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<CAPTION>
<S> <C> <C>
As filed with the Securities and Exchange Commission on April 23, 1999
Registration No. 333-
-----------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
SUGEN, INC.
(Exact name of Registrant as specified in its charter)
Delaware 2836 13-3629196
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification Number)
-----------------------
230 East Grand Avenue
South San Francisco, California 94080
(650) 553-8300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------------------
James L. Knighton
Senior Vice President and Chief Financial Officer
SUGEN, Inc.
230 East Grand Avenue
South San Francisco, California 94080
(650) 553-8300
(Name, address, including zip code, and telephone number, including area code, of agent for service)
-----------------------
Copies to:
Suzanne Sawochka Hooper, Esq. Brian W. Pusch, Esq.
Cooley Godward LLP Law Offices of Brian W Pusch
Five Palo Alto Square Penthouse Suite
3000 El Camino Real 29 West 57th Street
Palo Alto, California 94306-2155 New York, NY 10019
(650) 843-5000 (212) 980-0408
----------------------
Approximate date of commencement of proposed sale to
the public: As soon as practicable after this Registration
Statement becomes effective.
-----------------------
If the only securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than 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 filed in 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 of the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the
following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================
Title of Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered(1) Offering Price Per Share(2) Aggregate Offering Price(2) Registration Fee
------------- --------------------------- --------------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value
per share 3,240,000 shares $15.375 $49,815,000 $13,849
---------------- ------- ----------- -------
<FN>
(1) Includes (i) up to 1,365,000 shares of common stock to be issued upon conversion of SUGEN's 12% Senior Convertible Notes
due 2002 (the "Notes"), (ii) up to 1,025,000 shares of common stock to be issued upon conversion of SUGEN's 12% Senior
Convertible Notes (the "Warrant Notes") issuable upon exercise of SUGEN's 12% Senior Convertible Note Purchase Warrants (the
"Warrants"), (iii) up to 850,000 shares of common stock to be issued and paid in lieu of cash, at SUGEN's option, as interest
on the Notes and Warrant Notes through March 2001, (iv) up to 2,390,000 shares of common stock to be issued upon exercise of
Common Stock Purchase Warrants (the "Common Stock Warrants") that may be issued upon redemption of the Notes, Warrants and
Warrant Notes (all or some of these shares would be issued in lieu of a like number of the shares described under (i) and
(ii) above), and (v) an indeterminate number of additional shares of common stock as may from time to time become issuable
upon conversion of the Notes, Warrant Notes and Common Stock Warrants by reason of stock splits, stock dividends and other
similar transactions, which shares are registered hereunder pursuant to Rule 416 under the Securities Act.
(2) The price of $15.375 per share, which was the average of the high and low prices of the common stock reported by the
Nasdaq Stock Market on April 20, 1999, is set forth solely for the purpose of calculating the registration fee in accordance
with Rule 457(c) of the Securities Act of 1933, as amended.
</FN>
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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 that specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 23, 1999
[SUGEN Logo]
SUGEN, INC.
PROSPECTUS
3,240,000 Shares of Common Stock
Offered by Certain Selling Stockholders
This prospectus covers the offer and sale by certain selling stockholders named
below of up to 3,240,000 shares of common stock of SUGEN, Inc., consisting of:
o up to 1,365,000 shares that may be issued upon conversion of our
12% Senior Convertible Notes due 2002 (the "Notes");
o up to 1,025,000 shares that may be issued upon conversion of
additional notes (the "Warrant Notes") issuable upon exercise of
our 12% Senior Convertible Note Purchase Warrants (the
"Warrants");
o up to 2,390,000 shares that may be issued upon exercise of
warrants (the "Common Stock Warrants") that we may issue upon
redemption of the Notes, Warrants and Warrant Notes (all or some
of these shares would be issued in lieu of the same number of the
shares indicated above);
o up to 850,000 shares that may be issued and paid in lieu of cash,
at our option, as interest on the Notes and Warrant Notes through
March 2001; and
o an indeterminate number of additional shares as may from time to
time become issuable upon conversion of the Notes and Warrant
Notes, or upon exercise of the Common Stock Warrants, by reason of
stock splits, stock dividends and other similar transactions.
We are registering the shares pursuant to registration rights granted to the
selling stockholders. The selling stockholders may offer the shares through
public or private transactions at prevailing market prices, at prices related to
such prevailing market prices or at privately negotiated prices. Our common
stock is traded on The Nasdaq National Market under the symbol "SUGN." On April
21, 1999, the last reported sale price for our common stock was $16.25 per
share.
We will not receive any proceeds from the sale of the shares by the selling
stockholders. We will, however, receive proceeds upon any exercise of the
Warrants and Common Stock Warrants. We have agreed to pay certain expenses in
connection with the registration of the shares and to indemnify the selling
stockholders against certain liabilities, including liabilities under the
Securities Act.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THE SHARES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is April __, 1999
2
<PAGE>
TABLE OF CONTENTS
Page
Where You Can Find More Information ......................................... 3
Sugen ....................................................................... 4
Risk Factors................................................................. 6
Selling Stockholders......................................................... 14
Plan of Distribution......................................................... 16
Legal Matters................................................................ 16
Experts...................................................................... 16
<PAGE>
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The selling stockholders are offering to sell
and seeking offers to buy the shares only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of the shares.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any document we file
at the SEC's Public Reference Room at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549 and at the following regional offices of the
SEC: Pacific Regional Office, 5670 Wilshire Boulevard, 11th Floor, Los Angeles,
California 90036-3648; and San Francisco District Office, 44 Montgomery Street,
Suite 1100, San Francisco, California 94104. Copies can also be obtained from
the Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of prescribed rates. You may obtain information on the
operation of the SEC's Public Reference Room by calling the SEC at (800)
SEC-0300. Our SEC filings are available to you on the SEC's Internet site at
http://www.sec.gov. Our common stock is quoted on The Nasdaq National Market.
Reports, proxy statements and other information concerning us may be inspected
at the National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
This prospectus is only part of a registration statement on Form S-3
that we have filed with the SEC under the Securities Act, and therefore omits
certain information contained in the registration statement. We have also filed
exhibits and schedules with the registration statement that are not included in
this prospectus, and you should refer to the applicable exhibit or schedule for
a complete description of any statement referring to any contract or other
document. A copy of the registration statement, including the exhibits and
schedules thereto, may be inspected without charge at the Public Reference Room
of the SEC described above, and copies of such material may be obtained from
such office upon payment of the fees prescribed by the SEC.
The SEC allows us to "incorporate by reference" the information
contained in documents that we file with them, which means that we can disclose
important information to you by referring you to these documents. The
information incorporated by reference is considered to be part of this
prospectus and later information we file with the SEC will automatically update
and supercede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act. The documents we are incorporating by reference
are:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998;
2. Our Definitive Proxy Statement dated April 22, 1999, filed in
connection with our 1999 Annual Meeting of Stockholders;
3. Our Current Report on Form 8-K filed on March 29, 1999; and
4. The description of our common stock contained in our Registration
Statement on Form 8-A filed with the Commission on September 13, 1994,
including any amendments or reports filed for the purpose of updating
such description.
You may request a copy of any of these filings at no cost by writing or
telephoning us at:
SUGEN, Inc.
230 East Grand Avenue
South San Francisco, California 94080
Attn: Corporate Communications and Investor Relations
Telephone (650) 553-8300
3
<PAGE>
The following information is qualified in its entirety by the more
detailed information and financial statements, and notes to financial
statements, appearing elsewhere or incorporated by reference in this prospectus.
This prospectus contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual
results could differ materially from those projected in the forward-looking
statements as a result of certain of the risk factors set forth elsewhere in
this prospectus. Investors should carefully consider the information set forth
under the heading "Risk Factors."
SUGEN
SUGEN is a biopharmaceutical company focused on the discovery and
development of small molecule drugs which target specific cellular signal
transduction pathways. These signalling pathways are regulated by cell-surface
receptors or intracellular signalling molecules known as tyrosine kinases (TKs),
tyrosine phosphatases (TPs) and serine-threonine kinases (STKs), three of the
largest known families of receptors in the body and key regulators of critical
cellular functions. Aberrant signalling of TKs, TPs and STKs has been shown to
result in a variety of chronic and acute pathological diseases, including cancer
and diabetes as well as in dermatologic, ophthalmic, neurologic and immune
disorders. We believe that compounds designed to target certain kinases and
phosphatases and inhibit enzyme activity or prevent the binding of downstream
signalling molecules make attractive therapeutic product candidates. Our
research and development efforts in signal transduction are based in part upon
the pioneering accomplishments of our founding scientists, Dr. Axel Ullrich of
Max-Planck-Institut fur Biochemie and Dr. Joseph Schlessinger of New York
University Medical Center.
