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As filed with the Securities and Exchange Commission on October 11, 2000
Registration No. 333-34460
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MARTEK BIOSCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1399362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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6480 DOBBIN ROAD
COLUMBIA, MARYLAND 21045
(410) 740-0081
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HENRY LINSERT, JR.
CHIEF EXECUTIVE OFFICER
MARTEK BIOSCIENCES CORPORATION
6480 DOBBIN ROAD
COLUMBIA, MARYLAND 21045
(410) 740-0081
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
MICHAEL J. SILVER
HOGAN & HARTSON L.L.P.
111 SOUTH CALVERT STREET, 16TH FLOOR
BALTIMORE, MARYLAND 21202
(410) 659-2700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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 the securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. | | _________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | | ________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. | |
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.
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INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS 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.
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PROSPECTUS SUBJECT TO COMPLETION
OCTOBER 11, 2000
MARTEK BIOSCIENCES CORPORATION
2,536,532 SHARES OF COMMON STOCK
734,391 COMMON STOCK PURCHASE WARRANTS
The shareholders named on page 13 are offering to sell up to 2,536,532
shares of our common stock and up to 734,391 common stock purchase warrants.
Our common stock is traded on the Nasdaq Stock Market under the symbol
"MATK." On October 4, 2000, the last reported sale price of our common stock on
Nasdaq was $18.88 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE COMMON
STOCK OR THE COMMON STOCK PURCHASE WARRANTS, NOR HAVE THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is October , 2000.
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OUR BUSINESS
Martek Biosciences Corporation was founded in 1985. Our
principal executive offices are located at 6480 Dobbin Road, Columbia, Maryland
21045, and our telephone number is (410) 740-0081. We develop, manufacture and
sell products from microalgae and other sources.
Microalgae are microplants. We have pioneered the commercial
development of microalgae into a portfolio of high value products and product
candidates consisting of the following:
- NUTRITIONAL PRODUCTS - Over the past 8 years, we have developed
production methods and intellectual property for 2 important fatty
acids. These fatty acids are docosahexaenoic acid, commonly known
as DHA, and arachidonic acid, commonly known as ARA. We derive DHA
from microalgae and ARA from fungi, using proprietary processes.
Cell membranes throughout the body, especially in the brain,
central nervous system, retina and heart, contain these fatty
acids. DHA and ARA may help develop the eyes and central nervous
systems of newborns and promote adult mental and cardiovascular
health. An adult or newborn may obtain DHA and ARA via foods such
as red meats, fish and eggs, as well as supplements and
pharmaceuticals. In western developed societies, human consumption
of the foods containing high amounts of DHA has declined over the
last fifty years, and we believe that this possible dietary
deficiency is being recognized by scientists and will result in an
increase in demand for DHA-supplemented products.
- STABLE ISOTOPE PRODUCTS - We have developed several other
products and product candidates from microalgae, including amino
acids and sugars that are "labeled" with unique atoms. These
labels provide scientists with a tool to understand how chemical
compounds and proteins react. Researchers in the pharmaceutical
industry may use these products to evaluate the three-dimensional
structures of proteins using nuclear magnetic resonance
technology, which produces molecular pictures providing
information about how drugs react.
- OTHER PRODUCTS - We are also developing new fluorescent marker
products from microalgae that have potential applications in
automated biological screening to find new compounds or reduce
drug discovery time. These fluorescent marker products bring
greater sensitivity to existing tests and applications. Our
genomics group has developed key intellectual property that some
day may allow us to transfer the DHA producing genetic material of
microalgae into agricultural products like corn.
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RISK FACTORS
You should carefully consider the following risk factors, as well
as other information in this prospectus and all of the information incorporated
by reference before purchasing our common stock.
IF OUR INFANT FORMULA LICENSEES DO NOT INTRODUCE PRODUCTS CONTAINING OUR
NUTRITIONAL OILS IN THE UNITED STATES OR BROADEN THEIR USE OF OUR NUTRITIONAL
OILS IN THEIR PRODUCTS OVERSEAS, WE MAY NOT BE ABLE TO REACH REVENUE LEVELS THAT
WOULD MAKE US PROFITABLE.
Nutritional product sales and royalties are likely to be our main source of
revenues in the future. Although we sell some of our nutritional oils into the
adult nutritional products market, approximately two-thirds of our current
nutritional product revenues come from our license agreements with infant
formula manufacturers. As such, we depend on the licensees' sales of products
that include our nutritional oils. Although some of our licensees have included
our nutritional oils in some of their products outside the United States, we
cannot predict whether any licensee will introduce infant formula products
containing our nutritional oils in the United States, broaden their use of our
nutritional oils overseas, or whether any of our other licensees will
incorporate our nutritional oils into their products. Until these events occur
and we recognize significant revenues as a result of increased product
introductions, we do not expect to be profitable from the sale of nutritional
oils to our licensees. Ultimately our success in the infant formula industry
depends on growing acceptance of our nutritional oils as necessary or beneficial
additives to infant formulas. Not all experts in the field of infant nutrition
agree on that subject, and we are subject to the risk that the use of DHA and
ARA in infant formula may never gain widespread acceptance.
