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As filed with the Securities and Exchange Commission on October 8, 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
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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)
THOMAS B. OKARMA
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:
ALAN C. MENDELSON
ANDREA VACHSS
COOLEY GODWARD LLP
5 PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306
(650) 843-5000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE UNTIL 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]
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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
<TABLE>
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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(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Common stock, $0.001 par value 92,000 shares $10.56 $971,520 $271
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act. The price per share and
aggregate offering price are based on the average of the high and low prices
of the Registrant's common stock on October 4, 1999 as reported on the
Nasdaq National Market.
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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.
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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 is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
Subject to completion, dated October 8, 1999
PROSPECTUS
GERON CORPORATION
92,000 SHARES
OF COMMON STOCK
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The selling stockholder, the Wisconsin Alumni Research Foundation, is
offering up to 92,000 shares of Geron Corporation common stock.
Our common stock trades on the Nasdaq National Market under the symbol
GERN. On October 7, 1999, the last reported sale price of our common stock was
$10.99 per share.
We will not be paying any underwriting discounts or commissions in this
offering.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
October 8, 1999.
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TABLE OF CONTENTS
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INFORMATION ABOUT GERON......................................................................2
RECENT DEVELOPMENT...........................................................................3
RISK FACTORS.................................................................................4
YOU SHOULD NOT RELY ON FORWARD-LOOKING STATEMENTS BECAUSE THEY ARE INHERENTLY UNCERTAIN.....18
WHERE CAN YOU FIND MORE INFORMATION.........................................................18
USE OF PROCEEDS.............................................................................19
SELLING STOCKHOLDER.........................................................................20
PLAN OF DISTRIBUTION........................................................................20
LEGAL MATTERS...............................................................................21
EXPERTS.................................................................................... 21
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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.
INFORMATION ABOUT GERON
We are a biopharmaceutical company focused on discovering, developing and
commercializing therapeutic and diagnostic products to treat cancer and other
age-related chronic degenerative diseases. Our technology includes the discovery
of small molecule inhibitors of telomerase for cancer therapy; telomere and
telomerase-based research and diagnostic tools; telomerase activation to extend
the replicative lifespan of normal cells; and complementary stem cell, gene
therapy and nuclear transfer approaches to restore the function of degenerating
organs. 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.
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," and "Geron" refer to Geron Corporation and its
subsidiaries.
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RECENT DEVELOPMENT
On September 30, 1999, we completed a private placement of $12.5 million face
amount of Series C two percent (2%) convertible debentures and warrants to
purchase up to 1.1 million shares of our common stock, for an aggregate purchase
price of $12.5 million. The debentures are convertible into common stock at the
option of the holder until the date which is three years following the date of
issuance at a conversion price of $10.25 per share, subject to adjustment under
certain circumstances. The debentures are convertible at our option when the
closing bid price of our common stock on the Nasdaq National Market is greater
than 175% of the conversion price for ten consecutive trading days. The warrants
are exercisable for common stock at the option of the holder until the earlier
of (i) 540 days after our authorized common stock is duly increased by at least
2,899,390 shares or (ii) September 21, 2001. The exercise price is $12.50 per
share for 1,000,000 warrants and $12.75 per share for 100,000 warrants, subject
to adjustment under certain circumstances. 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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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.
Any of these risks could materially adversely affect our business, operating
results and financial condition.
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. Our research collaboration with the Roslin Institute focuses 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. As of June 30, 1999, our accumulated deficit was approximately
$87,971,000. 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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- 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 control over the activities of these
advisors and, except as otherwise required by our collaboration and consulting
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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 not obtain
the necessary licenses or alternative technologies, we may be delayed or
prevented from pursuing the
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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. We estimate that our existing capital
resources, payments under the Pharmacia & Upjohn collaborative agreement,
interest income and equipment financing will be sufficient to fund our current
level of
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operations through the second quarter of 2001. 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;
- the timing and scope of regulatory consents;
- availability of resources;
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- 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 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
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<PAGE> 15
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 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.
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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 could significantly and negatively affect the market price for our common
stock. As of October 6, 1999, we had outstanding approximately 16,712,100
shares of common stock. As of October 6, 1999, we also had reserved 4,974,267
shares of common stock for issuance upon exercise of outstanding warrants and
options that we issued to our employees and other entities.
In addition, the conversion of the remaining unconverted Series A and Series
B debentures and all of the Series C debentures, and the exercise of all the
Series A, B and C warrants would result in our issuance of a minimum of
4,369,512 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,
500,000 have already been issued and sold pursuant to the conversion of
$5,000,000 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 250,000 additional
shares of common stock and the Series A warrants would be exercisable into
625,000 shares of common stock. The remaining Series B debentures are
convertible for 550,000 shares of common stock and the Series B warrants are
exercisable into 625,000 shares of common stock. Additionally, the Series C
debentures are convertible for 1,219,512 shares of common stock and the Series C
warrants are exercisable into 1,100,000 shares of common stock. 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 under our stock plans or in connection with a strategic joint
venture, at a price less than the conversion price per share.
