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As filed with the Securities and Exchange Commission on October 31, 2000
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------------
ENCHIRA BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-3078857
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4200 RESEARCH FOREST DRIVE
THE WOODLANDS, TEXAS 77381
(281) 419-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-------------------------------
PETER POLICASTRO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
4200 RESEARCH FOREST DRIVE
THE WOODLANDS, TEXAS 77381
(281) 419-7000
(Name, address, including zip code, and telephone number, including area
code, of agent for service) With copies to:
JEFFREY R. HARDER
ANDREWS & KURTH L.L.P.
2170 BUCKTHORNE PLACE, SUITE 150
THE WOODLANDS, TEXAS 77380
(713) 220-4801
-------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of the Registration Statement.
If the only securities being registered on this form are being
offered pursuant to dividend or 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
<TABLE>
<CAPTION>
=============================================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of registration
Securities to be registered Registered offering price Aggregate offering fee
per share (2) price (2)
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<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 2,631,375(1) $7.375 $19,406,390.62 $5,123.29
=============================================================================================================================
</TABLE>
(1) Includes (i) 2,000,000 shares of Common Stock outstanding, (ii) 631,375
shares of Common Stock issuable upon exercise of warrants and (iii)
pursuant to Rule 416 of the Securities Act, an indeterminate number of
additional shares that may be issued under the terms of the above
mentioned warrants as a result of anti-dilution provisions, stock
splits, stock dividends or similar transactions.
(2) Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the registration fee based on the average of the high and low sales
price per share of the Registrant's common stock on the Nasdaq National
Market on October 27, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
===============================================================================
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
Subject to completion, dated October 31, 2000
2,631,375 SHARES
ENCHIRA BIOTECHNOLOGY CORPORATION
COMMON STOCK
The selling stockholders listed on page 12 may offer and resell up to
2,631,375 shares of our common stock under this prospectus, for each of their
own accounts. The number of shares the selling stockholders may sell includes
2,000,000 shares of common stock currently issued and outstanding, as well as
631,375 shares of common stock that they may receive if they exercise their
warrants. We will not receive any proceeds from these sales, but we will receive
proceeds from the exercise of any warrants.
The selling stockholders may sell the shares from time to time at fixed
prices, market prices or at negotiated prices, and may engage a broker or dealer
to sell the shares. For additional information on possible methods of sale, you
should see "Plan of Distribution" on page 13.
Our common stock is quoted on the Nasdaq National Market under the
symbol "ENBC." On October 27, 2000, the last sale price of our common stock was
$7.4375.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. PLEASE SEE
"RISK FACTORS" BEGINNING ON PAGE 4.
THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Forward-Looking Statements.............................................2
Summary................................................................3
Risk Factors...........................................................4
Use of Proceeds.......................................................11
Selling Stockholders..................................................11
Plan of Distribution..................................................13
Legal Matters.........................................................14
Experts...............................................................14
Available Information.................................................15
Information Incorporated by Reference.................................15
</TABLE>
FORWARD-LOOKING STATEMENTS
This prospectus and the documents it incorporates by reference
contain forward-looking statements. Forward-looking statements relate to
future periods and include descriptions of our plans, objectives, and
underlying assumptions for future operations, our market opportunities, our
acquisition opportunities, and our ability to compete.
Generally, "may," "will," "expect," "believe," "estimate,"
"anticipate," "intend," continue" and similar words identify forward-looking
statements. Forward-looking statements are based on our current expectations
and are subject to risks and uncertainties that can cause actual results to
differ materially. For information on these risks and uncertainties, see
"Risk Factors."
We urge you to consider these factors carefully in evaluating the
forward-looking statements contained in this prospectus. Forward-looking
statements are made only as of the date of this prospectus. We do not intend,
and undertake no obligation, to update these forward-looking statements.
As used in this prospectus, "Company," "we," "us" and "our" refer to
Enchira Biotechnology Corporation and its affiliates.
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SUMMARY
THE COMPANY
We are a biotechnology company dedicated to development of our
proprietary, state-of-the-art directed evolution techniques. In 1999, we
implemented a strategic initiative to develop a new proprietary gene
shuffling method called RACHITT-TM- (an acronym for Random Chimeragenesis on
Transient Templates). Gene shuffling is a powerful method to create millions
of new variant genes coding for enzymes with altered properties. To
complement this effort, we developed high-throughput-screening ("HTS")
capabilities at our laboratories to screen and select improved bacterial
strains. We believe that these capabilities may create new business
opportunities in many areas of biotechnology, including industrial enzymes,
crop enhancement and protection and protein-based pharmaceuticals. We intend
to further develop these assets in gene-shuffling technology and aggressively
pursue near-term business opportunities in this area through technology
licensing and other business relationships.
We believe that our RACHITT-TM- technology has several advantages
over other gene shuffling techniques currently being employed. For example,
it avoids the use of often problematic polymerase chain reaction, or PCR,
cycles to generate full-length chimeric molecules. RACHITT-TM- also reduces
the generation of potentially problematic "blind spots" in the gene of
interest encountered in the "sexual PCR" and staggered extension process, or
StEP, methods. Our RACHITT-TM- method also facilitates combination of genes
or regions of genes from related family members or otherwise similar
sequences recombination. No evidence for divergent gene shuffling has yet
been demonstrated by the StEP technique. Furthermore, the RACHITT-TM- method
can also facilitate the incorporation of genetic diversity from
uncharacterized sources (e.g., DNA isolated or amplified from soils and
aquatic environments), thereby further exploring "natural" sequence space of
a protein. RACHITT-TM- can also create entirely new solutions using
combinatorial libraries of synthetic oligonucleotides.
RECENT DEVELOPMENTS
On September 8, 2000 we completed a private placement of 2,000,000
shares of our common stock and two year warrants to purchase 600,000 shares
of our common stock at an exercise price of $7.44 per share for an aggregate
purchase price of $12.865 million. We paid approximately $360,000 to two
placement agents in connection with the private placement and granted one of
the placement agents a two year warrant to purchase 31,375 shares of our
common stock at an exercise price of $7.44 per share.
