<PAGE>
As filed with the Securities and Exchange Commission on February 17, 1999.
Registration No. 333-71883
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
GALAGEN INC.
(Exact name of the Registrant as specified in is charter)
Delaware 41-1719104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1275 Red Fox Road
Arden Hills, Minnesota 55112
(651) 634-4230
(Address and telephone number of the Registrant's
principal executive offices)
Robert A. Hoerr
Chairman of the Board of Directors and Chief Executive Officer
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112
(651) 634-4230
(Name, address and telephone number of agent for service)
-----------------------
copy to:
Kris Sharpe
Faegre & Benson LLP
200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
-----------------------
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of 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. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BE REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
SHARE (1) PRICE (1) FEE
<S> <C> <C> <C> <C>
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Common Stock, $.01 par value 318,800 $2.39 $761,932 $212 (2)
Shares
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) Previously paid.
------------------------------------
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 preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell and does not seek an offer to
buy these securities in any jurisdiction where the offer or sale in not
permitted.
Subject to completion. Dated February 17, 1999.
PROSPECTUS
318,800 SHARES
GALAGEN INC.
COMMON STOCK
______________
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112
(651) 634-4230
______________
This Prospectus relates to shares of our Common Stock that may be sold
by a certain stockholder. We will not receive any of the proceeds from the sale
of those shares.
Our Common Stock is traded on the Nasdaq National Market under the
symbol "GGEN." On February 12, 1999, the last sale price for the Common Stock,
as reported on the Nasdaq National Market, was $2.03 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR CERTAIN FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.
______________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of 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 February __, 1999
<PAGE>
THE COMPANY
We are a nutritional products company whose mission is to become the
leading presence in foods, beverages and dietary supplements that help enhance
the immune system. To accomplish this mission, we are focusing our efforts on
channels that demand immune-enhancing benefits in certain segments of the
consumer foods and beverages market and in certain segments of the clinical
nutrition products markets. A critical factor for our success is our
immune-enhancing ingredient that is derived from colostrum, the highly
nutritious first milk from a dairy cow, which has been branded Proventra-TM-
Brand Natural Immune Components ("Proventra"). The primary immune-enhancing
components of Proventra are antibodies, which are proteins that enhance the
body's immune system to protect against harmful pathogens. Secondary
immune-enhancing components providing further disease resistance are proteins,
such as lactoferrin, as well as growth factors and multiple vitamins and
minerals.
We are a Delaware corporation formed in 1992. Our executive offices are
located at 1275 Red Fox Road, Arden Hills, Minnesota 55112, and our telephone
number is (651) 634-4230.
RISK FACTORS
You should consider carefully the following risks before you decide to buy
our Common Stock. The risks and uncertainties described below are not the only
ones facing our company. Additional risks and uncertainties also may impair our
business operations. If any of the following risks actually occur, our
business, financial condition and results of operations would likely suffer. In
such case, the trading price of our Common Stock could decline, and you may lose
all or part of the money paid to buy our Common Stock.
This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about our business and our
industry. These forward-looking statements involve risks and uncertainties.
Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, as more fully
described below and elsewhere in this prospectus. We undertake no obligation to
update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.
GENERAL
SUFFICIENCY OF WORKING CAPITAL AND CAPITAL REQUIREMENTS
We have experienced significant operating losses in each year since our
inception in 1987 and have an accumulated deficit of more than $56 million as of
September 30, 1998. Our ability to achieve profitable operations depends in
large part on entering into agreements for product development and
commercialization and making the transition to a manufacturing and marketing
company. We cannot be sure we will ever achieve a profitable level of
operations.
Our anticipated cash requirements for working capital depend on numerous
factors. These factors include:
- our spending on marketing activities, including clinical marketing
trials for certain products acquired from NM Holdings, Inc. (formerly
known as Nutrition Medical, Inc.) ("NMI");
- our progress in securing strategic alliances;
- the willingness and ability of our partners in strategic alliances to
provide funding for product development and marketing;
- our spending on product development programs;
- the rate of technological advances in the production of our products;
- our spending on developing manufacturing capabilities; and
- the status of competitive products.
Our long-term ability to continue funding our planned operations depends on
our ability to obtain additional funds through:
- product revenues;
- equity or debt financing;
- strategic alliances;
- license agreements; or
- other financing sources.
A lack of adequate funding could eventually result in our insolvency or
bankruptcy. At a minimum, if adequate funds are not available, we may be
required to delay or to eliminate expenditures for certain of our product
development efforts or to license to third parties the rights to commercialize
products or technologies that we would otherwise seek to develop ourselves.