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 register these shares for resale within 120 days
following May 3, 1999.
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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 professional services agreement, we have also agreed to issue
and register for resale an aggregate of 75,000 shares of our common stock. Upon
their registration, which we expect to occur by the end of the fourth quarter of
1999, all of these shares will also be eligible for sale and freely transferable
in the public market. In connection with a registration rights agreement, we
have agreed to register for resale an aggregate of 2,899,390 shares of our
common stock, subject to adjustment under certain circumstances. We are
obligated to file a registration statement covering the registration of these
shares by October 28, 1999. 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.
COMPLIANCE WITH CERTAIN PROVISIONS OF OUR OUTSTANDING DEBENTURES ARE SUBJECT TO
OBTAINING APPROVAL OF OUR STOCKHOLDERS, WHICH IS OUTSIDE OUR CONTROL; FAILURE TO
OBTAIN SUCH APPROVALS COULD REQUIRE US TO REDEEM THE DEBENTURES
Currently, we do not have a sufficient number of authorized shares of common
stock to fulfill all of our reserve commitments. An increase in authorized
capital would require the approval of our stockholders to amend our Certificate
of Incorporation. We cannot assure you that we can obtain such approval. Our
inability to do so prior to March 31, 2000 would be an event of default under
our Series C debentures and would require us to redeem the remaining debentures
at a 15% premium to their principal balance at such time. In addition, under the
rules of the Nasdaq Stock Market, we may not issue shares upon conversion of the
Series A, B and C debentures in an aggregate amount greater than 19.99 percent
of the number of shares outstanding prior to the issuance of the debentures
without the prior approval of our stockholders. If, as a result of an adjustment
in the conversion price of any of the debentures, we would be required to issue
shares of our common stock in excess of such limitation and have not obtained
stockholder approval to do so, we would be required to redeem the remaining
debentures at a 15% premium to their principal balance at such time. Redemption
of a significant amount of debentures could deplete our cash reserves
significantly.
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 September 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 modifications to existing software and conversions
to new software, potential year 2000 problems will not pose
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<PAGE> 19
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.
We are completing formal communications with all of our significant
suppliers, service providers and corporate partners to determine the extent to
which our interface systems and other operations are vulnerable to those third
parties' failure to remediate their own year 2000 issues. Our total year 2000
project cost and estimated time to complete includes the estimated costs and
time associated with the impact of third party year 2000 issues and is based on
presently available information. However, we cannot assure you that the systems
of other companies on which our systems rely will be upgraded or converted and
will not have an adverse effect on our systems. Such suppliers, service
providers and corporate partners include our payroll service provider, local
financial institutions and website maintenance organization.
The total cost of our year 2000 project is estimated at $200,000 and is being
funded through current cash holdings. Of the total project cost, approximately
$100,000 is attributable to the purchase of new software and equipment, which
will be capitalized. The remaining $100,000, which will be expensed as incurred,
is not expected to have a material effect on our results of operations. To date,
we have incurred approximately $175,000 ($85,000 capitalized for new systems
and $90,000 expensed), related to the assessment of, and preliminary efforts
on, our year 2000 project.
The costs of the project and the date on which we believe we will complete
the year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions of future events, including the continued
availability of certain resources, third party modification plans and other
factors. However, we cannot assure you that these estimates will prove to be
accurate, and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes and similar
uncertainties.
Although we do not believe that we will incur any material costs or
experience material disruptions in our business associated with preparing our
internal systems for the year 2000, we cannot assure you that we will not
experience serious unanticipated negative consequences and/or material costs
caused by undetected errors or defects in the technology used in our internal
systems, which are composed of third party software and third party hardware
that contains embedded software. The most reasonably likely worst case scenarios
could include: (i) corruption of data contained in our internal information
systems, (ii) hardware failure, and (iii) the failure of infrastructure services
provided by government agencies and other third parties, such as electricity,
phone service, water, transport and Internet services.
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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 stockholder has
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 Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999
and June 30, 1999 (File No. 0-20859)
3. Our Current Report on Form 8-K, filed with the Commission on May 4, 1999
(File No. 0-20859).
4. 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).
5. Our Current Report on Form 8-K, filed with the Commission on October 5,
1999 (File No. 0-20859).
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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 stockholder. We will not
receive any proceeds from the sale of these shares of common stock.
-19-
<PAGE> 22
SELLING STOCKHOLDER
On April 23, 1999, we entered into a license agreement with the Wisconsin
Alumni Research Foundation. Under this agreement we paid a license fee
consisting of 92,000 shares of our common stock.
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
the 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
stockholder and only includes the number of shares of common stock already
issued.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED
OWNED PRIOR TO OFFERING AFTER OFFERING(1)
---------------------- SHARES BEING ----------------------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
- ----------------------------------------------- ----------- ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Wisconsin Alumni Research Foundation........... 92,000 * 92,000 -- --
</TABLE>
- ------------
* less than one percent of our common stock
(1) Assumes the sale of all shares offered hereby.
