<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 5, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------
CV THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 43-1570294
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
--------------------------
3172 PORTER DRIVE PALO ALTO, CA 94304
(650) 812-0585
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------------
LOUIS G. LANGE, M.D., PH.D.
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
CV THERAPEUTICS, INC.
3172 PORTER DRIVE
PALO ALTO, CA 94304
(650) 812-0585
(Name, address and telephone number of agent for service)
--------------------------
COPIES TO:
ALAN C. MENDELSON, ESQ. DAVID J. SEGRE, ESQ.
DEBORAH A. MARSHALL, ESQ. CHRISTOPHER K. SADEGHIAN, ESQ.
COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI
FIVE PALO ALTO SQUARE PROFESSIONAL CORPORATION
3000 EL CAMINO REAL 650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94306 PALO ALTO, CA 94306
(650) 843-5000 (650) 493-9300
--------------------------
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 in connection with dividend or interest
reinvestment plans, check the following box. / /
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
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
OFFERING PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO PRICE PER SHARE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) (2) OFFERING PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value.................... 1,955,000 $9.125 $17,839,375 $5,263
</TABLE>
(1) Includes 255,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(2) The price of $9.125 per share, which was the average of the high and low
prices of the Common Stock reported on the Nasdaq Stock Market on December
31, 1997, is set forth solely for the purpose of calculating the
registration fee in accordance with Rule 457(c) of the Securities Act of
1933, as amended.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION
DATED JANUARY 5, 1998
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.
<PAGE>
PROSPECTUS
1,700,000 SHARES
[LOGO]
COMMON STOCK
(PAR VALUE $0.001 PER SHARE)
All of the 1,700,000 shares of Common Stock (the "Common Stock") offered hereby
(the "Offering") are being sold by CV Therapeutics, Inc. ("CVT" or the
"Company"). The Company's Common Stock is quoted on the Nasdaq National Market
under the symbol CVTX. On December 31, 1997, the last reported sale price of the
Common Stock was $9.375 per share. See "Price Range of Common Stock."
SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2)
<S> <C> <C> <C>
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Per Share $ $ $
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Total (3) $ $ $
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</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
See "Underwriting."
(2) Before deducting expenses of the Offering payable by the Company, estimated
at $300,000.
(3) The Company has granted to the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional 255,000
shares of Common Stock on the same terms as set forth above solely to cover
over-allotments, if any. If such option is exercised in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ ,
$ and $ respectively. See "Underwriting."
The shares of Common Stock offered by this Prospectus are being offered by the
Underwriters, subject to prior sale, when, as and if delivered to and accepted
by the Underwriters, and subject to approval of certain legal matters by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Underwriters. It is expected that delivery of the shares of Common Stock offered
hereby will be made against payment therefor on or about at the
offices of J.P. Morgan Securities Inc., 60 Wall Street, New York, New York.
J.P. MORGAN & CO.
UBS SECURITIES
INVEMED ASSOCIATES, INC.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS
MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON NASDAQ
IN ACCORDANCE WITH RULE 103 UNDER REGULATION M. SEE "UNDERWRITING."
No person has been authorized to give any information or to make any
representations not contained in this Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, the Common Stock in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation. 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 subsequent to the date hereof.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Additional Information......................... 2
Available Information.......................... 3
Incorporation of Certain Documents by
Reference.................................. 3
Prospectus Summary............................. 4
Risk Factors................................... 7
Use of Proceeds................................ 14
Price Range of Common Stock.................... 14
Dividend Policy................................ 14
Capitalization................................. 15
Dilution....................................... 16
<CAPTION>
PAGE
<S> <C>
Selected Consolidated Financial Data........... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 18
Business....................................... 21
Management..................................... 38
Principal Stockholders......................... 41
Underwriting................................... 43
Legal Matters.................................. 44
Experts........................................ 44
</TABLE>
CV Therapeutics, Inc. and the CV Therapeutics logo are service marks of the
Company. All brand names or trademarks appearing in this Prospectus are the
property of their respective holders.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form S-3 under the Securities
Act, including amendments thereto, (collectively, the "Registration Statement")
relating to the Common Stock offered hereby with the Securities and Exchange
Commission (the "Commission"), Washington, D.C. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto, certain portions of which have been omitted pursuant to
the rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document referred to 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. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to such Registration Statement, exhibits
and schedules thereto. A copy of the Registration Statement may be inspected by
anyone without charge at the Commission's principal office at 450 Fifth Street,
N.W, Washington, D.C. 20549, and copies of all or any part thereof may be
obtained from the Public Reference Section, Securities and Exchange Commission,
Washington, D.C. 20549 upon the payment of certain prescribed fees.
