<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 1998
REGISTRATION NO. 333-60125
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AASTROM BIOSCIENCES, INC.
(Exact Name of Registrant as Specified in Its Charter)
_______________
Michigan 94-3096597
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification Number)
24 FRANK LLOYD WRIGHT DRIVE
P.O. BOX 376
ANN ARBOR, MICHIGAN 48106
(734) 930-5555
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
_______________
R. DOUGLAS ARMSTRONG, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AASTROM BIOSCIENCES, INC.
24 FRANK LLOYD WRIGHT DRIVE
P.O. BOX 376
ANN ARBOR, MICHIGAN 48106
(734) 930-5555
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent for Service)
_______________
COPIES TO:
DOUGLAS J. REIN, ESQ.
GRAY CARY WARE & FREIDENRICH LLP
4365 EXECUTIVE DRIVE, SUITE 1600
SAN DIEGO, CA 92121
TELEPHONE: (619) 677-1400
FACSIMILE: (619) 677-1477
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time as described in the Prospectus.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT (2) OFFERING PRICE (2) FEE (2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, ($0 par value) 5,537,765(1) $2.19 $12,127,705 $3,578
==============================================================================================================
</TABLE>
(1) Includes shares of Common Stock which may be offered pursuant to this
Registration Statement consisting of an estimated 3,473,545 shares issuable
upon conversion of 5,000 Series I Shares (as defined below) and 2,064,220
shares issuable upon conversion of 3,000 Series II Shares (as defined
below). For purposes of estimating the number of shares of Common Stock to
be included in this Registration Statement, the Company calculated 150% of
the number of shares of Common Stock issuable in connection with the
conversion of the Company's 1998 Series Shares (as defined below) (based on
a conversion price of $2.18, which is the average of the closing bid prices
of the Common Stock reported on the Nasdaq National Market for the lowest
five consecutive trading days during the twenty trading days preceding
September 5, 1998, multiplied by 94% pursuant to the terms of the 1998
Series Shares). In accordance with Rule 416, this Registration Statement
also covers such indeterminate number of additional shares as may become
issuable upon conversion of or in respect of 1998 Series Shares as a result
of any future stock splits, stock dividends or similar transactions.
(2) Estimated, pursuant to Rule 457(c), solely for the purpose of calculating
the registration fee based on the average of the high and low prices for
the Common Stock on September 4, 1998, as reported on the Nasdaq National
Market of $2.22. $3,771.79 previously paid at the time of original filing.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 1998
PROSPECTUS
- ----------
5,537,765 SHARES OF COMMON STOCK
AASTROM BIOSCIENCES, INC.
This Prospectus relates to the offer and sale of up to 5,537,765 shares
(the "Shares") of Common Stock of Aastrom Biosciences, Inc., a Michigan
corporation (the "Company"). The Shares are issuable upon conversion of shares
of 1998 Series I Convertible Preferred Stock of the Company (the "Series I
Shares") and shares of 1998 Series II Convertible Preferred Stock of the Company
(the "Series II Shares", and collectively with the Series I Shares the "1998
Series Shares"). The Shares may be offered for sale from time to time after
such conversion by or on behalf of the holder of 1998 Series Shares (the
"Selling Shareholder"). The Series I Shares were issued in connection with an
equity financing pursuant to a Securities Purchase Agreement (the "Purchase
Agreement") and the Series II Shares will be issued in connection with the
second closing of this equity financing upon satisfaction of certain conditions
set forth in the Purchase Agreement, including the effectiveness of the
Registration Statement of which this Prospectus is a part. None of these
conditions is within the control of the Selling Shareholder, and the Selling
Shareholder is obligated under the Purchase Agreement to purchase the Series II
Shares upon satisfaction of these conditions. See "Selling Shareholder." The
Company will not receive any proceeds from sales of the Shares by the Selling
Shareholders or from conversions, if any, of the 1998 Series Shares. The
Company has agreed to register the Shares for resale under the Securities Act of
1933, as amended (the "Securities Act"). The Company is also obligated to list
the Shares on the Nasdaq National Market. See "Plan of Distribution."
The Shares may be offered for sale in one or more transactions (which may
include block transactions) effected on the Nasdaq National Market (or any
national securities exchange or U.S. inter-dealer quotation system of a
registered national securities association, on which the Shares are then
listed), in sales occurring in the public market off such exchange, in private
negotiated transactions, through the writing of options on the Shares, short
sales or in a combination of such methods of sale, and on terms and at prices
then obtainable. The Company has agreed to indemnify in certain circumstances
the Selling Shareholder against certain liabilities, including liabilities under
the Securities Act. The Selling Shareholder has agreed to indemnify the Company
under certain circumstances against certain liabilities, including liabilities
under the Securities Act. See "Plan of Distribution."
The Company will bear all reasonable expenses incurred in connection with
the registration of the Shares for resale, including, without limitation, all
registration and filing fees imposed by the Securities and Exchange Commission
(the "Commission"), the National Association of Securities Dealers, Inc. (the
"NASD") and blue sky laws, printing expenses, transfer agents' and registrars'
fees, and the reasonable fees and disbursements of the Company's outside counsel
and independent accountants, but excluding brokerage commissions, underwriting
discounts or commissions, if any, and other expenses incurred by the Selling
Shareholder in the offer and sale of the Shares.
The Company's Common Stock is quoted on The Nasdaq National Market under
the symbol "ASTM." On September 9, 1998, the last sale price of the Company's
Common Stock as reported on The Nasdaq National Market was $2.0625.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________
THE DATE OF THIS PROSPECTUS IS _________, 1998.
<PAGE>
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 periodic reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information 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 Regional
Offices of the Commission at 230 South Dearborn Street, Chicago, Illinois 60604;
and at 75 Park Place, New York, New York 10007. In addition, copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Company's Common Stock is traded on The Nasdaq
National Market. Reports and other information concerning the Company can also
be inspected at the offices of the National Association of Securities Dealers,
Inc., Market Listing Section, 1735 K Street, N.W., Washington, D.C. 20006. Such
reports and other information may also be inspected without charge at a Web site
maintained by the Commission. The address of the site is http:\\www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
(Commission File No. 0-22025), pursuant to the Exchange Act are incorporated
herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1997 and all amendments thereto.
(2) Form 8-K filed by the Company on July 15, 1997.
(3) Form 10-Q filed by the Company on November 14, 1997.
(4) Form 10-Q filed by the Company on February 10, 1998.
(5) Form 10-Q filed by the Company on May 7, 1998.
(6) The portions of the registration statement on Form 8-A filed by the Company
pursuant to the Exchange Act which contain a description of the Common Stock.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the Registration Statement (the "Registration Statement") shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing of such documents or reports. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of the Registration
Statement 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 the Registration Statement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon oral or written request, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into the information that this Prospectus incorporates). Written or telephone
requests should be directed to Mr. Todd E. Simpson, Chief Financial Officer,
Aastrom Biosciences, Inc., 24 Frank Lloyd Wright Drive, P.O. Box 376, Ann Arbor,
Michigan, 48106, telephone number (734) 930-5555.
3
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RISK FACTORS
In addition to the other information in this Prospectus, prospective
investors should consider the following risk factors in evaluating the Company
and its business before purchasing any of the Common Stock offered hereby. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed below.
