<PAGE>
As filed with the Securities and Exchange Commission on July 27, 2000
Registration Statement No. 333-38482
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
BIOSPHERE MEDICAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------
DELAWARE 04-3216867
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
----------------------
1050 HINGHAM STREET
ROCKLAND, MASSACHUSETTS 02370
(781) 681-7900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES)
----------------------
JOHN M. CARNUCCIO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BIOSPHERE MEDICAL, INC.
1050 HINGHAM STREET
ROCKLAND, MASSACHUSETTS 02370
(781) 681-7900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
JOHN H. CHORY, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 526-6000
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO 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 a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. /_/
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
SHALL DETERMINE.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities or accept an offer to buy these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities, and we are
not soliciting offers to buy these securities in any state where the offer or
sale is not permitted.
PROSPECTUS (Subject to Completion)
Issued July , 2000
BIOSPHERE MEDICAL, INC.
817,355 SHARES OF COMMON STOCK
---------------
The selling stockholders named on page 18 of this prospectus are
selling up to an aggregate of 817,355 shares of our common stock.
Our common stock is traded on the Nasdaq National Market under the
symbol "BSMD." On July 26, 2000, the last reported sale price of our common
stock on the Nasdaq National Market was $12.00 per share.
---------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
---------------
The Securities and Exchange Commission and state securities regulators
have not approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
----------
The date of this prospectus is __________ , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
WHO WE ARE ................................................................ 1
RISK FACTORS .............................................................. 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ......................... 16
USE OF PROCEEDS ........................................................... 17
SELLING STOCKHOLDERS ...................................................... 17
PLAN OF DISTRIBUTION ...................................................... 20
LEGAL MATTERS ............................................................. 22
EXPERTS ................................................................... 22
WHERE YOU CAN FIND MORE INFORMATION ....................................... 22
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ........................... 22
</TABLE>
<PAGE>
WHO WE ARE
OUR COMPANY
We develop, market and manufacture innovative medical device
products for the treatment of hypervascularized tumors or arteriovenous
malformations using embolotherapy. Embolotherapy is a minimally invasive
procedure in which materials that inhibit blood flow, referred to as embolic
materials, such as our microspheres, are injected through a hollow, flexible
tube called a catheter into the blood vessels to inhibit blood flow to tumors
and arteriovenous malformations. By selectively blocking the tumor's blood
supply, embolotherapy is designed to cause the tumor to shrink.
Hypervascularized tumors are tumors that are supplied by a larger number of
blood vessels than the number of blood vessels supplying the tissue
surrounding the tumor. Arteriovenous malformations are abnormal connections
between arteries and veins, frequently characterized by a dense and
wide-spread network of interconnecting blood vessels. Our lead product,
EmboSphere Microspheres, is an acrylic bead with a proprietary design that is
used as an embolic material.
We intend that our first products will target the treatment of
hypervascularized tumors. Hypervascularized tumors include some tumors
affecting the brain and spinal cord, tumors in the uterus, known as uterine
fibroids, and tumors associated with liver cancer. Our primary focus is on
commercializing our microspheres for the treatment of uterine fibroids. We
are also focusing on the development and commercialization of microspheres
for the treatment of liver cancer. Additionally, we are exploring and/or
developing microspheres for use in the treatment of a number of conditions,
including stress urinary incontinence, facial wrinkles, gastroesophageal
reflux disease, a condition characterized by the abnormal reverse flow of
stomach contents into the esophagus, and tissue repair.
In April 2000, we received clearance from the United States Food and
Drug Administration, or FDA, for embolization of hypervascularized tumors and
arteriovenous malformations. We have commenced clinical testing under an
investigational device exemption to support an application for FDA approval
for the treatment of uterine fibroids using our Embosphere Microspheres. An
investigational device exemption is a regulatory exemption granted by the FDA
to medical device manufacturers for the purpose of conducting clinical
studies. We intend, pending FDA clearance and approval, that our first
products will target uterine fibroids and liver cancer. We do not anticipate
receiving FDA labeling approval for use of our products in treating uterine
fibroids and liver cancer before 2002, if at all.
We received CE Mark approval of our Embosphere Microspheres product
in the European Union in 1997. CE Mark Approval is a certification granted by
European regulatory bodies, or by some manufacturers with satisfactory
quality systems, that substantiates the compliance of products with specific
standards of quality and/or safety. This approval is generally required prior
to the commercialization of a medical device in the European Union. In
January 2000, we received marketing approval of our Embosphere Microspheres
product in Australia and Canada. We expect to file for marketing approval in
Japan for our Hepasphere Microspheres product for the treatment of liver
cancer within the next 24 months.
Radiologists specializing in the use of interventional devices to
deliver therapies in addition to diagnosing diseases, also known as
interventional radiologists, have performed embolotherapy procedures for over
20 years. However, the current embolic material, polyvinyl alcohol, has many
significant drawbacks, including limited effectiveness, limited control,
difficulty with use and chronic inflammatory response. We believe our
microspheres are a promising new alternative to the current embolic material.
Based on the number of vials of Embosphere Microsphere product sold to
date, we estimate that over 7,000 patients have been treated with our Embosphere
Microspheres product outside of the United States.
There are a number of risks relating to investing in our common
stock, including significant risks relating to our ability to develop, market
and sell our Embosphere Microspheres product successfully and achieve
profitability. For a detailed discussion of these risk factors, refer to the
"Risk Factors" section beginning on page 3.
CORPORATE HISTORY
We were incorporated in Delaware in December 1993. As of June 30,
2000, Sepracor Inc. beneficially owned approximately 58% of our outstanding
common stock. During 1999, we strategically refocused our business on the
commercialization of our microspheres for medical applications. In February
1999, we acquired a 51% ownership interest in Biosphere Medical S.A.
Biosphere Medical S.A. has the license to the embolotherapy device that is
now the main focus of our business. In May 1999, we sold substantially all of
our assets relating to our former core business, chromotography, and changed
our name to BioSphere Medical, Inc. In April 2000, we increased our ownership
interest in Biosphere Medical, S.A. to 85%. We have an option to acquire the
remaining 15% at a later date. We expect to spend substantial funds and to
experience increasing losses for the foreseeable future in connection with
this refocus of our business and our execution of our business plan.
Our principal executive offices are located at 1050 Hingham Street,
Rockland, Massachusetts 02370, and our telephone number is (781) 681-7900.
Embosphere(R) is a registered trademark and BioSphere Medical(TM) and
HepaSphere(TM) are trademarks of BioSphere Medical, Inc.
-2-
<PAGE>
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. YOU
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE YOU DECIDE TO BUY OUR
COMMON STOCK.