2
<PAGE>
AVAILABLE INFORMATION
The Company 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
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied at the Commission's Public Reference Section
located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at 7 World Trade Center, Suite 1300, New
York, New York 10048, and 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material also can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W, Washington, D.C. 20549, at
prescribed rates. The Commission also makes electronic filings publicly
available on the Internet. The Commission's Internet address is
http://www.sec.gov. The Commission's Web site also contains reports, proxy and
information statements and other information regarding the Company that has been
filed with the Commission. The Common Stock of the Company is quoted on the
Nasdaq National Market. Reports, proxy statements and other information
concerning the Company may be inspected at the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to the
Exchange Act are by this reference incorporated in and made a part of this
Prospectus:
(1) The Annual Report on Form 10-K for the fiscal year ended December 31, 1996,
filed on March 28, 1997, as amended on Form 10-K/A filed on April 25, 1997,
including all matters incorporated by reference therein;
(2) The Proxy Statement for the Company's 1997 Annual Meeting of Stockholders,
filed on May 15, 1997, including all matters incorporated by reference
therein;
(3) The Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1997, June 30, 1997 and September 30, 1997, including all matters
incorporated by reference therein;
(4) The Current Report on Form 8-K, filed on October 24, 1997; and
(5) The description of the Common Stock contained in the Company's Registration
Statement on Form 8-A filed on October 30, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated by reference
herein and to be a part of this Prospectus from the date of filing of such
documents. Any statement contained in a document 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 such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner to whom
this Prospectus is delivered, upon a written or oral request to CV Therapeutics,
Inc., Attention: Investor Relations, 3172 Porter Drive, Palo Alto, California,
94304, telephone number (650) 812-0585.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION DISCUSSED ELSEWHERE IN THIS PROSPECTUS AND THE CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO INCORPORATED HEREIN BY REFERENCE. THE
DISCUSSION IN THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES INCLUDING, BUT NOT LIMITED TO, THOSE SPECIFICALLY
IDENTIFIED HEREIN. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS," AS WELL AS THOSE DISCUSSED ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS
ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.
THE COMPANY
CV Therapeutics, Inc. ("CVT" or the "Company") is a biopharmaceutical company
focused exclusively on the application of molecular cardiology to the discovery,
development and commercialization of novel, small molecule drugs for the
treatment of chronic cardiovascular diseases. Molecular cardiology was
developed, in part, by CVT scientists and their academic collaborators and is
based upon the application of molecular biology and genetics to cardiovascular
diseases. This discipline has yielded new insights into the mechanisms
underlying chronic cardiovascular diseases and has enhanced the search for
innovative cardiovascular drugs by providing an increasing number of new
molecular targets for drug discovery. Two of the Company's drug candidates,
ranolazine for the treatment of angina and CVT-124 for the treatment of edema
due to congestive heart failure ("CHF"), are in clinical trials.