UNCERTAINTIES RELATED TO PRODUCT DEVELOPMENT AND MARKETABILITY
The Company has not completed the development or clinical trials of any of
its cell culture technologies or product candidates and, accordingly, has not
begun to market or generate revenue from their commercialization. Furthermore,
the Company's technologies and product candidates are based on cell culture
processes and methodologies which are not widely employed. Commercialization of
the Company's lead product candidate, the AastromReplicell(/TM/) Cell Production
System (the "AastromReplicell(/TM/) System"), will require substantial
additional research and development by the Company as well as substantial
clinical trials. There can be no assurance that the Company will successfully
complete development of the AastromReplicell(/TM/) System or its other product
candidates, or successfully market its technologies or product candidates, which
lack of success would have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company or its collaborators may encounter problems and delays relating
to research and development, regulatory approval and intellectual property
rights of the Company's technologies and product candidates. There can be no
assurance that the Company's research and development programs will be
successful, that its cell culture technologies and product candidates will
facilitate the ex vivo production of cells with the expected biological
activities in humans, that its technologies and product candidates, if
successfully developed, will prove to be safe and efficacious in clinical
trials, that the necessary regulatory approvals for any of the Company's
technologies or product candidates and the cells produced in such products will
be obtained or, if obtained, will be as broad as sought, that patents will issue
on the Company's patent applications or that the Company's intellectual property
protections will be adequate. The Company's product development efforts are
primarily directed toward obtaining regulatory approval to market the
AastromReplicell(/TM/) System as an alternative to the bone marrow harvest and
peripheral blood progenitor cell ("PBPC") stem cell collection methods. These
stem cell collection methods have been widely practiced for a number of years,
and there can be no assurance that any of the Company's technologies or product
candidates will be accepted by the marketplace as readily as these or other
competing processes and methodologies, or at all. The failure by the Company to
achieve any of the foregoing would have a material adverse effect on the
Company's business, financial condition and results of operations.
UNCERTAINTIES RELATED TO CLINICAL TRIALS
The approval of the U.S. Food and Drug Administration (the "FDA") will be
required before any commercial sales of the Company's product candidates may
commence in the United States, and approvals from foreign regulatory authorities
will be required before international sales may commence. Prior to obtaining
necessary regulatory approvals in the U.S., the Company will be required to
demonstrate the safety and efficacy of its processes and product candidates and
the cells produced by such processes and in such products for application in the
treatment of humans through extensive preclinical studies and clinical trials.
The Company is currently conducting pre-pivotal clinical trials to demonstrate
the safety and biological activity of patient-derived or umbilical cord blood
cells ("UCB cells") produced in the Company's prototype of the
AastromReplicell(/TM/) System in a limited number of patients. If the results
from these pre-pivotal trials are successful, the Company intends to seek
clearance from the FDA to commence pivotal clinical trials. The results of
preclinical studies and clinical trials of the Company's product candidates,
however, may not necessarily be predictive of results that will be obtained from
subsequent or more extensive clinical trials. Further, there can be no assurance
that pre-pivotal or pivotal clinical trials of any of the Company's product
candidates will demonstrate the safety, reliability and efficacy of such
products, or of the cells produced in such products, to the extent necessary to
obtain required regulatory approvals or market acceptance.
4
<PAGE>
The ability of the Company to complete its clinical trials in a timely
manner is dependent upon many factors, including the rate of patient enrollment.
Patient enrollment is a function of many factors, including the size of the
patient population, the proximity of suitable patients to clinical sites and the
eligibility criteria for the study. The Company has experienced delays in
patient accrual in its current pre-pivotal clinical trials. Further delays in
patient accrual, in the Company's current pre-pivotal clinical trials, or in
pivotal trials planned to be conducted, could result in increased costs
associated with clinical trials or delays in receiving regulatory approvals and
commercialization, if any. Furthermore, the progress of clinical investigations
with the AastromReplicell(/TM/) System and the Company's other product
candidates will be monitored by the FDA, which has the authority to cease
clinical investigations, at any time, due to patient safety or other
considerations. Any of the foregoing would have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Uncertainty of Regulatory Approval; Extensive Government Regulation."
The Company's current pre-pivotal trials are designed to demonstrate
specific biological safety and activity of cells produced in the
AastromReplicell(/TM/) System, but are not designed to demonstrate long-term
sustained engraftment of such cells. The patients enrolled in these pre-pivotal
trials will have undergone extensive chemotherapy treatment prior to the
infusion of cells produced in the AastromReplicell(/TM/) System. Such treatments
will have substantially weakened these patients and may have irreparably damaged
their hematopoietic systems. Due to these and other factors, it is possible that
patients may die or suffer severe complications during the course of the current
pre-pivotal trials or future trials. For example, in the trials to date,
patients who were in the transplant recovery process have died from
complications related to the patient's clinical condition that, according to the
physicians involved, were unrelated to the AastromReplicell(/TM/) System
procedure. Further, there can be no assurance that patients receiving cells
produced with the Company's technologies and product candidates will demonstrate
long-term engraftment in a manner comparable to cells obtained from current stem
cell therapy procedures, or at all. The failure to adequately demonstrate the
safety or efficacy of the Company's technologies and product candidates,
including long-term sustained engraftment, or the death of, or occurrence of
severe complications in, one or more patients could substantially delay, or
prevent, regulatory approval of such product candidates and have a material
adverse effect on the Company's business, financial condition and results of
operations.
MANUFACTURING AND SUPPLY UNCERTAINTIES; DEPENDENCE ON THIRD PARTIES
The Company does not operate and has no current intention to operate
manufacturing facilities for the production of its product candidates. The
Company currently arranges for the manufacture of its product candidates and
their components, including certain cytokines, serum and media, with third
parties, and expects to continue to do so in the foreseeable future. The Company
has entered into collaborative product development and supply agreements with
SeaMED Corporation ("SeaMED"), Ethox Corporation ("Ethox") and Anchor Advanced
Products, Inc., Mid-State Plastics Division ("MSP"), for the collaborative
development and manufacture of certain components of the AastromReplicell(/TM/)
System and is dependent upon those suppliers to manufacture its products. The
Company is also dependent upon Immunex Corporation ("Immunex"), Life
Technologies, Inc. and Biowhittaker for the supply of certain cytokines, serum
and media to be used in the AastromReplicell System. With regard to cytokines
that are not commercially available from other sources, Immunex is currently the
Company's sole supplier and few alternative supply sources exist. Apart from
SeaMED, Ethox, MSP and Immunex, the Company currently does not have contractual
commitments from any of these manufacturers or suppliers. There can be no
assurance that the Company's supply of such key cytokines, components and other
materials will not become limited, be interrupted or become restricted to
certain geographic regions. Additionally, there can be no assurance that the
Company will not require additional cytokines, components and other materials to
manufacture, use or market its product candidates, or that necessary key
components will be available for use on a sustained basis, if at all, by the
Company in the markets in which it intends to sell its products. There can also
be no assurance that the Company will be able to obtain alternative components
and materials from other manufacturers of acceptable quality, or on terms or in
quantities acceptable to the Company. In the event that any of the Company's key
manufacturers or suppliers fail to perform their respective obligations or the
Company's supply of such cytokines, components or other materials becomes
limited or interrupted, the Company would not be able to conduct clinical trials
or market its product candidates on a timely and cost-competitive basis, if at
all, which would have a material adverse effect on the Company's business,
financial condition and results of operations.
5
<PAGE>
Certain of the compounds used by the Company in its current stem cell
expansion process involve the use of animal-derived products. The availability
of these compounds for clinical and commercial use may become limited by
suppliers or restricted by regulatory authorities, which may impose a potential
competitive disadvantage for the Company's products compared to competing
products and procedures. There can be no assurance that the Company will not
experience delays or disadvantages related to the future availability of such
materials. Any restriction on the use of such materials could have a material
adverse effect on the Company's business, financial condition and results of
operations, and there can be no assurance that the Company will be able to
develop or obtain alternative compounds.
Like SeaMED, Ethox, MSP and Immunex, other suppliers would need to meet FDA
manufacturing requirements and undergo rigorous facility and process validation
tests required by federal and state regulatory authorities. Any significant
delays in the completion and validation of such facilities could have a material
adverse effect on the ability of the Company to complete clinical trials and to
market its products on a timely and profitable basis, which in turn would have a
material adverse effect on the Company's business, financial condition and
results of operations.
There can be no assurance that the Company will be able to continue its
present arrangements with its suppliers, supplement existing relationships or
establish new relationships or that the Company will be able to identify and
obtain the ancillary materials that are necessary to develop its product
candidates in the future. The Company's dependence upon third parities for the
supply and manufacture of such items could adversely affect the Company's
ability to develop and deliver commercially feasible products on a timely and
competitive basis.
