<PAGE>
As filed with the Securities and Exchange Commission on June 2, 2000
Registration Statement No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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. /_/
------------------------------------------
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Aggregate Aggregate
Title of Each Class of Securities to be Amount to be Price Per Offering Amount of
Registered Registered Share(1) Price(1) Registration Fee
--------------------------------------------- ------------------ --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per share 817,355 Shares(2) $14.69 $12,006,945 $3,170
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act and based upon the average of
the high and low prices of our Common Stock on the Nasdaq National Market on
May 31, 2000.
(2) Includes 163,468 shares of Common Stock issuable upon the exercise
of warrants.
-----------------------------------------
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 June __, 2000
BIOSPHERE MEDICAL, INC.
817,355 SHARES OF COMMON STOCK
---------------
This prospectus relates to resales of common stock, and shares of
common stock underlying warrants, that we issued and sold to the selling
stockholders listed on page 20. We will not receive any of the proceeds from the
sale of the shares by the selling stockholders.
The selling stockholders, or their pledgees, donees, transferees or
other successors in interest, may offer the shares through public or private
transactions at prevailing market prices, at prices related to prevailing market
prices or at privately negotiated prices.
Our common stock is traded on the Nasdaq National Market under the
symbol "BSMD." On May 31, 2000, the last reported sale price of our common stock
on the Nasdaq National Market was $14.84 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.
Our principal executive offices are located at 1050 Hingham Street,
Rockland, Massachusetts 02370 and our telephone number is (781) 681-7900.
----------
The date of this prospectus is __________ , 2000
<PAGE>
TABLE OF CONTENTS
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Page
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WHO WE ARE ................................................................ 1
RISK FACTORS .............................................................. 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ......................... 19
USE OF PROCEEDS ........................................................... 19
SELLING STOCKHOLDERS ...................................................... 19
PLAN OF DISTRIBUTION ...................................................... 22
LEGAL MATTERS ............................................................. 24
EXPERTS ................................................................... 24
WHERE YOU CAN FIND MORE INFORMATION 24
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ........................... 24
</TABLE>
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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.
<PAGE>
WHO WE ARE
OUR COMPANY
We are a medical technology company that develops, markets, and
manufactures innovative products for the treatment of hypervascularized
tumors or arteriovenous malformations which are vascular defects using
embolotherapy. Embolotherapy is a minimally invasive procedure in which
embolic materials, such as our microspheres, are injected through 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. 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, which are tumors fed by a large number of blood
vessels. Hypervascularized tumors include certain 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 focused 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 and gastroesophageal reflux disease, and tissue
repair.
In April 2000, we received FDA clearance 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. 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 Microsphere product in the
European Union in 1997 and received marketing approval in Australia and
Canada in January 2000. 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.
Embolotherapy procedures have been performed for over 20 years by
interventional radiologists. 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 Embosphere
Microsphere products outside of the United States.
CORPORATE HISTORY
We were incorporated in Delaware in December 1993. 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 the
chromatography
<PAGE>
business 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. 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.
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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.
RISKS RELATED TO OUR BUSINESS
OUR IMMEDIATE PRODUCT COMMERCIALIZATION EFFORTS ARE FOCUSED ON OUR EMBOSPHERE
MICROSPHERES, FOR WHICH WE HAVE RECEIVED ONLY LIMITED REGULATORY APPROVALS TO
DATE; WE HAVE NOT RECEIVED REGULATORY APPROVAL OR CLEARANCE TO MARKET ANY OTHER
PRODUCTS
Our immediate product commercialization efforts are focused on our
Embosphere Microspheres. In April 2000, we obtained marketing clearance from
the United States Food and Drug Administration, or FDA, for the use of our
Embosphere Microspheres in the United States for the embolization of
hypervascularized tumors and arteriovenous malformations. We have also
received regulatory approval for marketing our Embosphere Microspheres in the
European Union, Australia and Canada for use in the treatment of
arteriovenous malformations, hypervascularized tumors and control of
pre-surgical blood loss. Either a separate 510(k) notification or a premarket
approval will be required from the FDA with respect to the marketing in the
United States of Embosphere Microspheres for use in the embolization of
uterine fibroids. In either case, clinical studies will be required. The
regulatory approval process can take years. We 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 United States,
the European Union, Australia and Canada. If we do not receive required
regulatory approval or clearance to market our Embosphere Microspheres in the
United States for the treatment of uterine fibroids or for any other product,
or if required approvals or clearances are not received on a timely basis,
our business will be materially adversely affected.
