<PAGE>
Filed Pursuant To Rule 424(b)(2)
File Number: 333-39698
DATED JUNE 26, 2000
PROSPECTUS
----------
6,159,220 SHARES OF COMMON STOCK
AASTROM BIOSCIENCES, INC.
This prospectus relates to the offer and sale of 6,159,220 shares of common
stock being offered by RGC International Investors, LDC. These shares include
3,348,915 shares that are issuable upon exercise of warrants.
Our common stock is quoted on the Nasdaq National Market under the symbol
"ASTM." The selling stockholder will determine the price it may offer or sell
shares of our common stock independent of Aastrom. On June 23, 2000, the last
sale price of our common stock was $2.6875.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 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 JUNE 26, 2000.
<PAGE>
================================================================================
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.
================================================================================
<TABLE>
<CAPTION>
=============================================
TABLE OF CONTENTS
Page
----
<S> <C>
Summary................................ 3
Risk Factors........................... 4
Where You Can Find More Information.... 11
Selling Shareholder.................... 12
Plan of Distribution................... 13
Use of Proceeds........................ 14
Legal Matters.......................... 14
Experts................................ 14
=============================================
</TABLE>
2
<PAGE>
SUMMARY
-------
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
-------
We develop proprietary process technologies and devices intended for a
broad range of cell therapy applications. The AastromReplicell(TM) Cell
Production System is our lead product under development, and consists of a
clinical cell culture system that operates single-use therapy kits tailored for
patient therapy in the emerging cell therapy market. We had begun European
commercialization of the AastromReplicell(TM) System for use in stem cell
therapy and had started a pivotal study in the U.S. However, in October 1999 we
suspended marketing efforts in Europe and our U.S. clinical development
activities until we obtained additional funding. With recently received funding,
we intend to recommence our U.S. clinical development program, and we are
evaluating the possibility of resuming marketing efforts in Europe.
We believe that the AastromReplicell(TM) System method will be a cost-
effective, less invasive and less time-consuming alternative, or improvement to,
currently available stem cell collection methods and may enhance the clinical
utility of umbilical cord blood transplants in patients with certain forms of
leukemia and other blood diseases by expanding the number of cells available for
transplant. The AastromReplicell(TM) System is designed as a platform product
which implements our pioneering stem cell replication technology. We believe
that the AastromReplicell(TM) System can be modified to produce a wide variety
of other cell types for selected emerging therapies currently in development.
Stem cell therapy is a form of cell therapy used to restore blood and
immune system function to cancer patients following chemotherapy or radiation
therapy. 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. We believe 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 for stem cell therapy from a small starting volume of bone
marrow or umbilical cord blood cells. 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. We believe
that the combination of passive tumor cell depletion during culture with the
lower starting volume of cells used for the process may result in a procedure
that offers a tumor-free or tumor-reduced cell product for transplant. Although
we may not market the AastromReplicell(TM) System in the United States for stem
cell therapy unless and until we receive FDA and other necessary regulatory
approvals, we have already completed production-level versions of the
AastromReplicell System and have obtained permission to affix the CE Mark to
such versions.
Our principal executive offices are located at 24 Frank Lloyd Wright Drive,
P. O. Box 376, Ann Arbor, MI 48106. Our telephone number is (734) 930-5555.
The Offering
------------
Common stock offered by the selling
shareholder............................................. 6,159,220 shares
Recent Developments
-------------------
On June 6, 2000, we completed the sale of 2,810,305 shares of common stock
and warrants to purchase up to 3,348,915 shares of common stock at an exercise
price of $.01 per share. The warrants expire in approximately one year, and are
subject to early expiration in the event of certain change in control
transactions or if the price of our common stock reaches specified levels.
3
<PAGE>
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 at this time. 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. Our 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 We Cannot Complete Our Product Development Activities Successfully, Our
Ability to Operate or Finance Operations Will Be Severely Limited.
Commercialization in the United States of our lead product candidate, the
AastromReplicell(TM) Cell Production System, will require additional research
and development as well as substantial clinical trials. While we have commenced
initial marketing on a very limited basis of the Aastrom Replicell(TM) System in
Europe, we believe that the United States will be the principal market for our
products. We may not be able to successfully complete development of the
AastromReplicell(TM) System or our other product candidates, or successfully
market our technologies or product candidates. We and any of our potential
collaborators may encounter problems and delays relating to research and
development, regulatory approval and intellectual property rights of our
technologies and product candidates. Our research and development programs may
not be successful, and our 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 intended
regulatory approvals for our technologies or product candidates and the cells
produced in such products. If any of these events occur, we may not have
adequate resources to continue operations for the period required to resolve the
issue delaying commercialization and we may not be able to raise capital to
finance our continued operation during the period required for resolution of
that issue.
