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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 9, 2000
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
GALAGEN INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 41-1719104
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification Number)
</TABLE>
301 CARLSON PARKWAY, SUITE 301
MINNETONKA, MINNESOTA 55305
(952) 258-5500
(Address and Telephone Number of Principal Executive Offices)
---------------
HENRY J. CARDELLO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GALAGEN INC.
301 CARLSON PARKWAY, SUITE 301
MINNETONKA, MINNESOTA 55305
(952) 258-5500
(Name, Address, and Telephone Number of Agent for Service)
---------------
COPY TO:
Kris Sharpe
Faegre & Benson LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402-3901
APPROXIMATE DATE 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 the earlier effective
registration statement for the same offering. [ ] _____________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
===============================================================================================================================
AMOUNT
TITLE OF EACH CLASS OF SECURITIES TO TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BE REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE REGISTRATION FEE
SHARE(1) OFFERING PRICE(1)
===============================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,925,000 shares $ .742 $1,428,350 $378
===============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of the registration fee pursuant to
Rule 457(c) based on the average of the high and low sales prices per
share of the Registrant's Common Stock on November 7, 2000 as reported
on the Nasdaq SmallCap Market.
----------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion, dated November 9, 2000
PROSPECTUS
1,925,000 SHARES
GALAGEN INC.
COMMON STOCK
----------------------
This prospectus relates to shares of our common stock that may be
sold by the selling stockholders named under "Selling Stockholders." We will
not receive any of the proceeds from the sale of those shares.
Our common stock trades on the Nasdaq SmallCap Market under the
symbol "GGENC." On November 8, 2000, the last reported sale price of our
common stock on the Nasdaq SmallCap Market was $.75 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 2.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------
The date of this prospectus is , 2000
<PAGE>
GALAGEN INC.
We are a nutritional products company. Our 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 segments of the consumer foods and beverages market and the
clinical nutrition products market that demand immune-enhancing benefits. A
critical factor for our success is our immune-enhancing ingredient that is
derived from colostrum, milk collected in the first few milkings of a dairy
cow after its calf is born. We have branded our immune-enhancing ingredient
Proventra-TM- Brand Natural Immune Components. The primary immune-enhancing
components of Proventra are antibodies. Antibodies are proteins that enhance
the body's immune system to protect against harmful pathogens. Proventra also
provides proteins, such as lactoferrin, as well as growth factors and
multiple vitamins and minerals.
We are a Delaware corporation. We were formed, and our predecessor
company, Procor Technologies, Inc., merged with and into us, in 1992. Our
executive offices are located at 301 Carlson Parkway, Suite 301, Minnetonka,
Minnesota 55305, our telephone number is (952) 258-5500, and our web site
address is http://www.galagen.com. The information on our web site is not
incorporated into and is not intended to be a part of this prospectus.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS TOGETHER WITH ALL
OF THE OTHER INFORMATION INCLUDED IN OR INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS BEFORE YOU DECIDE TO BUY OUR COMMON STOCK. THE RISKS AND
UNCERTAINTIES WE FACE MAY MATERIALLY ADVERSELY AFFECT OUR BUSINESS, OPERATING
RESULTS AND FINANCIAL CONDITION. THIS COULD CAUSE THE TRADING PRICE OF OUR
COMMON STOCK TO DECLINE AND YOU MAY LOSE ALL OR PART OF THE MONEY PAID TO BUY
OUR COMMON STOCK.
GENERAL
WE MAY NOT EVER ACHIEVE A PROFITABLE LEVEL OF OPERATIONS.
Our ability to achieve profitable operations depends in large part on:
- entering into agreements to develop products and establish markets
for those products; and
- making the transition from a research company to an operating and
marketing company.
We cannot be sure we will be successful in ever achieving either
result. We have experienced significant operating losses in each year since
our inception in 1987. We have an accumulated deficit of more than $63
million as of August 31, 2000. We may continue to lose money in the future.
