adjusted as a result of stock splits, stock dividends and similar
transactions in accordance with Rule 416. Geron is not, however, relying on
Rule 416 to register any shares issuable as a result of other changes to the
conversion price of the debentures or the exercise price of the warrants.
(2) Estimated solely for the purpose of computing the amount of the registration
fee for the currently unregistered 1,925,000 shares, based on the average of
the high and low prices for Geron's common stock as reported on The Nasdaq
National Market on June 28, 1999, in accordance with Rule 457 under the
Securities Act of 1933.
(3) The proposed maximum offering price includes $21,235,252.50 that is
allocable to the 1,925,000 shares registered on the Original Registration
Statement, which is based on a proposed offering price for these shares of
$11.0313, the average of the high and low prices for Geron's common stock on
January 4, 1999.
(4) Geron previously paid a fee of $11,807, the calculation of which was based
on the registration of a total of 3,850,000 shares, with its Original
Registration Statement on January 8, 1999. The amount of this fee allocable
to the 1,925,000 shares being carried forward from the Original Registration
Statement is $5,904. The remaining $5,903 should be allocated to the
registration fee of $5,769 applicable to the additional 1,925,000 shares to
be registered hereunder.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE 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 A DATE THAT THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
GERON IS FILING THIS REGISTRATION STATEMENT UNDER RULE 429 OF THE SECURITIES
ACT. THE COMBINED PROSPECTUS CONTAINED HEREIN ALSO RELATES TO SHARES PREVIOUSLY
REGISTERED UNDER A REGISTRATION STATEMENT ON FORM S-3 WITH FILE NUMBER
333-70355.
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<PAGE> 3
PROSPECTUS Subject to Completion
July 1, 1999
GERON CORPORATION
2,300,000 SHARES
OF COMMON STOCK
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The shares of common stock offered by this prospectus are being offered by
the stockholders of Geron named in the section entitled "Selling Stockholders"
on page 20. The selling stockholders may sell the shares of common stock from
time to time in various types of transactions including
- on the Nasdaq National Market;
- in the over-the-counter market; and
- in privately negotiated transactions.
For additional information on methods of sale, you should refer to the
section entitled "Plan of Distribution" on page 24. Geron will not receive any
portion of the proceeds from the sale of these shares.
----------------
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5.
----------------
Geron's common stock is quoted on the Nasdaq National Market under the
symbol "GERN."
The selling stockholders will determine the price of the shares of common
stock independent of Geron. On June 28, 1999, the last sale price of the common
stock on the Nasdaq National Market was $10.50 per share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL 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 IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is _______ __, 1999.
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TABLE OF CONTENTS
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OFFICES AND PLACE OF INCORPORATION................................................................ 2
SUMMARY........................................................................................... 2
RISK FACTORS...................................................................................... 5
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY UNCERTAIN........... 17
WHERE CAN YOU FIND MORE INFORMATION............................................................... 18
USE OF PROCEEDS................................................................................... 18
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS.................................................. 19
SELLING STOCKHOLDERS.............................................................................. 20
DESCRIPTION OF CAPITAL STOCK...................................................................... 21
REGISTRATION RIGHTS OF OTHER HOLDERS.............................................................. 24
DELAWARE ANTI-TAKEOVER LAW; CHARTER AND BYLAW PROVISIONS THAT DISCOURAGE TAKEOVERS................ 24
PLAN OF DISTRIBUTION.............................................................................. 25
LEGAL MATTERS..................................................................................... 25
EXPERTS........................................................................................... 25
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction in which it is unlawful. The information
in this prospectus is current as of the date on the cover.
OFFICES AND PLACE OF INCORPORATION
We were incorporated in 1990 under the laws of Delaware. Our principal
executive offices are located at 230 Constitution Drive, Menlo Park, California
94025 and our telephone number is (650) 473-7700. References in this prospectus
to "we," "us," "our," the "Company" and "Geron" refer to Geron Corporation and
its subsidiaries.
SUMMARY
We are a biopharmaceutical company focused on researching, developing and
commercializing therapeutic and diagnostic products to treat cancer and other
age-related chronic degenerative diseases. We are in a position to pursue this
goal given our breakthrough discoveries surrounding telomeres, telomerase, human
pluripotent stem cells, and nuclear transfer technology. Telomeres are
structures at the ends of chromosomes that protect chromosomes from degradation
and act as a molecular clock of cellular aging. Telomerase is an enzyme that has
the capability of restoring telomere length and stopping the molecular clock,
thereby conferring cellular immortality. By manipulating telomere length through
telomerase regulation, we hope to be able to kill cancer cells where telomerase
is abnormally turned on. Conversely, we seek to increase the lifespan of normal
cells, where telomerase is normally turned off, to treat age-related diseases.
Human pluripotent stem cells are telomerase positive and therefore have an
unlimited replicative capacity, or ability to divide. They have the capability
to turn into any and all cell types and tissues in the body. Nuclear transfer is
a laboratory procedure in which a mature adult cell is fused with an egg cell
which has had its nucleus removed. This procedure results in the transfer of the
donor cell nucleus
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to the egg cell. This technique allows for the production of large numbers of
identical animals with known genetic traits. We plan to integrate these three
technology platforms by:
- utilizing human pluripotent stem cells to generate functional
differentiated cells to replace the damaged tissues of a diseased organ;
- applying telomerase gene transfer to extend the lifespan of these
functional differentiated cells to enable scaled-up production and
durable transplant results; and
- using nuclear transfer to generate human pluripotent stem cells derived
from the patient in order to prevent rejection of the transplanted cells
and avoid the need for immunosuppression therapy and organ donors.
Examples of chronic degenerative diseases potentially treatable by
transplantation of cells and tissues derived from tissue-matched human
pluripotent stem cells include:
- congestive heart failure;
- Parkinson's Disease;
- diabetes;
- osteoarthritis;
- osteoporosis;
- cancers; and
- skin disorders.
With our collaborators, we have demonstrated, both in the laboratory and
clinically, that telomeres shorten throughout a normal cell's replicative
lifespan and that ultimately, when telomeres reach a short enough length, cell
division halts and the cell enters a state known as senescence. We use
differential display techniques to analyze and catalogue the different patterns
of gene expression between young and senescent cells. Through these techniques,
we have determined that senescent cells display an altered pattern of gene
expression compared to replicatively young cells that leads to an imbalance in
the production of proteins and other cell products. We believe the altered
pattern of gene expression contributes to many age-related degenerative diseases
and conditions through a direct and destructive effect on surrounding tissues.
As a result, we are researching methods to manipulate telomerase activity to
maintain normal, or youthful, gene expression and prevent the onset of
senescence. To this end, our scientists and collaborators have shown that the
introduction of the catalytic protein gene of telomerase, which is the component
of telomerase that confers its activity, in normal cells can result in
telomerase activity that:
- halts telomere erosion;
- dramatically extends the normal lifespan of the cell;
- maintains normal gene expression; and
- prevents the onset of senescence.
Further, our scientists and collaborators have shown that the introduction of
the catalytic protein gene and resulting manipulation of telomerase activity
does not cause malignant or cancerous changes in the treated cells.
We believe that telomerase inhibition has potential as a therapy for cancer
and that telomerase detection and quantification has potential as a marker for
cancer. Cancer cells escape senescence and maintain an extended ability to
divide. They continue to divide past the senescent fate of normal cells by
virtue of activated oncogenes and inactivated tumor suppressor genes. We and our
collaborators have shown that for tumor cells to attain life threatening
characteristics, or to metastasize throughout the body, they generally must
become immortal through an alteration which prevents their telomeres from
shortening. In all cancer types studied to date, telomerase is abnormally
reactivated, thereby conferring cellular immortality. We and our collaborators
are evaluating compounds that selectively inhibit telomerase and that may
therefore result in a therapy for cancer. Given the correlation between levels
of telomerase and cancer, we also believe that telomerase is a universal and
highly specific marker of cancer and therefore, that the detection and
quantification of telomerase may have significant clinical utility for cancer
diagnosis, prognosis, and patient monitoring and screening.
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Our research and product development efforts are also focused on human
embryonic stem cells and human embryonic germ cells (together referred to as
human pluripotent stem cells), which were successfully derived and are being
maintained in culture by scientists at the University of Wisconsin-Madison and
Johns Hopkins University, respectively. We believe these cells, which we have
licensed, hold great promise as a universal source of replacement cells for
transplantation and for use in screens and functional genomics for
pharmaceutical research and development. This promise is enhanced by our
telomerase technology since it may allow us to increase the lifespan of the more
specialized functional cells, or differentiated cells, that we are able to
produce from human embryonic stem or germ cells. The technology combination
could position us to supply an unlimited number of young human cells and tissues
for therapeutic uses in the body and for drug discovery purposes. In addition,
further research with human pluripotent stem cells will improve our
understanding of reproductive and developmental biology. This could lead to
better treatments for infertility and the discovery of new approaches to treat a
wide variety of diseases.
We have licensed the nuclear transfer technology developed by scientists at
the Roslin Institute to enhance and accelerate development of new
transplantation therapies to treat chronic degenerative diseases. The primary
objective of our nuclear transfer research at the Roslin Institute is to
understand the molecular mechanism of nuclear reprogramming by animal egg cells.
Reprogramming is the ability of an enucleated egg's cytoplasm to reactivate all
the genes present in the transferred nucleus of the mature adult cell such that
embryonic development can occur. Once these molecular mechanisms are understood,
we should be able to confer the capacity to reprogram nuclei to the cytoplasm of
cells other than eggs, including somatic cells from any individual. If this can
be accomplished, we would be able to produce tissue-matched human pluripotent
stem cell lines. In this way, these human pluripotent stem cells would, in turn,
be able to produce differentiated cells and tissues that would be a perfect
tissue-match with the patient from whom the mature adult cell was first
obtained. Then, rejection of transplanted cells would be prevented without the
need for immunosuppressive drugs, thereby avoiding their associated toxic side
effects.
We believe that we have several broadly applicable proprietary platforms
for discovering, developing and commercializing novel therapeutics and
diagnostics as well as cell and gene therapy approaches for many age-related
chronic degenerative diseases, including cancer. We are currently focusing on
four product development programs:
- Telomerase Inhibition and Detection -- developing telomerase
inhibitors as potentially universal and highly specific cancer
therapies and telomerase assays for the detection of cancer;
- Telomerase Activation and Expression -- developing genetic or drug
therapies to modulate telomere length, thereby regulating cell aging
or senescence which contributes to degenerative diseases; and
- Pluripotent Stem Cell Therapies -- generating a broad array of cell
types from human embryonic stem or germ cells for use in
transplantation medicine, pharmaceutical research and development and
the study of human developmental biology.
- Nuclear Transfer -- reprogramming a mature adult cell to return to the
pluripotent state and once again express all the genes required for
full embryonic development of an adult animal for use in
transplantation medicine for humans and improvements in agriculture
and farm animals.
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RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should carefully consider
these risk factors, together with all of the other information included in this
prospectus, before you decide whether to purchase shares of our common stock.
OUR PRODUCT DEVELOPMENT PROGRAMS ARE AT AN EARLY STAGE AND MAY NOT RESULT IN ANY
COMMERCIALLY VIABLE PRODUCTS; FAILURE TO DEVELOP ANY COMMERCIALLY VIABLE
PRODUCTS MAY IMPAIR OUR ABILITY TO ATTRACT FUTURE FUNDING AND OUR ABILITY TO
SUSTAIN OPERATIONS
The study of the mechanisms of cellular aging and cellular immortality,
including telomere biology and telomerase, the study of human pluripotent stem
cells, and the process of nuclear transfer are relatively new areas of research.
While our development efforts are at different stages for different products, we
cannot assure you that we will successfully develop any products or that we will
not abandon some or all of our proposed research programs. In the long term, for
any of our cancer treatments or other discoveries to be proven commercially
viable, we will need to demonstrate to the health care community that the
treatment or products are:
- safe;
- effective;
- reliable; and
- not subject to other problems that would affect commercial viability.
