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As Filed with the Securities and Exchange Commission on August 10, 1999
Registration No. 333-____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ENTREMED, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE
(State or other jurisdiction of 58-1959440
incorporation or organization) (IRS Employer Identification No.)
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9640 Medical Center Drive
Rockville, Maryland 20850
(301) 217-9858
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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John W. Holaday, Ph.D.
Chairman of the Board, President and Chief Executive Officer
ENTREMED, INC.
9640 Medical Center Drive
Rockville, Maryland 20850
(301) 217-9858
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
ROBERT B. OTT, ESQ.
RICHARD E. BALTZ, ESQ.
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
(202) 942-5000
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Approximate date of commencement of proposed sale to the public: from
time to time as described in the prospectus 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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to be Proposed Maximum Proposed Maximum
Securities to be Registered Offering Price Per Aggregate Offering Amount of
Registered Share (2) Price (2) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value per share 1,478,118 $20.5625 $30,393,801 $8,449.48
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Common Stock issuable upon
exercise of Series 1
Warrants (1) 739,059 $33.02 $24,403,728 $6,784.24
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Common Stock issuable upon
exercise of Series 2
Warrants (1) 739,059 $25.45 $18,809,051 $5,228.92
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Total Fee $20,462.64
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(1) Represents number of shares of Common Stock issuable upon exercise of
outstanding warrants issued as described in the prospectus. Pursuant to
Rule 416 of the Securities Act, this Registration Statement also covers
such indeterminable additional shares as may become issuable upon
exercise of such warrants as a result of any future stock splits, stock
dividends or similar transactions.
(2) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457 of the Securities Act.
The Company hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Company 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 such Section 8(a),
may determine.
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PROSPECTUS
SUBJECT TO COMPLETION DATED August 10, 1999
ENTREMED, INC.
2,956,236 SHARES OF COMMON STOCK
The persons listed in this prospectus under "Selling Stockholders" may
offer and sell from time to time an aggregate of up to 2,956,236 shares of
common stock that they have acquired or may acquire on exercise of warrants
granted by us.
The Selling Stockholders may offer their shares through public or
private transactions, on or off the Nasdaq National Market, at prevailing
market prices or at privately negotiated prices. We will not receive any of the
proceeds from the sale of shares by the Selling Stockholders.
Our common stock is quoted on the Nasdaq National Market and traded
under the symbol "ENMD." On August 9, 1999, the closing sale price of the
common stock on the Nasdaq National Market was $20.5625.
Our principal executive offices are located at 9640 Medical Center
Drive, Rockville, Maryland 20850 and our telephone number is (301) 217-9858.
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SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN
MATERIAL FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN
OUR COMMON STOCK.
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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 August , 1999
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.
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TABLE OF CONTENTS
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PAGE
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Risk Factors................................................................................................ 2
The Company................................................................................................. 15
Use of Proceeds............................................................................................. 15
Selling Stockholders........................................................................................ 16
Plan of Distribution........................................................................................ 19
Rights of the Selling Stockholders.......................................................................... 20
Legal Matters............................................................................................... 21
Experts..................................................................................................... 21
Where You Can Find More Information......................................................................... 22
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THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. THESE FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, STATEMENTS
REGARDING THE VALUE OF OUR COMMON STOCK; UNCERTAINTIES RELATING TO OUR
TECHNOLOGICAL APPROACH, OUR HISTORY OF OPERATING LOSSES AND ANTICIPATION OF
FUTURE LOSSES; UNCERTAINTY OF OUR PRODUCT DEVELOPMENT; OUR NEED FOR ADDITIONAL
CAPITAL AND UNCERTAINTY OF ADDITIONAL FUNDING; OUR DEPENDENCE ON COLLABORATORS
AND LICENSEES; INTENSE COMPETITION AND RAPID TECHNOLOGICAL CHANGE IN THE
BIOPHARMACEUTICAL INDUSTRY; UNCERTAINTIES RELATING TO OUR PATENT AND
PROPRIETARY RIGHTS; UNCERTAINTIES RELATING TO CLINICAL TRIALS; GOVERNMENT
REGULATION AND UNCERTAINTIES OF OBTAINING REGULATORY APPROVAL ON A TIMELY BASIS
OR AT ALL; OUR DEPENDENCE ON KEY PERSONNEL, RESEARCH COLLABORATORS AND
SCIENTIFIC ADVISORS; UNCERTAINTIES RELATING TO HEALTH CARE REFORM MEASURES AND
THIRD-PARTY REIMBURSEMENT; AND RISKS ASSOCIATED WITH PRODUCT LIABILITY.
OUR FORWARD-LOOKING STATEMENTS ARE BASED ON INFORMATION AVAILABLE TO US TODAY,
AND WE WILL NOT UPDATE THESE STATEMENTS. OUR ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED.
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RISK FACTORS
You should carefully consider the risks described below together with all
of the other information provided and incorporated by reference in this
prospectus before making an investment decision. The risks and uncertainties
described below are not the only ones facing our Company. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial
may also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline, and you may
lose all or part of your investment.
WE HAVE A HISTORY OF LOSSES AND ANTICIPATE FUTURE LOSSES
To date, we have been engaged primarily in research and development
activities. Although we have received license fees and research and development
funding from our collaboration with Bristol-Myers Squibb Company and research
grants, we have not derived any revenues from operations.
At March 31, 1999, we had an accumulated deficit of approximately
$52,456,000. Significant losses have continued since March 31, 1999. We also
will be required to conduct substantial research and development and clinical
testing activities for all of our proposed products. We expect that these
activities will result in operating losses for the foreseeable future,
particularly due to the extended time period before we expect to commercialize
any products, if ever. In addition, to the extent we rely upon others for
development and commercialization of our products, our ability to achieve
profitability will depend upon the success of these other parties. We also rely
to a significant extent on grants from governmental and other organizations as
a source of revenues and funding for our research and the development of our
products. If our grant revenue were to be reduced to any substantial extent, it
may impair our revenues and hence our ability to continue our research and
development efforts. We cannot assure you that we will be able to generate
revenues from operations or achieve profitability on a sustained basis, if at
all.
DEPENDENCE ON CELGENE TO COMMERCIALIZE THALIDOMIDE
We have sublicensed to Celgene Corporation all of our rights to
commercialize and sell thalidomide worldwide. We have received and will
continue to receive royalties on all sales of thalidomide by Celgene. The
success of our relationship with Celgene and the marketing of thalidomide will
depend, in part, on Celgene's own competitive, marketing, and strategic
considerations, including the relative advantages of alternative products being
developed and marketed by its competitors. In addition, if Celgene is not
successful in marketing thalidomide, we would be materially adversely affected.
Thalidomide is currently in Phase 2 of human clinical trials for cancer
indications. Thalidomide has received orphan drug designation from the FDA as a
treatment for Kaposi's sarcoma, a form of skin cancer most frequently
associated with AIDS, and for primary brain malignancies. Celgene, to whom we
have licensed the rights to commercialize thalidomide, has received approval
from the FDA to market thalidomide for the treatment of erythema nodosum
leprosum, an inflammatory skin condition of some leprosy patients. The
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FDA, however, has not yet approved the marketing and sale of thalidomide for
cancer. Celgene still must pass significant regulatory hurdles before
thalidomide will be commercially available for the treatment of cancer, if
ever.
NATURE OF OUR RELATIONSHIP WITH CHILDREN'S HOSPITAL, BOSTON
We have relationships with collaborators at academic and other
institutions who conduct research either on our behalf or whose research we
have the right to license and use. Our primary research collaboration has been
with Children's Hospital, Boston. Pursuant to our agreement with Children's
Hospital, Boston, we agreed to provide funding for some of their
antiangiogenesis research projects and granted them options to acquire an
ownership interest in us. In return, they gave us the right to fund additional
research projects and obtain licenses to any discoveries arising from that
research. Children's Hospital, Boston, originally discovered Endostatin(TM)
protein, Angiostatin(R) protein, 2ME2, and the antiangiogenic properties of
thalidomide and thalidomide analogs. To date, we have received licenses from
Children's Hospital, Boston, for these products.
Researchers at Children's Hospital, Boston, also may be working on
other products that may be used to treat cancer in a variety of ways, including
by antiangiogenesis. Although we believe that, pursuant to our agreement, we
are entitled to license and use a wide variety of products related to
antiangiogenesis, Children's Hospital, Boston, may take a different position.
Children's Hospital, Boston, has licensed, and may in the future license,
products to our existing and potential competitors.