GALAGEN AND THE OWNERS OF SHARES OF OUR COMMON STOCK MAY HAVE
DIFFICULTY IN SELLING OUR COMMON STOCK IN THE FUTURE IF OUR COMMON STOCK IS
REMOVED FROM LISTING ON THE NASDAQ SMALLCAP MARKET.
Our common stock is listed on the Nasdaq SmallCap Market under a
conditional, temporary exception to the net tangible assets requirement for
listing on the SmallCap Market. If we do not meet the conditions related to
the exception, our common stock will be removed from listing on the SmallCap
Market and the trading price for our common stock may fall. The net tangible
asset exception requires that on or before January 2, 2001 we must make a
public filing with the Securities and Exchange Commission and Nasdaq showing
that we had net tangible assets of at least $3.8 million based on our balance
sheet at November 30, 2000 as adjusted for any significant events or
transactions occurring on or before the filing date. We have also been
granted temporary exception from the $1.00 per share minimum bid price
requirement for listing on the SmallCap Market. The temporary minimum bid
price exception applies for up to 90 days from the date on which the bid
price for a share of our common stock closed below $1.00. During the 90 day
exception period the closing bid price for our common stock must reach at
least $1.00 per share and thereafter the closing bid price must remain at not
less than $1.00 per share for a minimum of ten consecutive trading days. If
we do not meet the conditions related to either of the Nasdaq SmallCap
listing requirement exceptions, our common stock will be removed from listing
on the Nasdaq SmallCap Market.
We cannot be sure that our common stock will continue to be listed
on the SmallCap Market. It may be more difficult for owners of our common
stock to sell shares if our common stock is not listed on the Nasdaq SmallCap
Market. Also, we may have more difficulty raising funds through the sale of
our common stock or securities convertible into common stock if our common
stock is not listed on the Nasdaq SmallCap Market. We would be required to
demonstrate compliance with the applicable requirements for initial inclusion
of a security on the Nasdaq SmallCap 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.
2
<PAGE>
IF WE CANNOT OBTAIN CONTINUING FUNDING, WE MAY BE UNABLE TO
IMPLEMENT OUR BUSINESS PLANS.
We are actively seeking additional financial resources from a
variety of potential sources. If we cannot find adequate funding, we may have
to delay or eliminate some of our product development plans. We may be
required to grant licenses to others to establish markets for products or
technologies that we would otherwise seek to market ourselves.
We currently expect that our existing financial resources will be
sufficient to sustain our operations to the second quarter of 2001. However,
our actual requirements for financial resources depend on numerous factors.
These factors include:
- our spending on marketing activities, including clinical
marketing trials;
- our progress in finding partners to help us develop products and
market those products;
- the willingness and ability of our partners to provide funding
for our activities;
- our spending on product development programs;
- the rate of technological advances in the production of our
products;
- our spending on facilities, equipment and personnel to make our
products; 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;
- finding partners to help us develop products and market those
products;
- license agreements; or
- other financing sources.
Because of our significant long-term capital requirements, we may
seek to raise funds when conditions are favorable. We may do so even if we do
not have an immediate need for the capital at the time we raise it. 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. This could
result in significant dilution of our current stockholders.
IF WE DO NOT ACHIEVE A PROFITABLE LEVEL OF OPERATIONS AND CANNOT
FIND FUNDING IN THE FUTURE, WE COULD EVENTUALLY BECOME INSOLVENT OR BANKRUPT.
If we do not achieve a profitable level of operations and we do not
obtain funding necessary from some source other than operations, we could
eventually deplete our cash reserves and become insolvent or bankrupt.
THE RELATIVELY LOW LEVEL OF TRADING IN OUR COMMON STOCK MAY MAKE IT
HIGHLY VOLATILE.
The volume of shares of our common stock traded on the Nasdaq
SmallCap Market, and earlier on the Nasdaq National Market, has been
relatively small. Given the small volume of shares traded, market
fluctuations may have a particularly adverse effect on the market price of
our common stock. We cannot be sure of the liquidity of the market for the
common stock or the price at which any sales may occur. The volume of trading
in our common stock in the future will depend upon the number of holders of
the common stock, the interest of securities dealers in maintaining a market
in the common stock and other factors beyond our control. 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;
- technological developments;
- government regulations;
- the status of our proprietary rights to potential products;
- litigation;
- public safety concerns; and
- other factors.