HISTORY OF OPERATING LOSSES; ANTICIPATION OF FUTURE LOSSES
The Company is a development stage company and there can be no assurance
that its product applications for cell therapy will be successful. The Company
has not yet completed the development and clinical trials of any of its product
candidates and, accordingly, has not yet begun to generate revenues from the
commercialization of any of its product candidates. Aastrom was incorporated in
1989 and has experienced substantial operating losses since inception. As of
June 30, 1998, the Company has incurred net operating losses totaling
approximately $58.5 million. Such losses have resulted principally from costs
incurred in the research and development of the Company's cell culture
technologies and the AastromReplicell(/TM/) System, general and administrative
expenses, and the prosecution of patent applications. The Company expects to
incur significant and increasing operating losses until product sales commence,
primarily owing to the expansion of its research and development programs,
including preclinical studies and clinical trials. The amount of future losses
and when, if ever, the Company will achieve profitability, are uncertain. The
Company's ability to achieve profitability will depend, among other things, on
successfully completing the development of its product candidates, obtaining
regulatory approvals, establishing manufacturing, sales and marketing
arrangements with third parties, and raising sufficient funds to finance its
activities. No assurance can be given that the Company's product development
efforts will be successful, that required regulatory approvals will be obtained,
that any of the Company's product candidates will be manufactured at a
competitive cost and will be of acceptable quality, or that the Company will be
able to achieve profitability or that profitability, if achieved, can be
sustained.
LIMITED SALES AND MARKETING CAPABILITIES; DEPENDENCE ON COLLABORATIVE
RELATIONSHIPS
The Company has limited internal sales, marketing and distribution
capabilities. If any of the Company's product candidates are successfully
developed and the necessary regulatory approvals are obtained, the Company
intends to market such products through collaborative relationships with
companies that have established sales, marketing and distribution capabilities.
The Company has established a strategic alliance with Cobe Laboratories, Inc.
and Cobe BCT, Inc. (collectively, "Cobe") for the worldwide distribution of the
AastromReplicell(/TM/) System for stem cell therapy and related uses. Cobe has
the right to terminate its Distribution Agreement with the Company upon twelve
months notice upon a change of control of the Company, other than to Cobe, or if
Cobe determines that commercialization of the AastromReplicell(/TM/) System for
stem cell therapy on or prior to December 31, 1998 is unlikely. See
"Consequences of Cobe Relationship."
6
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The amount and timing of resources that Cobe commits to its strategic
alliance activities with the Company are, to a significant extent, outside of
the control of the Company. There can be no assurance that Cobe will pursue the
marketing and distribution of the Company's products, continue to perform its
obligations under its agreements with the Company or that the Company's
strategic alliance with Cobe will result in the successful commercialization and
distribution of the Company's technologies and product candidates. There can
also be no assurance that Cobe will be successful in its efforts to market and
distribute the Company's products for stem cell therapy. The suspension or
termination of the Company's strategic alliance with Cobe or the failure of the
strategic alliance to be successful may have a material adverse effect on the
Company's business, financial condition and results of operations.
Subject to the contractual requirements of the Cobe relationship, the
Company will seek to enter into other agreements relating to the development and
marketing of product candidates and in connection with such agreements may rely
upon corporate partners to conduct clinical trials, seek regulatory approvals
for, manufacture and market its potential products. There can be no assurance
that the Company will be able to establish collaborative relationships for the
development or marketing of the Company's product candidates on acceptable
terms, if at all, and if such relationships are established, that they will be
successful or sustained on a long-term basis. The inability of the Company to
establish such collaborative relationships may require the Company to curtail
its development or marketing activities with regard to its potential products
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
To date, Aastrom has funded its operations primarily through the sale of
equity securities and corporate collaborations. The Company anticipates that the
net proceeds from the sale of the Series I Shares, together with the Company's
available cash and expected interest income thereon, will be sufficient to
finance the development and manufacture of the AastromReplicell(/TM/) System for
use in clinical trials, expanded clinical trials, other research and development
and working capital and other corporate requirements until mid 1999. This
estimate is based on certain assumptions which could be negatively impacted by
the matters discussed under this heading and elsewhere under the caption "Risk
Factors." In order to grow and expand its business, and to introduce its product
candidates into the marketplace, the Company will need, among other things, to
raise additional funds. The development of the Company's products for the
expansion of additional cell types will require the Company to raise additional
funds or to seek collaborative partners, or both, to finance related research
and development activities.
The Company's future capital requirements will depend upon many factors,
including, but not limited to, continued scientific progress in its research and
development programs, costs and timing of conducting clinical trials and seeking
regulatory approvals and patent prosecutions, competing technological and market
developments, possible changes in existing collaborative relationships, the
ability of the Company to establish additional collaborative relationships, and
effective commercialization activities and facilities expansions if and as
required. Because of the Company's potential long-term funding requirements, it
may attempt to access the public or private equity markets if and whenever
conditions are favorable, even if it does not have an immediate need for
additional capital at that time. There can be no assurance that any such
additional funding will be available to the Company on reasonable terms, or at
all. If adequate funds are not available, the Company may be required to delay
or terminate research and development programs, curtail capital expenditures,
and reduce business development and other operating activities. The Company
intends to seek additional collaborative partners to assist in the development
of certain of its products. If the Company is not successful in finding,
entering into and maintaining such arrangements, its development efforts could
be delayed. Furthermore, there can be no assurance that the Company will be
able to implement collaborative development agreements under acceptable terms,
if at all. Any of the foregoing capital constraints would have a material
adverse effect on the Company's business, financial condition and results of
operations.
UNCERTAINTY OF REGULATORY APPROVAL; EXTENSIVE GOVERNMENT REGULATION
The Company's research and development activities, preclinical studies,
clinical trials, and the anticipated manufacturing and marketing of its product
candidates are subject to extensive regulation by the FDA and other
7
<PAGE>
regulatory authorities in the United States. These activities are also
regulated in other countries where the Company intends to test and market its
product candidates. The approval of the FDA will be required before any
commercial sales of the Company's product candidates may commence in the United
States. Additionally, the Company will be required to obtain approvals from
foreign regulatory authorities before international sales may commence.
The Company's products are potentially subject to regulation as medical
devices under the Federal Food, Drug and Cosmetic Act, or as biological products
under the Public Health Service Act, or both. Different regulatory requirements
may apply to the Company's products depending on how they are categorized by the
FDA under these laws. To date, the FDA has indicated that it intends to
regulate the AastromReplicell(/TM/) System for stem cell therapy as a Class III
medical device through the Center for Biologics Evaluation and Research.
However, there can be no assurance that the FDA will ultimately regulate the
AastromReplicell System(/TM/) for stem cell therapy as a medical device or that
regulatory approval for such product will be obtained in a timely fashion or at
all.
Further, it is unclear whether the FDA will separately regulate the cell
therapies derived from the AastromReplicell System(/TM/). The FDA is in the
process of developing its requirements with respect to somatic cell therapy and
gene cell therapy products, and recently proposed a new type of license for
autologous cells manipulated ex vivo and intended for structural repair or
reconstruction; autologous cells are cells obtained from, and administered to
the same patient. This proposal may indicate that the FDA will impose a similar
approval requirement on other types of autologous cellular therapies, such as
autologous cells for stem cell therapy. Any such additional regulatory or
approval requirement could significantly delay the introduction of the Company's
product candidates to the market, and have a material adverse effect on the
Company's business, financial condition and results of operations. Until the FDA
issues definitive regulations covering the Company's product candidates, the
regulatory guidelines or requirements for approval of such product candidates
will continue to be subject to significant uncertainty.