IF ADDITIONAL POSITIVE CLINICAL RESULTS ARE NOT OBTAINED, WE MAY NOT BE ABLE TO
DEVELOP A PROFITABLE MARKET FOR OUR NUTRITIONAL OILS OUTSIDE OF THE INFANT
FORMULA MARKET.
Approximately one-third of our current nutritional product revenues come from
sales of our nutritional oils to distributors and directly to consumers in the
adult supplement market. The future of this market depends on the success of our
ongoing clinical trials. If these trials do not provide adequate data supporting
the benefits of our nutritional oils for adults, we may never gain widespread
acceptance for these oils in this market.
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EVEN IF OUR PRODUCTS DO OBTAIN WIDESPREAD ACCEPTANCE, WE MAY NOT BE ABLE TO
PRICE THE PRODUCTS AT A LEVEL THAT WOULD ALLOW US TO BE PROFITABLE.
Although our current contracts with licensees outline product pricing and
royalty rates, we cannot predict whether these pricing structures will allow our
licensees to be competitive in the future. If we have to reduce our pricing
structure, we may not be able to sell products at a price that would enable us
to be profitable. We are currently negotiating flat pricing with our infant
formula licensees. The economics of flat prices will be similar to our current
economics, with the current transfer price and royalty combined into one price
with a slight discount. Although either our current pricing structure or the
flat rate pricing structure will enable us to achieve profitability if our
products receive widespread acceptance, we cannot predict whether either of
these pricing structures will enable our licensees and other customers to obtain
broad market acceptance of our products.
IF WE ARE UNABLE TO INCREASE OUR PRODUCTION OF NUTRITIONAL OILS, OR ENTER INTO
FAVORABLE THIRD PARTY MANUFACTURING AGREEMENTS TO PRODUCE OUR NUTRITIONAL OILS,
WE MAY NOT BE ABLE TO SUCCESSFULLY MEET FUTURE DEMANDS FOR OUR NUTRITIONAL OILS.
To meet our customers' projected demand for our nutritional oils, we have
developed a process for the large-scale production of our oils at our
Winchester, Kentucky manufacturing plant. While the DHA production level in our
plant is sufficient to meet current demand, if demand increases beyond our
current production capabilities, we may be unable to produce the required
quantities of oil cost effectively. While we believe that our plant can increase
its production to supply approximately 20 to 30% of the world wide infant
formula market, our ability to meet commercial production levels at the plant is
not yet proven. As a precaution, we have conducted DHA production trials with
third party manufacturers. However, we do not currently have a third party
manufacturing agreement in place to supply us with DHA containing oil.
Although we are able to produce ARA containing oil at our Winchester plant, we
do not currently produce it at the plant. Rather than produce ARA containing oil
at our Winchester plant, we have entered into an agreement with a third party
manufacturer, DSM Food Specialties, to supply our ARA containing oil. If DSM
Food Specialties fails to supply us with required amounts under the contract, we
would not be able to meet our customers' demands. In this case, we would have to
either manufacture the ARA containing oil at our plant, which would reduce our
DHA containing oil production capacity, or enter into other third party
manufacturer supply agreements. If we are unable to find alternative supply
sources or are unable to cost effectively manufacture the ARA containing oil in
our Winchester plant, we may be unable to meet product demand in the short-run.
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WE HAVE EXPERIENCED NET OPERATING LOSSES SINCE OUR INCEPTION, ARE LIKELY TO
CONTINUE TO EXPERIENCE NET OPERATING LOSSES IN THE SHORT TERM, AND MAY NEVER
BECOME PROFITABLE.
We have experienced net operating losses since our inception. As of July 31,
2000, we have an accumulated deficit of $85,569,000. Until we realize
significant revenues from our nutritional products, we expect to continue to
experience net operating losses. Our balance of cash and cash equivalents at
July 31, 2000 was $4,631,000 and, as of July 31, 2000, we had $19,451,000 in
short term investments and marketable securities. At April 30, 2000, these
amounts were $3,395,000 and $21,511,000, respectively. We must achieve sustained
profitability to generate the cash necessary to be a viable business in the long
term, and at this time we have not yet generated a sustained source of revenues
to achieve this.
BECAUSE WE ARE STILL IN THE EARLY STAGES OF PRODUCT DEVELOPMENT, WE WILL NEED
SIGNIFICANT ADDITIONAL CAPITAL TO CONTINUE OUR RESEARCH AND DEVELOPMENT, CONDUCT
PRODUCT TESTING, INCLUDING PRECLINICAL AND CLINICAL TRIALS, AND MANUFACTURE AND
MARKET OUR PRODUCTS.