If and when potential lead drug compounds or product candidates are
identified through our research programs, they will require significant
preclinical and clinical testing prior to regulatory approval in the United
States and elsewhere. In addition, we will also need to determine whether any of
these potential products can be manufactured in commercial quantities at an
acceptable cost. Our efforts may not result in a product that can be marketed.
Because of the significant scientific, regulatory and commercial milestones that
must be reached for any of our research programs to be successful, any program
may be abandoned, even after significant resources have been expended.
Our inability to identify an effective compound for inhibiting telomerase
may prevent us from developing a viable cancer treatment product, which
would adversely impact our future business prospects
As a result of our drug discovery efforts to date, we have identified
compounds in laboratory studies that demonstrate potential for inhibiting
telomerase in humans. However, additional development efforts will be required
before we select a lead compound for preclinical development and clinical trials
as a telomerase inhibitor for cancer. We will have to conduct additional
research before we can select a compound and we may never identify a compound
that will enable us to fully develop a commercially viable treatment for cancer.
If and when selected, a lead compound may prove to have undesirable and
unintended side effects or other characteristics affecting its safety or
effectiveness that may prevent or limit its commercial use. In terms of safety,
our discoveries may result in cancer treatment solutions that cause unacceptable
side effects for the human body. Our discoveries may also not be as effective as
is necessary to market a commercially viable product for the treatment of
cancer. For example, we expect that telomerase inhibition may have delayed
effectiveness as telomeres resume normal shortening. As a result, telomerase
inhibition may need to be used in conjunction with other cancer therapies.
Accordingly, it may become extremely difficult for us to proceed with
preclinical and clinical development, to obtain regulatory approval or to market
a telomerase inhibitor for the treatment of cancer. If we abandon our research
for cancer treatment for any of these reasons or for other reasons, our business
prospects would be materially and adversely affected.
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Our research related to the treatment of age-related degenerative diseases
has not yet identified a compound that has potential as a therapeutic agent
and failure to do so would lead to the termination of this program
The research resulting from our telomerase activation and expression program
has shown us that the activation of telomerase can extend cell lifespan in
normal human cells. While telomere length and replicative capacity have been
extended in laboratory studies, we may not discover a compound that will
modulate telomere length or increase replicative capacity effectively for
clinical use. We have yet to identify any lead compounds that have been
demonstrated to modulate gene expression in human cells and we cannot guarantee
that we will be able to discover or develop the necessary compound.
There is currently insufficient clinical data to determine the full utility
of our cancer diagnostic tests and negative data could cause cancellation of
the program.
There is, as yet, insufficient clinical data to confirm the full utility of
our proprietary telomerase detection technology to diagnose, prognose, monitor
patient status and screen for cancer. Although Intergen, Roche Diagnostics,
Kyowa Medex and PharMingen, our licensees, have begun to sell kits for research
use, additional development work and regulatory consents will be necessary prior
to the introduction of tests for clinical use.
Our research on human pluripotent stem cells is at an early stage and may
not result in any commercially viable products
Our pluripotent stem cell therapies program is also at an early stage. While
human pluripotent stem cells have been derived and allowed to expand and
differentiate into numerous cell types, our efforts to direct differentiation of
human pluripotent stem cells and develop products from our research may not
result in any commercial applications.
Our research related to nuclear transfer may not result in any commercially
viable products
Nuclear transfer techniques are still in the process of being fully
understood. The research collaboration between the Roslin Institute and us will
focus at its most fundamental level on understanding the molecular mechanisms
used by egg cell cytoplasm to reprogram adult cells. Our goal is to confer
reprogramming capability to the cytoplasm of any mature cell in order to produce
transplantable tissue-matched cells for an intended transplant recipient.
However, our research in this area is in its early stages and may not result in
any commercially viable products for human health or agriculture.
WE HAVE A HISTORY OF OPERATING LOSSES AND ANTICIPATE FUTURE LOSSES; CONTINUED
LOSSES COULD IMPAIR OUR ABILITY TO SUSTAIN OPERATIONS
We have incurred net operating losses every year since our operations began
in 1990. Losses have resulted principally from costs incurred in connection with
our research and development activities and from general and administrative
costs associated with our operations. We expect to incur additional operating
losses over the next several years as our research and development efforts and
preclinical testing activities are expanded. Substantially all of our revenues
to date have been research support payments under the collaborative agreements
with Kyowa Hakko and Pharmacia & Upjohn. Research support payments under the
agreement with Kyowa Hakko expired in April 1998. Research payments under the
agreement with Pharmacia & Upjohn expire in January 2000. We are unable to
estimate at this time the level of revenue to be received from the sale of
diagnostic products, and do not expect to receive significant revenues from the
sale of research-use-only kits. Our ability to achieve profitability is
dependent on our ability, alone or with others, to:
- continue to have success with our research and development efforts;
- select therapeutic compounds for development;
- obtain the required regulatory approvals; and
- manufacture and market resulting products.
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We cannot assure you when or if we will receive material revenues from
product sales or achieve profitability. Failure to generate significant
additional revenues and achieve profitability could impair our ability to
sustain operations.
WE DEPEND ON OUR COLLABORATIVE PARTNERS TO HELP US COMPLETE THE PROCESS OF
DEVELOPING AND TESTING OUR PRODUCTS AND OUR ABILITY TO DEVELOP AND COMMERCIALIZE
PRODUCTS MAY BE IMPAIRED OR DELAYED IF OUR COLLABORATIVE PARTNERSHIPS ARE
UNSUCCESSFUL
Our strategy for the development, clinical testing and commercialization of
our products requires entering into collaborations with corporate partners,
licensors, licensees and others. We are dependent upon the subsequent success of
these other parties in performing their respective responsibilities and the
continued cooperation of our partners. We cannot assure you that our partners
will cooperate with us or perform their obligations under our agreements with
them. We cannot control the amount and timing of our collaborators' resources
that will be devoted to our research activities related to our collaborative
agreements with them. Our collaborators may choose to pursue existing or
alternative technologies in preference to those being developed in collaboration
with us.
Our ability to successfully develop and commercialize telomerase inhibition
products depends on our corporate partnerships with Kyowa Hakko and Pharmacia &
Upjohn, and our ability to successfully develop and commercialize telomerase
diagnostic products depends on our corporate partnership with Roche Diagnostics.
Under our collaborative agreements with these partners, we rely significantly on
them, among other activities, to:
- design and conduct advanced clinical trials;
- fund research and development activities with us;
- pay us fees upon the achievement of milestones; and
- co-promote with us any commercial products that result from our
collaborations.
The development and commercialization of products from these collaborations
will be delayed if Kyowa Hakko, Pharmacia & Upjohn or Roche Diagnostics fail to
conduct these collaborative activities in a timely manner or at all. In
addition, Kyowa Hakko, Pharmacia & Upjohn or Roche Diagnostics could terminate
these agreements and we cannot assure you that we will receive any development
or milestone payments. If we do not receive research funds or achieve milestones
set forth in the agreements, or if Kyowa Hakko, Pharmacia & Upjohn or Roche
Diagnostics or any of our future partners breach or terminate collaborative
agreements with us, our business may be damaged significantly.
We are also, to a lesser extent, dependent upon collaborative partners other
than Kyowa Hakko, Pharmacia & Upjohn and Roche Diagnostics. For example, we have
entered into licensing arrangements with several diagnostic companies for our
telomerase detection technology. However, because these licenses are limited to
the research-use-only market, these arrangements are not expected to generate
significant commercial revenues, if at all.
UNEXPECTED COSTS AND OTHER DIFFICULTIES ARISING FROM OUR ACQUISITION OF ROSLIN
BIO-MED LTD. AND SIMULTANEOUS RESEARCH COLLABORATION WITH THE ROSLIN INSTITUTE
MAY DRAIN HUMAN AND FINANCIAL RESOURCES, OR OTHERWISE NEGATIVELY AFFECT OUR
OPERATIONS
With our acquisition of Roslin Bio-Med and formation of the research
collaboration with the Roslin Institute, the scope of our business and
operations has expanded. As a result, we may be presented with operational
issues that we have not previously faced as a company, but which generally
accompany acquisitions and research collaborations of this nature, including:
- the difficulty of assimilating Roslin Bio-Med's operations and
personnel;
- the potential disruption of ongoing business and distraction of
management;
- unanticipated expenses related to technology and research integration;
- the difficulty of implementing and maintaining uniform standards,
controls, procedures and policies;
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<PAGE> 10
- the potential impairment of relationships with employees and
collaborators as a result of integration of new management personnel;
and
- the potential unknown liabilities associated with acquired businesses.
We cannot assure you that we will be able to overcome any of these
obstacles, and our failure to do so could prevent us from achieving the
perceived benefits of the acquisition and collaboration as well as negatively
impact our research activities and results of operations.
THE ACQUISITION OF ROSLIN BIO-MED HAS SUBJECTED US TO THE UNCERTAINTY INHERENT
IN INTERNATIONAL OPERATIONS, AND WE HAVE LIMITED EXPERIENCE WITH INTERNATIONAL
OPERATIONS
To date, we have only limited experience in managing operations
internationally. Our acquisition of Roslin Bio-Med represents our first
experience in managing international operations. As a result of our
international expansion, we are now subject to the uncertainties inherent in
international operations, including:
- unexpected changes in regulatory requirements;
- compliance with international laws;
- difficulties in staffing and managing international operations including
those that arise as a result of distance, language and cultural
differences;
- currency exchange rate fluctuations;
- political instability;
- export restrictions; and
- potentially adverse tax consequences.
One or more of these factors could have a material adverse effect on our
future international operations, the success of our acquisition of Roslin
Bio-Med and, consequently, on our business, operating results, and financial
condition. Similarly, our collaborations with international partners such as the
Roslin Institute, Pharmacia & Upjohn, Kyowa Hakko and Roche Diagnostics could
also subject us to the above described international uncertainties.
IF WE ARE UNABLE TO ENTER INTO COLLABORATIVE RELATIONSHIPS FOR MANUFACTURING,
MARKETING AND SALES, WE WILL NEED TO DEVELOP THESE CAPABILITIES ON OUR OWN WHICH
WOULD BE COSTLY AND WOULD SLOW OUR PRODUCT DEVELOPMENT EFFORTS
We currently have no manufacturing infrastructure and no marketing or sales
organization. As a result, we intend to rely almost entirely on our current and
future collaborative partners for manufacturing and principal marketing and
sales responsibilities for any potential products. To the extent that we choose
not to or are unable to establish these arrangements, we will require
substantially greater capital to develop our own manufacturing, marketing and
sales capabilities.
We cannot assure you that we will be able to negotiate additional strategic
arrangements in the future on acceptable terms, if at all, or that any potential
strategic arrangement will be successful. In the absence of these arrangements,
we may encounter significant delays in introducing any product or find that the
research, development, manufacture, marketing or sale of any product is
adversely affected. In the event we need to enter into strategic arrangements in
the future, but are unable to do so, our business will be significantly and
negatively impacted.
OUR RELIANCE ON THE RESEARCH ACTIVITIES OF OUR NON-EMPLOYEE SCIENTIFIC ADVISORS
AND OTHER RESEARCH INSTITUTIONS, WHOSE ACTIVITIES ARE NOT WHOLLY WITHIN OUR
CONTROL, MAY LEAD TO DELAYS IN TECHNOLOGICAL DEVELOPMENTS
We rely extensively and have relationships with scientific advisors at
academic and other institutions, some of whom conduct research at our request.
These scientific advisors are not our employees and may have commitments to, or
consulting or advisory contracts with, other entities that may limit their
availability to us. We have limited
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control over the activities of these advisors and, except as otherwise required
by our collaboration and consulting agreements, can expect only limited amounts
of their time to be dedicated to our activities. If our scientific advisors are
unable or refuse to contribute to the development of any of our potential
discoveries, our ability to generate significant advances in our technologies
will be significantly harmed.
