AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 1997
REGISTRATION NO. 333-_____
- --------------------------------------------------------------------------------
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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HUMAN GENOME SCIENCES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 8980 22-3178468
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of incorporation) classification code number) identification number)
</TABLE>
9410 KEY WEST AVENUE
ROCKVILLE, MARYLAND 20850-3338
(301) 309-8504
(Address and telephone number of Registrant's principal executive offices)
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WILLIAM A. HASELTINE, PH.D.
HUMAN GENOME SCIENCES, INC.
9410 KEY WEST AVENUE
ROCKVILLE, MARYLAND 20850-3338
(301) 309-8504
(Name, address and telephone number of agent for service)
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COPIES TO:
Sheldon E. Misher, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
(212) 687-7000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
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If only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
<PAGE>
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, please 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>
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Shares of Common Stock, 50,871 $32.50 $1,653,308 $501.00
$.01 par value................
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Based on the average of the high and low price of the Common Stock as
reported on the Nasdaq National Market System on April 22, 1997.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
ii
<PAGE>
SUBJECT TO COMPLETION -- DATED APRIL 25, 1997
PROSPECTUS
50,871 SHARES
HUMAN GENOME SCIENCES, INC.
COMMON STOCK
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This Prospectus relates to the public offering of up to 50,871 shares
of Common Stock, $.01 par value (the "Common Stock") by the holder thereof (the
"Selling Stockholder"). The Common Stock offered by the Selling Stockholder
hereunder is issuable upon exercise of warrants to purchase Common Stock (the
"Warrants"). See "Selling Securityholder" herein. The Selling Stockholder
directly, through agents designated from time to time, or through dealers or
underwriters also to be designated, may sell the Common Stock from time to time
on terms to be determined at the time of sale. To the extent required, the
specific Common Stock to be sold, purchase price, public offering price, the
names of any such agent, dealer or underwriter, and any applicable commission or
discount with respect to a particular offer will be set forth in an accompanying
Prospectus Supplement. See "Plan of Distribution."
The Selling Stockholder and any broker-dealer, agents or underwriters
that participate with the Selling Stockholder in the distribution of the Common
Stock may be deemed to be "underwriters" within the meaning of the Securities
Act and any commission received by them and any profit on the resale of the
Common Stock purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. See "Plan of Distribution" herein for
indemnification arrangements.
The shares of Common Stock are listed on the NASDAQ National Market
System under the symbol "HGSI." The closing price of the Common Stock on April
23, 1997, was $33.50.
The Company is paying all the expenses of registering the Common Stock
under the Securities Act (including filing, legal, and miscellaneous expenses in
connection with the registration) which are estimated at $25,000. The Company
will not receive any of the proceeds from any sale of the Common Stock by the
Selling Stockholder. The Selling Stockholder will pay or assume underwriting
discounts, brokerage commissions or other charges incurred in any sale of the
Common Stock.
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THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING AT PAGE 6.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ___________, 1997
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission"), Washington, D.C. a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act") covering
the securities offered by this Prospectus. This Prospectus does not contain all
of the information set forth in the Registration Statement and the exhibits
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete and in each
instance such statement is qualified by reference to each such contract or
document. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports and
other information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at the
following addresses: New York Regional Office, Seven World Trade Center, New
York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
-----------
The Company furnishes to its stockholders annual reports containing
audited financial statements and quarterly reports for the first three quarters
of each fiscal year containing unaudited interim financial information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-22962)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, including any documents or portions thereof incorporated by
reference therein;
2. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of this offering.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of the filing
of such documents. Any statement contained herein, in any supplement or
amendment hereof or in a document all or any portion of which is incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any supplement or amendment hereof modifies or supersedes
such statement. Any statement so modified or
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<PAGE>
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any supplement or amendment hereof.
Neither the delivery of this Prospectus nor any sale of securities made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company or its affiliates since the date
hereof or that the information contained herein is correct as of any time
subsequent to its date.
Copies of documents incorporated by reference herein are available from
the Company without charge (other than exhibits to such document, unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates) to any person to whom this Prospectus is
delivered, upon written or oral request of such person. This request for such
documents should be directed to the Company, 9410 Key West Avenue, Rockville,
Maryland 20850-3338, (301) 309-8504, Attn: Senior Vice President and Chief
Financial Officer.
3
<PAGE>
THE COMPANY
Human Genome Sciences, Inc. (the "Company") is engaged in the research
and development of novel, proprietary pharmaceutical and diagnostic products
based on the discovery and understanding of the medical utility of genes. Using
automated, high throughput gene sequencing technology, the Company has generated
over 1,000,000 partial human gene sequences, which the Company believes
correspond to most of the expressed genes in the human body, and possesses one
of the largest proprietary databases of human and microbial genes. Based on this
genomic database, the Company has created a broad base of product opportunities.
The Company's activities have progressed to focusing primarily on research and
development of therapeutic protein product candidates. In its efforts to
identify the most promising product candidates, the Company uses its advanced
proprietary bioinformatics system to analyze partial gene sequences and identify
the genes corresponding to such partial gene sequences and the proteins encoded
by such genes. As of February 15, 1997, the Company has isolated and
characterized several hundred full-length genes and expressed and purified more
than 100 potential therapeutic proteins. The Company is currently evaluating six
therapeutic protein product candidates in preclinical studies. In addition, the
Company is investigating for development with its collaborators proprietary
product opportunities in diagnostics and small molecule drugs based on human
genes, as well as vaccines, antibiotics, and diagnostics based on genes of
microorganisms.
The Company has a two-pronged commercialization strategy:
PRODUCT DEVELOPMENT AND COMMERCIALIZATION. The Company utilizes its
internal capabilities to research and develop recombinant therapeutic
proteins, which are proteins that can be produced on a large scale and used
as drugs to treat diseases. The Company generally intends to develop
potential products to a late preclinical or early clinical stage and then
to collaborate with pharmaceutical or biotechnology companies for further
development and commercialization. However, the Company may consider
developing certain potential products on its own.
CORPORATE COLLABORATIONS. The Company leverages its resources and
capabilities by establishing collaborations with pharmaceutical companies
for the development and commercialization of new products. The Company
believes that these arrangements will enable the Company to focus its
internal resources on a select number of promising product candidates while
still exploiting the broader product opportunities presented by its genomic
database.