Some of these factors are unrelated to our operating performance and
beyond our control.
3
<PAGE>
FAILURE OF OUR COLLABORATIONS TO DEVELOP AND MARKET PRODUCTS
CONTAINING PROVENTRA COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND
FINANCIAL CONDITION.
We are relying on collaborations with larger more established
companies to develop and market products containing Proventra. Our
collaborators' inability to bring products to market could have a material
adverse effect on our business and financial condition. Introduction of new
products depends on our ability and our collaborators' ability to accomplish
the following:
- complete market research;
- complete product development;
- establish product manufacturing;
- initiate marketing, sales and distribution activities related to
such products; and
- provide the funding necessary to accomplish such activities.
DELAYS OR HIGH COSTS IN PRODUCT DEVELOPMENT COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
If we, or our strategic partners, cannot obtain accurate marketing
data, or develop a product responsive to the needs identified by that data,
our business and financial condition could be materially adversely affected.
The amount of time it will take us, together with our strategic partners, to
develop consumer and clinical nutrition products and the associated costs of
developing those products depends on, among other things, the results of our
market research for consumer and clinical products. It also depends on our
discussions with certain end users or purchasers of the potential products.
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.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS THAT EXCEED OUR
INSURANCE COVERAGE.
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. 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. We cannot be
sure that we will be able to obtain product liability insurance on acceptable
terms or that provides adequate protection. Furthermore, we cannot be sure
that we will be able to secure increased insurance coverage as the markets
for our products increase.
IF WE RELY ON INACCURATE MARKET INFORMATION, WE COULD MAKE DECISIONS
THAT HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
Because we are currently developing our products and markets for
those products, we rely heavily on market data. If that data is inaccurate,
we may commit resources to product development and marketing efforts that do
not become profitable. Product development and marketing efforts that do not
become profitable may have a material adverse effect on our business and
financial condition. We have obtained market and related data from a
competitive-market analysis firm. We have not independently verified the
accuracy of that information. In any event, the methodology typically used in
compiling market and related data makes it subject to inherent uncertainties
and estimations. As a result, we cannot be sure as to the accuracy or
completeness of our market information.
INADEQUATE PROVENTRA PRODUCTION COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR BUSINESS AND FINANCIAL CONDITION.
Given our limited experience in manufacturing Proventra, we cannot
be sure that we will be successful in producing Proventra of acceptable
quality on a commercial scale and at acceptable costs in our manufacturing
facility. If we cannot, our business and financial condition could be
materially adversely affected. In addition, the Minnesota Department of
Agriculture will regulate our production of Proventra. Compliance with
regulatory requirements may affect our ability to produce Proventra in
commercial quantities.
RISKS SPECIFIC TO FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS
PUBLIC MISPERCEPTION THAT OUR PRODUCTS MAY NOT BE SAFE COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
We are highly dependent upon consumers' perception of the safety and
quality of our products as well as of similar products distributed by other
companies. The publication of reports asserting that such products may be
harmful
4
<PAGE>
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.
INNOVATIVE INGREDIENTS MAY PRODUCE UNWANTED EFFECTS AND EXPOSE US TO
PRODUCT LIABILITY CLAIMS OR LOSS OF CONSUMER CONFIDENCE.
If we develop products with innovative ingredients that over time
are shown to produce unwanted effects, we could be exposed to product
liability claims and could lose consumer confidence, which could have a
material adverse effect on our business and financial condition. Some of our
future 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 LARGER COMPANIES WITH GREATER ACCESS TO CAPITAL AND PRODUCT
MARKETS ENTER OUR SEGMENT OF THE NUTRITIONAL PRODUCTS MARKET, WE MAY BE
MATERIALLY ADVERSELY AFFECTED.
Because the nutritional products industry generally has low barriers
to entry, additional competitors could enter the market at any time.
Potential competitors 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. 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 this industry or to consolidate it. Increased competition in the
industry could have a material adverse effect on our business and financial
condition.