In addition, we have formed research collaborations with many academic and
other research institutions throughout the world, including the Roslin
Institute. These research facilities may have commitments to other commercial
and non-commercial entities. We have limited control over the operations of
these laboratories and can expect only limited amounts of time to be dedicated
to our research goals.
IMPAIRMENT OF OUR INTELLECTUAL PROPERTY RIGHTS, WHICH ARE COSTLY AND DIFFICULT
TO PROTECT, MAY LIMIT OUR ABILITY TO PURSUE THE DEVELOPMENT OF OUR INTENDED
TECHNOLOGIES AND PRODUCTS
Our success will depend on our ability to obtain and enforce patents for our
discoveries; however, legal principles for biotechnology patents are not
firmly established and the extent to which we will be able to obtain patent
coverage is uncertain
Protection of our proprietary compounds and technology is critically
important to our business. Our success will depend in part on our ability to
obtain and enforce our patents and maintain trade secrets, both in the United
States and in other countries. The patent positions of pharmaceutical and
biopharmaceutical companies, including ours, are highly uncertain and involve
complex legal and technical questions for which legal principles are not firmly
established. We cannot assure you that we will continue to develop products or
processes that are patentable or that patents will issue from any of our pending
applications, including allowed patent applications. Further, we cannot assure
you that our current patents, or patents that issue on pending applications,
will not be challenged, invalidated or circumvented, or that our current or
future patent rights will provide proprietary protection or competitive
advantages to us. In the event that we are unsuccessful in obtaining and
enforcing patents, our business would be negatively impacted.
Patent applications in the United States are maintained in secrecy until
patents issue. Publication of discoveries in the scientific or patent literature
tends to lag behind actual discoveries by at least several months and sometimes
several years. Therefore, we cannot assure you that the persons or entities that
we or our licensors name as inventors in our patents and patent applications
were the first to invent the inventions disclosed in the patent applications or
patents, or file patent applications for these inventions. As a result, we may
not be able to obtain patents from discoveries that we otherwise would consider
patentable and that we consider to be extremely significant to our future
success.
Patent prosecution or litigation may also be necessary to obtain patents,
enforce any patents issued or licensed to us or to determine the scope and
validity of our proprietary rights or the proprietary rights of another. We
cannot assure you that we would be successful in any patent prosecution or
litigation. Patent prosecution and litigation in general can be extremely
expensive and time consuming, even if the outcome is favorable to us. An adverse
outcome in a patent prosecution, litigation or any other proceeding in a court
or patent office could subject our business to significant liabilities to other
parties, require disputed rights to be licensed from other parties or require us
to cease using the disputed technology.
We may be subject to infringement claims that are costly to defend, and
which may limit our ability to use disputed technologies and prevent us from
pursuing research and development or commercialization of potential
products.
Our commercial success depends significantly on our ability to operate
without infringing patents and proprietary rights of others. We cannot assure
you that our technologies do not and will not infringe the patents or
proprietary rights of others. In the event our technologies do infringe on the
rights of others, we may be prevented from pursuing research, development or
commercialization of potential products or may be required to obtain licenses to
these patents or other proprietary rights or develop or obtain alternative
technologies. We may not be able to obtain alternative technologies or any
required license on commercially favorable terms, if at all. If we do
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not obtain the necessary licenses or alternative technologies, we may be delayed
or prevented from pursuing the development of some potential products. Our
breach of an existing license or failure to obtain alternative technologies or a
license to any technology that we may require to develop or commercialize our
products will significantly and negatively affect our business.
Patent law relating to the scope and enforceability of claims in the
technology fields in which we operate is still evolving, and the degree of
future protection for any of our proprietary rights is highly uncertain. In this
regard we cannot assure you that independent patents will issue from any of our
patent applications, some of which include many interrelated applications
directed to common or related subject matter. As a result, our success may
become dependent on our ability to obtain licenses for using the patented
discoveries of others. We are aware of patent applications and patents that have
been filed by others with respect to telomerase and telomere length technology
and we may have to obtain licenses to use this technology. For example, there
are a number of issued patents and pending applications owned by others directed
to differential display, stem cell and other technologies relating to our
research, development and commercialization efforts. We may also become aware of
discoveries and technology controlled by third parties that are advantageous to
our other research programs. We cannot assure you that our discoveries and
treatments can be further developed and commercialized without a license to
these discoveries or technologies. Moreover, other patent applications may be
granted priority over patent applications that we or any of our licensors have
filed. Furthermore, others may independently develop similar or alternative
technologies, duplicate any of our technologies or design around the patented
technologies we have developed. In the event that we are unable to acquire
licenses to critical technologies that we cannot patent ourselves, we may be
required to expend significant time and resources to develop similar technology,
and we may not be successful in this regard. If we cannot acquire or develop
necessary technology, we may be prevented from pursuing some of our business
objectives. Moreover, one of our competitors could acquire or license the
necessary technology. Any of these events could have a material adverse effect
on our business.
We cannot assure you that we will not be subject to claims or litigation as
a result of entering into license agreements with third parties or infringing on
the patents of others. For example, we signed a licensing and sponsored research
agreement relating to our pluripotent stem cell therapies program with The Johns
Hopkins University School of Medicine in August 1997. Prior to signing this
agreement, we had been informed by a third party that we and Johns Hopkins
University would violate the rights of that third party and another academic
institution in doing so. After a review of the correspondence with the third
party and Johns Hopkins University, as well as related documents, including an
issued U.S. patent, we believe that both we and Johns Hopkins University have
substantial defenses to any claims that might be asserted by the third party. We
have agreed to provide indemnification to Johns Hopkins University relating to
potential claims. However, any litigation resulting from this matter may divert
significant resources, both financial and otherwise, from our research programs.
We cannot assure you that we would be successful if the matter is litigated. If
the outcome of litigation is unfavorable to us, our business could be materially
and adversely affected.
Much of the information and know-how that is critical to our business is not
patentable and we may not be able to prevent others from obtaining this
information and establishing competitive enterprises
We rely extensively on trade secrets to protect our proprietary technology,
especially in circumstances in which patent protection is not believed to be
appropriate or obtainable. We attempt to protect our proprietary technology in
part by confidentiality agreements with our employees, consultants and
contractors. We cannot assure you that these agreements will not be breached,
that we would have adequate remedies for any breach, or that our trade secrets
will not otherwise become known or be independently discovered by competitors,
any of which would harm our business significantly.
WE WILL NEED ADDITIONAL CAPITAL TO CONDUCT OUR OPERATIONS AND DEVELOP OUR
PRODUCTS, AND OUR ABILITY TO OBTAIN THE NECESSARY FUNDING IS UNCERTAIN
We will require substantial capital resources in order to conduct our
operations and develop our products. Based on current projections, we estimate
that our existing capital resources, payments under the Pharmacia & Upjohn
collaborative agreement, proceeds to be received under convertible debentures in
1999, interest income and
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equipment financing will be sufficient to fund our current level of operations
to the end of the year 2000. The timing and degree of any future capital
requirements will depend on many factors, including:
- the accuracy of the assumptions underlying our estimates for our capital
needs in 1999 and beyond;
- continued scientific progress in our research and development programs;
- the magnitude and scope of our research and development programs;
- our ability to maintain and establish strategic arrangements for
research, development, clinical testing, manufacturing and marketing;
- our progress with preclinical and clinical trials;
- the time and costs involved in obtaining regulatory approvals;
- the costs involved in preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims; and
- the potential for new technologies and products.
We intend to acquire additional funding through strategic collaborations,
public or private equity financings and capital lease transactions. Additional
financing may not be available on acceptable terms, or at all. Additional equity
financings could result in significant dilution to stockholders. Further, in the
event that additional funds are obtained through arrangements with collaborative
partners, these arrangements may require us to relinquish rights to some of our
technologies, product candidates or products that we would otherwise seek to
develop or commercialize ourselves. If sufficient capital is not available, we
may be required to delay, reduce the scope of or eliminate one or more of our
research or development programs, each of which could have a material adverse
effect on our business.
SOME OF OUR COMPETITORS MAY DEVELOP TECHNOLOGIES THAT ARE SUPERIOR TO OR MORE
COST-EFFECTIVE THAN OURS, WHICH MAY IMPACT THE COMMERCIAL VIABILITY OF OUR
TECHNOLOGIES AND WHICH MAY SIGNIFICANTLY DAMAGE OUR ABILITY TO SUSTAIN
OPERATIONS
The pharmaceutical and biopharmaceutical industries are intensely
competitive. We believe that other pharmaceutical and biopharmaceutical
companies and research organizations currently engage in or have in the past
engaged in efforts related to the biological mechanisms of cell aging and cell
immortality, including the study of telomeres, telomerase, human pluripotent
stem cells, and nuclear transfer. In addition, other products and therapies that
could compete directly with the products that we are seeking to develop and
market currently exist or are being developed by pharmaceutical and
biopharmaceutical companies, and by academic and other research organizations.
Many companies are also developing alternative therapies to treat cancer and, in
this regard, are competitors of ours. The pharmaceutical companies developing
and marketing these competing products have significantly greater financial
resources and expertise than we do in:
- research and development;
- manufacturing;
- preclinical and clinical testing;
- obtaining regulatory approvals; and
- marketing.
Smaller companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies.
Academic institutions, government agencies and other public and private research
organizations may also conduct research, seek patent protection and establish
collaborative arrangements for research, clinical development and marketing of
products similar to ours. These companies and institutions compete with us in
recruiting and retaining qualified scientific and management personnel as well
as in acquiring technologies complementary to our programs. There is also
competition for access to libraries of compounds to use for screening. Should we
fail to secure and maintain access to sufficiently broad libraries of compounds
for screening potential targets, our business would be materially harmed. In
addition to the above factors, we expect to face competition in the following
areas:
- product efficacy and safety;
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- the timing and scope of regulatory consents;
- availability of resources;
- reimbursement coverage;
- price; and
- patent position, including potentially dominant patent positions of
others.
As a result of the foregoing, our competitors may develop more effective or
more affordable products, or achieve earlier patent protection or product
commercialization than us. Most significantly, competitive products may render
our products that we develop obsolete.
THE LOSS OF KEY PERSONNEL COULD SLOW OUR ABILITY TO CONDUCT RESEARCH AND DEVELOP
PRODUCTS
Our future success depends to a significant extent on the skills, experience
and efforts of our executive officers and key members of our scientific staff.
The loss of any or all of these individuals could damage our business and might
significantly delay or prevent the achievement of research, development or
business objectives.
We also rely on consultants and advisors, including the members of our
Scientific Advisory Board, who assist us in formulating our research and
development strategy. We face intense competition for qualified individuals from
numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well
as academic and other research institutions. We may not be able to attract and
retain these individuals on acceptable terms. Failure to do so would adversely
affect our business.
THE ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF THE PLURIPOTENT STEM CELL
THERAPIES AND NUCLEAR TRANSFER PROGRAMS COULD PREVENT US FROM DEVELOPING OR
GAINING ACCEPTANCE FOR COMMERCIALLY VIABLE PRODUCTS IN THIS AREA
Our pluripotent stem cell therapies program may involve the use of human
pluripotent stem cells that would be derived from human embryonic or fetal
tissue. The use of human pluripotent stem cells gives rise to ethical, legal and
social issues regarding the appropriate utilization of these cells. In the event
that our research related to human pluripotent stem cell therapies becomes the
subject of adverse commentary or publicity, our name and goodwill could be
adversely affected.