We have a number of products that are in the early stages of research and
development, product testing, manufacturing or marketing. Although we receive
revenues from sales of infant formula containing our nutritional oils, our
dietary supplement Neuromins(R), our stable isotope products, and some other
products, the aggregate revenue from these products is currently insufficient to
internally fund our product development, manufacturing and marketing needs.
Therefore, we will continue to require additional outside sources of funding. We
estimate that we will need approximately $30-40 million over the next several
years to fund our research and development, product testing, manufacturing, and
marketing at budgeted levels. Additionally, if our business grows, these needs
will increase.
To continue to fund our growth, we will pursue various sources of funding, which
may include equity issuances, asset based borrowing, lease financing, and
collaborative arrangements with partners. Our existing term loan, which has a
current balance at September 28, 2000 of approximately $564,000, requires us to
meet certain debt covenants, which include maintaining a cash, cash equivalents
and marketable securities balance of at least $12 million and meeting certain
debt/equity and other ratios. Because additional debt financing arrangements
would have to comply with these financial covenants, we may not be able to
secure additional debt financing on terms acceptable to us. Additionally,
funding from other sources may not be available, or may not be available on
terms that would be commercially acceptable or permit us to continue the planned
commercialization of our products. If we obtain funds through collaborative or
strategic partners, these partners may require us to give them technology or
product rights, including patents, that could ultimately diminish our value. If
we cannot secure adequate
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funding, we may need to scale back our research, development, manufacturing, and
commercialization programs which may have a materially adverse affect on our
future business.
THE MARKET PRICE OF OUR COMMON STOCK MAY EXPERIENCE A HIGH LEVEL OF VOLATILITY
DUE TO FACTORS SUCH AS ITS RELATIVE ILLIQUIDITY, THE VOLATILITY IN THE MARKET
FOR BIOTECHNOLOGY STOCKS GENERALLY, AND THE EFFECT OF SHORT TERM EVENTS LIKE
PRODUCT LAUNCHES AND LICENSE ANNOUNCEMENTS.
We are a public emerging growth company in the biosciences sector. As frequently
occurs among these companies, the market price for our common stock may
experience a high level of volatility. During the fifty-two week period ending
September 21, 2000, our common stock price has traded between $6.25 and $32.00.
During the fifty-two week period ending September 21, 1999, our common stock
price ranged from $5.00 to $12.00. The following are examples of items that may
significantly impact the market price for our common stock:
- announcements of technical innovations, new commercial products,
new license arrangements or strategic partnerships by us or our
competitors;
- patent or other intellectual property disputes;
- quarterly fluctuations in our results of operations;
- regulatory developments concerning our products and our
competitors' products; and
- general market conditions for emerging growth companies and
bioscience companies.
Because we may experience a high level of volatility in our common stock, you
should not invest in our stock unless you are prepared to handle a significant
loss of your capital. At any given time, you may not be able to sell your shares
at a price you think is acceptable.
The market liquidity for our stock is relatively low. As of September 6, 2000,
we had 17,800,059 shares of common stock outstanding. Since our initial public
offering of common stock on November 23, 1993, the average daily trading volume
in our common stock as reported on the NASDAQ National market has been 149,045
shares. The average trading volume in our common stock during the fifty-two week
period ending September 30, 2000 has been 100,004 shares. The average trading
volume in our common stock during the fifty-two week period ending September 30,
1999 has been 58,379 shares. Although a more active trading
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market may develop in the future, the limited market liquidity for our stock may
effect your ability to sell and the price at which you are able to sell your
shares of common stock.
IF SIGNIFICANT SHARES ELIGIBLE FOR FUTURE SALE ARE SOLD OR REGISTRATION RIGHTS
ARE EXERCISED, THE RESULT MAY DEPRESS OUR STOCK PRICE BY INCREASING THE SUPPLY
OF OUR SHARES IN THE MARKET AT A TIME WHEN DEMAND MAY BE LIMITED.
Because we continue to require additional outside sources of capital to finance,
among other things, our research and development, product testing, and the
manufacturing or marketing of our products, we may need to raise additional
capital through the sale of equity securities. As of September 6, 2000, we had
17,800,059 shares of common stock outstanding, stock options outstanding to
purchase an aggregate of 2,861,330 shares of common stock at various exercise
prices ranging from $6.25 to $34.25 per share, and warrants outstanding to
purchase up to 734,391 shares of common stock at exercise prices between $7.51
and $18.76. To the extent that these options and warrants for our common stock
are exercised, the increase in the number of our outstanding shares of common
stock may adversely affect the price for our common stock. This could hurt our
ability to raise capital through the sale of equity securities. Additionally,
some of our stockholders who bought shares or warrants from us in private
placements have registration rights. If the stockholders were to exercise their
registration rights when we are seeking to raise capital by selling stock in a
registered offering, the result could effectively prevent us from doing so.