IF THE MARKET IS NOT RECEPTIVE TO OUR EMBOSPHERE MICROSPHERES PRODUCT, WE WILL
BE MATERIALLY ADVERSELY AFFECTED
We only recently began selling our Embosphere Microspheres product in
the European Union and only recently received regulatory clearance for marketing
our Embosphere Microspheres in the United States, Canada and Australia. We
cannot predict whether our Embosphere Microspheres will be accepted in the
market. The commercial success of our Embosphere Microspheres product will
depend upon its acceptance by the medical community, patients and third party
payors as clinically useful, cost effective and safe. Our Embosphere
Microspheres are based upon new technologies and therapeutic approaches. As a
result, it may be difficult for us to achieve market acceptance of this product.
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. However, unless
and until we receive the required regulatory approvals and clearances to market
our Embosphere Microspheres in the United States for uterine fibroids, we cannot
label or market our Embosphere Microspheres in the United States for the
treatment of uterine fibroids. While we have begun clinical testing under an
Investigational Device Exemption in order to apply for clearance or approval
from the FDA for this specific indication, we cannot assure you
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<PAGE>
that we will receive any required approval or clearance on a timely basis, if at
all. In addition, market acceptance of our Embosphere Microspheres product may
be adversely affected by negative publicity associated with any adverse medical
effects attributed to embolization treatments generally or our product
specifically. If we fail to achieve market acceptance of this product, we will
be materially adversely affected.
IF OUR EMBOSPHERE MICROSPHERES PRODUCT DOES NOT PROVE TO BE SAFE OR EFFECTIVE
THEN WE MAY BE REQUIRED TO WITHDRAW IT FROM THE MARKET
We may not discover all potential problems with our Embosphere
Microspheres product even after completing our testing or even after its use in
the market. 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. There is limited data concerning the long-term health effects on persons
resulting from embolotherapy using our Embosphere Microspheres. If our product
is found not to be safe or effective for any reason, we may be required to
withdraw it from the market or we could incur fines or other penalties, which
would have a material adverse effect on us.
OUR BUSINESS POTENTIALLY EXPOSES US TO SUBSTANTIAL PRODUCT LIABILITY CLAIMS,
WHICH MAY RESULT IN LARGE MONETARY AWARDS AGAINST US AND NEGATIVE PUBLICITY; IN
ADDITION, WE COULD BE SUBJECT TO PRODUCT RECALLS
Our business exposes us to the risk of product liability claims,
product recalls and fines or other penalties and associated adverse publicity
that are inherent in the testing, manufacturing, marketing and sale of medical
device products. We currently carry liability insurance with only limited
coverage. We cannot predict our ability to maintain our current insurance
coverage or to secure greater or broader product liability insurance coverage on
acceptable terms or at reasonable costs when we need it. A successful product
liability claim against us could require us to pay a substantial monetary award
and subject us to negative publicity. Even if we maintain insurance coverage,
our liability for damages could exceed the amount of coverage. In addition, a
product recall could generate substantial negative publicity about our products
and company and inhibit or prevent commercialization of other product
candidates.
SEASONAL TRENDS MAY CAUSE OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE, WHICH
MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK
We expect to experience seasonality in our business, particularly
because we do a significant percentage of our business in the European Union,
which typically experiences a slowdown in business during August. Accordingly,
we expect to generate lower revenue during the summer months and higher revenue
during the calendar year-end months. As a result, we expect our third quarter
revenue in 2000 to be lower than each of our first and second quarter revenue in
2000. If we do experience these revenue fluctuations, market analysts and
investors may not be able to predict our quarterly or annual operating results,
and if we fail to meet expectations of market analysts and investors, the price
of our common stock could decline.