SU101, our most advanced product candidate, is an inhibitor of the
platelet-derived growth factor receptor (PDGF TK) signalling pathway. Imbalances
in the PDGF TK signalling pathway have been shown by SUGEN and others to be
implicated in significant subsets of certain types of cancers, including brain,
prostate, lung and ovarian. We initiated a Phase III clinical trial in
refractory glioblastoma, an aggressive type of brain cancer, in the first
quarter of 1998 and expect to conduct an interim analysis by year end. A Phase
II clinical study of SU101 as single agent therapy for refractory anaplastic
astrocytoma, another type of malignant brain tumor, is also being conducted in
parallel with the Phase III trial. A Phase II clinical trial of SU101 in
combination with BCNU, the chemotherapy drug that is part of the standard
treatment regimen in newly diagnosed brain cancer patients, was initiated in
mid-1997, and is expected to be completed by mid-year. We are also conducting a
pilot study of SU101 in combination with mitoxantrone, in preparation for a
pivotal Phase III trial as combination front-line therapy in hormone-refractory
prostate cancer patients, set to begin later this year. In addition, we have
ongoing Phase II trials in ovarian and non small cell lung cancers, set for
completion in mid 2000. To date, over 400 patients have been treated with SU101
in 13 SUGEN-sponsored clinical trials.
In September 1997, we initiated Phase I clinical testing with our lead
angiogenesis inhibitor, SU5416, a Flk-1/KDR TK inhibitor, which is designed to
inhibit the growth and spread of cancer by preventing the formation of new blood
vessels (angiogenesis) required to nourish the tumor. To date, SU5416 has shown
an excellent safety profile in over 100 patients with a range of solid tumors,
including advanced colorectal, lung and renal cell cancers, and AIDS-related
Kaposi's sarcoma; anecdotal indications of activity have been observed in a
number of patients, including prolonged periods of stable disease and some
instances of tumor shrinkage. After extensive consultation with numerous
oncology opinion leaders, we announced plans to accelerate the development of
SU5416 with the initiation of Phase III clinical trials in non small cell lung
and colorectal cancers, and Phase II/III studies in AIDS-related Kaposi's
sarcoma in the U.S. and Europe this year. Meanwhile, we will be working with
certain investigators on NCI-sponsored Phase II studies in other cancer
indications. This strategy may expedite the commercialization of SU5416, which
has the potential to become the first specific angiogenesis inhibitor to reach
the U.S. market. There can be no assurance that this commercialization strategy
will result in accelerated commercialization of SU5416 or that other
angiogenesis inhibitors will not receive regulatory approval prior to any
approval of SU5416.
Our third novel anti-cancer drug candidate is SU6668, which combines
both angiogenic and cytostatic anti-tumor activity by selectively blocking
multiple targets involved in the growth and spread of tumors, including the
Flk-1/KDR, PDGF and fibroblast growth factor (FGF) receptors. SU6668 is
currently in Phase I clinical trials in Europe and in the U.S. using intravenous
and oral formulations, respectively. Both studies are expected to conclude in
the latter half of 1999.
We are also pursuing additional cancer-related drug development
programs, including Pan-Her, Met-TK, CDK2, GRB2 and other proprietary programs,
many of which have lead compounds now undergoing in vivo pharmacology studies.
We currently plan to select a lead compound for a small molecule Pan-Her
inhibitor this year, and expect to identify a clinical candidate for either the
Met-TK or CDK2 program in 1999. However, there can be no assurance that lead
compounds will emerge in any of these programs in 1999, or at all.
We are also applying our drug discovery and development platform to
areas outside oncology, including ophthalmology, rheumatoid arthritis,
cardiovascular disease, diabetes, and immunology. We are awaiting final results
of a Phase I/II clinical trial with SU5271, an epidermal growth factor receptor
antagonist, for the treatment of psoriasis; however, the results seen to date
have not been compelling, and given our prioritization on our cancer programs,
we do not currently anticipate moving forward into Phase II with SU5271.
We employ a target-driven approach to drug discovery and development.
We believe that the receptors and signal transduction pathways that play a
causative role in disease states are attractive targets for drug design and
development. Our drug discovery platform consists of:
o target identification, using advanced genomics techniques and our
proprietary bioinformatics program;
o target validation in relevant in vivo disease models;
o whole cell or other assay design and target-driven screening of
compounds for leads; and
o lead optimization using crystallography and computational
chemistry.
4
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We believe our drug discovery and development platform may reduce the
cost, time and risk associated with bringing potential products to market by
rationally screening for potent and specific drug leads in the early stages of
discovery and optimizing pharmacologic features in the later stages of drug
development, thereby reducing the incidence and severity of side effects.
We are concurrently pursuing two business strategies for
commercialization of our products and technologies. In the cancer field, we
intend to build a vertically integrated oncology business in North America, with
the objective of bringing to market a family of target-specific signal
transduction inhibitors proprietary to SUGEN. To market our products
effectively, we currently intend to build a focused U.S. sales force to target
the major cancer treatment centers and may explore alliances with potential
marketing and distribution partners to optimize sales. On the European front, we
recently established SUGEN Europe AG. This new entity has become the European
licensee for our cancer pipeline, with a mission to build a strong and
profitable cancer business in Europe. While we had initially planned to license
European rights to our products to a fully integrated pharmaceutical company, we
have concluded that the available financial terms of that route would not
adequately reflect the market potential of our products in such a potentially
rapidly growing market.
SUGEN Europe expects to work with a limited number of distribution
partners who bring a strong local presence on a pan-European scale to maximize
product revenue. The first of these distribution agreements has been concluded
with Esteve S.A. of Spain, and active negotiations are ongoing with respect to
the other European territories. We also plan to seek additional corporate
partners to fund product development and to commercialize our products in the
rest of the world.
In Japan, we have entered into an agreement with Taiho Pharmaceutical
Ltd. for the development and commercialization of our angiogenesis inhibitors
for the treatment of cancer. Under this agreement, Taiho is required to
contribute to the worldwide development and clinical trials costs of SU5416 and
SU6668, to make payments to us upon reaching certain milestones, and receives
Japanese commercial rights; through our affiliate, SUGEN International AG, we
may provide finished product to Taiho on prenegotiated terms.
While we generally intend to retain rights to our cancer programs in
North America, we are funding a portion of our ongoing cancer research through a
collaboration with Zeneca Limited for the development of five cancer targets,
including the Aurora2, an oncogene overexpressed in more than 50% of primary
colorectal cancers. Pursuant to our agreement with Zeneca, we will have the
opportunity to obtain profit participation rights in the North American market
by contributing to clinical development costs as incurred and in addition will
receive milestone payments and royalties on worldwide sales. Our agreement with
Zeneca will expire in March 2000 unless we agree with Zeneca to extend the
agreement.
Finally, we are collaborating with ASTA Medica Aktiengesellschaft of
Germany with respect to its Pan-Her and Raf programs currently in drug
discovery. Under this arrangement, ASTA Medica makes certain payments to us, and
receives European and Latin American commercial rights in cancer. Our agreement
with ASTA Medica will expire in December 1999 unless we agree with Asta Medica
to extend the agreement.
Outside of oncology, our strategy is to seek corporate collaborations
or joint ventures to which we contribute validated targets, screening
technologies and drug leads while the partner provides the disease-specific and
drug development expertise, marketing experience, and funding to bring these
potential products to market. As part of this strategy, we entered into a
collaboration with Allergan, Inc. and its affiliate, Vision Pharmaceuticals,
L.P., for angiogenesis inhibition in ophthalmic applications. We also have an
agreement with ProChon Biotech Ltd. for the development of drugs for the
treatment of achondroplasia and other growth disorders. Our agreement with
Allergan will expire in October 1999 unless we agree with Allergan to extend its
agreement.
We were incorporated in Delaware in 1991. Our executive offices are
located at 230 East Grand Avenue, South San Francisco, California 94080, and our
telephone number is (650) 553-8300. "SUGEN" is our trademark. This prospectus
also contains trademarks of other companies.
Recent Developments
On March 24, 1999 we sold to the selling stockholders $28,000,000
aggregate principal amount of the Notes and Warrants to purchase $21,000,000
aggregate principal amount of Warrant Notes. The sale was pursuant to Securities
Purchase and Exchange Agreements, dated as of March 19, 1999.
The shares being registered represent:
o up to 1,365,000 shares of our common stock that may be issued upon
conversion of the Notes;
o up to 1,025,000 shares of our common stock that may be issued upon
conversion of the Warrant Notes;
o up to 2,390,000 shares of our common stock that may be issued upon
exercise of Common Stock Warrants which may be issued upon the
redemption of the Notes, Warrants and Warrant Notes (all or some
of these shares would be issued in lieu of the same number of the
shares described above);
o up to 850,000 shares of our common stock that may be issued and
paid in lieu of cash, at our option, as interest on the Notes and
Warrant Notes through March 2001; and
o an indeterminate number of additional shares of our common stock
that may from time to time become issuable upon conversion of the
Notes and Warrant Notes, or upon exercise of the Common Stock
Warrants, by reason of stock splits, stock dividends and other
similar transactions.