We granted certain registration rights to the investors in the
above-described transactions. This prospectus serves to register all of the
shares of common stock subject to those registration rights.
CORPORATE INFORMATION
We were incorporated in Delaware on December 20, 1989. Our executive
offices and laboratories are located at 4200 Research Forest Drive, The
Woodlands, Texas 77381 and the main telephone number is (281) 419-7000. We
can also be reached by fax at 281-364-6112, or by e-mail at [email protected].
Our website is www.enchira.com.
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RISK FACTORS
INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS. YOU SHOULD
CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, TOGETHER WITH ALL OF THE OTHER
INFORMATION INCLUDED IN THIS PROSPECTUS, IN DECIDING WHETHER TO INVEST IN THE
COMMON STOCK.
THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS
PROSPECTUS.
- WE HAVE AN ARBITRATION PROCEEDING WITH MAXYGEN REGARDING OUR RACHITT-TM-
TECHNOLOGY THAT COULD ADVERSELY AFFECT OUR OPERATIONS IF WE ARE NOT
SUCCESSFUL IN DEFENDING OUR TECHNOLOGY.
On April 27, 2000, we received notice from Maxygen Inc. ("Maxygen")
that they had elected to seek arbitration under the License and Development
Agreement dated May 19, 1997 between us (the "Agreement"). Maxygen claims
that we used their confidential information which they allege was provided to
us under the Agreement to develop our own RACHITT-TM- directed evolution
technology. We deny all allegations of Maxygen and believe that our
technology was independently developed after the collaboration with Maxygen
ceased. The arbitration has been set for November 2000. While we believe that
there is no merit to the allegations brought against us by Maxygen, we cannot
assure that our defense will be substantially successful, if at all. The cost
of defending such arbitration could be quite substantial and could greatly
and adversely effect our projections for working capital. In addition, the
uncertainty surrounding the outcome of the arbitration as well as the delay
in bringing such matter to conclusion could materially and adversely affect
our ability to secure additional capital on a timely basis or at all.
Further, should the arbitrator's decision be adverse to us, our business
would be adversely affected.
- WE HAVE A HISTORY OF OPERATING LOSSES AND WE MAY NOT BE PROFITABLE IN THE
FUTURE.
We have incurred net losses since our inception and expect losses to
continue in the foreseeable future as we continue to expend capital for the
ongoing development and commercialization of our RACHITT-TM- directed
evolution technology. We have received a limited amount of revenue to date
from the use or sale of our RACHITT-TM- technology. At June 30, 2000, we had
an accumulated deficit of $78.6 million. We remain uncertain about the amount
of time required for us to become profitable. We cannot ensure that we will
achieve sustained profitability, if at all.
- IF WE DON'T ESTABLISH AND MAINTAIN COLLABORATIONS WITH OTHER PARTIES, THE
DEVELOPMENT OF OUR PRODUCTS MAY BE DELAYED OR STOPPED.
Because we do not currently possess the financial and other resources
necessary to develop potential products that may result from our
technologies, or the financial and other resources to complete any approval
processes which may be required for these products, we must enter into
collaborative arrangements to develop our products. If we do not maintain our
current collaboration with Genencor International, or if we do not enter into
new collaborative agreements, then our revenues will be reduced, and products
utilizing our technologies may not be developed, manufactured or marketed.
We have limited or no control over the resources that any
collaborator may devote to our products. Any of our present or future
collaborators may not perform their obligations as expected. These
collaborators may breach or terminate their agreement with us or otherwise
fail to conduct their collaborative activities successfully and in a timely
manner. Further, our collaborators may elect not to develop products arising
out of our collaborative arrangements or devote sufficient resources to the
development, manufacture, market or sale of these products. If any of these
events occur, we may not be able to develop our technologies or commercialize
our products.
- BECAUSE WE ARE A DEVELOPMENT STAGE COMPANY DEVELOPING AND DEPLOYING NEW
TECHNOLOGIES, WE MAY NOT BE ABLE TO COMMERCIALIZE OUR TECHNOLOGIES OR
PRODUCTS, WHICH COULD CAUSE US TO BE UNPROFITABLE OR CEASE OPERATIONS.
You must evaluate our business in light of the uncertainties and
complexities affecting a development stage
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biotechnology company. Our existing proprietary technologies are new and in
the early stage of development. We may not be successful in the commercial
development of these or any further technologies or products. Successful
products require significant development and investment to demonstrate their
cost-effectiveness prior to regulatory approval and commercialization. To
date, we have not commercialized any biotechnology products, and we have no
strategic partners who have yet incorporated our technologies or inventions
into their own commercial products from which we can generate royalties.
Because of these uncertainties, our discovery process may not result in the
identification of product candidates that we or our strategic partners will
commercialize. If we are not able to use our technologies to discover new
materials or products with significant commercial potential, we will not be
able to achieve our objectives or build a sustainable or profitable business.
- ETHICAL, LEGAL AND SOCIAL CONCERNS ABOUT GENETICALLY ENGINEERED PRODUCTS
COULD LIMIT OR PREVENT THE USE OF OUR PRODUCTS AND TECHNOLOGIES AND LIMIT
OUR REVENUE.
Some of our products are genetically engineered. If we are not able
to overcome the ethical, legal and social concerns relating to genetic
engineering, our products may not be accepted. Any of the risks discussed
below could result in expenses, delays or other impediments to our programs
or the public acceptance and commercialization of products dependent on our
technologies or inventions. Our ability to develop and commercialize one or
more of our technologies and products could be limited by the following
factors:
1. Public attitudes about the safety and environmental hazards of, and ethical
concerns over, genetic research and genetically engineered products, which
could influence public acceptance of our technologies and products;
2. Public attitude regarding, and potential changes to laws governing,
ownership of genetic material which could harm our intellectual property
rights with respect to our genetic material and discourage strategic
partners from supporting, developing or commercializing our products and
technologies; and
3. Governmental reaction to negative publicity concerning genetically modified
organisms, which could result in greater government regulation of genetic
research and derivative products, including labeling requirements.
