<PAGE>
As filed with the Securities And Exchange Commission on June 23, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
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 Identification Number)
of Incorporation or Organization)
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) 3,794,874(1) $1.3594 $5,158,752 $1,435.00
===============================================================================================================
</TABLE>
(1) Includes shares of Common Stock which may be offered pursuant to this
Registration Statement consisting of an estimated 3,494,874 shares issuable
upon conversion of 3,000 Series III Shares (as defined below) and 300,000
shares issuable upon exercise of warrants. 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 Series III Shares
(based on a conversion price of $1.2876, 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 June 21, 1999, multiplied by 100% pursuant to the
terms of the Series III 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 Series
III Shares or upon exercise of the Warrants 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 June 18, 1999, as reported on the Nasdaq National
Market.
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>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING HOLDER MAY NOT SELL THESE SECURITIES UNDER THIS PROSPECTUS UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER AND SALE WOULD NOT BE
PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 23, 1999
PROSPECTUS
- ----------
3,794,874 SHARES OF COMMON STOCK
AASTROM BIOSCIENCES, INC.
This Prospectus relates to the offer and sale of up to 3,794,874 shares of
common stock. The shares are issuable upon conversion of shares of our 1999
Series III Convertible Preferred Stock and upon exercise of warrants issued in
connection with the sale of those shares of preferred stock. The shares of
common stock may be offered for sale from time to time after such conversion or
exercise by or on behalf of the holders of those shares.
Aastrom will not receive any proceeds from sales of the shares by the
selling shareholders or from any conversions of the Series III Preferred Stock.
Aastrom will bear all reasonable expenses incurred in connection with the
registration of the shares for resale excluding any brokerage commissions,
underwriting discounts or commissions and other expenses incurred by the selling
shareholder in the offer and sale of the shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
"ASTM." On June 21, 1999, the last sale price of the our common stock was
$1.375.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 3
OF THIS PROSPECTUS BEFORE MAKING A DECISION TO PURCHASE OUR STOCK.
________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________
THE DATE OF THIS PROSPECTUS IS ________________, 1999.
1
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================================================================================
You should rely only on the information provided or incorporated by reference in
this prospectus. We have not authorized anyone to provide you with additional or
different information. This document may only be used where it is legal to sell
these securities. You should not assume that any information in this prospectus
is accurate as of any date other than the date of this prospectus.
================================================================================
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms located at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at The Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and at Seven World Trade Center, Suite 1300, New
York, New York 10048. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our filings with the SEC are also
available to the public on the SEC's Internet web site at http://www.sec.gov.
------------------
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file with the
SEC later will automatically update and supersede the information in this
Prospectus or incorporated by reference. The following documents filed by us
and any future filings made by us with the SEC under Sections 13(a), 13(c) 14 or
15(d) of the Securities Exchange Act of 1934, until the selling Shareholder
sells all of the common stock offered hereby, are incorporated by reference in
this Prospectus:
(i) the Company's Annual Report on Form 10-K for the year ended
June 30, 1998;
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1998, December 31, 1998 and March 31, 1999;
(iii) the Company's Registration Statement on Form 8-A;
(iv) the Company's Current Report on Form 8-K dated June 4, 1999.
YOU MAY REQUEST A COPY OF THESE FILINGS, AT NO COST, BY WRITING OR
TELEPHONING US AT AASTROM BIOSCIENCES, INC., 24 FRANK LLOYD WRIGHT DRIVE, P.O.
BOX 376, ANN ARBOR, MICHIGAN 48106, TELEPHONE NUMBER (734) 930-5555, ATTENTION:
MR. TODD SIMPSON, CHIEF FINANCIAL OFFICER.
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TABLE OF CONTENTS
Page
----
Where You Can Find More Information. 2
Risk Factors........................ 3
Aastrom............................. 12
Selling Shareholder................. 13
Plan of Distribution................ 14
Use of Proceeds..................... 15
Legal Matters....................... 15
Experts............................. 15
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RISK FACTORS
You should carefully consider the following risk factors before purchasing
our common stock. The risks and uncertainties described below are not the only
ones we face. There may be additional risks and uncertainties that are not
known to us or that we do not consider to be material. If the events described
in these risks occur, our business, financial condition and results of
operations would likely suffer. This prospectus contains forward-looking
statements which involve risks and uncertainties. Aastrom's actual results may
differ significantly from the results discussed in the forward-looking
statements. This section discusses some of the factors that might cause those
differences.
If Aastrom Cannot Complete Its Product Development Activities Successfully, Our
Business Will Suffer
Commercialization of our lead product candidate, the AastromReplicell Cell
Production System in the United States, will require additional research and
development by Aastrom as well as substantial clinical trials. While we have
commenced initial marketing on a limited basis of the Aastrom Replicell System
in Europe, we believe that the United States will be the principal market for
our products. Aastrom may not be able to successfully complete development of
the AastromReplicell System or its other product candidates, or successfully
market its technologies or product candidates. Aastrom or its potential
collaborators may encounter problems and delays relating to research and
development, regulatory approval and intellectual property rights of Aastrom's
technologies and product candidates. Aastrom's research and development programs
may not be successful, and its cell culture technologies and product candidates
may not facilitate the ex vivo production of cells with the expected biological
activities in humans. Our technologies and product candidates may not prove to
be safe and efficacious in clinical trials, and we may not obtain the necessary
regulatory approvals for our technologies or product candidates and the cells
produced in such products.