RISK RELATING TO OUR FUTURE PROFITABILITY
BECAUSE WE HAVE A HISTORY OF LOSSES AND OUR FUTURE PROFITABILITY IS
UNCERTAIN, OUR COMMON STOCK IS A HIGHLY SPECULATIVE INVESTMENT
We have incurred operating losses since our inception and, as of
March 31, 2000, had an accumulated deficit of approximately $37.5 million. We
expect to spend substantial funds to continue research and product testing,
to establish sales, marketing, quality control, regulatory and administrative
capabilities, and for other general corporate purposes. We expect to incur
increasing losses over the next several years as we expand our
commercialization efforts.
We may never become profitable. If we do become profitable, we may
not remain profitable on a continuing basis. Our failure to become and remain
profitable would depress the market price of our common stock and impair our
ability to raise capital and continue our operations.
RISKS RELATING TO REGULATORY MATTERS
IF WE DO NOT OBTAIN THE REGULATORY APPROVALS REQUIRED TO MARKET AND SELL OUR
PRODUCTS, THEN OUR BUSINESS WILL BE UNSUCCESSFUL AND THE MARKET PRICE OF OUR
STOCK WILL SUBSTANTIALLY DECLINE
We are subject to governmental regulation by national and local
government agencies in the United States and abroad with respect to the
manufacture, packaging, labeling, advertising, promotion, distribution and
sale of our products. For example, our products are subject to approval or
clearance by the FDA prior to marketing in the United States for commercial
use. The process of obtaining necessary regulatory approvals and clearances
will be time-consuming and expensive for us. If we do not receive required
regulatory approval or clearance to market our products, we will not be able
to develop and commercialize our products and become profitable, and the
value of our common stock will substantially decline.
We are focusing our immediate product commercialization efforts on
our Embosphere Microspheres. In April 2000, we obtained marketing clearance
from the FDA to use our Embosphere Microspheres in the United States for the
embolization of hypervascularized tumors and arteriovenous malformations.
However, we will require FDA clearance of either a premarket notification
under Section 510(k) of the Federal Food, Drug and Cosmetic Act, which we
refer to as a 510(k) notification, or approval of a premarket approval
application under Section 515 of the Federal Food, Drug and Cosmetic Act,
which we refer to as a premarket approval, before we can market Embosphere
Microspheres in the United States for use in the
-3-
<PAGE>
embolization of uterine fibroids. We do not expect to receive the required
clearance for uterine fibroids until 2002, if at all. In either case, the FDA
will require us to undertake clinical trials, which may be lengthy and
expensive. We currently do not have regulatory approvals or clearances to
market any other product in any country, other than approvals to market our
Embosphere Microspheres in the European Union, Australia and Canada for the
treatment of arteriovenous malformations, hypervascularized tumors and blood
loss.
IF THE FDA OR OTHER REGULATORY AGENCIES PLACE RESTRICTIONS ON, OR IMPOSE
ADDITIONAL APPROVAL REQUIREMENTS WITH RESPECT TO, PRODUCTS WE ARE THEN
MARKETING, WE MAY INCUR SUBSTANTIAL ADDITIONAL COSTS AND EXPERIENCE DELAYS OR
DIFFICULTIES IN CONTINUING TO MARKET AND SELL THESE PRODUCTS
Even if the FDA grants to us approval or clearance with respect to
any of our products, it may place substantial restrictions on the indications
for which we may market the product or to whom we may market the product,
which could result in us achieving less sales and lower revenues. The nature
of the marketing claims we are permitted to make in labeling or advertising
regarding our Embosphere Microspheres is limited to those specified in any
FDA clearance or approval, and if the FDA determines that we have made claims
beyond those cleared or approved by the FDA, then we will be in violation of
the Federal Food, Drug, and Cosmetic Act. For example, our products are not
specifically approved for labeling for use for uterine fibroids, which is one
of the uses for which we anticipate physicians may use our products. We may
not initiate discussions with physicians about this use and, if a physician
initiates the discussion, we may only provide peer-reviewed literature.
We may in the future make modifications to our Embosphere
Microspheres which we determine do not necessitate the filing of a new 510(k)
notification. However, if the FDA does not agree with our determination, it
will require us to make additional filings for the modification, and we will
be prohibited from marketing the modified product until we obtain FDA
clearance or approval, which could delay our ability to introduce product
modifications and enhancements into the market.
Further, the FDA has classified our embolotherapy device into Class
III, which means that even though we have obtained clearance under Section
510(k) of the Federal Food, Drug and Cosmetic Act to market the device, the
FDA could in the future promulgate a regulation requiring premarket approval
of the device under Section 515 of the Federal Food, Drug and Cosmetic Act to
allow it to remain on the market. A requirement for premarket approval would
likely require us to conduct costly and lengthy clinical trials. We may
experience difficulty in providing to the FDA sufficient data for premarket
approval in a timely fashion, if at all. If we fail to obtain premarket
approval, the FDA would require us to remove our product from the United
States market. In addition, the FDA may require us to conduct a postmarket
surveillance study on our embolotherapy device, which is designed to track
specific elements of patient experience with our Embosphere Microspheres
product after we have begun marketing it. If such a study revealed an
unexpected rate of adverse events, the FDA could place further restrictions
on our marketing of the device, or rescind our clearance.
Our legally-marketed products will be subject to continuing FDA
requirements relating to quality control, quality assurance, maintenance of
records,
-4-
<PAGE>
documentation, labeling and promotion of medical devices. We are also required
to submit medical device reports to the FDA to report device-related deaths,
serious injuries and malfunctions, the recurrence of which would be likely to
cause or contribute to a death or serious injury. These reports are publicly
available and, therefore, can become a basis for private tort suits, including
class actions, with respect to our products. Any of these suits would be costly
and time-consuming and would divert our management's attention from the
continued development of our business.
IF WE FAIL TO COMPLY WITH REGULATORY LAWS AND REGULATIONS, WE WILL BE SUBJECT
TO ENFORCEMENT ACTIONS, WHICH WILL AFFECT OUR ABILITY TO MARKET AND SELL OUR
PRODUCTS AND MAY HARM OUR REPUTATION
If we fail to comply with applicable federal, state or foreign laws
or regulations, we could be subject to enforcement actions, which could
affect our ability to develop, market and sell our products successfully and
could harm our reputation and lead to less acceptance of our products by the
market. These enforcement actions include:
- product seizures;
- voluntary or mandatory recalls;
- voluntary or mandatory patient or physician notification;
- withdrawal of product clearances or approvals;
- withdrawal of investigational drug exemption approval;
- restrictions on or prohibitions against marketing our products;
- fines;
- injunctions;
- civil and criminal penalties; and
- withdrawal of premarket approval or rescission of premarket
notification clearance.
IF OUR CLINICAL TRIALS ARE NOT COMPLETED SUCCESSFULLY, WE WILL NOT BE ABLE TO
DEVELOP AND COMMERCIALIZE OUR PRODUCTS
Although for planning purposes we forecast the timing of completion
of clinical trials, the actual timing can vary dramatically due to factors
such as delays, scheduling conflicts with participating clinicians and
clinical institutions, the rate of patient accruals and the uncertainties
inherent in the clinical trial process. In addition, because we have limited
experience in conducting clinical trials, we may rely on academic
institutions or clinical research organizations to conduct, supervise or
monitor some or all aspects of clinical trials involving our products.