In addition, our nuclear transfer program involves the same techniques that
have previously been utilized to clone sheep. It is possible that these nuclear
transfer techniques could also be utilized in attempts to reproductively clone
living human beings, an application that we believe to be unnecessary and
unethical. Although we and the Roslin Institute support the current
international prohibitions on human reproductive cloning, the process of nuclear
transfer itself still gives rise to ethical, legal and social issues regarding
the appropriate nature of this type of research. In the event that our research
related to nuclear transfer becomes the subject of adverse commentary or
publicity, our name and goodwill could be adversely affected.
We have established an Ethics Advisory Board comprised of independent and
recognized medical ethicists to advise us with respect to these issues. Indeed,
the use of human pluripotent stem cell and nuclear transfer techniques in
scientific research is an issue of national interest. Many research
institutions, including several of our scientific collaborators, have adopted
policies regarding the ethical use of these types of human cells. These policies
may have the effect of limiting the scope of research conducted in this area.
The United States government currently does not fund research that involves the
use of human pluripotent cells or tissue and may in the future regulate or
otherwise restrict its use. The pluripotent stem cell therapies program would be
significantly harmed if we are prevented from conducting research on these cells
due to government regulation or otherwise. Also, in the event that regulatory
bodies ban nuclear transfer processes, our nuclear transfer program could be
cancelled and our business could be negatively affected.
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OUR ABILITY TO EARN REVENUES FROM THE SALE OF MARKETABLE PRODUCTS IS PARTLY
DEPENDENT ON THE SCOPE OF GOVERNMENT REGULATION AND OUR SUCCESS IN OBTAINING
REGULATORY APPROVAL FOR OUR PRODUCTS
Our business is subject to intense government regulation and this regulation
may significantly impact our ability to create and market commercially
viable products
Federal, state and local governments in the United States and governments in
other countries have significant regulations in place that govern many of our
activities. The preclinical testing and clinical trials of the products that we
develop ourselves or that our collaborative partners develop are subject to
intense government regulation and may prevent us from creating commercially
viable products from our discoveries. In addition, the sale by us or our
collaborative partners of any commercially viable product will be subject to
government regulation from several standpoints, including the processes of:
- manufacturing;
- labeling;
- selling;
- distributing;
- marketing;
- advertising; and
- promoting.
We cannot assure you that we will be able to comply with these regulations
for any of our potentially marketable products. To the extent that we are
unable, our ability to earn revenues will be significantly and negatively
impacted.
The regulatory process, particularly for biopharmaceutical products like
ours, is uncertain, can take many years and requires the expenditure of
substantial resources
Any product that we or our collaborative partners develop must receive all
relevant regulatory agency approvals or clearances, if any, before it may be
marketed in the United States or other countries. Generally, biological drugs
and non-biological drugs are regulated more rigorously than medical devices. In
particular, human pharmaceutical therapeutic products, including a telomerase
inhibitor, are subject to rigorous preclinical and clinical testing and other
requirements by the Food and Drug Administration in the United States and
similar health authorities in foreign countries. The regulatory process, which
includes extensive preclinical testing and clinical trials of each product in
order to establish its safety and efficacy, is uncertain, can take many years
and requires the expenditure of substantial resources.
Data obtained from preclinical and clinical activities is susceptible to
varying interpretations that could delay, limit or prevent regulatory agency
approvals or clearances. In addition, delays or rejections may be encountered
based upon changes in regulatory agency policy during the period of product
development and/or the period of review of any application for regulatory agency
approval or clearance for a product. Delays in obtaining regulatory agency
approvals or clearances could:
- significantly harm the marketing of any products that we or our
collaborative partners develop;
- impose costly procedures upon our activities or the activities of our
collaborative partners;
- diminish any competitive advantages that we or our collaborative
partners may attain; or
- adversely affect our ability to receive royalties and generate revenues
and profits.
Even if we commit the time and resources, both economic and otherwise, that
are necessary, the required regulatory agency approvals or clearances may not be
obtained for any products developed by or in collaboration with us. If
regulatory agency approval or clearance for a new product is obtained, this
approval or clearance may entail limitations on the indicated uses for which it
may be marketed that could limit the potential market for the
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product. Furthermore, approved products and their manufacturers are subject to
continual review, and discovery of previously unknown problems with a product or
its manufacturer may result in restrictions on the product or manufacturer,
including withdrawal of the product from the market. Failure to comply with
regulatory requirements can result in severe civil and criminal penalties,
including but not limited to:
- recall or seizure of products;
- injunction against manufacture, distribution, sales and marketing; and
- criminal prosecution.
The imposition of any of these penalties could significantly impair our
business.
TO BE SUCCESSFUL, OUR PRODUCTS MUST BE ACCEPTED BY THE HEALTH CARE COMMUNITY
THAT CAN BE VERY SLOW TO ADOPT OR UNRECEPTIVE TO NEW TECHNOLOGIES AND PRODUCTS
We cannot assure you that any products successfully developed by us or by
our collaborative partners, if approved for marketing, will achieve market
acceptance since physicians, patients or the medical community in general may
decide not to accept and utilize these products. The products that we are
attempting to develop may represent substantial departures from established
treatment methods and will compete with a number of traditional drugs and
therapies manufactured and marketed by major pharmaceutical companies. The
degree of market acceptance of any of our developed products will depend on a
number of factors, including:
- our establishment and demonstration to the medical community of the
clinical efficacy and safety of our product candidates;
- our ability to create products that are superior to alternatives
currently on the market;
- our ability to establish in the medical community the potential
advantage of our treatments over alternative treatment methods; and
- reimbursement policies of government and third-party payors.
If the health care community does not accept our products for any of the
foregoing reasons, our ability to generate revenues will be significantly
impaired.
THE REIMBURSEMENT STATUS OF NEWLY-APPROVED HEALTH CARE PRODUCTS IS UNCERTAIN AND
FAILURE TO OBTAIN REIMBURSEMENT APPROVAL COULD SEVERELY LIMIT THE USE OF OUR
PRODUCTS
Significant uncertainty exists as to the reimbursement status of newly
approved health care products, including pharmaceuticals. If we fail to generate
adequate third party reimbursement for the users of our potential products and
treatments, then we may be unable to maintain price levels sufficient to realize
an appropriate return on our investment in product development.
In both domestic and foreign markets, sales of our products, if any, will
depend in part on the availability of reimbursement from third-party payors,
examples of which include:
- government health administration authorities;
- private health insurers;
- health maintenance organizations; and
- pharmacy benefit management companies.
Both federal and state governments in the United States and foreign
governments continue to propose and pass legislation designed to contain or
reduce the cost of health care through various means. Legislation and
regulations affecting the pricing of pharmaceuticals and other medical products
may change or be adopted before any of our potential products are approved for
marketing. Cost control initiatives could decrease the price that we receive for
any product we may develop in the future. In addition, third-party payors are
increasingly challenging the price and
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cost-effectiveness of medical products and services and any of our potential
products and treatments may ultimately not be considered cost effective by these
third parties. Any of these initiatives or developments could negatively impact
our business.
OUR ACTIVITIES INVOLVE HAZARDOUS MATERIALS AND IMPROPER HANDLING OF THESE
MATERIALS BY OUR EMPLOYEES OR AGENTS COULD EXPOSE US TO SIGNIFICANT FINANCIAL
PENALTIES
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. As a
consequence, we are subject to numerous environmental and safety laws and
regulations. We may be required to incur significant costs to comply with
current or future environmental laws and regulations and may be adversely
affected by the cost of compliance with these laws and regulations. Although we
believe that our safety procedures for using, handling, storing and disposing of
hazardous materials comply with the standards prescribed by state and federal
regulations, the risk of accidental contamination or injury from these materials
cannot be eliminated. In the event of an accident of this nature, our use of
these materials could be curtailed by state or federal authorities and we could
be held liable for any resulting damages. Should either of these contingencies
arise, our business could be materially and adversely affected.
WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN SUFFICIENT INSURANCE ON COMMERCIALLY
REASONABLE TERMS OR WITH ADEQUATE COVERAGE AGAINST POTENTIAL LIABILITIES IN
ORDER TO PROTECT OURSELVES AGAINST PRODUCT LIABILITY CLAIMS
Although we believe that we do not currently have any exposure to product
liability claims, our future business will expose us to potential product
liability risks that are inherent in the testing, manufacturing and marketing of
human therapeutic and diagnostic products. We currently have no clinical trial
liability insurance and we may not be able to obtain and maintain this type of
insurance for any of our clinical trials. In addition, we may not be able to
obtain or maintain product liability insurance in the future on acceptable terms
or with adequate coverage against potential liabilities.
THE SUBSTANTIAL NUMBER OF SHARES THAT WILL BE ELIGIBLE FOR SALE IN THE NEAR
FUTURE MAY ADVERSELY AFFECT THE MARKET PRICE FOR OUR COMMON STOCK AND MAY RESULT
IN SIGNIFICANT DILUTION TO OUR CURRENT STOCKHOLDERS
Sales of a substantial number of shares of our common stock in the public
market following this offering could significantly and negatively affect the
market price for our common stock. As of June 15, 1999, we had outstanding
approximately 16,220,394 shares of common stock. As of June 15, 1999, we also
have reserved 5,015,413 shares of common stock for issuance upon exercise of
outstanding warrants and options that we issued to our employees and other
entities.
The conversion of the remaining unconverted series A debentures and all of
the series B debentures, and the exercise of the series A and B warrants will
result in our issuance of a minimum of 2,300,000 additional shares of common
stock in the aggregate. Of the 750,000 shares of common stock issuable upon
conversion of all the series A debentures, 450,000 have already been issued and
sold pursuant to the conversion of $4,500,000 of series A debentures. If the
remaining series A debentures were converted and all of the series A warrants
were exercised on the date of this prospectus, the series A debentures would be
convertible into 300,000 additional shares of common stock and the series A
warrants would be exercisable into 625,000 shares of common stock. Additionally,
the series B debentures are convertible into 750,000 shares of common stock and
the series B warrants are exercisable into 625,000 shares of common stock. As
described in "Description of Capital Stock - Convertible debentures" and
- -"Warrants" on pages 21 and 23 of this prospectus, this number of shares could
prove to be significantly greater, and you would be increasingly diluted, in the
event that the conversion or exercise prices are reduced because we:
- have a rights offering, or a similar offering of securities to all
investors, at less than the conversion or exercise price per share
respectively; or
- issue common stock or securities convertible into common stock, other
than related to our option plans or in connection with a strategic joint
venture, at a price less than the conversion price per share.
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In connection with the acquisition of Roslin Bio-Med, we issued 1,891,371
shares of our common stock in exchange for all the outstanding shares of Roslin
Bio-Med and have assumed Roslin Bio-Med's fully vested options, which when
exercised would amount to 208,629 shares of our common stock. We are
contractually required to file a registration statement on Form S-3 within 120
days following May 3, 1999 covering the registration of these shares for resale.
Of the 2,100,000 total shares issued and issuable to Roslin Bio-Med
shareholders, 860,000 shares are held in escrow. Subject to claims against the
shares held in escrow, 545,000 of these shares will be released from escrow to
the former Roslin Bio-Med shareholders in November 1999 and the remaining
315,000 shares will be released from escrow to the former Roslin Bio-Med
shareholders in May 2000. Pursuant to a license agreement and a professional
services agreement, we have also agreed to issue and register for resale an
aggregate of 195,000 shares of our common stock. Upon their registration, which
we expect to occur by the end of the third quarter of 1999, all of these shares
will also be eligible for sale and freely transferable in the public market.
Additionally, one of our current strategic partners and shareholders, Pharmacia
& Upjohn, has contractually agreed not to sell the 696,787 shares of common
stock that it holds until April 2000, at which time these shares will be
eligible for sale and freely transferable in the public market.
Current holders of our common stock will also be immediately and
substantially diluted to the extent that the weighted average conversion and
exercise price of any of the above-described convertible and exercisable
securities is less than the price of our common stock on the date holders of
these securities convert or exercise their convertible or exercisable
securities.