If the Clinical Trials for Our Product Candidates Are Not Successful, We Would
Not Receive the Regulatory Approvals We Would Need to Sell Our Products
Commercially.
We must obtain the approval of the U.S. Food and Drug Administration (the
"FDA") before any commercial sales of Aastrom's product candidates may commence
in the United States. While we have commenced initial marketing on a limited
basis of the AastromReplicell System in Europe, we may be required to obtain
additional approvals from foreign regulatory authorities to continue or increase
our sales activities. Prior to obtaining necessary regulatory approvals in the
U.S., Aastrom will be required to demonstrate, through extensive preclinical
studies and clinical trials, the safety and efficacy of its processes and
product candidates, together with the cells produced by such processes and in
such products, for application in the treatment of humans. Aastrom is currently
conducting a pivotal clinical trial to demonstrate the safety and biological
activity of patient-derived cells produced in the AastromReplicell System. We
intend to commence two other pivotal clinical trials to demonstrate the safety
and biological activity of umbilical cord blood cells produced in the
AastromReplicell System. The results of these pivotal trials may differ from
the results of preclinical studies and previous clinical trials. Further, our
pivotal clinical trials may not demonstrate the safety, reliability and efficacy
of our product candidates, or of the cells produced in such products, to the
extent necessary to obtain required regulatory approvals or market acceptance.
Our ability to complete our clinical trials in a timely manner depends on
many factors, including the rate of patient enrollment. Patient enrollment can
vary with the size of the patient population, the proximity of suitable patients
to clinical sites and the eligibility criteria for the study. We have
experienced delays in patient accrual in our previous clinical trials. If we
experience future delays in patient accrual, we could experience increased costs
associated with clinical trials or delays in receiving regulatory approvals and
commercialization.
Aastrom's current trials are designed to demonstrate specific biological
safety and activity of cells produced in the AastromReplicell System, and to
demonstrate engraftment of those cells to provide for recovery of the patient's
blood and immune systems following aggressive therapies. The patients enrolled
in these trials will have undergone extensive treatment prior to the infusion of
cells produced in the AastromReplicell System. These treatments will have
substantially weakened these patients and may have irreparably damaged their
3
<PAGE>
hematopoietic systems. As a result, it is possible that patients may die or
suffer severe complications during the course of either the current trials or
future trials. For example, in our clinical 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 System procedure. Further, patients receiving
cells produced with Aastrom's technologies and product candidates may not
demonstrate long-term engraftment in a manner comparable to cells obtained from
current stem cell therapy procedures. If we cannot demonstrate the safety or
efficacy of our technologies and product candidates, including long-term
sustained engraftment, or one or more patients die or suffer severe
complications, the FDA or other regulatory authorities could delay or withhold
regulatory approval of our product candidates. Furthermore, the FDA monitors the
progress of clinical trials and it may suspend or terminate clinical trials at
any time due to patient safety or other considerations.
Even If We Obtain Regulatory Approvals to Sell Our Products, We Cannot Be
Certain of Commercial Acceptance
Aastrom's product development efforts are primarily directed toward
obtaining regulatory approval to market the AastromReplicell System as an
alternative to, or as an improvement for, the bone marrow harvest and peripheral
blood progenitor cell stem cell collection methods. These stem cell collection
methods have been widely practiced for a number of years, and Aastrom's
technologies or product candidates may not be accepted by the marketplace as
readily as these or other competing processes and methodologies.
We Depend on Third Parties for Manufacturing and Limited Source Supplies
Aastrom does not operate and has no current plans to operate manufacturing
facilities for the production of its product candidates. Aastrom currently
arranges for the manufacture of its product candidates and their components with
third parties, and expects to continue to do so in the foreseeable future.
Aastrom has entered into collaborative product development and supply agreements
with SeaMED Corporation, Ethox Corporation and Moll Industries, Mid-State
Division, for the collaborative development and manufacture of certain
components of the AastromReplicell System and is dependent upon those suppliers
to manufacture our products. Aastrom is also dependent upon Immunex Corporation,
Life Technologies, Inc. and Biowhittaker for the supply of certain cytokines,
serum and media to be used in the AastromReplicell System. Immunex is currently
Aastrom's sole supplier of certain cytokines and few alternative supply sources
exist. Apart from SeaMED, Ethox, Anchor and Immunex, Aastrom currently does not
have contractual commitments from any of these manufacturers or suppliers.
Aastrom's supply of such key cytokines, components and other materials may
become limited, be interrupted or become restricted to certain geographic
regions. Additionally, Aastrom may require additional cytokines, components and
other materials to manufacture, use or market its product candidates, and
necessary key components may not be available for use on a sustained basis, if
at all, by Aastrom in the markets in which it intends to sell its products.