OUR FAILURE TO OBTAIN NECESSARY APPROVALS OR OTHERWISE COMPLY WITH
GOVERNMENT REGULATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
AND FINANCIAL CONDITION.
Our current and potential functional foods and nutraceutical
products may become subject to 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.
Some of our products in development may be subject to regulation by
one or more federal agencies, principally the Food and Drug Administration
and the Federal Trade Commission, and to a lesser extent the Consumer Product
Safety Commission and the United States Department of Agriculture, regarding
the formulation, manufacturing, processing, packaging, labeling, advertising,
distribution and sale of nutritional supplements. These activities are also
regulated by various governmental agencies for the states and localities in
which our products are sold, as well as by governmental agencies in certain
foreign countries in which our products are sold. Among other matters, FDA
and FTC regulations govern claims we may make with respect to a product which
refers to the value of the product in treating or preventing disease or other
adverse health conditions.
RISKS SPECIFIC TO CRITICAL CARE NUTRITION PRODUCTS
IF HORMEL HEALTH LABS DOES NOT INCREASE THE SALES VOLUME OF OUR
CRITICAL CARE NUTRITION PRODUCTS, OUR BUSINESS AND FINANCIAL CONDITION MAY BE
MATERIALLY ADVERSELY AFFECTED.
We rely on Hormel Health Labs and its distribution network to sell
and distribute our critical care products. Because we entered into our sales
and distribution arrangement with Hormel Health Labs in August of 1999, we
cannot be sure that its sales force will actively promote our critical care
products or that the sales force will be successful in generating increased
sales of those products. If the sales volume of our critical care nutrition
products is not increased, our business and financial condition may be
materially adversely affected.
IF MARKETING EFFORTS DO NOT GENERATE THE NAME RECOGNITION FOR OUR
CRITICAL CARE PRODUCTS NECESSARY TO SIGNIFICANTLY ENHANCE REVENUES, OUR
BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY AFFECTED.
We cannot be sure that the marketing efforts of Hormel Health Labs,
will achieve the name recognition of our critical care nutrition products
necessary to significantly enhance revenues. If they do not, our business and
financial condition could be materially adversely affected. Our products,
with the exception of Glutasorb, are designed to be
5
<PAGE>
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 perceived by our
consumers to be, comparable to branded competitive products. Furthermore, our
products are relatively unknown to large segments of our target markets.
PRICE REDUCTIONS BY COMPETITORS COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR BUSINESS AND FINANCIAL CONDITION.
Much of the marketing strategy for our critical care nutrition
products is focused on the price advantage of our critical care nutrition
products. If a competitor reduces or eliminates the price advantage of our
products, we cannot be sure that we will be able to compete successfully with
the competitor, or operate profitably under such conditions. If we could not,
our business and financial condition could be materially adversely affected.
We believe that the principal advantage of our critical care nutrition
products, with the exception of Glutasorb, is cost effectiveness. We believe
that any selective price reductions by a competitor may result in lost sales
of our competing products.
IF THE CONTRACT MANUFACTURERS THAT PRODUCE OUR PRODUCTS CANNOT DO SO
ADEQUATELY, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY
AFFECTED.
We rely on contract manufacturers to produce our critical care
nutrition products according to our specifications. Any interruption in
supply from these manufacturers of any of our products could have a material
adverse effect on our business and financial condition. We cannot be sure
that contract manufacturers will consistently supply adequate quantities of
our products on a timely basis or that the quality of such products will be
consistently maintained. We also rely on these manufacturers to comply with
all applicable government regulations and manufacturing guidelines. We cannot
be sure these contract manufacturers will consistently comply with government
regulations. 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.
BECAUSE THE WAY WE DISTRIBUTE OUR PRODUCTS MAY RESULT IN A
RELATIVELY SMALL NUMBER OF CUSTOMERS, THE LOSS OF PARTICULAR CUSTOMERS COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
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.
WE MAY BECOME INVOLVED IN LITIGATION WITH COMPETITORS THAT MAY HAVE
A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
Companies in the private label industry are commonly the subjects 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. 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.