INFANT FORMULA CONTAINING OUR PRODUCTS, AND MANY OF OUR OTHER PRODUCTS AND
PRODUCT CANDIDATES, CAN ONLY BE MARKETED IN THE UNITED STATES AND ELSEWHERE IF
THEY RECEIVE GOVERNMENTAL APPROVALS, AND WE AND OUR LICENSEES AND COLLABORATORS
WHO MARKET OUR PRODUCTS MAY NOT BE ABLE TO RECEIVE THOSE APPROVALS.
Many of our products and the manufacturing and marketing of these products are
subject to extensive regulation by the FDA and similar regulatory authorities
in other countries depending on the product type and method of manufacture. For
example, the FDA regulates, to varying degrees and sometimes in very different
ways, infant formulas, dietary supplements, foods, medical foods, animal feed
and pharmaceutical products.
Infant Formula:
- Term infant formula products containing our nutritional oils are
currently being marketed outside the United States in 9 countries.
Pre-term infant
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formula products containing our oils are currently being marketed
outside the United States in over sixty countries. Our licensees
have informed us that they have received the appropriate
regulatory clearances needed to market products containing our
oils in those countries. To date, infant formula containing our
nutritional oils has not received regulatory approval in the
United States. As a result of prior filings for this approval by
our licensees, the FDA has raised questions pertaining to the
results of certain animal studies relating to DHA and ARA.
Management believes that all of these questions can be properly
resolved, and, along with our licensees, we are in the process of
responding to the FDA to address these questions. As part of this
process, during February 2000, we filed a "generally recognized as
safe" ("GRAS") notification with the FDA for the use of our DHA
and ARA nutritional oils in our licensees' infant formula. If the
FDA review results in a favorable outcome, each of our infant
formula licensees will need to obtain a separate FDA authorization
before marketing an infant formula with our sources of DHA and
ARA.
- We believe that, based on the data provided by numerous clinical
trials over the last ten years, our oils are both beneficial and
safe for inclusion in infant formula. This contention is further
supported by the fact that our oils are marketed in over sixty
countries around the world, including countries that have rigorous
premarket authorization requirements such as the United Kingdom,
France and Israel. Our oils have been sold in infant formulas in
these countries for several years with no reported problems.
Accordingly, we believe that the FDA review of our GRAS
notification, which may take a minimum of three to six additional
months from the effective date of this registration statement,
will have a favorable outcome. There can be no assurance that this
will be the case, and even if it is, there can be no assurance
that our licensees will be able to obtain the FDA approval to
market an infant formula containing our products in the United
States. If we are unable to obtain these approvals, or if
approvals are delayed, our ability to successfully market products
directly and through our licensees, and to generate revenues from
infant formula product sales or royalties, would be impaired.
Fluorescent Detection and Microalgae Products:
- We market fluorescent detection and other products derived from
microalgae for use in research. We believe that these products, as
currently used, are not subject to the FDA's regulation. There can
be no assurance that the FDA would concur with our position. To
the extent that the FDA considers these products subject to
regulation as either medical devices or as combination medical
device/drug product, we would need to cease marketing the products
while we obtained the necessary FDA premarket authorizations.
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OUR CURRENT PATENTS MAY NOT BE ABLE TO PROVIDE PROTECTION AGAINST COMPETITIVE
PRODUCTS AND WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY PORTFOLIO IN
THE FUTURE.
The patent position of health and bioscience firms is generally highly uncertain
and involves complex legal and factual questions. No consistent policy has
emerged regarding the breadth of claims allowed for health and bioscience
patents. Accordingly, our issued patents, or patents that we may obtain in the
future, may not afford adequate protection against competitors with competing
technology. We may have to engage in litigation from time to time in order to
enforce our intellectual property rights. If we are required to litigate, there
may be substantial costs involved and a significant diversion of our business
efforts.
We have obtained 7 United States patents covering certain aspects of our DHA
and/or ARA oils. We have applied for other patents in the United States covering
certain other aspects of our nutritional oils. We have also filed patent
applications on a selective basis in other industrialized countries, some of
which are pending and some of which have been granted. We are unable to predict,
however, whether these patents will be challenged, invalidated or circumvented
by others. We are aware that Omegatech, Inc., Monsanto Corporation, Aventis and
Nagasse currently are challenging the European patents covering our DHA
containing oils. Although we are confident in the strength of our patents
covering our DHA and ARA containing oils, there can be no assurance that these
patents will successfully protect our proprietary technology in these areas or
that we will be able to successfully defend against challenges to our patents.
If we fail to obtain adequate patent protection or successfully defend against
challenges for our nutritional oils, we may experience decreases in the future
sales of our nutritional oils, decreases in the revenues on sales of infant
formula containing our oils and decreases in license fees related to our oils.
IF OUR COMPETITORS DEVELOP SUPERIOR PRODUCTS OR TECHNOLOGIES, THESE PRODUCTS MAY
RENDER OUR PRODUCTS OBSOLETE.