The Company's initial collaboration was formed with SmithKline Beecham
Corporation ("SmithKline Beecham") in May 1993 (as amended, the "SB
Collaboration Agreements"). To date, the Company has received $125 million in
payments from SmithKline Beecham and is further entitled to product development
milestone payments and royalty payments. In June 1995, the Company and
SmithKline Beecham entered into a collaboration agreement with Takeda Chemical
Industries, Ltd. ("Takeda"), whereby Takeda was granted certain rights to
develop and commercialize products based on the Company's and SmithKline
Beecham's human gene technology ("Human Gene Technology") and an option to
develop and commercialize for Japan
4
<PAGE>
certain products developed by the Company. In June 1996 the Company entered into
a significant amendment (the "SB Amendment") to the SB Collaboration Agreements
which, among other things, allows the Company to designate six therapeutic
proteins at any one time for exclusive development and commercialization
(subject to certain restrictions and co- development rights of its
collaborators) and permits the Company and SmithKline Beecham to enter into
additional collaboration agreements in the field covered by the SB Collaboration
Agreements.
In June 1996 and July 1996, the Company and SmithKline Beecham entered
into collaboration agreements (the "New Collaboration Partner Agreements") with
Schering Corporation and Schering-Plough, Ltd. (collectively,
"Schering-Plough"), Synthelabo S.A. ("Synthelabo") and Merck KGaA ("Merck")
(collectively, the "New Collaboration Partners"). Under the terms of the New
Collaboration Partner Agreements, $87.5 million of license and research payments
is payable to the Company over five years, of which $17.5 million has been
received to date. In addition, the New Collaboration Partner Agreements provide
for milestone and royalty payments with respect to products developed under
these agreements. In exchange, the New Collaboration Partners received certain
rights to research, develop and commercialize therapeutic products based on the
Company's and SmithKline Beecham's Human Gene Technology. Schering-Plough and
SmithKline Beecham have been granted the right to develop jointly with the
Company certain of the therapeutic protein product candidates to which the
Company has retained the exclusive development rights.
The Company has entered into other collaborative agreements in certain
areas where the Company has retained exclusive rights, including: the creation
of bacterial vaccines and immunotherapeutics and antimicrobial agents based on
genes of infectious agents; corn genomics; and gene therapy. Pursuant to the
terms of such collaboration agreements, an aggregate of $34.1 million of license
and research payments is payable to the Company over five years, of which $18.5
million has been received to date.
The Company also has formed a collaboration with The Institute of
Genomic Research ("TIGR"). Under the collaboration agreement, the Company has
agreed to provide TIGR with funding totaling $85 million over a ten-year period
ending September 2002, of which $46 million has been paid to date. In return,
the Company is entitled to exclusive intellectual property rights to TIGR's
research.
The Company vigorously pursues patents to protect its intellectual
property. As of February 15, 1997, the Company has five issued U.S. patents
covering full-length genes and has filed U.S. patent applications covering more
than 230 full-length genes and the proteins they encode. The Company makes
patent filings outside the United States as it deems appropriate. In addition,
the Company has filed patent applications with respect to more than 190,000
expressed sequence tags ("EST's") that represent over 1,000,000 partial gene
sequences, although there is substantial uncertainty as to the patentability of
partial gene sequences.
The Company was incorporated in Delaware in June 1992. The Company's
executive offices are located at 9410 Key West Avenue, Rockville, Maryland 20850
and its telephone number is (301) 309-8504.
5
<PAGE>
RISK FACTORS
THE FOLLOWING RISK FACTORS SHOULD BE CAREFULLY CONSIDERED IN ADDITION
TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING THE
COMMON STOCK OFFERED HEREBY.
UNPROVEN BUSINESS STRATEGY. The Company's strategy of using high
throughput gene sequencing for the purpose of rapidly identifying and obtaining
proprietary rights to a substantial number of genes and then selecting from
those genes promising candidates to be used to develop novel pharmaceutical or
diagnostic products or pharmaceutical targets is unproven. The application of
this strategy is in too early a stage to determine whether it can be
successfully implemented. Unlike companies that have targeted particular
diseases and sought to find cures through gene-based therapies, the Company's
approach is to find as many genes as possible and then use this information as
the basis for development of potential products. There can be no assurance that
this strategy will result in the development of any products. See "--
Competition."
Although the Company has identified a substantial number of genes
through partial sequencing, its success will depend upon its ability and that of
its collaborators to determine which genes have potential value and to select an
appropriate commercialization strategy for each potential product they choose to
pursue. To select potential product candidates, the Company is investing
significant time and resources isolating and sequencing full-length genes,
testing and analyzing the genes and determining their functions. The Company is
now devoting an increasing portion of its resources to early-stage development
of therapeutic protein product candidates. The Company has recently made
substantial capital expenditures and hired additional personnel to enable it to
engage in these activities. Substantial additional expenditures will be required
by the Company. The failure to allocate its resources towards those products, if
any, with the most commercial potential could have a material adverse effect on
the Company. There can be no assurance that the Company will successfully select
those genes with the most potential for commercial development, or that any
products based on genes discovered by the Company can be successfully
commercialized.
EARLY STAGE OF THE COMPANY; ANTICIPATED FUTURE LOSSES. The Company is
in the early stage of development, and it will be a number of years, if ever,
before the Company is likely to receive revenues from product sales or
royalties. To date, substantially all of the Company's revenues have resulted
from payments made under the SB Collaboration Agreements and, to a lesser
extent, from other collaboration, option and licensing agreements. The Company
expects that most of its revenues for the foreseeable future will result from
payments under collaboration agreements previously entered into, including the
New Collaboration Partner Agreements. The Company expects to continue to incur
substantial expenses relating to its research and development efforts, which are
expected to increase relative to historical levels as the Company focuses on
preclinical and clinical trials required for the development of therapeutic
protein product candidates. As a result, the Company expects to incur continued
and increasing losses over the next several years unless it is able to realize
additional revenues under existing or new collaboration agreements. There can be
no assurance that the Company will receive milestone and royalty payments under
the SB Collaboration Agreements, the New Collaboration Partner Agreements or
other collaboration agreements, or that the Company will ever be profitable. See
"-- Relationship With SmithKline Beecham and Other Collaborators."
6
<PAGE>
Since inception, the Company has expended, and expects to continue to
expend, substantial funds to continue its research and development programs. In
the event of unanticipated expenses or delays in receipt of revenues, the
Company may, in the future, require additional financing to fund its operating
expenses and capital requirements. There can be no assurance that additional
financing will be available on acceptable terms or at all in the event that the
Company requires additional funding to conduct its operations. If additional
funds are raised by issuing equity securities, further dilution to the existing
stockholders may result.