The subject of genetically modified organisms has received negative
publicity, which has aroused public debate. The adverse publicity could lead
to greater regulation and trade restrictions on imports and exports of
genetically altered products.
- MANY POTENTIAL COMPETITORS WHO HAVE GREATER RESOURCES AND EXPERIENCE THAN WE
DO MAY DEVELOP PRODUCTS AND TECHNOLOGIES THAT MAKE OURS OBSOLETE.
The biotechnology industry is characterized by rapid technological
change, and the area of gene research is a rapidly evolving field. Our future
success will depend on our ability to maintain a competitive position with
respect to technological advances. Rapid technological development by others
may result in our products and technologies becoming obsolete.
We face, and will continue to face, intense competition. There are a
number of companies who compete with us in various steps throughout our
technology process. Many of these competitors have significantly greater
financial and human resources than we do. These organizations may develop
technologies that are superior alternatives to our technologies. Further, our
competitors may be more effective at implementing their gene-related
technologies to develop commercial products.
Any products that we develop through our RACHITT-TM- directed
evolution technology will compete in multiple, highly competitive markets.
Many of our potential competitors in these markets have substantially greater
financial, technical and marketing resources than we do, and we cannot assure
you that they will not succeed in developing products that would render our
products or those of our strategic partners obsolete or noncompetitive. In
addition, many of these competitors have significantly greater experience
than we do in their respective fields. Our ability to compete successfully
will depend on our ability to develop proprietary products that reach the
market in a timely manner and are technologically superior to and/or are less
expensive than other products on the market. Current competitors or other
companies may develop technologies and products that are more effective than
ours. Our technologies and products may be rendered obsolete or uneconomical
by technological advances or entirely different approaches developed by one
or more of our competitors. The existing approaches of our competitors or
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new approaches or technology developed by our competitors may be more
effective than those developed by us.
- ANY INABILITY TO ADEQUATELY PROTECT OUR PROPRIETARY TECHNOLOGIES COULD HARM
OUR COMPETITIVE POSITION.
Our success will depend in part on our ability to obtain patents and
maintain adequate protection of our other intellectual property for our
technologies and products in the United States and other countries. If we do
not adequately protect our intellectual property, competitors may be able to
practice our technologies and erode or negate our competitive advantage. The
laws of some foreign countries do not protect our proprietary rights to the
same extent as the laws of the United States, and we may encounter
significant problems in protecting our proprietary rights in these foreign
countries.
The patent positions of biotechnology companies, including our patent
position, involve complex legal and factual questions and, therefore,
validity and enforceability cannot be predicted with certainty. Patents may
be challenged, deemed unenforceable, invalidated or circumvented. We will be
able to protect our proprietary rights from unauthorized use by third parties
only to the extent that our proprietary technologies are covered by valid and
enforceable patents or are effectively maintained as trade secrets. We will
apply for patents covering both our technologies and technology-based
products as we deem appropriate. However, we may fail to apply for patents on
important technologies or products in a timely fashion or at all, and in any
event, the applications we do file may be challenged and may not result in
issued patents. Our existing patents and any future patents we obtain may not
be sufficiently broad to prevent others from practicing our technologies or
from developing competing products. Furthermore, others may independently
develop similar or alternative technologies or design around our patented
technologies. In addition, others may challenge or invalidate our patents, or
our patents may fail to provide us with any competitive advantages. If the
use or validity of any of our patents is ever challenged, resulting in
litigation or administrative proceedings, we would incur substantial costs
and the diversion of management in defending the patent. In addition, we
generally do not control the patent prosecution of technology that we license
from others. Accordingly, we are unable to exercise the same degree of
control over this intellectual property as we would over technology we own.
We rely upon trade secret protection for our confidential and
proprietary information. We have taken measures to protect our proprietary
information. These measures may not provide adequate protection for our trade
secrets or other proprietary information. We seek to protect our proprietary
information by entering into confidentiality agreements with employees,
collaborators, and consultants. Nevertheless, employees, collaborators, or
consultants may still disclose our proprietary information, and we may not be
able to meaningfully protect our trade secrets. In addition, others may
independently develop substantially equivalent proprietary information or
techniques or otherwise gain access to our trade secrets.
- LITIGATION OR OTHER PROCEEDINGS OR THIRD PARTY CLAIMS OF INTELLECTUAL
PROPERTY INFRINGEMENT COULD REQUIRE US TO SPEND TIME AND MONEY AND COULD
SHUT DOWN SOME OF OUR OPERATIONS.
Our commercial success depends in part on not infringing the patents
and proprietary rights of third parties and not breaching any licenses that
we have entered into with regard to our technologies and products. The
biotechnology industry is characterized by extensive litigation regarding
patents and other intellectual property rights. Other parties may have been
issued relevant patents or may have filed relevant patent applications that
could affect our ability to obtain patents or to operate as we would like to
in our research, development, and commercialization efforts. If we wish to
use technologies claimed by third parties in issued and unexpired patents,
then we may need to obtain license(s) from the owner(s) of such patent(s),
enter into litigation, or incur the risk of litigation. Litigation or failure
to obtain necessary licenses may impede our ability to obtain collaborations
or to develop our products and could prevent us or our collaborators from
developing or commercializing our products.
Other biotechnology companies have filed patent applications and
obtained patents, and in the future will likely continue to file patent
applications and obtain patents, claiming directed evolution technologies
similar to our RACHITT-TM- technology. If these patents are valid or if these
applications issue into valid patents, we will have to either circumvent the
claims in these patents, or obtain licenses to use the patented technology in
order to use these genes or technologies in the research, development and
commercialization of our products and technologies. If we are unsuccessful in
circumventing or acquiring licenses to these patents, our ability to
research, develop or commercialize products may be blocked.
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Third parties may sue us in the future to challenge our patent rights
or claim infringement of their patents. An adverse determination in
litigation to which we may become a party could subject us to significant
liabilities to third parties, require us to license disputed rights from
third parties or require us to cease using the disputed technology.