5
<PAGE>
RISK FACTORS
This prospectus contains forward-looking statements. These statements
relate to future events or our future clinical or product development or
financial performance. In some cases, you can identify forward-looking
statements by phrases such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," or "continue"
or the negative of such terms and other comparable phrases. These statements
reflect only our current expectations. Actual events or results may differ
materially. In evaluating these statements, you should specifically consider
various factors, including the risks outlined below. These factors may cause our
actual results to differ materially from any forward-looking statements. We are
not undertaking any obligation to update any forward-looking statements
contained in this prospectus to reflect any future events or developments.
You should carefully consider the following risk factors and warnings
before making an investment decision. The risks described below are not the only
risks we face. Additional risks that we do not yet know of or that we currently
think are immaterial may also impair our business operations. If any of the
events or circumstances described in the following risks actually occurs, our
business, financial condition, or results of operations could be materially
adversely affected. In such case, the trading price of our common stock could
decline, and you may lose all or part of your investment. You should also refer
to the other information set forth in this prospectus, including our financial
statements and the related notes.
Our products are at an early stage of development and there is a high risk of
failure
To date, none of our product candidates have received regulatory
approval for commercial sale. All of our product candidates are in early stages
of development, and we face the risks of failure inherent in developing
biotechnology products based on new technologies. To achieve profitable
operations on a continuing basis, we, alone or with collaborative partners, must
successfully develop, manufacture, introduce and market our proposed products.
To date, three of our cancer drug candidates have entered human clinical
testing. We cannot assure you that we will be able to develop any commercial
products. Products, if any, resulting from our research and development programs
are not expected to be commerically available until at least 2001, even if
successfully developed and proved to be safe and effective. Our products must
satisfy rigorous standards of safety and efficacy before they can be approved by
the United States Food and Drug Administration (FDA) and international
regulatory authorities for commercial use. We will have to conduct significant
additional research and preclinical (animal) and clinical (human) testing before
we can file applications with the FDA for product approval. Clinical trials are
lengthy and expensive and have a high risk of failure. In addition, to compete
effectively, our products must be easy to use, cost-effective and economical to
manufacture on a commercial scale. We cannot assure you that we can achieve any
of these objectives. Any of our products may fail in the testing phase or may
not attain market acceptance. Also, third parties may develop superior products
or have proprietary rights that preclude us from marketing our products. If
research and testing is not successful, our products are not commercially viable
or we cannot compete effectively, our business, financial condition and results
of operation will be materially adversely affected.
We focus on the discovery and development of small molecule drugs which
target specific cellular signal pathways that regulate critical cellular
functions. These signalling pathways are controlled by receptors on the cell's
surface or intracellular molecules known as tyrosine kinases (TKs), tyrosine
phosphatases (TPs) and serine-threonine kinases (STKs). Drug discovery and
development methods based on TKs, TPs and STKs and their related signalling
pathways are relatively new and untested. We cannot assure you that we will be
able to discover any additional lead compounds or develop any commercial
products based on these methods. Currently, our SU101, SU5416 and SU6668 product
candidates are undergoing clinical trials. Our other cancer-related drug
development programs and additional non-cancer drug development programs are
still in the early stages of research and development. We cannot assure you that
our proposed compounds will be submitted or accepted for clinical testing. If we
identify additional potential compounds, they will require substantial research,
development, preclinical and clinical testing, regulatory approval and
additional investment before they can be commercial products. We cannot assure
you that any of these efforts will be successful.
We will need additional funds
Our product development programs are very costly. We expect to continue
to spend substantial funds for our research, preclinical and clinical testing,
and operations for the foreseeable future. Our future cash liquidity and capital
requirements will depend on many factors, including:
o continued scientific progress of our research and development
programs
o our ability to establish collaborations with partners
o progress of our preclinical and clinical trials of product
candidates
o the time and costs of obtaining regulatory clearances
o the costs involved in obtaining and protecting our intellectual
property rights
o competing technological developments
o changes in our existing research and commercialization
collaboration arrangements
o costs associated with commercialization of our products
We believe that our existing capital resources, together with facility
and equipment lease lines, the anticipated revenues from current collaborations
and projected interest income, will support our current and planned operations
into 2000. While we believe that funds from future collaborations will extend
this time period, we cannot assure you that we will enter into such future
collaborations. Additionally, we cannot assure you that our assumed levels of
revenue and expense will prove accurate.
We intend to seek additional funding through collaborative
arrangements, public or private equity or debt financings and capital lease
transactions. However, we cannot assure you that we will be able to raise
additional funds on acceptable terms, or at all. If we raise additional funds
6
<PAGE>
by issuing equity securities, our existing stockholders may experience
substantial dilution. If we raise additional funds through collaborative
arrangements, we may have to give up some commercialization rights to our
technologies, product candidates or products. If adequate funds are not
available, we may have to delay, reduce or eliminate one or more of our research
or development programs which would materially adversely affect our business.
We have only a limited operating history and we expect to continue to generate
losses
We may never achieve a profitable level of operations. To date, we have
engaged primarily in research and development. Our development and general and
administrative expenses have resulted in substantial losses. As of December 31,
1998, we had an accumulated deficit of approximately $130,598,408 million. We
expect our losses to continue at least through 2001. We expect cumulative losses
to increase substantially as our research and development efforts, including
preclinical and clinical testing, are expanded. Our ability to become profitable
will depend on our ability to, among other things:
o obtain and protect our intellectual property rights
o complete our product development
o obtain product regulatory approvals
o manufacture and market our proposed products
o achieve market acceptance for our products.
We rely heavily on collaborations for the discovery, development, clinical
testing and commercialization of our product candidates
Our strategy for the discovery, development, clinical testing,
manufacturing and commercialization of our proposed products includes entering
into various collaborations with corporate partners, licensors, licensees and
others, and is dependent upon the subsequent success of these outside partners
in performing their responsibilities. Currently, we have collaborations with the
following partners:
o Allergan, Inc. and its affiliate Vision Pharmaceuticals, L.P.
o ASTA Medica Aktiengesellschaft
o Esteve S.A. of Spain.
o Max-Planck Society
o National Cancer Institute
o New York University Medical Center
o ProChon Biotech Limited
o Taiho Pharmaceutical Ltd.
o Zeneca Limited
Our ability to develop, test, manufacture and market our proposed
products successfully depends significantly on our partners' performance under
these, and future, collaborations. We cannot control the amount and timing of
resources to be devoted to our collaborations by corporate partners. We cannot
assure you that our partners will perform their obligations under these
collaborations or that we will succeed in identifying lead compounds or
developing commercial products from these or future collaborations. We cannot
assure you that our partners or any future partners will not pursue their own
existing or alternative technologies in preference to those being developed in
our collaborations. Generally, our collaborative arrangements do not obligate
our partners to devote a specific level of funding to research related to our
potential products. Our collaborative partners are free to select the methods
they use in pursuing their research targets. We cannot assure you that our
collaborative partners will continue to conduct research related to our
potential products or conduct research and select research targets in a manner
consistent with our best interests. If our collaborative partners do not
continue to conduct research related to our potential products, our business,
financial condition and results of operations could be materially adversely
affected. We also cannot assure you that we will derive any additional revenue
from such arrangements over and above the contractual payment amounts.
o Termination of collaborations. The termination or material
reduction in the scope of our collaborations could have a material
adverse effect on our business. Unless extended, our research
collaboration with Allergan expires in October 1999, research
funding under our collaboration with Zeneca expires in March 2000,
and our collaboration with New York University expires in
September 2001. Our collaboration with Max-Planck expired in
August 1997, but is expected to be renewed in modified form. We
cannot assure you that these agreements will be renewed on
favorable terms, if at all. Additionally, our collaborations may
be terminated under certain circumstances. In addition, the
collaborations may be terminated for material breach. If any of
our partners terminate their agreements or fail to provide
adequate funding to support our research and product development
efforts, we will need to obtain additional funding from other
sources and will be required to devote additional resources to the
development of our products. We cannot assure you that we would be
able to find a suitable substitute partner in a timely manner, on
reasonable terms, or at all. If we fail to find a suitable
partner, our research, development or commercialization of certain
planned products would be delayed significantly which would cause
us to incur additional expenditures. In addition, termination of a
collaboration may cause us to give up rights to technology or
products jointly developed under the collaboration.
7
<PAGE>
o Future collaborations. In addition, we cannot assure you that we
will be able to negotiate additional collaborative arrangements on
acceptable terms, if at all, or that such future collaborations
will be successful. To the extent that we choose not to or are
unable to establish such arrangements, it would require
substantially greater capital to undertake research, development
and marketing of our proposed products at our own expense. In
addition, we may encounter significant delays in introducing our
proposed products into certain markets or find that the
development, manufacture or sale of our proposed products in such
markets is adversely affected by the absence of such collaborative
agreements. Additionally, if we do not establish such future
collaborations, we may encounter significant delays in the
development and commercialization of our proposed products which
would cause us to incur substantial additional expenditures.
