<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
TARGETED GENETICS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
WASHINGTON 91-1549568
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1100 OLIVE WAY, SUITE 100
SEATTLE, WASHINGTON 98101
(206) 623-7612
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
H. STEWART PARKER
CHIEF EXECUTIVE OFFICER
TARGETED GENETICS CORPORATION
1100 OLIVE WAY, SUITE 100
SEATTLE, WASHINGTON 98101
(206) 623-7612
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
STEPHEN M. GRAHAM
ALESIA PINNEY-HAWKINS
PERKINS COIE LLP
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, 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 of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share......... 13,000,000 shares $1.46 $18,980,000 $5,600
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the
high and low sales prices of the Common Stock on Monday, April 27, 1998.
---------------
THE REGISTRANT HEREBY UNDERTAKES TO AMEND 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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 1, 1998
[LOGO OF TARGETED GENETICS CORPORATION]
13,000,000 SHARES
TARGETED GENETICS CORPORATION
-----------
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
-----------
This Prospectus relates to up to 13,000,000 shares (the "Shares") of Common
Stock, $.01 par value per share (the "Common Stock"), of Targeted Genetics
Corporation (the "Company"). The Shares may be offered by certain Shareholders
of the Company (the "Selling Shareholders") from time to time in transactions
in the over-the-counter market through the Nasdaq National Market ("Nasdaq"),
or on one or more other securities markets and exchanges, in privately
negotiated transactions, through the writing of options on the Shares, or
otherwise, or through a combination of such methods of sale, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they may sell as principals, or both (which compensation as to a
particular broker-dealer may be in excess of customary commissions). See
"Selling Shareholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling Shareholders
will be received by the Company. The Company has agreed to bear all expenses
(other than selling commissions and fees and stock transfer taxes) in
connection with the registration and sale of the Shares being offered by the
Selling Shareholders. The Company has agreed to indemnify the Selling
Shareholders and any broker-dealers who act in connection with the sale of the
Shares hereunder against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
All of the Shares were "restricted securities" under the Securities Act prior
to their registration hereunder. The Company sold all of the Shares to the
Selling Shareholders in a private transaction on April 17, 1998. The shares of
Common Stock sold in such transaction constitute the Shares being registered
hereunder. This Prospectus has been prepared so that future sales of the Shares
will not be restricted under the Securities Act. In connection with any sales,
the Selling Shareholders and any brokers participating in such sales may be
deemed to be "underwriters" within the meaning of the Securities Act. See
"Selling Shareholders."
The Common Stock is traded on the Nasdaq National Market ("Nasdaq") under the
symbol "TGEN." On April 30, 1998, the last reported sales price of the Common
Stock on Nasdaq was $1.53 per share.
THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is , 1998.
<PAGE>
FORWARD-LOOKING INFORMATION
This Prospectus includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The PSLRA
provides a "safe harbor" for such statements to encourage companies to provide
prospective information about themselves so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. All statements
other than statements of historical fact made in this Prospectus or
incorporated by reference are forward-looking. In particular, the statements
herein regarding industry prospects and the Company's future results of
operations or financial position are forward-looking statements. Forward-
looking statements represent management's current expectations and are
inherently uncertain. Investors are warned that the Company's actual results
may differ significantly from management's expectations and, therefore, from
the results discussed in such forward-looking statements. Factors that might
cause such differences include, but are not limited to, the "Risk Factors"
described herein.
AVAILABLE INFORMATION
The Company, a Washington corporation, is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's Regional Offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials can be obtained
upon written request from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a web site (http://www.sec.gov) that
contains certain reports, proxy statements and other information regarding the
Company. Reports and other information concerning the Company can also be
inspected at the National Association of Securities Dealers, Inc., Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act of 1933, as amended. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement. The Registration Statement and any amendments thereto,
including exhibits filed as a part thereof, also are available for inspection
and copying as set forth above. Statements contained in this Prospectus as to
the contents of any contract or other document referred to herein are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST TO
THE SECRETARY, TARGETED GENETICS CORPORATION, 1100 OLIVE WAY, SUITE 100,
SEATTLE, WASHINGTON 98101, TELEPHONE NUMBER (206) 623-7612.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-23930)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1997;
2. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A effective as of April 26,
1994, including any amendment or report filed for the purpose of updating
such description;
3. The Company's Proxy Statement filed with the Commission on March 31,
1998; and
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement
so superseded shall not be deemed to constitute part of this Prospectus.
----------------
The Company's principal executive offices are located at 1100 Olive Way,
Suite 100, Seattle, Washington 98101, telephone (206) 623-7612.
3
<PAGE>
RISK FACTORS
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE CONTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE
STATEMENTS CONTAINED IN THIS PROSPECTUS THAT ARE NOT PURELY HISTORICAL ARE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT, INCLUDING, WITHOUT LIMITATION,
STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS, ESTIMATES,
INTENTIONS AND STRATEGIES ABOUT THE FUTURE. WORDS SUCH AS "ANTICIPATES,"
"EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES," VARIATIONS OF
SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-
LOOKING STATEMENTS, BUT THEIR ABSENCE DOES NOT MEAN THE STATEMENT IS NOT
FORWARD-LOOKING. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT
TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF
CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS,
ELSEWHERE IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE. POTENTIAL INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS, AS WELL AS THE MORE DETAILED INFORMATION CONTAINED
ELSEWHERE IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY REFERENCE,
BEFORE MAKING A DECISION TO INVEST IN THE SHARES OFFERED HEREBY.
