Filed Pursuant to Rule 424(b)(4)
Registration Statement No. 333-76969
[SUGEN Logo]
SUGEN, INC.
PROSPECTUS
2,461,943 Shares of Common Stock
Offered by Certain Selling Stockholders
Sugen, Inc. is registering for resale up to 2,461,943 shares of its
common stock for seven selling stockholders. We will not receive any proceeds
from the sale of the shares by the selling stockholders.
Our common stock is traded on the Nasdaq National Market under the
symbol "SUGN." On July 30, 1999, the last reported sale price for our common
stock was $29.6875 per share.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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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 August 2, 1999
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TABLE OF CONTENTS
Page
Summary...................................................................... 3
Risk Factors................................................................. 5
Selling Stockholders......................................................... 12
Plan of Distribution......................................................... 14
Legal Matters................................................................ 14
Experts...................................................................... 14
Where You Can Find More Information.......................................... 15
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Our web site address is www.sugen.com. Information contained on our web
site is not a part of this prospectus.
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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.
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SUMMARY
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 pathways within and
between cells, known as signal transduction pathways. Receptors of chemical
messengers that are embedded in the cell wall or on signalling molecules within
the cell regulate these signalling pathways. These receptors or signalling
molecules are biochemical "targets" known as tyrosine kinases (TKs), tyrosine
phosphatases (TPs) and serine-threonine kinases (STKs). These biochemical
targets, which represent three of the largest known families of receptors in the
body, regulate critical cellular functions. Abnormal signalling of TKs, TPs and
STKs can result in a variety of chronic and acute pathological diseases,
including cancer and diabetes, as well as in dermatologic, ophthalmic,
neurologic and immune disorders. Kinases and phosphates are molecules that are
needed for normal signalling to occur between and within cells. 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. Drugs that regulate signalling
pathways, potentially stopping the growth of tumor cells (cytostatic drugs), may
be safer and more directed than traditional chemotherapy drugs that "kill" cells
(cytotoxic drugs). Our research and development efforts in signal transduction
incorporate 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.
SUGEN is developing new therapeutic approaches to diseases through its
development of small molecule inhibitors that regulate particular signalling
pathways. We currently have three anti-cancer drugs in clinical development,
including novel anti-tumor cytostatic agents and angiogenesis inhibitors which
inhibit the formation of new blood vessels that feed tumor cells. In addition to
our current focus in oncology, SUGEN is applying its technology platform to
identify and validate novel targets for a range of potential clinical
applications. Our current drug product candidates include:
o SU101, our most advanced cytostatic product candidate, inhibits the
signalling pathway regulated by a TK receptor for the chemical
messenger secreted by platelets, blood components required for
clotting. This receptor is known as the platelet-derived growth
factor receptor or PDGF TK. SUGEN and others have shown that
imbalances in the signalling pathway of PDGF TK are implicated in
significant subsets of certain types of cancers, including brain,
prostate, lung and ovarian. We initiated a Phase III clinical trial,
which is a study involving a large number of human patients designed
to demonstrate statistically significant drug efficacy, in
refractory glioblastoma, an aggressive type of brain cancer, in the
first quarter of 1998. We expect to conduct an interim analysis by
the end of 1999. We are also conducting a parallel Phase II clinical
trial, which is a study involving a small number of human patients
designed to demonstrate non-statistically significant drug efficacy,
of SU101 as single agent therapy for refractory anaplastic
astrocytoma, another type of malignant brain tumor. In 1997, we
initiated 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. We expect to
complete this study this year. We are also conducting a pilot study
of SU101 in combination with mitoxantrone, in preparation for a
pivotal Phase III trial as combination therapy in the early-stage
treatment of prostate cancer patients who have failed hormone
therapy (hormone therapy currently is the most common treatment for
prostate cancer). We plan to begin this Phase III study later this
year. In addition, we have ongoing Phase II trials in ovarian and
non small cell lung cancers, that are scheduled to be completed in
mid 2000. To date, over 400 patients have been treated with SU101 in
13 SUGEN-sponsored clinical trials.
o SU5416, our lead angiogenesis inhibitor, inhibits the receptor
called Flk-1/KDR TK. SUGEN believes SU5416 can inhibit the growth
and spread of cancer by preventing the formation of new blood
vessels (angiogenesis) required to nourish the tumor by blocking
this targeted receptor. In September 1997, we initiated Phase I
clinical testing to demonstrate drug safety. 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. In addition, we have
observed anecdotal indications of activity 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 and the FDA, 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 National Cancer Institute 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.