If any of our competitors have filed patent applications or have been
granted patents claiming inventions also claimed by us, we may have to
participate in an interference proceeding declared by the relevant patent
regulatory agency to determine priority of invention and, thus, the right to
a patent for these inventions in the United States. Such a proceeding could
result in substantial cost to us even if the outcome is favorable. Even if
successful on priority grounds, an interference may result in loss of claims
based on patentability grounds raised in the interference. Although patent
and intellectual property disputes in the biotechnology area are often
settled through licensing or similar arrangements, costs associated with
these arrangements may be substantial and could include ongoing royalties.
Furthermore, we cannot be certain that the necessary licenses would be
available to us on satisfactory terms, if at all.
Third parties may obtain patents in the future and then claim that
the use of our technologies infringes these patents or that we are employing
their proprietary technology without authorization. This is because patent
applications in the United States are secret until issued into corresponding
patents, and the applications can be pending for several years after filing.
We could incur substantial costs and diversion of management and technical
personnel in defending ourselves against any of these claims or enforcing our
patents against others. Furthermore, parties making claims against us may be
able to obtain injunctive or other equitable relief which could effectively
block our ability to further develop, commercialize, and sell products, and
could result in the award of substantial damages against us. In the event of
a successful claim of infringement against us, we may be required to:
- pay damages;
- stop using our products or methods;
- develop non-infringing products or methods; and
- obtain one or more licenses from third parties.
We may not be able to obtain these licenses at a reasonable cost, if at
all. In that event, we could encounter substantial delays in product
introductions while we attempt to develop alternative methods or products, which
we may not be able to accomplish.
- LAWS MAY LIMIT OUR PROVISION OF GENETICALLY ENGINEERED AGRICULTURAL PRODUCTS
IN THE FUTURE. THESE LAWS COULD REDUCE OUR ABILITY TO SELL THESE PRODUCTS.
All phases in the development of our potential products are subject
to significant federal, state, local and/or foreign governmental regulation.
Regulatory agencies may not allow us to produce and/or market our products in
a timely manner or under technically or commercially feasible conditions, or
at all, which could harm our business.
In the United States, products for our target markets are regulated
based on their application, by either the FDA, the Environmental Protection
Agency, or EPA, or, in the case of plants and animals, the United States
Department of Agriculture, or USDA. The FDA regulates drugs, food and feed,
as well as food additives, feed additives and substances generally recognized
as safe that are used in the processing of food or feed. In the future we may
pursue strategic alliances for further research and development of drug
products for humans that would require FDA approval before they could be
marketed in the United States. In addition, any product candidates must also
be approved by the regulatory agencies of foreign governments before any
product can be sold in those countries. Under current FDA policy, our
products, or products of our strategic partners incorporating our
technologies or inventions, to the extent that they come within the FDA's
jurisdiction, may be subject to lengthy FDA reviews and unfavorable FDA
determinations if they raise safety questions which cannot be satisfactorily
answered, if results from pre-clinical or clinical trials do not meet
regulatory requirements or if they are deemed to be food additives whose
safety cannot be demonstrated. An unfavorable FDA ruling could be difficult
to resolve and could prevent a product from being commercialized. Even after
investing significant time and expenditures, we may not obtain regulatory
approval for any of our products. We have not submitted an investigational
new drug application for any
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product candidate, and no product candidate developed with our technologies
has been approved for commercialization in the United States or elsewhere.
The EPA regulates biologically derived chemical substances not within the
FDA's jurisdiction. An unfavorable EPA ruling could delay commercialization
or require modification of the production process resulting in higher
manufacturing costs, thereby making the product uneconomical. In addition,
the USDA may prohibit genetically engineered plants from being grown and
transported except under an exemption, or under controls so burdensome that
commercialization becomes impracticable. Our future products may not be
exempted by the USDA.
The European regulatory process for these classes of biologically
derived products has been in a state of flux in the recent past, as the EU
attempts to replace country by country regulatory procedures with a
consistent EU regulatory standard in each case. Some country-by-country
regulatory oversight remains. Other than Japan, most other regions of the
world generally find adequate either a United States or a European clearance
together with associated data and information for a new biologically derived
product.
- WE MAY BE SUED FOR PRODUCT LIABILITY.
We may be held liable if any product we develop, or any product which
is made with the use of any of our technologies, causes injury or is found
otherwise unsuitable during product testing, manufacturing, marketing or
sale. We currently have no product liability insurance. When we attempt to
obtain product liability insurance, this insurance may be prohibitively
expensive, or may not fully cover our potential liabilities. Inability to
obtain sufficient insurance coverage at an acceptable cost or otherwise to
protect against potential product liability claims could prevent or inhibit
the commercialization of products developed by us or our strategic partners.
If we are sued for any injury caused by our products, our liability could
exceed our total assets.
- WE WILL NEED ADDITIONAL FUNDS. WE MAY NEED TO ENTER INTO FINANCING
ARRANGEMENTS WITH UNFAVORABLE TERMS OR WHICH COULD ADVERSELY AFFECT YOUR
OWNERSHIP INTEREST AND RIGHTS AS COMPARED TO OUR OTHER STOCKHOLDERS. IF SUCH
FINANCING IS NOT AVAILABLE, WE MAY NEED TO CEASE OPERATIONS.
We currently anticipate that our available cash resources and
receivables and committed funding from strategic partners will be sufficient
to meet our capital requirements for at least the next two years. However,
our capital requirements depend on several factors, including:
1. The level of research and development investment required to maintain our
technology leadership position;
2. Our ability to enter into new agreements with strategic partners or to
extend the terms of our existing collaborative agreements and the terms of
any agreement of this type;
3. The success rate of our discovery efforts to achieve milestones and receive
royalties;
4. Our ability to successfully commercialize products developed independently
and the demand for such products;
5. Our ability to find and enter into strategic collaborations on favorable
terms, or at all;
6. The timing and willingness of strategic partners to commercialize our
products that would result in royalties;
7. Costs of recruiting and retaining qualified personnel; and
8. Our need to acquire or license complementary technologies or acquire
complementary businesses.
As additional capital is required to operate our business, we cannot
assure you that additional financing will be available on terms favorable to
us, or at all. If adequate funds are not available or are not available on
acceptable terms, our ability to fund our operations, take advantage of
opportunities, develop products or technologies or otherwise respond to
competitive pressures could be significantly limited. In addition, if
financing is not available, we may need to cease operations.