Need for Substantial Additional Capital. The Company expects negative cash
flow from operations to continue for the foreseeable future. The Company will
require substantial additional funds to continue research and development; to
conduct further preclinical studies and clinical trials; to establish pilot-
scale and commercial-scale manufacturing processes and facilities; and to
expand or establish quality-control, regulatory, marketing, sales and
administrative capabilities. The Company's future capital requirements will
depend on numerous factors, including continued scientific progress in the
Company's research and development programs; the results of research and
development activities; preclinical studies and clinical trials; acquisition
of products or technology, if any; relationships with existing and future
corporate collaborators, if any; competing technological and market
developments; the time and costs involved in obtaining regulatory approvals;
the costs involved in filing, prosecuting and enforcing patent claims; the
time and costs of manufacturing scale-up and commercialization activities; and
other factors. The Company estimates that, at its planned rate of spending,
its existing cash, cash equivalents and securities available for sale and the
interest income thereon will be sufficient to meet its capital requirements
through the second quarter of 1999. There can be no assurance that the
underlying assumed levels of revenue and expense will prove to be accurate.
Whether or not these assumptions prove to be accurate, the Company will need
to raise substantial additional capital to fund operations. The Company
intends to seek additional funding through public or private financing,
including equity financing, and through collaborative arrangements. Adequate
funds for these purposes, whether obtained through financial markets or from
collaborative or other arrangements with corporate partners or other sources,
may not be available when needed or may not be available on terms favorable to
the Company, if at all. If additional funds are raised by issuing equity
securities, dilution to existing shareholders will result. In addition, in the
event that additional funds are obtained through arrangements with
collaborative partners, such arrangements may require the Company to
relinquish rights to certain of its technologies or potential products that it
would otherwise seek to develop or commercialize itself.
Effect of Failure to Obtain Adequate Funding. If funding is insufficient at
any time in the future, the Company may be required to delay, scale back or
eliminate some or all of its research and development programs or to license
third parties to commercialize products or technologies that the Company would
otherwise seek to develop itself. Furthermore, the terms of any such license
agreements might be less favorable than if the
4
<PAGE>
Company were negotiating from a stronger position. Moreover, if funding is
insufficient at any time in the future, and the Company's existing funds are
depleted, the Company may be required to cease operations.
Early Stage of Product Development; Technological Uncertainty. The Company
has no commercial products and all of its potential products are in research,
development or early-stage clinical trials. As such, the Company cannot
predict when or if any of its products under development will be
commercialized. Products, if any, resulting from the Company's research and
development programs are not expected to be commercially available for a
number of years, if at all, even if they are successfully developed and proven
safe and effective.
While many approaches to gene therapy and cell therapy are being pursued by
pharmaceutical and biotechnology companies, there are currently no marketed
gene therapies and a limited number of marketed cell therapies. Existing
preclinical and clinical data relating to the Company's specific gene and cell
therapy approaches are very limited. Prior to any commercial use, the products
and technologies currently under development by the Company will require
significant additional research and development efforts, extensive preclinical
and clinical testing and regulatory approval. Clinical trials in humans are
necessary to determine product safety and efficacy. Product development
involving new therapies is highly uncertain and unanticipated developments,
clinical and regulatory delays, adverse or unexpected side effects or immune
responses or inadequate therapeutic efficacy could slow or prevent the
successful completion of the Company's product and technology development
efforts and have a material adverse effect on the Company's business,
financial condition and results of operations.
In addition, gene and cell therapy products are subject to the risks of
failure inherent in the development of products based on innovative
technologies. There can be no assurance that Targeted Genetics will be
permitted to undertake additional or complete ongoing clinical trials of its
potential products within reasonable time periods or otherwise, that
sufficient numbers of patients can be accrued for such trials or that clinical
trials will demonstrate that the products tested are safe and effective. Even
if clinical trials are successful, there can be no assurance that the Company
will obtain regulatory approval for any indication, that an approved product
can be produced in commercial quantities at reasonable costs or gain
acceptance for use by physicians and healthcare providers or that any
potential products will be successfully marketed at prices that would permit
the Company to operate profitably, the failure of any of which would have a
material adverse effect on the Company's business, financial condition and
results of operations.
History of Losses and Uncertainty of Future Results. Targeted Genetics is a
development stage company and has generated minimal revenues since inception.
At December 31, 1997, the Company had an accumulated deficit of approximately
$67.8 million. Losses have resulted from expenses incurred in the Company's
research and development programs and, to a lesser extent, from general and
administrative and interest expenses. The Company expects to incur substantial
additional losses over at least the next several years and expects cumulative
losses to increase substantially as it continues or expands its research and
development activities. Payments from collaborative partners, if any, and
investment income are expected to be the only sources of revenue for the
foreseeable future and revenues from commercial sales of products are not
expected for a number of years, if at all. To achieve profitable operations,
Targeted Genetics, alone or with corporate collaborative partners, must
successfully develop, manufacture, obtain regulatory approvals and market
potential products, of which there can be no assurance. The time required to
reach sustained profitability is highly uncertain and there can be no
assurance that the Company will be able to achieve profitability on a
sustained basis, if at all. Moreover, if profitability is achieved, the level
of profitability cannot be predicted and it may vary significantly from
quarter to quarter.