Accordingly, we have less control over the timing and other aspects of these
clinical trials than if
-5-
<PAGE>
we conducted them entirely on our own. As a result of these factors, we or
third parties may not successfully begin or complete our clinical trials and
we may not make regulatory submissions or receive required regulatory
approvals to commence or continue our clinical trials in the time periods we
have forecasted, if at all. If we or third parties fail to commence or
complete, or experience delays in, any of our planned clinical trials, then
we are likely to incur additional costs and delays in our product development
programs, which could cause our stock price to decrease.
RISKS RELATING TO OUR INDUSTRY, BUSINESS AND STRATEGY
IF THE MARKET IS NOT RECEPTIVE TO OUR EMBOSPHERE MICROSPHERES PRODUCT, OUR
BUSINESS PROSPECTS WILL BE SERIOUSLY HARMED
Our Embosphere Microspheres are based on new technologies and
therapeutic approaches and we only recently began selling our Embosphere
Microspheres product in the European Union, United States, Canada and
Australia. Our success will depend upon the medical community, patients and
third party payors accepting our Embosphere Microspheres product as clinically
useful, cost-effective and safe. In particular, our success will depend upon
obstetrics and gynecology physicians referring patients to interventional
radiologists to receive treatment using our products in lieu of, or in
addition to, receiving other forms of treatment which the obstetrics and
gynecology physicians can provide directly.
In addition, if we receive negative publicity associated with any
adverse medical effects attributed to embolization treatments generally or
our product specifically, the market may not accept our products as safe. For
example, Embosphere Microspheres are designed to remain in the body
permanently. As a result, there may be some risk that some or all of the
Embosphere Microspheres used in a medical procedure may travel in the blood
system beyond the intended site of action and occlude, or block, other blood
vessels, resulting in significant adverse health effects on the patient or
even death. Moreover, to use our Embosphere Microspheres correctly for a
particular medical procedure, physicians must select and use the proper size
and quantity of Embosphere Microspheres. A physician's selection and use of
the wrong size or quantity of Embosphere Microspheres could have significant
adverse health effects on the patient, including death. In addition, there is
limited data concerning the long-term health effects on persons resulting
from embolotherapy using our Embosphere Microspheres. If the market
determines or concludes that our product is not safe or effective for any
reason, we may be exposed to product liability claims, product recalls and
fines or other penalties and associated adverse publicity. In addition, we
have provided to our customers a satisfaction guarantee that requires us to
accept the return of any inventory and credit the entire amount of the
original order if a properly-trained customer is not satisfied with the
performance of our embospheres. If we experience adverse publicity or are
subject to product liability claims, excessive guarantee claims, recalls,
fines and the like, we will be unable to commercialize successfully our
products and achieve profitability.
-6-
<PAGE>
IF WE EXPERIENCE DELAYS, DIFFICULTIES OR UNANTICIPATED COSTS IN ESTABLISHING
THE SALES, DISTRIBUTION AND MARKETING CAPABILITIES NECESSARY TO SUCCESSFULLY
COMMERCIALIZE OUR PRODUCTS, WE WILL HAVE DIFFICULTY MAINTAINING AND
INCREASING OUR SALES
We currently lack sales, distribution and marketing capabilities in
the United States and have only limited sales, distribution and marketing
capabilities in the European Union. It will be expensive and time-consuming
for us to develop a marketing and sales force and, consequently, we could be
required to delay our product launches. Moreover, we may choose or find it
necessary to enter into strategic partnerships to sell, market and distribute
our products. The terms of any partnership may not be favorable to us. We
currently rely on 17 distributors to sell our products outside of France. We
may not be able to provide adequate incentive to these distributors to
promote our products. If we are unable to successfully employ qualified
marketing and sales personnel and develop our sales and marketing
capabilities, or if our distributors fail to promote our products, we will
have difficulty maintaining and increasing our sales.
IF WE ARE UNABLE TO OBTAIN ADEQUATE PRODUCT LIABILITY INSURANCE, THEN WE MAY
HAVE TO PAY SIGNIFICANT MONETARY DAMAGES IN A SUCCESSFUL PRODUCT LIABILITY
CLAIM AGAINST US
Product liability insurance is generally expensive for medical
device companies such as ours. Although we maintain limited product liability
insurance coverage for the clinical trials of our products, it is possible
that we will not be able to obtain further product liability insurance on
acceptable terms, if at all. Insurance we subsequently obtain may not provide
us with adequate coverage against all potential claims. If we are exposed to
product liability claims for which we have insufficient insurance, we may be
required to pay significant damages which would prevent or delay our ability
to commercialize our products.
IF WE ARE NOT BE ABLE TO COMPETE EFFECTIVELY, WE MAY EXPERIENCE DECREASED
DEMAND FOR OUR PRODUCTS AND PRICE REDUCTIONS
We have many competitors in the United States and abroad, including
medical device and therapeutics companies, universities and other private and
public research institutions. Our success depends upon our ability to develop
and maintain a competitive position in the embolotherapy market. Our key
competitors are Cordis Corporation, a Johnson & Johnson company, Boston
Scientific Corporation and Nycomed Amersham. These and many of our other
competitors have greater capabilities, experience and financial resources
than we do. As a result, they may develop products which compete with our
Embosphere Microspheres product more rapidly or at less cost than we can.
Currently, the primary products with which our Embosphere Microspheres
compete for some of our applications are polyvinyl alcohol, polymerizing gels
and coils. In addition, our competitors may develop technologies that render
our products obsolete or otherwise noncompetitive.
We may not be able to improve our products or develop new products
or technologies quickly enough to maintain a competitive position in our
market and continue to grow our business. Moreover, we may not be able to
compete effectively, and competitive pressures may result in less demand for
our products and impair our ability to become profitable.
-7-
<PAGE>
IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR PRODUCTS BY
THIRD PARTY PAYORS, THERE MAY BE NO COMMERCIALLY VIABLE MARKETS FOR OUR
PRODUCTS
The availability and levels of reimbursement by governmental and
other third party payors affects the market for any medical device. We may
not be able to sell our products profitably if reimbursement is unavailable
or limited in scope or amount. Currently, only a limited number of insurance
companies fully or partially reimburse for embolization procedures. These
third-party payors continually attempt to contain or reduce the costs of
healthcare by challenging the prices that companies such as ours charge for
medical products. In some foreign countries, particularly the countries of
the European Union where our Embosphere Microspheres product is currently
marketed and sold, the pricing of medical devices is subject to governmental
control and the prices charged for our products have in some instances been
reduced as a result of these controls. Additionally, in both the United
States and some foreign jurisdictions, there have been a number of
legislative and regulatory proposals to change the healthcare system. Further
proposals are likely. These proposals, if adopted, could result in less sales
revenue to us, and could affect our ability to raise capital and market our
products.