We Cannot Be Certain That We Will Be Able to Raise the Required Capital to
Conduct Our Operations and Develop Our Products.
We will require substantial capital resources in order to conduct our
operations and develop our products. In October 1999, Aastrom was forced to
reduce operations based on its declining level of capital resources and its
limited financing alternatives available at that time. Although we have started
to restore operating activities, the previous reduction in our operating
activities has negatively affected our ability to develop our products and has
delayed our product development programs. Based on current funding and
anticipated operating activities, we expect that our available cash and expected
interest income will be sufficient to finance our current activities through
mid-calendar year 2001. This is a forward-looking statement and could be
negatively affected by funding limitations, the implementation of additional
research and development programs and other factors discussed under this
heading. We are currently pursuing additional sources of financing. If we cannot
obtain additional funding prior to that time, we will be forced to make
substantial reductions in the scope and size of our operations, and may be
forced to curtail activities that we currently plan to resume. In order to grow
and expand our business, and to introduce our product candidates into the
marketplace, we will need to raise additional funds. We will also need
additional funds or a collaborative partner, or both, to finance the research
and development activities of our new product candidates for the production of
additional cell types.
Our 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;
4
<PAGE>
. the ability of Aastrom to establish additional collaborative
relationships; and
. effective commercialization activities and facility expansions if
and as required.
Because of our long-term funding requirements, we may attempt to access the
public or private equity markets if and whenever conditions are favorable, even
if we do not have an immediate need for additional capital at that time.
Further, we may enter into financing transactions at rates which are at a
substantial discount to market. This additional funding may not be available to
us on reasonable terms, or at all. If adequate funds are not available, we may
be required to further delay or terminate research and development programs,
curtail capital expenditures, and reduce business development and other
operating activities.
We Must Successfully Complete Our Clinical Trials to be Able to Market Our
Products.
To be able to market products in the United States, we must demonstrate,
through extensive preclinical studies and clinical trials, the safety and
efficacy of our processes and product candidates, together with the cells
produced by such processes in such products, for application in the treatment of
humans. We are currently conducting a pivotal clinical trial to demonstrate the
safety and biological activity of patient-derived cells produced in the
AastromReplicell(TM) System. Depending on the availability of resources, we
intend to commence at least one additional pivotal clinical trial to demonstrate
the safety and biological activity of umbilical cord blood cells produced in the
AastromReplicell(TM) System. If our clinical trials are not successful, our
products may not be marketable.
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, perceptions of the utility of stem cell therapy for the
treatment of certain diseases and the eligibility criteria for the study. We
have experienced delays in patient accrual in our previous and current clinical
trials. If we experience future delays in patient accrual, we could experience
increased costs and delays associated with clinical trials which would impair
our product development programs and our ability to market our products.
Furthermore, the U.S. Food and Drug Administration ("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.
Failure to Obtain and Maintain Required Regulatory Approvals Would Severely
Limit Our Ability to Sell Our Products.
We must obtain the approval of the FDA before commercial sales of our
product candidates may commence in the United States, which we believe will be
the principal market for our products. We may also be required to obtain
additional approvals from foreign regulatory authorities to continue or increase
our sales activities in those jurisdictions. If we cannot demonstrate the
safety, reliability and efficacy of our product candidates, or of the cells
produced in such products, we may not be able to obtain required regulatory
approvals. Many of the patients enrolled in the clinical trials will have
previously undergone extensive treatment which will have substantially weakened
the patients and may have irreparably damaged the ability of their blood and
immune system to recover. Some patients undergoing the transplant recovery
process have died, from causes that were, according to the physicians involved,
unrelated to the AastromReplicell(TM) System procedure, and it is possible that
other patients may die or suffer severe complications during the course of
either the current or future clinical trials. In addition, patients receiving
cells produced with our 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 if 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.
Finally, 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. Even after granting regulatory approval, the FDA, other regulatory
agencies, and governments in other countries 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.
5
<PAGE>
Further, governmental regulatory agencies may establish additional regulations
which could prevent or delay regulatory approval of our products.
