<PAGE> 1
As filed with the Securities and Exchange Commission on June 24, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DIACRIN, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 22-3016912
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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CHARLESTOWN NAVY YARD, BUILDING 96, 13TH STREET, CHARLESTOWN,
MASSACHUSETTS 02129
(617) 242-9100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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THOMAS H. FRASER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DIACRIN, INC.
CHARLESTOWN NAVY YARD, BUILDING 96, 13TH STREET
CHARLESTOWN, MASSACHUSETTS 02129
(617) 242-9100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
STEVEN D. SINGER, ESQ.
HALE AND DORR
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 526-6000
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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
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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<TABLE>
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Title of each Class of Amount to Proposed Maximum Proposed Maximum Amount of Registration
Securities to be Registered be Registered Offering Price Per Share(1) Aggregate Offering Price(1) Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock(2) 465,853 $13.13 $6,116,649.89 $2,109.19
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<FN>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933
and based on the market price of the Company's Units as of June 20, 1996.
(2) Represents shares of Common Stock which represent the maximum number of
shares issuable by the Registrant upon exercise of certain outstanding
transferable Common Stock Warrants originally issued by the Company in
November 1991.
</TABLE>
ALSO REGISTERED HEREUNDER PURSUANT TO RULE 416 ARE AN INDETERMINATE NUMBER
OF SHARES OF COMMON STOCK THAT MAY BECOME ISSUABLE PURSUANT TO ANTIDILUTION
ADJUSTMENTS ARISING UNDER THE COMMON STOCK WARRANTS.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS AT ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 24, 1996
465,853 Shares
DIACRIN, INC.
COMMON STOCK
All of the shares of Common Stock of Diacrin, Inc. ("Diacrin" or the
"Company") offered hereby represent shares that may be issued upon exercise of
outstanding warrants issued by the Company pursuant to a Warrant Agreement dated
as of November 14, 1991 (the "Warrant Agreement"). Each Warrant currently
entitles the registered holder thereof to purchase one share of the Company's
Common Stock at an exercise price of $7.20 per share during the period
commencing August 10, 1996 and ending on November 14, 1996. The exercise price
of the Warrants and the number and kind of Common Stock or other securities or
property to be obtained upon exercise of the Warrants are subject to adjustment
in certain circumstances.
----------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD
BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
OFFER OR SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
----------------------
The date of this Prospectus is August 9, 1996
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the following regional offices of
the Commission: the Northeast Regional Office located at 7 World Trade Center,
Suite 1300, New York, New York 10048; and the Midwest Regional Office located at
the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of this material also may be obtained from the Commission's
Public Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission. Certain of the Company's securities are quoted on the Nasdaq
National Market. Reports, proxy and information statements and other information
concerning the Company may be inspected at the office of The Nasdaq Stock
Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement and the exhibits and
schedules thereto. Statements contained in this Prospectus as to the contents of
any contract or other document filed as an exhibit to the Registration Statement
are not necessarily complete, and in each case reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each statement being qualified in all respects by such reference. For further
information with respect to the Company and the securities, reference is hereby
made to the Registration Statement, exhibit and schedules which may be inspected
without charge at the principal office of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission are hereby
incorporated by reference into this Prospectus: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1995; (ii) the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996; and (iii) the
Company's Registration Statement on Form 10, as amended, registering the Common
Stock under Section 12 of the Exchange Act.
All documents filed by the Company with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the effective date of this
Registration Statement and prior to the termination of the offering of the
Common Stock registered hereby shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is a
part to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or such Registration Statement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of the Prospectus has been delivered, and who
makes a written or oral request, a copy of any and all of the foregoing
documents incorporated by reference in the Registration Statement (other than
exhibits unless such exhibits are specifically incorporated by reference into
such documents). Requests should be submitted in writing or by telephone to the
Director of Finance and Administration, Diacrin, Inc., at the Company's
executive offices, Charlestown Navy Yard, Building 96, 13th Street, Charlestown,
Massachusetts 02129, telephone (617) 242-9100.