PLAN OF DISTRIBUTION
Shares of common stock offered by this prospectus may be offered and sold
from time to time by the selling stockholder or by donees, pledges, transferees
or other successors in interest. The selling stockholder will act independently
of us in making decisions with respect to the timing, manner and size of each
sale. The selling stockholder may sell shares on the Nasdaq National Market, or
in private sales at negotiated prices, directly or through a broker. The selling
stockholder 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.
The selling stockholder 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. The selling stockholder will
also pay all applicable transfer taxes and fees for its legal counsel incurred
in connection with the sale of shares.
From time to time, the selling stockholder may transfer, pledge, donate or
assign its shares of common stock to lenders or others and each of such persons
will be deemed to be a "selling stockholder" for purposes of this prospectus.
The number of shares of common stock beneficially owned by the selling
stockholder will decrease as and when it takes such actions. The plan of
distribution for the selling stockholder's shares of common stock sold under
this prospectus will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be selling stockholders hereunder.
The selling stockholders will be subject to the prospectus delivery
requirements of the Securities Act. Geron has informed the selling stockholder
that the anti-manipulative provisions of Regulation M under the Exchange Act may
apply to its sales in the markets.
The selling stockholder also may resell all or a portion of its shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided it meets the criteria and conforms to the requirements of such Rule.
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. The selling stockholder may sell all, some or none of the shares offered by
this prospectus.
-20-
<PAGE> 23
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon
by Cooley Godward LLP.
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 audited financial statements and schedules of Roslin Bio-Med Limited,
incorporated by reference in this prospectus and elsewhere in the registration
statement, have been audited by Arthur Andersen, independent public accountants,
as indicated in their report dated April 15, 1999, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
-21-
<PAGE> 24
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 stockholder 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>
<CAPTION>
<S> <C>
SEC registration fee $ 271
Legal fees and expenses 15,000
Accounting fees and expenses 3,000
Miscellaneous expenses 1,729
-------
Total $20,000
=======
</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.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBITS.
<S> <C>
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Arthur Andersen, Independent Public Accountants
23.3 Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
------------
</TABLE>
II-1
<PAGE> 25
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> 26
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 October 8, 1999.
GERON CORPORATION
By: /s/ David L. Greenwood
---------------------------------------
David L. Greenwood
Chief Financial Officer
II-3
<PAGE> 27
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Thomas B. Okarma 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/ Thomas B. Okarma President, Chief Executive Officer and October 8, 1999
- ---------------------------------
Thomas B. Okarma Director
/s/ David L. Greenwood Vice President and Chief Financial October 8, 1999
- ---------------------------------
David L. Greenwood Officer (Principal Financial and
Accounting Officer)
/s/ Alexander E. Barkas Director October 8, 1999
- ---------------------------------
Alexander E. Barkas
Director
- ---------------------------------
Ronald W. Eastman
/s/ Edward V. Fritzky Director October 8, 1999
- ---------------------------------
Edward V. Fritzky
/s/ Thomas D. Kiley Director October 8, 1999
- ---------------------------------
Thomas D. Kiley
/s/ Gary L. Neil Director October 8, 1999
- ---------------------------------
Gary L. Neil
/s/ Robert B. Stein Director October 8, 1999
- ---------------------------------
Robert B. Stein
Director
- ---------------------------------
John P. Walker
</TABLE>
II-4
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Arthur Andersen, Independent Public Accountants
23.3 Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-4)
</TABLE>
<PAGE> 1
EXHIBIT 5.1
OPINION OF COUNSEL
October 8, 1999
Geron Corporation
230 Constitution Drive
Menlo Park, CA 94025
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Geron Corporation (the "Company") of a Registration Statement
on Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering for resale of 92,000 shares of the Company's
Common Stock (the "Shares"), with a par value of $.001, issued in connection
with that certain License Agreement (the "License Agreement") by and between the
Company and Wisconsin Alumni Research Foundation dated as of April 23, 1999.
In connection with this opinion, we have examined the Registration Statement,
the Company's Certificate of Incorporation and Bylaws, as amended, the
resolutions adopted by the Board of Directors of the Company on April 23, 1999
and October 1, 1999, and such other documents, records, certificates, memoranda
and other instruments as we deem necessary as a basis for this opinion. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares are validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus included in the Registration Statement.
Very truly yours,
/s/ ANDREA VACHSS
--------------------
Andrea Vachss
<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 92,000 shares 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 and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
October 7, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the audited financial
statements of Roslin Bio-Med Limited dated April 15, 1999, included in Geron
Corporation's Form 8-K filed on May 18, 1999, and amended on May 21, 1999 and
June 29,1999, and to all references to our Firm included in this Form S-3
registration statement filed by Geron Corporation on October 8, 1999.
/s/ ARTHUR ANDERSEN
-------------------
ARTHUR ANDERSEN
Edinburgh, Scotland
October 8, 1999