Because of our significant long-term capital requirements, we may seek to raise
funds when conditions are favorable, even if we do not have an immediate need
for such additional capital at such time. If we have not raised funds prior to
when our needs for funding become immediate, we may be forced to raise funds
when conditions are unfavorable, which could result in significant dilution of
our current stockholders.
VOLATILITY OF MARKET FOR COMMON STOCK
While our Common Stock has been traded on the Nasdaq National Market since
our initial public offering, the volume of shares of Common Stock traded on that
market has been small relative to comparable issuers. We cannot be sure that an
active trading market will be sustained after the sale of the Common Stock
offered hereby. Further, we cannot be sure of the liquidity of the market for
the Common Stock or the price at which any sales may occur. The trading price
of the Common Stock in the future will depend upon the number of holders
thereof, the interest of securities dealers in maintaining a market in the
Common Stock and other factors beyond our control. In addition, the stock
market has from time to time experienced extreme price and volume volatility.
These fluctuations may be unrelated to the operating performance of particular
companies whose shares are traded. Market fluctuations may adversely affect the
market price of our Common Stock, particularly given the small volume of shares
traded. The market price of our Common Stock could be subject to significant
fluctuations in response to our operating results, the operating results of our
competitors or other biotechnology companies, or regarding technological
developments, government regulations, proprietary rights, litigation or public
safety concerns, and other factors.
LOSS OF NASDAQ NATIONAL MARKET LISTING
Our Common Stock is currently listed on the Nasdaq National Market. On
August 22, 1997, the Securities and Exchange Commission (the "SEC") approved a
number of proposed changes to the Nasdaq listing requirements that became
effective February 22, 1998. Under these requirements, a company with a security
listed on the Nasdaq National
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Market must meet certain quantitative maintenance criteria for continued
listing of the security. Under "Maintenance Standard 1" for the Nasdaq
National Market, which is the maintenance standard most applicable to our
Common Stock, each of the following conditions must be maintained:
- our Common Stock must have a minimum bid price of $1 per share;
- our Common Stock must have a public float of 750,000 shares;
- the market value of the public float of our Common Stock must be over
$5 million;
- we must have net tangible assets of over $4 million;
- there must be a minimum of 400 round lot holders of our Common Stock;
and
- there must be at least two market makers in our Common Stock.
As of December 31, 1998, all of the requirements for continued listing
of our Common Stock on the Nasdaq National Market were being met. Failure to
maintain the continued listing requirements, or to file a plan acceptable to
Nasdaq for meeting those requirements, may result in the removal of our
Common Stock from listing on the Nasdaq National Market. If trading
privileges in our Common Stock on the Nasdaq National Market were terminated,
we would be required to demonstrate compliance with the applicable
requirements for initial inclusion of a security on the Nasdaq National
Market before our Common Stock would be listed again on that exchange. The
requirements for initial inclusion are more stringent than those for
continued listing. We cannot be sure that our Common Stock will continue to
be listed on the Nasdaq National Market. If we anticipate that our Common
Stock will not qualify for continued listing on the Nasdaq National Market,
we would apply to have its listing transferred to the Nasdaq Small Cap
Market. If the listing of our Common Stock is transferred from the Nasdaq
National Market to the Nasdaq Small Cap Market, it may be more difficult for
broker-dealers to sell our Common Stock. If our Common Stock is removed from
listing on the Nasdaq National Market, owners of shares of our Common Stock
may have difficulty in selling such shares in the future. Additionally, if
our Common Stock is removed from listing on the Nasdaq National Market, it
may become more difficult for us to raise funds through the sale of Common
Stock or securities convertible into Common Stock.
PRODUCT LIABILITY AND INSURANCE RISKS
Our business involves exposure to potential product liability risks that
are inherent in the production, manufacture and distribution of consumer and
clinical food products that are designed to be ingested. We maintain a
general insurance policy that includes coverage for product liability claims
up to an aggregate amount of $2 million. We cannot be sure, however, that we
will be able to maintain such insurance on acceptable terms, that we will be
able to secure increased coverage as the commercialization of our products
increases or that any insurance will provide adequate protection against
potential liabilities. We are not currently a named defendant in any product
liability lawsuit. The successful assertion or settlement of any uninsured
claim, a significant number of insured claims or a claim exceeding our
insurance coverage could have a material adverse effect on our business and
financial condition.