If we raise additional funds through the issuance of equity
securities, the percentage ownership of our stockholders will be reduced,
stockholders may experience additional dilution or such equity securities may
provide
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for rights, preferences or privileges senior to those of the holders of our
common stock. If we raise additional funds through the issuance of debt
securities, such debt securities would have rights, preferences and
privileges senior to holders of common stock and the terms of such debt could
impose restrictions on our operations.
- WE RELY HEAVILY ON A FEW KEY EMPLOYEES FOR MANAGEMENT AND PRODUCT
DEVELOPMENT EFFORTS.
We depend on the efforts of our executive officers, scientists and
other key employees, the loss of any one of whom could materially and
adversely affect us. Shortages of qualified scientists within certain
disciplines may occur and competition for the services of qualified
scientists may intensify. We may not succeed in recruiting or retaining these
personnel in the future.
- WE USE HAZARDOUS MATERIALS IN OUR BUSINESS. ANY CLAIMS RELATING TO IMPROPER
HANDLING, STORAGE OR DISPOSAL OF THESE MATERIALS COULD BE TIME CONSUMING AND
COSTLY.
Our research and development processes involve the controlled use of
hazardous materials, including chemical, radioactive and biological
materials. Our operations also produce hazardous waste products. We cannot
eliminate entirely the risk of accidental contamination or discharge and any
resultant injury from these materials. Federal, state and local laws and
regulations govern the use, manufacture, storage, handling and disposal of
these materials. We may be sued for any injury or contamination that results
from our use or the use by third parties of these materials, and our
liability may exceed our total assets. In addition, compliance with
applicable environmental laws and regulations may be expensive, and current
or future environmental regulations may impair our research, development or
production efforts.
- SOME OF OUR EXISTING STOCKHOLDERS CAN EXERT CONTROL OVER US, AND MAY NOT
MAKE DECISIONS THAT ARE IN THE BEST INTERESTS OF ALL STOCKHOLDERS.
Our officers, directors and principal stockholders (greater than 5%
stockholders) together control approximately 60.0% of our outstanding common
stock. As a result, these stockholders, if they act together, will be able to
exert a significant degree of influence over our management and affairs and
over matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. In addition,
this concentration of ownership may delay or prevent a change in control of
us and might affect the market price of our common stock, even when a change
may be in the best interests of all stockholders. In addition, the interests
of this concentration of ownership may not always coincide with our interests
or the interests of other stockholders and accordingly, they could cause us
to enter into transactions or agreements which we would not otherwise
consider.
- OUR STOCK PRICE IS VOLATILE.
The market price of our common stock, like other emerging technology
companies, has been highly volatile. In the future, the market price of our
common stock could fluctuate substantially due to a variety of factors,
including the results of our arbitration with Maxygen, our ability to secure
additional collaborative programs relating to our RATCHITT-TM- directed
evolution technology, governmental regulation, developments in patent or
other proprietary rights of us or our competitors, fluctuations in our
operating results and fluctuations in the market prices of emerging
technology stocks and market conditions in general.
- DIVIDENDS ON OUR PREFERRED STOCK DILUTE OWNERSHIP IN OUR COMMON STOCK AND
CREATE A DEFICIENCY IN BOTH FIXED CHARGES AND IN PREFERRED STOCK DIVIDEND
COVERAGE.
In the past, we have from time to time elected to pay dividends on
our preferred stock with our common stock, although we may pay dividends in
cash or a combination of common stock and cash. Dividends will be payable on
the preferred stock only when, as and if declared by our Board of Directors
as permitted under Delaware law although we do incur an obligation to pay
such dividends in a manner to be determined at our sole discretion until they
become payable. We have incurred net losses since our inception, and we
expect our losses to increase in the foreseeable future. While we intend to
pay dividends on the preferred stock in common stock, we anticipate that we
will continue to incur losses and thus will continue to have a deficiency in
fixed charges and preferred stock dividend coverage. Preferred stock
dividends may be paid only out of capital surplus (within the meaning of the
Delaware General Corporation Law) or out of our net profits for the fiscal
year in which the dividend is declared and
9
<PAGE>
the preceding fiscal year. We have issued a total of 564,411 shares of common
stock to date as dividends on the preferred stock. In addition, the dividend
payments due on the Series B Preferred Stock for calendar years 1999 and 2000
have not yet been declared.
- CERTAIN CHARTER AND BYLAW PROVISIONS AND OUR STOCKHOLDER RIGHTS PLAN MAY
NEGATIVELY AFFECT THE STOCKHOLDERS.
Certain provisions of our charter, bylaws and rights plan may
discourage proposals by third parties to acquire a controlling interest in
us, which could deprive stockholders of the opportunity to consider an offer
that would be beneficial to them.
- FUTURE SALES OF COMMON STOCK MAY NEGATIVELY AFFECT THE STOCKHOLDERS.
On September 30, 2000, 9,054,860 shares of our common stock were
outstanding, 1,165,573 shares of common stock were issuable upon conversion
of shares of our preferred stock and 905,492 shares of common stock were
issuable upon the exercise of outstanding options and warrants. Future sales
of substantial amounts of our common stock in the public market could have an
adverse effect on prevailing market prices of the common stock and the
marketability of and price obtainable for shares of the common stock.
- OUR COMMON STOCK COULD BE DELISTED FROM NASDAQ.
Although our common stock meets the current listing requirements of,
and presently lists on, the Nasdaq National Market, we must maintain certain
minimum financial requirements for continued inclusion on Nasdaq. If we
cannot satisfy Nasdaq's maintenance requirements, Nasdaq may delist our
common stock. In such event, trading in our common stock would thereafter be
conducted in the over-the-counter markets in the so-called "pink sheets" or
the NASD's "Electronic Bulletin Board." Consequently, the liquidity of our
common stock could be impaired, not only in the number of shares which could
be bought and sold, but also through delays in the timing of the
transactions, reductions in security analysts' and the news media's coverage
of us, and lower prices for our common stock than it might otherwise attain.