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RISK FACTORS
The shares offered hereby involve a high degree of risk. The following risk
factors should be considered carefully in addition to the other information
included or incorporated by reference in this Prospectus before purchasing the
shares of Common Stock offered hereby. Except for the historical information
contained herein or incorporated herein by reference, the discussion included or
incorporated by reference in this Prospectus contains certain forward-looking
statements that involve risks and uncertainties, such as statements of the
Company's plans, objectives, expectations and intentions. The cautionary
statements made or incorporated by reference in this Prospectus should be read
as being applicable to all related forward-looking statements wherever they
appear in or are incorporated by reference in this Prospectus. The Company's
actual results could differ materially from those discussed here. Factors that
could cause such differences include those discussed below, as well as those
discussed elsewhere or incorporated by reference herein.
History of Operating Losses; No Assurance of Revenue or Operating Profit
The Company is in the development stage and has generated no revenue from
product sales to date. Diacrin has accumulated net losses from its inception in
1989 through December 31, 1995 of approximately $27.3 million, and losses are
continuing. The Company expects to incur substantial operating losses for the
foreseeable future. The Company currently has no material sources of revenue
from product sales, license fees or research funding, and there can be no
assurance that it will be able to develop such revenue sources or that its
operations will become profitable, even if it is able to commercialize any
products.
Lack of Commercial Products; No Assurance of Successful Product Development
The Company has no products available for sale and does not expect to have
any therapeutic products commercially available for at least the next several
years, if at all. The Company's potential products will require significant
additional development, preclinical and clinical testing, regulatory approval
and additional investment prior to commercialization. The Company's potential
therapeutic products are at early stages of research and development and the
Company's growth will depend on the successful development and commercialization
of its products. There can be no assurance that any such potential products will
be successfully developed, prove to be safe and efficacious in clinical trials,
meet applicable regulatory standards, be capable of being produced in commercial
quantities at acceptable costs or be successfully marketed.
Reliance on Cell Transplantation Technology; No Currently Approved Cell Therapy
Products
Diacrin has concentrated its efforts and therapeutic product research on
its cell transplantation technology and will be dependent on the successful
development of the technology. Cell transplantation technology is an emerging
technology with, as yet, limited clinical applications. There can be no
assurance that the Company's cell transplantation technology will result in the
development of any therapeutic products. If it does not, the Company may be
required to change dramatically the scope and direction of its product
development activities.
The Company's approach involves xenotransplantation -- the transplantation
of cells from one species into another. Although several companies are focusing
on this area, xenotransplantation-based products represent a novel therapeutic
approach that has not yet been subject to extensive clinical testing. The risk
that viruses or other animal pathogens will be unintentionally transmitted to a
human patient is a risk associated with xenotransplantation. No
xenotransplantation-based therapeutic product has been approved for sale by the
FDA. The FDA has not yet established definitive regulatory guidelines for
xenotransplantation, but is planning to announce guidelines in the future in an
attempt to reduce the risk of contamination of transplanted cellular products
with infectious agents. There can be no assurance that such guidelines will be
issued, or that Diacrin will be able to comply with any guidelines that may be
issued. Furthermore, there can be no assurance that any products developed and
tested by Diacrin will be approved by the FDA or regulatory authorities in other
countries, or that xenotransplantation-based products, including the Company's
product candidates, will be accepted by the medical community or third-party
payors or that the degree of acceptance will not limit the size of the market
for such products.
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Need for Substantial Additional Funds
The Company will require substantial additional funding for its research
and product development programs and operating expenses, and for pursuing
regulatory clearances and building production capabilities. Adequate funds for
these purposes, whether obtained through equity or debt financings,
collaborative or other arrangements with potential corporate partners or from
other sources, may not be available when needed or on terms acceptable to the
Company. Insufficient funds may require the Company to delay, scale back or
eliminate certain of its product development programs or to license others to
commercialize products or technologies that the Company would otherwise seek to
develop and commercialize itself, any of which would have a material adverse
effect on the Company.