RELIABILITY OF MARKET DATA
We have obtained market and related data, which we may refer to from
time to time in our press releases or filings with the SEC, from Frost &
Sullivan, a competitive-market analysis firm. We have not independently
verified the accuracy of such information, and, in any event, the methodology
typically used in compiling market and related data means that such data is
subject to inherent uncertainties and estimations. As a result, we cannot be
sure as to the accuracy or completeness of such information. If we rely on
inaccurate market information, the result could have a material adverse
effect on our business and financial condition.
ADEQUATE PROVENTRA PRODUCTION
We believe that our current manufacturing facility will meet the
anticipated requirements for the production of Proventra for use in consumer
and clinical nutritional products through the year 2000. Further, we believe
that contract manufacturers would be available to increase our Proventra
production capacity quickly, if required. However, given our limited
experience in manufacturing Proventra, we cannot be sure that we will be
successful in producing acceptable Proventra on a commercial scale and at
acceptable costs in our pilot plant facility. Our Proventra will be
regulated by the Minnesota Department of Agriculture under the appropriate
license. Our inability to adequately produce Proventra could have a material
adverse effect on our business and financial condition.
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<PAGE>
SUCCESSFUL COLLABORATIONS
We anticipate that products containing Proventra will be introduced into
certain markets in the last half of 1999 through certain collaborations we
have established with other companies. Whether such products are introduced
to test market on schedule depends on our ability and our collaborators'
ability to accomplish the following:
- successfully finalize market research;
- successfully finalize product development;
- establish product manufacturing;
- initiate marketing, sales and distribution activities related to such
product; and
- provide the funding necessary to accomplish such activities.
Our or our collaborators' inability to bring certain products to certain
markets in 1999 could have a material adverse effect on our business and
financial condition.
PRODUCT DEVELOPMENT COSTS AND TARGET CUSTOMERS
The amount of time it will take us, in conjunction with a strategic
partner, to develop consumer and clinical nutrition products and the
associated costs of such product development depends on, among other things,
results of our market research for consumer and clinical products and on our
discussions with certain end users or purchasers of the potential products.
Such market research and discussions may give us indications of potential
customers, what types of products they may desire and what clinical
information is necessary for effective marketing and sales. Our or our
partner's inability to obtain accurate marketing data, or to develop a
product responsive to the needs identified by such data, could have a
material adverse effect on our business and financial condition.
FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS
FAVORABLE PUBLIC PERCEPTION
We are highly dependent upon consumers' perception of the safety and
quality of our products as well as similar products distributed by other
companies. Thus, the mere publication of reports asserting that such products
may be harmful could have a material adverse effect on our business and
financial condition, regardless of whether such reports are scientifically
supported and regardless of whether the alleged harmful effects would be present
at the dosages recommended for such products.
INGREDIENT RISKS
Some of our products may contain innovative ingredients or combinations of
ingredients that do not have a long history of human consumption. While we
believe all of our products will be safe when taken as we direct, there is
little long-term experience with human consumption of certain of these
innovative product ingredients or combinations thereof in concentrated form.
Although we perform research and/or test the formulation and production of our
products, we will sponsor only limited clinical studies or rely on other outside
published data. If certain of our innovative ingredients produce unwanted
effects, we could be exposed to product liability claims and lose consumer
confidence, which could have a material adverse effect on our business and
financial condition.
COMPETITION IN NUTRITIONAL PRODUCTS MARKET
The nutritional products market is highly competitive with many large
nationally known manufacturers and many smaller manufacturers and marketers
of nutritional products. We currently know of no other company that is
developing or marketing a nutritional food or beverage product that
incorporates Proventra technology combined with active cultures and other
ingredients. Potential competitors, however, could be larger than we are,
have greater access to capital than we do and may be better able to withstand
volatile market conditions than we are. Moreover, because the nutritional
products industry generally has low barriers to entry, additional competitors
could enter the market at any time. Although the nutritional products
industry to date has been characterized by many relatively small
participants, national or international companies (which may include
pharmaceutical companies or other suppliers to mass merchandisers) may seek
to enter or to increase their presence in or to consolidate this industry.
Increased competition in the industry could have a material adverse effect on
our business and financial condition.
4
<PAGE>
CRITICAL CARE NUTRITION PRODUCTS
INCREASED SALES VOLUME
On December 23, 1998, we acquired certain critical care nutrition
products from NMI. The products purchased from NMI had annualized sales of
approximately $1.1 million at the time of the acquisition. Our ability to
increase sales levels of the acquired critical care enteral nutrition
products depends on our ability to successfully complete certain clinical
marketing studies and the ability of the sales and marketing group we hired
from NMI to effectively execute its operating sales and marketing plans. We
may be materially adversely affected if we do not complete certain clinical
marketing studies or if the sales and marketing personnel do not effectively
execute their operating plans.