RELATIONSHIP WITH SMITHKLINE BEECHAM AND OTHER COLLABORATORS. The
Company is substantially dependent on SmithKline Beecham and the New
Collaboration Partners for research, development and commercialization of
products pursuant to the SB Collaboration Agreements and the New Collaboration
Partner Agreements, and on other collaborators. Under the collaboration
agreements, the Company has agreed to restrictions on entering into other
collaboration agreements in certain significant fields, including restrictions
on entering into new collaboration agreements granting rights to Human Gene
Technology in the fields covered by the SB Collaboration Agreements. SmithKline
Beecham and other collaborators will have the right to control the development,
regulatory approval and marketing of any products developed by them under these
collaboration agreements. If SmithKline Beecham or other collaborators fail to
develop marketable products, to obtain regulatory approvals for or to
successfully market products based on the genes identified by the Company, the
Company's ability to achieve profitability could be delayed or materially
adversely affected.
The Company has entered into collaboration agreements with several
companies with respect to development of products based on genes discovered by
the Company in certain areas not covered by the SB Collaboration Agreements and
has also entered into material transfer agreements with a number of academic
institutions. In connection with these agreements, the Company is dependent upon
the success of these outside parties in performing their responsibilities.
Conflicts of interest could arise between the Company and its
collaborators. Each of the Company's collaborators is conducting multiple
product development efforts. The Company's collaborators may pursue existing or
alternative technologies in preference to products being developed under the
collaboration agreements with the Company, and this could have a material
adverse impact on the Company's receipt of milestone and royalty revenues.
Additionally, the Company's collaborators may develop, either alone or with
others, products that are similar to or in competition with products being
developed under collaboration agreements with the Company.
PRODUCT DEVELOPMENT RISKS. The Company has recently begun to focus an
increasing amount of its resources on the development of therapeutic protein
product candidates. The Company's ability to develop and commercialize products
based on therapeutic proteins and, in the future, other products as to which it
has retained the rights to commercialize on its own will depend on the Company's
ability to develop internally product development, preclinical development and
testing, clinical, regulatory, sales and marketing resources, or enter into
arrangements with third parties to provide such functions. The Company has only
recently commenced such product development activities, and has limited
experience in connection with these activities. There can be no assurance that
the Company will be successful in developing
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such resources or entering into agreements with third parties. Additionally,
there can be no assurance that the Company will be able to enter into
collaboration agreements with respect to products being developed by the Company
on favorable terms, to the extent that the Company seeks to enter into such
agreements.
In addition, the Company has limited experience in conducting
preclinical and clinical development activities and intends to rely in large
part on its collaborative partners and third party clinical research
organizations to design and conduct most of such activities, if required. The
Company's inability to contract for any necessary clinical activities on
acceptable terms would impair or delay the Company's ability to complete product
development, which could have a material adverse effect on the Company.
Moreover, the Company's reliance upon such collaborators and third parties for
preclinical and clinical development activities will reduce the Company's
control over such activities and will make the Company dependent upon such
parties.
COMPETITION. There is a finite number of genes in the human genome, and
the Company believes that the majority of such genes have been identified by the
Company or others conducting genomic research and that virtually all will be
identified within several years. While the Company's goal has been to identify,
establish the utility of and ultimately patent as many genes as it can as
rapidly as possible, the Company continues to face substantial competition in
these efforts both from entities using high throughput gene sequencers to
discover genes, as well as from entities using more traditional methods to
discover genes related to particular diseases. Research to identify genes is
also being conducted by various institutes and United States and foreign
government-financed entities, including British, French, German and Japanese
efforts, as well as numerous smaller laboratories associated with universities
or other not-for-profit entities. In addition, a number of pharmaceutical and
biotechnology companies and government-financed programs are engaged in or have
announced the intention to engage in areas of human genome research similar to
or competitive with the Company's focus on gene discovery, and other companies
are likely to enter the field. The gene sequencing machines used by the Company
are commercially available and are currently being utilized by many other
companies, in some cases for business purposes competitive with those of the
Company. In addition, a number of other companies have announced plans to engage
in gene discovery and could acquire similar machines and develop procedures for
automated sequencing of genes. Although the Company believes that its large
scale, automated processes and lead time provide it with a competitive
advantage, any one of these companies or other entities may discover and
establish a patent position in one or more genes that the Company has identified
and might have designated or considered designating as a product candidate. Any
potential products based on genes identified by the Company will face
competition both from companies developing gene-based products and from
companies developing other forms of treatment for diseases that may be caused
by, or related to, genes identified by the Company.
The Company's potential competitors include pharmaceutical and
biotechnology firms and other companies, not-for-profit entities and United
States and foreign government-financed programs, many of which have
substantially greater research and product development capabilities and
financial, scientific, marketing and human resources than the Company. These
competitors may succeed in identifying genes or developing products earlier than
the Company or its collaborators, obtaining approvals from the United States
Food and Drug Administration (the "FDA") or other regulatory agencies for such
products more rapidly than the Company or its
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collaborators, or developing products that are more effective than those
proposed to be developed by the Company or its collaborators. Certain of these
competitors may be further advanced than the Company in developing potential
products that may compete with potential products of the Company. There can be
no assurance that research and development by others will not render the
products that the Company or its collaborators may seek to develop obsolete or
uneconomical or result in treatments, cures or diagnostics superior to any
therapy or diagnostics developed by the Company or its collaborators, or that
any therapy or diagnostics developed by the Company or its collaborators will be
preferred to any existing or newly developed technologies. The Company expects
that competition in this field will intensify.
TECHNOLOGICAL UNCERTAINTY; RISK OF OBSOLESCENCE. Development of
products based on genes discovered by the Company is still in an early stage and
will require significant further research, development, testing and regulatory
approvals and is subject to the risks of failure inherent in the development of
products based on innovative technologies and the risks associated with drug
development generally. These risks include the possibilities that: these
technologies or any or all of the products based on these technologies will be
found to be ineffective or toxic, or otherwise fail to receive necessary
regulatory clearances; the products, if safe and effective, will be difficult to
manufacture on a large scale or uneconomical to market; proprietary rights of
third parties will preclude the Company or its collaborators from marketing
products; or third parties will market superior or equivalent products.