Uncertainties Relating to Clinical Trials and Product Development. Existing
data on the safety and efficacy of gene and cell therapy treatments are
limited. The Company has performed limited clinical testing of certain of its
product candidates and technologies under development. Preclinical studies of
product candidates may not predict and do not ensure safety or efficacy in
humans and are not necessarily indicative of the results that may be achieved
in clinical trials with humans. Possible serious side effects of viral vector-
based gene transfer include viral infections resulting from contamination with
replication-competent viruses. In addition, the
5
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development of cancer in a patient is theoretically a possible side effect of
all methods of gene transfer. Furthermore, as with most other
biopharmaceutical products, there is also a possibility of toxicity or
decreased efficacy associated with a host immune response toward any vector
used in the Company's treatments. The possibility of such response may be
increased if there is a need to deliver the vector frequently. There can be no
assurance that unacceptable side effects will not be discovered during
preclinical and clinical testing of the Company's potential products. Even
after being cleared by the United States Food and Drug Administration (the
"FDA") or the regulatory authorities of other countries, a product may later
be shown to be unsafe or to not have its purported effect, thereby preventing
its widespread use or requiring its withdrawal from the market. The rate of
completion of the Company's clinical trials depends on, among other factors,
the rate of patient enrollment. Patient enrollment is a function of many
factors, including the size of the patient population, the nature of the
clinical protocol, the proximity of patients to clinical sites and the
eligibility criteria for the trial. Delays in planned patient enrollment may
result in increased costs, delays or termination of clinical trials, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company has a limited
clinical staff and, as a result, will rely on third parties to assist it in
overseeing and monitoring clinical trials, which may result in delays in
completing, or failure to complete, clinical trials if such third parties fail
to perform under their agreements with the Company or fail to meet regulatory
standards in the performance of their obligations under such agreements.
Uncertainty of Patent Position and Proprietary Rights; Access to Proprietary
Genes. The Company's success will depend in part on the ability of the Company
and its licensors to obtain and maintain patent protection for the Company's
technology and to preserve its trade secrets and operate without infringing on
the proprietary rights of others, both in the United States and in other
countries. The failure of the Company or its licensors to obtain and maintain
patent protection for the Company's technology could have a material adverse
effect on the Company. Patent positions in the biotechnology field are highly
uncertain and involve complex legal, scientific and factual questions. To
date, there has emerged no consistent policy regarding the breadth of claims
allowed in biotechnology patents, particularly in regard to human therapeutic
uses. There can be no assurance that patent applications relating to the
technology used by the Company will result in patents being issued or that, if
issued, the patent will not be subjected to further proceedings limiting the
scope of the rights under the patent or that such patent will provide a
competitive advantage or will afford protection against competitors with
similar technology, or will not be challenged successfully, invalidated or
circumvented by competitors. Moreover, because patent applications in the
United States are maintained in secrecy until patents issue and patent
applications in certain other countries generally are not published until more
than 18 months after they are filed, and since publication of discoveries in
scientific or patent literature often lags behind actual discoveries, the
Company cannot be certain that it or any licensor was the first creator of
inventions covered by pending patent applications or that it or such licensor
was the first to file patent applications for such inventions. The Company may
become involved in patent interference proceedings declared by the United
States Patent and Trademark Office ("USPTO") to determine priority of
invention relating to patent applications. Participation in such proceedings
could result in substantial cost to the Company, even if the eventual outcome
were favorable to it. If the outcome of an interference proceeding were
unfavorable, the Company may be unable to obtain rights to the invention
involved. The Company has rights to technology relating to certain novel
cholesterol derivatives ("DC Chol"), which rights were granted through a
license agreement with the University of Tennessee Research Corporation
("UTRC"). UTRC is responding in Europe and Australia to third-party
observations based on prior-art publications that question the patentability
of the pending claims in the respective patent applications relating to DC
Chol. The possibility of an adverse decision in these proceedings, or in a
subsequent opposition proceeding if the respective patents issue, cannot be
excluded. In addition, the Company may become involved in further proceedings
before the USPTO concerning the issued DC Chol patent. The costs associated
with such proceedings or an unfavorable outcome in any such proceedings may
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company's processes and potential products may conflict with patents
that have been or may be granted to competitors, universities or others. As
the biotechnology industry expands and more patents are issued, the risk
increases that the Company's processes and potential products may give rise to
claims that they infringe the
6
<PAGE>
patents of others. Such other persons could bring legal actions against the
Company claiming damages and seeking to enjoin clinical testing, manufacturing
and marketing of the affected product or use of the affected process.