PRODUCT ACCEPTANCE AND PRICING
Our products, with the exception of Glutasorb-TM-, are designed to be
substantially equivalent to existing branded competitive products. Although we
believe that the quality and efficacy of our critical care nutrition products
are comparable to branded competitive products, no independent comparison
between our critical care nutrition products and competitive products has been
completed. We cannot be sure that the efficacy or quality of our critical care
nutrition products is, or will be, comparable to branded competitive products.
Furthermore, our name and our products are relatively unknown to large segments
of our target markets. We cannot be sure that our marketing efforts will
achieve sufficient name recognition of our company and of our critical care
nutrition products to significantly enhance revenues, which could have a
material adverse effect on our business and financial condition.
The principal advantage of our critical care nutrition products, with
the exception of Glutasorb, is cost effectiveness. Because these products
were recently acquired, we have not experienced any competitor lowering its
prices to offset any price advantage we may have. We are aware that while
the products were owned by NMI, at least one competitor in the critical care
nutrition products market lowered prices to various customers of certain
branded products to levels that offset all or part of the price advantage
held by NMI. We believe that any selective price reductions by a competitor
may result in indeterminable lost sales of our competing products. Because
much of our marketing strategy is focused on the price advantage of our
critical care nutrition products, if a competitor selling competitive
products reduces or eliminates the price advantage of our products, we cannot
be sure that we will be able to compete successfully with such a competitor
or operate profitably under such conditions, which could have a material
adverse effect on our business and financial condition.
DEPENDENCE ON CONTRACT MANUFACTURERS
We engage contract manufacturers to produce our critical care nutrition
products according to our specifications. We rely on these manufacturers to
comply with all applicable government regulations and manufacturing guidelines.
We cannot be sure that contract manufacturers will consistently supply adequate
quantities of our products on a timely basis, that such manufacturers will
consistently comply with government regulations or that the quality of such
products will be consistently maintained. In the event of a sale of a defective
product, we would be exposed to product liability claims and could lose customer
confidence. In addition, minimum quantity order requirements imposed by
manufacturers may result in excess inventory levels, requiring additional
working capital and increasing exposure to losses from inventory obsolescence.
Although we believe we could find alternative manufacturers for our products,
any interruption in supply of any of our products could have a material adverse
effect on our business and financial condition.
CUSTOMER CONCENTRATION
Although our experience with our customer base is limited, our critical
care nutrition product sales may become concentrated with a few large
distributors and certain customers. We cannot be sure that orders from such
customers will continue or that our future orders will not significantly
decline, which could have a material adverse effect on our business and
financial condition.
LITIGATION INVOLVING COMPETITORS
Companies in the private label industry are commonly the subject of
claims and lawsuits brought by brand name competitors alleging that the
private label products have formulas, labeling or packaging similar to
competing brand name products. Certain of the critical care nutrition
products we acquired from NMI were the subject of a lawsuit alleging patent
infringement. The suit was favorably resolved before we acquired the
products. Similar claims may be made against us by competitors in the
future. Competitors may also respond to our marketing strategy by more
aggressively seeking patents on their products to limit our future product
development efforts. If similar allegations are made against
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us in the future, some of our current and future products may need to be
reformulated or repackaged in order for us to continue to market products
that are comparable to competitors' patented products. While we believe that
reformulation of our products is generally possible, we may be unable to
effectively reformulate certain of our products. We cannot be sure that a
reformulated product would be deemed by customers to be essentially
equivalent to the patented product. Moreover, we cannot be sure that any
future lawsuits could be satisfactorily settled by reformulating, relabeling
or repackaging a product. Such litigation may require the commitment of
substantial management time and legal fees. Accordingly, such litigation may
have a material adverse effect on our business and financial condition.
COMPETITION
Our competitors in the critical care nutrition products market are
established companies that sell branded products that have achieved a high
level of customer awareness. Although we believe we are the only company
currently offering cost effective alternatives to the established brands,
other companies may enter this market. If a larger company with significant
financial resources were to compete directly with us in particular market
segments, we cannot be sure that we would be able to compete successfully or
operate profitably, which could have a material adverse effect on our
business and financial condition.
TRADEMARKS
We are in the process of registering existing trademarks for the
products acquired from NMI with the United States Patent & Trademark Office.