We recently extended our agreement with Children's Hospital, Boston for
another year. However, while this Agreement has been renewed before, we do not
know whether this Agreement will be renewed again in the future. Because
Children's Hospital, Boston, has, in the past, been an important source of
product candidates for us, the expiration of this collaboration may adversely
impact our ability to acquire future product candidates. We cannot be sure that
we will be able to negotiate research collaborations with new institutions or
that any new collaboration will be successful. The expiration of the
collaboration with Children's Hospital, Boston, may subject us to increased
competition. It also is possible that, after the expiration of our agreement,
Children's Hospital, Boston, may develop other products that have
antiangiogenic qualities similar to those contained in the products that we
currently license and could license those products to our competitors.
WE ARE DEPENDENT ON IDENTIFYING NEW COLLABORATIVE PARTNERS
We intend to seek new corporate alliances and partners to develop,
commercialize and market our products. We expect to grant to our partners
certain rights to commercialize any products developed under these agreements,
and we may rely on our partners to conduct research and development efforts and
clinical trials on, obtain regulatory approvals for, and manufacture and market
any products licensed to them. Each individual partner will control the amount
and timing of resources devoted to these activities generally. Our revenues
will be obtained from strategic partners as research and development payments
and upon achievement of certain milestones. Since we generally expect to retain
a royalty for sales or a percentage of profits of products licensed to third
parties, our revenues may be less than if we retained all commercialization
rights and marketed products directly. In addition, there is a risk that our
corporate partners will pursue alternative technologies or develop competitive
products as a means for developing treatments for the diseases targeted by our
programs.
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We also may elect to collaborate with another partner to replace
Bristol-Myers Squibb. Even if we find such a partner to assist us with the
research, development and eventual commercialization of Angiostatin(R) protein,
our work on the product may not be successful. We will depend, in part, on our
partner's own competitive, marketing and strategic considerations, including
the relative advantages of other products being developed and marketed.
We cannot guarantee that we will be successful in establishing any
additional collaborative arrangements, that products will be successfully
commercialized under any collaborative arrangement or that we will derive any
revenues from our arrangements. Our strategy also involves entering into
multiple, concurrent strategic alliances to pursue commercialization of our
core technologies. There is a risk that we will not be able to manage
simultaneous programs successfully. With respect to existing and potential
future strategic alliances and collaborative arrangements, we will depend on
the expertise and dedication of sufficient resources by these outside parties
to develop, manufacture, or market products. If a strategic alliance or
collaborative partner fails to develop or commercialize a product to which it
has rights, our business could be materially and adversely affected.
DEVELOPMENT OF OUR PRODUCTS IS AT AN EARLY STAGE AND IS UNCERTAIN
Our proposed products and research programs are in the early stage of
development and require significant, time-consuming and costly research and
development, testing and regulatory clearances. In developing our products, we
are subject to risks of failure that are inherent in the development of
products and therapeutic procedures based on innovative technologies. For
example, it is possible that any or all of these proposed products or
procedures will be ineffective or toxic, or otherwise will fail to receive
necessary FDA clearances. There is a risk that the proposed products or
procedures will be uneconomical to manufacture or market or will not achieve
broad market acceptance. There also is a risk that third parties may hold
proprietary rights that preclude us from marketing our proposed products or
that others will market a superior or equivalent product. The failure of our
research and development activities to result in any commercially viable
products would materially adversely affect our business.
Angiostatin(R) and Endostatin(TM) protein, 2ME2 and thalidomide analogs
are at the preclinical stages of development. These product candidates have
only been tested on animals and not on humans. Although these product
candidates have demonstrated some success in preclinical studies in combating
tumors in mice, there is absolutely no assurance that the agents will be
similarly effective in combating tumors in humans. Mice are not people, and
although the scientific community considers the study of mice useful, we cannot
say whether agents that are successful in treating tumors in mice will be
non-toxic to humans, let alone beneficial. In the cancer context, testing on
mice occurs under different conditions than testing in people, including the
manner in which tumors are introduced into mice (by injection as opposed to
natural development), the genetic make-up of laboratory mice populations
(homogeneity as opposed to diversity), tumor location (near the skin as opposed
to deep-seated) or other unidentified factors. There are many regulatory steps
that must be taken before any of these product candidates will be eligible for
FDA approval and subsequent sale, including the completion of preclinical
(animal) and clinical (human) trials. We do not expect that these product
candidates will be commercially available for several years, if ever.
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WE MUST SUBJECT POTENTIAL PRODUCTS TO CLINICAL TRIALS, THE RESULTS OF WHICH ARE
UNCERTAIN
Before obtaining regulatory approvals for the commercial sale of our
products, we or our collaborative partners will be required to demonstrate
through preclinical studies (animal testing) and clinical trials (human
testing) that our proposed products are safe and effective for use in each
target indication. The majority of our product candidates, including
Angiostatin(R) protein, Endostatin(TM) protein, 2ME2 and thalidomide analogs,
have only been subjected to preclinical studies on mice and monkeys and have
not yet been tested on humans. The results from these preclinical studies on
animals may not be predictive of results that will be obtained in clinical
trials and large-scale testing on humans.
Our product candidate thalidomide is currently being tested in Phase 2
clinical trials on humans for a variety of types of cancer. In the future, we
will be required to conduct clinical trials on humans for Angiostatin(R)
protein, Endostatin(TM) protein, 2ME2 and thalidomide analogs. We have only
limited experience in conducting clinical trials on humans and intend to rely
on pharmaceutical companies, the National Cancer Institute, and contract
research organizations with which we collaborate for clinical development and
regulatory approval of our product candidates. We cannot guarantee that the
clinical trials conducted by our partners or us will demonstrate sufficient
safety and efficacy to obtain the required regulatory approvals or will result
in marketable products.
The results of initial preclinical studies and clinical trials of
products under development are not necessarily indicative of results that will
be obtained from subsequent or more extensive preclinical studies and clinical
testing. In advanced clinical development, numerous factors may be involved
that may lead to different results in larger, later-stage trials from those
obtained in earlier-stage trials. Early stage trials usually involve a small
number of patients and thus may not accurately predict the actual results
regarding safety and efficacy that may be demonstrated with a large number of
patients in a later-stage trial. Also, differences in the clinical trial design
between an early-stage and late-stage trial may cause different results
regarding the safety and efficacy of a product to be obtained. In addition,
many early stage trials are unblinded and based on qualitative evaluations by
clinicians involved in the performance of the trial whereas later-stage trials
are generally required to be blinded in order to provide more objective data
for assessing the safety and efficacy of the product. The failure to adequately
demonstrate the safety and efficacy of a product under development could delay
or prevent regulatory clearance of the potential product and would have a
significant adverse effect on the Company.
Clinical trials involving cancer patients are often conducted with
terminally ill patients having the most advanced stages of a disease. During
the course of treatment, these patients can die or suffer other adverse events
due to the advanced stage of their disease despite the efficacy of the agents
being tested. These deaths and/or adverse events, though unrelated to the agent
being tested, can nevertheless adversely affect clinical trial results. Various
companies in the pharmaceutical industry, including biotechnology companies,
have suffered significant setbacks in advanced clinical trials, even after
attaining promising results in earlier trials. Clinical trials for the product
candidates being developed by EntreMed and its collaborators may be delayed by
many factors, including that potential candidates for testing are limited in
number. Any delays in, or termination of, the clinical trials of any of our
product candidates, or the failure of any clinical trials to meet applicable
regulatory standards, could have a material adverse effect on our business.
In addition, we hope eventually to market our products outside of the
United States. This will entail foreign regulatory approvals from governments in
other countries that may have different requirements from the
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regulatory process in the United States, subjecting our products to additional
clinical trials and approvals, as well as licensing, manufacturing and labeling
standards, even though the products are fully approved for manufacture,
marketing and distribution in the United States. In order to meet any
additional requirements that might be imposed by foreign governments, we may
incur additional costs that will inhibit our profitability. If the relevant
approvals cannot be obtained or will be too expensive to obtain, foreign
distribution may not be feasible, which could have a material adverse impact on
our business.
THERE ARE MARKETING RISKS RELATED TO THE HISTORY OF THALIDOMIDE
One of our potential products, thalidomide, has caused serious birth
defects in children whose mothers used it during pregnancy. Therefore,
physicians prescribing the drug to women with childbearing potential must take
strict precautions, and there can be no assurance that such precautions will be
observed in all cases or, if observed, will be effective. Use of thalidomide
has also been associated, in a limited number of cases, with other side
effects, including nerve damage. We believe that the characteristics of
thalidomide that may have affected fetal development and caused birth defects
by blocking new blood vessel growth are the same characteristics that may make
thalidomide useful in the prevention and treatment of angiogenic disorders such
as cancer. However, we cannot guarantee that clinical trials with the drug will
demonstrate its safety and efficacy or that the drug will not be associated
with other characteristics that prevent or limit its commercial use.