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<PAGE>
OUR HISTORY OF LOSSES AND THE UNCERTAINTY OF OUR FUTURE PROFITABILITY MAKES OUR
COMMON STOCK 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 cannot predict the size or duration of any future losses. We cannot
be certain that we will ever become profitable or that, if we do become
profitable, we will remain profitable on a continuing basis. 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.
WE HAVE RECENTLY UNDERTAKEN A STRATEGIC REDIRECTION OF OUR BUSINESS AND THERE
CAN BE NO ASSURANCE THAT OUR STRATEGIC SHIFT WILL PROVE TO BE SUCCESSFUL
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. Consistent
with this decision, in February 1999 we acquired a 51% ownership interest in
Biosphere Medical S.A. In May 1999, we sold substantially all of our assets
relating to the chromatography business 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% between
December 31, 2003 and December 31, 2004. We have restated our historical
financial statements to reflect the 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. We have no assurance
that our decision to exit the chromatography business and focus on the
commercialization of microspheres will prove to be successful.
WE MAY EXPERIENCE DELAYS, DIFFICULTIES OR UNANTICIPATED COSTS IN ESTABLISHING
THE SALES AND MARKETING AND DISTRIBUTION CAPABILITIES NECESSARY TO GAIN MARKET
ACCEPTANCE FOR OUR PRODUCTS
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. To market our products directly, we must
develop an effective marketing and sales force with technical expertise and a
supporting distribution capability. Developing a marketing and sales force is
expensive and time-consuming and could delay a product launch. 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 distributors to sell our products outside of France.
We may not be able to provide adequate incentive to these distributors to
promote our products. Our inability to successfully employ qualified marketing
and sales personnel and develop our sales and marketing capabilities, or the
failure of our distributors to promote our products would harm our business.
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WE WILL INCUR SUBSTANTIAL COSTS TO EDUCATE PHYSICIANS ABOUT USING OUR PRODUCT
CORRECTLY
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. It will be necessary for us to incur
substantial costs to educate physicians about the selection and use of the
proper size and quantity of Embosphere Microspheres in patient therapy. This
will involve spending significant amounts of money and allocating management
resources to this effort. If we are not able to successfully educate physicians
to properly use our product, we could be subject to substantial product
liability claims and we will not achieve widespread market acceptance or
significant product revenue.
WE HAVE ONLY ONE MANUFACTURING FACILITY, AND IF WE EXPERIENCE MANUFACTURING
DELAYS OR INTERRUPTIONS IN PRODUCTION, OUR BUSINESS WOULD BE ADVERSELY AFFECTED
We currently produce all of our Embosphere Microsphere products in one
manufacturing facility in France. We would likely experience significant delays
or cessation in production of 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. Also, manufacturers,
including us, must adhere to FDA's current Good Manufacturing Practices, or GMP
regulations, which are enforced by the FDA through its facilities inspection
program. We cannot assure you that third party manufacturers will be able to
comply or maintain compliance with GMP regulations. Any failure to comply could
significantly delay a 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. 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. In addition, if we are required to depend on
third-party manufacturers, our profit margins may be adversely affected.
BECAUSE WE HAVE LIMITED SOURCES OF PRODUCTION AND SUPPLY, OUR ABILITY TO PRODUCE
AND SUPPLY OUR PRODUCTS COULD BE IMPAIRED
Certain key components of our Embosphere Microspheres are currently
purchased from a limited number of outside sources and may only be available
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:
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<PAGE>
- 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;
- 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 components from our suppliers are
delayed or interrupted for any reason, our ability to produce and supply our
products could be impaired.
OUR INTELLECTUAL PROPERTY RIGHTS MAY NOT ADEQUATELY PROTECT US FROM COMPETITION
BY THIRD PARTIES USING OUR TECHNOLOGY, OR VERY SIMILAR TECHNOLOGY
Although we own or license several patents and patent applications
relating to our microsphere technology, these patents and patent applications
may not afford meaningful protection for our technology and products. You
should not assume that these patents and patent applications will necessarily
prevent our competitors from designing products similar to or otherwise
competitive with our Embosphere Microspheres and other products
commercialized by us. Among other things, competitors may develop products
similar to ours which are not protected by our owned or licensed patents. 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 and cell adhesion
promoters. The other two patents that relate to Embosphere Microspheres cover
chemical coupling of marketing agents and cell adhesion promoters on the
Embosphere Microspheres and 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 could be materially adversely affected. In addition,
others may challenge our patents and, as a result, our patents could be
narrowed, invalidated or rendered unenforceable. We cannot determine whether
competitors have similar United States patent applications on file, since
under the present United States patent laws, United States patent
applications are secret until issued. 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.