As part of NMI, the products were not registered but instead relied on NMI's
common law trademark rights. The lack of such registration may impair the
ability of the Company to successfully register the trademarks or to
prosecute successfully an infringement action against other users of these
trademarks. We cannot be sure that our marks do not or will not violate the
proprietary rights of others, that our proprietary rights in the marks would
be upheld if challenged, or that we would not be prevented from using the
marks, any of which could have a material adverse effect on our business and
financial condition. In addition, we cannot be sure that we will have the
financial resources necessary to enforce or defend our trademarks, which
could also have a material adverse effect on our business and financial
condition.
GOVERNMENT REGULATION
Our critical care products and potential critical care products are, or
will be, subject to government regulation. Our current products are
regulated as food and medical food by the Food and Drug Administration (the
"FDA") and are subject to certain labeling requirements, current good
manufacturing practice regulations and certain other regulations designed to
ensure the safety of the products.
Claims we make in labeling and advertising our products are subject to
regulation by the FDA, the Federal Trade Commission and various state
agencies under their general authority to prevent false, misleading and
deceptive trade practices. These regulations involve stringent tracking,
testing and documentation standards. Failure to comply with such
requirements can result in adverse regulatory action, including injunctions,
civil or criminal penalties, product recalls or the relabeling, reformulation
or possible termination of certain products.
Our current and potential products may become subject to further
governmental regulation in the future. The burden of such regulation could
add materially to the costs and risks of our development and marketing
efforts. There can be no assurance that we could obtain the required
approvals or comply with new regulations if our products are subject to
additional governmental regulation in the future. Our failure to obtain
necessary approvals or otherwise comply with government regulations could
have a material adverse effect on our business and financial condition.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our Common Stock is listed on the Nasdaq National Market under the
symbol GGEN. The following table shows, for the calendar periods indicated,
the reported high and low sale prices of the Common Stock on the Nasdaq
National Market, as reported by the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
---------- ----------
<S> <C> <C>
1997:
First Quarter $4.625 $1.750
Second Quarter 3.250 2.000
Third Quarter 2.750 2.000
Fourth Quarter 2.375 1.500
1998:
First Quarter $2.250 $0.844
Second Quarter 3.313 1.563
Third Quarter 4.000 1.625
Fourth Quarter 3.000 1.375
1999:
First Quarter (through February 12, 1999) $2.625 $1.750
</TABLE>
As of January 29, 1999 there were approximately 1,400 holders of record of
our Common Stock.
We have never declared or paid any cash dividends on our Common Stock. We
currently do not anticipate paying any cash dividends in the foreseeable future.
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SELLING STOCKHOLDER
The following table identifies the selling stockholder (the "Selling
Stockholder") and the number of outstanding shares of our Common Stock
beneficially owned by it as of January 29, 1999. The maximum number of shares
proposed to be sold by the Selling Stockholder pursuant to this Registration
Statement and the number of shares it will own after such sales are also shown
below. The Selling Stockholder obtained the shares offered hereby pursuant to
an Asset Purchase Agreement dated as of September 1, 1998, as amended on
October 28, 1998 and December 23, 1998 (collectively, the "Purchase Agreement")
by and between Nutrition Medical, Inc. (currently known as NM Holdings, Inc.)
and the Company. The percentages are based on 8,948,446 shares outstanding on
January 29, 1999.
<TABLE>
<CAPTION>
SHARES OWNED SHARES OWNED
PRIOR TO OFFERING AFTER OFFERING (1)
---------------------- -------------------------
PERCENT OF SHARES PERCENT OF
NAME NUMBER OUTSTANDING OFFERED NUMBER OUTSTANDING
- ----------------------------------------- ------- ----------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
NM Holdings, Inc. 318,800 3.6 318,800 0 --
</TABLE>
- ----------------------------------
(1) Assumes sale of all shares of the Selling Stockholder offered hereby.
PLAN OF DISTRIBUTION
The Selling Stockholder may effect the distribution of the shares from
time to time (but no later than March 31, 2001) in one or more transactions:
- on the Nasdaq National Market or otherwise;
- in the over-the-counter market;
- in negotiated transactions;
- through the writing of options on shares (whether the options are
listed on an options exchange
or otherwise); or
- a combination of such methods of sale.