Even if thalidomide is demonstrated to be safe and effective for use in
treating angiogenic disorders, we may face difficulties in gaining public
acceptance of the drug based on its history of causing birth defects. This may
adversely affect the marketing efforts of our collaborator Celgene Corporation.
In addition, we may be subject to liability arising out of any adverse effects
of thalidomide. Pursuant to our agreement with Celgene, Celgene has agreed to
indemnify us from any liability that may arise from its sales of thalidomide.
However, we cannot guarantee that we will be protected from such liability and
the possible related losses.
WE HAVE NO CURRENT MANUFACTURING OR MARKETING CAPACITY
We do not expect to manufacture or market products in the near term,
but we may try to do so in certain cases. We do not currently have the capacity
to manufacture or market products or any experience in these activities. If we
elect to perform these functions, we will be required to either develop these
capacities, or contract with others to perform some or all of these tasks. We
may be dependent to a significant extent on corporate partners, licensees, or
other entities for manufacturing and marketing of products. If we engage
directly in manufacturing or marketing, we will require substantial additional
funds and personnel and will be required to comply with extensive regulations.
We cannot guarantee that we will be able to develop or contract for these
capacities when required in connection with our business.
The manufacture of pharmaceutical products can be an expensive, time
consuming, and complex process. Manufacturers often encounter difficulties in
scaling up production of new products, including problems involving production
yields, quality control and assurance, and shortages of personnel. Delays in
formulation and scale-up to commercial quantities could result in additional
expense, delays in our clinical trials, regulatory submissions, and
commercialization. The manufacturing processes for several of the small
molecules and proteins we are developing as product candidates have not yet
been tested at commercial levels, and we cannot guarantee that it will be
possible to manufacture these materials in a cost-effective manner.
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In addition, we will depend on all such third-party manufacturers to
perform their obligations effectively and on a timely basis. There can be no
assurance that such parties will perform such obligations and any such
non-performance may delay clinical development or submission of products for
regulatory approval, or otherwise impair our competitive position, which would
have a material adverse affect on our business. Any manufacturer of our product
candidates will be subject to applicable good manufacturing practices ("GMP")
prescribed by the FDA or other rules and regulations prescribed by foreign
regulatory authorities. We cannot guarantee that we or any of our collaborators
will be able to enter into or maintain relationships either domestically or
abroad with manufacturers whose facilities and procedures comply or will
continue to comply with GMP and who are able to produce our small molecules and
proteins. Should manufacturing agreements be entered into, our collaborators
and we will be dependent on such manufacturers for continued compliance with
GMP. Failure by a manufacturer of our products to comply with GMP could result
in significant time delays or our inability to commercialize or continue to
market a product. Changes in our manufacturers could require new product
testing and facility compliance inspections. In the United States, failure to
comply with GMP or other applicable legal requirements can lead to federal
seizure of violative products, injunctive actions brought by the federal
government, and potential criminal and civil liability on the part of a company
and its officers and employees. Because of these and other factors, we may not
be able to replace our manufacturing capacity quickly or efficiently, in the
event that our current or future manufacturers are unable to manufacture our
products at one of more of their facilities. For certain of our potential
products, we will need to substantially increase the capacity of our production
facilities (or those of our manufacturers) in order to conduct human clinical
trials and to produce such products for commercial sale at an acceptable cost.
At this time, we have limited marketing and sales staff. To the extent
that we undertake to market our products, or are unable to enter into
co-promotion agreements or to arrange for third-party distribution of our
products, additional expenditures and management resources will be required to
develop an effective sales force. There can be no assurance that we will be
able to establish a sales force or to enter into co-promotion or distribution
agreements on favorable terms or on a timely basis. In addition, other
companies offering similar or substitute products may have well-established
sales forces or agreements in place that will allow them to market their
products more successfully. Failure to establish sufficient marketing
capabilities may have a material adverse impact on our business.
WE CANNOT GUARANTEE THAT OUR PRODUCTS WILL ACHIEVE MARKET ACCEPTANCE
Even if our products eventually do reach the market, our success will
be dependent on market acceptance of our products in the United States and,
later, in international markets. Since we have not received the necessary
approvals to sell our products in the United States or elsewhere, we cannot
predict whether any of our products will achieve market acceptance, either in
the United States or abroad. A number of factors may limit the market
acceptance of our products, including the timing of regulatory approval and
market entry relative to competitive products, the availability of alternative
therapies or treatments, the price of our products relative to any
alternatives, the availability of third-party reimbursement to pay for them,
and the extent of the marketing efforts by competitors. Other risk factors
identified in this section also may affect market acceptance.
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WE CANNOT GUARANTEE THAT IT WILL BE COMMERCIALLY FEASIBLE TO MANUFACTURE
ANGIOSTATIN(R) PROTEIN AND ENDOSTATIN(TM) PROTEIN
We have entered into an agreement with Covance Biotechnology Services
Inc. under which Covance is responsible for producing sufficient amounts of the
Angiostatin(R) and Endostatin(TM) proteins for preclinical toxicology studies
and for scaling-up the production of these proteins under GMP conditions for
clinical trials. We have spent significant time and funds to transfer the
technology underlying the production of the Angiostatin(R) and Endostatin(TM)
proteins to Covance. As such, we are reliant on Covance for the production of
sufficient quantities of the Angiostatin(R) and Endostatin(TM) proteins to
complete our clinical studies, and if Covance fails to produce such quantities,
then we would have to delay our clinical studies. If we are required to change
to a new manufacturer, and if any suitable manufacturer can be found,
significant additional time and funds would be required for technology transfer
and testing. Furthermore, Covance has only recently initiated production of the
Angiostatin(R) and Endostatin(TM) proteins and, therefore, has limited
experience in manufacturing these proteins. Delays in Covance's scale-up
production could result in delays that will affect our clinical trials,
regulatory submissions, and commercialization. Indeed, the production of
protein-based therapeutics using recombinant DNA techniques and fermentation is
a difficult, expensive process. There is, therefore, no assurance that it will
be possible to manufacture commercial quantities of the Angiostatin(R) and
Endostatin(TM) proteins in a cost-effective manner.
WE ARE UNCERTAIN WHETHER ADDITIONAL FUNDING WILL BE AVAILABLE FOR OUR FUTURE
CAPITAL NEEDS AND COMMITMENTS
We will require substantial funds in addition to our existing working
capital to develop our product candidates and otherwise to meet our business
objectives. We have never generated enough cash during any period since our
inception to cover our expenses and have spent, and expect to continue to
spend, substantial funds to continue our research and development programs. Any
one of the following factors, among others, could cause us to require
additional funds or otherwise cause our cash requirements in the future to
materially increase:
- results of research and development activities;
- progress of our preclinical studies or clinical trials;
- changes in or terminations of our relationships with strategic
partners;
- changes in the focus, direction, or costs of our research and
development programs;
- competitive and technological advances; or
- the regulatory approval process.
Also pursuant to sponsored research agreements, we have agreed to fund
$2,251,000 through 2000. Under the terms of certain license agreements, we must
be diligent in bringing potential products to market and must make certain
milestone payments that, in some instances, are substantial. If we fail to
comply with the milestones or fail to make any required sponsored research or
milestone payment, we could face the termination of the relevant sponsored
research or license agreement, which could have a material adverse effect on
our business.
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We may seek additional funding through collaborative arrangements and
public or private financing, including equity financing. We cannot guarantee
that collaborative arrangements or additional financing will be available on
acceptable terms to us or at all. If we issue more common stock to raise funds
in the future, your ownership in us may be diluted. If adequate funds are not
available, we may be required to take one or more of the following actions:
- delay, reduce the scope of, or eliminate one or more of our
research and development programs;
- forfeit our rights to future technologies;
- obtain funds through arrangements with collaborative partners or
others that may require us to relinquish rights to certain of our
technologies, product candidates or products that we would
otherwise seek to develop or commercialize on our own; or
- license the rights to such products on terms that are not favorable
to us.
OUR POTENTIAL PRODUCTS ARE SUBJECT TO GOVERNMENT REGULATORY REQUIREMENTS AND A
LENGTHY APPROVAL PROCESS
Our research, development, preclinical and clinical trials,
manufacturing, and marketing of most of our product candidates are subject to
an extensive regulatory approval process by the FDA and other regulatory
agencies in the United States and abroad. The process of obtaining FDA and
other required regulatory approvals for drug and biologic products, including
required preclinical and clinical testing, is lengthy, expensive and uncertain.