Litigation may be necessary to enforce patents issued to the Company, to
protect trade secrets or know-how owned by the Company or to determine the
enforceability, scope and validity of proprietary rights of others. If the
Company becomes involved in such litigation, it could result in substantial
expense to the Company and significant diversion of effort by the Company's
technical and management personnel. In addition to any potential liability for
significant damages, the Company could be required to obtain a license to
continue to manufacture or market the affected product or use the affected
process. Costs associated with any licensing arrangement may be substantial
and could include ongoing royalties. There can be no assurance that any
license required under any such patent would be made available to the Company
on acceptable terms, if at all. If such licenses could not be obtained on
acceptable terms, the Company could be prevented from manufacturing and
marketing its potential products. Accordingly, an adverse determination in
such litigation could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company also relies upon unpatented proprietary technology. There can be
no assurance that the Company can meaningfully protect its rights in such
unpatented proprietary technology, that any obligation to maintain the
confidentiality of such proprietary technology will not be breached by
employees, consultants, advisors or others, or that others will not
independently develop substantially equivalent technology. Any such failure to
protect, or the breach or development of, equivalent technology may have a
material adverse effect on the Company's business, financial condition and
results of operations.
The genes that the Company expects to deliver as part of any gene therapy
products are generally the subject of issued patents or patent applications.
The Company has entered into licenses granting it certain rights to the use of
certain genes currently required in the Company's product development
programs. Failure by the Company to obtain or maintain in effect a license to
any genes it may require to commercialize its potential products may have a
material adverse effect on its business, financial condition and results of
operations.
Some of the vectors the Company currently produces for its product
development programs are based on technology in the public domain, as well as
nonexclusive licenses to patented technology. In addition, disputes may arise
as to the ownership of proprietary rights to the extent that outside
collaborators apply technological information developed independently by them
or by others to Company projects or apply Company technology to other
projects. Any such dispute may result in significant expense to the Company
and an unfavorable outcome of any such dispute may have a material adverse
effect on the Company's business, financial condition and results of
operations.
Uncertainty of Governmental Regulatory Requirements; Lengthy Approval
Process. The Company's potential products are subject to extensive regulation
by the FDA and foreign governmental authorities. The process of obtaining
regulatory approvals for clinical trials or for the manufacturing or marketing
of the Company's potential products is costly and time-consuming and is
subject to unanticipated delays. Because gene and cell therapy are relatively
new technologies and have not been extensively tested in humans, the
regulatory requirements governing gene and cell therapy products and related
clinical procedures are uncertain and are likely to be modified. There can be
no assurance as to the length of the clinical trial period or the number of
patients required to be enrolled in clinical trials in order to establish the
safety, efficacy and potency of therapeutic products. Accordingly, delays,
rejections or unexpected costs may be encountered based on changes in the
policy or regulations of the FDA or foreign governmental authorities during
the period of product development and regulatory review, which changes may
result in limitations or restrictions on the Company's ability to utilize its
technology or develop its product candidates. Regulatory requirements
ultimately imposed could also adversely affect the ability of the Company to
clinically test, manufacture or market products. In addition, many academic
institutions and companies conducting research in the gene and cell therapy
fields are using a variety of approaches and technologies. Any adverse results
obtained by such researchers in preclinical studies or clinical trials could
materially adversely affect the regulatory environment for gene and cell
therapy products generally, possibly leading to delays in the regulatory
review and approval process for the Company's potential products. Furthermore,
the Company or governmental authorities may suspend clinical trials at any
time
7
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if it is determined that the subjects participating in such trials are exposed
to unacceptable health risks. There can be no assurance that the Company will
not encounter these or other problems in clinical trials that will cause the
Company or governmental authorities to delay or suspend such trials. Even if
regulatory approval of a potential product is obtained, such approval may
entail limitations on the indicated uses for which such product may be
marketed, which may restrict the patient population for which any product may
be prescribed. In addition, a marketed product is subject to continual FDA
review. Later discovery of previously unknown problems or failure to comply
with the applicable regulatory requirements may result in restrictions on
marketing a product or withdrawal of the product from the market, as well as
possible criminal or civil sanctions.
To commercialize any product and prior to submitting the application for
marketing approval in the United States, the Company must sponsor and file an
Investigational New Drug application ("IND") for each proposed product and
must be responsible for initiating and overseeing the clinical studies to
demonstrate the safety and efficacy that are necessary to obtain FDA approval
of such product. There can be no assurance that the Company will be able to
obtain the necessary clearances for clinical trials or approvals for
manufacturing or marketing any of its product candidates.
After completion of clinical trials of a new product, FDA marketing approval
must be obtained. At that time, the Company must submit relevant data,
including the results of product development activities, preclinical studies
and clinical trials, in addition to detailed manufacturing information.
Notwithstanding the submission of relevant data, the FDA may withhold
marketing approval and may require additional clinical trials. All
manufacturing operations also are subject to the FDA's current Good
Manufacturing Practice ("cGMP") requirements on an ongoing basis. There can be
no assurance that the Company will be able to attain or maintain compliance
with cGMP requirements. The Company is similarly subject to regulation by
foreign governmental authorities.
Failure to obtain regulatory approvals for its product candidates or to
either attain or maintain compliance with cGMP or other manufacturing
requirements would have a material adverse effect on the Company's business,
financial condition and results of operations.