Uncertainty Associated with Preclinical and Clinical Testing
Before obtaining regulatory approvals for the commercial sale of any of the
Company's potential products, the products will be subjected to extensive
preclinical and clinical testing to demonstrate their safety and efficacy in
humans. To date, the Company has administered NeuroCell[Trademark]-PD and
NeuroCell[Trademark]-HD to a limited number of patients in Phase 1 clinical
trials. Results of initial preclinical and clinical testing of products under
development by the Company are not necessarily predictive of results that will
be obtained from subsequent or more extensive preclinical and clinical testing.
Furthermore, there can be no assurance that clinical trials of products under
development will demonstrate the safety and efficacy of such products at all
or to the extent necessary to obtain regulatory approvals. Companies in the
biotechnology industry have suffered significant setbacks in advanced clinical
trials, even after promising results in earlier trials. The failure to
adequately demonstrate the safety and efficacy of a therapeutic product under
development could delay or prevent regulatory approval of the product and would
have a material adverse effect on the Company.
The rate of completion of clinical trials is dependent upon, among other
factors, the enrollment of patients. Patient accrual is a function of many
factors, including the size of the patient population, the proximity of patients
to clinical sites, the eligibility criteria for the study and the existence of
competitive clinical trials. Delays in planned patient enrollment in the
Company's current clinical trial or future clinical trials may result in
increased costs, program delays or both, which could have a material adverse
effect on the Company.
No Assurance of FDA Approval; Government Regulation
The FDA and comparable government agencies in foreign countries impose
substantial regulations on the manufacture and marketing of pharmaceutical
products through lengthy and detailed laboratory and clinical testing
procedures, sampling activities and other costly and time-consuming procedures.
Satisfaction of these regulations typically takes several years or more and
varies substantially based upon the type, complexity and novelty of the proposed
product. The Company cannot yet accurately predict when it might first submit
any Product License Application for FDA or other regulatory approval.
The effect of government regulation may be to delay marketing of new
products for a considerable or indefinite period of time, to impose costly
procedures upon the Company's activities or to diminish or eliminate any
competitive advantage the Company may enjoy. There can be no assurance that FDA
or other regulatory approval for any products developed by the Company will be
granted on a timely basis, if at all. Any such delay in obtaining, or failure to
obtain, such approvals could adversely affect the marketing of the Company's
products and the ability to generate product revenue. The extent of potentially
adverse government regulation which might arise from future legislation or
administrative action cannot be predicted.
If regulatory approval of a drug is obtained, such approval may be
conditioned upon limitations and restrictions on the drug's use. In addition,
any marketed drug and its manufacturer are subject to continuing governmental
review and any subsequent discovery of previously unrecognized problems could
result in restrictions on the product or manufacturer, including, without
limitation, withdrawal of the product from the market. Failure of the Company to
comply with applicable regulatory requirements can, among other things, result
in fines, suspension of regulatory approvals, product recalls, seizure of
products, operating restrictions or criminal prosecution.
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<PAGE> 6
Additionally, the Company is or may become subject to various federal,
state and local laws, regulations and recommendations relating to safe working
conditions, laboratory and manufacturing practices, the experimental use of
animals and the use and disposal of hazardous or potentially hazardous
substances, including radioactive compounds and infectious disease agents, used
in connection with the Company's research and development work. The Company is
unable to predict the extent of restrictions that might arise from any
governmental or administrative action. There can also be no assurance that the
Company will not be required to incur significant costs to comply with
environmental laws and regulations, or any assurance that the operations,
business or assets of the Company will not be materially adversely affected by
current or future environmental laws or regulations.
Rapid Technological Changes; Competition
The Company is engaged in activities in the biopharmaceutical field, which
is characterized by extensive research efforts and rapid technological progress.
There can be no assurance that research and discoveries by other biotechnology
or pharmaceutical companies will not render the Company's programs or products
uneconomical, result in therapies superior to any therapy developed by the
Company or that any products developed by the Company will be preferred to any
existing or newly-developed technologies.
The biotechnology and pharmaceutical industries are characterized by
intense competition. The Company competes against numerous companies, many of
which have substantially greater financial and other resources than the Company.