We may not be able to protect our intellectual property or operate our business
without infringing intellectual property rights of others
Our technology will be protected from unauthorized use by others only
to the extent that it is covered by valid and enforceable patents or effectively
maintained as trade secrets. As a result, our success depends in part on our
ability to:
o obtain patents
o protect trade secrets
o operate without infringing on the proprietary rights of others
o prevent others from infringing on our proprietary rights.
As of January 31, 1999, we held exclusive rights to at least 45 issued
U.S. patents, exclusive rights to at least 20 U.S. patent applications and had
filed or held exclusive licenses to approximately 110 U.S. patent applications.
We also hold exclusive rights to many corresponding foreign patent applications.
Patent matters for biotechnology companies, especially concerning cell receptors
and the DNA encoding them, involve complex legal and factual questions, so we
cannot predict the availability and scope of patent protection. We cannot be
certain that we will develop products that are patentable or that patents will
issue from our pending applications. In addition, we cannot assure you that our
patents or patents that we license from others will be enforceable and afford
protection against competitors. Our patents or patent applications, if issued,
may be challenged, invalidated or circumvented. Our patent rights may not
provide us with proprietary protection or competitive advantages against
competitors with similar technologies. Others may independently develop
technologies similar to ours or independently duplicate our technologies. Due to
the extensive time required for development, testing and regulatory review of
our potential products, our patents may expire or remain in existence for only a
short period following commercialization. This would reduce or eliminate any
advantage of the patents.
We cannot be certain that we were the first to make the products or
processes covered by each of our issued or pending patent applications or that
we were the first to file patent applications for such products or processes. A
number of pharmaceutical companies, biotechnology companies, universities and
research institutions have filed patent applications or received patents in the
field of TKs, TPs and STKs and their related signalling pathways. Our commercial
success will depend, in part, on not infringing our competitors' patents and not
breaching technology licenses we obtain. We have been notified from time to time
of claims that we may be infringing other's intellectual property rights. Some
companies have filed patent applications or been granted patents covering
subject matter potentially useful or necessary to us or conflicting with our
patents and patent applications. Such conflicts could significantly reduce the
scope of our issued or licensed patents. In addition, we may need to license the
right to use third-party patents and other intellectual property to continue
development and marketing of our products. We may not be able to acquire such
required licenses on acceptable terms, if at all. If we do not obtain such
licenses, we may need to design around other parties' patents or we may not be
able to proceed with the development, manufacture or sale of our products.
o SU101. SU101, a compound generally known as leflunomide, was
discovered more than 17 years ago. In December 1997, we received
two U.S. patents relating to methods of using SU101 for treating
various diseases, including certain cancers characterized by
inappropriate PDGF-R activity. We currently own the exclusive
rights to one of the patents. We have been assigned exclusive
world-wide rights to the other patent and the corresponding
foreign patent applications from all but one party. We cannot
assure you that negotiations with the remaining party to acquire
the remaining rights will be successful. In addition, we have
filed several U.S. patent applications (and corresponding foreign
patent applications) covering different formulations of SU101 and
their use to treat various diseases. Currently, we have received
two U.S. patents relating to SU101 formulations. These two patents
cover the SU101 formulation that we believe will be commercially
marketed. While we plan to commercialize SU101 in certain major
markets outside the U.S. through our affiliates or licensees, we
cannot assure you that we will receive patent protection outside
the U.S.
Hoechst AG holds a number of U.S. and foreign patents and has
filed U.S. and foreign patent applications covering different
compositions and pharmaceutical uses of leflunomide, including the
use of leflunomide for treating cancer. We believe our research
and development and clinical trials with SU101 in the U.S. are
protected from claims of infringement of the Hoechst U.S. patents
because such activities are being conducted for the development
and submission of information to the FDA for regulatory approval.
However, similar protection may not be available outside the U.S.
Although we cannot predict if SU101 will be approved by the FDA
for marketing in the U.S., we believe that some of Hoechst's U.S.
patents may have expired by the time marketing of SU101 begins and
that Hoechst's other U.S. patents will either not be infringed by
our making and selling of SU101 in the U.S. or are subject to
claims that they are not valid, thereby permitting us to produce
and market SU101 without valid claims of infringement of the
Hoechst patents. However, we cannot assure you that a court will
agree with our beliefs regarding invalidity and non-infringement
of Hoechst's issued patents or that the term of Hoechst's issued
patents will not be extended. To date, Hoechst has not initiated
legal proceedings against us concerning possible patent
infringement. However, we cannot assure you that Hoechst will not
assert claims against us in the future. If a court found us to be
infringing a valid patent issued to Hoechst covering the use of
leflunomide for treating cancer, we would be required to obtain a
license from Hoechst to manufacture or sell SU101 for treating
cancer. We cannot assure you that we would be able to reach
agreement with Hoechst for a license for SU101 upon favorable
terms, if at all. The assertion of any infringement claims, even
if resolved in our favor,
8
<PAGE>
could result in substantial costs and expenses to us.
o SU5416. In August 1998, we received a U.S. patent covering, among
other things, SU5416 and methods of using SU5416. Currently, we
have related foreign patent applications pending, including in
Japan and the European community. Except in Japan, we hold
exclusive worldwide rights to these applications. If foreign
patents are not issued, the failure to receive foreign patent
protection could materially adversely affect our business,
financial condition and results of operations.
o SU6668. The compound SU6668 is generically covered by an issued
U.S. patent. That is, SU6668 is encompassed by some of the claims
in the issued U.S. patent, but SU6668 is not specifically recited
in the claims. In general, such generic coverage provides adequate
patent protection. However, it may be advantageous under certain
circumstances to obtain claims that specifically recite SU6668.
For example, a competitor that challenges the validity of a patent
may be able to invalidate a claim that encompasses many different
compounds, but not a claim that recites one specific compound. We
have filed a provisional patent application in the U.S.
specifically covering SU6668. We intend to file a U.S. utility
application and corresponding foreign patent applications before
the application deadline. We hold the exclusive worldwide rights
to these applications, except in Japan. We cannot assure you that
patents will issue with respect to SU6668 or that the term of any
U.S. patents will exceed that of the term of the outstanding U.S.
patent that generically covers SU6668. The failure to receive U.S.
and foreign patent protection could materially adversely affect
our business, financial condition and results of operations.
We may face litigation to defend against claims of infringement, assert
claims of infringement, enforce our patents, protect our trade secrets or
know-how, or determine the scope and validity of others' proprietary rights.
Patent litigation is costly and would divert our attention and resources. In
addition, we may be involved in interference proceedings declared by the United
States Patent and Trademark Office to determine the priority of our patent
applications compared to the patent applications of one or more third parties.
Litigation or interference proceedings could have a material adverse effect on
our business, financial condition and results of operations, including as a
result of any delay in the marketing of our products due to litigation related
to our intellectual property. Additionally, we could be unsuccessful in our
efforts to enforce our intellectual property rights or obtain patent protection.
We also rely on trade secrets to protect technology, especially where
patent protection is not believed to be appropriate or obtainable. We attempt to
protect our proprietary technology and processes in part by confidentiality
agreements with our employees, consultants and certain contractors. There can be
no assurance that these agreements will not be breached, that we would have
adequate remedies for any breach, or that our trade secrets will not otherwise
become known or be independently discovered by competitors. To the extent that
we or our consultants or research collaborators use intellectual property owned
by others in their work for us, disputes may also arise as to the rights in
related or resulting know-how and inventions.
The progress and results of our preclinical and clinical testing are uncertain
We must provide the FDA and foreign regulatory authorities with
clinical data that demonstrate the safety and efficacy of our products before
they can be approved for commercial sale. The failure to adequately demonstrate
the safety and efficacy of a product under development could delay or prevent
regulatory clearance of the potential product and would materially adversely
affect our business. Clinical development, including preclinical testing, is a
long, expensive and uncertain process. Any of our clinical trials may not be
correctly designed to result in data necessary to prove the safety and efficacy
of our product candidates. It may take us several years to complete our testing,
and failure can occur at any stage of testing. We cannot rely on interim results
of trials to necessarily predict their final results, and acceptable results in
early trials might not be repeated in later trials. A number of companies in the
pharmaceutical and biotechnology industries have suffered significant setbacks
in advanced clinical trials, even after promising results in earlier trials. Any
trial may fail to produce results satisfactory to the FDA. Preclinical and
clinical data can be interpreted in different ways, which could delay, limit or
prevent regulatory approval. Negative or inconclusive results or adverse medical
events during a trial could cause a trial to be repeated or a program to be
terminated.