Before marketing, the AastromReplicell System(/TM/) or other product
candidates developed by the Company must undergo an extensive regulatory
approval process. The regulatory process, which includes preclinical studies and
clinical trials to establish safety and efficacy, takes many years and requires
the expenditure of substantial resources. Data obtained from preclinical and
clinical activities are susceptible to varying interpretations which could
delay, limit or prevent FDA approval. In addition, delays or rejections may be
encountered based upon changes in FDA policy for medical product approvals
during the period of product development, changes in FDA classification of the
Company's products, and FDA regulatory review of applications submitted by the
Company for product approval. Similar delays may also be encountered in foreign
countries. There can be no assurance that, even after the expenditures of
substantial time and financial resources, regulatory approval will be obtained
for any products developed by the Company. Moreover, if regulatory approval of a
product is obtained, such approval may be subject to limitations on the
indicated uses for which it may be marketed. Further, even if such regulatory
approval is obtained, a marketed product, its manufacturer and its manufacturing
facilities are subject to continual review and periodic inspections by the FDA,
and later discovery of previously unknown problems with a product, manufacturer
or facility may result in restrictions on such product or manufacturer,
including a withdrawal of the product form the market. Failure to comply with
the applicable regulatory requirements can, among other things, result in fines,
suspensions of regulatory approvals, product recalls, operating restrictions and
criminal prosecution. Further, additional governmental regulation may be
established which could prevent or delay regulatory approval of the Company's
products.
The Company believes that the AastromReplicell(/TM/) System's components
will be regulated in Europe as Class I Sterile, Class IIb and Class III medical
devices, under the authority of the new Medical Device Directives ("MDD") being
implemented by European Union ("EU") member countries. In order for the Company
to market its products in Europe, it must obtain a CE Mark from a Notified Body
to certify that the Company and its operations comply with certain minimum
quality standards and compliance procedures, or, alternatively, that its
manufactured products meet a more limited set of requirements. There can be no
assurance that the Company and its suppliers will be able to meet these minimum
requirements, or, if met, that the Company and its suppliers will be able to
maintain such compliance. The result of such non-compliance would have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance, however, that the
AastromReplicell(/TM/) System will ultimately be regulated in Europe as
currently expected, and, if the
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AastromReplicell(/TM/) System is not so regulated, the Company could be forced
to obtain additional regulatory approvals and could be subject to additional
regulatory requirements and uncertainty, which would have a material adverse
effect on the Company's business, financial condition and results of operations.
CONSEQUENCES OF COBE RELATIONSHIP
Cobe is the largest single shareholder of the Company, beneficially owning
approximately 20.2% of the outstanding Common Stock (prior to conversion of any
1998 Series Shares into Common Stock, but including the shares of Common Stock
issuable upon conversion of the outstanding 5 1/2% Convertible Preferred Stock
as of August 31, 1998). In addition, Cobe has certain preemptive rights to
maintain its relative percentage ownership and voting interest in the Company.
Cobe also has an option, until February 2000, to purchase from the Company an
amount of Common Stock equal to 30% of the Company's fully diluted shares after
the exercise of such option, at a purchase price equal to 120% of the public
market trading price of the Company's Common Stock. If such option is exercised,
Cobe would significantly increase its ownership interest in the Company and, as
a consequence of such share ownership, obtain effective control of the Company.
Such effective control would include the ability to influence the outcome of
shareholder votes, including votes concerning the election of directors, the
amendment of provisions of the Company's Restated Articles of Incorporation or
Bylaws, and the approval of mergers and other significant transactions. Cobe
also has been granted a "right of first negotiation" in the event that the
Company determines to sell all, or any material portion, of its assets to
another company or to merge with another company. Edward C. Wood, Jr., the
President of Cobe BCT, is a director of the Company. Furthermore, the Company
has agreed to use reasonable and good faith efforts to cause a nominee
designated by Cobe to be elected to the Board of Directors for as long as Cobe
owns at least 15% of the outstanding Common Stock. The existence of the
foregoing rights or the exercise of such control by Cobe could have the effect
of delaying, deterring or preventing certain takeovers or changes in control of
the management of the Company, including transactions in which shareholders
might otherwise receive a premium for their shares over then current market
prices.
COMPETITION AND TECHNOLOGICAL CHANGE
The Company is engaged in the development of medical products and processes
which will face competition in a marketplace characterized by rapid
technological change. Many of the Company's competitors have significantly
greater resources than the Company, and have developed and may develop product
candidates and processes that directly compete with the Company's products.
Moreover, competitors that are able to achieve patent protection, obtain
regulatory approvals and commence commercial sales of their products before the
Company, and competitors that have already done so, may enjoy a significant
competitive advantage. The Company's product development efforts are primarily
directed toward obtaining regulatory approval to market the
AastromReplicell(/TM/) System for stem cell therapy. That market is currently
dominated by the bone marrow harvest and PBPC collection methods. The Company's
clinical data, although early, suggests that cells expanded in the
AastromReplicell(/TM/) System using its current process will enable
hematopoietic recovery within the time frames currently achieved by bone marrow
harvest, however, neutrophil and platelet recovery times may be slower than with
PBPC collection methods. The Company is evaluating techniques and methods to
optimize the cells produced in the AastromReplicell(/TM/) System to reduce the
recovery time of neutrophils and platelets in patients. There can be no
assurance that if such procedure optimization does not lead to recovery times
equal to or faster than those of PBPC collection methods, such outcome would not
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, the bone marrow harvest and PBPC
collection methods have been widely practiced for a number of years and,
recently, the patient costs associated with these procedures have begun to
decline. There can be no assurance that the AastromReplicell(/TM/) System
method, if approved for marketing, will prove to be competitive with these
established collection methods on the basis of hematopoietic recovery time, cost
or otherwise. The Company also is aware of certain other products manufactured
or under development by competitors that are used for the prevention or
treatment of certain diseases and health conditions which the Company has
targeted for product development. In particular, the Company is aware that
competitors such as Amgen, Inc., CellPro, Incorporated, Novartis, A.G., VimRx
Pharmaceuticals, Inc. and Rhone-Poulenc Rorer Inc. ("RPR") are in advanced
stages of development of technologies and products for use in stem cell therapy
and other market applications currently being pursued by the Company. In
addition, Cobe, a significant shareholder of the Company, is a market leader in
the blood cell processing products industry and, accordingly, a potential
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competitor of the Company. There can be no assurance that developments by others
will not render the Company's product candidates or technologies obsolete or
noncompetitive, that the Company will be able to keep pace with new
technological developments or that the Company's product candidates will be able
to supplant established products and methodologies in the therapeutic areas that
are targeted by the Company. The foregoing factors could have a material adverse
effect on the Company's business, financial condition and results or operations.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS
Aastrom's success depends in part on its ability, and the ability of its
licensors, to obtain patent protection for its products and processes, preserve
its trade secrets, defend and enforce its rights against infringement and
operate without infringing the proprietary rights of third parties, both in the
United States and in other countries. The validity and breadth of claims in
medical technology patents involve complex legal and factual questions and,
therefore, may be highly uncertain. No assurance can be given that any patents
based on pending patent applications or any future patent applications of the
Company or its licensors will be issued, that the scope of any patent protection
will exclude competitors or provide competitive advantages to the Company, that
any of the patents that have been or may be issued to the Company or its
licensors will be held valid if subsequently challenged or that others will not
claim rights in or ownership of the patents and other proprietary rights held or
licensed by the Company. Furthermore, there can be no assurance that others
have not developed or will not develop similar products, duplicate any of the
Company's products or design around any patents that have been or may be issued
to the Company or its licensors. Since patent applications in the United States
are maintained in secrecy until patents issue, the Company also cannot be
certain that others did not first file applications for inventions covered by
the Company's and its licensors' pending patent applications, nor can the
Company be certain that it will not infringe any patents that may issue to
others on such applications. The Company relies on certain licenses granted by
the University of Michigan for certain of its patent rights. If the Company
breaches such agreements or otherwise fails to comply with such agreements, or
if such agreements expire or are otherwise terminated, the Company may lose its
rights under the patents held by the University of Michigan, which would have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company also relies on trade secrets and
unpatentable know-how which it seeks to protect, in part, by confidentiality
agreements with its employees, consultants, suppliers and licensees. There can
be no assurance that these agreements will not be breached, that the Company
would have adequate remedies for any breach, or that the Company's trade secrets
or unpatentable know-how will not otherwise become known or be independently
developed by competitors.