Several such enterprises have initiated cell transplantation research programs
and/or efforts to treat the same diseases targeted by the Company through
alternate technologies. These competitive enterprises have devoted, and will
continue to devote, substantial resources to the development of cell
transplantation or other products to treat such diseases. Private and public
academic and research institutions also compete with Diacrin in the research and
development of human therapeutic products.
In addition, many of the Company's competitors have significantly greater
experience than the Company in preclinical testing and human clinical trials of
biotechnology and pharmaceutical products and in obtaining FDA and other
regulatory approvals of products. Accordingly, the Company's competitors may
succeed in obtaining FDA approval for products more rapidly or effectively than
the Company. If the Company commences significant commercial sales of its
products, it will also be competing with respect to manufacturing efficiency and
sales and marketing capabilities, areas in which it has no experience.
Limited Clinical Testing, Regulatory, Manufacturing, Marketing and Sales
Capabilities
Because of the relatively early stage of the Company's research and
development programs, the Company has not yet invested significantly in
clinical, regulatory, manufacturing, marketing, distribution or product sales
resources. To date, the Company has relied on others for the production of pigs
free of infectious agents and the clinical evaluation of its product candidates.
The Company currently has only limited in-house clinical and regulatory
capabilities. Although the Company intends to develop clinical, regulatory,
manufacturing, marketing, distribution and sales resources in the future, there
can be no assurance that the Company will be able to develop such resources
successfully.
Uncertain Ability to Protect Proprietary Technology; Reliance Upon Licenses
The biotechnology and pharmaceutical industries place considerable
importance on obtaining patent and trade secret protection for new technologies,
products and processes. The Company's success will depend, in part, on its
ability to obtain patent protection for its products, preserve its trade secrets
and operate without infringing the proprietary rights of others. The Company has
ongoing research efforts and expects to seek additional patents covering this
research in the future. There can be no assurance of its success or timeliness
in obtaining any patents, or of the breadth or degree of protection that any
such patents will afford the Company.
The patent position of biotechnology products is often highly uncertain and
usually involves complex legal and factual questions. There can be no assurance
that patent applications relating to the Company's potential products or
technology will result in additional patents being issued or that, if issued,
such patents will afford adequate protection to the Company or not be
challenged, invalidated or infringed. Furthermore, there can be no assurance
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<PAGE> 7
that others will not independently develop similar products and processes,
duplicate any of the Company's products or, if patents are issued to the
Company, design around such patents. In addition, the Company could incur
substantial costs in defending itself in suits brought against it or in suits in
which it may assert its patents against others. If the outcome of any such
litigation is unfavorable, the Company's business could be adversely affected.
To determine the priority of inventions, the Company may also have to
participate in interference proceedings declared by the United States Patent and
Trademark Office, which could result in substantial cost to the Company.
Much of the Company's know-how and technology is not patentable. To protect
its rights, the Company requires all employees, consultants, advisors and
collaborators to enter into confidentiality agreements with Diacrin. There can
be no assurance, however, that these agreements will provide meaningful
protection for the Company's trade secrets, know-how or other proprietary
information in the event of any unauthorized use or disclosure. Further, in the
absence of patent protection, the Company's business may be adversely affected
by competitors who independently develop substantially equivalent technology.
Uncertain Availability of Third-Party Reimbursement and Product Pricing
The Company's ability to commercialize products successfully will depend
substantially on reimbursement of the costs of such products and related
treatments at acceptable levels from government authorities, private health
insurers and other organizations, such as health maintenance organizations
("HMOs"). There can be no assurance that reimbursement in the United States or
foreign countries will be available for any products the Company may develop or,
if available, will not be decreased in the future, or that reimbursement amounts
will not reduce the demand for, or the price of, the Company's products, thereby
adversely affecting the Company's business.
Third-party payors are increasingly challenging the prices charged for
medical products and services. Also, the trend toward managed health care in the
United States and the concurrent growth of organizations, such as HMOs, which
can control or significantly influence the purchase of health care services and
products, as well as legislative proposals to reform health care or reduce
government insurance programs, may result in lower prices for therapeutic
products. The cost containment measures that healthcare providers are
instituting, including practice protocols and guidelines and clinical pathways,
and the effect of any health care reform, could materially adversely affect the
Company's ability to sell its products if successfully developed and approved.