Aastrom may also be unable to obtain alternative components and materials from
other manufacturers of acceptable quality, or on terms or in quantities
acceptable to Aastrom. If any of our key manufacturers or suppliers fail to
perform their respective obligations or our supply of such cytokines, components
or other materials becomes limited or interrupted, we would not be able to
conduct clinical trials or market our product candidates on a timely and cost-
competitive basis.
Certain of the compounds used by Aastrom in its current stem cell expansion
processes involve the use of animal-derived products. Suppliers or regulatory
authorities may limit or restrict the availability of these compounds for
clinical and commercial use. Any restrictions would impose a potential
competitive disadvantage for Aastrom's products compared to competing products
and procedures. If Aastrom was not able to develop or obtain alternative
compounds, its product development and commercialization efforts would be
harmed.
All of Aastrom's product component suppliers 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 Aastrom to complete clinical trials and to market its
products on a timely and profitable basis.
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Aastrom may not be able to continue its present arrangements with its
suppliers, supplement existing relationships or establish new relationships or
be able to identify and obtain the ancillary materials that are necessary to
develop its product candidates in the future. Aastrom's dependence upon third
parities for the supply and manufacture of such items could adversely affect
Aastrom's ability to develop and deliver commercially feasible products on a
timely and competitive basis.
We Have a History of Losses and Expect Future Losses
Aastrom is a development stage company and its product applications for
cell therapy may not be successful. Aastrom 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 March 31, 1999,
Aastrom has incurred net operating losses totaling approximately $67.5 million.
These losses have resulted principally from costs incurred in the research and
development of Aastrom's cell culture technologies and the AastromReplicell
System, general and administrative expenses, and the prosecution of patent
applications. Aastrom expects to incur significant operating losses until
product sales commence, primarily owing to its research and development
programs, including preclinical studies and clinical trials, and the
establishment of marketing and distribution capabilities necessary to support
commercialization efforts for its products. Aastrom cannot predict with any
certainty the amount of future losses and when, if ever, Aastrom will achieve
profitability. Aastrom'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. Aastrom may not be able to achieve or sustain
profitability.
We Have Limited Sales and Marketing Capabilities and Must Develop Collaborative
Relationships
While we have commenced initial marketing on a limited basis of the
AastromReplicell System in Europe, we have only limited internal sales,
marketing and distribution capabilities. Aastrom intends to market its products
through collaborative relationships with companies that have established sales,
marketing and distribution capabilities. Aastrom and Cobe BCT recently
terminated their strategic alliance for the worldwide distribution of the
AastromReplicell System for stem cell therapy and related uses.
We are seeking to enter into other agreements relating to the development
and marketing of our product candidates. If we enter into any such agreements,
we may rely upon corporate partners to conduct clinical trials, seek regulatory
approvals for, and manufacture and market our potential products. We may not be
able to establish collaborative relationships for the development or marketing
of our product candidates on acceptable terms, if at all. If we do establish
these relationships, they may not be successful or sustained on a long-term
basis. If we cannot establish and maintain these collaborative relationships,
we may be required to curtail our development or marketing activities for our
potential products.
We Will Need Additional Funds, Which May Not Be Available
Aastrom has funded its operations primarily through the sale of equity
securities, corporate collaborations and research grants. Aastrom anticipates
that the net proceeds received from the sale of the Series III Shares, together
with Aastrom's available cash and expected interest income, will be sufficient
to finance the development and manufacture of the AastromReplicell System for
use in clinical trials, expanded clinical trials, other research and development
and working capital and other corporate requirements into early 2000. 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 our business, and to introduce our product
candidates into the marketplace, Aastrom will need to raise additional funds. We
will also need additional funds or a collaborative partner to finance the
research and development activities of Aastrom's product candidates for the
expansion of additional cell types.
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Aastrom's future capital requirements will depend upon many factors,
including
. 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 Aastrom to establish additional collaborative
relationships, and
. effective commercialization activities and facilities expansions
if and as required.
Because of Aastrom'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. This additional funding may not be available to Aastrom on
reasonable terms, or at all. If adequate funds are not available, Aastrom may
be required to delay or terminate research and development programs, curtail
capital expenditures, and reduce business development and other operating
activities. Aastrom intends to seek additional collaborative partners to assist
in the development of its products. If Aastrom is not successful in finding,
entering into and maintaining arrangements with collaborators, its development
efforts could be delayed. Furthermore, Aastrom may not 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
Aastrom's business, financial condition and results of operations.
We are Subject to Extensive Government Regulation Which Could Prevent, Limit or
Delay Our Ability to Market or Develop Our Products
The FDA and other regulatory authorities in the United States impose
significant regulatory requirements on Aastrom's research and development
activities, preclinical studies, clinical trials, and the manufacturing and
anticipated marketing of our product candidates. These activities are also
regulated in other countries where we intend to test and market our product
candidates. We must obtain the approval of the FDA before we can begin any
commercial selling efforts of Aastrom's product candidates in the United States.