The Company's success will also depend in part on its ability to develop
commercially viable products without infringing the proprietary rights of
others. The Company has not conducted freedom of use patent searches and no
assurance can be given that patents do not exist or could not be filed which
would have an adverse effect on the Company's ability to market its products or
maintain its competitive position with respect to its products. If the
Company's technology components, devices, designs, products, processes or other
subject matter are claimed under the existing United States or foreign patents
or are otherwise protected by third party proprietary rights, the Company may be
subject to infringement actions. In such event, the Company may challenge the
validity of such patents or other proprietary rights or be required to obtain
licenses from such companies in order to develop, manufacture or market its
products. There can be no assurance that the Company would be able to obtain
such licenses or that such licenses, if available, could be obtained on
commercially reasonable terms. Furthermore, the failure to either develop a
commercially viable alternative or obtain such licenses could result in delays
in marketing the Company's proposed products or the inability to proceed with
the development, manufacture or sale of products requiring such licenses, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. If the Company is required to defend
itself against charges of patent infringement or to protect its own proprietary
rights against third parties, substantial costs will be incurred regardless of
whether the Company is successful. Such proceedings are typically protracted
with no certainty of success. An adverse outcome could subject the Company to
significant liabilities to third parties, and force the Company to curtail or
cease its development and sale of its products and processes.
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NO ASSURANCE OF THIRD PARTY REIMBURSEMENT
The Company's ability to successfully commercialize its product candidates
will depend in part on the extent to which payment for the Company's products
and related treatments will be available from government healthcare programs,
such as Medicare and Medicaid, as well as private health insurers, health
maintenance organizations and other third party payors. Government and other
third-party payors are increasingly attempting to contain health care costs, in
part by challenging the price of medical products and services. Reimbursement by
third-party payors depends on a number of factors, including the payor's
determination that use of the product is safe and effective, not experimental or
investigational, medically necessary, appropriate for the specific patient and
cost-effective. Since reimbursement approval is required form each payor
individually, seeking such approvals is a time-consuming and costly process
which will require the Company to provide scientific and clinical support of the
use of each of the Company's products to each payor separately. Significant
uncertainty exists as to the payments status of newly approved medical products,
and there can be no assurance that adequate third-party payments will be
available to enable the Company to establish or maintain price levels sufficient
to realize an appropriate return on its investment in product development. If
adequate payment levels are not provided by government and third-party payors
for use of the Company's products, the market acceptance of those products will
be adversely affected.
There can be no assurance that reimbursement in the United States or
foreign countries will be available for any of the Company's product candidates,
that any reimbursement granted will be maintained, or that limits on
reimbursement available form third-party payors will not reduce the demand for,
or negatively affect the price of, the Company's products. The unavailability
or inadequacy of third-party reimbursement for the Company's product candidates
would have a material adverse effect on the Company. Finally, the Company is
unable to forecast what additional legislation or regulation relating to the
healthcare 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.
HAZARDOUS MATERIALS
The Company's research and development activities involve the controlled
use of hazardous materials, chemicals and various radioactive compounds. The
Company is subject to federal, state and local laws and regulations governing
the use, manufacture, storage, handling and disposal of such materials and
certain waste products. In the event of any contamination or injury from these
materials, the Company could be held liable for any damages that result and any
such liability could exceed the resources of the Company. Furthermore, the
failure to comply with current or future regulations could result in the
imposition of substantial fines against the Company, suspension of production,
alteration of its manufacturing processes or cessation of operations. There can
be no assurance that the Company will not be required to incur significant costs
to comply with any such laws and regulations in the future, or that such laws or
regulations will not have a material adverse effect on the Company's business,
financial condition and results of operations. Any failure by the Company to
control the use, disposal, removal or storage of, or to adequately restrict the
discharge of, or assist in the cleanup of, hazardous chemicals or hazardous,
infectious or toxic substances could subject the Company to significant
liabilities, including joint and several liability under certain statutes. The
imposition of such liabilities would have a material adverse effect on the
Company's business, financial condition and results of operations.
PRODUCT LIABILITY AND LIMITED INSURANCE
The Company faces an inherent business risk of exposure to product
liability claims in the event that the use of the AastromReplicell System during
research and development efforts, including clinical trials, or after
commercialization results in adverse effects. As a result, the Company may
incur significant product liability exposure. There can be no assurance that
existing insurance coverage will be adequate or that adequate insurance coverage
for future clinical trials or commercial activities will be available at an
acceptable cost, if at all, or that a product liability claim would not
materially adversely affect the business, financial condition or results of
operations of the Company.
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DEPENDENCE ON KEY PERSONNEL
The success of the Company depends in large part upon the Company's ability
to attract and retain highly qualified scientific and management personnel. The
Company faces competition for such personnel from other companies, research and
academic institutions an other entities. There can be no assurance that the
Company will be successful in hiring or retaining key personnel.
SHARES ELIGIBLE FOR FUTURE SALE; POTENTIAL FOR DILUTION
Future sales of shares by existing shareholders could adversely affect the
market price of the Company's Common Stock. Substantially all of the
outstanding shares of Common Stock and the shares issuable upon the conversion
of the various series of preferred stock of the Company are freely tradeable,
subject to restrictions imposed by Rule 144 under the Securities Act of 1933, as
amended, with respect to sales by affiliates.
As of August 31, 1998, 5,000 of the Series I Shares were issued and
outstanding, and none of the Series II Shares were outstanding, though the
Selling Shareholder is obligated under the Purchase Agreement to purchase 3,000
Series II Shares upon satisfaction of certain conditions. See "Selling
Shareholder." The 1998 Series Shares are each convertible into such number of
shares of Common Stock as is determined by dividing the stated value ($1,000) of
each 1998 Series Share (as such value is increased by a premium based on the
number of days the 1998 Series Shares are held) by the then current conversion
price (which is determined by reference to the then current market price). If
circumstances were such that the Selling Shareholder was able to and did
convert all of its Series I Shares as of September 5, 1998, the Selling
Shareholder would have received 2,077,456 shares of Common Stock, but this
number of shares could prove to be significantly greater in the event of a
decrease in the trading price of the Common Stock. Purchasers of Common Stock
could therefore experience substantial dilution of their investment upon
conversion of the 1998 Series Shares. Similarly, issuance and sale of the
shares of Common Stock upon conversion of the Series II Shares could result in
substantial dilution of existing shareholders and could adversely affect the
market price for the Common Stock. The 1998 Series Shares are not registered
and may be sold only if registered under the Securities Act or sold in
accordance with an applicable exemption from registration, such as Rule 144.
The shares of Common Stock into which the 1998 Series Shares may be converted
are being registered pursuant to this Registration Statement.
CONTROL BY EXISTING MANAGEMENT AND SHAREHOLDERS
As of August 31, 1998, the Company's directors, executive officers, and
certain principal shareholders, including Cobe, affiliated with members of the
Board of Directors and their affiliates beneficially own approximately 29.0% of
the outstanding shares of Common Stock (prior to conversion of any 1998 Series
Shares into Common Stock, but including the shares of Common Stock issuable upon
conversion of the outstanding 5 1/2% Convertible Preferred Stock).
Accordingly, such shareholders, acting together, may have the ability to exert
significant influence over the election of the Company's Board of Directors and
other matters submitted to the Company's shareholders for approval. The voting
power of these holders may discourage or prevent certain takeovers or changes in
control of the management of the Company unless the terms are approved by such
holders.
POSSIBLE STOCK PRICE AND VOLUME VOLATILITY
The trading price and volume of the Company's Common Stock has experienced
significant volatility. The trading price and volume of the Common Stock and
the price at which the Company may sell securities in the future could be
subject to wide fluctuations in response to announcements of clinical results,
research activities, technological innovations or new products by the Company or
competitors, changes in government regulation, developments concerning
proprietary rights, variations in the Company's operating results, announcements
by the Company of regulatory developments, litigation, disputes concerning
patents or proprietary rights or public concern regarding the safety, efficacy
or other implications of the products or methodologies to be developed by the
Company or its collaborators or enabled by the Company's technology, general
market conditions, the liquidity of the Company or its ability to raise
additional funds, and other factors or events. In addition, the stock market
has experienced extreme fluctuations in price and volume. This volatility has
significantly affected the market prices for securities of emerging technology
companies for reasons frequently unrelated to or disproportionate to the
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operating performance of the specific companies. These market fluctuations, as
well as shortfalls in revenue or earnings as compared with public market
analysts' expectations, changes in such analysts' recommendations or projections
and fluctuations in the stock markets generally, as well as sales or offers of
the large amounts of Shares, may adversely affect the market price of the Common
Stock. In addition, since the Company's initial public offering in February
1997, the average daily trading volume of the Common Stock on the Nasdaq
National Market has generally been relatively low. There can be no assurance
that a more active trading market will develop in the future.