Moreover, the Company is unable to predict what additional legislation or
regulation, if any, relating to the health care industry or third-party coverage
and reimbursement may be enacted in the future or what effect such legislation
or regulation would have on the Company's business.
Dependence on Key Personnel
Because of the specialized nature of its business, the Company is highly
dependent on its ability to attract and retain qualified scientific and
technical personnel for the research and development activities conducted or
sponsored by the Company. The loss of certain key executive officers could be
significantly detrimental to the Company. Recruiting and retaining qualified
scientific personnel to perform research and development work is critical to the
Company's success. In addition, the Company's anticipated growth and expansion
into areas and activities requiring additional expertise, such as clinical
testing, regulatory compliance, manufacturing and marketing, will require the
addition of new management personnel and the development of additional expertise
by existing management personnel. There is intense competition for qualified
personnel in the areas of the Company's activities, and there can be no
assurance that the Company will be able to continue to attract and retain the
qualified personnel necessary for the development of its business. The failure
to attract and retain such personnel or to develop such expertise would
adversely affect the Company's business.
Dependence on Others
Currently, the Company's exclusive source for the pigs from which its
porcine cells are harvested is Tufts University School of Veterinary Medicine
("Tufts"). While the Company is planning to secure additional sources of pigs
for its programs, the Company currently is dependent upon Tufts for its pig
supply. There can be no assurance that the Company will be able to secure
additional pig suppliers or that Tufts or any other supplier will
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<PAGE> 8
be able to provide qualified pigs in quantities and at times required by the
Company. Failure by Tufts or any other supplier to provide such supply could
have a material adverse effect on the Company.
The Company's strategy for development and commercialization of certain of
its products entails entering into arrangements with corporate partners,
licensees and others, and upon the subsequent successes of these partners,
licensees and others in performing preclinical and clinical testing, obtaining
regulatory approvals, manufacturing and marketing. To date, the Company has not
entered into any arrangements with corporate partners for any of its potential
products. There can be no assurance that the Company will be able to enter into
any such arrangements on favorable terms, if at all. If the Company is able to
enter into such arrangements, such arrangements may require the Company to
transfer certain material rights to such corporate partners, licensees and
others. While the Company believes its partners, licensees and others will have
an economic motivation to succeed in performing their contractual
responsibilities, the amount and timing of resources to be devoted to these
activities will be controlled by others. Consequently, there can be no assurance
that any revenues or profits will be derived from such arrangements.
Potential Product Liability; Limited Product Liability Insurance
The testing, marketing and sale of human health care products entail an
inherent risk of product liability claims, and there can be no assurance that
substantial product liability claims will not be asserted against the Company.
The Company has limited product liability insurance and may need to increase its
coverage as it expands human clinical trials and if and when it begins to market
products. There can be no assurance that adequate insurance coverage will be
available on acceptable terms, if at all, or that a product liability claim
would not materially adversely affect the business or financial condition of the
Company.
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<PAGE> 9
THE COMPANY
Diacrin is developing porcine (pig) cells for the treatment of human
diseases which are characterized by cell dysfunction or cell death and for
which current therapies are either inadequate or nonexistent. Candidate cell
types for transplantation include: neurons for the treatment of Parkinson's
disease, Huntington's disease, focal epilepsy and cognitive disorders;
hepatocytes (liver cells) for the treatment of familial hypercholesterolemia;
cardiac myocytes for the treatment of cardiac disease; and pancreatic islets
for the treatment of diabetes. In March 1995, the United States Food and Drug
Administration ("FDA") cleared the Company to conduct the first ever clinical
trial of transplanted porcine cells in humans. In April 1995, the Company
initiated a Phase 1 clinical trial of its most advanced product candidate,
NeuroCell[Trademark]-PD for the treatment of Parkinson's disease. In addition,
in May 1996, the Company initiated a Phase 1 clinical trial to evaluate
NeuroCell[Trademark]-HD for the treatment of Huntington's disease.