Our success depends upon achieving and maintaining a superior competitive
position in our most important markets. Competition from other biotechnology and
pharmaceutical companies is intense. Many of our competitors have substantially
greater research and development capabilities, marketing, financial and
managerial resources and experience in the industry. If a competitor develops a
better product or technology, our products or technologies may be rendered
obsolete.
Although we believe we have developed the most efficient method of producing DHA
and ARA oils, we are aware that other methods of producing DHA and ARA are
available, and some infant formulas and other products now on the market outside
the United States use oils derived from other sources, such as fish or eggs. We
are
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aware of the development of a DHA-containing fish oil low in EPA which provides
an alternative to our DHA oil for infant formula applications. Although it is a
lower cost product relative to our DHA, fish oil, including low EPA fish oil,
has odor, stability and taste characteristics that may limit its usefulness. We
are also aware of the development of microencapsulated low-EPA fish oil products
by several large companies, including BASF and F. Hoffman-LaRoche Ltd. Although
microencapsulation of the oil resolves much of the odor, stability and taste
issues found with fish oil, a microencapsulated product is significantly more
costly than regular fish oil. Because fish oil is significantly less costly that
our DHA oil, fish oil will present a substantial competitive threat to our
Neuromins(R) DHA. Published reports, however, have cited a number of fish oils
as containing chemical toxins that are not present in our oils. In addition, we
believe that the combination of either low-EPA fish oil or microencapsulated
fish oil with a microbial source of ARA for use in infant formula would likely
infringe on our patents. We are also aware that Omegatech, Inc., an early stage
company, is currently able to produce DHA from a strain of fungus containing
DHA. We are currently unable to evaluate the degree of competitive threat that
this fungal source of DHA will present to our DHA oil in the future.
WE HAVE CERTAIN "TAKEOVER DEFENSES" IN PLACE THAT COULD DETER BIDS FOR THE
COMPANY THAT YOU MAY FAVOR.
To protect long term shareholder value, we have adopted a stockholder rights
plan and taken other steps to deter hostile or coercive attempts to acquire the
company. You may favor offers from a third party to acquire us, but these steps
may prevent offers from being made or successfully carried out.
If any person or group acquires more than 20% of our common stock without
approval of the board, the acquisition will trigger our stockholder rights plan.
Once triggered, the plan distributes rights to stockholders enabling those
stockholders to acquire shares of our common stock or that of an acquiror, at a
substantial discount to the public market price. We have reserved 300,000 shares
of Series A Junior Participating Preferred Stock for issuance in connection with
the stockholder rights plan. We are authorized to issue an additional 4,700,000
shares of preferred stock in one or more series, having terms fixed by the
board, without a stockholder vote. While the board has no current intentions or
plans to issue any preferred stock, issuance of these shares could also be used
as an anti-takeover device. We also have divided our board into 3 classes with
each class of directors being elected to three-year terms on a rotating basis.
As such only approximately one-third of the members of our board stand for
election every year. A staggered board deters hostile or coercive attempts to
acquire a company by electing a new board of directors.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with 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 at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-732-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the selling stockholders sell all of their common stock:
- annual report on form 10-K for the fiscal year ended October 31,
1999, as amended;
- quarterly report on forms 10-Q for the fiscal quarters ended January
31, 2000, April 30, 2000, and July 31, 2000 respectively;
- current report on form 8-K filed on April 17, 2000; and
- the description of Martek's common stock contained in form 8-A.
To obtain a copy of these filings at no cost, you may write or
telephone us at the following address:
Chief Financial Officer
Martek Biosciences Corporation
6480 Dobbin Road
Columbia, Maryland 21045
(410) 740-0081
This prospectus contains forward-looking statements relating to future
events or our future financial performance. These statements are only
predictions and actual events or results may be materially different from our
predictions. In evaluating these statements, you should consider the various
factors identified in this prospectus. Some of these factors are set forth under
the heading "Risk Factors" and could cause actual results to differ materially
from those indicated by forward-looking statements contained in this prospectus.
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You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. Neither we nor the
selling stockholders have authorized anyone else to provide you with different
information. Neither we nor the selling stockholders are making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front of the prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common shares or
warrants by the selling stockholders. If all the warrants are exercised in full,
we will receive up to approximately $9.9 million, which will be used for general
corporate purposes. The selling stockholders may never exercise the warrants in
full or at all.
SELLING STOCKHOLDERS
This prospectus relates to the offering by the selling stockholders
named in this prospectus of up to 2,536,532 shares of common stock and 734,391
common stock purchase warrants. All of the selling stockholders have acquired
common stock in private placements and may acquire additional shares of common
stock upon the exercise of warrants issued in the private placements.
The following table sets forth important information with respect to
the selling stockholders as of October 4, 2000, as follows:
- the name and position or other relationship with Martek within the
past 3 years of the selling stockholders;
- the number of Martek's outstanding shares of common stock
beneficially owned by the selling stockholders prior to this
offering, including shares obtainable under warrants exercisable
within sixty days of October 4, 2000.