OUR STOCK PRICE MAY BE ADVERSELY IMPACTED AS A RESULT OF THE ACQUISITION OF
ROSLIN BIO-MED OR THE RESEARCH COLLABORATION WITH THE ROSLIN INSTITUTE IF WE ARE
UNABLE TO ACHIEVE THE PERCEIVED BENEFITS OF THE TRANSACTIONS
The market price of our common stock may decline as a result of the
acquisition of Roslin Bio-Med or the research collaboration with the Roslin
Institute if the integration of Roslin Bio-Med into our operations is
unsuccessful or if the combined company or the research collaboration does not
achieve the perceived benefits as rapidly or to the extent anticipated.
OUR STOCK PRICE HAS HISTORICALLY BEEN VERY VOLATILE, WHICH MAY MAKE IT MORE
DIFFICULT FOR YOU TO RESELL SHARES WHEN YOU WANT AT PRICES YOU FIND ATTRACTIVE
Stock prices and trading volumes for many biopharmaceutical companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations. This market volatility,
as well as general domestic or international economic, market and political
conditions, could materially and adversely affect the market price of our common
stock and your return on your investment.
Historically, our stock price has been extremely volatile. Between January
1998 and June 1999, our stock price traded as high as $24.50 per share and as
low as $3.50 per share. The significant market price fluctuations of our common
stock are due to a variety of factors, including:
- depth of the market for the common stock;
- the experimental nature of our prospective products;
- fluctuations in our operating results;
- market conditions relating to the biopharmaceutical and pharmaceutical
industries;
- any announcements of technological innovations, new commercial products
or clinical progress or lack thereof by us, our collaborative partners
or our competitors; or
- announcements concerning regulatory developments, developments with
respect to proprietary rights and our collaborations.
In addition, the stock market is subject to other factors outside our
control that can cause extreme price and volume fluctuations. Securities class
action litigation has often been brought against companies, including many
biotechnology companies, which then experience volatility in the market price of
their securities. Litigation brought
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against us could result in substantial costs and a diversion of management's
attention and resources, which could adversely affect our business.
OUR UNDESIGNATED PREFERRED STOCK MAY INHIBIT POTENTIAL ACQUISITION BIDS; THIS
MAY ADVERSELY AFFECT THE MARKET PRICE FOR OUR COMMON STOCK AND THE VOTING RIGHTS
OF THE HOLDERS OF COMMON STOCK
Our certificate of incorporation provides our Board of Directors with the
authority to issue up to 3,000,000 shares of undesignated preferred stock and to
determine the rights, preferences, privileges and restrictions of these shares
without further vote or action by the stockholders. In March 1998, we designated
and issued 15,000 shares as series A preferred stock, all of which have since
been converted into common stock or redeemed. As of the date of this prospectus,
the Board of Directors still has authority to designate and issue up to
2,985,000 shares of preferred stock. The rights of the holders of common stock
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred stock that may be issued in the future. The issuance of shares
of preferred stock may delay or prevent a change in control transaction without
further action by our stockholders. As a result, the market price of our common
stock may be adversely affected. The issuance of preferred stock may also result
in the loss of voting control by others.
PROVISIONS IN OUR CHARTER AND BYLAWS, AND PROVISIONS OF DELAWARE LAW, MAY
INHIBIT POTENTIAL ACQUISITION BIDS FOR US, WHICH MAY PREVENT HOLDERS OF OUR
COMMON STOCK FROM BENEFITING FROM WHAT THEY BELIEVE MAY BE THE POSITIVE ASPECTS
OF ACQUISITIONS AND TAKEOVERS.
In addition to the undesignated preferred stock, provisions of our charter
documents and bylaws may make it substantially more difficult for a third party
to acquire control of us and may prevent changes in our management, including
provisions that:
- prevent stockholders from taking actions by written consent;
- divide the board of directors into separate classes with terms of office
that are structured to prevent all of the directors from being elected
in any one year; and
- set forth procedures for nominating directors and submitting proposals
for consideration at stockholders' meetings.
Provisions of Delaware law may also inhibit potential acquisition bids for
us or prevent us from engaging in business combinations.
Either collectively or individually, these provisions may prevent holders of
our common stock from benefiting from what they may believe are the positive
aspects of acquisitions and takeovers, including the potential realization of a
higher rate of return on their investment from these types of transactions.
YEAR 2000 PROBLEMS COULD AFFECT OUR DAY-TO-DAY OPERATIONS AND CAUSE SIGNIFICANT
ECONOMIC LIABILITIES
Potential year 2000 problems are the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
our computer programs or laboratory equipment that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions in
operations, including, among other things, a temporary inability to:
- process transactions;
- send checks;
- perform research and development activities; or
- engage in similar normal business activities.
Based on a recent assessment, we have determined that we will be required to
modify or replace portions of our software so that our computer systems will
function properly with respect to dates in the year 2000 and beyond. These
software programs include our accounting package and voicemail system. We
presently believe that with
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<PAGE> 20
modifications to existing software and conversions to new software, potential
year 2000 problems will not pose significant operational problems for our
computer systems. However, if these modifications and conversions are not made,
or are not completed timely, potential year 2000 problems could have a
significant and negative impact on our operations.
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS
BECAUSE THEY ARE INHERENTLY UNCERTAIN
This prospectus contains forward-looking statements that involve risks and
uncertainties. You should not rely on these forward-looking statements. We use
words such as "anticipates," believes," "plans," "expects," "future," "intends"
and similar expressions to identify forward-looking statements. These statements
appear throughout the prospectus and are statements regarding our intent,
belief, or current expectations, primarily with respect to our operations and
related industry developments. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.
Our actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us and
described in the preceding pages and elsewhere in this prospectus.
WHERE CAN YOU FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission, or the "Commission." Some
information in the registration statement has been omitted from this prospectus
in accordance with the Commission rules. We file annual, quarterly and special
reports, proxy statements and other information with the Commission. You can
read and copy the registration statement as well as reports, proxy statements
and other information we have filed with the Commission at the public reference
room maintained by the Commission at 450 Fifth Street, NW, Washington, D.C.
20549, and at the following Regional Offices of the Commission: Seven World
Trade Center, New York, New York 10048, and Northwest Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. You can call the Commission at
1-800-732-0330 for further information about the public reference room. We are
also required to file electronic versions of these documents with the
Commission, which may be accessed through the Commission's World Wide Web site
at http://www.sec.gov. Our common stock is quoted on The Nasdaq National Market.
Reports, proxy and information statements and other information concerning our
company may be inspected at The Nasdaq Stock Market at 1735 K Street, NW,
Washington, D.C. 20006.
The Commission allows us to "incorporate by reference" the information we
have previously filed with them, which means we can disclose important
information by referring you to those documents. All information that we have
incorporated by reference is available to you in accordance with the above
paragraph. Information that we file with the Commission subsequent to the date
of this prospectus will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), until the selling stockholders have
sold all the shares.
The following documents filed with the Commission are incorporated by
reference in this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998
(File No. 0-20859).
2. Our definitive Proxy Statement dated April 8, 1999, filed in connection
with our 1999 Annual Meeting of Stockholders.
3. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
(File No. 0-20859).
4. Our Current Report on Form 8-K, filed with the Commission on May 4, 1999
(File No. 0-20859).
5. Our Current Report on Form 8-K, filed with the Commission on May 18,
1999 and amended on May 21, 1999 and June 29, 1999 (File No. 0-20859).
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<PAGE> 21
6. The description of our common stock set forth in our registration
statement on Form 8-A, filed with the Commission on June 13, 1996 (File
No. 0-20859).
We will furnish without charge to you, on written or oral request, a copy of
any or all of the documents incorporated by reference, including exhibits to
these documents. You should direct any requests for documents to David L.
Greenwood, Chief Financial Officer, Geron Corporation, 230 Constitution Drive,
Menlo Park, California 94025, telephone: (650) 473-7700.
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling stockholders. We will not
receive any proceeds from the sale of these shares of common stock.
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On December 10, 1998, we completed a private placement of $7,500,000 face
amount of series A debentures and series A warrants to purchase up to 625,000
shares of our common stock. The series A debentures are convertible into common
stock at the option of the holder until the date which is three years following
the date of issuance, or December 10, 2001, at a conversion price of $10.00 per
share, subject to adjustment under circumstances more extensively described in
the section entitled "Description of Capital Stock - Convertible debentures" on
page 21 of this prospectus. The series A debentures are convertible at our
option when the closing bid price of our common stock on the Nasdaq National
Market is greater than $17.50 for five consecutive trading days. From the date
of their issuance until the date of this prospectus, $4,500,000 of these series
A debentures have been converted into 450,000 shares of our common stock. As a
result, $3,000,000 of series A debentures currently remain outstanding. The
series A warrants are exercisable for common stock at the option of the holder
until June 10, 2000 at an exercise price of $12.00 per share, subject to
adjustment under circumstances more extensively described in the section
entitled "Description of Capital Stock Warrants" on page 23 of this prospectus.
From the date of their issuance until the date of this prospectus, none of the
series A warrants have been exercised. On June 17, 1999, we completed a private
placement of $7,500,000 face amount of series B debentures and series B warrants
to purchase up to 625,000 shares of our common stock. From the date of their
issuance until the date of this prospectus, none of the series B debentures have
been converted and none of the series B warrants have been exercised. The series
B debentures and series B warrants are identical in price and terms to the
series A debentures and the series A warrants, except for the date of issuance.
The series A and B debentures and the series A and B warrants were sold in
reliance on Rule 506 of the Securities Act of 1933 (the "Securities Act") which
provides an exemption from registration for sales to "accredited investors," as
defined by Rule 501 under Regulation D of the Securities Act. Under the terms of
the private placement, we agreed to file a registration statement on Form S-3 to
cover the shares of common stock issuable upon conversion of the debentures and
exercise of the warrants.
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<PAGE> 22
SELLING STOCKHOLDERS
The following table sets forth information known to us with respect to
beneficial ownership of our common stock as of the date of this prospectus by
each selling stockholder. The number of shares set forth in the table represents
an estimate of the number of shares of common stock to be offered by the selling
stockholders and only includes the number of shares of common stock expected to
be issuable upon conversion of the series A and B debentures and exercise of the
series A and B warrants. We expect that the $3,000,000 of remaining outstanding
series A debentures and $7,500,000 of series B debentures will be convertible at
a conversion price of $10.00 per share into 1,050,000 shares of common stock
collectively. We also expect that the series A and B warrants will be
exercisable at an exercise price of $12.00 per share into 1,250,000 shares of
common stock collectively. This prospectus covers the sale of all 2,300,000 of
these shares that we expect to be issuable by the selling stockholders based on
the current conversion and exercise prices. The actual number of shares of
common stock issuable upon conversion of the debentures and exercise of the
warrants is indeterminate and could be materially less or more than the amount
estimated due to the conversion and exercise price adjustments explained in the
section of this prospectus entitled "Description of Capital Stock" on page 21
and, in particular, the subsections entitled "Convertible debentures" on page 21
and "Warrants" on page 23. We have therefore registered, under a registration
statement on Form S-3 of which this prospectus is a part, 1,550,000 more shares
than are covered by this prospectus for sale by the selling stockholders in the
event the actual number of shares issuable upon conversion of the debentures or
exercise of warrants increases as a result of adjustments in the conversion or
exercise prices. These additional shares may only be sold by the selling
stockholders after we reflect the change in the number of shares offered in a
supplement to this prospectus. This table, however, assumes no price adjustment
to the conversion price of the debentures or exercise price of the warrants. We
cannot assure you that the selling stockholders will sell any or all of the
shares that they may acquire upon their exercise of warrants or conversion of
debentures.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO THIS SHARES TO BE SHARES OFFERED SHARES OFFERED
OFFERING, INCLUDING ACQUIRED THROUGH PURSUANT TO PURSUANT TO SHARES BENEFICIALLY
SHARES ACQUIRED PLACEMENT OF CONVERSION OF EXERCISE OF OWNED AFTER THE
THROUGH PLACEMENT OF SERIES B SERIES A AND SERIES A AND OFFERING
SERIES A DEBENTURES AND DEBENTURES AND SERIES B SERIES B --------------------
SELLING STOCKHOLDERS WARRANTS WARRANTS DEBENTURES WARRANTS SHARES PERCENT
- -------------------- ------------------------ ----------------- -------------- -------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
RGC International
Investors, LDC 458,333 458,334 500,000 416,667 0 *
Brown Simpson Strategic
Growth Fund, Ltd. 122,500 192,500 140,000 175,000 0 *
Brown Simpson Strategic
Growth Fund, L.P. 52,500 82,500 60,000 75,000 0 *
Brown Simpson - ORD
Investments LLC 41,667 91,666 50,000 83,333 0 *
LB I Group Inc. 250,000 550,000 300,000 500,000 0 *
--------- ---------
Total 1,050,000 1,250,000
</TABLE>
- ------------
* less than one percent of our common stock
ADDITIONAL INFORMATION REGARDING BENEFICIAL OWNERSHIP OF SHARES BY THE SELLING
STOCKHOLDERS
The terms of the debentures and the warrants provide that the debentures are
convertible and the warrants are exercisable by any holder only to the extent
that the number of shares of common stock issuable at that time, together with
the number of shares of common stock beneficially owned by that holder and its
affiliates as determined in accordance with Section 13(d) of the Exchange Act,
would not exceed 9.9% of our then outstanding common stock. As of the date of
this prospectus, none of the selling stockholders would beneficially own under
Rule 13d-3 more than 9.9% of our outstanding common stock based on the currently
applicable exercise price of the warrants and conversion price of the
debentures.