Even If We Obtain Regulatory Approvals to Sell Our Products, Lack of Commercial
Acceptance Would Impair Our Business.
Our product development efforts are primarily directed toward obtaining
regulatory approval to market the AastromReplicell(TM) 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 our technologies or
product candidates may not be accepted by the marketplace as readily as these or
other competing processes and methodologies. Additionally, our technologies or
product candidates may not be employed in all potential applications being
investigated, and any limited applications would limit the market acceptance of
our technologies and product candidates and our potential revenues. As a result,
even if we obtain all required regulatory approvals, we cannot be certain that
our products and processes will be adopted at a level that would allow us to
operate profitably.
Failure of Third Parties to Manufacture Component Parts or Provide Limited
Source Supplies Would Impair Our New Product Development and Our Sales
Activities.
We rely solely on third parties to manufacture our product candidates and
their component parts. We also rely solely on third party suppliers to provide
necessary key mechanical components, as well as growth factors and other
materials used in the cell expansion process. We would not be able to obtain
alternate sources of supply for many of these items on a short-term basis. If
any of our key manufacturers or suppliers fail to perform their respective
obligations or if our supply of growth factors, components or other materials is
limited or interrupted, we would not be able to conduct clinical trials or
market our product candidates on a timely and cost-competitive basis, if at all.
Furthermore, some of the compounds used by us in our current stem cell
expansion processes involve the use of animal-derived products. Suppliers or
regulatory authorities may limit or restrict the availability of such compounds
for clinical and commercial use. Any restrictions on these compounds would
impose a potential competitive disadvantage for our products. If we were not
able to develop or obtain alternative compounds, our product development and
commercialization efforts would be harmed.
Finally, we may not be able to continue our present arrangements with our
suppliers, supplement existing relationships, establish new relationships or be
able to identify and obtain the ancillary materials that are necessary to
develop our product candidates in the future. Our dependence upon third parties
for the supply and manufacture of these items could adversely affect our ability
to develop and deliver commercially feasible products on a timely and
competitive basis.
Our Past Losses and Expected Future Losses Cast Doubt on Our Ability to Operate
Profitably.
We were incorporated in 1989 and have experienced substantial operating
losses since inception. As of March 31, 2000, we have incurred net operating
losses totaling approximately $77.6 million. These losses have resulted
principally from costs incurred in the research and development of our cell
culture technologies and the AastromReplicell(TM) System, general and
administrative expenses, and the prosecution of patent applications. We expect
to incur significant operating losses until product sales increase, primarily
owing to our research and development programs, including preclinical studies
and clinical trials, and the establishment of marketing and distribution
capabilities necessary to support commercialization efforts for our products. We
cannot predict with any certainty the amount of future losses. Our ability to
achieve profitability will depend, among other things, on successfully
completing the development of our product candidates, obtaining regulatory
approvals, establishing manufacturing, sales and marketing arrangements with
third parties, and raising sufficient funds to finance our activities. We may
not be able to achieve or sustain profitability.
6
<PAGE>
Given Our Limited Internal Sales and Marketing Capabilities, We Need to Develop
Collaborative Relationships to Sell, Market and Distribute Our Products.
While we have commenced initial marketing on a limited basis of the
AastromReplicell(TM) System in Europe, we have only limited internal sales,
marketing and distribution capabilities. We intend to market our products
through collaborative relationships with companies for sales, marketing and
distribution capabilities. If we cannot develop and maintain those
relationships, we would have only a limited ability to market, sell and
distribute our products. Even if we are able to enter into such relationships,
they may not succeed or be sustained on a long-term basis, and termination would
require us to develop alternate arrangements at a time when we need sales,
marketing or distribution capabilities to meet existing demand. For example, in
November 1998 Aastrom and COBE BCT terminated a strategic alliance for the
worldwide distribution of the AastromReplicell(TM) System for stem cell therapy
and related uses. We are now seeking to enter into other arrangements relating
to the development and marketing of our product candidates.
Any Changes in the Governmental Regulatory Classifications of Our Products Could
Prevent, Limit or Delay Our Ability to Market or Develop Our Products.