Competitors may also respond to our marketing strategy by more aggressively
seeking patents on their products to limit our future product development
efforts. If infringement allegations are made against 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. We may be unable to effectively reformulate
certain of our products. Furthermore, we cannot be sure that customers would
view a reformulated product 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.
DIRECT COMPETITION FROM LARGER COMPANIES WITH SIGNIFICANT FINANCIAL
RESOURCES MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL
CONDITION.
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. If we are not able to compete successfully or
operate profitably, our business and financial condition could be materially
adversely affected. Other companies may also enter this market.
6
<PAGE>
IF WE CANNOT ENFORCE, FOR ANY REASON, THE TRADEMARKS THAT WE
ACQUIRED FROM NMI, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY
ADVERSELY AFFECTED.
We cannot be sure that the trademarks we acquired from NMI do not or
will not violate the proprietary rights of others. Nor can we be sure that
our proprietary rights in the marks would be upheld if challenged. If we were
prevented from using the marks for any reason, our business and financial
condition may be materially adversely affected. 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. 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.
Instead NMI relied on common law trademark rights. The lack of such
registration may impair our ability to successfully register the trademarks
or to prosecute successfully an infringement action against other users of
these trademarks.
OUR FAILURE TO OBTAIN NECESSARY APPROVALS OR OTHERWISE COMPLY WITH
GOVERNMENT REGULATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
AND FINANCIAL CONDITION.
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 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.
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.
Claims we make in labeling and advertising our products are subject
to regulation by the FDA, the FTC 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.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make many statements in this prospectus under Risk Factors and
elsewhere that are forward-looking and are not based on historical facts.
These statements relate to our future plans, objectives, expectations and
intentions. We may identify these statements by the use of words such as
believe, expect, will, anticipate, intend and plan and similar expressions.
These forward-looking statements involve a number of risks and uncertainties.
Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including those we
discuss in Risk Factors and elsewhere in this prospectus. These
forward-looking statements are based on our current expectations,
assumptions, estimates and projections about our business and industry, and
we caution you not to rely on these statements without considering the risks
and uncertainties associated with these statements and our business that are
addressed 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.
DIVIDEND POLICY
We have never declared or paid any dividends. We anticipate that all
of our earnings, if any, will be retained for development of our business and
we do not anticipate paying any cash dividends in the foreseeable future.
SELLING STOCKHOLDERS
The following table presents the number of outstanding shares of our
common stock beneficially owned by the selling stockholders as of November 1,
2000. The table also presents the maximum number of shares proposed to be
sold by the selling stockholders and the number of shares they will own after
the sales. The percentages are based on 12,268,371 shares outstanding on
November 1, 2000.
<TABLE>
<CAPTION>
SHARES OWNED SHARES OWNED
PRIOR TO OFFERING AFTER OFFERING (1)
-------------------------------- -----------------------------
PERCENT OF SHARES PERCENT OF
NAME NUMBER (2) OUTSTANDING OFFERED (2) NUMBER OUTSTANDING
-------------------------------- ------------- ---------------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Lombard Odier & Cie 1,221,250 9.9 206,250 1,015,000 8.3
Basellandschaftliche 1,031,250 8.3 1,031,250 0 --
Pensionskasse
Swisspartners Investment 687,500 5.6 687,500 0 --
Networks AG
--------------------------------
</TABLE>
(1) Assumes sale of all shares of the respective selling stockholder being
offered.
(2) The numbers reported for Lombard Odier & Cie include 18,750 shares
issuable upon exercise of a currently exercisable warrant. The numbers
reported for Basellandschaftliche Pensionskasse include 93,750 shares
issuable upon exercise of a currently exercisable warrant. The numbers for
Swisspartners Investment Networks AG include 62,500 shares issuable upon
exercise of a currently exercisable warrant.