Even after spending time and money, we may not receive regulatory approvals for
clinical testing or for the manufacturing or marketing of any products. Our
collaborators or we may encounter significant delays or excessive costs in the
effort to secure necessary approvals or licenses. Even if we obtain regulatory
clearance for a product, that product will be subject to continual review.
Later discovery of previously unknown defects or failure to comply with the
applicable regulatory requirements may result in restrictions on a product's
marketing or withdrawal of the product from the market, as well as possible
civil or criminal penalties.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY
The pharmaceutical and biotechnology industries are intensely
competitive and we expect competition from other companies and other research
and academic institutions to increase. Many of these companies have
substantially greater financial and research and development capabilities than
we have and have substantially greater experience in undertaking preclinical
and clinical testing of products, obtaining regulatory approvals and
manufacturing and marketing pharmaceutical products. We are aware of a number
of other companies and academic institutions that are pursuing angiogenesis
research and are testing other angiogenesis inhibitors.
These other companies and academic institutions may be larger than we
are and have significantly greater financial resources, or be supported by
large entities with greater financial resources than are currently available to
us. They may also have established marketing and distribution channels. The
drug industry is characterized by intense price competition, and we anticipate
that we will face this and other forms of competition. There can be no
assurance that developments by others will not render our products or
technologies obsolete or noncompetitive or that we will be able to keep pace
with technological developments. Competitors may develop products that use an
entirely different approach or means of accomplishing the
9
<PAGE> 12
desired therapeutic effect that our products seek to achieve and may be more
effective or less costly, or both. In addition, other competitors may have
significantly greater experience than we do in undertaking preclinical testing
and human clinical trials and obtaining regulatory approvals of pharmaceutical
products. Accordingly, our competitors may succeed in commercializing products
more rapidly than we do. Were these competitors to develop their products more
rapidly and complete the regulatory process sooner, it could have a material
adverse effect on our business.
If other companies were to get FDA approval to market thalidomide for
other disease indications, "off-label" use of thalidomide could adversely
affect the Company's business and operations. We are aware of other companies
engaged in the development of thalidomide for various disease indications.
Although the FDA does not permit a manufacturer or distributor to market or
promote an approved drug for an unapproved off-label use or dosage level, under
its "practice of medicine" policy, the FDA generally does not prohibit a
physician from prescribing an approved drug product for an unapproved use or
dosage. In addition, the FDA has from time to time proposed to liberalize its
restrictions on the dissemination of off-label information.
Our blood oxygen enhancement product candidate may also compete for
certain applications with numerous other available therapeutics and with blood
and blood substitute products being developed by others. In addition to
competing with universities and other research institutions to develop
products, technologies, and processes, we may compete with other companies to
acquire rights to products or technologies from universities.
The pharmaceutical and biotechnology industries are rapidly evolving.
We may not be able to develop products that are more effective or achieve
greater market acceptance than our competitors' products. Our competitors may
succeed in developing products and technologies that are more effective than
those being developed by us or that render our products and technologies less
competitive or obsolete. One competitor in particular is working on the
development for clinical trials of an antiangiogenic developed by the same
researcher at Children's Hospital, Boston, who developed Angiostatin(R) protein
and Endostatin(TM) protein. While we do not know the potential effectiveness of
this product in comparison to Angiostatin(R) protein, Endostatin(TM) protein or
our other products, it is possible that this product will be more effective
than our products, will be easier to manufacture, will come to market before
any of our products or will achieve market acceptance over our products.
WE DEPEND ON PATENTS AND OTHER PROPRIETARY RIGHTS, SOME OF WHICH ARE UNCERTAIN
Our success will depend in part on our ability to obtain patents for
our products, both in the United States and abroad. The patent position of
biotechnology and pharmaceutical companies in general is highly uncertain and
involves complex legal and factual questions. Risks related to patenting our
products include the following:
- failure of EntreMed to obtain additional patents;
- challenge, invalidation, or circumvention of patents already issued
to us;
- failure of the rights granted under our patents to provide
sufficient protection;
- independent development of similar products by third parties; or
- ability of third parties to design around patents issued to
EntreMed or its collaborators.
10
<PAGE> 13
For several of the products that we are developing, including
thalidomide and 2ME2, composition of matter patents are not available because
the compounds are in the public domain. In these cases, only patents covering
the "use" of the product are available. In general, patents covering a new use
for a known compound can be more difficult to enforce against infringers of the
use claims in the patent. We have secured use patents covering the use of
thalidomide for the treatment of angiogenic diseases. We are aware of at least
two other issued patents covering certain non-antiangiogenic uses of
thalidomide. Although we believe that the claims in such patents will not
interfere with our proposed use of thalidomide, we cannot guarantee that the
holders of such patents will not be able to exclude the Company from marketing
thalidomide for other uses. We have also secured use patents covering 2ME2.
The enactment of the legislation implementing the General Agreement on
Tariffs and Trade caused certain changes to United States patent laws that
became effective on June 8, 1995. Most notably, the term of patent protection
for patent applications filed on or after June 8, 1995 is no longer a period of
seventeen years from the date of grant. The new term of a United States patent
will commence on the date of issuance and terminate twenty years from the
earliest effective filing date of the application. Since the time from filing
to issuance of biotechnology patents is often more than three years, a
twenty-year term from the effective date of filing may result in a term of
patent protection that is substantially shorter than seventeen years. This may
adversely impact our patent position. Often, the duration and level of the
royalties we are entitled to receive from a collaborative partner is based on
the existence of a valid patent. Thus, the shorter period of patent protection
may adversely affect our future operating results and financial condition.
Our potential products may conflict with patents that have been or may
be granted to competitors, universities or others. As the biotechnology
industry expands and more patents are issued, the risk increases that our
potential products may give rise to claims that they infringe the patents of
others. Such other persons could bring legal actions against us claiming
damages and seeking to enjoin clinical testing, manufacturing and marketing of
the affected products. Any such litigation could result in substantial cost to
us and diversion of effort by our management and technical personnel. If any
these actions are successful, in addition to any potential liability for
damages, we could be required to obtain a license in order to continue to
manufacture or market the affected products. We cannot guarantee that we would
prevail in any action or that any license required under any needed patent
would be made available on acceptable terms, if at all. Failure to obtain
needed patents, licenses, or proprietary information held by others may have a
material adverse effect on our business.
We are a party to sponsored research agreements and license agreements
that require us to make milestone payments upon attainment of certain
regulatory milestones. One of the milestones requires us to file an IND
application with the FDA regarding Angiostatin(R) protein by March of 2000. Our
failure to file this IND application could result in a loss of our rights with
regard to Angiostatin(R) protein. We believe that we will be able to make this
filing within the required time period, but no assurance can be given that we
will do so.
We also rely on trade secret protection for our confidential and
proprietary information. However, trade secrets are difficult to protect and we
cannot guarantee that others will not independently develop substantially
equivalent proprietary information and techniques or otherwise gain access to
our trade secrets or disclose our technology, or that we can meaningfully
protect our rights to unpatented trade secrets. We require our employees,
consultants, and advisors to execute a confidentiality agreement when beginning
an employment or a consulting relationship with EntreMed. The agreements
generally provide that all trade secrets and inventions
11
<PAGE> 14
conceived by the individual and all confidential information developed or made
known to the individual during the term of the relationship automatically
become our exclusive property. Employees and consultants must keep such
information confidential and may not disclose such information to third parties
except in specified circumstances. We cannot guarantee, however, that these
agreements will provide meaningful protection for our proprietary information
in the event of unauthorized use or disclosure of such information.
To the extent that consultants, key employees, or other third parties
apply technological information independently developed by them or by others to
our proposed projects, disputes may arise as to the proprietary rights to such
information which may not be resolved in our favor. Certain of our consultants
are employed by or have consulting agreements with others and any inventions
discovered by them generally will not become our property.
LOSS OF KEY PERSONNEL AND CONSULTANTS COULD ADVERSELY AFFECT OUR BUSINESS
We are dependent on certain of our executive officers and scientific
personnel, including John W. Holaday, Ph.D., our co-founder, Chairman,
President and Chief Executive Officer. We have a three-year employment
agreement with Dr. Holaday through December 31, 2001. Competition for qualified
employees among pharmaceutical and biotechnology companies is intense, and the
loss of certain of our personnel, or an inability to attract, retain, and
motivate additional highly skilled scientific, technical, and management
personnel, could materially adversely affect our business and prospects. We
cannot guarantee that we will be able to retain our existing personnel or
attract and retain additional qualified employees.