ANTI-TAKEOVER EFFECT OF CHARTER AND BYLAW PROVISIONS AND MICHIGAN LAW
The Company's Restated Articles of Incorporation authorize the Board of
Directors to issue, without shareholder approval, an additional 2,792,000 shares
of preferred stock with voting, conversion, and other rights and preferences
that could materially and adversely affect the voting power or other rights of
the holders of Common Stock. The issuance of preferred stock or of rights to
purchase preferred stock could be used to discourage an unsolicited acquisition
proposal. The Company's Bylaws contain procedural restrictions on director
nominations by shareholders and the submission of other procedures required for
director nominations and shareholder proposals could discourage a proxy contest,
make more difficult the acquisition of a substantial block of Common Stock, or
limit the price that investors might be willing to pay in the future for shares
of Common Stock. The Company's Restated Articles of Incorporation eliminate the
right of shareholders to act without a meeting, do not provide for cumulative
voting in the election of directors and provide that the holders of at least
two-thirds of the outstanding shares of Common Stock must approve certain
transactions resulting in a change of control of the Company. In addition,
certain provisions of Michigan laws applicable to the Company, including, but
not limited to, provisions requiring class or series votes in certain
circumstances with respect to proposed business combinations, could also delay
or make more difficult a merger, tender offer or proxy contest involving the
Company.
ABSENCE OF DIVIDENDS
The Company has never paid cash dividends on its Common Stock and does not
anticipate paying any cash dividends on its Common Stock in the foreseeable
future. The Company's 5 1/2% Convertible Preferred Stock accrues a dividend at
5 1/2% per annum, payable, at the Company's option, in cash or through the
issuance of shares of Common Stock of the Company. As of June 30, 1998, 72,940
shares have been issued as payment of this dividend.
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, including, but not limited to, statements
regarding: uncertainties related to product development and marketability;
uncertainties related to clinical trials; manufacturing and supply uncertainties
and dependence on third parties; history of operating losses and anticipation of
future losses; limited sales and marketing capabilities and dependence on
collaborative relationships; future capital needs and uncertainty of additional
funding; uncertainty of regulatory approval and extensive government regulation;
consequences of Cobe relationship; competition and technological change;
uncertainty regarding patents and proprietary rights; no assurance of third
party reimbursement; hazardous materials; and potential product liability and
availability of insurance. These statements are subject to risks and
uncertainties, including those set forth under this caption, and actual results
could differ materially from those expressed or implied in these statements.
All forward-looking statements included in this Prospectus are made as of the
date hereof, and the Company assumes no obligation to update any such forward-
looking statement or reason why actual results might differ.
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THE COMPANY
Aastrom Biosciences, Inc. is developing proprietary process technologies
and devices for a range of cell therapy applications, including stem cell
therapies and selected emerging therapies such as immunotherapy, solid tissue
repair and ex vivo gene therapy. The AastromReplicell(/TM/) System is the
Company's lead product under development, and consists of a clinical cell
culture system that operates single-use therapy kits tailored for each patient
therapy for use in the rapidly growing cell therapy market. The Company is
currently conducting pre-pivotal trials at multiple sites in the United States
and Europe of the AastromReplicell(/TM/) System for use in stem cell therapy in
preparation for pivotal trials in the United States and potential marketing in
Europe. The Company believes that the AastromReplicell(/TM/) System method will
be cost-effective, less invasive and a less time consuming alternative to
currently available stem cell collection methods and may enhance the clinical
utility of umbilical cord blood ("UCB") transplants by expanding the number of
cells available for transplant. For stem cell therapy, the Company has entered
into a strategic collaboration for the marketing, distribution and customer
service of the AastromReplicell(/TM/) System with Cobe BCT, Inc., a subsidiary
of Gambro AB and a leading provider of blood cell processing products.
The AastromReplicell(/TM/) System is designed as a platform product which
implements the Company's pioneering stem cell replication technology. The
Company also believes that the AastromReplicell(/TM/) System can be modified to
produce a wide variety of other cell types for selected emerging therapies being
developed by other companies and institutions. The Company intends to develop
additional strategic collaborations for the development of the
AastromReplicell(/TM/) System in certain of these other cell therapy market
segments. In ex vivo gene therapy, the Company is also developing the Aastrom
Gene Loader, which is being designed to address the production of gene-modified
cells.
Stem cell therapy is a rapidly growing form of cell therapy used to restore
blood and immune system function to cancer patients following chemotherapy or
radiation therapy. Other novel applications of stem cell therapy are under
development by third parties, which include the treatment of autoimmune diseases
and augmenting recipient acceptance of organ transplants. Current stem cell
collection methods, including bone marrow harvest and peripheral blood
progenitor cell mobilization, are costly, invasive and time-consuming for both
medical personnel and patients. Technologies which facilitate a more readily
available source of cells may contribute to additional growth in cell therapy
procedures. UCB is emerging as a new source of cells for stem cell therapy,
offering additional market opportunity, although the more widespread use of UCB
transplants has been restricted by cell quantity limitations, which the Company
believes may ultimately be addressed by the AastromReplicell(/TM/) System.
The Company believes that the AastromReplicell(/TM/) System will offer
significant advantages over traditional stem cell collection methods. The
AastromReplicell(/TM/) System is intended to be used to produce cells used for
stem cell therapy from a small starting volume of bone marrow or UCB cells. The
AastromReplicell(/TM/) System may also permit higher and more frequent doses of
chemotherapy to be administered to cancer patients by enabling the production of
multiple doses of cells from patient samples taken at the initial collection.
Further, in an evaluation of seven tumor-contaminated bone marrow samples that
were expanded with the AastromReplicell(/TM/) System process, the presence of
breast cancer cells in each sample was either substantially reduced or was no
longer detectable. The Company believes that the combination of passive
depletion during culture with the lower starting volume of tumor cells may
result in a tumor-free or tumor-reduced cell product for transplant.
Aastrom is currently conducting pre-pivotal stem cell therapy clinical
trials in patients with cancer and other genetic diseases at multiple sites in
the U.S. and Europe. These clinical trials are designed to demonstrate that
cells produced using the AastromReplicell(/TM/) System can provide hematopoietic
recovery in accordance with trial endpoints in such patients who have received
myeloablative chemotherapy. Pending a positive outcome of these and other
related trials, the Company intends to seek FDA approval to begin a multi-center
pivotal trial for use of the AastromReplicell(/TM/) System in stem cell therapy.
It is anticipated that the results of this pivotal trial will be used to support
the Company's Pre-Market Approval ("PMA")
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submission to the FDA. The Company has also initiated two clinical sites in
Europe. The Company may not market the AastromReplicell(/TM/) System in the
United States for stem cell therapy unless and until FDA and other necessary
regulatory approvals are received and in Europe until CE Mark certification is
obtained. The Company is currently attempting to complete product development
versions of the AastromReplicell(/TM/) System and obtain permission to affix the
CE Mark to such versions to allow for their limited marketing in Europe.
The Company's business strategy is to: (i) establish a consumable-based
business model; (ii) focus initially on the currently-reimbursed stem cell
therapy market; (iii) leverage Aastrom's cell production technology across
multiple cell therapy market opportunities; and (iv) establish multiple
strategic collaborations.
For stem cell therapy, Aastrom has entered into a strategic collaboration
with Cobe BCT to be the Company's exclusive worldwide marketing, distribution
and service provider for the AastromReplicell(/TM/) System. In 1993, the Company
entered into a series of agreements, pursuant to which Code BCT purchased an
aggregate of $20,000,000 of the Company's equity securities, and acquired the
worldwide distribution rights to the AastromReplicell(/TM/) System for stem cell
therapy. Under the terms of the collaboration, Aastrom retains manufacturing
rights and 58% to 62% of all revenue generated by Cobe BCT's sale of the
AastromReplicell(/TM/) System, subject to the Company's obligation to make
certain royalty payments. Aastrom also retains all marketing and distribution
rights to the AastromReplicell(/TM/) System for other cell types and ex vivo
gene therapy applications, including stem cells.