To date, relatively few products based on genes have been developed and
commercialized. Even if the Company identifies a gene and determines that it has
potential commercial value, the Company and its collaborators may not be able to
develop a commercially feasible product based on the gene or the protein
expressed by the gene. Certain areas of drug discovery conducted by the
Company's collaborators, including gene therapy, and other areas, such as
antisense drugs, involve new technologies, and existing data on the safety and
efficacy of these technologies is very limited. At present, there are no
products for patient use that have been developed from these technologies or
that have received FDA approval. Several significant scientific challenges must
be addressed before the therapeutic potential of these technologies can be
commercially realized. The Company and its licensees or collaborators will not
be able to commercialize any products for a number of years, if at all.
Additionally, the areas in which the Company or its licensees or collaborators
plan to develop products are new and rapidly evolving, and are expected to
continue to undergo significant and rapid technological changes. Rapid
technological development could result in actual and proposed products, services
or processes becoming obsolete before the Company recovers a significant portion
of its related research, development and capital expenses. In addition, new gene
sequencing machines are being developed, and, depending on the conditions upon
which they are made available, there can be no assurance that the Company will
be able to obtain access to those new machines. The introduction of gene
sequencing machines that embody new and superior technology could render
obsolete the gene sequencers used by the Company. The Company's competitive
position would be adversely affected if it were unable to anticipate such future
developments and obtain access to the new technology.
PATENTS AND PROPRIETARY RIGHTS. The Company's commercial success is
dependent in part on its ability to obtain patent protection on genes discovered
by it. The Company applies for patent protection for genes identified by partial
sequencing and, subsequently, for those genes
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which it fully sequences. However, there is substantial uncertainty as to the
patentability of genes based on partial sequences. Even if patent protection is
afforded for such sequences, it may not provide effective commercial
exclusivity. While the Company's business might be enhanced by obtaining patent
protection based on partial gene sequences, the Company does not believe that
its commercial success will be materially dependent on its ability to do so. The
Company has isolated and obtained full-length sequence information for many of
the genes that the Company or its collaborators intend to develop further and
has filed, and continues to file, for patent protection based on such
full-length sequences. However, the Company does not expect to isolate and fully
sequence a significant portion of the partial gene sequences it discovers.
The patent positions of biotechnology firms generally are highly
uncertain and involve complex legal and factual questions. There is a
substantial backlog of biotechnology patent applications at the United States
Patent and Trademark Office ("PTO"), and no clear policy has emerged regarding
the breadth of claims covered in biotechnology patents. There have been, and
continue to be, intensive discussions on the scope of patent protection for both
gene fragments and full-length genes. There have also been proposals for review
of the appropriateness of patents on genes and gene fragments. There can be no
assurance that these or other proposals will not result in changes in, or
interpretations of, the patent laws which will adversely affect the Company's
patent position. The biotechnology patent situation outside the United States is
even more uncertain and is currently undergoing review and revision in many
countries.
As of February 15, 1997, the Company had filed United States patent
applications with respect to more than 230 full-length human genes and their
corresponding proteins. The Company has also filed U.S. patent applications with
respect to all or portions of genomes of five infectious microorganisms and one
non-infectious microorganism. As of February 15, 1997, the Company has five
issued U.S. patents covering full-length human genes, which expire between 2013
and 2014. There can be no assurance that the remaining applications covering
full- length genes and their corresponding proteins will result in the issuance
of any patent. While the Company identifies multiple uses for genes it has fully
sequenced, these uses may not be sufficient to meet the statutory requirements
for patentability in all cases. Additionally, in view of the substantial number
of genes that may be covered by the Company's patent applications, the Company
cannot predict what issues may arise in connection with the Company's patent
applications or the timing of the grant of patents with respect to genes covered
by such patent applications. Moreover, in certain instances, the Company will be
dependent upon its collaborators to file and prosecute patent applications.
The Company has also filed U.S. patent applications claiming more than
190,000 partial human gene sequences. These applications seek to protect partial
human and non-human gene sequences, the full-length gene sequences that include
the partial sequences, as well as products derived therefrom and uses therefor.
These applications identify possible biological functions for some of the genes
based in part on a comparison to genes included in public databases, but do not
contain any laboratory or clinical data with respect to such biological
functions. There are certain court decisions indicating that disclosure of a
partial sequence may not be sufficient to support the patentability of a
full-length sequence. In view of these court decisions, as well as the position
of the PTO referred to below, the Company believes that there is significant
risk that patents will not issue based on patent disclosures limited to partial
gene sequences. Finally, even
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if patents issue on the basis of partial gene sequences, there is uncertainty as
to the scope of the coverage, enforceability or commercial protection provided
by any such patents.
In June 1991, the National Institutes of Health (the "NIH") filed a
patent application seeking protection for a substantial number of genes based
upon partial gene sequences. The application generated substantial controversy
in the scientific community regarding the patentability of gene fragments and
the full-length gene based on only partial sequencing of genes, particularly in
cases where the biological function of the full-length gene is not identified.
An examiner in the PTO rejected the patent claims contained in the NIH
application and the rejection was not appealed by the NIH. The Company believes
that the patent applications that have been filed by the Company based on
partial gene sequences may be considered similar to the application filed by the
NIH. To date, the Company has not received notice from the PTO of a similar
rejection of its patent applications covering partial gene sequences.
Publication of information concerning genes prior to the time the
Company applies for patent protection based on the full-length gene could
adversely affect the Company's ability to obtain patent protection with respect
to genes identified by it. Washington University has identified genes through
partial sequencing pursuant to funding provided by Merck & Co. and has deposited
the partial sequences identified in a public database. See "-- Competition." In
July 1994, the Company, TIGR and SmithKline Beecham reached an agreement to
contribute a number of partial cDNA sequences to a database (the "Human cDNA
Database"). Pursuant to the agreement, the Human cDNA Database is accessible
only to academic scientists and researchers at non-profit institutions that sign
access agreements. In October 1996, TIGR notified SmithKline Beecham and the
Company of its decision to terminate the Human cDNA Database Agreement according
to its terms, effective in April 1997. TIGR and researchers who are provided
access to proprietary data in the Human cDNA Database have certain rights to
publish human cDNA sequences in which the Company has rights. The termination of
the Human cDNA Database Agreement in April 1997 will eliminate limitations on
publication of those sequences in the Human cDNA Database as of that date. While
the Company believes that the limitations on publication of sequences in the
Human cDNA Database have generally been sufficient to permit the Company to
apply for patent protection on genes in which it is interested in pursuing
further research, there can be no assurance that such publication will not
affect the Company's ability to obtain patent protection for some genes in which
it may have an interest.