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<PAGE>
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 applications
directed to improvements of this inventor's technology. However, there can be
no assurance that such patent applications will issue as patents or that such
patents, if issued, will provide sufficient protection against competitors.
Further, we may be required to obtain additional licenses concerning the
Japanese patent application, and any such licenses, if obtained, may not be
on terms that are acceptable to us.
The patent position of companies like ours generally is highly
uncertain, involves complex legal and factual questions, and has recently been
the subject of much litigation. No consistent policy has emerged from the United
States Patent and Trademark Office or the courts regarding the breadth of claims
allowed or the degree of protection afforded under patents like those we own,
have licensed, may license or may file in the future. As a result, 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.
We require our employees, consultants and advisors to execute
confidentiality agreements. However, we cannot guarantee that these agreements
will provide us with adequate protection against improper use or disclosure of
confidential information. In addition, in some situations, these agreements may
conflict with, or be subject to, the rights of third parties with whom our
employees, consultants or advisors have prior employment or consulting
relationships. Further, others may independently develop substantially
equivalent proprietary information and techniques, or otherwise gain access to
our trade secrets. Our failure to protect our proprietary information and
techniques may inhibit or limit our ability to exclude certain competitors from
the market.
WE MAY BE INVOLVED IN LAWSUITS TO PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY
RIGHTS. IF WE LOSE, WE MAY LOSE THE BENEFIT OF SOME OF OUR INTELLECTUAL PROPERTY
RIGHTS, THE LOSS OF WHICH MAY INHIBIT OR ELIMINATE OUR ABILITY TO EXCLUDE
CERTAIN COMPETITORS FROM THE MARKET
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 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 that settled in December 1997 related to our discontinued business.
Intellectual property litigation is costly, and, even if we prevail, the cost of
such litigation could adversely affect us. In addition, litigation is time
consuming and could divert management attention and resources away from our
business.
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
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connection with embolotherapy with L'Assistance Publique-Hopitaux De Paris,
referred to as 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 such suit and enforce these patent rights relating to the
microspheres could be harmed, which could have a material adverse effect on us.
OUR RIGHT TO USE CERTAIN TECHNOLOGIES IS DEPENDENT ON LICENSES WHICH COULD BE
TERMINATED OR LOST
We are dependent on various license agreements relating to each of
our current and proposed products that give us rights under certain
intellectual property rights of third parties. These licenses impose various
commercialization, sublicensing, royalty, insurance and other obligations on
us. Our failure or any third party's failure to comply with the terms of any
license could have a material adverse effect on our business, financial
condition and results of operations.
OUR BUSINESS IS SUBJECT TO AN EXTENSIVE AND POTENTIALLY COSTLY GOVERNMENTAL
APPROVAL PROCESS
The manufacture, packaging, labeling, advertising, promotion,
distribution and sale of our products are subject to governmental regulation by
national and local government agencies in the United States and abroad. Our
products are subject to approval or clearance by the FDA prior to marketing in
the United States for commercial use. Our inability to obtain required
regulatory approval or clearance on a timely or acceptable basis could harm our
business. The process of obtaining necessary FDA approvals and clearances can be
time-consuming, expensive and uncertain. Further, approval or clearance may
place substantial restrictions on the indications for which the product may be
marketed or to whom it may be marketed. In addition, we may be required by the
FDA to conduct a postmarket surveillance study on our embolotherapy device. If
such a study revealed an unexpected rate of adverse events, the FDA could place
further restrictions on the marketing of the device, or rescind its clearance.