- STOCKHOLDERS FACE THE RISKS OF HOLDING "PENNY STOCKS."
If Nasdaq delisted our common stock, it could become subject to Rule
15g-9 under the Securities and Exchange Act of 1934, as amended, (the
"Exchange Act"), which imposes additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and "accredited investors" (generally, individuals with net worths
in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000
together with their spouses). For transactions covered by this rule, a
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written consent to the transaction prior to sale.
Consequently, the rule may adversely affect the ability of the holders of our
common stock to sell their shares in the secondary market.
Regulations of the Securities and Exchange Commission, or the
Commission, define a "penny stock" to be any non-Nasdaq equity security that
has a market price (as therein defined) of less than $5.00 per share or with
an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the Commission relating to the penny stock
market. The Commission also requires disclosure about commissions payable to
both the broker-dealer and the registered representative and current
quotations for the securities. Finally, the Commission requires monthly
statements to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
These penny stock restrictions will not apply to our common stock if
Nasdaq continues to list it and has certain price and volume information
provided on a current and continuing basis or meets certain minimum net
tangible assets or average revenue criteria. We cannot ensure that our common
stock will qualify for exemption from these restrictions. Even if our common
stock were exempt from such restrictions, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the Commission the authority to
prohibit any person engaged in unlawful conduct while participating in a
distribution of a penny stock from associating with a broker-dealer or
participating in a distribution of a penny stock, if the Commission finds
that such a restriction would be in the public
10
<PAGE>
interest. If our common stock were subject to the rules on penny stocks, the
market liquidity for our common stock could be severely and adversely
affected.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by any
of the selling stockholders. We will use any proceeds we receive from the
exercise of warrants for general corporate purposes.
SELLING STOCKHOLDERS
This prospectus covers a total of 2,631,375 shares of common stock to
be sold by the selling stockholders, including:
- 2,000,000 shares of common stock issued and outstanding; and
- 631,375 shares of common stock issuable upon exercise of
outstanding warrants
On September 8, 2000, we completed a private placement of 2,000,000
shares of common stock and warrants to purchase 600,000 shares of common
stock. As part of the payment of the fee to one of the placement agents in
connection with such transaction, we issued such placement agent a warrant to
purchase 31,375 shares of our common stock.
The table on the following page lists:
- all of the selling stockholders;
- the number of shares of common stock owned by each selling
stockholder immediately prior to this offering;
- the number of shares of common stock (including those shares
of common stock underlying warrants) covered by this
prospectus; and
- the amount of shares of common stock that will be owned by
each selling stockholder assuming that each selling
stockholder sells all of his or her shares of common stock
that this prospectus registers.
11
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Stock Covered by this Prospectus
Shares of Shares of
Common Stock Issuable Upon Common Stock
Owned Prior to Exercise of Owned After
Name of Selling Stockholder the Offering(1) Outstanding Warrants Total the Offering(2)
--------------------------- --------------- ----------- -------- ----- ---------------
<S> <C> <C> <C> <C> <C>
Caduceus Capital II, L.P. .......... 273,000 210,000 63,000 273,000 0
Dean Witter Foundation ............. 31,327(3) 9,000 2,700 11,700 19,627(3)
Susan Uris Halpern ................. 14,660(3) 5,000 1,500 6,500 8,160(3)
Andrew Heiskell .................... 23,400 18,000 5,400 23,400 0
Public Employee Retirement System
of Idaho ........................ 132,761(4) 47,000 14,100 61,100 71,661(4)
William B. Lazar ................... 6,500 5,000 1,500 6,500 0
William E. Konrad, Trustee for the
William E. Konrad Trust ............ 734,442 50,000 15,000 65,000 669,442
City of Milford Pension & Retirement
Fund ............................. 74,342(5) 18,000 5,400 23,400 50,942(5)
Domenic J. Mizio ................... 33,863(6) 9,000 2,700 11,700 22,163(6)
Jeanne L. Morency .................. 6,500 5,000 1,500 6,500 0
Morgan Trust Co. of the Bahamas
Ltd. as Trustee U/A/D 11/30/93 ... 39,700 9,000 2,700 11,700 28,000
Nicola Z. Mullen ................... 17,100 7,000 2,100 9,100 8,000
NFIB Corporate Account ............. 25,520(6) 9,000 2,700 11,700 13,820(6)
Norwalk Employees' Pension Plan .... 35,100 27,000 8,100 35,100 0
Oracle Offshore Limited ............ 108,818 79,200 23,760 102,960 5,858
Oracle Partners, L.P. .............. 386,100 297,000 89,100 386,100 0
Oracle Institutional Partners, L.P.. 102,960 79,200 23,760 102,960 0
PW Eucalyptus Fund, LLC ............ 780,000 600,000 180,000 780,000 0
PW Eucalyptus Fund, Ltd. ........... 45,500 35,000 10,500 45,500 0
Sam Oracle Investements Inc. ....... 51,480 39,600 11,880 51,480 0
City of Stamford Firemen's Pension
Fund ............................. 23,400 18,000 5,400 23,400 0
The Trout Group LLC ................ 31,375 0 31,375 31,375 0
Wells Family LLC ................... 46,633(5) 9,000 2,700 11,700 34,933(5)
Winchester Global Trust Company
Limited as Trustee for Caduceus
Capital Trust .................... 533,000 410,000 123,000 533,000 0
David Zesiger ...................... 6,500 5,000 1,500 6,500 0
--------- --------- ------- --------- -------
Totals .......................... 3,468,261 2,000,000 631,375 2,631,375 836,886
</TABLE>
-----------------
(1) All of the amounts above include shares issuable upon exercise of warrants
in the amounts set forth next to the applicable selling stockholder under
the column "Shares of Common Stock Covered by this Prospectus -- Issuable
Upon Exercise of Warrants."
(2) All of the selling stockholders listed above shall hold less than 1% of the
outstanding shares of our common stock after this offering (assuming the
sale of all of the shares of our common stock covered by this prospectus),
except for William E. Konrad, Trustee for the William E. Konrad Trust, who
will own 6.9%.