However, we cannot predict whether this commercialization strategy
will result in accelerated commercialization of SU5416 or whether
other angiogenesis inhibitors will receive regulatory approval prior
to any approval of SU5416.
o SU6668, our third novel anti-cancer drug candidate, combines two
strategies for blocking tumor growth through its angiogenesis and
cytostatic anti-tumor activity. It selectively blocks 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. SUGEN hopes
to conclude both studies by the end of the year.
o 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 pharmacology studies. However, we cannot predict
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whether lead compounds will emerge in any of these programs in 1999,
or at all.
o We are also applying our drug discovery and development platform to
areas outside oncology, including ophthalmology, rheumatoid
arthritis, cardiovascular disease, diabetes and immunology.
SUGEN has collaborated with a number of entities in its research and
development activities to date. Our current collaborators include: Zeneca
Limited, ASTA Medica Aktiengesellschaft of Germany, Allergan, Inc. and its
affiliate, Vision Pharmaceuticals, L.P., Taiho Pharmaceutical Ltd., ProChon
Biotech Ltd. and Esteve S.A. of Spain.
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
Merger Announced with Pharmacia & Upjohn. On June 15, 1999, SUGEN
entered into an Agreement and Plan of Merger with Pharmacia & Upjohn, Inc. Under
the terms of the agreement, Pharmacia & Upjohn would acquire complete ownership
of SUGEN with each share of SUGEN stock exchanged for approximately $31 of
Pharmacia & Upjohn stock, so long as the average price of Pharmacia & Upjohn
stock is between $60.16 and $49.22 at the time of the closing of the
transaction. In no event would SUGEN stockholders receive less than .515 of a
share of Pharmacia & Upjohn common stock, nor more than .630 of a share of
Pharmacia & Upjohn stock for each share of SUGEN common stock. The exact
exchange ratio would be based on the average price of Pharmacia & Upjohn stock
prior to the closing of the merger. The transaction is intended to be accounted
for as a pooling of interests and to qualify as a tax-free exchange. The
transaction has received the approval of the Boards of Directors of both
Pharmacia & Upjohn and SUGEN and is subject to the approval by SUGEN's
stockholders and other customary closing conditions, including receipt of
regulatory approvals. Under certain circumstances, if the merger agreement is
terminated, Pharmacia & Upjohn would have the right to purchase up to 19.9% of
SUGEN's common stock and would have the right to receive from SUGEN a fee of $17
million and repayment of its expenses. Investors should read SUGEN's Current
Report on Form 8-K, filed with the SEC on June 21, 1999, for more information
regarding the proposed merger and merger agreement.
This Offering. On March 24, 1999, we sold to the selling stockholders
listed in this prospectus $28,000,000 aggregate principal amount of our 12%
Senior Convertible Notes due 2002 (Notes) and warrants to purchase $21,000,000
aggregate principal amount of additional 12% Senior Convertible Notes (Warrant
Notes). The Notes and Warrant Notes were sold pursuant to Securities Purchase
and Exchange Agreements, dated as of March 19, 1999. SUGEN is registering for
resale up to 2,461,943 shares of common stock underlying the convertible
securities sold to the selling stockholders in March 1999. The shares being
registered for resale include:
o up to 1,365,849 shares that may be issued upon conversion of
the Notes;
o up to 1,024,386 shares that may be issued upon conversion of
the Warrant Notes which are issuable upon exercise of our 12%
Senior Convertible Note Purchase Warrants (Warrants);
o up to 2,461,943 shares that may be issued upon exercise of
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); 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.
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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.
The following risks relate to the consummation of the proposed merger
with Pharmacia & Upjohn.
SUGEN stockholders may receive less than $31.00 worth of Pharmacia & Upjohn
common stock for each share of SUGEN common stock.
Upon consummation of the merger, each share of SUGEN common stock will
be converted into a fraction of a share of Pharmacia & Upjohn common stock equal
to the exchange ratio as set forth in the merger agreement. If the average
closing price of Pharmacia & Upjohn common stock is equal to or less than
$49.21875 during the 20 trading day period ending three days prior to the SUGEN
stockholders' special meeting, you will receive 0.51533 of a share of Pharmacia
& Upjohn common stock, which may be worth less than $31.00 a share, for each
share of SUGEN common stock. SUGEN cannot terminate the merger agreement in the
event such initial value is below $31.00. The actual number of shares of
Pharmacia & Upjohn common stock to be issued to holders of SUGEN common stock
will not be determined until three trading days prior to the SUGEN special
meeting of stockholders. The volume weighted average closing price of Pharmacia
& Upjohn common stock for the 20 trading day period may be lower than the market
price as of the date of execution of the merger agreement, the date hereof or
the date on which stockholders vote on the merger.