Some changes to legally-marketed devices also require new regulatory
submissions, for example, a change in intended use or a change that affects
safety or effectiveness. We may in the future make certain enhancements 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 would be prohibited from marketing the modified product
until we obtained FDA clearance or approval. The nature of marketing claims we
will be permitted to make in labeling or advertising regarding our Embosphere
Microspheres is limited to those specified in any FDA clearance or approval
-9-
<PAGE>
and claims beyond those cleared or approved will constitute a violation of the
Federal Food, Drug, and Cosmetic Act. We have not received clearance from the
FDA to market our Embosphere Microspheres for use in treating uterine fibroids.
We do not expect to receive such clearance until 2002, if at all.
Further, our embolotherapy device is classified into Class III by the
FDA, which means that even though we have obtained 510(k) clearance to market
the device, the FDA could promulgate a regulation requiring premarket approval
of the device to allow it to remain on the market. A requirement for premarket
approval will likely require us to conduct costly clinical trials and there is
no guarantee that we can provide the FDA sufficient data for premarket approval
in a timely fashion, if at all. Failure to obtain premarket approval would
result in removal of our product from the United States market.
Legally marketed products are subject to continuing FDA requirements
relating to quality control and quality assurance, maintenance of records and
documentation and 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.
Medical device laws and regulations are also in effect in many
countries outside the United States. These range from comprehensive device
approval requirements for some or all of our medical device products to requests
for product data or certifications. The number and scope of these requirements
are increasing. Failure to comply with applicable federal, state and foreign
medical device laws and regulations may harm our business, financial condition
and results of operations.
WE ARE SUBJECT TO RULES REGARDING LABELING AND ADVERTISING AND VIOLATION OF
THOSE RULES COULD ADVERSELY AFFECT OUR BUSINESS
The federal, state and foreign laws and regulations regarding the
manufacture and sale of our products are subject to future changes, as are
administrative interpretations of regulatory agencies. If we fail to comply with
applicable federal, state or foreign laws or regulations, we could be subject to
enforcement actions, including product seizures, voluntary or mandatory recalls,
voluntary or mandatory patient or physician notification, withdrawal of product
clearances or approvals, withdrawal of IDE approval, restrictions on or
injunctions against marketing our products, fines, injunctions and civil and
criminal penalties. 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.
In addition, if we fail to comply with any applicable FDA requirements,
the FDA could withdraw premarket approval or rescind premarket notification
clearance. The FDA also has the authority to request repair, replacement or
refund of the purchase price of any devices manufactured or sold by us. Any of
these sanctions may have a material adverse effect on our
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business, financial condition and results of operations, and could materially
adversely affect our ability to successfully market our products.
IT MAY TAKE LONGER THAN WE EXPECT TO COMPLETE CLINICAL TRIALS, MAKE REGULATORY
SUBMISSIONS AND RECEIVE REGULATORY APPROVALS
Although for planning purposes we forecast the timing of completion of
clinical trials, regulatory submissions and regulatory approvals, the actual
timing of these events 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 regulatory
approval process. Clinical trials involving our product candidates may not
commence or be completed and we may not make regulatory submissions or receive
regulatory approvals as forecasted, if at all.
We have limited experience in conducting clinical trials and in
obtaining regulatory approvals. In certain circumstances we rely on academic
institutions or clinical research organizations to conduct, supervise or monitor
some or all aspects of clinical trials involving our products. As a result, we
will have less control over the timing and other aspects of these clinical
trials than if we conducted them entirely on our own. However, we will remain
responsible for their regulatory compliance and the accuracy of the data. These
trials may not commence or be completed as we expect or be conducted
successfully. The uncertainties inherent in the regulatory approval process will
affect our products in development as well as our existing embolotherapy
products. Products that we are developing and intend to develop may not be
successful in preclinical testing, or clinical testing, which most, if not all,
will require. Moreover, these products may not obtain the necessary marketing
clearances or approvals in a timely fashion, if at all. Failure to commence or
complete, or delays in, any of our planned clinical trials, regulatory
submissions or regulatory approvals could undermine investors' confidence in our
ability to develop products, which could cause our stock price to decrease.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY, WHICH COULD RESULT IN DECREASED
DEMAND FOR OUR PRODUCTS AND PRICE REDUCTIONS
Medical devices and therapeutics are rapidly evolving fields in which
scientific and technological developments are expected to continue at a rapid
pace. 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 product categories and technologies
on which we focus. Many of our competitors have greater capabilities, experience
and financial resources than we do. Competition is intense and is expected to
increase as new products enter the market and new technologies become available.