In January 1997, TIGR, in collaboration with the National Center for
Biological Information (NCBI), disclosed full-length DNA sequences (which are
reportedly in excess of 35,000 sequences) assembled from partial gene sequences
(EST's) available in publicly accessible databases or sequenced at TIGR. Such
disclosure might limit the scope of claims or make unpatentable subsequent
patent applications on full length genes filed by the Company which, in the case
of genes of commercial significance, could have a material adverse effect on the
Company. See "-- Relationship with TIGR; Funding Obligations; Potential
Dispute."
In addition, others have filed and are likely to file in the future
patent applications which have not yet been published covering genes or protein
sequences similar or identical to those of the Company. Moreover, the number of
patent applications covering genes and proteins expressed by genes has been
increasing, and is expected to continue to increase, as a result of the increase
in the number of entities conducting genomic research. See "-- Competition." The
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<PAGE>
Company has been notified that there may be patent applications filed by others
which cover genes for which the Company has filed patent applications. The
priority of competing patent claims would be decided in an interference
proceeding before the PTO. No assurance can be given that any such patent
application of third parties will not have priority over patent applications
filed by the Company or that any patent applications filed by the Company will
result in issued patents.
The Company is aware that patent applications have been filed by one or
more third parties with respect to three of the Company's therapeutic protein
product candidates. The Company has been granted a patent with respect to DNA
sequences encoding one of the three therapeutic proteins. However, proceedings
may be instituted in the PTO to determine which of the Company or a third party
is entitled to a United States patent covering such protein and/or DNA encoding
such protein. As to the remaining two therapeutic proteins, the Company has been
notified that the PTO is considering instituting proceedings to determine which
of the Company or a third party is entitled to a patent covering the DNA
encoding one of such therapeutic proteins, and it is possible that proceedings
may be instituted as to the third therapeutic protein.
Accordingly, there can be no assurance that patents issued and any
additional patents, if issued, will provide commercially meaningful protection
against competitors. There can also be no assurance that any patent issued to
the Company will provide it with competitive advantages, or will not be
challenged by others. Furthermore, there can be no assurance that others will
not independently develop similar products which could result in an interference
proceeding in the PTO. Others may be able to design around issued patents or
develop products providing similar effect to products being developed by the
Company based on genes or proteins expressed by genes which are not covered by
patents issued to the Company. In addition, others may discover uses for genes
or proteins other than those uses covered in the Company's patent applications,
and these other uses may be separately patentable. In such case, the holder of a
use patent covering an invention as to which the Company has a composition of
matter patent claim could exclude the Company from selling a product for a use
covered by such use patent.
The Company's 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 and other companies
engage in the business of discovering genes through the use of high speed
sequencers, the risk increases that the Company's potential products may give
rise to claims that they infringe the patents of others. Such other persons
could bring legal actions against the Company claiming damages and seeking to
enjoin clinical testing, manufacturing and marketing of the affected products.
If any such actions are successful, in addition to any potential liability for
damages, the Company could be required to obtain a license in order to continue
to manufacture or market the affected products. There can be no assurance that
the Company would prevail in any such action or that any license required under
any such patent would be made available on acceptable terms. The Company
believes that there will continue to be significant litigation in the industry
regarding patent and other intellectual property rights. If the Company becomes
involved in such litigation, it could consume a substantial portion of the
Company's resources.
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In addition, some of the genes (representing a small percentage of
sequences covered by the Company's patent filings) covered by two of the patent
applications in which the Company has rights that have been filed were
identified pursuant to research funded by grants from the United States
Department of Energy ("DOE"). TIGR is also receiving funding from the DOE with
respect to certain non-pathogenic bacterial genomes it is sequencing. The DOE
has a statutory right under certain circumstances (including lack of action on
the part of the holder of the patent rights to achieve practical application of
the invention or a need to alleviate public health or safety concerns not
reasonably satisfied by the holder of the patent rights) to grant to other
parties licenses under the patents which may be granted based on research funded
by the DOE.
The Company also relies on trade secret protection for its confidential
and proprietary information. The Company believes it has developed proprietary
procedures for making cDNA libraries and sequencing and analyzing genes. The
Company has not sought patent protection for these procedures. Additionally, the
Company has developed a substantial database concerning genes identified by it.
The Company has taken security measures to protect its data and continues to
explore ways to further enhance the security for its data. However, trade
secrets are difficult to protect. While the Company has entered into
confidentiality agreements with employees and academic collaborators who are
provided data or materials under material transfer agreements, there can be no
assurance that such data or material will not be disclosed, that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology, or that the Company can meaningfully protect its trade secrets.
In addition, certain trade secrets important to the Company's business have been
developed by, or are in the possession of, TIGR, including information
concerning sequencing procedures and genes identified by TIGR. Although TIGR
also enters into confidentiality agreements with its employees, there is an
additional risk that such trade secrets cannot be meaningfully protected.
RELATIONSHIP WITH TIGR; FUNDING OBLIGATIONS; POTENTIAL DISPUTE. The
Company has committed to pay TIGR approximately $85 million during the ten-year
period ending September 30, 2002, approximately $44 million of which had been
paid through February 15, 1997. In return, the Company received exclusive
proprietary rights to the intellectual property resulting from TIGR's research
through September 30, 2002. Under the Company's agreements with TIGR, TIGR
generally has the right to direct its research activities independently from the
Company and there can be no assurance that TIGR will conduct research in areas
of interest to the Company. The Company's substantial financial commitment to
fund TIGR's research continues regardless of whether the Company requires TIGR's
services or derives useful information therefrom.
The Company's agreements with TIGR include non-disclosure obligations
on the part of TIGR. The Company and TIGR have had recent disagreements
concerning the scope of these non-disclosure obligations. It has come to the
Company's attention that certain disclosures by TIGR of sequence and other
information which the Company believes may violate such non- disclosure
obligations may have taken place or may take place in the future. Disclosure of
information by TIGR in violation of its non-disclosure obligations may
negatively affect the Company's ability to obtain patent protection on
inventions described therein. The Company is investigating this situation and
will determine what action, if any, should be taken to prevent
13
<PAGE>
such disclosures. See "-- Patents and Proprietary Rights." There can be no
assurance that these disagreements will not materially affect the Company's
relationship with TIGR. However, TIGR has been primarily sequencing microbial
genes and not human genes in recent years, and the Company does not believe that
it is or will be dependent on TIGR.