While the feasibility of cell transplantation has been demonstrated
clinically by others, widespread use in clinical applications has been hampered
by the lack of an adequate supply of human donor cells. To overcome this
constraint, Diacrin has pioneered the use of porcine cells for clinical
transplantation. The Company believes that pigs will be a reliable source of a
wide range of cell types suitable for transplantation into humans. The Company
has shown in preclinical and early clinical studies that, under standard
immunosuppressive regimens, transplanted porcine cells are capable of addressing
the functional deficits caused by cell dysfunction or cell death.
In addition, Diacrin is developing a proprietary immunomodulation
technology which is exclusively licensed to the Company from the Massachusetts
General Hospital. This technology involves the selective treatment of major
histocompatibility complex class I antigens on cell populations prior to
transplantation to prevent the patient's immune system from rejecting the
transplanted cells. The Company's approach would obviate the need for chronic
immunosuppression, which may leave the patient vulnerable to a wide range of
undesirable side effects, including susceptibility to infectious agents and
cancer. Preclinical studies in animal models, including primates, have confirmed
the ability of the Company's immunomodulation technology to prevent rejection of
transplanted porcine cells without compromising the ability of the immune system
to protect the recipient in its normal fashion. Neurons, hepatocytes, cardiac
myocytes and islets treated with Diacrin's proprietary immunomodulation
technology have been successfully transplanted into animals without
immunosuppression.
The Company has an active Drug Master File at the FDA covering the
production of NeuroCell[Trademark]-PD and is collaborating with clinical
investigators under an Investigational New Drug application to evaluate the
transplantation of NeuroCell[Trademark]-PD for the treatment of severe
Parkinson's disease. In April 1995, the Company and its collaborators initiated
a Phase 1 clinical trial involving the transplantation of
NeuroCell[Trademark]-PD into humans. It is anticipated that all 12 patients
planned for this study will be transplanted by the end of 1996. Assuming
successful completion of the Phase 1 clinical trial, the Company expects to
begin a Phase 2 clinical trial in early 1997.
In May 1996, the Company initiated a Phase 1 clinical trial of
NeuroCell[Trademark]-HD for the treatment of Huntington's disease. It is
planned that the 12 patients to be entered in this trial will be transplanted
by early 1997. The genetic basis for Huntington's disease has recently been
defined, and affected patients can therefore be definitively identified;
however, no effective treatment currently exists.
Diacrin has five additional products in various stages of preclinical
development: (i) NeuroCell[Trademark]-FE for the treatment of complex partial
epileptic seizures, a condition that currently may not be well-controlled with
existing drug therapy or surgery; (ii) NeuroCell[Trademark]-CD for the
treatment of cognitive disorders; (iii) HepatoCell[Trademark] for the treatment
of familial hypercholesterolemia, a disease caused by a defective low density
lipoprotein (LDL) receptor gene that can lead to elevated serum cholesterol
levels and coronary heart disease; (iv) CardioCell[Trademark] for the treatment
of cardiac disease; and (v) IsletCell[Trademark] for the treatment of diabetes.
The Company was incorporated under the laws of the State of Delaware in
1989 and commenced operations in 1990. The Company's principal executive offices
are located at Charlestown Navy Yard, Building 96, 13th Street, Charlestown,
Massachusetts 02129 and its telephone number is (617) 242-9100.
-8-
<PAGE> 10
USE OF PROCEEDS
The Company intends to use any net proceeds from the exercise of the
Warrants to fund research, development and clinical testing and for working
capital and general corporate purposes.
LEGAL MATTERS
Hale and Dorr, Boston, Massachusetts will pass on the validity of the
shares offered hereby for the Company. Steven D. Singer, a partner of Hale and
Dorr, is Secretary of the Company.