- the number of shares of common stock and warrants being offered
through this prospectus; and
- the number and percentage of Martek's outstanding shares of common
stock to be beneficially owned by the selling stockholders after the
sale of common stock being offered through this prospectus.
The selling stockholders do not have to sell all of the shares and
warrants that they own.
-12-
<PAGE> 15
<TABLE>
<CAPTION> Number of
---------
Shares Shares Beneficially
------ -------------------
Beneficially Number of Number of Owned After the
------------ --------- --------- ---------------
Owned Prior Shares Warrants
----------- ------ --------
Selling to the Offered Owned and Offering
------- ------ ------- ---------- --------
Stockholder Offering Hereby (1) Offered Hereby Number Percentage
----------- -------- ---------- -------------- ------ ----------
<S> <C> <C> <C> <C> <C>
Vector Later-Stage Equity 64,367 64,367 61,172 0 *
Fund II, L.P. (2) (3)
Moore Global Investments, 721,019 721,019 105,731 0 *
Ltd. (4)
Remington Investment 158,272 158,272 21,490 0 *
Strategies, L.P. (4)
J. N. Whipple, III (5) 379,999 97,699 24,469 282,300 1.6
Buena Vista Partners, LLC 48,850 48,850 12,235 0 *
(6)
Vector Later Stage Equity 193,102 193,102 183,518 0 *
Fund (QP), L.P. (2) (3)
Black Bear Fund I, L.P. (7) 625,466 215,966 49,838 409,500 2.3
Black Bear Fund II, L.L.C. 57,277 20,877 4,818 36,400 *
(7)
Black Bear Offshore Ltd. 677,866 219,566 50,669 458,300 2.6
(7)
Black Bear Pacific Master 167,012 47,512 10,964 119,500 *
Fund Unit Trust (7)
George Haywood 1,107,584 431,934 99,677 675,650 3.8
State of Wisconsin 2,227,612 575,912 0 1,651,700 9.3
Investment Board (8) (9)
</TABLE>
-13-
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C>
MFS Mid Cap Growth Fund 368,071 187,171 43,193 180,900 1.0
(EXOT) (10)
MFS Mid Cap Growth Fund 183,085 100,785 23,258 82,300 *
(OTC) (10)
MFS New Discovery Fund 143,978 143,978 33,226 0 *
(NDF) (10)
MFS/Sun Life New Discovery 7,199 7,199 1,661 0 *
Fund (NWD) (10)
MFS New Discovery Fund 720 720 166 0 *
(UND) (10)
AGR Halifax Fund, Ltd. (11) 35,994 35,994 8,306 0 *
</TABLE>
----------------
(1) Consists of shares of common stock currently owned by the selling
stockholders and offered hereby as well as shares of common stock issuable
to such selling stockholders upon exercise of warrants currently held and
offered hereby by such selling stockholders.
(2) Sandra Panem, a director of Martek since May 1995, was the President of
Vector Fund Management, L.L.C. ("VFM"), which is the general partner of
Vector Later-Stage Equity Fund II, L.P. ("VLSEF II") and Vector
Later-Stage Equity Fund II (QP), L.P. ("VSELF QP"), and a Senior Vice
President of Vector Asset Management, Inc., which is the managing member
of VFM and is the general partner of Vector Fund Management L.P., the
general partner of Vector Later-Stage Equity Fund L.P. Ms. Panem resigned
from all positions with the various Vector entities in 1999.
(3) Vector Later-Stage Equity Fund II, L.P. and Vector Later Stage Equity
Fund (QP). L.P. are each managed by an investment committee which
exercises sole voting and investment power.
(4) Moore Global Investments, Ltd and Remington Investment Strategies,
L.P. are each managed by an investment committee which exercises
sole voting and investment power.
(5) Includes 36,000 shares of common stock currently owned by J.N. Whipple,
Inc., a company controlled by J.N. Whipple. Mr. Whipple disclaims
beneficial ownership of the shares of common stock held by J. N. Whipple,
Inc.
(6) James Anderson is the natural person who exercises the sole voting and
investment power for the Buena Vista Partners, LLC.
(7) Jim Carruthers is the natural person who exercises the sole voting and
investment power for the Black Bear Fund I, L.P., Black Bear Fund II,
-14-
<PAGE> 17
L.L.C., the Black Bear Offshore Ltd., and the Black Bear Pacific Master
Fund Unit Trust.
(8) The State of Wisconsin Investment Board holds the securities for the
benefit of the Wisconsin Retirement Trust.
(9) John Nelson is the natural person who exercises the sole voting and
investment power for the State of Wisconsin Investment Board.
(10) Mark Regan is the natural person who exercises the sole voting and
investment power for the MFS Mid Cap Growth Fund (EXOT), the MFS Mid Cap
Growth Fund (OTC), the MFS New Discovery Fund (NDF), MFS/Sun Life New
Discovery Fund (NWD), and the MFS New Discovery Fund (UND).