We may also be dependent, in part, upon the continued contributions of
the lead investigators of our sponsored research programs. Our scientific
consultants and collaborators may have commitments to or consulting or advisory
agreements with other entities that may affect their ability to contribute to
EntreMed or may be competitive with it. Inventions or processes discovered by
them will not necessarily become our property, but may remain the property of
these persons or of these persons' full-time employers.
POTENTIAL PRODUCTS MAY SUBJECT US TO PRODUCT LIABILITY FOR WHICH INSURANCE MAY
NOT BE AVAILABLE
The use of our potential products in clinical trials and the marketing
of any pharmaceutical products may expose us to product liability claims. We
have obtained a level of liability insurance coverage that we believe is
appropriate for our current stage of development. However, there is a risk that
our present insurance coverage is not adequate. Such existing coverage will not
be adequate as we further develop products, and there is a risk that in the
future adequate insurance coverage and indemnification by collaborative
partners will not be available in sufficient amounts or at a reasonable cost. A
successful product liability claim could have a material adverse effect on our
business and financial condition.
THE MARKETABILITY OF OUR POTENTIAL PHARMACEUTICAL PRODUCTS MAY DEPEND ON
REIMBURSEMENT AND REFORM MEASURES IN THE HEALTH CARE INDUSTRY
Our success may depend, in part, on the extent to which reimbursement
for the costs of therapeutic products and related treatments will be available
from third-party payors such as government health
12
<PAGE> 15
administration authorities, private health insurers, managed care programs, and
other organizations. Over the past decade, the cost of health care has risen
significantly, and there have been numerous proposals by legislators,
regulators, and third-party health care payors to curb these costs. Some of
these proposals have involved limitations on the amount of reimbursement for
certain products. We cannot guarantee that similar federal or state health care
legislation will not be adopted in the future or that any products sought to be
commercialized by us or our collaborators will be considered cost-effective or
that adequate third-party insurance coverage will be available for us to
establish and maintain price levels sufficient for realization of an
appropriate return on our investment in product development. Moreover, the
existence or threat of cost control measures could have an adverse effect on
the willingness or ability of our corporate collaborators to pursue research
and development programs related to our product candidates.
WE ARE SUBJECT TO RISK DUE TO OUR USE OF HAZARDOUS MATERIALS
Our research and development involves the controlled use of hazardous
biological, chemical, and radioactive materials. We are subject to federal,
state, and local laws and regulations governing the use, manufacture, storage,
handling, and disposal of such materials and certain waste products. Although
we believe that our safety procedures for handling and disposing of such
materials comply with the standards prescribed by such laws and regulations,
the risk of accidental contamination or injury from these materials cannot be
completely eliminated. In the event of such an accident, we could be held
liable for any damages that result and any such liability could have a material
adverse effect on us.
THE PRICE OF OUR STOCK IS HIGHLY VOLATILE
The market price of our common stock, like that of the common stock of
many other biopharmaceutical companies, has at times been, and again may be,
highly volatile. Factors that may have a significant impact on the market price
of our common stock include:
- the results of preclinical studies and clinical trials by us or our
competitors;
- FDA actions with respect to our product candidates;
- other evidence of the safety or efficacy of our product candidates
or those of our competitors;
- announcements of technological innovations or new commercial
products by us or our competitors;
- changes in reimbursement policies;
- health care legislation;
- developments in patent or other proprietary rights;
- developments in our relationships with collaborative partners;
- public concern as to the safety and efficacy of drugs we develop;
- fluctuations in our operating results;
- actions by traders and shortsellers;
- articles in the public press;
- general market conditions; and
- sales of substantial numbers of shares of common stock by the
Selling Stockholders or others.
13
<PAGE> 16
PROVISIONS OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
AND DELAWARE LAW COULD DETER TAKEOVER ATTEMPTS
Any of the following provisions could discourage, hinder or preclude an
unsolicited acquisition of EntreMed and could make it less likely that
stockholders receive a premium for their shares as a result of any such
attempt:
- Without shareholder approval, our Board of Directors may issue up to
5,000,000 shares of preferred stock with voting rights equal to the
common stock and conversion, liquidation, or dissolution rights and
preferences that may be superior to the common stock. The rights of
the holders of any such preferred stock may adversely affect the
rights of holders of common stock. The issuance of preferred stock
or of rights to purchase preferred stock could be used to discourage
an unsolicited acquisition proposal.
- In addition, our Board of Directors is divided into three classes,
the members of each of which will serve for a staggered three-year
term. Because shareholders only may elect one-third of the Directors
each year, it is more difficult for a third party to gain control of
our Board of Directors.
- Furthermore, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law, which prohibits
us form engaging in a "business combination" with an "interested
stockholder," unless the business combination is approved in a
prescribed manner.
RISKS RELATED TO POTENTIAL YEAR 2000 PROBLEMS MIGHT ADVERSELY AFFECT OUR
BUSINESS
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. As a result,
those computer programs having time-sensitive software would recognize a date
using "00" as the year 1900 rather than the year 2000.
Based on a recent assessment, we determined that our accounting
software will need to be updated or modified. This should be accomplished
through updates from the software manufacturer. However, if such updates are
not made, or are not completed on a timely basis, the Year 2000 issue could
have a material impact on our business.
We have queried our most significant supplier that does not also share
information systems with us. To date, we are not aware that this, or any other
supplier, has a Year 2000 issue that would materially impact our results of
operations, liquidity, or capital resources. However, we have no means of
ensuring that suppliers will be Year 2000 ready. The inability of suppliers to
complete the Year 2000 resolution process in a timely fashion could materially
impact our business. The effect of non-compliance by suppliers is not
determinable.
We anticipate no other Year 2000 problems that are reasonably likely
to have a material adverse effect on our operations. There can be no assurance,
however, that such problems will not arise.
Our plans to complete the Year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events including the continued availability of certain resources, and
other factors. Estimates on the status of completion and the expected
completion dates are based on costs incurred to date compared to total expected
costs. However, there can be no guarantee that these
14
<PAGE> 17
estimates will be achieved and actual results could differ materially from
those plans. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes,
and similar uncertainties.
THE COMPANY
We were incorporated in Delaware in September 1991 and are engaged
primarily in the research and development of biopharmaceutical products that
address the role of angiogenesis in the prevention and treatment of a broad
range of diseases.
We are an innovative biopharmaceutical company with a research and
product focus on the role of angiogenesis in disease. Our core technologies
include an antiangiogenesis program focused on the development of proprietary
products intended to inhibit the abnormal growth of new blood vessels
associated with cancer and certain causes of blindness. Our other core
technology is a blood cell permeation device designed to enhance the ability of
red blood cells to deliver oxygen to organs and tissues.
Angiogenesis is the biological process by which new blood vessels are
formed and is a normal process during the first three months of embryonic
development, the reproductive cycle of women, and in wound healing. At other
times, angiogenesis is harmful when associated with disease, particularly that
of cancer and macular degeneration, a leading cause of blindness. We believe
that antiangiogenic products, which inhibit the abnormal growth of blood
vessels, may have fewer adverse side effects than traditional therapies for
these diseases. Our portfolio of potential products includes antiangiogenic
compounds, Angiostatin(R) protein, Endostatin(TM) protein, 2-Methoxyestradiol
and thalidomide which are used to block the growth of blood vessels supplying
primary and metastatic tumors.
Our principal executive offices are located at 9640 Medical Center
Drive, Rockville, Maryland 20850, and our telephone number is (301) 217-9858.
For further information about the business and operations of the Company,
reference is made to the Company's reports incorporated herein by reference.
See "Where You Can Find More Information."
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock offered by this prospectus by the Selling Stockholders, and all such
proceeds will go to the Selling Stockholders to be used for their own purposes.
If all of the warrants are exercised, we would receive significant
additional funding. We will use the net proceeds, if any, realized from the
exercise of the warrants for continued clinical development of our products,
working capital and general corporate purposes, at the discretion of management.
15
<PAGE> 18
SELLING STOCKHOLDERS
We originally issued and sold the shares of common stock and the
warrants in July 1999 in a private placement.
The following table shows, as of August 9, 1999, each Selling
Stockholder, the number of shares of common stock owned by each Selling
Stockholder, the number of shares of common stock that each Selling Stockholder
would receive upon the exercise of all of the warrants and the maximum number
of shares of common stock that each Selling Stockholder can offer pursuant to
this prospectus.
The Selling Stockholders may elect to exercise or hold their warrants,
and may sell all, some or none of the shares of common stock that are subject
to sale pursuant to this prospectus. Therefore, we cannot provide you with an
estimate of the number of shares of common stock that the Selling Stockholders
will hold in the future. There can be no assurance that any shares of common
stock will be sold pursuant to this prospectus.