The Selling Stockholder may sell the shares at market prices prevailing
at the time of sale, at prices related to those prevailing market prices or
at negotiated prices. The Selling Stockholder also may sell the shares
pursuant to Rule 144 adopted under the Securities Act of 1933, as amended
(the "Securities Act"), at such times as such sales are permitted pursuant to
such Rule. The Selling Stockholder may effect transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as
agents or principals. Such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholder or
to the purchasers of the shares for whom such broker-dealers may act as
agents or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer may be in excess of customary commissions). The
Selling Stockholder and broker-dealers that participate with the Selling
Stockholder in the distribution of shares may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any
commissions received by them and any profit on the resale of shares may be
deemed to be underwriting compensation. We have informed the Selling
Stockholder that the anti-manipulative provisions of Regulation M promulgated
under the Securities Exchange Act of 1934 (as amended) may apply to the
Selling Stockholder's sales of shares in the market.
Upon notification to us by the Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
Prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of the participating broker-dealers,
(ii) the number of shares involved, (iii) the price at which such shares were
sold, (iv) the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable, (v) that such broker-dealers did not conduct
any
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investigation to verify the information set out or incorporated by reference
in this Prospectus and (vi) other facts material to the transaction.
The Selling Stockholder agreed pursuant to the Purchase Agreement to
limit its sales of the shares offered hereby as follows:
(a) immediately upon effectiveness of the registration statement to which
this Prospectus relates, the Selling Stockholder may sell or transfer up to 10%
of the shares offered hereby;
(b) during each month of December 1998 through May 1999 the Selling
Stockholder may sell or transfer up to an additional 5% of the shares offered
hereby per month; and
(c) during each month of June 1999 through November 1999 the Selling
Stockholder may sell or transfer up to an additional 10% of the shares offered
hereby per month.
The foregoing percentages are intended to be cumulative, such that any
shares not sold within such limitations at the time or within the period
permitted shall continue to be available for sale at any time during the
remainder of the one-year period following December 23, 1998. After December
23, 1999 the Purchase Agreement imposes no limitation on the Selling
Stockholder's ability to sell the shares offered hereby.
We may suspend sales of shares offered hereby for a limited time, which in
no event shall be longer than 90 days, if (a) such sales would materially
adversely affect, or would be improper in view of (or improper without
disclosure in a prospectus or other filing with the SEC), a proposed financing,
reorganization, recapitalization, merger, acquisition, consolidation or similar
transaction or other development involving or with respect to us (including,
without limitation, through the premature disclosure thereof) or (b) we are
conducting a public offering of capital stock (including during the
effectiveness of any registration statement pertaining thereto) and the managing
underwriter concludes in its reasonable judgment that sales of shares held by
the Selling Stockholder would materially adversely affect the success of the
offering. We will promptly notify the Selling Stockholder any time sales of
shares offered hereby are suspended and will promptly notify the Selling
Stockholder of the termination of any such suspension.
9
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). Our SEC
filings are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the
SEC at its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. You can also obtain copies of the documents at prescribed rates by
writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of its Public Reference Room. Our SEC filings are
also available at the office of the National Association of Securities Dealers,
Inc. For more information on obtaining copies of our public filings at the
National Association of Securities Dealers, Inc., you should write to National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file subsequently
with the SEC will automatically update this prospectus. We incorporate by
reference the documents listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as
amended, after the initial filing of the registration statement that contains
this prospectus and prior to the time that we sell all the securities offered by
this prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1997
(including information specifically incorporated by reference into our
Form 10-K from our 1997 Annual Report to Shareholders and our
definitive Notice and Proxy Statement for our 1998 Annual Meeting of
Shareholders);
- Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 1998;
- Current Report on Form 8-K dated December 23, 1998; and
- the description of our Common Stock contained in the registration
statement on Form 8-A filed on March 13, 1996 and any amendment or
reports filed to update that description after the date of this
prospectus.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning us at the following address:
Mr. Gregg A. Waldon
Secretary
GalaGen Inc.
1275 Red Fox Road
Arden Hills, Minnesota 55112
(651) 634-4230
You should rely only on the information incorporated by reference or
presented in this prospectus or the applicable prospectus supplement. We have
not authorized anyone else to provide you with different information. We may
only use this prospectus to sell securities if it is accompanied by a prospectus
supplement. We are only offering these securities in states where the offer is
permitted. You should not assume that the information in this prospectus or the
applicable prospectus supplement is accurate as of any date other than the dates
on the front of those documents.