We face the risk that any drug may be toxic or produce negative side
effects in animals or humans when given in high doses or over long periods of
time. We cannot assure you that unacceptable toxicities or side effects will not
occur at any time in any toxicological study or human clinical trial of our
proposed products. If our products produce unacceptable toxicities or side
effects in our clinical testing, we and/or the FDA may interrupt, limit, delay
or stop the development of our product candidates. Even if a product receives
regulatory clearance, it may later be shown to be unsafe or ineffective, thus
limiting the product's use or requiring its removal from the market. We cannot
assure you that any of our product candidates will be safe and effective when
administered to patients.
The rate of completion of our clinical trials is dependent upon, among
other factors, the rate of patient enrollment. Patient enrollment can be
affected by the size of the available patient population, the nature of the
trial protocol, the location of clinical sites and the patient eligibility
criteria for the study. Delays in patient enrollment may result in increased
costs, delays or termination of clinical trials, which could have a material
adverse effect on our business. In addition, because we have a limited clinical
staff, we generally rely on third-party clinical investigators to conduct our
clinical trials, and as a result, we face certain additional delaying factors
outside our control. These factors include:
o third-party investigator failure to perform their contractual
obligations
o third-party investigator failure to meet regulatory standards
o inadequately trained or insufficient personnel at the study site
o delays in approvals from a study site's review board.
We cannot assure you that we will be able to submit a new drug application as
scheduled if clinical trials are completed or when new drug applications will be
reviewed and cleared by the FDA, if at all. We currently have three cancer drug
candidates in clinical trials. We cannot assure you that planned trials will
begin on time or that any of our clinical trials will be completed on schedule
or at all. We cannot assure you that any
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<PAGE>
trials will result in marketable products or that any products will be
commercially successful even if approved for marketing. Our product development
costs will increase if we have delays in testing or approvals. If the delays are
significant, our business, financial condition and results of operations will be
materially adversely affected.
We face manufacturing uncertainties because we rely on third-party
manufacturers, and our products have not been manufactured on a commercial scale
We have no manufacturing facilities and thus rely on third-party manufacturers
to produce our compounds for research and development, preclinical and clinical
purposes. Our products under development, as well as many of their components,
have never been manufactured on a commercial scale. It may be difficult or
impossible to economically manufacture our products on a commercial scale. If we
cannot contract for a sufficient supply of our compounds on acceptable terms, or
if our manufacturers experience delays or difficulties, our preclinical and
clinical testing schedule would be delayed. A delay in our testing schedule
would result in a delay in the submission of products for regulatory approval
and the subsequent commercial sale of such products, which would materially
adversely affect our business. Also, any manufacturer will have to prove both to
us and to the FDA that its manufacturing process complies with government
regulations. We may need to identify and qualify additional manufacturers for
commercial production. We cannot be certain that our existing manufacturers or
any new manufacturer will be able to provide the required quantities of our
compounds on reasonable terms, or at all.
We face marketing uncertainties because we have no sales and marketing
capability
We currently have very limited sales, marketing and distribution
capability. We intend to rely on relationships with one or more pharmaceutical
companies with established distribution systems and sales forces to market some
of our proposed products. In addition, we expect to market some of our proposed
products directly. Thus, we must develop a marketing and sales force with the
necessary technical expertise. We cannot assure you that we will be able to
establish sufficient in-house sales and distribution capabilities. In addition,
we cannot assure you that we will be able to establish successful marketing,
co-promotion or licensing arrangements with third parties on reasonable terms,
or at all.
Our products and therapeutic approach may never be accepted by the health care
community
We believe that our ability to commercialize our product candidates
effectively will depend on the safety, efficacy and cost-effectiveness of our
products and the availability of adequate insurance reimbursement for these
products. The treatment of cancer with cytostatic, as opposed to cytotoxic,
therapy is a novel method of treating cancer that may not be accepted by the
health care community. Additionally, even if our approach to the treatment of
cancer with cytostatic therapy is proven to be safe and effective and is
accepted by the health care community, our ability to successfully commercialize
our products depends in part on obtaining adequate reimbursement for product
costs from governmental authorities and private health care insurers (including
health maintenance organizations). Government and private third-party payors are
increasingly attempting to contain health care costs by limiting both the extent
of coverage and the reimbursement rate for new tests and treatments. Even if our
products receive the necessary regulatory and health care reimbursement
approvals, our products may not achieve any significant degree of market
acceptance among physicians, patients and health care payors. We cannot assure
you that our technologies will be accepted rapidly or at all. If our products
fail to achieve market acceptance, our business, results of operations and
financial condition would be materially adversely affected.
Our products are subject to extensive regulation by domestic and foreign
governments
Our products under development and anticipated future products are
subject to extensive and rigorous regulation by United States local, state and
federal regulatory authorities and by foreign regulatory bodies. These
regulations are wide-ranging and govern, among other things:
o product development
o product testing
o product manufacturing
o product labeling
o product storage
o product pre-market clearance or approval
o product sales and distribution
o product advertising and promotion.
The FDA and other agencies in the United States and in foreign
countries impose substantial requirements upon the manufacturing and marketing
of products such as those being developed by our company or any partner. The
process of obtaining FDA and other required regulatory approvals is long,
expensive and uncertain. The time required for regulatory approvals is uncertain
and the process typically takes a number of years, depending on the type,
complexity and novelty of the product. We may encounter significant delays or
excessive costs in our efforts to secure necessary approvals or licenses.
We cannot be sure that our products will receive FDA approval in a
timely manner, if at all. Even if approvals are obtained, the marketing and
manufacturing of drug products are subject to continuing FDA and other
regulatory requirements, such as requirements to comply with good manufacturing
practices, as defined by the FDA. The failure to comply with such requirements
could result in enforcement action, which could adversely affect us and our
business. Later discovery of problems with a product, manufacturer or facility
may result in additional restrictions on the product or manufacturer, including
withdrawal of the product from the market. The government may impose new
regulations which could further delay or preclude regulatory approval of our
potential products. We cannot predict the impact of adverse governmental
regulation which might arise
10
<PAGE>
from future legislative or administrative action.
We intend to generate product revenue from sales outside of the United
States. Distribution of our products outside the United States also may be
subject to extensive government regulation. These regulations, including the
requirements for approvals or clearance to market, the time required for
regulatory review and the sanctions imposed for violations, vary by country. It
is uncertain whether we will obtain regulatory approvals in such countries or
that we will be required to incur significant costs in obtaining or maintaining
our foreign regulatory approvals. Failure to obtain necessary regulatory
approvals or any other failure to comply with regulatory requirements could
result in reduced revenue and earnings.
To support our requests for FDA approval to market our products, we intend
to conduct various types of studies including:
o toxicology studies to evaluate product safety
o in vitro and animal studies to evaluate product effectiveness
o human clinical trials to evaluate the safety, tolerability and
effectiveness of the products.
We operate in a competitive industry with rapidly changing technology
We operate in a rapidly changing field, and we expect our products to
encounter significant competition. Currently, other products and therapies exist
or are being developed that will compete with the products that we are seeking
to develop and market. We face intense competition from large pharmaceutical
companies, more established biotechnology companies and even smaller companies
that form collaborative arrangements with large pharmaceutical and biotechnology
companies. Such competition is expected to increase. Our success will depend in
part on our ability to respond quickly to medical and technological changes
through the development and introduction of new products. Product development is
risky and uncertain, and we cannot assure you that we will develop our products
successfully. Competitors' products or technologies may make our products
obsolete or non-competitive before we are able to generate any significant
revenue. Many of our competitors or potential competitors have substantially
greater financial and other resources than we have. These competitors, academic
institutions and research organizations all may have greater experience in
preclinical testing, human clinical trials and other regulatory approval
procedures. Our ability to compete successfully will depend, in part, on our
ability to:
o attract and retain skilled scientific personnel
o develop safe and efficacious products
o obtain patent or other proprietary protection for our products and
technologies
o obtain required regulatory approvals for our products
o maintain access to sufficiently broad libraries of compounds for
screening potential targets
o be early entrants to the market
o manufacture, market and sell our products, independently or
through collaborations.
We cannot assure you that our competitors will not develop more effective or
more affordable products or achieve product patent protection and
commercialization earlier than we will.
Failure to attract and retain key employees will adversely affect our business
Because of the scientific nature of our business, we depend on the
principal members of our management and scientific staff, including our Science
Advisory Board and Clinical Advisory Board. We do not maintain "key person" life
insurance on any of our officers, employees or consultants. Our success will
depend largely on our ability to attract and retain highly skilled executive,
scientific and managerial personnel. Competition for such personnel is intense.
We cannot assure you that we will be successful in attracting and retaining such
personnel. In July 1998, we entered into a compensation arrangement with Stephen
Evans-Freke, our Chairman of the Board and Chief Executive Officer, related to
Mr. Evans-Freke's commitment to serve as our Chief Executive Officer until at
least June 30, 1999. Generally, we do not have employment agreements with our
executive officers providing for a term of service, and we do not have any
agreement with Mr. Evans-Freke providing for his service as Chief Executive
Officer after June 30, 1999. The failure to maintain our executive, management
and scientific staff and to attract additional key personnel could materially
adversely affect our business, financial condition and results of operations.