DEPENDENCE UPON KEY PERSONNEL. The Company is dependent on its Chairman
and Chief Executive Officer, William A. Haseltine, Ph.D., and its Senior Vice
President, Research and Development, Craig A. Rosen, Ph.D. The Company has
entered into employment agreements with each of Drs. Haseltine and Rosen for
terms expiring in February 2000 and November 1997, respectively. Each of these
employment agreements automatically renews for a one year term unless terminated
by either party. The Company has not purchased key-man life insurance on either
Dr. Haseltine or Dr. Rosen. Competition among pharmaceutical and biotechnology
companies for qualified employees is intense, and the loss of qualified
employees, or an inability to attract, retain and motivate additional highly
skilled employees required for the expansion of the Company's activities, could
adversely affect its business and prospects. There can be no assurance that the
Company will be able to retain its existing personnel or to find and attract
additional qualified employees.
UNCERTAINTY OF GOVERNMENT REGULATORY REQUIREMENTS; LENGTHY APPROVAL
PROCESS; NO ASSURANCE OF PRODUCT APPROVAL. Products such as those proposed to be
developed by the Company or its collaborators are subject to an extensive
regulatory approval process by the FDA and comparable agencies in other
countries. The U.S. government has recently established a working group to
assess whether additional regulation in the area of genetic testing may be
appropriate, which may ultimately result in further regulation. The regulation
of new therapeutic products and diagnostics is extensive, and the required
preclinical and clinical testing is lengthy and expensive. There can therefore
be no assurance that FDA approvals will be obtained in a timely manner, if at
all. The Company or its collaborators may encounter significant delays or
excessive costs in their efforts to secure necessary approvals or licenses. Even
if FDA regulatory approvals are obtained, the FDA extensively regulates
manufacturing, labeling, distributing, marketing, promotion and advertising
after product approval. Moreover, several areas in which the Company or its
collaborators may develop products involve relatively new technology and have
not been the subject of extensive product testing in patients. Accordingly, the
regulatory requirements governing such products and related clinical procedures
are uncertain and such products may be subject to substantial additional review
by various governmental regulatory authorities, which could prevent or delay
regulatory approval. Regulatory requirements ultimately imposed on these and
other areas could adversely affect the Company's ability to clinically test,
manufacture or market products.
The Company is also subject to regulation under state and federal laws
regarding environmental protection and hazardous substances control. The Company
believes it is in material compliance with applicable laws relating to
environmental protection and hazardous substances control. The impact that these
laws or any changes in these laws may have on future operations of the Company
cannot be predicted. Moreover, federal and state agencies and congressional
committees have expressed interest in further regulation of biotechnology. The
Company is unable to estimate the extent and impact of regulation in the
biotechnology field (including genetic testing) resulting from any future
federal, state or local legislation or administrative action.
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DEPENDENCE UPON THIRD PARTIES FOR SUPPLY. The Company currently relies
on a single supplier, Applied Biosystems, a division of Perkin-Elmer
Corporation, to provide all of its gene sequencing machines and certain reagents
required in connection with the gene sequencing process. While other gene
sequencing machines are available, the Company does not believe that such other
machines are as efficient as the machines currently used by the Company. No
assurance can be given that either the gene sequencing machines or the reagents
will remain available in commercial quantities at acceptable costs. Should the
Company be unable to obtain additional machines or an adequate supply of
reagents or other ingredients at commercially reasonable rates, its ability to
continue to identify genes through gene sequencing would be adversely affected.
The Company has contracted for the manufacture of therapeutic proteins
for preclinical testing and clinical development from a single supplier. The
supplier is a recently organized entity which will manufacture the therapeutic
proteins in a new cGMP manufacturing facility. The Company will be dependent on
this company for its supply of therapeutic proteins. Any failure or delay in
supplying therapeutic proteins could affect the timing of preclinical tests and
clinical trials and could delay submission of products for regulatory approval.
NO MANUFACTURING OR MARKETING CAPACITY. The Company has developed
in-house capabilities for the production and purification of recombinant
proteins for use in its research activities, but does not currently have any
manufacturing facilities capable of supplying materials suitable for clinical
trials or for commercial sale or any experience in manufacturing materials
suitable for clinical trials or for commercial sale. In the near term, the
Company intends to rely on third parties for production of certain of its
therapeutic proteins for use in pre- clinical and early clinical development and
has entered into an agreement with a third party to supply such materials. The
Company will depend on such third party to comply with current good
manufacturing practices ("cGMPs") and other regulatory requirements and to
deliver materials on a timely basis; however, there can be no assurance that
such party will perform. Any failures by third parties may delay clinical
development or the submission of products for regulatory approval, or otherwise
impair the Company's competitive position, which could have a material adverse
effect on the Company's business.
The Company is planning the construction of a pilot scale production
and process development facility for the preparation of clinical trial
quantities of its therapeutic proteins in compliance with cGMP requirements. The
Company has completed the conceptual design and has begun the preliminary
engineering design and site selection process. Construction is expected to begin
by mid 1997 and be completed in mid to late 1998. The facility will be designed
to allow for the production and purification of multiple recombinant proteins.
The Company intends to use the facility for production of preclinical and
clinical supplies of its therapeutic proteins and for process development and
scale-up. A delay in completion of the facility could adversely affect the cost
and timing of clinical trials and could delay submission of products for
regulatory approval. Moreover, the Company intends to seek financing with
respect to all or a portion of the estimated $40 million construction cost of
such facility. There can be no assurance that the Company will be able to obtain
any such financing on terms acceptable to the Company, or at all. In the event
that financing is not available on acceptable terms, the Company may determine
to use its own capital resources to finance all or a portion of the cost of such
facility.
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The Company's long range plan is to establish manufacturing
capabilities to allow it to meet its clinical trial and commercial manufacturing
requirements. However, the Company may contract with third party manufacturers
or develop products with partners and take advantage of the partner's
manufacturing capabilities. There can be no assurance that the Company will be
able to successfully establish manufacturing capabilities and manufacture its
products economically or in compliance with cGMPs and other regulatory
requirements.
The Company generally expects to rely on its collaborators or on third
parties with whom the Company may contract to market any products. In either
case, the Company will be dependent on such third parties for marketing.
However, in the future, the Company may co- promote or retain U.S. marketing
rights to certain of its products. Significant additional expenditures and
management resources will be required to develop an external sales force and
implement its marketing strategy if the Company decides to market products
directly. There can be no assurance that the Company's collaborators or other
third parties will be successful in marketing products, or that the Company will
be able to establish a successful marketing force.
UNCERTAINTY RELATED TO CHANGES IN THE HEALTHCARE SYSTEM; REIMBURSEMENT
POLICIES. In recent years, there have been numerous proposals to change the
healthcare system in the United States. Some of these proposals have included
measures that would limit or eliminate payments for certain medical procedures
and treatments or subject the pricing of pharmaceuticals to government control.