(11) Jeff Smith is the natural person who exercises the sole voting and
investment power for AGR Halifax Fund, Ltd.
PLAN OF DISTRIBUTION
The common stock being offered by the selling stockholders, or by their
respective pledgees, donees, transferees, or other successors in interest, will
be sold in one or more transactions, which may involve block transactions, on
the Nasdaq Stock Market or on another market on which the common stock may from
time to time be trading, in privately-negotiated transactions, through the
writing of options on the common stock, short sales or any combination thereof.
The sale price to the public may be the market price prevailing at the time of
sale, a price related to the prevailing market price or at any other price as
the selling stockholders determine from time to time. The selling stockholders
shall have the sole and absolute discretion not to accept any purchase offer or
make any sale of common stock if they deem the purchase price to be
unsatisfactory at any particular time.
The common stock may also be sold pursuant to Rule 144. Rule 144
provides an exemption from registration for the resale of securities which
selling stockholders acquired in a private offering. In order to sell under Rule
144, the following 5 conditions must exist:
- We must be current in filing our SEC reports.
- The amount of common stock a selling stockholder can sell
under Rule 144 during any three-month period cannot exceed the
greater of (a) 1% of our outstanding common stock, or (b) the
average weekly reported trading volume for our common stock
during the 4 calendar weeks preceding the filing of the notice
of sale referred to below.
- The common stock must be sold in unsolicited brokers'
transactions or directly to a market maker.
-15-
<PAGE> 18
- The selling stockholder must file a notice of the proposed
sale with the SEC at the time the order to sell is placed with
the broker, unless the amount to be sold neither exceeds 500
shares nor involves sale proceeds greater than $10,000.
- The selling stockholder must have held the common stock for at
least 1 year (counting any time the stock was held by persons
other than affiliates of the company).
If a selling stockholder has held the common stock for at least 2 years
and has not been an affiliate of the company during the 3 months preceding the
sale, the stock can be sold free of any of these conditions except the condition
that the stock be sold through an unsolicited broker transaction or to a market
maker.
The selling stockholders may also sell the common stock directly to
market makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Brokers acting as agents for the selling
stockholders will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the common stock
will do so for their own account and at their own risk. It is possible that the
selling stockholders will attempt to sell shares of common stock in block
transactions to market makers or other purchasers at a price per share which may
be below the then market price. In addition, the selling stockholders or their
successors in interest may enter into hedging transactions with broker-dealers
who may engage in short sales of common stock in the course of hedging the
positions they assume with a selling stockholder. It is possible not all, or
even none, of the common stock offered hereby will be issued to, or sold by, the
selling stockholders. Broker-dealers or agents and any other participating
broker-dealers or the selling stockholders may be deemed to be "underwriters"
within the meaning of section 2(11) of the Securities Act of 1933 in connection
with sales of the shares. Accordingly, any commission, discount or concession
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting discounts or concessions under the Securities
Act. Because selling stockholders may be deemed "underwriters" within the
meaning of section 2(11) of the Securities Act, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act.
Any person engaged in the distribution of the shares of common stock
offered hereby may not simultaneously engage in market making activities with
respect to our common stock for a period of 2 business days prior to the
commencement of such distribution. In addition, each selling stockholder will be
subject to the Exchange Act and the associated rules and regulations under the
Exchange Act, including Regulation M, which provisions may limit the timing of
purchases and sales of shares of our common stock by the selling stockholders.
We will make copies of this prospectus available to the selling stockholders and
have informed them of the need
-16-
<PAGE> 19
to deliver copies of this prospectus to purchasers at or prior to the time of
any sale of the shares.
Martek has agreed to indemnify the selling stockholders, or their
respective transferees or assignees, against potentially significant
liabilities, including liabilities under the Securities Act, or to contribute to
payments these selling stockholders or their respective pledgees, donees,
transferees or other successors in interest, may be required to make.