Our competitors may:
- develop technologies and products that are more effective than
ours;
- develop technologies that render our products obsolete or
otherwise noncompetitive;
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- obtain regulatory approval for products more rapidly or
effectively than we can;
- design around patents owned or licensed by us or otherwise
develop products similar to ours that do not infringe our
intellectual property rights; and/or
- obtain patent protection or other intellectual property rights
that would block our ability to develop competitive products.
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 adversely affect demand for our
products or our profitability.
WE MAY NOT BE ABLE TO MEET THE OPERATIONAL, LEGAL AND FINANCIAL CHALLENGES THAT
WE WILL ENCOUNTER IN OUR INTERNATIONAL OPERATIONS, WHICH MAY LIMIT THE GROWTH OF
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. 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.
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.
WE MAY LOSE MONEY WHEN WE EXCHANGE FOREIGN CURRENCY RECEIVED FROM INTERNATIONAL
SALES INTO U.S. DOLLARS OR MAKE FOREIGN CURRENCY PAYMENTS
Most of our business is conducted in currencies other than the U.S.
dollar. 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. We cannot predict the effects of exchange
rate fluctuations upon our future operating results because of the number of
currencies involved, the variability of currency exposure and the potential
volatility of currency exchange rates. We do not currently engage in foreign
exchange hedging transactions to manage our foreign currency exposure.
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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. There are
currently a limited number of insurance companies that fully or partially
reimburse for this procedure. These third party payors continually attempt to
contain or reduce the costs of healthcare by challenging the prices charged for
medical products. Additionally, in both the United States and certain 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 affect our ability to market our products. Also, in certain
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.
We may not be able to sell our products profitably if reimbursement is
unavailable or limited in scope or amount.
OUR PRODUCTS ARE TESTED IN LABORATORY ANIMALS, AND THIS FORM OF TESTING MAY BE
CURTAILED BY SOCIAL FACTORS AND REGULATORY CHANGES
Our research and development efforts often involve the controlled use
of laboratory animals. Opposition to this practice by activist groups may
interfere with the use of animal testing. Negative publicity generated by
activist groups may harm companies using this practice, including us. In
addition, physical force and demonstrations may occur against us which could
delay the testing of our products. Lobbying efforts by activist groups and other
groups and individuals against the use of animals in testing is ongoing, and may
result in changes in laws, regulations or accepted clinical procedures that
would restrict the use of animals in testing. In the event of a change in laws,
regulations or accepted clinical procedures, delays in our product development
will likely result until we find other methods for effective testing. In
addition, preclinical testing in animals and in vitro is subject to good
laboratory practices regulations. Failure to comply with good laboratory
practices regulations could result in the inability to rely on data obtained in
such testing to support proposed trials in humans and/or to support applications
for marketing clearances or approvals.
WE DEPEND GREATLY ON THE INTELLECTUAL CAPABILITIES AND EXPERIENCE OF OUR KEY
EXECUTIVES AND SCIENTISTS, AND THE LOSS OF ANY OF THEM COULD ADVERSELY AFFECT
OUR ABILITY TO DEVELOP OUR PRODUCT CANDIDATES
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. We also depend on our scientific collaborators and advisors, all of whom
have other commitments that may limit their availability to us. In addition, we
believe that 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 personnel from other companies, research and
academic institutions, government entities and other organizations. We cannot
predict our success in hiring or retaining the personnel we require for
continued growth.
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IF WE MAKE ANY ACQUISITIONS, WE WILL INCUR A VARIETY OF COSTS AND MAY NEVER
REALIZE THE ANTICIPATED BENEFITS
If appropriate opportunities become available, we may attempt to
acquire businesses, technologies, services or products that we believe are a
strategic fit with our business. If we undertake this or any other acquisition,
the process of integrating an acquired business, technology, service or product
may result in operating difficulties and expenditures and may 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. Future acquisitions could result in potentially dilutive issuances
of equity securities, the incurrence of debt or a decrease in the cash available
for our operations, contingent liabilities and/or amortization expenses related
to goodwill and other intangible assets, which could adversely affect our
results of operations and financial condition.