In addition, significant uncertainty exists as to the reimbursement status of
newly-approved healthcare products. Government and other third-party payors are
increasingly attempting to contain healthcare costs by limiting both coverage
and the level of reimbursement of new therapeutic and diagnostic products and by
refusing, in some cases, to provide any coverage of uses of approved products
for disease indications other than those for which the FDA has granted marketing
approval. It is uncertain what legislative proposals will be adopted or what
actions Federal, state or private payors for healthcare goods and services may
take to limit their payments for such goods and services. The Company cannot
predict the effect that changes in the healthcare system may have on its
business, and no assurance can be given that any such changes will not have a
material adverse effect on the Company.
VOLATILITY OF STOCK PRICE. The market prices for securities of both
emerging and biotechnology companies, including the market price of shares of
the Company's Common Stock, have historically been highly volatile. Future
announcements concerning the Company or its competitors, including the results
of clinical testing, technological innovations or new commercial products,
changes in government regulations, regulatory actions, announcements relating to
healthcare reform, developments concerning proprietary rights, litigation and
public concern as to safety of the Company's products, as well as
period-to-period variances in financial results could cause the market price of
the Common Stock to fluctuate substantially. In addition, the stock market has
experienced extreme price and volume fluctuations that have particularly
affected the market price for many emerging and biotechnology companies and that
have often been unrelated to the operating performance of these companies. These
broad market fluctuations may adversely affect the market price of the Common
Stock.
SHARES AVAILABLE FOR RESALE. All of the 22,078,936 shares of Common
Stock that are outstanding are eligible for immediate sale in the public market,
subject in the case of approximately 6,628,616 such shares to compliance with
the provisions of Rule 144 under the
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<PAGE>
Securities Act of 1933, as amended (the "Securities Act"). Additionally, holders
of 6,075,760 shares of Common Stock or warrants to purchase Common Stock have
registration rights with respect to such shares. Sales of substantial amounts of
Common Stock pursuant to Rule 144 or otherwise may have an adverse effect on the
market price of the Common Stock.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained in "The Company", and "Risk Factors" such
as statements concerning future collaboration agreements, royalties and other
payments under collaboration agreements, and product development and sales and
other statements contained herein regarding matters that are not historical
facts are forward looking statements; actual results may differ materially from
those projected in the forward looking statements, which statements involve
risks and uncertainties, including but not limited to, the following: the
scientific progress of the Company in its research and development programs; the
magnitude of these programs; the ability of the Company to establish additional
collaborative and licensing arrangements; the extent to which the Company
engages in clinical development of any products on its own; the scope and
results of pre-clinical testing and clinical trials; the time and costs involved
in obtaining regulatory approvals; the costs involved in preparing, filing,
prosecuting, maintaining and enforcing patent claims; competing technological
and market developments; and whether conditions to milestone payments are met
and the timing of such payment. Investors are also directed to the other risks
discussed herein under "Risk Factors," in the Company's Annual Report on Form
10-K and in other documents filed by the Company with the Commission.
17
<PAGE>
SELLING SECURITYHOLDER
The following table sets forth certain information as of March 31,
1997, hereof, with respect to the Common Stock held by the Selling Stockholder.
Except as set forth below, the Selling Stockholder has not had a material
relationship with the Company within the past three years other than as a result
of the ownership of the Common Stock. The Common Stock offered by this
Prospectus may be offered from time to time by the Selling Stockholder:
Number of Shares of
Name Beneficially Owned Percentage of Number of Shares
and Address Common Stock Shares Outstanding Being Offered
- ----------- ------------ ------------------ -------------
Bear Stearns 86,181(1) * 50,871(1)
International
Limited
One Canada Square
London E14 5AD
England
* less than 1%
(1) Includes 50,871 shares issuable on exercise of Warrants which were
purchased from HealthCare Ventures III, L.P. ("HCV III") and HealthCare
Ventures IV, L.P. ("HCV IV") on October 28, 1996. James Cavanaugh, a
director of the Company, is a general partner of the general partner of
HCV III and HCV IV. The shares included in the table as beneficially
owned by the Selling Stockholder exclude shares held in the name of
Bear Stearns Securities Corp., an affiliate of the Selling Stockholder,
which are not held in discretionary or custodial accounts
Bear, Stearns & Co., Inc. ("Bear Stearns"), an affiliate of the Seller
Stockholder, was one of the representatives of the underwriters in public
offerings of the Company's securities commenced on December 1, 1993, September
28, 1995 and March 13, 1997. In addition, Bear Stearns acts as a market-maker in
the shares of the Common Stock of the Company.
The Selling Stockholder may offer all or part of the Common Stock which
they hold pursuant to the offering contemplated by this Prospectus. Therefore,
no estimate can be given as to the amount of Common Stock that will be held by
the Selling Stockholder upon completion of such offering.
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time to purchasers directly
by the Selling Stockholder. Alternatively, the Selling Stockholder may from time
to time offer the Common Stock through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholder and/or the purchasers of Common Stock
for whom they may act as agent. The Selling Stockholder and any underwriters,
dealers or agents that participate in the distribution of Common Stock may be
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<PAGE>
deemed to be underwriters, and any profit on the sale of Common Stock by them
and any discounts, commissions or concessions received by any such underwriters,
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act. At the time a particular offer of Common Stock is
made, to the extent required, a Prospectus Supplement will be distributed which
will set forth the terms of the offering, including the name or names of any
underwriters, dealers or agents, any discounts, commissions and other items
constituting compensation from the Selling Stockholder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
The Common Stock may be sold from time to time in one or more
transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. From time to
time, the Selling Stockholder may engage in short sales, or short sales versus
the box, and may sell and deliver the shares being offered hereby in connection
therewith. In addition, the Selling Stockholder may sell such shares through the
writing of options (whether such options are listed on an options exchange or
otherwise) on the shares, and in privately negotiated transactions.
The Company will pay substantially all of the expenses incident to the
offering and sale of the Common Stock to the public other than commissions and
discounts of underwriters, dealers or agents. Under an agreement entered into
with the Company, the Selling Stockholder, and any underwriter they may utilize,
will be indemnified by the Company against certain civil liabilities, including
liabilities under the Securities Act.
USE OF PROCEEDS
The Common Stock offered hereby are offered by the Selling Stockholder.