IF WE DO NOT RETAIN OUR SENIOR MANAGEMENT AND OTHER KEY EMPLOYEES, WE MAY NOT
BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS STRATEGY
The loss of Jean-Marie Vogel, our Chairman, John M. Carnuccio, our
President and Chief Executive Officer, Jonathan McGrath, our Vice-President
Worldwide Research and Development or other key members of our staff could
harm us. Mr. Vogel is the only key employee with whom we currently have a
long-term employment agreement. We also depend on our scientific
collaborators and advisors, all of whom have other commitments that may limit
their availability to us. Our success is substantially dependent on the
ability, experience and performance of these members of our senior management
and other key employees, scientific collaborators and advisors. Because of
their ability and experience, if we lose one or more of these individuals,
our ability to implement successfully our business strategy could be
seriously harmed.
IF WE DO NOT ATTRACT AND RETAIN SKILLED PERSONNEL, WE WILL NOT BE ABLE TO
EXPAND OUR BUSINESS
Our future success will depend in large part upon our ability to
attract and retain highly skilled scientific, managerial and marketing
personnel, particularly as we expand our activities in clinical trials, the
regulatory approval process and sales and manufacturing. We face significant
competition for this type of person from other companies, research and
academic institutions, government entities and other organizations.
Consequently, if we are unable to attract and retain skilled personnel, we
will not be able to expand our business.
IF THE STRATEGIC REDIRECTION OF OUR BUSINESS IS NOT SUCCESSFUL, WE MAY BE
UNABLE TO ACHIEVE GROWTH IN OUR BUSINESS
In early 1999, we decided to exit the chromatography business, which
had constituted our core business, to focus on the commercialization of
microspheres for use in embolotherapy and other medical applications. We have
restated our historical financial statements to reflect the
-8-
<PAGE>
discontinuation of our chromatography business. In addition, 73% of 1999
revenue and 71% of first quarter 2000 revenue included in our restated
financial statements was derived from the sale of products we consider to be
nonstrategic and which we do not expect to constitute a significant portion
of our revenue on an ongoing basis. Our strategic shift from the
chromatography business to the commercialization of microspheres may not
prove to be successful and, consequently, we may be unable to grow our
business and achieve profitability.
IF WE MAKE ANY ACQUISITIONS, WE WILL INCUR A VARIETY OF COSTS AND MAY NEVER
SUCCESSFULLY INTEGRATE THE ACQUIRED BUSINESS INTO OURS
We may attempt to acquire businesses, technologies, services or
products that we believe are a strategic fit with our business. We may
encounter operating difficulties and expenditures relating to integrating an
acquired business, technology, service or product. These acquisitions may
also absorb significant management attention that would otherwise be
available for ongoing development of our business. Moreover, we may never
realize the anticipated benefits of any acquisition. We may also make
dilutive issuances of equity securities, incur debt or experience a decrease
in the cash available for our operations, or incur contingent liabilities
and/or amortization expenses related to goodwill and other intangible assets,
in connection with any future acquisitions.
IF WE ARE COMPELLED TO ACQUIRE THE REMAINING INTEREST IN BIOSPHERE MEDICAL
S.A., WE MAY BE REQUIRED TO INCUR INDEBTEDNESS OR MAKE A SIGNIFICANT CASH
PAYMENT, WHICH MAY RESULT IN A DECREASE IN AVAILABLE CASH FOR OUR OPERATIONS
We currently own 85% of the outstanding capital stock of Biosphere
Medical S.A. We have the right to acquire the remaining 15% of Biosphere
Medical S.A. in 2004. The purchase price that we are required to pay if we
exercise this right is equal to 15% of the aggregate sales of Biosphere
Medical S.A. and sales of our microspheres subject to our license agreement
with Biosphere Medical S.A. for the twelve-month period prior to the exercise
of our right. In addition, the holder of the remaining 15% of Biosphere
Medical S.A. has a "put" right to require us to purchase the remaining 15% in
2004. The purchase price that we are required to pay if the minority holder
exercises this put right is equal to 15% of the aggregate sales of Biosphere
Medical S.A. and sales of our microspheres subject to our license agreement
with Biosphere Medical S.A. for the nine-month period prior to the exercise
of the put right. In any event, the price that we are required to pay if the
minority holder exercises the put right shall not be less than FF1,800,000
($264,000 at March 31, 2000). If we are compelled by the minority stockholder
to acquire the minority interest at a future date, we could be required to
make a significant cash payment, which could result in us incurring debt or a
decrease in the cash available to us for our operations.
-9-
<PAGE>
RISKS RELATING TO OUR FINANCIAL RESULTS AND NEED FOR FINANCING
WE WILL CONTINUE TO NEED SUBSTANTIAL ADDITIONAL FUNDS, AND IF ADDITIONAL
CAPITAL IS NOT AVAILABLE, WE MAY HAVE TO CURTAIL OR CEASE OUR OPERATIONS
We will need to raise additional funds to develop and commercialize
our products successfully. If we cannot raise more funds, we could be
required to reduce our capital expenditures, scale back our product
development, reduce our workforce and license to others products or
technologies that we otherwise would seek to commercialize ourselves. We may
not receive additional funding on reasonable terms or at all. Other than a
$2.0 million credit line with a bank, we have no committed source of capital.
Sepracor is the guarantor of this credit line. We have entered into a
security agreement with Sepracor pursuant to which we have pledged to
Sepracor all of our assets, including our equity interest in Biosphere
Medical S.A., as collateral for Sepracor's guarantee to the bank. We are
likely to raise more money for working capital purposes by selling additional
capital stock, which is a common strategy for companies such as ours. Any
sales of additional shares of our capital stock are likely to dilute our
existing stockholders. Further, if we issue additional equity securities, the
new equity securities may have rights, preferences or privileges senior to
those of existing holders of our common stock. Alternatively, we may borrow
money from commercial lenders, possibly at high interest rates, which will
increase the risk of your investment in us.
IF OPERATING RESULTS FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER, THEN
OUR STOCK PRICE MAY DECLINE
Our operating results could fluctuate significantly from quarter to
quarter. These fluctuations may be due to several factors including the
timing and volume of customer orders for our Embosphere Microspheres,
customer cancellations and general economic conditions. We also expect that
our operating results will be affected by seasonality, since we expect our
revenues to decline substantially in the third quarter of each year from the
first two quarters of each year because we do a significant percentage of our
business in the European Union, which typically experiences a slowdown of
business during August. Due to these fluctuations, our operating results in
some quarters may not meet the expectations of stock market analysts and
investors. In that case, our stock price would probably decline.