Additionally, Aastrom may be required to obtain additional approvals from
foreign regulatory authorities to continue and expand international marketing
activities in Europe.
Different regulatory requirements may apply to Aastrom's products depending
on how they are categorized by the FDA. To date, the FDA has indicated that it
intends to regulate the AastromReplicell System for stem cell therapy as a Class
III medical device through the Center for Biologics Evaluation and Research.
However, the FDA may ultimately choose to regulate the AastromReplicell System
for stem cell therapy under another category. A change in the regulatory
classification would affect our ability to obtain FDA approval.
Further, the FDA may separately regulate the cell therapies derived from
the AastromReplicell System. 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 our product candidates
to the market. Until the FDA issues definitive regulations covering our product
candidates, the regulatory guidelines or requirements for approval of such
product candidates will continue to be uncertain.
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Before marketing the AastromReplicell System or other product candidates in
the United States, Aastrom 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, we may encounter delays or
rejections based upon changes in FDA policy for medical product approvals during
the period of product development, changes in FDA classification of Aastrom's
products, and FDA regulatory review of applications submitted by Aastrom for
product approval. We may encounter similar delays in foreign countries. Even
after the expenditures of substantial time and financial resources, we may not
obtain regulatory approval for our products in all of the markets we would like
to enter. Moreover, even if we obtain regulatory approval of a product, that
approval may be subject to limitations on the indicated uses for which it may be
marketed. Further, even after obtaining regulatory approval, the FDA and other
regulatory agencies continue to review and inspect marketed products,
manufacturers and manufacturing facilities. Later discovery of previously
unknown problems with a product, manufacturer or facility may result in
restrictions on the product or manufacturer, including a withdrawal of the
product from the market. Further, governmental regulatory agencies may establish
additional regulations which could prevent or delay regulatory approval of our
products.
We have received approval to affix the CE Mark to the AastromReplicell
System instrumentation platform and the various components of the SC-I Therapy
Kit for the production of bone marrow derived cells and the CB-I Therapy Kit
used for expansion of umbilical cord blood cells, which permits marketing in the
European Union. However, Aastrom and its suppliers must continue to meet the
minimum requirements necessary to maintain such approval. If we cannot comply
with ongoing European regulatory requirements for manufacturing of the
AastromReplicell System or commercialization, we would not be able to sell those
products in Europe. If the regulatory classification for those products is
changed, we 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 our business.
If We Do Not Keep Pace With Our Competitors and With Technological Changes, Our
Products May Become Obsolete and Our Business May Suffer
Aastrom is engaged in the development of medical products and processes
which will face competition in a marketplace characterized by rapid
technological change. Many of Aastrom's competitors have significantly greater
resources than Aastrom, and have developed and may develop product candidates
and processes that directly compete with Aastrom's products. Moreover,
competitors that achieve patent protection, obtain regulatory approvals and
commence commercial sales of their products before Aastrom may enjoy a
significant competitive advantage. Aastrom's product development efforts are
primarily directed toward obtaining regulatory approval to market the
AastromReplicell System for stem cell therapy. That market is currently
dominated by the bone marrow harvest and PBPC collection methods. Aastrom's
clinical data, although early, suggests that cells expanded in the
AastromReplicell 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. To address this, Aastrom's initial pivotal clinical trial
evaluates the organization of PBPC collected in a single apheresis procedure by
cells produced in the AastromReplicell(TM) System to reduce the overall cell
collection burden to the patient. Aastrom is evaluating techniques and methods
to optimize the cells produced in the AastromReplicell System to reduce the
recovery time of neutrophils and platelets in patients. If we cannot improve our
cell production procedure to lead to recovery times equal to or faster than
those of PBPC collection methods, we may suffer competitive disadvantages. 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. Even after obtaining regulatory approval
to market the AastromReplicell System method, it may not be competitive with
these established collection methods on the basis of hematopoietic recovery
time, cost or otherwise. Aastrom also is aware of certain other products
manufactured or under development by competitors that are used for the
prevention or treatment of diseases and health conditions which Aastrom has
targeted for product development. Aastrom is also aware of new scientific
approaches that may provide different methods of addressing the health
conditions which Aastrom has targeted for product development. Developments by
others may render Aastrom's product candidates or technologies obsolete or
noncompetitive. Aastrom may not be able to keep pace with new technological
developments and Aastrom's product candidates may not be able to supplant
established products and methodologies in the therapeutic areas that are
targeted by Aastrom.
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If Our Patents and Proprietary Rights Do Not Provide Substantial Protection, Our
Business and Competitive Position Will Suffer
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. Our pending patent applications or any
future patent applications of Aastrom or its licensors may not result in issued
patents. The scope of our patent protection may not exclude competitors or
provide competitive advantages to Aastrom. The patents that have been or may be
issued to Aastrom or its licensors may not be held valid if subsequently
challenged and others may claim rights in or ownership of the patents and other
proprietary rights held or licensed by Aastrom. Furthermore, others may develop
similar products, duplicate our products or design around our patent protection.