Except as set forth in the footnotes to the table, none of the Selling
Stockholders has, or within the past three years has had, any position, office
or material relationship with us or any of our predecessors or affiliates. The
table has been prepared based upon information furnished to us by or on behalf
of the Selling Stockholders.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Number of Shares Number of Number of Shares
Currently Owned Shares Subject Offered by this
Selling Stockholder (1) ------------------ to Warrants (2) Prospectus
- ------------------- ----------------- ------------------
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Juniper Trading Services, Inc. (3) 245,555 245,555 491,110
- -----------------------------------------------------------------------------------------------------
Raymond Kurzweil 14,733 14,733 29,466
- -----------------------------------------------------------------------------------------------------
Aaron Kleiner 1,227 1,227 2,454
- -----------------------------------------------------------------------------------------------------
Michael Sokol 1,227 1,227 2,454
- -----------------------------------------------------------------------------------------------------
Donald Gonson 1,718 1,718 3,436
- -----------------------------------------------------------------------------------------------------
Joe E. Coons 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
Arnold Gumowitz and Anne Gumowitz 132,599 132,599 265,198
- -----------------------------------------------------------------------------------------------------
Gary Gumowitz 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
AAG Management, Inc.- Employee 63,844 63,844 127,688
Benefit Plan
- -----------------------------------------------------------------------------------------------------
Joan Matthews 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
John Hughes 982 982 1,964
- -----------------------------------------------------------------------------------------------------
Milton Gumowitz 9,822 9,822 19,644
- -----------------------------------------------------------------------------------------------------
Michael Gumowitz 9,822 9,822 19,644
- -----------------------------------------------------------------------------------------------------
Hans Moppert 98,222 98,222 196,444
- -----------------------------------------------------------------------------------------------------
Frank Redican 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
Norman Gorin 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
James Shanman 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
Eric Tolmach & Billie Tolmach 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
Ann Redican 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
Richard Mangano 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
Emilie Spaulding 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
Steven Flagg 2,455 2,455 4,910
- -----------------------------------------------------------------------------------------------------
Aaron Priest 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
John Ross 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Number of Shares Number of Number of Shares
Currently Owned Shares Subject Offered by this
Selling Stockholder (1) ------------------ to Warrants (2) Prospectus
- ------------------- ----------------- ------------------
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
David Corbett and Mary Ahroon 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
Robert Newman 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
John Doern 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
Richard Cleary and Maura Cleary 4,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
Lindemann Capital Partners, L.P. 50,000 50,000 100,000
- -----------------------------------------------------------------------------------------------------
Wendell M. Starke, as Trustee 238,926 49,111 98,222
under Declaration of Trust Dated
October 2, 1991 (4)
- -----------------------------------------------------------------------------------------------------
JNC Strategic Fund Ltd. (5) 98,222 98,222 196,444
- -----------------------------------------------------------------------------------------------------
TrustCapital Technology, N.V. 12,768 12,768 25,536
- -----------------------------------------------------------------------------------------------------
Creafund C.V.B.A. (6) 28,729 28,729 57,458
- -----------------------------------------------------------------------------------------------------
John Alexander Black (7) 43,733 14,733 29,466
- -----------------------------------------------------------------------------------------------------
Kyle E. Black (8) 35,822 9,822 19,644
- -----------------------------------------------------------------------------------------------------
Wayne Cline Jr. and Christine D. Cline (9) 9,911 4,911 9,822
- -----------------------------------------------------------------------------------------------------
William Reid Black (10) 116,644 19,644 39,288
- -----------------------------------------------------------------------------------------------------
Alfred University 4,918 4,918 9,836
- -----------------------------------------------------------------------------------------------------
Core Technology Fund, Inc. 16,865 16,865 33,730
- -----------------------------------------------------------------------------------------------------
Walt Disney Company Retirement 35,972 35,972 71,944
- -----------------------------------------------------------------------------------------------------
Executive Technology L.P. 6,421 6,421 12,842
- -----------------------------------------------------------------------------------------------------
Foundation Partners Fund, G.P. 3,580 3,580 7,160
- -----------------------------------------------------------------------------------------------------
Matrix Technology Group N.V. 3,448 3,448 6,896
- -----------------------------------------------------------------------------------------------------
Rochester Institute of Technology 15,691 15,691 31,382
- -----------------------------------------------------------------------------------------------------
Sci-Tech Investment Partners, L.P. 11,109 11,109 22,218
- -----------------------------------------------------------------------------------------------------
SG Partners LP 23,745 23,745 47,490
- -----------------------------------------------------------------------------------------------------
Tampsco II Partnership 1,511 1,511 3,022
- -----------------------------------------------------------------------------------------------------
Yale University 43,735 43,735 87,470
- -----------------------------------------------------------------------------------------------------
Yale University Retirement Plan 4,886 4,886 9,772
for Staff Employees
- -----------------------------------------------------------------------------------------------------
Pequot Scout Fund, L.P. (11) 196,444 196,444 392,888
- -----------------------------------------------------------------------------------------------------
Winchester Global Trust Company 39,288 39,288 78,576
Limited As Trustee For Caduceus
Capital Trust (12)
- -----------------------------------------------------------------------------------------------------
Caduceus Capital II, L.P. 9,822 9,822 19,644
- -----------------------------------------------------------------------------------------------------
Bedford Oak Partners, L.P. (13) 100,000 100,000 200,000
- -----------------------------------------------------------------------------------------------------
Lawrence Doyle 5,353 5,353 10,706
- -----------------------------------------------------------------------------------------------------
Edward O. Thorp 15,000 15,000 30,000
- -----------------------------------------------------------------------------------------------------
Dr. Joanna Horobin (14) 24,750 1,000 2,000
- -----------------------------------------------------------------------------------------------------
James D. Johnson, Ph.D. (15) 50,000 3,000 6,000
- -----------------------------------------------------------------------------------------------------
John W. Holaday, Ph.D. (16) 736,634 800 1,600
- -----------------------------------------------------------------------------------------------------
Marc D. Kozin (17) 4,000 4,000 8,000
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Except as otherwise indicated below, to the knowledge of the Company, each
Selling Stockholder named in the table has sole voting and investment
power with respect to all shares shown as beneficially owned by such
Selling Stockholder.
(2) The number of shares set forth in the table represents the number of
shares of common stock issuable upon exercise of all of the warrants held
by the Selling Stockholder. The actual number of shares of common stock
issuable upon exercise of the warrants is subject to adjustment. The
actual number of shares of common stock offered hereby, and included in
the Registration Statement of which this prospectus is a part, includes
such additional number of shares of common stock as may be issued or
17
<PAGE> 20
issuable upon exercise of the warrants by reason of adjustment mechanisms
described therein, or by reason of any future stock splits, stock
dividends or similar transaction involving the common stock, in order to
prevent dilution.
(3) Mills Value Adviser, Inc. under the management of Charles A. Mills, has
full investment discretion over the shares of the Company owned by Juniper
Trading Services, Inc. The Director of Juniper Trading Services, Inc.,
Compass Services Limited, has voting control over the shares of the
Company owned by Juniper Trading Services, Inc.
(4) The shares beneficially owned by Mr. Starke prior to the offering include
189,815 shares issuable upon exercise of options and warrants held by Mr.
Starke which may be exercised within 60 days following May 12, 1999. Such
figure does not include 40,761 shares owned by various family members of
Mr. Starke, as to which Mr. Starke disclaims beneficial ownership. Mr.
Starke has been a director of the Company since April 1994 and
Vice-Chairman of the Company since April 1998.
(5) Encore Capital Management, L.L.C. is the investment advisor to JNC
Strategic Fund, Ltd., and as such, has the authority to vote and dispose
of the shares being offered by JNC Strategic Fund, Ltd. hereunder. James
Q. Chau and Neil T. Chau are the controlling persons of Encore Capital
Management, L.L.C.
(6) The following persons have voting and investment control over Creafund,
C.V.B.A.: Mr. Aime Desimpel, through NV De Speyebeek, Clintonpark 7-8800
Roeselare; Mr. Herman Wielfaert, Erfgoedlaan 11-9800 Deinze; and Mr. Dirk
Haerinck, Hesstertstraat 39 a-8553 Otegem.
(7) The shares beneficially owned by John Alexander Black include 29,000
shares that were owned prior to his purchase in the private placement
transaction.
(8) The shares beneficially owned by Kyle E. Black include 26,000 shares that
were owned prior to his purchase in the private placement transaction.
(9) The shares beneficially owned by Wayne Cline, Jr. and Christine D. Cline
include 5,000 shares that were owned prior to their purchase in the
private placement transaction.