In addition, a large portion of our expenses, including expenses for
facilities, equipment and personnel, are relatively fixed. Accordingly, if
our revenue declines or does not grow as much as we anticipate, we might not
be able to improve our operating margins. In addition, we plan to
significantly increase operating expenses in the next several years. Failure
to achieve anticipated levels of revenue could therefore significantly harm
our operating results for a particular fiscal period.
-10-
<PAGE>
RISKS RELATING TO THE PRODUCTION AND SUPPLY OF OUR PRODUCTS
IF WE EXPERIENCE MANUFACTURING DELAYS OR INTERRUPTIONS IN PRODUCTION THEN WE
MAY EXPERIENCE CUSTOMER DISSATISFACTION AND OUR REPUTATION COULD SUFFER
If we fail to produce enough products at our own manufacturing
facility or at a third-party manufacturing facility, we may be unable to
deliver products to our customers on a timely basis, which could lead to
customer dissatisfaction and could harm our reputation and ability to
compete. We currently produce all of our Embosphere Microspheres products in
one manufacturing facility in France. We would likely experience significant
delays or cessation in producing our products at this facility if a labor
strike, natural disaster, local or regional conflict or other supply
disruption were to occur. If we are unable to manufacture our products at our
facility in France, we may be required to enter into arrangements with one or
more contract manufacturing companies. We do not currently have contingency
plans in place and, if alternate arrangements are required, we could
encounter delays or difficulties establishing relationships with contract
manufacturers or in establishing agreements on terms that are favorable to
us. In addition, if we are required to depend on third-party manufacturers,
our profit margins may be lower, which will make it more difficult for us to
achieve profitability.
Also, manufacturers, including us, must adhere to the FDA's current
Good Manufacturing Practices regulations, which are enforced by the FDA
through its facilities inspection program. Third-party manufacturers may not
be able to comply or maintain compliance with Good Manufacturing Practices
regulations. If third parties fail to comply, their non-compliance could
significantly delay our receipt of 510(k) clearance or premarket approval.
For a premarket approval device, if we change our manufacturing facility or
switch to a third-party manufacturer we will be required to submit a
premarket approval application supplement. For a 510(k) product, a change in
our manufacturing location would require us to change our registration with
the FDA.
BECAUSE WE RELY ON A LIMITED NUMBER OF SUPPLIERS WE MAY EXPERIENCE DIFFICULTY
IN MEETING OUR CUSTOMERS' DEMANDS FOR OUR PRODUCTS IN A TIMELY MANNER OR
WITHIN BUDGET
We currently purchase key components of our Embosphere Microspheres
from approximately 16 outside sources. Some of these components may only be
available to us through a few sources. We generally do not have long-term
agreements with any of our suppliers.
Our reliance on our suppliers exposes us to risks, including:
- the possibility that one or more of our suppliers could terminate their
services at any time without penalty;
- the potential inability of our suppliers to obtain required components;
- the potential delays and expenses of seeking alternative sources of
supply;
-11-
<PAGE>
- reduced control over pricing, quality and timely delivery due to the
difficulties in switching to alternative suppliers; and
- the possibility that one or more of our suppliers could fail to satisfy
any of the FDA's required current Good Manufacturing Practices
regulations.
Consequently, in the event that our suppliers delay or interrupt the
supply of components for any reason, our ability to produce and supply our
products could be impaired, which could lead to customer dissatisfaction.
RISKS RELATING TO INTELLECTUAL PROPERTY
IF WE ARE UNABLE TO OBTAIN PATENT PROTECTION FOR OUR DISCOVERIES, THE VALUE
OF OUR TECHNOLOGY AND PRODUCTS COULD DECLINE AND WE MAY NOT BE ABLE TO
DEVELOP AND COMMERCIALIZE OUR PRODUCTS, OR THE COST OF DOING SO MAY INCREASE
We may not obtain meaningful protection for our technology and
products with the patents and patent applications that we own or license
relating to our microsphere technology. In particular, our patents and patent
applications may not prevent others from designing products similar to or
otherwise competitive with our Embosphere Microspheres and other products
commercialized by us. For example, one of the three patents related to
copolymers used to make our present Embosphere Microspheres will expire in
June 2001 and relates to the co-polymers that are used to make the Embosphere
Microspheres. We are currently developing a microsphere that has marking
agents, which are materials that will improve visualization of the Embosphere
Microspheres during a procedure, and cell adhesion promoters, which are
materials that will improve the attraction and bonding between the Embosphere
Microspheres and adjacent cell membranes. The other two patents that relate
to Embosphere Microspheres cover chemical coupling of marketing agents and
cell adhesion promoters on the Embosphere Microspheres. Coupling is a
mechanism for incorporating materials into the Embosphere Microspheres that
enables chemical bonding between an additive and one of the base materials in
the formulation. These two patents do not cover the chemical components of
Embosphere Microspheres. To the extent that our competitors are able to
design products competitive with ours without infringing our intellectual
property rights, we may experience less market penetration with our products
and, consequently, we will have decreased revenues.
We do not know whether competitors have similar United States patent
applications on file, since United States patent applications are secret
until issued. Consequently, the United States Patent and Trademark Office
could initiate interference proceedings involving our owned or licensed
United States patent applications or issued patents. Further, there is a
substantial backlog of patent applications at the United States Patent and
Trademark Office, and the approval or rejection of patent applications may
take several years.
We have a license to technology invented by a Japanese inventor.
However, the license is limited to a single Japanese patent application. In
other words, corresponding United States and European patent applications
were not filed by this inventor. We intend to file patent
-12-
<PAGE>
applications directed to improvements of this inventor's technology. However,
patent applications may not issue as patents, and these patents, if issued, may
not provide us with sufficient protection against competitors. Further, we may
be required to obtain additional licenses concerning the Japanese patent
application, and any licenses, if obtained, may not be on terms that are
acceptable to us.
IF WE BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER PROCEEDINGS TO
ENFORCE OUR PATENT RIGHTS, WE COULD INCUR SUBSTANTIAL COSTS AND EXPENSES OR
SUBSTANTIAL LIABILITY FOR DAMAGES OR BE REQUIRED TO STOP OUR PRODUCT
DEVELOPMENT AND COMMERCIALIZATION EFFORTS
In order to protect or enforce our patent rights, we may have to
initiate legal proceedings against third parties, such as infringement suits
or interference proceedings. By initiating legal proceedings to enforce our
intellectual property rights, we may also provoke these third parties to
assert claims against us. Furthermore, we may be sued for infringing on the
intellectual property rights of others, and, as a result, our patents could
be narrowed, invalidated or rendered unenforceable by a court. We may find it
necessary, if threatened, to initiate a lawsuit seeking a declaration from a
court regarding the proprietary rights of others. For example, we were
engaged in patent litigation related to our discontinued business that
settled in December 1997 . Intellectual property litigation is costly, and,
even if we prevail, could divert management attention and resources away from
our business.