LEGAL OPINIONS
Faegre & Benson LLP, 2200 Norwest Center, Minneapolis, Minnesota 55402,
will pass upon the validity of the shares of Common Stock offered hereby for the
Company.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements appearing in our Annual Report on Form 10-K for the year ended
December 31, 1997, as set forth in their report thereon included therein and
incorporated herein by reference. Those financial statements are incorporated
herein by reference in reliance upon their report given upon their authority as
experts in accounting and auditing.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance and distribution of
the shares of Common Stock being registered hereunder other than underwriting
commissions and expenses, are estimated below.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . $ 212
Nasdaq listing fee . . . . . . . . . . . . . 6,376
Legal services and expenses. . . . . . . . . 65,000
Accounting services and expenses . . . . . . 1,000
Printing fees. . . . . . . . . . . . . . . . 500
Miscellaneous. . . . . . . . . . . . . . . . 412
-------
Total $73,500
-------
-------
</TABLE>
Except for the SEC registration fee and the Nasdaq listing fee,
all of the foregoing expenses have been estimated. The Selling Stockholder
will bear fees and disbursements of their own legal counsel and transfer
taxes, provided, however, that the Company will pay up to $1,250 of the
expenses for legal counsel to the Selling Stockholder in connection with the
registration of this offering. The Company will bear all other expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Delaware law, a corporation may indemnify any person who was
or is a party or is threatened to be made a party to an action (other than an
action by or in the right of the corporation) by reason of his or her
services as a director or officer of the corporation, or his or her service,
at the corporation's request, as a director, officer, employee or agent of
another corporation or other enterprise, against expenses (including
attorneys' fees) that are actually and reasonably incurred by him or her
("Expenses"), and judgments, fines and amounts paid in settlement that are
actually and reasonably incurred by him or her, in connection with the
defense or settlement of such action, provided that he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed
to the corporation's best interests, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that his or her conduct was
unlawful. Although Delaware law permits a corporation to indemnify any
person referred to above against Expenses in connection with the defense or
settlement of an action by or in the right of the corporation, provided that
he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the corporation's best interests, if such person
has been judged liable to the corporation, indemnification is only permitted
to the extent that the Court of Chancery (or the court in which the action
was brought) determines that, despite the adjudication of liability, such
person is entitled to indemnity for such Expenses as the court deems proper.
The General Corporation Law of the State of Delaware also provides for
mandatory indemnification of any director, officer, employee or agent against
Expenses to the extent such person has been successful in any proceeding
covered by the statute. In addition, the General Corporation Law of the
State of Delaware provides for the general authorization of advancement of a
director's or officer's litigation Expenses in lieu of requiring the
authorization of such advancement by the board of directors in specific
cases, and that indemnification and advancement of Expenses provided by the
statute shall not be deemed exclusive of any other rights to which those
seeking indemnification of Expenses may be entitled under any bylaw,
agreement or otherwise.
The Restated Certificate of Incorporation of the Company eliminates
the personal liability of a director to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except under
certain circumstances involving certain wrongful acts such as breach of a
director's duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, for any unlawful acts
under Section 174 of the General Corporation Law of the State of Delaware, or
for any transaction from which a director derives an improper personal benefit.
The Company's Restated Certificate of Incorporation and Restated Bylaws provide
for the broad indemnification of the directors and officers of the Company and
for advancement of litigation expenses to the fullest extent required or
permitted by current Delaware law.
Under Section 15.5 of the Purchase Agreement filed as Exhibit 4.2
hereto, the Selling Stockholder agrees to indemnify, under certain conditions,
the Company, its directors, certain of its officers and persons who control the
Company within the meaning of the Securities Act of 1933, as amended, against
certain liabilities.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
3.1 Restated Certificate of Incorporation of the Company. (1)
3.2 Restated Bylaws of the Company. (2)
4.1 Specimen Common Stock Certificate. (3)
4.2 Asset Purchase Agreement by and between the Company and Nutrition
Medical, Inc. dated as of September 1, 1998. (4)
4.3 Amendment to Asset Purchase Agreement by and between the Company and
Nutrition Medical, Inc. dated as of October 28, 1998. (5)
4.4 Second Amendment to Asset Purchase Agreement by and between the
Company and Nutrition Medical, Inc. dated as of December 23,
1998. (6)
5 Opinion of Faegre & Benson LLP. (7)
23.1 Consent of Ernst & Young LLP. (7)
23.2 Consent of Faegre & Benson LLP (included in Exhibit 5).
24 Powers of Attorney of directors and officers of the Company. (7)
</TABLE>
- --------------------------
(1) Incorporated herein by reference to Exhibit No. 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996 (File No. 0-27976).
(2) Incorporated by reference to Exhibit No. 3.4 of the Company's
Registration Statement on Form S-1 (Registration No. 333-1032)
(3) Incorporated herein by reference to the same numbered Exhibit to the
Company's Registration Statement on Form S-1 (Registration No.