Intense Competition. The Company is experiencing intense competition from
companies developing gene and cell therapy technologies as well as those using
more traditional approaches to treating human diseases. The Company is aware
of a number of companies and institutions that are developing or considering
the development of potential gene and cell therapy treatments, including
early-stage gene therapy companies, fully integrated pharmaceutical companies,
universities, research institutions, governmental agencies and other
healthcare providers. In addition, the Company's potential products will be
required to compete with existing pharmaceutical products, or products
developed in the future, that are based on established technologies. Many of
the Company's competitors have substantially more financial and other
resources, larger research and development staffs, and more experience and
capabilities in researching, developing and testing products in clinical
trials, in obtaining FDA and other regulatory approvals, and in manufacturing,
marketing and distribution than the Company. In addition, the competitive
positions of other early-stage companies may be enhanced significantly through
their collaborative arrangements with large pharmaceutical companies or
academic institutions. The Company's competitors may succeed in developing,
obtaining patent protection for, receiving FDA and other regulatory approvals
for, or commercializing products more rapidly than the Company. If the Company
is successful in commercializing its products, it will be required to compete
with respect to manufacturing efficiency and marketing capabilities, areas in
which it has no experience. The Company also competes with others in acquiring
products or technology from research institutions or universities. The
Company's competitors may develop new technologies and products that are
available for sale prior to the Company's potential products or that are more
effective than the Company's potential products. In addition, competitive
products may be manufactured and marketed more successfully than the Company's
potential products. Such developments could render the Company's potential
products less competitive or obsolete, and could have a material adverse
effect on the Company's business, financial condition and results of
operations.
Rapid Technological Change. Gene and cell therapy are new and rapidly
evolving fields, and are expected to continue to undergo significant and rapid
technological change. Considerable experimentation and clinical
8
<PAGE>
testing must be completed successfully before gene and cell therapies are used
in practice. Rapid technological development could result in actual and
proposed technologies, products or processes of the Company becoming obsolete
prior to successful commercialization. There can be no assurance that the
Company's research and development efforts will be successful.
Dependence on Reimbursement. Successful commercial sales of the Company's
potential products will depend in part on the availability of reimbursement
from third-party payors, such as government and private insurance plans. There
is significant uncertainty concerning the reimbursement status of newly
approved healthcare products, and third-party payors are increasingly
challenging the prices charged for medical products and services. There can be
no assurance that adequate third-party reimbursement will be available for the
Company's potential products, or that any third-party reimbursement that is
obtained will be adequate to enable the Company to maintain price levels
sufficient to realize an adequate return on its investments in manufacturing
and product development. If adequate reimbursement is not provided by
government and third-party payors for the Company's potential products, the
Company's business, financial condition and results of operations would be
materially adversely affected.
Dependence on Key Personnel and Scientific Collaborators. The Company is
highly dependent on the principal members of its scientific and management
staff. Loss of any of these persons could materially adversely affect the
Company's business, financial condition and results of operations. The Company
does not have any employment contracts or key person life insurance. The
Company's success will depend in large part on its ability to attract and
retain key employees and scientific advisors. Competition among biotechnology
and pharmaceutical companies for highly skilled scientific and management
personnel is intense. There can be no assurance that the Company will be
successful in retaining its existing personnel or advisors, or in attracting
additional qualified employees. The failure to attract and retain such
personnel or loss of existing personnel could have a material adverse effect
on the Company's business, financial condition and results of operations.
The Company also depends on the continued availability of outside scientific
collaborators who perform research, which may be funded by the Company, in
certain areas relevant to the Company's research. The Company's scientific
collaborators are not employees of the Company and generally may terminate
their relationship with the Company at any time. In addition, certain of the
Company's collaborators have consulting or other advisory relationships with
other entities that may conflict with their obligations to the Company. As a
result, the Company has limited control over their activities and can expect
that only limited amounts of their time will be dedicated to Company
activities. For these reasons, there can be no assurance that inventions or
processes developed by the Company's collaborators will become the property of
the Company. Although certain of the Company's scientific collaborators have
agreed not to engage in activities that would involve a conflict of interest
with the Company, there can be no assurance that this will not occur. The
Company has relied upon scientific, technical, clinical, commercial and other
data supplied and disclosed by outside collaborators and will rely in part on
such data in support of INDs and subsequent clinical trials for its potential
products. There can be no assurance that such information will not contain
errors or omissions of fact or will not otherwise prove inadequate to support
the Company's research and development efforts.
No Commercial Manufacturing, Distribution or Marketing Capability. The
Company's current facilities and staff will need to be expanded or
supplemented for large-scale clinical or commercial production of its
potential products. Large-scale manufacturing of gene and cell therapy
products has not been demonstrated by any third party. The Company will be
required to contract with others or to construct a production facility in
order to complete all the clinical trials necessary for product
commercialization. Certain of the Company's products under development may be
delivered through the processing of patient cells in specialized laboratories.