The patent position of companies like us generally is highly
uncertain, involves complex legal and factual questions, and has recently
been the subject of much litigation. We may not prevail in any patent-related
proceeding. If we do not prevail in any litigation, in addition to any
damages we might have to pay, we could be required to stop the infringing
activity or obtain a license. Any required license may not be available to us
on acceptable terms, or at all. In addition, some licenses may be
nonexclusive, and therefore, our competitors may have access to the same
technology licensed to us. If we fail to obtain a required license or are
unable to design around a patent, we may be unable to sell some of our
products, which could have a material adverse affect on us.
Our majority-owned French subsidiary, Biosphere Medical S.A.,
jointly owns two United States patents and corresponding foreign patents
relating to microsphere technology for use in connection with embolotherapy
with L'Assistance Publique-Hopitaux De Paris, referred to as
-13-
<PAGE>
AP-HP, a French public health establishment. Pursuant to the terms of a
related license agreement with AP-HP, Biosphere Medical S.A. may be required
to seek AP-HP's participation in any United States legal proceedings it
initiates against third parties to protect or enforce its rights under the
jointly-owned patents. If Biosphere Medical S.A. is not able to obtain the
cooperation of AP-HP in any infringement suit against a third party, then its
ability to pursue a law suit and enforce these patent rights relating to the
microspheres could be harmed, which could have a material adverse effect on
us.
IF ANY OF OUR LICENSES TO USE THIRD-PARTY TECHNOLOGIES IN OUR PRODUCTS ARE
TERMINATED, WE MAY BE UNABLE TO DEVELOP, MARKET AND SELL OUR PRODUCTS
We are dependent on various license agreements relating to each of
our current and proposed products that give us rights under intellectual
property rights of third parties. These licenses impose commercialization,
sublicensing, royalty, insurance and other obligations on us. Our failure, or
any third party's failure, to comply with the terms of any of these licenses
could result in us losing our rights to the license, which could result in us
being unable to develop, manufacture or sell products which contain the
licensed technology.
RISKS RELATING TO OUR FOREIGN OPERATIONS
IF WE ARE UNABLE TO MEET THE OPERATIONAL, LEGAL AND FINANCIAL CHALLENGES THAT
WE WILL ENCOUNTER IN OUR INTERNATIONAL OPERATIONS, WE MAY NOT BE ABLE TO GROW
OUR BUSINESS
Our operations are currently conducted primarily through our French
subsidiary. Furthermore, we currently derive substantially all of our revenue
from the sale of our Embosphere Microspheres and other products in the
European Union. We are increasingly subject to a number of challenges which
specifically relate to our international business activities. Our
international operations may not be successful if we are unable to meet and
overcome these challenges, which would limit the growth of our business.
These challenges include:
- failure of local laws to provide the same degree of protection against
infringement of our intellectual property;
- protectionist laws and business practices that favor local competitors,
which could slow our growth in international markets;
- potentially longer sales cycles to sell products, which could slow our
revenue growth from international sales; and
- potentially longer accounts receivable payment cycles and difficulties
in collecting accounts receivable.
-14-
<PAGE>
BECAUSE WE EXCHANGE FOREIGN CURRENCY RECEIVED FROM INTERNATIONAL SALES INTO
U.S. DOLLARS AND ARE REQUIRED TO MAKE FOREIGN CURRENCY PAYMENTS, WE MAY LOSE
MONEY DUE TO FLUCTUATIONS IN FOREIGN CURRENCY TRANSLATIONS
Most of our business is conducted in French francs and the euro
dollar. In 1999 and 2000 we experienced foreign currency exchange gains of
$24,211 and $41,483, respectively. We recognize foreign currency gains or
losses arising from our operations in the period incurred. As result,
currency fluctuations between the U.S. dollar and the currencies in which we
do business will cause foreign currency translation gains and losses, which
may cause fluctuations in our future operating results. We do not currently
engage in foreign exchange hedging transactions to manage our foreign
currency exposure.
RISKS RELATING TO AN INVESTMENT IN OUR COMMON STOCK
BECAUSE THE MARKET PRICE OF OUR STOCK IS HIGHLY VOLATILE, YOUR INVESTMENT IN
US COULD RAPIDLY LOSE ITS VALUE AND WE MAY INCUR SIGNIFICANT COSTS FROM CLASS
ACTION LITIGATION
The market price of our stock is highly volatile. As a result, your
investment in us could rapidly lose its value. In addition, the stock market
often experiences extreme price and volume fluctuations, which affect the
market price of many medical device companies and which are often unrelated
to the operating performance of these companies.
Recently, when the market price of a stock has been as volatile as
our stock price has been, holders of that stock have occasionally instituted
securities class action litigation against the company that issued the stock.
If any of our stockholders were to bring a lawsuit of this type against us,
even if the lawsuit is without merit, we could incur substantial costs in
defending the lawsuit. The lawsuit could also divert the time and attention
of our management.
BECAUSE SEPRACOR INC. AND OUR EXECUTIVE OFFICERS AND DIRECTORS OWN A MAJORITY
OF OUR COMMON STOCK, THEY HAVE SUBSTANTIAL CONTROL OVER US
As of May 1, 2000, Sepracor Inc., together with its affiliates,
beneficially owned, in the aggregate, approximately 58% of our outstanding
common stock. In addition, as of May 1, 2000, our executive officers and
directors beneficially owned, in the aggregate, approximately 10% of our
outstanding common stock, excluding shares owned by Sepracor which some of
our directors and executive officers may be deemed to beneficially own. Two
of our directors are executive officers of Sepracor. Sepracor and our
executive officers and directors are able to control all corporate actions
requiring stockholder approval irrespective of how our other stockholders may
vote, including:
- the election of directors;
- the amendment of charter documents;
- the approval of mergers and other significant corporate transactions,
including a sale of substantially all of our assets; and
- the defeat of any non-negotiated takeover attempt that might otherwise
benefit the public stockholders.
This ownership concentration could cause the market price of our common
stock to decline. In addition, conflicts of interest between us and Sepracor may
arise, including with respect to competitive business activities and control of
our management and our affairs.
-15-
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
substantial risks and uncertainties. In some cases you can identify these
statements by forward-looking words such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," "should," "will," and "would" or similar
words. You should read statements that contain these words carefully because
they discuss future expectations, contain projections of future results of
operations or of financial position or state other "forward-looking"
information. The important factors listed above in the section captioned "Risk
Factors," as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations described in these forward-looking
statements. You should be aware that the occurrence of the events described in
these risk factors and elsewhere in this prospectus could have an adverse effect
on our business, results of operations and financial position.
Any forward-looking statements in this prospectus are not guarantees of
future performance, and actual results, developments and business decisions may
differ from those envisaged by such forward-looking statements, possibly
materially. We disclaim any duty to update any forward-looking statements, all
of which are expressly qualified by the statements in this section.
-16-
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the
selling stockholders.