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<PAGE> 23
ADDITIONAL INFORMATION REGARDING BENEFICIAL OWNERSHIP OF SHARES BY THE SELLING
STOCKHOLDERS
In May 1999, Brown Simpson - ORD Investments LLC converted all of their
series A debentures, or $500,000 of series A debentures, into 50,000 shares of
our common stock and LB I Group Inc. converted all of their series A debentures,
or $3,000,000 of series A debentures, into 300,000 shares of our common stock.
In June 1999, Brown Simpson Strategic Growth Fund, Ltd. converted $700,000
series A debentures into 70,000 shares of our common stock and Brown Simpson
Strategic Growth Fund, L.P. converted $300,000 of series A debentures into
30,000 shares of our common stock. All of these shares have been subsequently
sold. Therefore, for each of these entities, the shares set forth in the first
column of the above table, entitled "Shares beneficially owned prior to this
offering, including shares acquired through placement of series A debentures and
warrants", only include shares that the respective entities have the right to
acquire pursuant to the exercise of series A warrants or conversion of their
remaining outstanding series A debentures, if any.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 25,000,000 shares of common stock,
$0.001 par value per share, and 3,000,000 shares of preferred stock, $0.001 par
value per share. As of June 15, 1999, there were 16,220,394 shares of common
stock outstanding held of record by approximately 750 record holders.
COMMON STOCK
Each common stockholder is entitled to one vote per share on all matters to
be voted upon by the stockholders. Subject to preferences that may be applicable
to any outstanding preferred stock, the common stockholders are entitled to
receive ratably any dividends that are declared from time to time by the board
of directors out of legally available funds. In the event of liquidation,
dissolution or winding up, the holders of our common stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
rights of preferred stock, if any, then outstanding. The common stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions available to the common stockholders. All
outstanding shares of common stock are fully paid and non-assessable.
PREFERRED STOCK
The board of directors has the authority to issue up to 3,000,000 shares of
preferred stock in one or more series and to fix the rights, preferences and
privileges, including dividend rights, conversion rights, voting rights, terms
of redemption, liquidation preferences, sinking fund terms and the number of
shares constituting any series or the designation of the series, without any
further vote or action by stockholders. The issuance of preferred stock could
adversely affect the voting power of holders of common stock and the likelihood
that these holders will receive dividend payments and payments upon liquidation
and could have the effect of delaying, deterring or preventing a change in
control.
Of the authorized preferred stock, 15,000 shares were designated series A
convertible preferred stock and were issued in March 1998. Of these 15,000
shares, 11,548 were converted into shares of our common stock and the remaining
3,452 were redeemed by us in exchange for $3,700,000. Both the redeemed and
converted shares have subsequently been retired.
CONVERTIBLE DEBENTURES
As of the date of this prospectus, $3,000,000 of the $7,500,000 originally
issued face amount of series A debentures are outstanding and all $7,500,000
face amount of series B debentures are outstanding. The series A and series B
debentures are identical in price and terms, except for the date of issuance.
The debentures are "zero-coupon" securities because they require no regular
payments of interest. In the event of a default, the debentures will accrue
penalty interest at a rate of 15% per year from the date of the default.
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<PAGE> 24
The debentures are convertible at any time, at the option of the holder,
until the third anniversary of issuance, which is December 10, 2001 in the case
of the series A debentures and June 17, 2002 in the case of the series B
debentures. The debentures are convertible into that number of shares of common
stock as is determined by dividing the value of debentures converted by the then
current conversion price which, as of the date of this prospectus, is fixed at
$10.00 per share. In May 1999, an aggregate of $3,500,000 of series A debentures
were converted into 350,000 shares of our common stock and in June 1999, an
aggregate of $1,000,000 of series A debentures were converted into 100,000
shares of our common stock. If the remaining $3,000,000 of series A debentures
were converted on the date of this prospectus, these series A debentures would
be convertible into 300,000 shares of our common stock. The $7,500,000 of series
B debentures are convertible into 750,000 shares of common stock. The conversion
price of all of the debentures is subject to customary adjustments in the event
of a stock split or stock dividend. The conversion price is also subject to a
weighted average adjustment in the event we have a rights offering, or a similar
offering of securities to all investors, at less than the conversion price per
share, within 15 months of the issuance date.
Additionally, the conversion price of the debentures will be adjusted in the
event that we issue common stock or securities convertible into common stock at
a price less than the conversion price per share, not including shares issued
pursuant to our option plans, or shares issued in connection with a strategic
joint venture. In the event that we issue shares of our stock at less than the
conversion price per share, the conversion price of the debentures will be
adjusted to the actual price of that issuance. This conversion price adjustment
is operative for 15 months from the date of issuance of the debentures. However,
it expires automatically on the 180th day following the issuance of the
debentures, which is June 8, 1999 in the case of the series A debentures and
December 14, 1999 in the case of the series B debentures, if the closing bid
price of our common stock on the Nasdaq National Market or any other national
exchange or quotation system as permitted under the terms of the debentures is
greater than 150% of the conversion price for five consecutive trading days
following the effective date of this prospectus. The conversion price of the
debentures will have identical terms of adjustment.
The debentures may be converted at our option if the closing bid price of
our common stock on the Nasdaq National Market is greater than $17.50 for five
consecutive trading days. We will have 45 days following the five trading day
period in which to exercise our option to force conversion of the debentures. We
may convert all or a portion of the outstanding debentures, but if only a
portion of the debentures are to be converted, the forced conversion will be pro
rata among all debenture holders. However, no debenture holder will be forced to
convert if (1) this prospectus is not currently effective and (2) the holder
would not currently be permitted to resell the underlying shares within 90 days
under Rule 144(k) under the Securities Act without volume restrictions.
Under the terms of the debentures, the maximum number of shares of common
stock that may be issued in connection with series A and series B debenture
conversions may not equal or exceed, in the aggregate, 20% of the common shares
outstanding immediately prior to the last issuance of the debentures. If a
debenture holder wishes to convert after the share limit is reached, we will not
issue shares, but will pay cash in an amount equal to the greater of (1) 115% of
the principal balance of the unconverted debentures or (2) the amount, in cash,
the shares that would have been issued would have been worth had they been
issued, based either on the conversion price and average share price on the
trading day immediately prior to the day the cash payment is made, or the
conversion price and average share price on the day of the conversion request.
In the case that we determine that the share limit has been reached and elect to
pay cash in the amount described above, we will notify all remaining debenture
holders within two trading days after we make this determination. Ten days
following the delivery of this notice, we will pay the required amount. If we do
not pay this amount in full within five business days after the date it is due,
we will pay interest at a rate of 15% per annum, to be accrued on a daily basis
from the date of conversion, to the converting debenture holders until we have
paid the full amount in cash as described above, plus all interest.
The debentures will be considered to be in default if, among other things:
- we fail to make any payment due under the terms of the debentures;
- we fail to make any payment due under the terms of any other debt of
more than $1,000,000;
- we file for bankruptcy or are adjudged bankrupt;
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<PAGE> 25
- our stock is delisted from Nasdaq and trading has not resumed on Nasdaq
or another national exchange or quotation system within three days;
- we are acquired (unless the acquirer assumes the obligations); or
- judgments or orders (that are not covered by insurance) for the payment
of money are entered against us, and remain in effect for 30 days, that
are in excess of $500,000 in the aggregate.
If not converted, the debentures will mature three years from the issuance
date, which is December 10, 2001 in the case of the series A debentures and June
17, 2002 in the case of the series B debentures. We have not set up a sinking
fund to repay the principal on any unconverted debentures.
On December 10, 1998, we received proceeds of $7,500,000 from the issuance
of the series A debentures. We allocated these proceeds between the value of the
series A debentures and the value of the series A warrants, which we determined
to be $719,000, issued on that date. The difference between the face value and
the book value of the series A debentures is being amortized over the life of
the series A debentures and recorded as interest expense.
On June 17, 1999, we received proceeds of $7,500,000 from the issuance of
the series B debentures. We allocated these proceeds between the value of the
series B debentures and the value of the series B warrants, which we determined
to be $719,000, issued on that date. The difference between the face value and
book value of the series B warrants is being amortized over the life of the
series B debentures and recorded as interest expense.
In addition, we recorded approximately $562,000 of interest expense in
connection with the issuance of series A debentures and approximately $1,218,750
of interest expense in connection with the issuance of series B debentures. This
interest expense represents the difference between the conversion price of the
debentures and the closing market price of our common stock on the date the
debentures were issued.
WARRANTS
In connection with the sale of the series A debentures, we issued warrants
to the purchasers of the series A debentures to purchase up to 625,000 shares of
our common stock. In connection with the sale of the series B debentures, we
issued warrants to the purchasers of the series B debentures to purchase up to
an additional 625,000 shares of our common stock. Other than the issuance date,
the series B warrants have the same terms as the series A warrants.
The warrants will entitle the holder to purchase shares of common stock at
an exercise price of $12.00 per share, subject to the adjustments described
below, for a period of 18 months from the date of issuance, which is June 10,
2000 in the case of the series A warrants and December 17, 2000 in the case of
the series B warrants.
The exercise price of the warrants is subject to customary adjustment in the
event of a stock split or stock dividend. The exercise price is also subject to
a weighted average adjustment in the event we have a rights offering, or a
similar offering of securities to all investors, at less than the exercise price
per share within 12 months of the issuance date. In the case of series A
warrants, the exercise price is also subject to adjustment in the event we issue
common stock or securities convertible into Common Stock at a price of less than
the conversion price per share of the series A debentures, not including shares
issued pursuant to our option plans, or shares issued in connection with a
strategic joint venture. In the event that we issue stock at a price below the
conversion price of the series A debentures, the exercise price of the series A
warrants will be adjusted to equal 120% of the actual price of issuance. This
exercise price adjustment is operative for 12 months from the date of issuance
of the debentures. However, it will expire automatically on the 180th day
following the date of issuance of the warrants, which is June 8, 1999 in the
case of the series A warrants and December 14, 1999 in the case of the series B
warrants, if the closing bid price of our Common Stock on the Nasdaq National
Market is greater than 150% of the exercise price for five consecutive trading
days following the effective date of this prospectus. The exercise price of the
series B warrants will have identical terms of adjustment.