The following risks relate to the operation of SUGEN as an independent
entity in the event the proposed merger with Pharmacia & Upjohn is not
consummated.
Our product candidates are at an early stage of development, and if we are
unable to successfully develop and commercialize products, we would not generate
revenues.
To date, none of our product candidates have been commercialized. All
of our product candidates are in early stages of development, and our drug
discovery and development methods are relatively new and untested. 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 drug
candidates have entered human clinical testing. We cannot predict whether we
will be able to develop any commercial products. Products, if any, resulting
from our research and development programs are not expected to be commercially
available until at least 2001, even if successfully developed and proven to be
safe and effective.
If we are unable to raise additional funds, we may not be able to continue our
product development efforts, and the future viability of our business will be at
risk.
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; and
o costs associated with commercialization of our products.
As of March 31, 1999, we had approximately $61.9 million available in
cash and short-term investments, and we incurred approximately $19.2 million in
development and operating expenses in the first quarter of fiscal year 1999. 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. However, we cannot predict whether our assumed levels of revenue and
expense will prove accurate.
We may need to raise additional funds if:
o our lead product candidates, SU101, SU5416 and SU6668, are not
sufficiently safe or effective to be commercialized;
o we do not establish future collaborations with partners;
o our clinical trials of SU101, SU5416 and SU6668 are delayed,
are not successful or are more costly than currently
predicted; or
o additional clinical trials are required for product approval.
We cannot predict whether we will be able to raise sufficient funds in
the future. If adequate funds are not available, we may be unable to fund our
research and development efforts, conduct our clinical trials, or successfully
commercialize and market our product candidates. If we raise additional funds by
issuing equity securities, our existing stockholders may experience substantial
dilution. If we raise additional funds through collaborative arrangements, we
may be required to give up some commercialization rights to our technologies,
product candidates or products.
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 March 31,
1999, we had an accumulated deficit of approximately $145.5 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;
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o complete our product development;
o obtain product regulatory approvals;
o manufacture and market our proposed products; and
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 dependence on
collaborators may delay or impair our ability to generate revenues or adversely
affect our profitability.
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. If our partners are not successful, we may
not be able to continue our product development efforts, and the future
viability of our company will be at risk. 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
be certain 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
predict whether our partners or any future partners will 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 predict whether 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 predict whether 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, and the restatement and renewal of
this arrangement is currently under negotiation. We expect to
complete written documentation of the renewed, modified
collaboration that is consistent with the oral understanding
Max-Planck and SUGEN have been operating under to date.
However, we cannot predict whether any of these agreements
will be renewed on favorable terms, if at all. Additionally,
our collaborations may be terminated under certain
circumstances. If any of our partners terminates its agreement
or fails 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 predict whether 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.
o Future collaborations. In addition, we cannot predict whether
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
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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.
If we are unable to protect our intellectual property, we may be unable to
prevent other companies from using our technology in competitive products. If we
are unable to operate our business without infringing intellectual property
rights of others, we may be prevented from developing and commercializing our
product candidates.
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; and
o prevent others from infringing on our proprietary rights.
As of June 14, 1999, we held exclusive rights to at least 60 issued
U.S. patents, exclusive rights to at least 10 U.S. patent applications for which
notices of allowances had been received, 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 predict whether 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 predict whether 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 predict whether 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, using 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
predict whether 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 be extended. To
date, Hoechst has not initiated legal proceedings against us
concerning possible patent infringement. However, we cannot
predict whether Hoechst will 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
predict whether we would be able to reach agreement with
Hoechst for
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a license for SU101 upon favorable terms, if at all. The
assertion of any infringement claims, even if resolved in our
favor, 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 U.S. utility application and corresponding foreign
patent applications specifically claiming SU6668. We hold the
exclusive worldwide rights to these applications, except in
Japan. We cannot predict whether patents will issue which
specifically recite 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 have received letters from at least two third parties indicating that they
believe we may be practicing their proprietary technology. We do not believe
that we practice any validly claimed subject matter in which these third parties
possess an ownership interest. However, we cannot predict whether the third
parties will agree with our position or that a court will agree with our belief
regarding invalidity and/or non-infringement. As set forth above, any resulting
litigation could materially adversely affect our business, financial condition
and results of operations.
If we are not able to demonstrate the safety and efficacy of our product
candidates in our clinical trials or our clinical trials are delayed, we would
not be able to market our products in the United States or abroad on a timely
basis, if at all.