Although we intend to provide incentive compensation to attract and retain our
key personnel, we cannot guarantee these efforts will be successful.
We may not be successful in our attempt to commercialize our products in Europe
through European national partners.
Our strategy for the commercialization of our product candidates in
Europe includes entering into agreements with a limited number of distribution
partners who bring strong local presence on a pan-European scale rather than
with a single international pharmaceutical company. We cannot assure you that
this commercialization strategy will prove to be successful.
This strategy may require more capital than licensing European rights
to product candidates. We cannot assure you that we will be able to obtain
sufficient capital to pursue this strategy. Our strategy may cause SUGEN Europe
to bear research and development expenses for a longer period of time without
sharing the costs with a corporate partner. Thus, if products are not ultimately
successful, we may have large research and development losses. We may not be
able to establish arrangements with appropriate partners in all relevant
countries on reasonable terms, or at all. Our success will depend significantly
on our partners' ability and willingness to perform their obligations. We cannot
assure you that our partners will perform their obligations under any
commercialization arrangements. Additionally, contracting with numerous local
partners instead of one large European partner may be harder to manage and have
higher administrative costs. In addition, our commercialization arrangements may
be effected by the European Union requirements for free trade within Europe.
Price sensitivities in individual markets, including Spain, where SUGEN Europe
recently entered into a distribution arrangement, may impact the terms of
collaborations and the pricing of our products in individual markets. As is
generally the case for trading within the European Union, the ability of buyers
in countries throughout the European Union to purchase products in lower price
markets may impact SUGEN Europe's ability to enter into distribution
arrangements for additional European markets and the terms of these
arrangements.
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Our European operations are subject to the additional risks inherent in
international business activities, including:
o the general economic conditions in the countries in which we and
our affiliates operate
o overlapping tax structures
o unexpected changes in regulatory requirements
o compliance with various foreign laws and regulations
o longer accounts receivable payment cycles in some countries
o import and export licensing requirements
o trade restrictions
o exchange controls
o changes in tariff and freight rates.
The market price of our stock may be highly volatile
Our common stock currently trades on the Nasdaq National Market. The
market prices for securities of emerging biotechnology companies like us have
been highly volatile. Announcements may have a significant impact on the market
price of our common stock. Such announcements may include:
o biological or medical discoveries
o technological innovations or new commercial products by us or our
competitors
o developments concerning proprietary rights, including patents and
litigation matters
o regulatory developments in both the United States and foreign
countries
o public concern as to the safety of new technologies
o developments in our relationships with current or future
collaborative partners
o general market conditions
o comments made by analysts, including changes in analysts'
estimates of our financial performance
o quarterly fluctuations in our revenue and financial results.
The stock market has from time to time experienced extreme price and
volume fluctuations, which have particularly affected the market prices for
emerging biotechnology companies, and which have often been unrelated to the
operating performance of such companies. These broad market fluctuations may
adversely affect the market price of our common stock. In addition, sales of
substantial amounts of our common stock in the public market following this
offering could lower the market price of our common stock. In the past,
following periods of volatility in the market price of a company's stock,
securities class action litigation has occurred against the issuing company.
Such litigation could result in substantial costs and a diversion of
management's attention and resources, which could have a material adverse effect
on our revenue and earnings. Any adverse determination in such litigation could
also subject us to significant liabilities.
We may be liable if our products harm people
We are exposed to potential liability risks inherent in the testing and
marketing of medical products. We may be liable if any of our products causes
injury, illness or death. We have obtained limited product liability insurance
for our human clinical trials. However, such insurance is becoming increasingly
expensive, and we cannot assure you that we will be able to maintain such
insurance or to obtain insurance covering injury, illness or death from use of
our products that are commercialized at a reasonable cost, if at all. Any
insurance we obtain may not provide adequate coverage against potential
liabilities. A liability claim, regardless of merit or eventual outcome, could
materially adversely affect our business, results of operation and financial
condition.
We use hazardous substances that are subject to environmental regulation
Our research and development involves the controlled use of hazardous
materials, including certain hazardous chemicals and various radioactive
materials. Accordingly, we are subject to federal, state and local laws
governing the use, handling and disposal of these materials. We may incur
significant costs to comply with additional environmental and health and safety
regulations in the future. Although we believe that our safety procedures for
handling and disposing of hazardous materials comply with regulatory
requirements, we cannot eliminate the risk of accidental contamination or
injury. If an accident occurs, we could be held liable for any damages that
result.
Shares eligible for sale in the public market may affect the market price of our
common stock
Substantially all of the shares of our common stock are eligible for
sale in the public market. The issuance of shares of our common stock upon the
exercise of stock options and warrants, and the future sale of such shares by
current stockholders, could adversely affect the market price of our
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common stock. In March 1999, we issued:
o 12% senior convertible notes which are convertible into common
stock
o warrants to purchase 12% senior convertible notes which are
convertible into common stock
Conversion of the 12% senior convertible notes, exercise of any common stock
warrants issued upon redemption of the 12% senior convertible notes or warrants
to purchase additional 12% senior convertible notes and payment of interest on
the 12% senior convertible notes in shares of common stock could adversely
affect the market price of our common stock.
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SELLING STOCKHOLDERS
The following table sets forth certain information about the number of
shares of our common stock beneficially owned by each of the selling
stockholders named below as of April 15, 1999 and on an as adjusted basis to
give effect to the sale of the shares offered by the selling stockholders. The
shares are being registered to permit public secondary trading of the shares,
and the selling stockholders may offer the shares for resale from time to time.
See "Plan of Distribution."
The shares being offered hereby by the selling stockholders may be acquired,
from time to time upon:
o conversion of the Notes,
o conversion of the Warrant Notes,
o payment by SUGEN, in lieu of cash, of shares of common stock as
interest on the Notes and Warrant Notes through March 2001, and
o exercise of the Common Stock Warrants that may be issued upon
redemption of the Notes, Warrants and Warrant Notes.
This prospectus covers the resale by the selling stockholders of up to
3,240,000 shares of our common stock, plus an indeterminate number of additional
shares of our common stock as may from time to time become issuable upon
conversion of the Notes and Warrant Notes, or upon exercise of the Common Stock
Warrants, by reason of stock splits, stock dividends and other similar
transactions. See "SUGEN-Recent Developments."
In accordance with registration rights granted to the selling
stockholders, SUGEN has filed with the SEC, under the Securities Act, a
Registration Statement on Form S-3, of which this prospectus forms a part, with
respect to the resale of the shares from time to time on the Nasdaq National
Market, in privately-negotiated transactions or otherwise, and has agreed to
prepare and file such amendments and supplements to the Registration Statement
as may be necessary to keep such Registration Statement effective until the
shares are no longer required to be registered for the sale thereof by the
selling stockholders.
<TABLE>
The shares of common stock covered by this prospectus may be offered from time
to time by the selling stockholders named below:
<CAPTION>
Ownership After
Offering(1)
Number of Shares Number of
Names of Selling Owned Prior to Shares Being Number of
Stockholders Offering (1)(2) Offered (3) Shares Percent
------------ --------------- ----------- ------ -------
<S> <C> <C> <C> <C>
Damson Investment Holdings, Ltd.................. 57,857 57,857 0 0%
Delta Opportunity Fund (Institutional), LLC(4)... 543,319 312,660 0 1.15%
Delta Opportunity Fund, Ltd.(4).................. 1,454,683 824,233 0 3.14%
Fisher Capital Ltd(5)............................ 564,107 564,107 0 3.34%
Omicron Partners, LP............................. 1,105,950 1,026,964 0 *%
OTATO Limited Partnership(4)..................... 265,924 150,429 0 *%
Wingate Capital, Ltd(5).......................... 303,750 303,750 0 1.80%
<FN>
* less than one percent
(1) Percentage of beneficial ownership is calculated assuming 16,869,233 shares of common stock were
outstanding as of April 15, 1999. Ownership after this offering assumes the sale of all shares held by
such selling stockholders offered hereby. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission and the footnotes to this table, and generally includes voting
or investment power with respect to securities. Shares of common stock subject to options or warrants
currently exercisable or convertible, or exercisable or convertible within 60 days of April 15, 1999 are
deemed outstanding for computing the percentage of the person or entity holding such option or warrant but
are not deemed outstanding for computing the percentage of any other person or entity. Except as indicated
in the footnotes to this table and pursuant to applicable community property laws, the persons or entities
named in the table have sole voting and investment power with respect to all shares of common stock
beneficially owned.