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<PAGE> 26
REGISTRATION RIGHTS OF OTHER HOLDERS
Excluding the shares of common stock issuable upon conversion of the
debentures, and the shares of common stock issuable upon exercise of the
warrants, the holders of approximately 2,398,110 shares of common stock,
warrants to purchase 200,311 shares of common stock and options to purchase
208,629 shares of common stock or their transferees have rights with respect to
the registration of their shares under the Securities Act. These rights are
provided under the terms of agreements between us and the holders of these
shares of common stock. If at any time we register any of our common stock, the
holders of these shares of common stock are entitled to include their shares of
common stock in the registration. A holder's right to include shares in an
underwritten registration is subject to the ability of the underwriters to limit
the number of shares included in the offering. All registration expenses must be
borne by us and all selling expenses relating to these shares of common stock
must be borne by the holders of the securities being registered. In addition,
these holders may require us to use our best efforts to file a registration
statement under the Securities Act at our expense with respect to their shares
of common stock, subject to limitations further set forth in their registration
rights agreements.
DELAWARE ANTI-TAKEOVER LAW;
CHARTER AND BYLAW PROVISIONS THAT DISCOURAGE TAKEOVERS
Provisions of Delaware law and our charter documents could make the
acquisition of us and the removal of incumbent officers and directors more
difficult. These provisions are expected to discourage coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of us to first negotiate with us. We believe that the benefits
of increased protection of our potential ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to acquire or restructure us outweigh
the disadvantages of discouraging these proposals because, among other things,
negotiation of these proposals could result in an improvement of their terms.
We are subject to the provisions of Section 203 of the Delaware law. In
general, the statute prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date that the person became an interested
stockholder. These transactions may be permitted if the business combination or
the transaction in which the person became an interested stockholder occurs
after the interested stockholder owns 85% of the voting stock of the corporation
or if the transaction is approved by the directors or the shareholders.
Generally, a "business combination" includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the stockholder.
Generally, an "interested stockholder" is a person who, together with affiliates
and associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock. These provisions may have the effect of delaying,
deferring or preventing a change in control of us without further action by the
stockholders.
Our amended and restated bylaws provide for a classified board of directors
divided into three classes, with staggered three-year terms. As a result, only
one class of directors will be elected at each annual meeting of stockholders,
with the other classes continuing for the remainder of their respective
three-year terms. The classification of the board of directors may make it more
difficult for existing stockholders to replace the board of directors as well as
for another party to obtain control of us by replacing the board of directors.
Since the board of directors has the power to retain and discharge officers,
these provisions could also make it more difficult for existing stockholders or
another party to effect a change in management.
Our restated certificate of incorporation provides that stockholder action
can be taken only at an annual or special meeting of stockholders and may not be
taken by written consent. The bylaws provide that special meetings of
stockholders can be called only by the board of directors, the chairman of the
board, if any, the president and holders of 10% of the votes entitled to be cast
at a meeting. Moreover, the business permitted to be conducted at any special
meeting of stockholders is limited to the business brought before the meeting by
the board of directors, the chairman of the board, if any, the president or the
10% holders that call the meeting. The bylaws set forth an advance notice
procedure with regard to the nomination, other than by or at the direction of
the board of directors, of candidates for election as directors and with regard
to business to be brought before a meeting of stockholders.
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<PAGE> 27
PLAN OF DISTRIBUTION
Shares of common stock offered by this prospectus may be offered and sold
from time to time by the selling stockholders. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders may sell shares on the Nasdaq
National Market, or in private sales at negotiated prices directly or through a
broker. The selling stockholders and any underwriters, dealers or agents who
participate in the distribution of the shares may be deemed to be "underwriters"
under the Securities Act. Any discount, commission or concession received by
these persons might be deemed to be an underwriting discount or commission under
the Securities Act. Further, we have agreed to indemnify the selling
stockholders against liabilities arising under the Securities Act as it relates
to information contained or required to be contained in this prospectus.
The selling stockholders will pay selling commissions or brokerage fees, if
any, with respect to the sale of the common stock offered by this prospectus in
amounts customary for this type of transaction. Each selling stockholder will
also pay all applicable transfer taxes and fees for its legal counsel incurred
in connection with the sale of shares.
The anti-manipulation rules under the Securities Exchange Act of 1934, which
restricts trading activities and imposes restrictions on stabilization
activities of persons with an interest in the outcome of securities offerings,
may apply to sales of the shares offered by this prospectus in the market, and
to the activities of the selling stockholders and their affiliates.
Additionally, the selling stockholders have advised us that during the time they
are engaged in attempting to sell the shares of common stock offered by this
prospectus, they will:
- provide copies of this prospectus to each person to whom shares may be
offered, and to each broker-dealer, if any, through whom shares are
offered; and
- not effect any sale or distribution of the shares offered hereby until
after the prospectus has been appropriately amended or supplemented, if
required.
We have agreed to maintain the effectiveness of this registration statement
until the earlier of the sale of all the shares offered by this prospectus or
the date that each holder of shares can sell all of the shares it holds in any
three-month period in compliance with Rule 144 promulgated under the Securities
Act, but in no event after three years following the date of this prospectus. No
sales may be made pursuant to this prospectus after the expiration date unless
we amend or supplement this prospectus to indicate that we have agreed to extend
the period of effectiveness. The selling stockholders may sell all, some or none
of the shares offered by this prospectus.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Venture Law Group, A Professional Corporation, Menlo Park, California,
counsel to Geron.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements included in our Annual Report on Form 10-K for the three
years ended December 31, 1998, as set forth in their report which is
incorporated in this prospectus by reference. Our consolidated financial
statements are incorporated by reference in reliance upon Ernst & Young LLP's
report given on their authority as experts in accounting and auditing.
The financial statements of Roslin Bio-Med Limited incorporated by
reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen, independent auditors, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
-25-
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The registrant will bear no expenses in connection with any sale or other
distribution by the selling stockholders of the shares being registered other
than the expenses of preparation and distribution of this registration statement
and the prospectus included in this registration statement. The extent of these
expenses is set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee $11,673
Legal fees and expenses 30,000
Accounting fees and expenses 3,000
Miscellaneous expenses 5,327
-------
Total $50,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify these persons for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
registrant's certificate of incorporation and bylaws provide for indemnification
of the registrant's directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. The registrant has also entered into agreements with its directors and
officers that will require the registrant, among other things, to indemnify them
against liabilities that may arise by reason of their status or service as
directors to the fullest extent not prohibited by law. In addition, the
registrant carries director and officer liability insurance.
In connection with this offering, the selling stockholders have agreed to
indemnify the registrant, its directors and officers and each person who
controls the registrant, against any and all liability arising from inaccurate
information provided to the registrant by the selling stockholders and contained
herein.
ITEM 16. EXHIBITS.
EXHIBITS.
4.1* Form of series A and series B zero coupon convertible debenture
4.2* Form of series A and series B warrant
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Arthur Andersen, Independent Auditors
23.3 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
10.40** Securities Purchase Agreement dated as of December 10, 1998
between Geron and certain investors
10.41* Registration Rights Agreement dated as of December 10, 1998
between Geron and certain investors
10.44 Amendment No. 1 to the Securities Purchase Agreement, dated as of
June 17, 1999, by and among Geron and certain investors
10.45 Amendment No. 1 to the Registration Rights Agreement, dated as of
June 17, 1999, by and among Geron and certain investors
- ------------
* Incorporated by reference to identically numbered exhibit filed with our
Current Report on Form 8-K, as filed on December 17, 1998.
** Previously filed with Amendment No. 1 to our S-3 on March 18, 1999.
II-1
<PAGE> 29
ITEM 17. UNDERTAKINGS.
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 to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to that information in the registration statement.
(2) That, for the purpose 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 it offers, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of this offering.
(4) 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 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 the 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 foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC this form of indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against these
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 a director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of this issue.
II-2
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Geron Corporation 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 Menlo Park, State of California, on July 1, 1999.
GERON CORPORATION
By: /s/ DAVID L. GREENWOOD
-------------------------------------
David L. Greenwood
Chief Financial Officer
II-3
<PAGE> 31
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Ronald W. Eastman and David L. Greenwood,
jointly and severally, his or her true and lawful attorneys-in-fact, each with
full power of substitution, for him or her in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement, and to sign any registration statement for the same
offering covered by this Registration Statement that is to be effective upon
filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and
all post-effective amendments thereto, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done or by virtue hereof.
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 dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ RONALD W. EASTMAN President, Chief Executive Officer and Director July 1, 1999
- ----------------------------------------
Ronald W. Eastman
/s/ DAVID L. GREENWOOD Vice President of Corporate Development and July 1, 1999
- ---------------------------------------- Chief Financial Officer (Principal Financial
David L. Greenwood and Accounting Officer)
/s/ ALEXANDER E. BARKAS Director July 1, 1999
- ----------------------------------------
Alexander E. Barkas
/s/ EDWARD V. FRITZKY Director July 1, 1999
- ----------------------------------------
Edward V. Fritzky
/s/ THOMAS D. KILEY Director July 1, 1999
- ----------------------------------------
Thomas D. Kiley
/s/ GARY L. NEIL Director July 1, 1999
- ----------------------------------------
Gary L. Neil
Director
- ----------------------------------------
Robert B. Stein
/s/ JOHN P. WALKER Director July 1, 1999
- ----------------------------------------
John P. Walker
</TABLE>
II-4
<PAGE> 32
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
4.1* Form of series A and series B zero coupon convertible
debenture
4.2* Form of series A and series B warrant
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Arthur Andersen, Independent Auditors
23.3 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
10.40** Securities Purchase Agreement dated as of December 10,
1998 between Geron and certain investors
10.41* Registration Rights Agreement dated as of December 10,
1998 between Geron and certain investors
10.44 Amendment No. 1 to the Securities Purchase Agreement,
dated as of June 17, 1999, by and among Geron and certain
investors
10.45 Amendment No. 1 to the Registration Rights Agreement,
dated as of June 17, 1999, by and among Geron and certain
investors
</TABLE>
- ------------
* Incorporated by reference to identically numbered exhibit filed with our
Current Report on Form 8-K, as filed on December 17, 1998.
** Previously field with Amendment No. 1 to our S-3 on March 18, 1999.
<PAGE> 1
EXHIBIT 5.1
OPINION OF COUNSEL
July 1, 1999
Geron Corporation
230 Constitution Drive
Menlo Park, CA 94025
Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 (the
"Registration Statement") filed by you with the Securities and Exchange
Commission (the "Commission") pursuant to rule 429 of the Securities Act of
1933, as amended (the "Securities Act"), on July 1, 1999 in connection with the
registration under the Securities Act of a total of 3,850,000 shares of your
Common Stock (collectively, the "Shares") to be sold by certain stockholders
listed in the Registration Statement (the "Selling Stockholders"). We note that
1,925,000 of the Shares have previously been registered under a registration
statement on Form S-3 filed by you initially on January 8, 1999 and declared
effective by the Commission on May 4, 1999 (File No. 333-70355). The Shares are
issuable to the Selling Stockholders upon their conversion of an aggregate of
$7,500,000 face amount of Series A Zero Coupon Convertible Debentures and
exercise of Series A Warrants to purchase up to 625,000 shares of your Common
Stock, and upon their conversion of an aggregate of $7,500,000 face amount of
Series B Zero Coupon Convertible Debentures and exercise of Series B Warrants to
purchase up to 625,000 shares of your Common Stock. We note that 450,000 of the
Shares have already been issued by you to the Selling Stockholders upon their
conversion of an aggregate of $4,500,000 of Series A Zero Coupon Convertible
Debentures. As your counsel in connection with this filing, we have examined the
proceedings taken and are familiar with the proceedings proposed to be taken by
you in connection with the sale and issuance of the Shares.