(10) The shares beneficially owned by William Reid Black include 97,000 shares
that were owned prior to his purchase in the private placement
transaction.
(11) Pequot Capital Management, Inc. is the Investment Advisor in the
investment management activities of Pequot Scout Fund, L.P.
(12) The company having voting or investment control over Caduceus Capital
Trust's shares is OrbiMed Advisors LLC.
(13) Harvey P. Eisen, the Chairman and Managing Member of Bedford Oak Advisers,
LLC, the Investment Adviser to Bedford Oak Partners, L.P., has voting
power on behalf of Bedford Oak Partners, L.P. with regard to the shares of
the Company owned by Bedford Oak Partners, L.P.
(14) The shares beneficially owned by Dr. Horobin prior to the offering include
23,750 shares issuable upon exercise of options and warrants held by Dr.
Horobin which may be exercised within 60 days following May 12, 1999. Dr.
Horobin has been a Senior Vice President for Commercial Development of the
Company since February 10, 1999.
(15) The shares beneficially owned by Dr. Johnson include 47,000 shares that
were owned prior to his purchase in the private placement transaction. Dr.
Johnson is a partner at Jones & Askew of Atlanta, Georgia, and in such
capacity has served as patent counsel to the Company.
(16) The shares beneficially owned by Dr. Holaday prior to the offering include
126,666 shares held by a limited partnership of which Dr. Holaday is the
general partner, and 609,168 shares issuable upon exercise of options and
warrants which are exercisable within 60 days following May 12, 1999,
including (i) 100,000 shares issuable upon exercise of a warrant granted
on August 6, 1992 and (ii) 200,002 of 266,666 shares issuable upon
exercise of a warrant granted on November 2, 1995. Dr. Holaday is a
co-founder of the Company and has served as its President and Chief
Executive Officer and a director since August 1992 and as Chairman of the
Board of Directors since November 1995.
(17) Mr. Kozin is the president of LEK Consulting, LLC, a management consulting
firm which provides services to the Company.
18
<PAGE> 21
PLAN OF DISTRIBUTION
We are registering shares of our common stock on behalf of the Selling
Stockholders. As used in this prospectus, "Selling Stockholders" includes
donees, transferees and pledgees selling shares received from a named Selling
Stockholder after the date of this prospectus. We will pay for all costs,
expenses and fees in connection with the registration of the shares. The
Selling Stockholders will pay for all selling discounts and commissions, if
any. The Selling Stockholders may offer and sell their shares from time to time
in one or more of the following types of transactions (including block
transactions):
- on the Nasdaq National Market,
- in the over-the-counter market,
- in privately negotiated transactions,
- through put or call options transactions relating to the shares,
- through short sales of shares, or
- a combination of such methods of sale.
The Selling Stockholders may sell their shares at prevailing market
prices, or at privately negotiated prices. Such transactions may or may not
involve brokers or dealers. The Selling Stockholders have advised us that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their shares, nor is there
an underwriter or coordinating broker acting in connection with the proposed
sale of shares by the Selling Stockholders.
The Selling Stockholders may offer and sell their shares directly to
purchasers or to or through broker-dealers, which may act as agents or
principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Stockholders and/or the
purchasers of shares. The Selling Stockholders and any broker-dealers or agents
that participate with the Selling Stockholders in sales of the shares may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased
by them may be deemed to be underwriting commissions or discounts under the
Securities Act.
When they purchased shares of common stock and the warrants pursuant to
the securities purchase agreement, each of the Selling Stockholders agreed to
certain restrictions on its ability to trade in our securities. For example,
each Selling Stockholder must limit its trading in our common stock on any
business day to fifteen percent of the average trading volume of the common
stock on the Nasdaq National Market for twenty consecutive days, and no
Selling Stockholder may engage in any trading of our common stock in the twenty
minutes preceding the close of the trading day on the Nasdaq National Market.
We have agreed to waive these limits with respect to certain Selling
Stockholders and may grant additional waivers in the future.
We have agreed to indemnify each Selling Stockholder against certain
liabilities, including liabilities arising under the Securities Act.
19
<PAGE> 22
Selling Stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such rule.
RIGHTS OF THE SELLING STOCKHOLDERS
We originally issued and sold the shares of common stock and the
warrants in July 1999 in a private placement transaction under a securities
purchase agreement dated as of July 22, 1999 between our Company and the
Selling Stockholders. The following is a summary of certain provisions of that
agreement and of the other documents related to the private placement
transaction, including the warrants and the registration rights agreement dated
July 27, 1999. Copies of those agreements and documents may be obtained as
described under "Where You Can Find More Information."
REGISTRATION RIGHTS
When we issued and sold the shares of common stock and the warrants to
the Selling Stockholders in the July 1999 private placement, we agreed to
register for resale under the Securities Act of 1933 all of the shares of
common stock and shares issuable upon exercise of the warrants that would be
held by the Selling Stockholders. The warrants themselves will not be
registered for resale and may not be freely transferred. The registration
rights agreement requires us to file the registration statement, of which this
prospectus is a part, with the SEC, to file amendments and supplements to this
registration statement and prospectus as necessary to keep this registration
statement effective and to keep this registration statement continuously
effective until all of the shares of common stock and shares issuable upon
exercise of the warrants may be sold without registration or restriction.
During any twelve month period, we may suspend the effectiveness of this
registration statement for no more than ninety days if our obligations to
maintain the effectiveness of this registration statement would require us to
make a disclosure that would, in the reasonable judgment of our board of
directors, have a material adverse effect on the shares of our common stock,
the warrants or the shares of common stock issuable upon the exercise of the
warrants, or on our ability to perform our obligations under the securities
purchase agreement, the warrants or the registration rights agreement, or on
our (or our subsidiaries') business, operations, properties, prospects or
financial condition.
The registration rights agreement also provides that we will pay
expenses associated with the registration of the shares of common stock and the
shares issuable upon exercise of the warrants, including, but not limited to,
SEC filing fees, printers' and accounting fees and the fees and disbursements
of our counsel. However, the Selling Stockholders will pay all brokers' fees,
underwriting discounts and commissions and similar selling expenses.
Each Selling Stockholder that sells shares of common stock or common
stock issuable upon exercise of the warrants pursuant to this registration
statement will be required to deliver a prospectus to the purchaser in
connection with such sale.
CERTAIN RESTRICTIONS ON TRANSFERS OF WARRANTS
A holder of a warrant may transfer or assign the warrant, in whole or
in part, but any transfer or assignment of a warrant in part must be in minimum
increments of 100,000 shares. A holder may not exercise a
20
<PAGE> 23
warrant if such exercise would result in the holder and its affiliate becoming
the beneficial owners of more than 9.99% of the outstanding shares of common
stock of our Company. We and the Selling Stockholders may amend the terms of
the warrants by a written agreement between us and the warrant holder, except
that any amendment to the provision described in the preceding sentence would
also require the consent of the holders of a majority of our outstanding shares
of common stock.
OUR ABILITY TO CALL THE WARRANTS
The Series 1 Warrant is exercisable until July 27, 2004, at an exercise
price of $33.02. The Series 2 Warrant is exercisable until January 18, 2001, at
an exercise price of $25.45. The exercise price and the number of shares of
common stock issuable upon exercise of a warrant are both subject to adjustment
in certain circumstances which would otherwise have the effect of depriving the
warrant holders of the benefit of all or a portion of the purchase rights
evidenced by the warrants.
Under certain circumstances, we will have the ability to require the
holders of the warrants to exercise their warrants in full or lose the warrants
altogether. We will be able to cause the holders to "use or lose" their Series
1 Warrants at any time after January 27, 2002, if the average closing bid price
of the shares of common stock is more than 187.5% of the then exercise price of
the Series 1 Warrant during the ten consecutive days prior to the date of the
mandatory exercise. We will be able to cause the holders to "use or lose" their
Series 2 Warrants at any time after April 22, 2000, if the average closing bid
price of the shares of common stock is more than 150% of the then exercise
price of the Series 2 Warrant during the ten consecutive days prior to the date
of the mandatory exercise.
LOCK-UP PERIOD
We have agreed that until October 25, 1999, we will not, without the
prior written consent of the Selling Stockholders or their designees, contract
with any party to obtain additional financing in any transaction in which we
issue any equity securities to such party pursuant to an offering which is
exempt from the registration requirements of the Securities Act and which
grants registration rights to such party that are exercisable within six months
of July 27, 1999. The foregoing lock-up provisions also do not prevent us from
issuing securities in connection with: a merger (or similar business
combination), a strategic partnership, collaboration or joint venture (so long
as the primary purpose of such venture is not to raise additional capital), an
underwritten public offering, the exercise or conversion of any of our
convertible securities that were outstanding as of July 27, 1999 or an
authorized employee benefit plan.