The Company will be required to construct its own commercial-scale
laboratories or contract with others for such processing. In addition, the
Company has no experience in sales and marketing. To market any products that
may result from its development programs, Targeted Genetics will have to
develop marketing and sales capabilities, either on its own or in conjunction
with others. The Company will depend to a significant extent on collaborative
partners, licensees or other entities for development, manufacturing and
commercialization of its potential products. There can be no assurance that
the Company will be able to enter into any such arrangements
9
<PAGE>
on acceptable terms, if at all. If the Company is unable to obtain or retain
third-party manufacturing on commercially acceptable terms, its ability to
commercialize potential products may be delayed or foreclosed. The Company's
dependence upon third parties for the manufacture, marketing and sale of its
potential products may materially adversely affect the Company's ability to
develop and deliver products on a timely and competitive basis. In addition,
the terms of the Company's collaborative agreement with Laboratoires Fournier
S.C.A. ("Fournier") contemplate that, upon the negotiation and execution of a
definitive supply agreement, the Company will have the right, subject to
certain conditions, to manufacture and supply to Fournier its requirements for
the Company's E1A tumor suppressor product candidate, for which the Company
would receive manufacturing fees. There can be no assurance that the Company,
either independently or with third parties, will be able to manufacture such
product in compliance with applicable regulatory requirements and in
sufficient quantities on a timely and cost-effective basis, if at all, or that
any manufacturing fees will be received. If the Company engages in commercial-
scale manufacturing and marketing of its or its collaborative partners'
potential products, it will require substantial additional funds, personnel
and production facilities.
Dependence on Corporate Collaborators. The Company expects to rely in the
future on corporate collaborative partners to conduct clinical trials, obtain
regulatory approvals and manufacture and market any resulting products.
Although the Company believes that such collaborative partners would have an
economic motivation to commercialize products that result from the Company's
research and development efforts, the amount and timing of resources devoted
to these activities by such parties could depend on the achievement of
technical and research goals by the Company and generally would be controlled
by such partners. The sale of products may depend on the successful completion
of arrangements with future partners, licensees or distributors in each
territory. There can be no assurance that the Company will be successful in
establishing any such collaborative arrangements or that any such future
partner would be successful in commercializing products. The Company has an
existing collaborative arrangement with Fournier under which Fournier has
exclusive rights to develop and commercialize in Europe the Company's E1A
tumor suppressor product candidate and any other product candidates based on
the E1A tumor suppressor gene and developed pursuant to the agreement.
Fournier has agreed to coordinate development of the E1A tumor suppressor
product candidate in Europe by conducting clinical trials, preparing and
filing submissions for regulatory approval in its territory and paying all
associated costs, while the Company has corresponding responsibilities with
respect to development and commercialization in the United States. The
agreement provides that Fournier will make milestone payments upon the
achievement of specified goals by Fournier or the Company and also will pay
manufacturing fees if the Company manufactures products for Fournier and
royalties on sales of resulting products, if any. Because Fournier has been
granted exclusive development and commercialization rights with respect to the
E1A tumor suppressor product candidate in Europe, the success of the product
candidate and related products in Europe depends upon the efforts of Fournier.
There can be no assurance that Fournier will perform its obligations under the
agreement, that it or the Company will successfully develop or market any
products under the agreement, or that the Company will ever receive any
milestone payments, royalties or manufacturing fees under the agreement, any
of which could have a material adverse effect on the Company's business,
financial condition and results of operations. Furthermore, there can be no
assurance that present or future collaborators will not pursue existing or
alternative technologies in preference to potential products being developed
in collaboration with the Company.
Hazardous Materials; Environmental Matters. The Company's research and
development activities involve the controlled use of hazardous materials,
chemicals, biological materials and radioactive compounds. The Company is
subject to federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of such materials and certain
waste products. Although the Company believes that its safety procedures for
handling and disposing of such materials comply with the standards prescribed
by such laws and regulations, the risk of accidental contamination or injury
from these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any resulting damages, and any
such liability could exceed the Company's resources. The Company may be
required to incur significant costs to comply with environmental laws and
regulations in the future. Current or future environmental laws or regulations
may have a material adverse effect on the Company's business, financial
condition and results of operations.
10
<PAGE>
Product Liability. The testing, manufacture, marketing and sale of human
healthcare products entail the inherent risk of liability claims or product
recalls and associated adverse publicity. The Company currently has a limited
amount of product liability insurance. Such insurance is expensive and there
can be no assurance that it will continue to be available in sufficient
amounts and on acceptable terms, if at all. In addition, pursuant to the terms
of its agreement with Fournier, the Company has agreed to indemnify Fournier
with respect to certain losses incurred as a result of the manufacture, supply
or sale of potential product candidates. A product liability claim or product
recall could inhibit or prevent commercialization of products being developed
by the Company Any product liability claim, including an indemnification claim
under the Fournier agreement or any other collaborative agreement, or product
recall could have a material adverse effect on the Company's business,
financial condition and results of operations.
Potential Volatility of Stock Price; Absence of Dividends. Since the
Company's initial public offering, the market price of the Common Stock has
fluctuated significantly. The stock market has experienced significant price
and volume fluctuations that are often unrelated to the operating performance
of particular companies. In addition, the market price of the Common Stock,
similar to that of securities of other biotechnology companies, may, at times,
be highly volatile. Factors such as the results of preclinical studies and
clinical trials by the Company or its competitors, other evidence of the
safety or efficacy of products of the Company or its competitors,
announcements of technological innovations or new products by the Company or
its competitors, changes in governmental regulation, developments in patent or
other proprietary rights of the Company or its competitors, including
litigation, fluctuations in the Company's operating results and changes in
general market conditions for biotechnology stocks could have a significant
impact on the future price of the Common Stock. The Company has never paid
cash dividends on the Common Stock and does not anticipate paying cash
dividends in the foreseeable future.