EXPERTS
The audited consolidated financial statements and five-year selected
consolidated financial data incorporated by reference in this Prospectus have
been audited by Arthur Andersen LLP, independent public accountants; as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
-9-
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Item Amount
---- ------
<S> <C>
SEC Registration Fee ..................................... $ 2,109
Accounting Fees and Expenses ............................. 2,500*
Legal (including Blue Sky) Fees and Expenses ............. 7,500*
Printing, Engraving and Mailing Expenses ................. 5,000*
Miscellaneous ............................................ 1,391*
-------
Total .................................................... $18,500*
=======
<FN>
- ----------------
* Estimated
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
Article ELEVENTH of the Registrant's Certificate of Incorporation provides
that a director or officer of the Registrant (a) shall be indemnified by the
Registrant against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement reasonably incurred in connection with any
litigation or other legal proceeding (other than an action by or in the right of
the Registrant) brought against such director or officer by virtue of a position
as a director or officer of the Registrant if such director or officer acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Registrant, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful and (b)
shall be indemnified by the Registrant against expenses (including attorneys'
fees) and amounts paid in settlement reasonably incurred in connection with any
action by or in the right of the Registrant by virtue of a position as a
director or officer of the Registrant if such officer or director acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interests of the Registrant, except that no indemnification shall be made with
respect to any such matter as to which such director or officer shall have been
adjudged to be liable to the Registrant, unless and only to the extent that a
court determines that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper. Notwithstanding the
foregoing, to the extent that a director or officer has been successful, on the
merits or otherwise, such person shall be indemnified against all expenses
(including attorneys' fees) reasonably incurred by him in connection therewith.
Expenses incurred in defending a civil or criminal action, suit or proceeding
shall be advanced by the Registrant to a director or officer, at such person's
request, upon receipt of an undertaking by the director or officer to repay such
amount if it is ultimately determined that such person is not entitled to
indemnification.
II-1
<PAGE> 12
Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for
indemnification, or if the Registrant fails to make an indemnification payment
within 60 days after such payment is claimed by such person, such person is
permitted to petition a court to make an independent determination as to whether
such person is entitled to indemnification. As a condition precedent to the
right of indemnification, the director or officer must give the Registrant
notice of the action for which indemnity is sought and the Registrant has the
right to participate in such action or assume the defense thereof.
Article ELEVENTH of the Registrant's Certificate of Incorporation further
provides that the indemnification provided therein is not exclusive, and
provides that in the event that the Delaware General Corporation Law is amended
to expand the indemnification permitted to directors or officers, the Registrant
shall indemnify those persons to the fullest extent permitted by such law as so
amended.
The Company has purchased a general liability insurance policy which covers
certain liabilities of directors and officers of the Company arising out of
claims based on acts or omissions in their capacity as directors or officers.
Article SEVENTH of the Registrant's Certificate of Incorporation provides
that, except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Registrant shall be personally liable to
the Registrant or its stockholders for monetary damages for any breach of
fiduciary duty as a director.
ITEM 16. EXHIBITS
Exhibit No. Title
- ----------- -----
3.1(1) - Amended and Restated Certificate of Incorporation of the
Company, as amended to date
3.2(2) - Amended and Restated By-laws of the Company
4.1(3) - Warrant Agreement dated November 14, 1991 by and between
the Company and American Stock Transfer & Trust Company,
as Warrant Agent
4.1(a)(4) - Supplement No. 1 to Warrant Agreement dated November 14,
1991, dated April 24, 1995, by and between the Company
and American Stock Transfer & Trust Company, as Warrant
Agent
5.1 - Opinion of Hale and Dorr
23.1 - Consent of Arthur Andersen LLP, Independent Public
Accountants
23.2 - Consent of Hale and Dorr (included in Exhibit 5.1)
24.1 - Power of Attorney (included on the signature pages of
this Registration Statement)
- ----------------
(1) Filed as an exhibit to the Company's Annual Report on Form 10-K (File No.
0-20139) for the year ended December 31, 1995 and incorporated herein by
reference.
(2) Filed as an exhibit to the Company's Registration Statement on Form S-2, as
amended (Registration No. 33-80773) and incorporated herein by reference.
II-2
<PAGE> 13
(3) Filed as an exhibit to the Company's Form 10, as amended (File No.
0-20139), and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (File
No. 0-20139) for the quarter ended June 30, 1995 and incorporated herein by
reference.
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;
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424 (b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement:
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions contained in the
Certificate of Incorporation and By-laws of the Registrant and the laws of the
State of Delaware, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in said Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in said Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts on the 24th day
of June, 1996.