The FDA establishes regulatory requirements based on the classification of
a product. Although the FDA has indicated it intends to regulate the
AastromReplicell(TM) System for stem cell therapy as a Class III medical device,
the FDA may ultimately choose to regulate the AastromReplicell System under
another category. Because our product development programs are designed to
satisfy the standards applicable to Class III medical devices, a change in the
regulatory classification would affect our ability to obtain FDA approval of our
products. Also, the FDA is in the process of developing its requirements with
respect to somatic cell therapy and gene cell therapy products. Until the FDA
issues definitive regulations covering our product candidates, the regulatory
guidelines or requirements for approval of such product candidates and/or the
cells produced by them will continue to be uncertain.
If We Do Not Keep Pace With Our Competitors and With Technological and Market
Changes, Our Products May Become Obsolete and Our Business May Suffer.
The market for our product is very competitive and is subject to rapid
technological changes. Many of our competitors have significantly greater
resources, more product candidates and have developed product candidates and
processes that directly compete with our products. Our competitors may have
developed, or could in the future develop, new technologies that compete with
our products or even render our products obsolete. In addition, some recently
published studies have suggested that stem cell therapy, which is the current
principal market for our products, may have limited clinical benefit in the
treatment of breast cancer, which is a significant portion of the current
overall stem cell transplant market. Our products are designed to improve upon
traditional stem cell collection methods, but even if we are able to demonstrate
improved or equivalent results, practitioners may not switch to our new
processes. Given the experience and expertise associated with traditional
methods, if we cannot develop our cell production procedure to lead to a less
expensive and quicker recovery time than seen with the traditional methods, then
we will suffer a competitive disadvantage. Finally, to the extent that others
develop new technologies that address the diseases and health conditions we have
targeted, our business will suffer.
If Our Patents and Proprietary Rights Do Not Provide Substantial Protection,
Then Our Business and Competitive Position Will Suffer.
Our success depends in large part on our ability to develop or license and
protect proprietary products and technologies. However, we cannot be assured
that patents will be granted on any of our pending or future patent
applications. We also cannot be assured that the scope of any of our issued
patents will be sufficiently broad to offer meaningful protection. In addition,
our issued patents or patents licensed to us could be successfully challenged,
invalidated or circumvented so that our patent rights would not create an
effective competitive barrier. Furthermore, we rely on licenses granted by the
University of Michigan for certain of our patent rights. If we breach such
agreements or otherwise fail to comply with such agreements, or if such
agreements expire or are otherwise terminated, we may lose our rights under the
patents held by the University of Michigan. We also rely on trade
7
<PAGE>
secrets and unpatentable know-how which we seek to protect, in part, by
confidentiality agreements with our employees, consultants, suppliers and
licensees. These agreements may be breached, and we might not have adequate
remedies for any breach. If this were to occur, our business and competitive
position would suffer.
Intellectual Property Litigation Could Harm Our Business.
Our success will also depend in part on our ability to develop commercially
viable products without infringing the proprietary rights of others. Although we
have not been subject to any filed infringement claims, other patents could
exist or could be filed which would prohibit or limit our ability to market our
products or maintain our competitive position. In the event of an intellectual
property dispute, we may be forced to litigate. Intellectual property litigation
would divert management's attention from developing our products and would force
us to incur substantial costs regardless of whether we are successful. An
adverse outcome could subject us to significant liabilities to third parties,
and force us to curtail or cease the development and sale of our products and
processes.
The Market for Our Products Will Be Heavily Dependent on Third Party
Reimbursement Policies.
Our ability to successfully commercialize our product candidates will
depend 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. 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. Reimbursement in the United States
or foreign countries may not be available or maintained for any of our product
candidates. If we do not obtain approvals for adequate third-party
reimbursements, we may not be able to establish or maintain price levels
sufficient to realize an appropriate return on our investment in product
development. Any limits on reimbursement available from third-party payors may
reduce the demand for, or negatively affect the price of, our products. For
example, recently published studies have suggested that stem cell
transplantation in breast cancer, which constitutes a significant portion of the
overall stem cell therapy market, may have limited clinical benefit. The market
for our products would be negatively affected by lack of reimbursement for these
procedures by insurance payors.
Potential Product Liability Claims Could Effect Our Earnings and Financial
Condition.
We face an inherent business risk of exposure to product liability claims
in the event that the use of the AastromReplicell(TM) System during research and
development efforts, including clinical trials, or after commercialization
results in adverse effects. As a result, we may incur significant product
liability exposure, which could exceed existing insurance coverage. We may not
be able to maintain adequate levels of insurance at reasonable cost and/or
reasonable terms. Excessive insurance costs or uninsured claims would increase
our operating loss and affect our financial condition.