8
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PLAN OF DISTRIBUTION
The selling stockholders may sell the shares being offered from time
to time in one or more transactions:
- on the Nasdaq SmallCap 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 stockholders may sell the shares at market prices
prevailing at the time of sale, at prices related to those market prices or
at negotiated prices. The selling stockholders also may sell the shares
pursuant to Rule 144 adopted under the Securities Act of 1933 as permitted by
that Rule. The selling stockholders may effect transactions by selling shares
directly to purchasers or to or through broker-dealers. The broker-dealers
may act as agents or principals. The broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the selling
stockholders or the purchasers of the shares. The compensation of any
particular broker-dealer may be in excess of customary commissions. The
selling stockholders and broker-dealers that participate with the selling
stockholders in the distribution of shares may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act. 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 stockholders that the
anti-manipulative provisions of Regulation M promulgated under the Securities
Exchange Act of 1934 may apply to their sales of shares in the market.
Upon notification to us by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale or
purchase of shares, a supplement to this prospectus will be filed, if
required, disclosing:
- the name of the participating broker-dealers;
- the number of shares involved;
- the price at which such shares were sold;
- the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable;
- that such broker-dealers did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
- other facts material to the transaction.
We may suspend sales of shares offered by this prospectus for a
limited time, according to the terms of the purchase agreements relating to
the shares. We will promptly notify the selling stockholders any time sales
of shares are suspended and will promptly notify the selling stockholders of
the termination of any such suspension.
LEGAL MATTERS
Faegre & Benson LLP, 2200 Wells Fargo Center, Minneapolis, Minnesota
55402 will pass upon the validity of the shares of common stock offered by
this prospectus.
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, 1999, as set forth in their report thereon included in that
Report and incorporated in this prospectus by reference. Those financial
statements are incorporated in this prospectus by reference in reliance upon
their report given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. 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
9
<PAGE>
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 have filed a registration statement on Form S-3 under the
Securities Act with respect to this offering. For further information
regarding us and our common stock you should refer to the registration
statement and its exhibits and schedules.
INCORPORATION BY REFERENCE
The Commission allows us to "incorporate by reference" the
information in documents that we file with them. This 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 in documents that we file later with the
Commission will automatically update and supersede this information.
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 after the initial filing of the registration
statement that contains this prospectus and prior to the time that all the
securities offered by this prospectus are sold:
- Annual Report on Form 10-K for the year ended December 31, 1999
(including information specifically incorporated by reference
into our Form 10-K from our 1999 Annual Report to Stockholders
and our definitive Notice and Proxy Statement for our 2000 Annual
Meeting of Stockholders);
- Quarterly Reports on Form 10-Q for the periods ended May 30, 2000
and June 30, 2000;
- Current Report on Form 8-K dated October 11, 2000; 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:
Franklin L. Kuhar
Vice President and Chief Financial Officer
GalaGen Inc.
301 Carlson Parkway, Suite 301
Minnetonka, Minnesota 55305
(952) 258-5500
You should rely only on the information incorporated by reference or
presented in this prospectus. We have not authorized anyone else to provide
you with different information. The selling stockholders are only offering
these securities in states where the offer is permitted. You should not
assume that the information in this prospectus is accurate as of any date
other than the date on the cover page of this prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified
or superseded for the purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference modifies
or supersedes that statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this prospectus.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by us in
connection with the sale of common stock being registered. The selling
stockholders will bear fees and disbursements of their own legal counsel and
transfer taxes. The Registrant will bear all other expenses. All amounts are
estimates except the Securities and Exchange Commission registration fee and the
Nasdaq SmallCap Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 378
Nasdaq SmallCap Market listing fee.............................. 17,500
Legal fees and expenses......................................... 10,000
Accounting fees and expenses.................................... 1,000
Printing expenses............................................... 500
Miscellaneous................................................... 622
-------
Total......................................................... $30,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
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 that 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 Registrant eliminates
the personal liability of a director to the Registrant 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 Registrant's Restated Certificate of Incorporation and Restated Bylaws
provide for the broad indemnification of the directors and officers of the
Registrant and for advancement of litigation expenses to the fullest extent
required or permitted by current Delaware law.