(2) Represents (i) the number of shares of common stock issuable upon conversion of the Notes and Warrant
Notes with respect to the face value of the Notes and Warrant Notes, based upon certain conversion
provisions of the Notes and Warrant Notes, (ii) the number of shares of common stock which may be issued
and paid in lieu of cash, at SUGEN's option, as interest on the Notes and Warrant Notes through March
2001, (iii) the number of shares of common stock issuable upon exercise of the Common Stock Warrants that
may be issued upon redemption of the Notes, Warrants and Warrant Notes, and (iv) all other shares of
common stock beneficially owned as of April 15, 1999.
14
<PAGE>
(3) Represents (i) the number of shares of common stock issuable upon conversion of the Notes and Warrant
Notes with respect to the face value of the Notes and Warrant Notes, based upon certain conversion
provisions of the Notes and Warrant Notes, (ii) the number of shares of common stock which may be issued
and paid in lieu of cash, at SUGEN's option, as interest on the Notes and Warrant Notes through March 2001
and (iii) the number of shares of common stock issuable upon exercise of the Common Stock Warrants that
may be issued upon redemption of the Notes, Warrants and Warrant Notes.
(4) Delta Opportunity Fund (Institutional), LLC, a Delaware limited liability company ("Delta
Institutional"), Delta Opportunity Fund, Ltd., a British Virgin Islands corporation ("Delta"), and OTATO
Limited Partnership, a Grand Cayman limited partnership ("OTATO"), together with certain other persons
have filed a Schedule 13G relating to their beneficial ownership of common stock of SUGEN. In such
Schedule 13G, such other persons reported beneficial ownership of shares of SUGEN common stock as follows:
Diaz & Altschul Group, LLC, a New York limited liability company ("D&A Group"), reported beneficial
ownership of 871,431 shares constituting approximately 4.9%, Diaz & Altschul Advisors, LLC, a New York
limited liability company ("D&A Advisors"), reported beneficial ownership of 861,109 shares constituting
approximately 4.9%, Diaz & Altschul Management, a Delaware limited liability company ("D&A Management"),
reported beneficial ownership of 230,059 shares constituting approximately 1.36%, ACI/DA Investors I, LLC,
a Delaware limited liability company ("ACI/DA"), reported beneficial ownership of 3,752 shares
constituting approximately 0.02%, and Overbrook Fund I, LLC, a New York limited liability company
("Overbrook") reported beneficial ownership of 446 shares. Each of Delta, Delta Institutional and OTATO
disclaimed beneficial ownership of the shares of SUGEN common stock reported as beneficially owned by such
other persons in the Schedule 13G.
D&A Advisors serves as investment advisor to Delta and Delta Institutional and serves as trading advisor
to ACI/DA and Overbrook with respect to the shares of common stock stated as beneficially owned by ACI/DA
and Overbrook. By reason of such relationship, D&A Advisors may be deemed to share dispositive power over
the shares of Common Stock owned by Delta, Delta Institutional, ACI/DA and Overbrook. The amount stated as
beneficially owned by D&A Advisors includes the amounts listed as beneficially owned by Delta, Delta
Institutional, ACI/DA and Overbrook. D&A Advisors disclaims beneficial ownership of such shares of common
stock.
D&A Management serves as investment manager to and managing member of Delta Institutional. By reason of
such relationship, D&A Management may be deemed to share dispositive power over the shares of common stock
listed as beneficially owned by Delta Institutional. The amount stated as beneficially owned by D&A
Management includes the amount stated as beneficially owned by Delta Institutional. D&A Management
disclaims beneficial ownership of such shares of common stock.
D&A Group is the parent company of D&A Advisors and D&A Management. By reason of its control of D&A
Advisors and D&A Management, D&A Group may be deemed to share dispositive power over the shares of common
stock stated as beneficially owned by D&A Advisors and D&A Management. The amount listed as beneficially
owned by D&A Group includes the amounts stated as beneficially owned by D&A Advisors and D&A Management.
D&A Group disclaims beneficial ownership of such shares of common stock.
All shares of Common Stock listed as beneficially owned by the reporting persons are shares which such
persons have the right to acquire upon conversion of SUGEN's outstanding 5% Senior Custom Convertible
Notes (the "5% Notes") and the Notes and the Warrant Notes and upon exercise of SUGEN's Common Stock
Purchase Warrants ("Warrants").
The 5% Notes and the Warrants contain limitations on the conversion or exercise thereof which make the 5%
Notes inconvertible and the Warrants unexercisable to the extent the holder would, upon conversion or
exercise, beneficially own more than 4.9% of the common stock. By reason of such limitations, a portion of
the 5% Notes held by the reporting persons were inconvertible and a portion of the Warrants held by the
reporting person were unexercisable on April 15, 1999 as follows:
Shares Shares
Underlying Underlying
Inconvertible Unexercisable
Notes Warrants
----- --------
Delta 55,983 75,000
Delta Institutional -- --
D&A Group 55,983 158,780
D&A Advisors 55,983 99,002
D&A Management -- --
ACI/DA -- 21,448
OTATO 10,833 15,000
Overbrook -- 2,554
(5) Citadel Limited Partnership is the managing general partner of NP Partners and the trading manager of
each of Olympus Securities, Ltd., Fisher Capital Ltd. and Wingate Capital Ltd. (the "Citadel Entities")
and consequently has voting control and investment discretion over securities held by the Citadel
Entities. The ownership for each of Fisher Capital Ltd. and Wingate Capital Ltd. does not include the
ownership information for the other Citadel Entities. Citadel Limited Partnership and each of the Citadel
Entities disclaims beneficial ownership of the securities held by the other Citadel Entities. As of April
15, 1999, NP Partners held 89,945 shares of common stock, Notes in the aggregate principal amount of
$2,191,000 (convertible into 106,878 shares of common stock), Warrant Notes to acquire $1,643,250
principal amount of Notes, and warrants to acquire 32,400 shares of common stock. As of April 15, 1999,
Olympus Securities Ltd. held 109,855 shares of common stock, Notes in the aggregate principal amount of
$2,685,550 (convertible into 131,002 shares of common stock), Warrant Notes to acquire $2,014,163
principal amount of Notes, and warrants to acquire 32,400 shares of common stock.
</FN>
</TABLE>
15
<PAGE>
PLAN OF DISTRIBUTION
Sugen will receive no proceeds from this offering. The shares offered hereby may
be sold by the selling stockholders or by pledgees, donees, transferees or other
successors in interest that receive such shares as a gift, partnership
distribution or other non-sale related transfer. The shares may be sold from
time to time in transactions on the Nasdaq National Market, in the
over-the-counter market, in negotiated transactions, or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. The selling stockholders may effect such transactions by
selling the shares to or through broker-dealers, including block trades in which
brokers or dealers will attempt to sell the shares as agent but may position and
resell the block as principal to facilitate the transaction, or in one or more
underwritten offerings on a firm commitment or best effort basis. Sales of
selling stockholders' Shares may also be made pursuant to Rule 144 under the
Securities Act, where applicable.
To the extent required under the Securities Act, the aggregate amount of selling
stockholders' shares being offered and the terms of the offering, the names of
any such agents, brokers, dealers or underwriters and any applicable commission
with respect to a particular offer will be set forth in an accompanying
Prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the shares may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from a Selling
Stockholder and/or purchasers of selling stockholders' shares, for whom they may
act (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
From time to time, one or more of the selling stockholders may pledge,
hypothecate or grant a security interest in some or all of the shares owned by
them, and the pledgees, secured parties or persons to whom such securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be selling stockholders hereunder. In addition, a selling stockholder may, from
time to time, sell short the common stock of SUGEN, and in such instances, this
prospectus may be delivered in connection with such short sales and the shares
offered hereby may be used to cover such short sales.
From time to time one or more of the selling stockholders may transfer, pledge,
donate or assign such selling stockholders' shares to lenders or others and each
of such persons will be deemed to be a "Selling Stockholder" for purposes of
this prospectus. The number of selling stockholders' shares beneficially owned
by those selling stockholders who so transfer, pledge, donate or assign selling
stockholders' shares will decrease as and when they take such actions. The plan
of distribution for selling stockholders' shares sold hereunder will otherwise
remain unchanged, except that the transferees, pledgees, donees or other
successors will be selling stockholders hereunder.
A selling stockholder may enter into hedging transactions with broker-dealers
and the broker-dealers may engage in short sales of the common stock in the
course of hedging the positions they assume with such selling stockholder,
including, without limitation, in connection with distributions of the common
stock by such broker-dealers. A selling stockholder may also enter into option
or other transactions with broker-dealers that involve the delivery of the
common stock to the broker-dealers, who may then resell or otherwise transfer
such common stock. A selling stockholder may also loan or pledge the common
stock to a broker-dealer and the broker-dealer may sell the common stock so
loaned or upon a default may sell or otherwise transfer the pledged common
stock.
In order to comply with the securities laws of certain states, if applicable,
the shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the shares may not
be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.