See "Selling Securityholder" and "Plan of Distribution". The Company will not
receive any proceeds from the sale of the Common Stock.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Certificate of Incorporation and By-Laws of the Registrant provide
that the Company shall indemnify any person to the full extent permitted by the
Delaware General Corporation Law (the "GCL"). Section 145 of the GCL, relating
to indemnification, is hereby incorporated herein by reference.
In accordance with Section 102(a)(7) of the GCL, the Certificate of
Incorporation of the Registrant eliminates the personal liability of directors
to the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director with certain limited exceptions set forth in Section
102(a)(7).
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange
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<PAGE>
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
EXPERTS
The financial statements of the Company at December 31, 1995 and 1996,
and for the years then ended, appearing in the Company's Annual Report (Form
10-K) have been audited by Ernst & Young LLP, independent auditors, and for the
year ended December 31, 1994, by Richard A. Eisner & Company, LLP ("Eisner"),
independent auditors, as set forth in their respective reports thereon included
therein, and incorporated herein by reference in reliance upon such reports
given upon the authority of such firms as experts in accounting and auditing.
The Company has agreed to indemnify Eisner against certain liabilities,
including liabilities arising under the Securities Act, provided, that such
indemnification shall not be effective with regard to any liability for
professional malpractice or payment of settlement or judgement costs.
20
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered (other than
underwriting discounts and commissions) are as follows:
Amount
------
SEC Registration Fee...................... $ 501.00
Accounting Fees and Expenses.............. 5,000.00
Legal Fees and Expenses................... 15,000.00
Miscellaneous Expenses.................... 4,499.00
----------
Total................................ $25,000.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation and By-Laws of the Registrant provide
that the Company shall indemnify any person to the full extent permitted by the
Delaware General Corporation Law (the "GCL"). Section 145 of the GCL, relating
to indemnification, is hereby incorporated herein by reference.
In accordance with Section 102(a)(7) of the GCL, the Certificate of
Incorporation of the Registrant eliminates the personal liability of directors
to the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director with certain limited exceptions set forth in Section
102(a)(7).
ITEM 16. EXHIBITS
3.1* Restated Certificate of Incorporation (Fifth) of the Registrant
(Filed as Exhibit 3.1 to the Registrant's Form 10-K for the
fiscal year ended December 31, 1993 and incorporated herein by
reference).
3.2* By-laws of the Registrant (Filed as Exhibit 3.2 to the
Registrant's Form 10-K for the fiscal year ended December 31,
1993 and incorporated herein by reference).
4.1* Form of Common Stock certificate
5.1 Opinion of Bachner, Tally, Polevoy & Misher LLP
II-1
<PAGE>
23.1 Consent of Bachner, Tally, Polevoy & Misher LLP (Included in
Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
23.3 Consent of Richard A. Eisner & Co, LLP, Independent Auditors
24.1 Power of Attorney (Included on signature page)
- -------------
* Incorporated by reference.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statements to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement; and
(iii)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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission
II-2
<PAGE>
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
requirements for filing on Form S-3 and has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Rockville, State of Maryland on the 23rd day of
April, 1997.
HUMAN GENOME SCIENCES, INC.,
By: /s/ William A. Haseltine, Ph.D.
---------------------------------
William A. Haseltine, Ph.D.
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below under the heading "Signature" constitutes and appoints William A.
Haseltine, Ph.D. or Melvin D. Booth, his true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities to sign any or all amendments
to this registration statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each 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, as fully for all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
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/ William A. Haseltine, Ph.D. Chairman of the Board April 23, 1997
-------------------------------------------- and Chief Executive
William A. Haseltine, Ph.D. Officer (principal
executive officer)
/s/ Melvin D. Booth President and Chief April 23, 1997
-------------------------------------------- Operating Officer and
Melvin D. Booth Director
II-4
<PAGE>
/s/ Craig A. Rosen, Ph.D. Senior Vice President April 23, 1997
------------------------------------------- -- Research and
Craig A. Rosen, Ph.D. Development and
Director
/s/ Bradley G. Lorimier Senior Vice President April 23, 1997
------------------------------------------- -- Business Development
Bradley G. Lorimier and Director
/s/ Steven Mayer Senior Vice President April 23, 1997
-------------------------------------------- and Chief Financial Officer
Steven Mayer (principal financial and
accounting officer)
/s/ Robert A. Armitage Director ____________, 1997
--------------------------------------------
Robert A. Armitage
-------------------------------------------- Director ____________, 1997
James H. Cavanaugh, Ph.D.
/s/ Beverly Sills Greenough Director April 23, 1997
-------------------------------------------
Beverly Sills Greenough
/s/ Donald D. Johnston Director April 23, 1997
-------------------------------------------
Donald D. Johnston
/s/ Max Link Director April 23, 1997
-------------------------------------------
Max Link
------------------------------------------- Director ____________, 1997
Joshua Ruch
/s/ Robert Hormats Director April 23, 1997
-------------------------------------------
Robert Hormats
/s/ James B. Wyngaarden, M.D. Director April 23, 1997
------------------------------------------
James B. Wyngaarden, M.D.
</TABLE>
II-5
Exhibit 5.1
April 25, 1997
Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850-3338
Re: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have served as your counsel in connection with the preparation of
your Registration Statement on Form S-3 to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, representing
the offering and issuance by a selling stockholder of an aggregate of 50,871
shares of the Common Stock, $.01 par value (the "Common Stock") of Human Genome
Sciences, Inc. issuable on exercise of certain warrants.
We have examined such corporate records, documents and matters of law
as we have considered appropriate for the purposes of this opinion.
Based upon such examination and our participation in the preparation of
the Registration Statement, is it our opinion that the Common Stock, when sold
pursuant to the Registration Statement, will be validly issued, fully paid and
non-assessable.
We consent to the reference made to our firm in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Bachner, Tally, Polevoy &
Misher LLP
BACHNER, TALLY, POLEVOY
& MISHER LLP
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333- ) and related Prospectus of Human
Genome Sciences, Inc. for the registration of 50, 871 shares of common stock
underlying warrants and to the incorporation by reference therein of our report
dated February 14, 1997, with respect to the financial statements of Human
Genome Sciences, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
Vienna, Virginia
April 24, 1997 /s/ Ernst & Young LLP
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 of our report dated February 14, 1995 on the financial statements of
Human Genome Sciences, Inc. (the "Company") for the year ended December 31,
1994, included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and to the reference to us under the caption "Experts"
included in the Prospectus.
/s/ Richard A. Eisner & Company LLP
New York, New York
April 24, 1997