Under the form of subscription agreement and investment letter filed as
Exhibit 4.2 hereto, the selling stockholders agree to indemnify, under certain
conditions, the Registrant, its directors, certain of its officers and persons
who control the Registrant within the meaning of the Securities Act of 1933, as
amended, against certain liabilities.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of the Registrant. (1)
3.2 Restated Bylaws of the Registrant. (2)
4.1 Specimen Common Stock Certificate. (3)
4.2 Form of the Subscription Agreement and Investment Letter entered
into by each of the selling stockholders. (4)
5 Opinion of Faegre & Benson LLP.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Faegre & Benson LLP (included in Exhibit 5).
24 Powers of Attorney of directors and officers of the Registrant
(included on Page II-4 of this Registration Statement).
</TABLE>
------------------------------
(1) Incorporated herein by reference to Exhibit No. 3.2 to the
Registrant'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
Registrant's Registration Statement on Form S-1 (Registration
No. 333-1032)
(3) Incorporated herein by reference to the same numbered Exhibit
to the Registrant's Registration Statement on Form S-1
(Registration No. 333-1032).
(4) Incorporated herein by reference to Exhibit No. 99 to the
Registrant's Current Report on Form 8-K dated October 13, 2000
(File No. 0-27976).
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, (ii) to reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement, 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 Registrant 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 that 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
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
II-2
<PAGE>
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 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
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minnetonka, State of
Minnesota, on November 9, 2000.
GALAGEN INC.
By /s/ Henry J. Cardello
-------------------------------------
Henry J. Cardello
President and Chief Executive Officer
POWER OF ATTORNEY
Each of the undersigned hereby appoints Henry J. Cardello and
Franklin L. Kuhar, and each of them (with full power to act alone), as
attorneys and agents for the undersigned, with full power of substitution,
for and in the name, place and stead of the undersigned, to sign and file
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended, any and all amendments and exhibits to this Registration
Statement and any and all applications, instruments and other documents to be
filed with the Securities and Exchange Commission pertaining to the
registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite and
necessary or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, representing
a majority of the Board of Directors, in the capacities indicated on November
9, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Robert A. Hoerr Chairman of the Board of Directors and
----------------------------------------- Chief Technology Officer
Robert A. Hoerr, M.D., Ph.D.
/s/ Henry J. Cardello President, Chief Executive Officer (Principal
----------------------------------------- Executive Officer) and Director
Henry J. Cardello
/s/ Franklin L. Kuhar Vice President, Chief Financial Officer and Treasurer
----------------------------------------- (Principal Financial and Accounting Officer)
Franklin L. Kuhar
/s/ Helmut B. Breuer Director
-----------------------------------------
Helmut B. Breuer
/s/ Austen S. Cargill II Director
-----------------------------------------
Austen S. Cargill II, Ph.D.
/s/Ronald O. Ostby Director
-----------------------------------------
Ronald O. Ostby
Director
-----------------------------------------
Winston R. Wallin
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION METHOD OF FILING
------------ --------------------------------------------------------------- -----------------------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation of the Registrant. (1) Incorporated by Reference
3.2 Restated Bylaws of the Registrant. (2) Incorporated by Reference
4.1 Specimen Common Stock Certificate. (3) Incorporated by Reference
4.2 Form of the Subscription Agreement and Investment Letter entered Incorporated by Reference
into by each of the selling stockholders. (4)
5 Opinion of Faegre & Benson LLP. Filed Electronically
23.1 Consent of Ernst & Young LLP. Filed Electronically
23.2 Consent of Faegre & Benson LLP (included in Exhibit 5). Filed Electronically
24 Powers of Attorney of directors and officers of the Registrant Filed Electronically
(included on page II-4 of this Registration Statement).
</TABLE>
---------------------------
(1) Incorporated herein by reference to Exhibit No. 3.2 to the
Registrant'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
Registrant's Registration Statement on Form S-1 (Registration
No. 333-1032)
(3) Incorporated herein by reference to the same numbered Exhibit
to the Registrant's Registration Statement on Form S-1
(Registration No. 333-1032).
(4) Incorporated herein by reference to Exhibit No. 99 to the
Registrant's Current Report on Form 8-K dated October 13, 2000
(File No. 0-27976).