333-1032).
(4) Incorporated herein by reference to Exhibit No. 10.26 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ending
September 30, 1998 (File No. 0-27976).
(5) Incorporated herein by reference to Exhibit No. 2.2 to the Company's
Current Report on Form 8-K dated December 23, 1998 (File No. 0-27976).
(6) Incorporated herein by reference to Exhibit No. 2.3 to the Company's
Current Report on Form 8-K dated December 23, 1998 (File No. 0-27976).
(7) Filed with original filing.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement, and (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 (1)(i) and
(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 Company pursuant to Section 13 or 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 of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be deemed
to be
II-2
<PAGE>
a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 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 Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant certifies that it has reasonable grounds to believe it
meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Arden Hills, State of
Minnesota, on February 17, 1999.
GALAGEN, INC.
(Registrant)
By /s/ Robert A. Hoerr, M.D., Ph.D.
--------------------------------
Robert A. Hoerr, M.D., Ph.D.
CHAIRMAN OF THE BOARD OF DIRECTORS
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed below by the following persons, representing a
majority of the Board of Directors, in the capacities indicated as of
February 17, 1999.
<TABLE>
<CAPTION>
NAME TITLE
- ----------------------------------- -------------------------------
<S> <C>
/s/ Robert A. Hoerr, M.D., Ph.D.
- -----------------------------------
Robert A. Hoerr, M.D., Ph.D. Chairman of the Board of
Directors and Chief Executive
Officer (Principal Executive
Officer and Director)
/s/ Gregg A. Waldon
- -----------------------------------
Gregg A. Waldon Vice President, Chief Financial
Officer, Treasurer and
Secretary (Principal Financial
Officer and Principal
Accounting Officer)
*
- -----------------------------------
Henry J. Cardello Director
*
- -----------------------------------
Ronald O. Ostby Director
*
- ------------------------------------
R. David Spreng Director
</TABLE>
*Robert A. Hoerr, M.D., Ph.D., by signing his name hereto, does hereby sign this
document on behalf of himself and each of the other above-named directors of the
Registrant pursuant to powers of attorney duly executed by such person.
/s/ Robert A. Hoerr, M.D., Ph.D.
- ------------------------------------
Robert A. Hoerr, M.D., Ph.D.
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------- ----------------------------------------------- ------------------------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the INCORPORATED BY REFERENCE
Company. (1)
3.2 Restated Bylaws of the Company. (2) INCORPORATED BY REFERENCE
4.1 Specimen Common Stock Certificate. (3) INCORPORATED BY REFERENCE
4.2 Asset Purchase Agreement by and between the INCORPORATED BY REFERENCE
Incorporated Company and Nutrition Medical,
Inc. dated as by Reference of September 1,
1998. (4)
4.3 Amendment to Asset Purchase Agreement by and INCORPORATED BY REFERENCE
between the Company and Nutrition Medical,
Inc. dated as of October 28, 1998. (5)
4.4 Second Amendment to Asset Purchase Agreement INCORPORATED BY REFERENCE
by and between the Company and Nutrition
Medical, Inc. dated as of December 23, 1998.
(6)
5 Opinion of Faegre & Benson LLP. PREVIOUSLY FILED ELECTRONICALLY
23.1 Consent of Ernst & Young LLP. PREVIOUSLY FILED ELECTRONICALLY
23.2 Consent of Faegre & Benson LLP (included in PREVIOUSLY FILED ELECTRONICALLY
Exhibit 5).
24 Powers of Attorney of directors and officers PREVIOUSLY FILED ELECTRONICALLY
of the Company.
</TABLE>
- ----------------------------
(1) Incorporated herein by reference to Exhibit No. 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996 (File No. 0-27976).
(2) Incorporated by reference to Exhibit No. 3.4 of the Company's
Registration Statement on Form S-1 (Registration No. 333-1032)
(3) Incorporated herein by reference to the same numbered Exhibit to the
Company's Registration Statement on Form S-1 (Registration No.
333-1032).
(4) Incorporated herein by reference to Exhibit No. 10.26 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ending
September 30, 1998 (File No. 0-27976).
(5) Incorporated herein by reference to Exhibit No. 2.2 to the Company's
Current Report on Form 8-K dated December 23, 1998 (File No. 0-27976).
(6) Incorporated herein by reference to Exhibit No. 2.3 to the Company's
Current Report on Form 8-K dated December 23, 1998 (File No. 0-27976).