It is our opinion that upon conclusion of the proceedings being taken
or contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, and upon completion of the proceedings being taken in order to permit
such transactions to be carried out in accordance with the securities laws of
the various states where required, the Shares when issued and sold in the manner
described in the Registration Statement will be legally and validly issued,
fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and in any amendment thereto.
Very truly yours,
VENTURE LAW GROUP
A Professional Corporation
/s/ VENTURE LAW GROUP
<PAGE> 1
EXHIBIT 10.44
AMENDMENT NO. 1
SECURITIES PURCHASE AGREEMENT
This Amendment No. 1 (this "Amendment") is made as of June 17, 1999
and to that certain Securities Purchase Agreement (the "Securities Purchase
Agreement") dated as of December 10, 1998 by and among Geron Corporation, a
Delaware corporation, Brown Simpson Strategic Growth Fund, Ltd., a Cayman
Islands exempt company, Brown Simpson Strategic Growth Fund, L.P., a New York
limited partnership, LB I Group Inc., a Delaware corporation and RGC
International Investors, LDC, a Cayman Islands limited duration company.
WHEREAS the parties hereto are parties to the Securities Purchase
Agreement and desire to amend the terms of the Securities Purchase Agreement as
provided herein.
NOW THEREFORE, the parties hereto, in consideration of the mutual
agreements herein contained and the promises herein expressed, and for other
good consideration acknowledged by each of them to be satisfactory and adequate,
do hereby agree as follows:
1. Capitalized Terms. Capitalized terms used herein but not defined
herein have the meanings given to them in the Securities Purchase Agreement.
2. Amendments to the Securities Purchase Agreement. Pursuant to
Section 5.4, the parties hereto agree to the following amendments:
(a) The first paragraph of the Securities Purchase Agreement is
hereby deleted in its entirety and replaced with "THIS SECURITIES PURCHASE
AGREEMENT (this "Agreement") is dated as of December 10, 1998, among Geron
Corporation, a Delaware corporation (the "Company"), Brown Simpson Strategic
Growth Fund, Ltd., a Cayman Islands exempt company ("Brown Simpson Limited"),
Brown Simpson Strategic Growth Fund, L.P., a New York limited partnership
("Brown Simpson LP"), Brown Simpson-ORD Investments LLC, a New York limited
liability company ("Brown Simpson-ORD"), LB I Group Inc., a Delaware corporation
("LB Group") and RGC International Investors, LDC, a Cayman Islands limited
duration company ("RGC"). Brown Simpson Limited, Brown Simpson LP, Brown
Simpson-ORD, LB Group and RGC are each referred to herein as a "Purchaser" and
are collectively referred to herein as the "Purchasers."
(b) As of the date hereof, Schedule I to the Securities Purchase
Agreement is hereby updated in its entirety with Schedule I attached hereto.
(c) As of the date hereof, Schedule II to the Securities Purchase
Agreement is hereby updated in its entirety with Schedule II attached hereto.
(d) As of the date hereof, the Schedules to the Securities Purchase
Agreement referenced throughout its Section 2.1 are hereby updated in their
entirety with the Amended and Restated Schedules attached hereto.
<PAGE> 2
3. Entire Agreement. This Amendment, together with the Securities
Purchase Agreement, contains the entire agreement of the parties with respect to
the subject matter hereof and no representations, inducements, promises or
agreements, oral or otherwise, between the parties not embodies herein shall be
of any force or effect.
4. Governing Law. This Amendment shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Amendment and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]
2
<PAGE> 3
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed this Amendment as of the day first above written.
GERON CORPORATION
By: /s/ David Greenwood
---------------------------------
Name: David Greenwood
Title: Vice President of Corporate
Development and Chief Financial
Officer
BROWN SIMPSON STRATEGIC
GROWTH FUND, LTD.
By: /s/ Mitchell Kaye
---------------------------------
Name: Mitchell Kaye
Title: Principal
Residence: Grand Cayman, Cayman Islands
BROWN SIMPSON STRATEGIC
GROWTH FUND, L.P.
By: /s/ Mitchell Kaye
---------------------------------
Name: Mitchell Kaye
Title: Principal
Residence: New York, New York
LB I GROUP INC.
By: /s/ Steven Berkenfeld
-----------------------------------
Name: Steven Berkenfeld
Title: Senior Vice President
Residence: New York, New York
3
<PAGE> 4
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P.,
Investment Manager
By: RGC General Partner Corp.,
as General Partner
By: /s/ Wayne D. Bloch
-----------------------------------
Name: Wayne D. Bloch
Title: Managing Director
Residence: Grand Cayman, Cayman Islands
AGREED TO AND ACKNOWLEDGED THIS
17th DAY OF JUNE, 1999:
BROWN SIMPSON-ORD INVESTMENTS LLC
By: /s/ Richard Cayne
-----------------------------------
Name: Richard Cayne
Title:
Residence: New York, New York
4
<PAGE> 5
Schedule I
<TABLE>
<CAPTION>
Principal Principal
Amount of Amount of
Convertible Convertible
Debentures at Debentures at
Tranche A No. of Tranche Tranche B No. of Tranche B
Name of Purchaser Closing Date A Warrants Closing Date Warrants(1)
- ------------------- -------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Brown Simpson
Strategic Growth
Fund, Ltd. $1,050,000 87,500 $1,050,000 87,500
Brown Simpson
Strategic Growth
Fund, L.P. $ 450,000 37,500 $ 450,000 37,500
Brown Simpson-ORD
Investments LLC $ 500,000 41,667 $ 500,000 41,667
LB I Group Inc. $3,000,000 250,000 $3,000,000 250,000
RGC International
Investors, LDC $2,500,000 208,333 $2,500,000 208,333
</TABLE>
- --------
(1) As may be adjusted from time to time in accordance with and subject to
paragraph 6 of the Warrant.
5
<PAGE> 6
Schedule II
<TABLE>
<CAPTION>
Name of Purchaser Address
- ----------------- -------
<S> <C>
Brown Simpson Strategic Growth Fund, Ltd. 152 West 57th Street, 40th Floor
New York, New York 10019
Attn: Paul Gustus
Fax: (212) 247-1329
Brown Simpson Strategic Growth Fund, L.P. 152 West 57th Street, 40th Floor
New York, New York 10019
Attn: Paul Gustus
Fax: (212) 247-1329
Brown Simpson-ORD Investments LLC [152 West 57th Street, 40th Floor
New York, New York 10019
Attn: Paul Gustus
Fax: (212) 247-1329]
LB I Group Inc. c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Attn: Kevin Jenirs
Fax: (212) 526-2198
RGC International Investors, LDC c/o Rose Glen Capital Management, L.P.
3 Bala Plaza East, Suite 200
251 Saint Asaphs Road
Bala Cynwyd, PA 19004
Attn: Wayne D. Bloch
Fax: (620) 617-0570
</TABLE>
6
<PAGE> 1
EXHIBIT 10.45
AMENDMENT NO. 1
REGISTRATION RIGHTS AGREEMENT
This Amendment No. 1 (this "Amendment") is made as of June 17, 1999
and to that certain Registration Rights Agreement (the "Registration Rights
Agreement") dated as of December 10, 1998 among Geron Corporation, a Delaware
corporation and the other parties set forth on Schedule I thereto.
WHEREAS the parties hereto are parties to the Registration Rights
Agreement and desire to amend the terms of the Registration Rights Agreement as
provided herein.
NOW THEREFORE, the parties hereto, in consideration of the mutual
agreements herein contained and the promises herein expressed, and for other
good consideration acknowledged by each of them to be satisfactory and adequate,
do hereby agree as follows:
1. Capitalized Terms. Capitalized terms used herein but not defined
herein have the meanings given to them in the Registration Rights Agreement.
2. Amendment to the Registration Rights Agreement. Pursuant to
Section 7(e), the parties hereto agree to the following amendment:
(a) As of the date hereof, Schedule I to the Registration Rights
Agreement is hereby updated in its entirety with Schedule I
attached hereto.
3. Entire Agreement. This Amendment, together with the Registration
Rights Agreement, contains the entire agreement of the parties with respect to
the subject matter hereof and no representations, inducements, promises or
agreements, oral or otherwise, between the parties not embodies herein shall be
of any force or effect.
4. Governing Law. The corporate laws of the State of Delaware shall
govern all issues concerning the relative rights of the Company and the
Purchasers as its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Amendment shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law. Each party hereby irrevocably submits
to the nonexclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Amendment and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
<PAGE> 2
5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2
<PAGE> 3
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed this Amendment as of the day first above written.
GERON CORPORATION
By: /s/ David Greenwood
---------------------------------
Name: David Greenwood
Title: Vice President of Corporate
Development and Chief Financial
Officer
BROWN SIMPSON STRATEGIC
GROWTH FUND, LTD.
By: /s/ Mitchell Kaye
---------------------------------
Name: Mitchell Kaye
Title: Principal
Residence: Grand Cayman, Cayman Islands
BROWN SIMPSON STRATEGIC
GROWTH FUND, L.P.
By: /s/ Mitchell Kaye
---------------------------------
Name: Mitchell Kaye
Title: Principal
Residence: New York, New York
LB I GROUP INC.
By: /s/ Steven Berkenfeld
-----------------------------------
Name: Steven Berkenfeld
Title: Senior Vice President
Residence: New York, New York
<PAGE> 4
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P.,
Investment Manager
By: RGC General Partner Corp.,
as General Partner
By: /s/ Wayne D. Bloch
-----------------------------------
Name: Wayne D. Bloch
Title: Managing Director
Residence: Grand Cayman, Cayman Islands
AGREED TO AND ACKKNOWLEDGED THIS
17th DAY OF JUNE, 1999:
BROWN SIMPSON-ORD INVESTMENTS LLC
By: /s/ Richard Cayne
-----------------------------------
Name: Richard Cayne
Title:
Residence: New York, New York
<PAGE> 5
SCHEDULE I
Company
GERON CORPORATION
230 Constitution Drive
Menlo Park, CA 94025
Fax: (650) 473-7701
Purchasers:
BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
152 West 57th Street, 40th Floor
New York, New York 10019
Attn: Paul Gustus
Fax: (212) 247-1329
Debentures
Warrants
BROWN SIMPSON STRATEGIC GROWTH FUND, LTD.
152 West 57th Street, 40th Floor
New York, New York 10019
Attn: Paul Gustus
Fax: (212) 247-1329
Debentures
Warrants
BROWN SIMPSON-ORD INVESTMENTS LLC
1 Manhattanville Road
Purchase, New York 10577
Attn: Richard Cayne
Fax: (914) 694-5831
Debentures
Warrants
LB I GROUP INC.
c/o Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Attn: Kevin Jenirs
Fax: (212) 526-2198
Debentures
Warrants
<PAGE> 6
RGC INTERNATIONAL INVESTORS, LDC
c/o Rose Glen Capital Management, L.P.
3 Bala Plaza East, Suite 200
251 Saint Asaphs Road
Bala Cynwyd, PA 19004
Attn: Wayne D. Bloch
Fax: (620) 617-0570
Debentures
Warrants
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of Geron Corporation
for the registration of its Common Stock and to the incorporation by reference
therein of our report dated February 12, 1999, with respect to the financial
statements of Geron Corporation included in its Annual Report on Form 10-K for
the year ended December 31, 1998 filed with the Securities sand Exchange
Commission.
ERNST & YOUNG LLP
/s/ Ernst & Young LLP
Palo Alto, California
June 29, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ARTHUR ANDERSEN, INDEPENDENT AUDITORS OF ROSLIN BIO-MED LIMITED
As independent auditors, we hereby consent to the incorporation by reference in
this registration statement of our report dated April 15, 1999 included in
Geron Corporation's Form 8-K filed as of May 18, 1999, and amended on both May
21, 1999 and June 29, 1999, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN
/s/ ARTHUR ANDERSEN
Edinburgh, Scotland
July 1, 1999