Antitakeover Considerations. The Company has the authority to issue up to
6,000,000 shares of Preferred Stock in one or more series and to fix the
powers, designations, preferences and relative rights thereof without any
further vote or action by the Company's shareholders. The issuance of
Preferred Stock could dilute the voting power of holders of Common Stock and
could have the effect of delaying, deferring or preventing a change in control
of the Company. Certain provisions of the Company's Restated Articles of
Incorporation, the Amended and Restated Bylaws and employee benefit plans, as
well as Washington law, may operate in a manner that could discourage or
render more difficult a takeover of the Company, the removal of directors or
the ability to call a special meeting of the shareholders, or may limit the
price certain investors may be willing to pay in the future for shares of
Common Stock.
Shares Eligible for Future Sale. Substantially all of the Company's shares
are eligible for sale in the public market, including the shares of Common
Stock registered hereby. Sales of a substantial number of shares of Common
Stock being registered, as well as future sales of such Common Stock or of
shares of Common Stock by existing shareholders, or the perception that such
sales could occur, could adversely affect the market price of the Common
Stock.
11
<PAGE>
SELLING SHAREHOLDERS
The following table provides certain information regarding the Selling
Shareholders and the number of Shares being offered by them.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BENEFICIALLY
PRIOR OWNED AFTER
TO OFFERING(1) SHARES OFFERING(2)
----------------- BEING -----------------
NAME AND ADDRESS NUMBER PERCENT OFFERED NUMBER(3) PERCENT
---------------- --------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
The Equitable Life Assurance
Society......................... 3,000,000 10.04% 3,000,000 -- --
International Biotechnology
Trust plc....................... 4,450,000 14.89% 3,000,000 1,450,000 4.37%
GeneChem Technologies Venture
Fund L.P........................ 3,000,000 10.04% 3,000,000 -- --
SOFINOV Societe Financiere
d'Innovation Inc................ 4,000,000 13.24% 4,000,000 -- --
</TABLE>
- --------
(1) Assumes the exercise of warrants, which are immediately exercisable.
(2) Includes shares issuable upon exercise of warrants, which are immediately
exercisable.
(3) Assumes the sale of all shares offered by each of the Selling
Shareholders.
None of the Selling Shareholders has had any material relationship with the
Company, or any of its affiliates, within the past three years. Jeremy Curnock
Cook, a director and Chairman of the Board of the Company, however, is a
director of International Biotechnology Trust plc.
The Selling Shareholders have represented to the Company that they purchased
the Shares for their own account for investment only and not with a view
toward the public sale or distribution thereof, except pursuant to sales
registered under the Securities Act or exemptions therefrom. In recognition of
the fact that the Selling Shareholders, even though purchasing the Shares for
investment, may wish to be legally permitted to sell their Shares when they
deem appropriate, the Company agreed with the Selling Shareholders to file
with the Commission under the Securities Act the Registration Statement with
respect to the resale of the Shares from time to time in transactions in the
over-the-counter market through Nasdaq, in privately negotiated transactions,
through the writing of options on the Shares, or otherwise, or through a
combination of such methods of sale, and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary
to keep the Registration Statement effective until the earlier of April 17,
2000 and the date on which the Selling Shareholders have sold all the Shares.
PLAN OF DISTRIBUTION
All of the Shares offered hereby may be sold from time to time by the
Selling Shareholders, or by their pledgees, donees, transferees or other
successors-in-interest. The sale of the Shares by the Selling Shareholders may
be effected from time to time in transactions in the over-the-counter market
through Nasdaq, or on one or more other securities markets and exchanges, in
privately negotiated transactions, through the writing of options on the
Shares, or otherwise, or through a combination of such methods of sale, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices relating to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect the above-mentioned transactions
by selling the Shares to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Shareholders and/or the purchasers of the Shares for whom
such broker-dealers may act as agents or to whom they may sell as principals,
or both (which compensation as to a particular broker-dealer may be in excess
of customary commissions). Any broker-dealer may act as a broker-dealer on
behalf of the Selling Shareholders in connection with the offering of certain
of the Shares by the Selling Shareholders. None of the proceeds from the sale
of the Shares by the Selling Shareholders will be received by the Company. In
addition, any of the Shares that qualify for sale pursuant to Rule 144
promulgated under the Securities Act may be sold in transactions complying
with such Rule, rather than pursuant to this Prospectus.
12
<PAGE>
The Company has the right to suspend use of this Prospectus for a discrete
period of time under certain circumstances.
Any broker-dealers who act in connection with the sale of the Shares
hereunder may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any commissions received by them and profit
on any resale of the Shares as principal may be deemed to be underwriting
discounts and commissions under the Securities Act. The Company has agreed to
bear all expenses (other than selling commissions and fees and stock transfer
taxes) in connection with the registration and sale of the Shares being
offered by the Selling Shareholders. The Company has agreed to indemnify the
Selling Shareholders and broker-dealers who act in connection with the sale of
the Shares hereunder against certain liabilities, including liabilities under
the Securities Act.