Since patent applications in the United States are maintained in secrecy until
patents are issued, we also cannot be certain that others did not first file
applications for inventions covered by Aastrom's and its licensors' pending
patent applications, and we cannot be certain that we will not infringe any
patents that may issue to others on such applications. Aastrom relies on
certain licenses granted by the University of Michigan for certain of its patent
rights. If Aastrom breaches such agreements or otherwise fails to comply with
such agreements, or if such agreements expire or are otherwise terminated,
Aastrom may lose its rights under the patents held by the University of
Michigan. Aastrom 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. These agreements may be breached, and
Aastrom might not have adequate remedies for any breach.
Aastrom's success will also depend in part on its ability to develop
commercially viable products without infringing the proprietary rights of
others. Aastrom has not conducted freedom of use patent searches and other
patents could exist or could be filed which would have an adverse effect on our
ability to market our products or maintain our competitive position. If
Aastrom'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, Aastrom may be
subject to infringement actions. In such event, Aastrom 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. Aastrom may not be able to obtain such licenses, especially on
commercially reasonable terms. Any such failure could result in delays in
marketing Aastrom's current and any future products. If Aastrom is required to
defend itself against charges of patent infringement or to protect its own
proprietary rights against third parties, we will incur substantial costs
regardless of whether we are successful. An adverse outcome could subject
Aastrom to significant liabilities to third parties, and force Aastrom to
curtail or cease its development and sale of its products and processes.
Without Third Party Reimbursement For Our Products, Our Revenues Will Be Limited
Aastrom's ability to successfully commercialize its product candidates will
depend in part on the extent to which government healthcare programs, such as
Medicare and Medicaid, as well as private health insurers, health maintenance
organizations and other third party payors will pay for our products and related
treatments. 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 each payor
independently decides on reimbursement, seeking such approvals is a time-
consuming and costly process which will require Aastrom to provide to each payor
scientific and clinical support of the use of each of Aastrom's products. If we
do not obtain approvals for adequate third-party payments, we may not be able to
establish or maintain price levels sufficient to realize an appropriate return
on our investment in product development.
Reimbursement in the United States or foreign countries may not be
available or maintained for any of Aastrom's product candidates. Any limits on
reimbursement available from third-party payors may reduce the demand for, or
negatively affect the price of, our products. Finally, we cannot forecast what
additional legislation or
8
<PAGE>
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 our business.
Our Use of Hazardous Materials Subjects Us to Potential Liabilities
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. We are
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,
Aastrom could be held liable for any damages that result and any such liability
could exceed the resources of Aastrom. Furthermore, if we fail to comply with
current or future regulations we could be subject to substantial fines,
suspension of production, alteration of our manufacturing processes or cessation
of operations. Aastrom may be required to incur significant costs to comply with
any such laws and regulations in the future. If we fail 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, we could be subject to significant liabilities.
Our Potential Products Liability Exposure May Exceed Available Insurance
Protection
Aastrom 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, Aastrom may incur significant product
liability exposure. Our existing insurance coverage may not be adequate and we
may not be able to obtain adequate insurance coverage for future clinical trials
or commercial activities at an acceptable cost.
If We Cannot Attract and Retain Key Personnel, Our Business Will Suffer
Our success depends in large part upon our ability to attract and retain
highly qualified scientific and management personnel. We face competition for
such personnel from other companies, research and academic institutions and
other entities. We may not be successful in hiring or retaining key personnel.
The Series III Shares and Other Outstanding Shares of Preferred Stock Share Have
the Potential for Substantial Dilution
The Series III shares and the other outstanding shares of preferred stock
are each convertible into a number of shares of common stock that increases as
the current market price of the common stock decreases. If the selling
shareholder was able to and did convert all of its Series III shares and other
outstanding shares of preferred stock as of June 21, 1999, the selling
shareholder would have received approximately 5,820,000 shares of common stock.
This number of shares could become 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 Series III shares and the other outstanding shares of
preferred stock. The Series III shares and other outstanding shares of
preferred stock 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
Series III shares may be converted are being registered pursuant to this
Registration Statement.
Our Stock Price Has Been Volatile and Future Sales of Substantial Numbers of Our
Shares Could Have an Adverse Effect on the Market Price of Our Shares
The market price of shares of our common stock has been volatile. The
price of our common stock may continue to fluctuate in response to a number of
events and factors, such as:
9
<PAGE>
. clinical trial results
. the amount of our cash resources and our ability to obtain
additional funding
. announcements of research activities, business developments,
technological innovations or new products by us or our
competitors
. changes in government regulation
. disputes concerning patents or proprietary rights
. changes in our revenues or expense levels
. public concern regarding the safety, efficacy or other aspects of
the products or methodologies we are developing
. changes in recommendations by securities analysts.
Any of these events may cause the price of our shares to fall, which may
adversely affect our business and financing opportunities. In addition, the
stock market in general and the market prices for biotechnology companies in
particular have experience significant volatility that often has been unrelated
to the operating performance or financial conditions of such companies. These
broad market and industry fluctuations may adversely affect the trading price of
our shares, regardless of our operating performance or prospects.