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.
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; and
o delays in approvals from a study site's review board.
We cannot predict whether 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. For our three
cancer drug candidates currently in clinical trials, we cannot be certain that
planned trials will begin on time, and we cannot predict whether clinical trials
will be completed on schedule. We cannot predict whether any 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.
Clinical testing may uncover negative side effects for our product candidates
which may delay or prevent commercialization of such drug products.
We face the risk that any drug candidate 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 predict whether unacceptable toxicities or side
effects will occur at any time in any toxicological
8
<PAGE>
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 predict whether any of our product
candidates will be safe and effective when administered to patients.
Our products have never been manufactured on a commercial scale, and our lack of
manufacturing expertise may impair our ability to generate revenues.
We have no manufacturing facilities and thus rely on third-party
manufacturers to produce our compounds for research and development, preclinical
and clinical purposes. 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. 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. 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 have no sales and marketing capability, and our lack of sales and marketing
personnel and expertise may impair our ability to generate revenues.
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. If we do not establish sufficient in-house sales
and distribution capabilities or establish successful marketing, co-promotion or
licensing arrangements with third parties, we will not be able to successfully
market and commercialize our drug products.
If our products are not accepted by the health care community, including
physicians, patients and health care payors, we may not be able to market and
commercialize our products, and our profitability may be adversely affected.
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. If cytostatic cancer treatments are not accepted by the
health care community, our ability to generate revenues may be impaired.
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. If government and
private third-party payors do not adequately provide reimbursement for our
product costs, our products may not be accepted by the health care community,
and our ability to generate revenues may be impaired. Even if our products
receive the necessary regulatory and health care reimbursement approvals, our
products still may not achieve any significant degree of market acceptance among
physicians, patients and health care payors. We cannot predict whether 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.
If we fail to comply with extensive regulations enforced by domestic and foreign
regulatory authorities, the commercialization of our product candidates could be
prevented or delayed.
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. The FDA and
other regulatory agencies 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, and delays or failures to receive regulatory
approvals may prevent us from commercializing our products and impair our
ability to generate revenues. 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.
To date, none of our product candidates have received FDA approval for
commercialization. The FDA may not approve any of our product candidates if it
believes that any applicable regulatory criteria are not satisfied. The FDA may
also require additional testing for safety and efficacy, which would delay our
commercialization of our product candidates. We cannot predict whether 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 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.
We may not be able to effectively compete against our current and potential
competitors.
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
9
<PAGE>
with the products that we are seeking to develop and market. We face intense
competition from large pharmaceutical companies, including Zeneca, Novartis and
Bayer. We also compete with more established biotechnology companies, such as
Genentech and Immuncy, and even smaller companies that form collaborative
arrangements with large pharmaceutical and biotechnology companies, such as
InCLONE and Entremed. 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 predict whether 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; and
o manufacture, market and sell our products, independently or
through collaborations.
We cannot predict whether our competitors will 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 could adversely affect our research
and development efforts, our ability to conduct clinical trials or our ability
to market and commercialize our product candidates.
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 future 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 predict whether 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 and may prevent us from achieving our business
objectives. Although we intend to provide incentive compensation to attract and
retain our key personnel, we cannot guarantee these efforts will be successful.
If we are not successful in our attempt to commercialize our products in Europe
through European national partners, our ability to generate revenues may be
impaired and our profitability may be adversely affected.
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 predict whether
this commercialization strategy will prove to be successful.
This strategy may require more capital than licensing European rights
to product candidates. We cannot predict whether 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
predict whether 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.
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;
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<PAGE>
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; and
o changes in tariff and freight rates.
The market price of our stock may be highly volatile which could result in
substantial losses for individual stockholders.
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; and
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. For example, our stock
price has ranged from $9.75 to $29.50 over the last two years. 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 face 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 predict whether we will be able to maintain such
insurance or 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.