The selling stockholders and any broker-dealers or agents that participate with
the selling stockholders in the distribution of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not bid for or purchase shares of
common stock during a period which commences one business day (5 business days,
if SUGEN's public float is less than $25 million or its average daily trading
volume is less than $100,000) prior to such person's participation in the
distribution, subject to exceptions for certain passive market making
activities. In addition and without limiting the foregoing, each selling
stockholder will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including, without limitation, Regulation M
which provisions may limit the timing of purchases and sales of shares of
SUGEN's common stock by such selling stockholder.
The shares were originally issued to the selling stockholders pursuant to an
exemption from the registration requirements of the Securities Act provided by
Section 4(2) thereof. Sugen agreed to register the shares under the Securities
Act and to indemnify and hold the selling stockholders harmless against certain
liabilities under the Securities Act that could arise in connection with the
sale by the selling stockholders of the shares. The Company has agreed to pay
all reasonable fees and expenses incident to the filing of this Registration
Statement.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for SUGEN by
Cooley Godward LLP, Palo Alto, California.
EXPERTS
The financial statements of SUGEN appearing in SUGEN's Annual Report on Form
10-K for the year ended December 31, 1998 have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
16
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
3,240,000 Shares of Common Stock
SUGEN, Inc.
PROSPECTUS
APRIL ___, 1999
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses expected to be incurred by
the Registrant in connection with the sale and distribution of the securities
being registered hereby. All amounts are estimated except the Securities and
Exchange Commission registration fee and the Nasdaq National Market listing fee.
SEC Registration Fee............................................... $ 13,849
Nasdaq National Market Listing Fee................................. 17,500
Accounting Fees and Expenses....................................... 15,000
Legal Fees and Expenses............................................ 75,000
Miscellaneous Fees and Expenses.................................... 8,651
Total $130,000
===== ========
Item 15. Indemnification of Directors and Officers
Under Section 145 of the Delaware General Corporation Law, the Registrant has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act of
1933, as amended. The Registrant's Bylaws also provide that the Registrant shall
indemnify its directors and officers and may indemnify its other employees and
other agents to the fullest extent not prohibited by Delaware law.
The Registrant's Certificate of Incorporation provides for the elimination of
liability of monetary damages for breach of the directors' fiduciary duty of
care to the Registrant and its stockholders. These provisions do not eliminate
the directors' duty of care and, in appropriate circumstances, equitable
remedies such an injunctive or other forms of non-monetary relief will remain
available under Delaware law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any dividends or approval of
stock repurchases or redemption that are unlawful under Delaware law. The
provision does not affect a director's responsibilities under any other laws,
such as the federal securities laws or state of federal environmental laws.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonable incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director of officer of the
Registrant or any of its affiliated enterprises, provided such person acted in
good faith and in a manner such person reasonable believed to be in or not
opposed to the best interests of the Registrant and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreement also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
Item 16. Exhibits and Financial Statement Schedules
The exhibits listed in the Exhibit Index as filed as part of this Registration
Statement.
(a) Exhibits
Exhibit
Number Exhibit
3.1 Restated Certificate of Incorporation, filed February 23,
1995. (2)
3(ii).2 Bylaws of the Registrant. (1)
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Registrant. (3)
4.1 Reference is made to Exhibits 3.1 through 3(ii).2.
4.2 Specimen Stock Certificate. (1)
5.1 Opinion of Cooley Godward LLP.
II-1
<PAGE>
10.70 Form of 12% Senior Convertible Note due 2002. (4)
10.71 Form of 12% Senior Convertible Note Purchase Warrant. (5)
10.72 Form of Securities Purchase and Exchange Agreement, dated
as of March 19, 1999, by and between the Company and the
investor named therein. (4)
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP (reference is made to Exhibit
5.1).
(1) Incorporated by reference to identically numbered exhibits filed in
response to Item 16 "Exhibits" of SUGEN's Registration Statement on
Form S-1, as amended (File Number 33-77074), which became effective
October 4, 1994.
(2) Incorporated by reference to identically numbered exhibits filed in
response to Item 14 "Exhibits" of SUGEN's Annual Report on Form 10-K
for the year ended December 31, 1994.
(3) Filed as an exhibit to the Form 8-K Current Report dated July 26,
1995 and incorporated herein by reference.
(4) Incorporated by reference to exhibit 4.2 to the Form 8-K Current
Report dated March 29, 1999 (the "Form 8-K").
(5) Incorporated by reference to exhibit 4.3 to the Form 8-K.
(6) Incorporated by reference to exhibit 4.1 to the Form 8-K.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to
include any prospectus required by Section 10(a) (3) of the Securities
Act; (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; and (iii) to include any material
information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that (i)
and (ii) do not apply if the Registration Statement is on Form S-3 or
Form S-8, and the information required to be included in a
post-effective amendment by (i) and (ii) is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, SUGEN certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
South San Francisco, State of California, on the 22nd day of April, 1999.
SUGEN, INC.
By: /s/ Stephen Evans-Freke
----------------------------
Stephen Evans-Freke
Chief Executive Officer and
Chairman of the Board
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of
Stephen Evans-Freke and James L. Knighton his or her true and lawful
attorney-in-fact and agent, each acting alone, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any or all amendments or supplements (including
post-effective amendments) to the registration statement on Form S-3, and to
sign any and all additional registration statements relating to the same
offering of securities as those that are covered by the registration statement
that are filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, 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 to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the persons whose signatures appear below,
which persons have signed such Registration Statement in the capacities and on
the dates indicated:
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Stephen Evans-Freke
- --------------------------
Stephen Evans-Freke Chief Executive Officer and April 22, 1999
Chairman of the Board
(Principal Executive Officer)
/s/ James L. Knighton
- --------------------------
James L. Knighton Senior Vice President and April 22, 1999
Chief Financial Officer (Principal
Financial and Accounting Officer)
/s/ Jeremy L. Curnock Cook
- --------------------------
Jeremy L. Curnock Cook Director April 22, 1999
/s/ Samuel A. Hamad
- --------------------------
Samuel A. Hamad Director April 22, 1999
/s/ Heinrich Kuhn
- --------------------------
Heinrich Kuhn Director April 22, 1999
/s/ Gerald Moller
- --------------------------
Gerald Moller Director April 22, 1999
/s/ Donald E. Nickelson
- --------------------------
Donald E. Nickelson Director April 22, 1999
/s/ Richard D. Spizzirri
- --------------------------
Richard D. Spizzirri Director and Secretary April 22, 1999
/s/ Axel Ullrich
- --------------------------
Axel Ullrich Director April 22, 1999
</TABLE>
II-3
EXHIBIT 5.1
[Cooley Godward LLP Letterhead]
April 23, 1999
SUGEN, Inc.
230 East Grand Avenue
South San Francisco, CA 94080
Ladies and Gentleman:
You have requested our opinion with respect to certain matters in connection
with the filing by SUGEN, Inc., a Delaware corporation (the "Company"), of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") on April 23, 1999,
covering the offering of a total of up to 3,240,000 shares of the Company's
Common Stock with a par value of $0.01 (the "Shares"). The Shares are issuable
(a) upon conversion of the Company's 12% Senior Convertible Notes due 2002 (the
"Notes"), (b) upon conversion of the Company's Warrant Notes (the "Warrant
Notes") issuable upon exercise of the Company's 12% Senior Convertible Note
Purchase Warrants (the "Note Purchase Warrants"), (c) in lieu of cash at the
Company's option, as interest on the Notes and Warrant Notes through March 2001,
and (d) upon exercise of the Comapny's Common Stock Warrants (the "Warrants")
that may be issued upon redemption of the Notes, Warrant Notes or Note Purchase
Warrants. All of the Shares are to be sold by certain stockholders as described
in the Registration Statement.
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus included therein, the Company's
Restated Certificate of Incorporation and Bylaws, and the originals or copies
certified to our satisfaction of such records, documents, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, and
the conformity to originals of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof. We have also assumed payment
for the Warrant Notes upon exercise of the Note Purchase Warrants, and payment
of the exercise price upon exercise of the Warrants.
Our Opinion is given on the basis of facts and applicable law as of the date
hereof, and we do not give any opinion with respect to any changes in the
foregoing after the date hereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued upon conversion of the Notes and Warrant Notes, as
interest on the Notes and Warrant Notes, and upon exercise of the Warrants, will
be validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Suzanne Sawochka Hooper
--------------------------
Suzanne Sawochka Hooper
EXHIBIT 23.1
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) and related Prospectus of SUGEN, Inc. for the
registration of 3,240,000 shares of its common stock and to the incorporation by
reference therein of our report dated February 5, 1999, except for Note 13 as to
which the date is March 24, 1999, with respect to the consolidated financial
statements and schedules of SUGEN, Inc. included in its Annual Report (Form
10-K) for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
Ernst & Young LLP
April 23, 1999
Palo Alto, California