In addition, sales, or the possibility of sales, of substantial numbers of
shares of common stock in the public market could adversely affect prevailing
market prices of shares of common stock. Our employees hold a significant
number of options to purchase shares, many of which are presently exercisable.
Employees may exercise their options and sell shares shortly after such options
become exercisable, particularly if they need to raise funds to pay for the
exercise of such options or to satisfy tax liabilities that they may incur in
connection with exercising their options. Additionally, beginning January 1,
2001, Cobe BCT will be able to sell all of its approximately 2.4 million shares
of our common stock without restriction.
Our Corporate Documents and Michigan Law Contain Provisions That May Make It
More Difficult For Us to Be Acquired
Our board of directors has the authority, without shareholder approval, to
issue additional shares of preferred stock and to fix the rights, preferences,
privileges and restrictions of these shares without any further vote or action
by our shareholders. This authority, together with certain provisions of our
charter documents, may have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of our company. This effect could occur even if our shareholders
consider the change in control to be in their best interest.
We May Be Required to Redeem a Portion of the Series III Shares, Which Would
Significantly Reduce Our Limited Cash Resources
The holders of Series III shares may require us to redeem some or all of
those shares. These redemption rights would be triggered if we fail to issue
shares of common stock on conversion of the Series III Preferred, if we fail to
maintain the effectiveness of a registration statement for the resale of those
shares of common stock, if we are subject to bankruptcy or insolvency
proceedings, if we fail to maintain our listing on the Nasdaq stock market, or
if we fail to obtain shareholder approval of the issuance of the Series III
shares and the conversion of those Series III shares would result in the
issuance of more than 3,084,340 shares of common stock. Any redemption would
reduce our available cash resources, which are already very limited.
10
<PAGE>
Absence of Dividends
Aastrom 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.
Year 2000 Issues May Affect Our Computer Systems and Our Business
Many currently installed computer systems and software products cannot
distinguish 20th century dates from 21st century dates. As a result, in less
than one year, computer systems and/or software used by many companies in a wide
variety of applications will experience operating difficulties unless they are
modified or upgraded to adequately process information involving, related to, or
dependent upon the century change. Industry experts and observers differ on the
scope and magnitude of problems associated with the century change. In light of
the potentially broad effects of the year 2000 on a wide range of business
systems, we may be affected. We utilize and are dependent upon data processing
computer hardware and software to conduct our business. We have completed an
assessment of our own computer systems and based upon this assessment, we
believe our computer systems are substantially "Year 2000 compliant;" that is,
our computer systems are capable of adequately distinguishing 21st century dates
from 20th century dates. However, we may not timely identify and fix all
significant Year 2000 problems in our computer systems, and any remedial efforts
may involve significant expense. We have not determined the extent, or
completed activities to minimize the risk, that the computer systems of our
suppliers and manufacturers are not Year 2000 compliant, or will not become
compliant on a timely basis. We expect to make inquires with these suppliers
through the end of 1999. Year 2000 problems could prevent any of our suppliers
from timely delivery of products or services that we need. We currently believe
that our costs to address the Year 2000 issue relating to our suppliers will not
be material, and that these costs will be funded from our operating cash flows.
To the extent practical, we intend to identify alternative suppliers and
manufacturers in the event our preferred suppliers cannot deliver products or
services that we need on a timely basis. Our expectations of Year 2000 costs
relating to our suppliers and manufacturers are only estimates, which were
derived from numerous assumptions of future events, including the continued
availability of resources and third-party remediation plans with regard to year
2000 issues. These estimates may not be correct and actual results could differ
materially from these estimates.
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. These forward-looking statements include statements regarding:
. uncertainties related to product development and marketability;
. uncertainties related to clinical trials;
. manufacturing and supply uncertainties and dependence on third
parties;
. anticipation of future losses;
. limited sales and marketing capabilities;
. future capital needs and uncertainty of additional funding;
. uncertainty of regulatory approval and extensive government
regulation;
. 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 in this Risk Factors section, 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. Aastrom
assumes no obligation to update any such forward-looking statement or reason why
actual results might differ.
11
<PAGE>
AASTROM
Because this is a summary, it does not contain all the information about us
that may be important to you. You should read the more detailed information and
the financial statements and related notes which are incorporated by reference
in this Prospectus.
Aastrom 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 our 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. Aastrom believes that the AastromReplicell(TM) System method
will be a cost-effective, less invasive and less time consuming alternative to,
or an improvement on, currently available stem cell collection methods for some
patients and may enhance the clinical utility of umbilical cord blood ("UCB")
transplants by expanding the number of cells available for transplant.
The AastromReplicell(TM) System is designed as a platform product which
implements Aastrom's pioneering stem cell replication technology. Aastrom 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. Aastrom intends to develop strategic
collaborations for the development of the AastromReplicell(TM) System in certain
of these other cell therapy market segments. In ex vivo gene therapy, Aastrom 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, can be 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
Aastrom believes may ultimately be addressed by the AastromReplicell(TM) System.