The selling stockholders will pay any selling commissions and
expenses they may incur for brokerage, accounting, tax, legal services or
other expenses relating to the disposition of their shares, as well as any
transfer taxes on the shares that they sell. We will bear all other costs,
fees and expenses relating to the registration of the shares, including,
without limitation, all registration and filing fees, Nasdaq listing fees,
fees and expenses of our counsel, fees of our accountants, and blue sky fees
and expenses.
SELLING STOCKHOLDERS
We issued the shares of common stock covered by this prospectus,
including the shares of common stock underlying the warrants set forth below,
in a private placement in February 2000. We have set forth in the following
table, to our knowledge, information about the selling stockholders as of
June 30, 2000. We have calculated beneficial ownership based on SEC
requirements, and the information we have included regarding beneficial
ownership is not necessarily indicative of beneficial ownership for any other
purpose. Unless we otherwise indicate below, each stockholder named in the
table has sole voting and investment power with respect to all shares
beneficially owned, subject to applicable community property laws. We have
based the percentage calculated for each selling stockholder upon the sum of
the "Common Stock" and "Common Stock Issuable Upon Exercise of Warrants"
columns.
John Carnuccio is a director and the President and Chief Executive
Officer of BioSphere; Jean-Marie Vogel is the Chairman of BioSphere; Timothy
Barberich and David Southwell, directors of BioSphere, are President and
Chief Executive Officer and Executive Vice President and Chief Financial
Officer, respectively of Sepracor, the parent corporation of BioSphere.
Except as set forth in the immediately preceding sentence, none of the
selling stockholders has held any position or had any material relationship
with BioSphere in the past three years.
We do not know when or in what amounts the selling stockholders may
offer shares for sale. The selling stockholders may decide not to sell all or
any of the shares offered by this prospectus. Because the selling stockholder
may offer all or some of the shares pursuant to this offering, and because
there are currently no agreements, arrangements or understandings with
respect to the sale of any of the shares that the selling stockholders will
hold after completion of the offering, we cannot estimate the number of the
shares that the selling stockholders will hold after completion of the
offering. However, for purposes of this table, we have assumed that, after
completion of the offering, none of the shares covered by this prospectus
will be held by the selling stockholders.
-17-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Common Stock Number of Number of Shares of Common Stock
Beneficially Owned Prior to Offering Shares of Beneficially Owned After Offering
----------------------------------------- Common -----------------------------------
Stock to be
Number Percent Sold Number Percent
------------------------ ----------- ------------ ------------------------------ -------------
Common Stock Common Stock
Name of Issuable Issuable
Selling Common Upon Exercise Common Upon Exercise
Stockholders Stock of Warrants Stock of Warrants
------------- ----------- -------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
ABS Employees'
Venture Fund
Limited
Partnership 27,777 6,944 * 34,721 0 0 0
ACI Capital /
BSMD, LLC 16,666 4,166 * 20,832 0 0 0
ACI Capital /
BSMDI, LLC 177,777 44,444 2.4 222,221 0 0 0
Timothy J.
Barberich 75,777(1) 6,944 * 34,721 48,000(1) 0 *
Biopergs, LLC 27,777 6,944 * 34,721 0 0 0
John M.
Carnuccio 89,955(1) 1,388 * 6,943 84,400(1) 0 *
Cerberus
Partners, L.P. 55,556 13,889 * 69,445 0 0 0
Cerberus
International,
LTD. 116,112 27,778 1.6 138,890 0 0 0
Pequod
Investments,
L.P. 150,200 25,000 1.9 125,000 0 0 0
Pequod
International,
LTD 104,900 16,667 1.3 83,335 0 0 0
Richard Gallen
& Co. Pension
Trust 002 11,112 2,778 * 13,890 0 0 0
David P.
Southwell 13,555(1) 1,388 * 6,943 8,000(1) 0 *
Ursus Capital,
L.P. 15,000 3,750 * 18,750 0 0 0
Jean-Marie
Vogel 647,215(1) 1,388 6.6 6,943 641,660(1) 0 6.5
-------------------------
</TABLE>
-------------------------
*Represents beneficial ownership of less than one percent of our common stock.
-18-
<PAGE>
(1) Includes shares of common stock underlying options which are exercisable
within 60 days of May 1, 2000 as follows: Timothy J. Barberich, 48,000 shares;
John Carnuccio, 84,400 shares; David Southwell, 7,000 shares; and Jean-Marie
Vogel, 607,433 shares. Excludes the 5,369,788 shares of common stock
beneficially owned by Sepracor, the parent corporation of BioSphere, as to which
shares Messrs. Barberich, Carnuccio, Southwell and Vogel disclaim beneficial
ownership.
-19-
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, offer and sell the
shares covered by this prospectus. The term "selling stockholders" includes
pledgees, donees, transferees or other successors in interest selling shares
received after the date of this prospectus from the selling stockholders as a
pledge, gift or other non-sale related transfer. To the extent required, we
may amend and supplement this prospectus from time to time to describe a
specific plan of distribution.
The selling stockholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. The
selling stockholders may make these sales at prices and under terms then
prevailing or at prices related to the then current market price. The selling
stockholders may also make sales in negotiated transactions, including
pursuant to one or more of the following methods:
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
- block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- an over-the-counter distribution in accordance with the rules
of the Nasdaq National Market; and
- in privately negotiated transactions.
In connection with distributions of the shares or otherwise, the
selling stockholders may:
- enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short
sales of the shares in the course of hedging the positions
they assume;
- sell the shares short and redeliver the shares to close out
such short positions;
- enter into option or other transactions with broker-dealers or
other financial institutions which require the delivery to
them of shares offered by this prospectus, which they may in
turn resell; and
- pledge shares to a broker-dealer or other financial
institution, which, upon a default, they may in turn resell.
In addition, the selling stockholders may sell any shares that qualify
for sale pursuant to Rule 144 under Rule 144 rather than pursuant to this
prospectus.
-20-
<PAGE>
In effecting sales, broker-dealers or agents that the selling
stockholders engage may arrange for other broker-dealers to participate.
Broker-dealers or agents may receive commissions, discounts or concessions
from the selling stockholders, in amounts to be negotiated immediately prior
to the sale.
In offering shares covered by this prospectus, the selling
stockholders, and any broker-dealers and any other participating
broker-dealers who execute sales for the selling stockholders, may be deemed
to be "underwriters" within the meaning of the Securities Act in connection
with these sales. Any profits that the selling stockholders realize, and the
compensation that they pay to any broker-dealer, may be deemed to be
underwriting discounts and commissions.
In order to comply with the securities laws of some states, the
selling stockholders must sell the shares in those states only through
registered or licensed brokers or dealers. In addition, in some states the
selling stockholders must sell the shares only if they have been registered
or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and the selling
stockholder complies with the exemption.