The Company has exclusive rights to 14 issued U.S. patents, including
patents relating to production methods and composition of matter for stem and
progenitor cells and the genetic modification of stem and other cell types, as
well as patents for cell culture devices for human cells.
The Company's principal executive offices are located at 24 Frank Lloyd
Wright Drive, P. O. Box 376, Ann Arbor, MI 48106.
SELLING SHAREHOLDER
This Prospectus relates to the offering by the Selling Shareholder for
resale of up to 5,537,765 shares of Common Stock. After giving effect to the
Offering, the Selling Shareholder will beneficially own no shares of Common
Stock of the Company. RGC International Investors, LDC ("RGC") will acquire the
Shares upon (i) conversion, from time to time, of the Series I Shares that it
acquired pursuant to the Purchase Agreement in July 1998, and (ii) conversion,
from time to time, of the 3,000 Series II Shares that it is obligated to
purchase under the Purchase Agreement upon satisfaction of conditions contained
in the Purchase Agreement which are outside of the control of the Selling
Shareholder, including the trading of the Common Stock of the Company at a price
greater than $6.00 per share for any twenty consecutive Trading Days (as defined
in the Certificate of Designations, Preferences and Rights of the Series I
Shares) during the period from October 2, 1998 through July 2, 1999. If
circumstances were such that RGC was able to and did convert all of its Series I
Shares as of September 5, 1998, RGC would have received 2,077,456 shares of
Common Stock. The following table sets forth certain information with respect to
the Selling Shareholder as of September 5, 1998, as follows: (i) the name and
position or other relationship with the Company within the past three years, if
any, of the Selling Shareholder; (ii) the number of such shares of Common Stock
beneficially owned by the Selling Shareholder (including shares obtainable under
options exercisable within sixty (60) days of such date) prior to the offering
hereby; (iii) the number of shares of Common Stock being offered hereby; and
(iv) the number and percentage of the Company's outstanding shares of Common
Stock to be beneficially owned by the Selling Shareholder after completion of
the sale of Common Stock being offered hereby. There is no assurance that the
Selling Shareholder will sell any or all of the shares offered hereby.
15
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED NUMBER OF NUMBER OF SHARES
PRIOR TO THE SUCH SHARES BENEFICIALLY OWNED
SELLING SHAREHOLDER OFFERING BEING OFFERED AFTER THE OFFERING
- ------------------- ------------------- -------------- --------------------
<S> <C> <C> <C>
RGC International Investors, LDC (1) (2) 3,312,024 3,312,024 0
</TABLE>
- -------------------
(1) 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 Shareholder.
The actual number of shares of Common Stock issuable upon conversion of
1998 Series Shares is indeterminate, is subject to adjustment and could be
materially less or more than such estimated number depending on factors
which cannot be predicted by the Company at this time, including, among
other factors, the future market price of the Common Stock. The actual
number of shares of Common Stock offered hereby, and included in the
Registration Statement of which this Prospectus is a part, includes such
additional number of shares of Common Stock as may be issued or issuable
upon conversion of the 1998 Series Shares by reason of any stock split,
stock dividend or similar transaction involving the Common Stock, in order
to prevent dilution, in accordance with Rule 416 under the Securities Act.
(2) The number of shares of Common Stock beneficially owned by the Selling
Shareholder with respect to 1998 Series Shares is based on a conversion
price of $2.43. If circumstances were such that the Selling Shareholder was
able to and did convert the 1998 Series Shares on September 5, 1998, the
conversion price would have been $2.43 (the average of the closing bid
prices of the Common Stock for the lowest five consecutive trading days
during the twenty trading days preceding such date, multiplied by 105%
pursuant to the terms of the 1998 Series Shares). The 1998 Series Shares
are convertible by any holder only to the extent that the number of
shares of Common Stock owned by such holder and its affiliates (but not
including shares of Common Stock underlying unconverted 1998 Series
Shares) after such conversion would not exceed 4.9% of the then
outstanding Common Stock as determined in accordance with Section 13(d)
of the Exchange Act. Accordingly, the number of shares of Common Stock
set forth in the table for the Selling Shareholder exceeds the number of
shares of Common Stock that the Selling Shareholder could own
beneficially at any given time through its ownership of 1998 Series
Shares. In that regard, beneficial ownership of the Selling Shareholder
set forth in the table is not determined in accordance with Rule 13d-3
under the Exchange Act.
PLAN OF DISTRIBUTION
The Shares being offered by the Selling Shareholder or its permitted
donees, pledgees, transferees, or other successors in interest, will be sold in
one or more transactions (which may involve block transactions) on the Nasdaq
National Market or on such other market on which the Common Stock may from time
to time be trading (the Purchase Agreement requires the Company to obtain and
maintain listing of the Shares on the Nasdaq National Market), in privately-
negotiated transactions, through the writing of options on the Shares, short
sales or any combination thereof. The sale price to the public may be the market
price prevailing at the time of sale, a price related to such prevailing market
price or such other price as the Selling Shareholder determines from time to
time. The Shares may also be sold pursuant to Rule 144. The Selling Shareholder
shall have the sole and absolute discretion not to accept any purchase offer or
make any sale of Shares if they deem the purchase price to be unsatisfactory at
any particular time.
The Selling Shareholder or its permitted donees, pledgees, transferees, or
other successors in interest, may also sell the Shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves or
their customers. Brokers acting as agents for the Selling Shareholder will
receive usual and customary commissions for brokerage transactions, and market
makers and block purchasers purchasing the Shares will do so
16
<PAGE>
for their own account and at their own risk. It is possible that the Selling
Shareholder will attempt to sell shares of Common Stock in block transactions to
market makers or other purchasers at a price per share which may be below the
then market price. There can be no assurance that all or any of the Shares
offered hereby will be issued to, or sold by, the Selling Shareholder.
The Selling Shareholder, alternatively, may sell all or any part of the
Shares through an underwriter. The Selling Shareholder has not entered into any
agreement with a prospective underwriter and there is no assurance that any such
agreement will be entered into. If a Selling Shareholder enters into such an
agreement or agreements, the relevant details will be set forth in a supplement
or revisions to this Prospectus.
The Selling Shareholder and any other persons participating in a
distribution of the Shares will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including without
limitation, Regulation M, which may restrict certain activities of, and limit
the timing of purchases and sales of the Shares by the Selling Shareholder and
other persons participating in a distribution of the Shares. Furthermore, under
Regulation M, persons engaged in distributions of securities are prohibited from
simultaneously engaging in market making and certain other activities with
respect to the Shares for a specified period of time prior to the commencement
of such distribution subject to specified exceptions or exemptions. All of the
foregoing may affect the marketability of the Shares offered hereby.
The Company has agreed to indemnify the Selling Shareholder, or certain
transferees or assignees, against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments the Selling Shareholder,
or certain transferees or assignees, may be required to make in respect thereof.
The Selling Shareholder has agreed to indemnify the Company against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Company may be required to make in respect thereof.
The Selling Shareholder, RGC International Investors, LDC is a party to an
investment management agreement with Rose Glen Capital Management, L.P., a
Delaware limited partnership ("RG Capital"). Pursuant to the investment
management agreement, RG Capital has sole voting and dispositive power over the
Shares. The general partner of RG Capital is RGC General Partner Corp., a
Delaware corporation.
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Shares or from
conversions of the 1998 Series Shares, if any.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Pepper Hamilton LLP, Detroit, Michigan. Gray Cary Ware & Freidenrich
LLP, San Diego, California, has acted as special counsel to the Company in
connection with this offering.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Company's Annual Report on Form 10-K for the year ended June 30, 1997 and
all amendments thereto have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
17
<PAGE>
<TABLE>
<CAPTION>
================================================ ==================================================
<S> <C>
No dealer, salesman or other person has been
authorized to give any information or to make
any representations other than those
contained or incorporated by reference in
this prospectus in connection with the
offering described herein, and, if given or
made, such information or representation must 5,537,765 SHARES
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, any
securities other than the registered
securities to which it relates, or an offer
to sell, or a solicitation of an offer to COMMON STOCK
buy, in any jurisdiction in which it is
unlawful to make such offer or solicitation.