Aastrom believes that the AastromReplicell(TM) System may 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. Aastrom believes that the combination of passive depletion
during culture with the lower starting volume of tumor cells may result in a
procedure that offers a tumor-free or tumor-reduced cell product for transplant.
Aastrom is currently conducting a pivotal stem cell therapy clinical trial
in patients with cancer at multiple sites in the U.S. and we intend to initiate
additional pivotal clinical trials. We anticipate that the results of this
pivotal trial will be used to support Aastrom's Pre-Market Approval ("PMA")
submission to the FDA. Aastrom has also initiated two clinical sites in Europe.
Aastrom may not market the AastromReplicell(TM) System in the United States for
stem cell therapy unless and until it receives FDA and other necessary
regulatory approvals. Aastrom has completed production-level versions of the
AastromReplicell(TM) System, has obtained permission to affix the CE Mark to
such versions and has initiated a limited product launch in Europe.
Aastrom's principal executive offices are located at 24 Frank Lloyd Wright
Drive, P. O. Box 376, Ann Arbor, MI 48106.
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<PAGE>
SELLING SHAREHOLDER
This prospectus relates to the offering by RGC International Investors, LDC
for resale of up to 3,794,874 shares of common stock. The selling shareholder
will acquire the shares upon (i) conversion, from time to time, of the Series
III shares that it acquired in May 1999, and (ii) exercise, from time to time,
of the warrants that it holds. If the selling shareholder was able to and did
convert all of its Series III shares as of June 21, 1999, RGC would have
received 2,338,693 shares of common stock. The following table sets forth
certain information with respect to the selling shareholder as of June 21, 1999:
(i) the name and position or other relationship with Aastrom within the past
three years, if any, of the selling shareholder; (ii) the number of Aastrom's
outstanding 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 such shares being
offered hereby; and (iv) the number and percentage of Aastrom'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. The number of
shares reported as being beneficially owned after the offering represents shares
of common stock issuable upon conversion of another outstanding series of
preferred stock. These shares of common stock have been registered for sale and
they may be sold before or after the shares that may be sold pursuant to this
prospectus. There is no assurance that the selling shareholder will sell any or
all of the shares offered hereby.
<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 6,119,827 3,794,874 3,481,134
</TABLE>
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 Series III
shares and of the other outstanding series of preferred stock is indeterminate,
is subject to adjustment and could be materially less or more than this estimate
depending on factors which cannot be predicted by Aastrom at this time,
including 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
Series III 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.
The number of shares of common stock set forth above as beneficially owned
by the selling shareholder with respect to Series III shares and of the other
outstanding series of preferred stock based on a conversion price of $1.2876. If
circumstances were such that the selling shareholder was able to and did convert
the Series III shares on June 21, 1999, the conversion price would have been
$1.2876 (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 100% pursuant to the terms of the Series III shares).
The Series III shares are convertible and the warrants are exercisable 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 Series III shares) after such conversion or exercise
would not exceed 4.9% of the then outstanding common stock as determined in
accordance with Section 13(d) of the Securities 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
Series III 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.
13
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock 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:
. in privately-negotiated transactions
. through the writing of options on the shares
. short sales or
. any combination of these transactions.
The sale price may be:
. the market price prevailing at the time of sale
. a price related to the 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 may not accept any purchase offer or make any sale of
shares if it considers 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 for their own
account and at their own risk. The selling shareholder may 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 current 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.
Alternatively, the selling shareholder 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 may not do so. If the selling
shareholder enters into such an agreement or agreements, Aastrom will supplement
or revise this prospectus.
The selling shareholder and any other persons participating in a
distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act and the rules and regulations thereunder, including
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 a distribution of the shares 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 distributions subject to specified exceptions or exemptions. All of the
foregoing may affect the marketability of the shares offered hereby.
Aastrom 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 Aastrom against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments Aastrom may be required to make in respect thereof.
14
<PAGE>
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. Pursuant to the investment management agreement,
Rose Glen Capital Management has sole voting and dispositive power over the
shares.
USE OF PROCEEDS
Aastrom will not receive any proceeds from sales of the shares or from any
conversions of the Series III shares.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Aastrom by Pepper Hamilton LLP, Detroit, Michigan. Gray Cary Ware & Freidenrich
LLP, San Diego, California, has acted as special counsel to Aastrom in
connection with this offering.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended June 30, 1998 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
15
<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 (all expenses other than the SEC
Registration Fee are estimates):
<TABLE>
<CAPTION>
Item Company Expense
---- ---------------
<S> <C>
SEC Registration Fee...................................... $ 1,435
Printing and engraving expenses........................... $ 2,000
Legal fees and expenses................................... $10,000
Accounting fees and expenses.............................. $ 5,000
Miscellaneous............................................. $ 6,565
-------
Total................................................. $25,000
-------
</TABLE>
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.
16
<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.