We will advise the selling stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in
the market and to the activities of the selling stockholders and their
affiliates. In addition, we will make copies of this prospectus available to
the selling stockholders for the purpose of satisfying the prospectus
delivery requirements of the Securities Act. The selling stockholders may
indemnify any broker-dealer that participates in transactions involving the
sale of the shares against liabilities, including liabilities arising under
the Securities Act.
At the time a particular offer of shares is made, if required, we
will distribute a prospectus supplement that will set forth:
- the number of shares being offered;
- the terms of the offering, including the name of any
underwriter, dealer or agent;
- the purchase price paid by any underwriter;
- any discount, commission and other underwriter compensation;
- any discount, commission or concession allowed or reallowed or
paid to any dealer; and
- the proposed selling price to the public.
We have agreed to indemnify the selling stockholders against
liabilities, including liabilities under the Securities Act.
We have agreed with the selling stockholders to keep the
Registration Statement of which this prospectus constitutes a part effective
until the earlier of (i) such time as the selling stockholders have disposed
of all of the shares, (ii)
-21-
<PAGE>
February 4, 2002 or (iii) such time as the selling stockholders can sell all
of the shares without registration under the Securities Act.
LEGAL MATTERS
Hale and Dorr LLP has passed upon the validity of the shares offered
by this prospectus.
EXPERTS
Arthur Andersen LLP, independent public accountants, have audited
our financial statements which are incorporated by reference in this
prospectus and elsewhere in the registration statement, as indicated in their
reports with respect thereto. The financial statements are incorporated
herein in reliance upon the authority of Arthur Andersen as experts in
accounting and auditing in giving these reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and special reports, proxy statements,
and other information with the SEC. You can read our SEC filings, including
the registration statement, over the Internet at the SEC's web site at
HTTP://WWW.SEC.GOV. You may also read and copy any document we file with the
SEC at its public reference facilities at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may also obtain copies of the documents at prescribed rates
by writing to the Public Reference Section of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference facilities.
This prospectus is part of a registration statement that we filed
with the SEC. The registration statement contains more information than this
prospectus regarding us and our common stock, including specified exhibits
and schedules. You can obtain a copy of the registration statement from the
SEC at the address listed above or from its Internet web site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information
we file with the SEC in other documents. This means that we can disclose
important information to you by referring to other documents that contain
that information. The information we incorporate by reference is part of this
prospectus, and information that we file with the SEC in the future and
incorporate by reference will automatically update and may supersede the
information contained in this prospectus. We incorporate by reference the
documents listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the sale of
all the shares covered by this prospectus:
- our Annual Report on Form 10-K for the year ended December 31,
1999;
-22-
<PAGE>
- our Quarterly Report on Form 10-Q for the quarters ended
March 31, 2000;
- our Current Report on Form 8-K dated February 4, 2000;
- all of our filings pursuant to the Exchange Act after the date
of filing the initial registration statement and prior to
effectiveness of the registration statement; and
- the description of our common stock contained in our
Registration Statement on Form S-1, as amended (File No.
33-75212), including any amendments or reports filed for the
purpose of updating that description.
You may request a copy of these documents, at no cost, by writing to:
BioSphere Medical, Inc.
1050 Hingham Street
Rockland, Massachusetts 02370
Attention: Comptroller
Telephone: (781) 681-7900
We have not authorized anyone to provide you with information different
from that contained or incorporated by reference in this prospectus. The selling
stockholders are offering to sell, and seeking offers to buy, shares of our
common stock 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.
-23-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred by
us in connection with the sale and distribution of the securities being
registered hereby, all of which will be borne by us (except any underwriting
discounts and commissions and expenses incurred by the selling stockholder for
brokerage, accounting, tax or legal services or any other expenses incurred by
the selling stockholder in disposing of the shares. All amounts shown are
estimates except the Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee $ 3,170
Accounting fees and expenses $ 5,000
Legal fees and expenses $30,000
-------
Total expenses $38,170
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ninth of the Registrant's Certificate of Incorporation requires
the Registrant to indemnify each person who is or was or has agreed to be a
director or officer of the Registrant against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement to the maximum extent
permitted from time to time under the Delaware General Corporation Law, as
amended. In addition, Article Eighth provides that no director or officer of the
Registrant shall be liable for monetary damages for any breach of fiduciary
duty, except to the extent that the Delaware General Corporation Law prohibits
the elimination or limitation of liability of directors for breach of fiduciary
duty.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at its request in such capacity in another corporation or
business association, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 102(b) (7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholder, (ii) for acts or omissions not in good faith or
which involve intentional
II-1
<PAGE>
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
ITEM 16. LIST OF EXHIBITS.
4.1(1) Certificate of Incorporation, as amended, of our company.
4.2(1) By-Laws of our company.
4.3(2) Specimen stock certificate for shares of common stock of our company.
5* Opinion of Hale and Dorr LLP.
23.1* Consent of Hale and Dorr LLP, included in Exhibit 5 filed herewith.
23.2 Consent of Arthur Andersen LLP.
24* Power of Attorney (See page II-6 of this Registration Statement).
------------------
(1) Incorporated by reference to our Registration Statement on Form S-8,
dated June 10, 1996 (File No. 333-05621).
(2) Incorporated by reference to our Annual Report on Form 10-K for the
fiscal year ended December 31, 1999.
* Previously filed
-----------------
ITEM 17. UNDERTAKINGS.
Our company, 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 of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this 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 this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
derivation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
Registration Statement; and
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the registration
statement is on Form S-3, Form S-8 or Form F-3, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 and 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each 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 the 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.
We hereby undertake that, for purposes of determining any liability
under the Securities Act, each filing of our annual report pursuant to Section
13(a) or 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 this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at the time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of our
company pursuant to the indemnification provisions described herein, or
otherwise, we have 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 us
of expenses incurred or paid by a director, officer, or controlling person of
our company 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, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
BioSphere Medical, Inc. 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 Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Rockland,
Massachusetts, on this 27th day of July, 2000.
BIOSPHERE MEDICAL, INC.
By: /s/ Robert M. Palladino
-----------------------
Robert M. Palladino
Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President, Chief Executive Officer and July 27, 2000
------------------------ Director (Principal Executive Officer)
John M. Carnuccio
/s/ Robert M. Palladino Vice President and Chief Financial July 27, 2000
------------------------ Officer(Principal Financial and
Robert M. Palladino Accounting Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
* Chairman and Director July 27, 2000
-----------------------------------
Jean-Marie Vogel
Director July , 2000
-----------------------------------
Timothy J. Barberich
* Director July 27, 2000
-----------------------------------
William M. Cousins, Jr.
* Director July 27, 2000
-----------------------------------
Alexander M. Klibanov, Ph. D.
Director July , 2000
-----------------------------------
Paul A. Looney
* Director July 27, 2000
-----------------------------------
Riccardo Pigliucci
Director July , 2000
-----------------------------------
David P. Southwell
</TABLE>
* By: /s/ Robert M. Palladino
------------------------
Robert M. Palladino
As Attorney-In-Fact
II-5