If We Cannot Attract and Retain Key Personnel, Then 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. For example, since our initial public offering in February 1997
four of the six executive officers at that time have since left for positions
with other organizations. We have hired two new executive officers to assume
their responsibilities, one of which subsequently left. Further, in an effort to
conserve financial resources, we have been forced to implement reductions in our
work force on two separate occasions. As a result of these and other factors, we
may not be successful in hiring or retaining key personnel.
8
<PAGE>
The Warrants Have the Potential for Substantial Dilution.
In June 2000, we issued warrants to purchase up to 3,348,915 shares of our
common stock at $0.01 per share. If all 3,348,915 shares of common stock are
issued under the warrants, then holders of common stock could experience
significant dilution of their investment.
The exercise price of the warrants that we issued in February 2000 is
subject to certain reduction in the event the price of our common stock goes
down at specified times in the future or if we issue additional securities at
less than the warrant exercise price. If the exercise price of these warrants is
reduced, there would also be an increase in the number of shares that could be
issued upon exercise of the warrants. The warrants are currently exercisable for
1,132,075 shares of common stock. This number of shares could increase to 2,614,
386 shares of common stock and the exercise price could be reduced to as low as
$1.60 per share. Holders of common stock could therefore experience dilution of
their investment upon exercise of these warrants.
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:
. 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; and
. changes in potential 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. For example,
within the last year, our stock price has experienced a day where it traded at
approximately twice the previous day's closing price and another day when it
dropped by over 20% from the previous day's closing price.
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
9
<PAGE>
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 Our Shares, Which Would Significantly
Reduce Our Limited Cash Resources.
The original purchasers of the shares and warrants issued in February 2000
and June 2000 may require us to redeem some or all of those shares in the event
that we fail to perform certain administrative activities that are within our
control. These administrative activities include: issuing the shares of common
stock upon the exercise of the warrants, transferring or instructing the
transfer agent to transfer shares of common stock issued upon exercise of the
warrants when required and removing any restrictive legends from such shares of
common stock when required. Such a redemption could significantly reduce our
limited capital resources.
Our Stock May Be Delisted From Nasdaq, Which Could Affect its Market Price and
Liquidity.
We are required to meet certain financial tests (including, but not limited
to, a minimum bid price of our common stock of $1.00 and $4 million in tangible
net worth) to maintain the listing of our common stock on the Nasdaq National
Market. Within the last nine months, our common stock price has fallen below the
minimum level for some periods and during other periods our tangible net worth
has been below the amount required. In the future, our stock price or tangible
net worth may fall below the Nasdaq requirements, or we may not comply with
other listing requirements, with the result being that our common stock might be
delisted. If that happened the market price and liquidity of our common stock
would be impaired.
Absence of Dividends Could Reduce Our Attractiveness to Investors.
Some investors favor companies that pay dividends, particularly in market
downturns. We have never paid cash dividends on our common stock and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future. Therefore, your return on this investment will depend on your ability to
sell our stock at a profit.
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 potential strategic collaborations with
others;
. future capital needs and uncertainty of additional funding;
. 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;
. 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. We assume
no obligation to update any such forward-looking statement or reason why actual
results might differ.
10
<PAGE>
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:
a. the Company's Annual Report on Form 10-K for the year ended
June 30, 1999 (Commission File No.: 000-22025), but specifically
excluding The Report of the Independent Accountants thereto which
is superceded by the report included in the Company's current
report on Form 8-K filed on December 10, 1999 (Commission File
No. 000-22025);
b. the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999 (Commission File No. 000-22025);
c. the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1999 (Commission File No. 000-22025);
d. the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2000 (Commission File No. 000-22025);
e. the Company's Current Report of Form 8-K filed with the
Commission on October 27, 1999 (Commission File No.: 000-22025)
f. the Company's Current Report of Form 8-K filed with the
Commission on December 10, 1999 (Commission File No.: 000-22025);
g. the Company's Current Report on Form 8-K filed with the
Commission on January 19, 2000 (Commission File No.: 000-22025);
h. the Company's Current Report on Form 8-K filed with the
Commission on March 3, 2000 (Commission File No.: 000-22025); and
i. the Company's Registration Statement on Form 8-A filed with
the Commission on April 11, 1997 (Commission File No.: 000-
22025).
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:
CHIEF FINANCIAL OFFICER.