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. from December 31, 2003 until December 31, 2004. The purchase price payable
upon exercise of 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% from December 31,
2003 until December 31, 2004. The purchase price payable by us upon the exercise
of 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 payable by us upon the exercise of 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 the incurrence of debt or a decrease in the cash available for
our operations.
IF WE FAIL TO MANAGE OUR GROWTH, OUR BUSINESS COULD BE IMPAIRED
We expect to experience growth in the number of our employees and the
scope of our operating and financial systems. This growth will result in an
increase in responsibilities for both existing and new management personnel. Our
ability to manage growth effectively will require us to continue to implement
and improve our operational, financial and management information systems and to
recruit, train, motivate and manage our employees. We may not be able to manage
our growth and expansion, which would impair our business.
WE WILL CONTINUE TO NEED SUBSTANTIAL ADDITIONAL FUNDS, AND IF ADDITIONAL CAPITAL
IS NOT AVAILABLE, WE MAY HAVE TO CURTAIL OR CEASE OPERATIONS
We will need to raise additional funds to successfully develop and
commercialize our products. Other than a $2.0 million credit line with a bank,
we have no committed source of capital. 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
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additional funding on reasonable terms or at all. We may seek 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.
OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER, WHICH
COULD CAUSE A DECLINE IN OUR STOCK PRICE
Our operating results could fluctuate significantly from quarter to
quarter. We expect to continue to experience significant fluctuations as a
result of a variety of factors, many of which are outside of our control. The
following factors could affect our operating results:
- seasonality, since we expect our revenue to decline
substantially in the third quarter of each year from the first
two quarters of each year;
- market acceptance of our products;
- the timing and scope of regulatory approvals or denials;
- the timing of revenue generated from product sales;
- the introduction and marketing of new products;
- changes in demand for our products;
- availability of the components used in our products; and
- general and medical device industry-specific business and
economic conditions.
In addition, a large portion of our expenses, including expenses for
facilities, equipment and personnel, are relatively fixed. Accordingly, if
revenue declines or does not grow as anticipated, 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.
Due to the possibility of fluctuations in our revenue and expenses, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance. 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.
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RISKS RELATING TO THIS OFFERING
THE MARKET PRICE OF OUR STOCK IS HIGHLY VOLATILE, AND, AS A RESULT, YOUR
INVESTMENT IN US COULD RAPIDLY LOSE ITS VALUE
The market price of our stock is highly volatile. As a result, your
investment in us could rapidly lose its value. Factors that may have a
significant negative effect on the market price of our common stock include:
- actual or anticipated variations in quarterly operating
results, as described above;
- announcements of technological innovations or new commercial
products by our competitors;
- disclosure of unsuccessful results of clinical testing or
regulatory proceedings and governmental denials;
- adverse developments in patent or other proprietary rights;
- public concern as to the safety of products developed by us;
and
- general and industry-specific business, economic and market
conditions.
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.
WE MAY INCUR SIGNIFICANT COSTS FROM CLASS ACTION LITIGATION DUE TO OUR EXPECTED
STOCK VOLATILITY
As described above, our stock price is highly volatile. Recently, when
the market price of a stock has been 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 defending the lawsuit. The lawsuit could
also divert the time and attention of our management.
SEPRACOR INC. AND OUR EXECUTIVE OFFICERS AND DIRECTORS HAVE SUBSTANTIAL CONTROL
OVER US
As of May 1, 2000, Sepracor Inc., together with its affiliates,
beneficially own, in the aggregate, approximately 58% of our outstanding common
stock. In addition, as of May 1, 2000, our executive officers and directors
beneficially own in the aggregate approximately 10% of our outstanding common
stock, excluding shares owned by Sepracor which certain 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:
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- the election of directors;
- the amendment of charter documents;
- the approval of certain 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 adversely affect the market price of
our common stock. In addition, we cannot assure you that conflicts of interest
between us and Sepracor will not arise, including with respect to competitive
business activities and control of our management and our affairs.