Neither the delivery of this prospectus nor
any sale made hereunder shall, under any
circumstances, create an implication that ------------
there has been no change in the affairs of PROSPECTUS
the Company since the date hereof or that the ------------
information contained herein is correct as of
any time subsequent to the date hereof.
SUMMARY TABLE OF CONTENTS
Page
----
Available Information............................ 3
Incorporation of Certain
Documents by Reference......................... 3
Risk Factors..................................... 4
The Company...................................... 14
Selling Shareholder.............................. 14
Plan of Distribution............................. 15
Use of Proceeds.................................. 17
Legal Matters.................................... 17
Experts.......................................... 17
________, 1998
================================================ ==================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Other expenses in connection with the registration of the Common Stock
hereunder will be substantially as follows:
<TABLE>
<CAPTION>
Item Company Expense
---- ---------------
<S> <C>
SEC Registration Fee...................................... $ 3,770.00
Printing and engraving expenses........................... $ 2,000.00
Legal fees and expenses................................... $30,000.00
Accounting Fees and expenses.............................. $ 5,000.00
Miscellaneous............................................. $19,230.00
Total............................... $60,000.00
----------
</TABLE>
- -------------
* Estimated for purposes of this filing.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 1561 through 1565 of the Michigan Business Corporation Act (the
"MBCA") authorize a corporation to grant or a court to award indemnity to
directors, officers, employees and agents in terms sufficiently broad to permit
such indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.
The Bylaws of the Registrant, provide that the Registrant shall, to the
fullest extent authorized or permitted by the MBCA, or other applicable law,
indemnify a director or officer who was or is a party or is threatened to be
made a party to any proceeding by or in the right of the Registrant to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Registrant, against expenses,
including actual and reasonable attorneys' fees, and amounts paid in settlement
incurred in connection with the action or suit, if the indemnitee acted in good
faith and in a manner the person reasonably believed to be in, or not opposed
to, the best interests of the Registrant or its shareholders. This section also
authorizes the Registrant to advance expenses incurred by any agent of the
Registrant in defending any proceeding prior to the final disposition of such
proceeding upon receipt of an undertaking by or on behalf of the agent to repay
such amount unless it shall be determined ultimately that the agent is entitled
to be indemnified.
The Bylaws also authorize the Registrant to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Registrant against any liability asserted against or incurred by such person
in such capacity or arising out of such person's status as such, regardless of
whether the Registrant would have the power to indemnify such person against
such liability under the provisions of the MBCA.
The Registrant has entered into an indemnification agreement with certain
of its directors, officers and other key personnel, which contains provisions
that may in some respects be broader than the specific indemnification
provisions contained under applicable law. The indemnification agreement may
require the Registrant, among other things, to indemnify such directors,
officers and key personnel against certain liabilities that may arise by reason
of their status or service as directors, officers or employees of the
Registrant, to advance the expenses incurred by such parties as a result of any
threatened claims or proceedings brought against them as to which they could be
indemnified and, to the maximum extent that insurance coverage of such
directors, officers and key employees under the Registrant's directors' and
officers' liability insurance policies is maintained.
<PAGE>
Section 1209 of the MBCA permits a Michigan corporation to include in its
Articles of Incorporation a provision eliminating or limiting a director's
liability to a corporation or its shareholders for monetary damages for breaches
of fiduciary duty. The enabling statute provides, however, that liability for
breaches of the duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct or knowing violation of the law, or the receipt
of improper personal benefits cannot be eliminated or limited in this manner.
The Registrant's Restated Articles of Incorporation include a provision which
eliminates, to the fullest extent permitted by the MBCA, director liability for
monetary damages for breaches of fiduciary duty.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
3.1* Certificate of Designations, Preferences and Rights of Series I
Shares
3.2* Form of Certificate of Designations, Preferences and Rights of
Series II Shares
5.1* Consent and Opinion of Pepper Hamilton LLP
10.1* Securities Purchase Agreement for 1998 Series Shares
10.2* Registration Rights Agreement for 1998 Series Shares
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants
23.2* Consent of Gray Cary Ware & Freidenrich LLP
23.3* Consent of Pepper Hamilton LLP (included in Exhibit 5.1)
24.1* Power of Attorney
24.2 Power of Attorney
</TABLE>
- -----------------------
* Filed as an exhibit to the Company's Registration Statement on Form S-3 (No.
333-60125) on July 28, 1998.
A. 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 (the "Securities Act");
(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% 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; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
<PAGE>
(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.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
D. 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
E. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of 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 Ann Arbor, State of Michigan, on September 10, 1998.
AASTROM BIOSCIENCES, INC.
By: /s/ R. Douglas Armstrong, Ph.D.
--------------------------------
R. Douglas Armstrong, Ph.D.
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ R. Douglas Armstrong, Ph.D. President, Chief Executive Officer and Director September 10, 1998
- ---------------------------------------- (Principal Executive Officer)
R. Douglas Armstrong, Ph.D.
/s/ Todd E. Simpson Vice President, Finance and Administration, Chief September 10, 1998
- ---------------------------------------- Financial Officer, Secretary and Treasurer
Todd E. Simpson (Principal -Financial and Accounting Officer)
/s/ Mary L. Campbell*
- ----------------------------------------
Mary L. Campbell
Robert J. Kunze* Chairman of the Board and Director September 10, 1998
- ----------------------------------------
Robert J. Kunze
Stephen G. Emerson, M.D., Ph.D.* Director September 10, 1998
- ----------------------------------------
Stephen G. Emerson, M.D., Ph.D.
Horst R. Witzel, Dr.-Ing.* Director September 10, 1998
- ----------------------------------------
Horst R. Witzel, Dr.-Ing.
Edward C. Wood, Jr.* Director September 10, 1998
- ----------------------------------------
Edward C. Wood, Jr.
*By: /s/ R. Douglas Armstrong, Ph.D.
------------------------------------
R. Douglas Armstrong, Ph.D.
Attorney-in-fact
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<S> <C>
3.1* Certificate of Designations, Preferences and Rights of Series I Shares
3.2* Form of Certificate of Designations, Preferences and Rights of Series II Shares
5.1* Consent and Opinion of Pepper Hamilton LLP
10.1* Securities Purchase Agreement for 1998 Series Shares
10.2* Registration Rights Agreement for 1998 Series Shares
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants
23.2* Consent of Gray Cary Ware & Freidenrich LLP
23.3* Consent of Pepper Hamilton LLP (included in Exhibit 5.1)
24.1* Power of Attorney
24.2 Power of Attorney
</TABLE>
- ----------------------------------
* Filed as an exhibit to the Company's Registration Statement on Form S-3
(No. 333-60125) on July 28, 1998.
<PAGE>
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to Registration Statement on Form S-3
of our report dated August 15, 1997 appearing on page 39 of Aastrom Biosciences,
Inc.'s Annual Report on Form 10-K for the year ended June 30, 1997. We also
consent to the reference to us under the heading "Experts."
/s/ PRICEWATERHOUSECOOPERS LLP
- -------------------------------
PRICEWATERHOUSECOOPERS LLP
Bloomfield Hills, Michigan
September 9, 1998
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints R. Douglas Armstrong and Todd E. Simpson,
or either of them, as his attorney-in-fact, each with full power of substitution
for him in any and all capacities, to sign any and all amendments to this
registration statement, including, but not limited to, post-effective amendments
and any and all new registration statements filed pursuant to Rule 462 under the
Securities Act of 1933 in connection with or related to the offer contemplated
by this registration statement, as amended, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each said
attorney-in-fact or his substitute or substitutes may do or cause to be done by
virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Mary L. Campbell Director July 28, 1998
- ----------------------
Mary L. Campbell