LEGAL MATTERS
Hogan & Hartson L.L.P., Baltimore, Maryland, has passed upon certain
legal matters with respect to the common stock and warrants offered hereby.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our annual report on form 10-K for the year ended October
31, 1999, as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Our financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
-17-
<PAGE> 20
<TABLE>
<S> <C>
==================================================================================================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. MARTEK
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A BIOSCIENCES
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED CORPORATION
HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED COMMON STOCK
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. AND
WARRANTS
-------------
PROSPECTUS
-------------
------------------------
TABLE OF CONTENTS PAGE
----
Our Business .......................... 2
Risk Factors .......................... 3
Where You Can Find More Information......... 11
Use of Proceeds .......................... 12
Selling Stockholders ....................... 12
Plan of Distribution........................ 15
Legal Matters .......................... 17
Experts .......................... 17
October , 2000
==================================================================================================================================
</TABLE>
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses to be paid by the
Company in connection with the issuance and distribution of the securities being
registered hereby. All the amounts are estimates, except the Commission
registration fee. The selling stockholders will bear the cost of all selling
commissions and underwriting discounts with respect to the sale of any
securities by them.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.................... $ 119
Legal fees and expenses ............................................... 9,000
Accounting and miscellaneous expenses.................................. 10,881
----------
Total......................................................... $ 20,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL"), a corporation may indemnify its directors, officers,
employees and agents and its former directors, officers, employees and agents
and those who serve, at the corporation's request, in such capacities with
another enterprise, against expenses (including attorney's fees), as well as
judgments, fines and settlements in nonderivative lawsuits, actually and
reasonably incurred in connection with the defense of any action, suit or
proceeding in which they or any of them were or are made parties or are
threatened to be made parties by reason of their serving or having served in
such capacity. The DGCL provides, however, that such person must have acted in
good faith and in a manner he or she reasonably believed to be in (or not
opposed to) the best interests of the corporation and, in the case of a criminal
action, such person must have had no reasonable cause to believe his or her
conduct was unlawful. In addition, the DGCL does not permit indemnification in
an action or suit by or in the right of the corporation, where such person has
been adjudged liable to the corporation, unless, and only to the extent that, a
court determines that such person fairly and reasonably is entitled to indemnity
for costs the court deems proper in light of liability adjudication. Indemnity
is mandatory to the extent a claim, issue or matter has been successfully
defended.
Article ELEVENTH of the Company's Certificate of Incorporation provides
that the Company will indemnify its directors and officers to the full extent
permitted by law and that no director shall be liable for monetary damages to
the Registrant or its stockholders for any breach of fiduciary duty, except to
the extent provided by applicable law (i) for any breach of the director's duty
of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL, or (iv) for any transaction from
which such director derived an improper personal benefit. In addition, under
indemnification agreements with its directors, the Registrant is obligated, to
the fullest extent permissible by the DGCL, as it currently exists or may be
amended, to indemnify and hold harmless its directors, from and against all
expense, liability and loss reasonably incurred or suffered by such directors.
II-1
<PAGE> 22
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------ -------------------
<S> <C>
4.1 Form of certificate representing shares of Martek common
stock, par value $0.10 per share (filed as Exhibit 4.01 to the
Company's Registration Statement on Form S-1, File No.
33-68922, declared effective November 23, 1993, and
incorporated herein by reference).
5 Opinion of Hogan & Hartson L.L.P. (to be filed by amendment).
23.1* Consent of Ernst & Young LLP, as independent auditors for the
Company.
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion
filed as Exhibit 5).
24 Powers of Attorney (included in the Signature Page to this
Registration Statement).
</TABLE>
--------------------
*Filed herewith.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
II-2
<PAGE> 23
of the Securities Exchange Act of 1934 (and, where applicable, 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 therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) 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 Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the 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 County of Howard, State of Maryland on October 11, 2000.
MARTEK BIOSCIENCES CORPORATION
By: /s/ Henry Linsert, Jr.
-----------------------------------
Henry Linsert, Jr.
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C>
Date: October 11, 2000 /s/ Henry Linsert Jr. .
----------------------------------------
Henry Linsert, Jr.
Chief Executive Officer and Director
(Principal Executive Officer)
Date: October 11, 2000 /s/ Peter L. Buzy
----------------------------------------
Peter L. Buzy
(Chief Financial and Accounting Officer)
Date: October 11, 2000 *
----------------------------------------
Jules Blake
Director
Date: October 11, 2000 *
----------------------------------------
Gordon S. Macklin
Director
Date: October 11, 2000 *
----------------------------------------
Ann L. Johnson
Director
Date: October 11, 2000 * .
----------------------------------------
Douglas J. MacMaster, Jr.
Director
Date: October 11, 2000 *
----------------------------------------
John H. Mahar
Director
Date: October 11, 2000 *
----------------------------------------
Sandra Panem
Director
Date: October 11, 2000 *
----------------------------------------
Richard J. Radmer
Director
</TABLE>
II-4
<PAGE> 25
<TABLE>
<S> <C>
Date: October 11, 2000 *
----------------------------------------
Eugene H. Rotberg
Director
Date: October 11, 2000 *
----------------------------------------
William D. Smart
Director
</TABLE>
* By /s/ Peter L. Buzy
-------------------------
Peter L. Buzy
Attorney-In-Fact
II-5
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------ -------------------
<S> <C>
4.1 Form of certificate representing shares of Martek common stock, par
value $0.10 per share (filed as Exhibit 4.01 to the Company's
Registration Statement on Form S-1, File No. 33-68922, declared
effective November 23, 1993, and incorporated herein by reference).
5 Opinion of Hogan & Hartson L.L.P. (to be filed by amendment).
23.1* Consent of Ernst & Young LLP, as independent auditors for the
Company.
23.2 Consent of Hogan & Hartson L.L.P. (included in their opinion filed
as Exhibit 5).
24 Powers of Attorney (included in the Signature Page to this
Registration Statement).
</TABLE>
--------------------
*Filed herewith.