Exhibit
Number Description of Document
------ -----------------------
3.1 Certificate of Designations, Preferences and Rights of Series
III Shares
5.1 Consent and Opinion of Pepper Hamilton LLP
10.1 Securities Purchase Agreement for Series III shares
10.2 Registration Rights Agreement for Series III shares
10.3 Stock Purchase Warrants dated May 27, 1999
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 (included on the signature page)
---------------
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.
(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.
17
<PAGE>
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.
18
<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 June 22, 1999.
AASTROM BIOSCIENCES, INC.
By: /s/ R. Douglas Armstrong, Ph.D.
--------------------------------
R. Douglas Armstrong, Ph.D.
President and Chief Executive Officer
(Principal Executive Officer)
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 or her attorney-in-fact, each with full power
of substitution for him or her 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 our
signatures as they may be signed by our said attorney to said registration
statement and any and all amendment thereto.
Pursuant to the requirements of the Securities Act of 1933, this
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 June 22, 1999
- ------------------------------------------- (Principal Executive Officer)
R. Douglas Armstrong, Ph.D.
/s/ Todd E. Simpson Vice President, Finance and Administration, June 22, 1999
- ------------------------------------------- Chief Financial Officer, Secretary and Treasurer
Todd E. Simpson (Principal -Financial and Accounting Officer)
/s/ Robert J. Kunze Chairman of the Board and Director June 22, 1999
- -------------------------------------------
Robert J. Kunze
/s/ Mary L. Campbell Director June 22, 1999
- -------------------------------------------
Mary L. Campbell
/s/ Stephen G. Emerson, M.D., Ph.D. Director June 22, 1999
- -------------------------------------------
Stephen G. Emerson, M.D., Ph.D.
/s/ Arthur F. Staubitz Director June 22, 1999
- -------------------------------------------
Arthur F. Staubitz
/s/ Joseph Taylor Director June 22, 1999
- -------------------------------------------
Joseph Taylor
</TABLE>
19
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Document
------ -----------------------
3.1* 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 Series III shares
10.2* Registration Rights Agreement for Series III shares
10.3* Stock Purchase Warrants dated May 27, 1999
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 (included on the signature page)
----------------------
* Incorporated by reference from Aastrom's Current Report on Form 8-K filed on
June 4, 1999.
20
<PAGE>
EXHIBIT 5.1
June 18, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Aastrom Biosciences, Inc. Registration
Statement on Form S-3
File No.: 333-_______________
Gentlemen:
We have acted as special counsel to Aastrom Biosciences, Inc., a
Michigan corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission (the "Commission") of a
registration statement filed with the SEC on June 18, 1999, as amended (the
"Registration Statement") of the Company on Form S-3 under the Securities Act of
1933, as amended (the "Act"). The Registration Statement relates to the
proposed issuance by the Company of shares of the Company's Common Stock (the
"Shares") covered by the Registration Statement.
In this connection, we have examined the Registration Statement,
including the exhibits thereto, the originals or copies, certified or otherwise
identified to our satisfaction, of the Articles of Incorporation and the By-Laws
of the Company amended to date, resolutions of the Company's Board of Directors
and such other documents and corporate records relating to the Company, and the
issuance and sale of the Company's 1999 Series III Convertible Preferred Stock
(the "1999 Series Shares") and warrants issued in connection with the sale of
the 1999 Series Shares (the "Warrants") and the conversion of the 1999 Series
Shares into the Shares issuance of the Shares upon exercise of the Warrants, as
we have deemed appropriate. The opinion expressed herein is based exclusively
on the applicable provisions of the Michigan Business Corporation Act as in
effect on the date hereof.
On the basis of the foregoing, we are of the opinion that the Shares
to be issued by the Company upon conversion of the Company's 1999 Series Shares
and upon exercise of the Warrants will be, duly authorized, validly issued,
fully paid, and non-assessable.
We hereby consent to the reference to our firm under the caption
"Legal Matters" in the Registration Statement and to the filing of this opinion
as an exhibit to the Registration Statement. Such consent does not constitute a
consent under Section 7 of the Act, since we have not certified any part of such
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission promulgated thereunder.
Very truly yours,
PEPPER HAMILTON LLP
By: /s/ Michael B. Staebler
-----------------------
Michael B. Staebler Exhibit 23.1
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
August 7, 1998 appearing on page 9 of Aastrom Biosciences, Inc.'s Annual Report
on Form 10-K for the year ended June 30, 1998. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
June 18, 1998
<PAGE>
EXHIBIT 23.2
[GRAY CARY WARE & FREIDENRICH LETTERHEAD]
June 21, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Aastrom Biosciences, Inc. Registration Statement on Form S-3
Ladies and Gentlemen:
As counsel to Aastrom Biosciences, Inc., a Michigan corporation (the
Company"), in connection with the proposed offer and sale of those certain
shares of the Company's Common Stock, $0 par value, as set forth in the
Registration Statement on Form S-3 (the "Registration Statement"), we hereby
consent to the use of our name under the caption "Legal Matters" in the
Registration Statement, including the Prospectus constituting a part thereof, as
originally filed or as subsequently amended.
Very truly yours,
/s/ GRAY CARY WARE & FREIDENRICH LLP