(3) Includes 4,475 shares of common stock issuable upon conversion of 1,500
shares of Series B Convertible Preferred Stock.
(4) Includes 17,900 shares of common stock issuable upon conversion of 6,000
shares of Series B Convertible Preferred Stock.
(5) Includes 11,933 shares of common stock issuable upon conversion of 4,000
shares of Series B Convertible Preferred Stock.
(6) Includes 5,967 shares of common stock issuable upon conversion of 2,000
shares of Series B Convertible Preferred Stock.
12
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may offer the shares of common stock subject
to this prospectus from time to time for their own account in transactions on
The Nasdaq National Market, in negotiated transactions or otherwise, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The selling stockholders
may effect such transactions by selling the shares to or through
broker-dealers and such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling stockholders or the
purchasers of the shares for whom such broker-dealers may act as agent or to
whom they sell as principal or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). The methods by
which the shares may be sold include:
1. a block trade (which may involve crosses) in which the broker
or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as
principal to facilitate the transaction;
2. purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this
prospectus;
3. ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
4. privately negotiated transactions.
We will not receive any of the proceeds from the sale of the shares
of common stock subject to this prospectus by the selling stockholders except
for payment of the exercise price in the event that the warrants are
exercised. We have agreed to bear certain expenses in connection with the
registration and sale of the shares being offered by the selling
stockholders. The selling stockholders and any broker-dealers participating
in the distribution of the shares of common stock subject to this prospectus
may be deemed to be "underwriters" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"), and any profit on the sale of
shares by the selling stockholders and any commissions received by any such
broker-dealers may be deemed to be underwriting commission under the
Securities Act.
The shares of common stock subject to this prospectus have not been
registered for sale by the selling stockholders under the securities laws of
any state as of the date of this prospectus. Brokers or dealers effecting
transactions in the shares should confirm registration thereof under the
securities laws of the states in which such transactions occur, or the
existence of any exemption from registration.
If underwriters are used in any offering of shares of common stock,
the underwriter or underwriters with respect to such offering will be named
in a prospectus supplement. Only underwriters named in a prospectus
supplement will be deemed to be underwriters in connection with the shares of
common stock offered thereby. Firms not so named will have no direct or
indirect participation in the underwriting of such common stock, although
such a firm may participate in the distribution of such common stock under
circumstances entitling it to a dealer's commission. Unless otherwise set
forth in the prospectus supplement relating to such offering, any
underwriting agreement pertaining to any offering of shares of common stock
will:
1. entitle the underwriters to indemnification by us and the
selling stockholders against certain civil liabilities under
the Securities Act;
2. provide that the obligations of the underwriters will be
subject to certain conditions precedent; and
3. provide that the underwriters will be obligated to purchase
all shares of such common stock so offered if any shares are
purchased.
If underwriters are used in any offering of common stock, the names
of such underwriters, the anticipated date of delivery and other material
terms of the transaction will be set forth in the prospectus supplement
relating to such offering.
13
<PAGE>
Underwriters, brokers and dealers may engage in transactions with or
perform services for us in the ordinary course of business.
Offers to purchase common stock may be solicited, and sales thereof
may be made, by the selling stockholders directly to one or more purchasers
in fixed price offerings, in negotiated transactions, at market prices
prevailing at the time of sale or at prices related to such market prices.
Certain of such purchasers may be deemed to be underwriters with respect to
any resale by them of common stock so acquired. This prospectus may be
delivered by any such purchaser in connection with any such resales. Such
resales may be through underwriters, brokers or dealers, or directly to one
or more purchasers, all in the manner described above.
LEGAL MATTERS
Andrews & Kurth L.L.P. will issue an opinion about the legality of
the shares for us.
EXPERTS
The financial statements incorporated by reference in this prospectus
and elsewhere in the registration statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
with respect thereto, and are included herein in reliance upon the authority
of said firm as experts in giving said reports.
14
<PAGE>
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 under the Securities Act with respect to
the shares of common stock offered by this prospectus. This prospectus does
not contain all the information set forth in the registration statement and
the exhibits and schedules thereto. For further information about us and
shares of our common stock, we refer you to the registration statement and to
the exhibits and schedules filed with it. Statements contained in this
prospectus as to the contents of any contract or other documents referred to
are not necessarily complete. We refer you to those copies of contracts or
other documents that have been filed as exhibits to the registration
statement, and statements relating to such documents are qualified in all
aspects by such reference.
We are subject to the information requirements of the Exchange Act
and therefore we file reports, proxy statements and other information with
the Commission. You can inspect and copy the reports, proxy statements and
other information that we file at the public reference facilities maintained
by the Commission at the Public Reference Room, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices at 7 World
Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. You can also obtain copies of
such material from the Commission's Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission also makes
electronic filings publicly available on its Web site at http: //www.sec.gov.
Reports, proxy and information statements and other information about us may
be inspected at the National Association of Securities Dealers, Inc. at 1735
K Street, N.W., Washington, D.C. 20006.
Our common stock is traded on the Nasdaq National Market under the
symbol "ENBC." Certain information, reports and proxy statements of our
Company are also available for inspection at the offices of the Nasdaq
National Market Reports Section, 1735 K Street, Washington, D.C. 20006.
INFORMATION INCORPORATED BY REFERENCE
The following documents, which we have filed with the Commission, are
incorporated by reference into this prospectus:
- Our annual report on Form 10-K for the fiscal year ended December
31, 1999 (filed under our former name, Energy BioSystems
Corporation);
- Our quarterly reports on Form 10-Q for the quarters ended March
31, 2000 (filed under our former name, Energy BioSystems
Corporation) and June 30, 2000;
- The description of our common stock contained in our Registration
Statement on Form 8-A filed on January 25, 1993, as amended by
Post-Effective Amendment No. 1 filed with the Commission on March
15, 1993 (both filed under our former name, Energy BioSystems
Corporation); and
- Our Definitive Proxy Statement for our annual meeting of
shareholders filed on May 1, 2000 (filed under our former name,
Energy BioSystems Corporation).