11
<PAGE>
SELLING SHAREHOLDER
This prospectus relates to the offering by RGC International Investors, LDC
for resale of up to 6,159,220 shares of common stock. In addition to the
2,810,305 shares of common stock currently owned, the selling shareholder may
acquire 3,348,915 shares upon exercise, from time to time, of the warrants that
it holds. The table below sets forth the following information with respect to
the selling shareholder as of June 9, 2000:
. the name and position or other relationship with Aastrom within the past
three years, if any, of the selling shareholder,
. the number of Aastrom's outstanding shares of common stock beneficially
owned by the selling shareholder (including shares obtainable under
options exercisable within sixty days of such date) prior to the
offering hereby,
. the number of such shares being offered hereby,
. 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.
We cannot be sure that the selling shareholder will exercise any of the
warrants or sell any or all of the shares offered hereby.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Beneficially Owned Number of Number of Shares Aastrom Stock
Prior to the Such Shares Beneficially Owned Owned After
Selling Shareholder Offering Being Offered After the Offering the Offering
------------------- ------------------ ------------- ------------------ -------------
<S> <C> <C> <C> <C>
RGC International 7,735,100 (1) 6,159,220 1,575,880 (1) 4.94%
Investors, LDC
</TABLE>
_______________________
(1) Includes (i) 443,805 shares of common stock and (ii) 1,132,075 shares of
common stock issuable under a warrant. These shares have been registered on our
Registration Statement on Form S-3 filed with the SEC on March 21, 2000 (File
No.:333-32914).
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
number of shares set forth in the table includes 3,348,915 shares the selling
shareholder would receive as the maximum number of shares issuable under the
warrant. The number of shares of common stock issuable upon exercise of the
warrant is subject to reduction (i) if the average closing bid price of our
common stock as measured across the ten trading day period ending June 8, 2001
exceeds $2.135, (ii) if we do not issue additional securities for less than
$2.135 per share, (iii) if the selling shareholder sells some of the 2,810,305
shares purchased in June 2000 at prices above $2.135 per share, or (iv) upon
certain change of control events. The actual number of shares of common stock
issuable upon exercise of the warrant is indeterminate and is subject to
adjustment. Therefore, the actual number of shares could be materially less than
this maximum amount depending on, among other things, the unpredictable factors
listed above. The actual number of shares of common stock offered hereby, and
included in the Registration Statement of which this prospectus is a part, also
includes an additional number of shares of common stock that may be issued or
issuable upon exercise of the warrant 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.
Pursuant to all the warrants held by the selling shareholder, such 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 after such
12
<PAGE>
conversion or exercise would not exceed 9.9% 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
immediate exercise of the warrants. 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.
The selling shareholder, RGC International Investors, LDC, is a party to
an investment management agreement with Rose Glen Capital Management, L.P., a
limited partnership of which the general partner is RGC General Partner Corp.
Messrs. Wayne Bloch, Gary Kaminsky and Steve Katznelson own all of the
outstanding capital stock of RGC General Partner Corp., are the sole officers
and directors of RGC General Partner Corp. and are parties to a shareholders'
agreement pursuant to which they collectively control RGC General Partner Corp.
Through RGC General Partner Corp., these individuals control Rose Glen Capital
Management, L.P. These individuals disclaim beneficial ownership of Aastrom's
Common Stock owned by the selling shareholder.
PLAN OF DISTRIBUTION
The shares of common stock may be offered for sale from time to time by
or on behalf of the holder of those shares. The actual number of shares that may
be offered will vary based on the market price of our common stock, and the
6,159,220 shares covered by this prospectus is based on the maximum number of
shares that may be issued under the warrant.
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 shares may also be sold pursuant to Rule 144.
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 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.
13
<PAGE>
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, we 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.
We have 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 us against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments we
may be required to make in respect thereof.
USE OF PROCEEDS
We will not receive any proceeds from sales of the shares. We may receive
up to approximately $33,489 upon exercise of the warrants. This is based on a
potential full exercise of the warrants to purchase 3,348,915 shares of common
stock at $0.01 per share. We intend to apply any net proceeds received from
exercise of the warrants to general working capital purposes.
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 Current Report on Form 8-K filed with the Commission on December 10, 1999,
have been so incorporated in reliance on the report (which contains an
explanatory paragraph relating to the Company's ability to continue as a going
concern as described in Note 1 to the Financial Statements) of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
14