There can be no assurance that the Selling Shareholders will sell any or all
of the Shares offered by them hereunder.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered hereby
have been passed upon for the Company by Perkins Coie LLP, Seattle,
Washington.
EXPERTS
The financial statements of the Company included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
13
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Forward-Looking Information................................................. 2
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 3
Risk Factors................................................................ 4
Selling Shareholders........................................................ 12
Plan of Distribution........................................................ 12
Legal Matters............................................................... 13
Experts..................................................................... 13
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
13,000,000 SHARES
[LOGO OF TARGETED GENETICS CORPORATION]
TARGETED GENETICS CORPORATION
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
----------------
PROSPECTUS
----------------
MAY , 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts payable, by the registrant in connection with the sale
of Common Stock being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and the Nasdaq National Market
additional listing fee.
<TABLE>
<S> <C>
SEC registration fee............................................ $ 5,600
NASD filing fee................................................. 2,372
Nasdaq National Market listing fee.............................. 17,500
Printing and engraving expenses................................. 30,000
Legal fees and expenses......................................... 15,000
Accounting fees and expenses.................................... 6,000
Miscellaneous fees and expenses................................. 3,528
-------
Total......................................................... $80,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 10 of the registrant's Bylaws provides for
indemnification of the registrant's directors, officers, employees and agents
to the maximum extent permitted by Washington law. Certain of the directors of
the registrant, who are affiliated with principal shareholders of the
registrant, also may be indemnified by such shareholders against liability
they may incur in their capacities as directors of the registrant, including
pursuant to a liability insurance policy to be maintained by the registrant
for such purpose.
Section 23B.08.320 of the Washington Business Corporation Act authorizes a
corporation to limit a director's liability to the corporation or its
shareholders for monetary damages for acts or omissions as a director, except
in certain circumstances involving intentional misconduct, knowing violations
of law or illegal corporate loans or distributions, or any transaction from
which the director personally receives a benefit in money, property or
services to which the director is not legally entitled. Article 11 of the
registrant's Articles of Incorporation contains provisions implementing, to
the fullest extent permitted by Washington law, such limitations on a
director's liability to the registrant and its shareholders.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
5.1 Opinion of Perkins Coie LLP, counsel to the registrant, regarding the
legality of the Common Stock
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1)
24.1 Power of attorney (contained on signature page)
</TABLE>
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
A. 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 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;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(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.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
D. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
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, thereunder duly
authorized, in the City of Seattle, State of Washington, on the 30th day of
April, 1998.
TARGETED GENETICS CORPORATION
/s/ H. Stewart Parker
By: _________________________________
H. Stewart Parker
Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes H.
Stewart Parker and James A. Johnson, or either of them, as attorneys-in-fact
with full power of substitution, to execute in the name and on the behalf of
each person, individually and in each capacity stated below, and to file, any
and all amendments to this Registration Statement, including any and all post-
effective amendments, and any related Rule 462(b) Registration Statement and
any amendment thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below on the 30th day of April, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ H. Stewart Parker President, Chief Executive Officer and
_____________________________________________ Director (Principal Executive Officer)
H. Stewart Parker
/s/ James A. Johnson Vice President, Finance, Chief Financial
_____________________________________________ Officer, Treasurer and Secretary
James A. Johnson (Principal Financial and Accounting
Officer)
/s/ Jeremy Curnock Cook Chairman of the Board of Directors
_____________________________________________
Jeremy Curnock Cook
/s/ Jack L. Bowman Director
_____________________________________________
Jack L. Bowman
/s/ Stephen A. Duzan Director
_____________________________________________
Stephen A. Duzan
/s/ James D. Grant Director
_____________________________________________
James D. Grant
Director
_____________________________________________
Donald E. O'Neill
/s/ Mark Richmond, Ph.D. Director
_____________________________________________
Mark Richmond, Ph.D.
/s/ Martin P. Sutter Director
_____________________________________________
Martin P. Sutter
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
5.1 Opinion of Perkins Coie LLP, counsel to the registrant, regarding the
legality of the Common Stock
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1)
24.1 Power of attorney (contained on signature page)
</TABLE>
<PAGE>
EXHIBIT 5.1
PERKINS COIE LLP
1201 Third Avenue, 40th Floor Seattle, Washington 98101-3099
Telephone: 206 583-8888 Facsimile: 206 583-8500
May 1, 1998
Targeted Genetics Corporation
Suite 100
1100 Olive Way
Seattle, WA 98101
RE: REGISTRATION STATEMENT ON FORM S-3
Gentlemen and Ladies:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), which you are filing with the
Securities and Exchange Commission for the resale of up to 13,000,000 shares of
Common Stock, $.01 par value (the "Shares"). We have examined the Registration
Statement and such documents and records of the Company and other documents as
we have deemed necessary for the purpose of this opinion.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized and are validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
Perkins Coie LLP
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EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference of our firm under the captions "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Targeted Genetics
Corporation for the registration of shares of its common stock and to the
incorporation by reference therein of our report dated February 3, 1998, with
respect to the financial statements of Targeted Genetics Corporation included
in its Annual Report (Form 10-K) for the year ended December 31, 1997, filed
with the Securities and Exchange Commission.
Ernst & Young LLP
Seattle, Washington
April 30, 1998