All documents that we file with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the termination of the offering of the shares of common
stock shall be deemed incorporated by reference into this prospectus and to
be a part of this prospectus from the respective dates of filing such
documents.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, upon such person's written or oral request, a copy
of any and all of the information incorporated by reference in this
prospectus, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this
prospectus incorporates. Requests should be directed to:
15
<PAGE>
Enchira Biotechnology Corporation
4200 Research Forest Drive
The Woodlands, Texas 77381
281-419-7000
Attention: Secretary
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
that also is or is deemed to be incorporated by reference in this prospectus
modifies, supersedes or replaces such statement. Any statement so modified,
superseded or replaced shall not be deemed, except as so modified, superseded
or replaced, to constitute a part of this prospectus.
16
<PAGE>
We have not authorized any dealer, salesperson or other person to give you
written information (other than this prospectus) or to make any representations
as to matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or a
solicitation of your offer to buy these securities in any jurisdiction where
that would not be permitted or legal. Neither the delivery of this prospectus
nor any sale made hereunder after the date of this prospectus shall create an
implication that the information contained herein or our affairs have not
changed since the date thereof.
-----------------------
ENCHIRA BIOTECHNOLOGY
CORPORATION
2,631,375 Shares
Common Stock
----------------
PROSPECTUS
----------------
October 31, 2000
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the
sale of the Common Stock being registered. All the amounts shown are
estimates except for the registration fee.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $5,123
NASD filing fee 2,000
Blue Sky fees and expenses 2,267
Legal fees and expenses 20,000
Accounting fees and expenses 3,000
Transfer agent and registrar fees 1,500
Miscellaneous fees and expenses 500
-------
TOTAL $34,390
=======
</TABLE>
Item 15. Indemnification of Officers and Directors
Section 145 of the Delaware General Corporation Law ("DGCL"), inter
alia, empowers a Delaware corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in the right
of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent
of another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action, suit
or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. Similar
indemnity is authorized for such persons against expenses (including
attorneys' fees) actually and reasonably incurred in connection with the
defense or settlement of any such threatened, pending or completed action or
suit if such person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation,
and provided further that (unless a court of competent jurisdiction otherwise
provides) such person shall not have been adjudged liable to the corporation.
Any such indemnification may be made only as authorized in each specific case
upon a determination by the stockholders or disinterested directors or by
independent legal counsel in a written opinion that indemnification is proper
because the indemnitee has met the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, against any liability asserted against such person and
incurred by him or her in any such capacity, or arising out of his or her
status as such, whether or not the corporation would otherwise have the power
to indemnify him under Section 145. The Company maintains policies insuring
its and its subsidiaries' officers and directors against certain liabilities
for actions taken in such capacities, including liabilities under the
Securities Act.
Article Sixth, Section (f) of the Company's Amended and Restated
Certificate of Incorporation, as amended, limits under certain circumstances
the liability of the Company's directors for a breach of their fiduciary duty
as directors. These provisions do not eliminate the liability of a director
(i) for a breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (relating to the declaration of dividends and purchase or
redemption of shares in violation of the DGCL) or (iv) for any transaction
from which the director derived an improper personal benefit.
II-1
<PAGE>
The Bylaws of the Company provide for indemnification of the
directors, officers and employees of the Company to the full extent permitted
by law. The Company currently has a liability insurance policy which insures
directors and officers of the Company in certain circumstances. The policy
also insures the Company against losses as to which its directors and
officers are entitled to indemnification.
Item 16. Exhibits
(a) Exhibits
*5.1 Opinion of Andrews & Kurth L.L.P.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1).
*24.1 Powers of Attorney (included as part of the signature page of this
Registration Statement).
-----------------------
* Filed herewith.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(a) 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 and 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 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (a)(i) and (a)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement.
(b) 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.
(c) 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.
II-2
<PAGE>
(d) 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 Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d)
of the Exchange Act) 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.
(e) That, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the
time it was declared effective.
(f) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus 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.
(g) 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
of 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The Woodlands, Texas, on the 31st day of
October, 2000.
ENCHIRA BIOTECHNOLOGY CORPORATION
By: /s/ Peter Policastro
-------------------------------------
Peter Policastro, Ph.D.
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers
and directors of Enchira Biotechnology Corporation (the "Company") hereby
constitutes and appoints Peter Policastro, William E. Nasser, and Paul G. Brown,
III, or any of them (with full power to each of them to act alone), his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this Registration Statement
under the Securities Act of 1933, as amended, and any or all amendments
(including, without limitation, post-effective amendments), with all exhibits
and any and all documents required to be filed with respect thereto, with the
Securities and Exchange Commission or any regulatory authority, granting unto
such attorneys-in-fact and agents, and each of them acting alone, full power and
authority to do and 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
to all intents and purposes as he himself might or could do if personally
present, hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any of them, or their substitute or substitutes, may lawfully do or
cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Peter Policastro President and Chief Executive Officer October 31, 2000
------------------------------ (PRINCIPAL EXECUTIVE OFFICER)
Peter Policastro, Ph.D.
/s/ Paul G. Brown, III Vice President-Finance and October 31, 2000
------------------------------ Chief Financial Officer
Paul G. Brown, III
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
/s/ Daniel J. Monticello, PH.D. Vice President-Research and October 31, 2000
------------------------------ Development, and Director
Daniel J. Monticello, Ph.D.
/s/ William E. Nasser Chairman of the Board October 31, 2000
------------------------------
William E. Nasser
/s/ Ramon Lopez Director October 31, 2000
------------------------------
Ramon Lopez
/s/ R. James Comeaux Director October 31, 2000
------------------------------
R. James Comeaux
/s/ Thomas E. Messmore Director October 31, 2000
------------------------------
Thomas E. Messmore
/s/ William D. Young Director October 31, 2000
------------------------------
William D. Young
Director October 31, 2000
------------------------------
Nancy Chang, Ph.D.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
*5.1 Opinion of Andrews & Kurth L.L.P.
*23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1)
*24.1 Powers of Attorney (included as part of the signature page of this
Registration Statement).
</TABLE>
* Filed herewith.