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 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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<PAGE>
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 July 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, 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
2,461,943 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.................... 42,796 43,963 -- 0%
Delta Opportunity Fund (Institutional), LLC(4)..... 231,272 237,577 -- 0%
Delta Opportunity Fund, Ltd.(4).................... 799,033 626,302 189,352 1.11%
Fisher Capital Ltd(5).............................. 417,267 428,642 -- 0%
Omicron Partners, LP............................... 831,641 780,350 72,000 *%
OTATO Limited Partnership(4)....................... 148,610 114,303 37,340 *%
Wingate Capital, Ltd(5)............................ 224,682 230,806 -- 0%
<FN>
* less than one percent
(1) Percentage of beneficial ownership is calculated assuming 16,976,672 shares of common stock were
outstanding as of July 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
dispositive power with respect to securities. Shares of common stock subject to options or warrants or other
rights that are currently exercisable or convertible, or exercisable or convertible within 60 days of July 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 dispositive 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, and certain 12% Senior Convertible Notes
due 2001 (Exchange Notes) and 12% Senior Convertible Note Purchase Warrants (Exchange Warrants) issued upon
exchange of SUGEN's 5% Senior Custom Convertible Notes based upon certain conversion provisions of the Notes,
Warrant Notes, Exchange Notes and Exchange Warrants, (ii) the number of shares of common stock issuable upon
exercise of common stock warrants issued in September 1997, (iii) the number of shares of common stock
issuable upon exercise of common stock warrants that may be issued upon redemption of the Notes, Warrants and
Warrant Notes, (all or some of which would be issued in lieu of the same number of shares referred to in the
preceding clause (i)) and (iv) all other shares of common stock beneficially owned as of July 15, 1999.
(3) Represents (i) the number of shares of common stock issuable upon conversion of the Notes and Warrant
Notes, based upon certain conversion provisions of the Notes and Warrant Notes and (ii) 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 (all or some of which would be issued in lieu of the same number of shares
referred to in the preceding clause (i)). The Notes and Warrant Notes provide that upon conversion, the number
of shares issuable is the quotient obtained by dividing the conversion price into the sum of the principal
amount converted plus accrued and unpaid interest on such principal to the date of conversion. For purposes of
such formula, the component for accrued and unpaid interest will vary based on the date of conversion. The
amount shown assumes the maximum amount of such component would be equal to three months' interest, which
would be the case if the Company does not default on any interest payment.
12
<PAGE>
(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. Based on the information contained in such
Schedule 13G, such other persons beneficially owned shares of SUGEN common stock as of July 15, 1999 as
follows: Diaz & Altschul Group, LLC, a New York limited liability company ("D&A Group"), beneficially owned
1,142,465 shares constituting approximately 6.3%, Diaz & Altschul Advisors, LLC, a New York limited liability
company ("D&A Advisors"), beneficially owned 1,072,465 shares constituting approximately 5.94%, Diaz &
Altschul Management, a Delaware limited liability company ("D&A Management"), beneficially owned 234,789
shares constituting approximately 1.36%, ACI/DA Investors I, LLC, a Delaware limited liability company
("ACI/DA"), beneficially owned 25,200 shares constituting approximately 0.01%, and Overbrook Fund I, LLC, a
New York limited liability company ("Overbrook") beneficially owned 3,000 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 the Notes, the Warrant Notes, the Exchange Notes and 12% Senior
Convertible Notes that may be issued upon exercise of the Exchange Warrants and upon exercise of SUGEN's
Common Stock Purchase Warrants ("Warrants").
(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 July 15, 1999, NP Partners
held Notes in the aggregate principal amount of $2,191,009 plus accrued and unpaid interest (convertible into
107,377 shares of common stock), Warrant Notes to acquire $1,643,257 principal amount of Notes, and warrants to
acquire 32,400 shares of common stock. As of July 15, 1999, Olympus Securities Ltd. held Notes in the aggregate
principal amount of $2,685,550 plus accrued and unpaid interest (convertible into 131,613 shares of common
stock), Warrant Notes to acquire $2,014,163 principal amount of Notes, and warrants to acquire 39,600 shares of
common stock.
</FN>
</TABLE>
13
<PAGE>
PLAN OF DISTRIBUTION
SUGEN will receive no proceeds from this offering. We are registering
the shares pursuant to registration rights granted to the selling stockholders.
We will pay certain expenses in connection with the registration of the shares
and will indemnify the selling stockholders against certain liabilities,
including liabilities under the Securities Act.
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. SUGEN 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
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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.
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, as
amended (File No. 0-24814);
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999,
as amended (File No. 0-24814);
3. Our Definitive Proxy Statement dated April 22, 1999, filed in
connection with our 1999 Annual Meeting of Stockholders (File No.
0-24814);
4. Our Current Report on Form 8-K filed on March 29, 1999 (File No.
0-24814);
5. Our Current Report on Form 8-K filed on June 21, 1999 (File No.
0-24814); and
6. The description of our common stock contained in our Registration
Statement on Form 8-A filed on September 13, 1994, including any
amendments or reports filed for the purpose of updating such
description (File No. 0-24814).
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
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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.
2,461,943 Shares of Common Stock
SUGEN, Inc.
PROSPECTUS
AUGUST 2, 1999
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