DIACRIN, INC.
By: /s/ Thomas H. Fraser
-------------------------------------
Thomas H. Fraser
President and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Diacrin, Inc. hereby
severally constitute and appoint Thomas H. Fraser, Mark J. Fitzpatrick and E.
Michael Egan, and each of them singly, our true and lawful attorneys with full
power to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, the Registration Statement on Form S-3 filed
herewith and any and all subsequent amendments to said Registration Statement,
and generally to do all such things in our names and behalf in our capacities as
officers and directors to enable Diacrin, Inc. to comply with all requirements
of the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.
<TABLE>
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.
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas H. Fraser President, Chief Executive June 24, 1996
- ------------------------ Office and Director
Thomas H. Fraser (Principal Executive Officer)
/s/ Mark J. Fitzpatrick Director of Finance and June 24, 1996
- ------------------------ Administration and Treasurer
Mark J. Fitzpatrick (Principal Financial and Accounting Officer)
/s/ Zola P. Horovitz Director June 24, 1996
- ------------------------
Zola P. Horovitz
/s/ John W. Littlechild Director June 24, 1996
- ------------------------
John W. Littlechild
/s/ Stelios Papadopoulos Director June 24, 1996
- ------------------------
Stelios Papadopoulos
</TABLE>
II-4
<PAGE> 1
EXHIBIT 5.1
HALE AND DORR
Counsellors at Law
60 STATE STREET, BOSTON, MASSACHUSETTS 02109
617-526-6000 -- FAX 617-526-5000
June 24, 1996
Diacrin, Inc.
Building 96, 13th Street
Charlestown Navy Yard
Charlestown, MA 02129
Gentlemen and Ladies:
This opinion is furnished to you in connection with a Registration
Statement on Form S-3 (the "Registration Statement") filed today with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended, for the registration of 465,853 shares (the "Warrant
Shares") of Common Stock, $.01 par value per share (the "Common Stock"), of
Diacrin, Inc., a Delaware corporation (the "Company"), issuable upon exercise of
the Warrants (the "Warrants") issued by the Company pursuant to a Warrant
Agreement dated November 14, 1991 by and between the Company and American Stock
Transfer & Trust Company, as agent thereunder (the "Warrant Agreement"). The
Warrants were issued and sold and the Warrant Shares are to be issued and sold,
pursuant to the Warrant Agreement.
We have acted as counsel for the Company in connection with the issue and
sale by the Company of the Warrant Shares. We have examined signed copies of the
Registration Statement and all exhibits thereto, all as filed with the
Commission. We have also examined and relied upon a copy of the Warrant
Agreement, the original or copies of minutes of meetings of the stockholders and
Board of Directors of the Company as provided to us by the Company, stock record
books of the Company as provided to us by the Company, a copy of the Certificate
of Incorporation and By-Laws of the Company, each as restated and/or amended to
date, and such other documents as we have deemed necessary for purposes of
rendering the opinions hereinafter set forth.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as copies, and the authenticity of the originals of such latter documents.
Based upon the foregoing, we are of the opinion that the Warrant Shares
have been duly authorized and, when issued and delivered and paid for in
accordance
WASHINGTON, DC BOSTON, MA MANCHESTER, NH
- --------------------------------------------------------------------------------
HALE AND DORR IS A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
<PAGE> 2
Diacrin, Inc.
June 24, 1996
Page 2
with the terms of the Warrant Agreement, will be validly issued, fully paid and
nonassessable.
It is understood that this opinion is to be used only in connection with
the offer and sale of the Warrant Shares while the Registration Statement is in
effect.
Please note that we are opining only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters.
We hereby consent to the filing of this opinion as part of the Registration
Statement and to the use of our name therein and in the related Prospectus under
the caption "Legal Matters."
Very truly yours,
/s/ Hale and Dorr
-----------------
HALE AND DORR
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 17, 1996
(except with respect to the matters discussed in Note 10 as to which the date
is March 7, 1996) included in Diacrin Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1995 and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts,
June 20, 1996