LEGAL MATTERS
The validity of the shares of common stock offered hereby has been
passed upon for the Company by Arnold & Porter, Washington, D.C.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial
21
<PAGE> 24
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549, or at the SEC's public reference rooms in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov. Our common stock is
traded on The Nasdaq National Market under the symbol "ENMD." Our Company's Web
site is located at http://www.entremed.com.
The SEC allows us to incorporate by reference the information that we
file with the SEC, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be 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 (File No. 000-20713) we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1998, filed with the Commission on March 31, 1999,
as amended;
2. The Company's Quarterly Report on Form 10-Q for the Quarter
ended March 31, 1999, filed with the Commission on May 17, 1999,
as amended; and
3. The Company's Current Report on Form 8-K filed under the
Exchange Act, filed with the Commission on February 11, 1999.
4. The Company's Current Report on Form 8-K filed under the
Exchange Act, filed with the Commission on August 10, 1999.
5. The description of the Company's common stock contained in the
Company's Registration Statement on Form 8-A filed under the
Exchange Act, including any amendment or report filed for the
purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
R. Nelson Campbell
EntreMed, Inc.
9640 Medical Center Drive
Rockville, Maryland 20850
Telephone: (301) 217-9858
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in
this prospectus. We have authorized no one to provide information
22
<PAGE> 25
other than that provided in this prospectus. We have authorized no one to
provide you with different information. We are not 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 this document.
23
<PAGE> 26
<TABLE>
<CAPTION>
============================================ ==========================
<S> <C>
No dealer, salesman or other person has
been authorized to give any information
or to make any representations other
than those contained in or incorporated
by reference in this prospectus in
connection with the offering described
herein, and, if given or made, such
information or representation must not
be relied upon as having been authorized
by the Company or any of its agents.
This prospectus does not constitute an
offer to sell, or a solicitation of an offer 2,956,236 Shares
to buy, any securities other than the
registered securities to which it relates,
or an offer to sell, or a solicitation of an
offer to buy, in any jurisdiction in which ENTREMED, Inc.
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 an
implication that there has been no COMMON STOCK
change in the affairs of the Company
since the date hereof or that the --------
information contained herein is correct
as of any time subsequent to the date PROSPECTUS
hereof.
August , 1999
============================================ ==========================
</TABLE>
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses in
connection with the sale and distribution of the securities being registered,
all of which will be paid by the Company.
<TABLE>
<CAPTION>
To be Paid
By The
Company
-------
<S> <C>
SEC Registration Fee $_____
Nasdaq filing fee *
Accounting fees and expenses *
Printing and Engraving expenses *
Blue Sky fees and expenses *
Legal fees and expenses *
[Federal and state taxes and fees]
[Transfer agents' and trustees' fees]
[D&O insurance premiums]
Miscellaneous expenses *
Total.......................................................................*
</TABLE>
* To be completed by amendment.
- --------------------------------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") sets
forth conditions and limitations governing the indemnification of officers and
directors of the Company and certain other persons. Section 145 of the DGCL is
hereby incorporated herein by reference. The Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") and Bylaws
provide that the Company shall indemnify any person to the full extent
permitted by the DGCL.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers or controlling persons of the Company pursuant to the Company's
Certificate of Incorporation and Bylaws and the DGCL, the Company has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
II-1
<PAGE> 28
As authorized by Section 102(b)(7) of the DGCL, the Certificate of
Incorporation also limits, to the fullest extent permitted by Delaware law, a
director's liability for monetary damages for breach of fiduciary duty as a
director. The effect of this provision is to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
the fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in certain limited situations.
This provision does not eliminate a director's duty of care nor does it limit
or eliminate the rights of the Company or any stockholder to seek non-monetary
relief or remedies such as an injunction or rescission in the event of a
director's breach of the duty of care. These provisions will not alter the
liability of directors under federal securities laws.
The Company has entered into indemnification agreements with each of
its executive officers and directors, the form of which is filed as Exhibit
10.21 to the Company's Registration Statement on Form S-1 (File No. 333-3536)
and is incorporated by reference herein.
The Company has obtained and maintains insurance policies having a face
amount totaling $15,000,000 (subject to certain deductible provisions and
exclusions) covering its officers and directors and indemnifying them against
loss on account of claims made against them, including, but not limited to,
damages, judgments, costs and the costs of defense of such claims, arising from
breach of duty, neglect, error, negligent misrepresentations, omission or act,
or any claim arising solely by reason of status as an officer or director.
ITEM 16. EXHIBITS.
The exhibits listed on the Index to Exhibits of this Registration
Statement are filed herewith or are incorporated herein by reference to other
filings.
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;
(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
II-2
<PAGE> 29
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission 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) 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 may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company 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 Rockville, State of Maryland on August 10, 1999.
ENTREMED, INC.
By: /s/ John W. Holaday, Ph.D.
-------------------------------------
John W. Holaday, Ph.D.
Chairman of the Board of Directors,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ John W. Holaday, Ph.D.
- --------------------------
John W. Holaday, Ph.D. Chairman of the Board of
Directors, President and Chief August 10, 1999
Executive Officer (Principal
Executive Officer)
/s/ R. Nelson Campbell
- --------------------------
R. Nelson Campbell Chief Financial Officer (Principal
Financial and Accounting Officer) August 10, 1999
/s/ Donald S. Brooks
- --------------------------
Donald S. Brooks Director August 10, 1999
/s/ Jerry Finkelstein
- --------------------------
Jerry Finkelstein Executive Advisor and Director August 10, 1999
/s/ Lee F. Meier
- --------------------------
Lee F. Meier Director August 10, 1999
/s/ Mark C. M. Randall
- --------------------------
Mark C. M. Randall Director August 10, 1999
/s/ Wendell M. Starke
- --------------------------
Wendell M. Starke Director August 10, 1999
</TABLE>
II-4
<PAGE> 31
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
** Exhibit 5 Opinion of Arnold & Porter.
** Exhibit 23.1 Consent of Arnold & Porter, included in the opinion filed as
Exhibit 5 hereto.
* Exhibit 23.2 Consent of Ernst & Young LLP.
* Exhibit 24 Powers of Attorney of certain directors of the Company.
</TABLE>
* Filed herewith.
** To be filed by amendment.
II-5
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of EntreMed, Inc. for
the registration of 2,956,236 shares of its common stock and to the
incorporation by reference therein of our report dated February 10, 1999, with
respect to the consolidated financial statements of EntreMed, Inc. included in
its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
August 5, 1999
Atlanta, Georgia
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each undersigned director
and/or officer of EntreMed, Inc., a corporation organized under the laws of the
state of Delaware (the "Corporation"), hereby constitutes and appoints John W.
Holaday, Robert B. Ott and Richard E. Baltz and each of them (with full power
to each of them to act alone), his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her on
his or her behalf and in his or her name, place and stead, in any and all
capacities, to sign, execute and affix his or her seal to and file with the
Securities and Exchange Commission (or any other governmental or regulatory
authority) a Registration Statement on Form S-3 or any other appropriate form
and all amendments or supplements (including post-effective amendments) thereto
with all exhibits and any and all documents required to be filed therewith or
with respect thereto, relating to the registration of shares of common stock,
par value $0.01 per share, of the Corporation (the "Common Stock") issued or
issuable upon the exercise of certain issued warrants to purchase Common Stock,
and grants to each of them full power and authority to do and to perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself or she herself might or could do if personally present,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, each undersigned director and/or officer has
hereunto set his or her hand and seal, as of the date specified.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ John W. Holaday, Ph.D.
- -------------------------- Chairman of the Board of Directors, August 10, 1999
John W. Holaday, Ph.D. President and Chief Executive
Officer (Principal Executive
Officer)
/s/ R. Nelson Campbell
- -------------------------- Chief Financial Officer (Principal
R. Nelson Campbell Financial and Accounting Officer) August 10, 1999
/s/ Donald S. Brooks
- -------------------------- Director August 10, 1999
Donald S. Brooks
/s/ Jerry Finkelstein
- -------------------------- Director August 10, 1999
Jerry Finkelstein
/s/ Lee F. Meier
- -------------------------- Director August 10, 1999
Lee F. Meier
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Mark C. M. Randall
- ---------------------- Director August 10, 1999
Mark C. M. Randall
/s/ Wendell M. Starke
- ---------------------- Director August 10, 1999
Wendell M. Starke
</TABLE>