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<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.
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<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
incurred by them for brokerage, accounting, tax, legal services or other
expenses incurred by the selling stockholders in disposing of their shares, as
well as any transfer taxes on the shares that they sell. We will bear all other
costs, fees and expenses incurred in effecting the registration of the shares
covered by this prospectus, 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. The following table sets forth, to our
knowledge, certain information about the selling stockholders as of May 1, 1999.
Beneficial ownership is calculated based on SEC requirements and is not
necessarily indicative of beneficial ownership for any other purpose. Unless
otherwise indicated 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. The percentage calculated for each selling
stockholder is based 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 CEO of BioSphere;
Jean-Marie Vogel is the Chairman of BioSphere; Timothy Barberich and David
Southwell, directors of BioSphere, are President and CEO and Executive Vice
President and CFO, 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 not 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 will be held by the selling stockholders after completion of the
offering, we cannot estimate the number of the shares that will be held by the
selling stockholders 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.
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<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. 111,112 27,778 1.5 138,890 0 0 0
Pequod
Investments,
L.P. 100,000 25,000 1.3 125,000 0 0 0
Pequod
International,
LTD 66,668 16,667 * 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.
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(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.
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PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time
to time by the selling stockholders. 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 BioSphere 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.
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In effecting sales, broker-dealers or agents engaged by the selling
stockholders 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 the 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 realized by the selling stockholders and the compensation of
such broker-dealer may be deemed to be underwriting discounts and commissions.
In order to comply with the securities laws of certain states, the
shares must be sold in those states 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.
We have advised 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
certain 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 certain
liabilities, including certain 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 all of the shares covered by this prospectus have
been disposed of pursuant to the Registration Statement, (ii)
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February 4, 2002 or (iii) such time as all of the shares covered by this
prospectus can be sold without registration under the Securities Act.
LEGAL MATTERS
The validity of the shares offered by this prospectus has been passed
upon by Hale and Dorr LLP.
EXPERTS
The financial statements and schedules incorporated by reference in
this prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
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 certain 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 incorporated by reference is considered to be 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.
The following documents that we have filed with the SEC are
incorporated herein by reference:
- our Annual Report on Form 10-K for the year ended December 31,
1999;
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<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
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<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
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<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.
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
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<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.
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<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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Rockland, Massachusetts, on this 1st day of June, 2000.
BIOSPHERE MEDICAL, INC.
By: /s/ John M. Carnuccio
---------------------
John M. Carnuccio
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of BioSphere Medical, Inc,
hereby severally constitute John M. Carnuccio, Robert M. Palladino and
Jean-Marie Vogel, and each of them singly, our true and lawful attorneys with
full power to any of them, and to each of them singly, to sign for us and in our
names in the capacities indicated below the Registration Statement on Form S-3
filed herewith and any and all pre-effective and post-effective amendments to
said Registration Statement and generally to do all such things in our name and
behalf in our capacities as officers and directors to enable BioSphere Medical,
Inc., to comply with the provisions of the Securities Act and all requirements
of the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John M. Carnuccio President, Chief Executive Officer and June 1, 2000
_____________________ Director (Principal Executive Officer)
John M. Carnuccio.
/s/ Robert M. Palladino Vice President and Chief Financial June 1, 2000
_______________________ Officer(Principal Financial and
Robert M. Palladino Accounting Officer)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
/s/ Jean-Marie Vogel Chairman and Director June 1, 2000
____________________
Jean-Marie Vogel
Director June 1, 2000
________________________
Timothy J. Barberich
/s/ William M. Cousins, Jr. Director June 1, 2000
___________________________
William M. Cousins, Jr.
/s/ Alexander M. Klibanov, Ph. D.
_________________________________ Director June 1, 2000
Alexander M. Klibanov, Ph. D.
___________________________ Director June 1, 2000
Paul A. Looney
/s/ Riccardo Pigliucci
___________________________ Director June 1, 2000
Riccardo Pigliucci
Director June 1, 2000
___________________________
David P. Southwell
</TABLE>
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