The Company initiated a Phase III clinical trial of ranolazine, a novel small
molecule, in October 1997 for the treatment of angina. The trial is a placebo
controlled, double-blind, cross-over study of a sustained release formulation of
ranolazine ("ranolazine SR") in approximately 150 patients with chronic stable
angina. Ranolazine was licensed from Syntex (U.S.A.), Inc. ("Syntex"), an
indirect subsidiary of Roche Holding Limited ("Roche"), in March 1996. Its novel
metabolic mechanism of action was discovered, in part, by cardiovascular
researchers now at or associated with CVT. In Phase I and Phase II clinical
trials conducted by Syntex, an immediate release formulation of ranolazine
("ranolazine IR") was administered to over 1,200 patients. These clinical trials
have indicated that ranolazine IR improved exercise tolerance in angina patients
without adversely affecting heart rate or decreasing blood pressure, a clinical
profile absent from currently available drugs. The Company believes ranolazine
could particularly benefit angina patients who also suffer from CHF or remain
symptomatic despite maximal doses of currently available anti-anginal drugs. In
the United States, approximately 7.1 million patients are currently diagnosed
with angina. Based on published studies, approximately one-third, or 2.3
million, are either diagnosed with both angina and CHF or are resistant to
currently available treatments. The Company believes these patients would
represent the initial target market for ranolazine.
CVT-124, which is currently in Phase II clinical trials, is an adenosine A(1)
receptor antagonist discovered by CVT through its application of molecular
cardiology. Adenosine A(1) receptor antagonists block certain actions of
adenosine, a hormone that modulates different functions of the cardiovascular
system. CVT-124 has potential applications in the treatment of edema (fluid
accumulation) associated with CHF and the prevention and treatment of acute
renal failure. A recently completed Phase II trial in moderately severe CHF
patients indicated that CVT-124 is generally well-tolerated and produces
clinically useful and statistically significant increases in urine, sodium and
chloride excretion compared to placebo, with clinically minimal increases in
potassium excretion. This is an improved clinical profile compared to currently
available therapies. In March 1997, the Company entered into two research
collaboration and license agreements with Biogen, Inc. and a wholly-owned
subsidiary of Biogen, Inc. (collectively, "Biogen") granting Biogen an exclusive
worldwide license to develop, manufacture and commercialize CVT-124 for all
indications. In exchange, the Company received a $16.0 million upfront payment,
including an equity investment, advanced funding of a development milestone and
funding under a loan facility. In addition, Biogen agreed to make significant
milestone payments and equity investments and provide funding under a general
purpose loan facility, all of which are subject to the achievement of certain
clinical development and commercialization milestones. Biogen will also pay
royalties on any future product
4
<PAGE>
sales. Approximately one-quarter of the 875,000 patients in the United States
hospitalized with a primary diagnosis of CHF exhibit resistance to current
diuretic treatments. The Company believes that these patients would represent
the initial target market for CVT-124 in this indication.
In addition to ranolazine and CVT-124, the Company has several product
candidates that are currently in preclinical studies. The Company has developed
and synthesized a series of adenosine A(1) agonist compounds that it believes
may have potential application in treating supraventricular tachycardias.
Supraventricular tachycardias are among the most common cardiac arrhythmias
complicating ischemic heart disease and cardiac surgical procedures and account
for over 300,000 new hospital admissions in the United States each year. The
Company believes that compared to current therapies, its compounds may offer an
improved clinical profile for immediate treatment of these arrhythmias without
lowering blood pressure. CVT-313, also in preclinical studies, is a selective
inhibitor of the cell cycle enzyme, cyclin-dependent kinase 2 ("CDK2"). The
Company believes that CVT-313 may be useful in a variety of cellular
proliferative disorders, including the prevention of restenosis, as an adjunct
to coronary artery bypass surgery and as a treatment for cardiomyopathy (heart
muscle damage). CVT-634, an inhibitor of another cell cycle regulating enzyme,
is also being evaluated in animal models of chronic cardiovascular disease.
The Company was incorporated in Delaware in December 1990 and changed its name
to CV Therapeutics, Inc. in June 1992. The Company's executive offices are
located at 3172 Porter Drive, Palo Alto, California 94304, and its telephone
number is (650) 812-0585.
RECENT DEVELOPMENTS
In October 1997, the Company and Biogen completed a randomized, double-blind,
placebo-controlled, ascending dose crossover Phase II trial of intravenous
CVT-124 in 18 patients with moderately severe CHF. In this trial, CVT-124
exhibited clinically useful and statistically significant increases in urine,
sodium and chloride excretion compared to placebo, with clinically minimal
increases in potassium excretion. This is an improved clinical profile compared
to currently available therapies. CVT-124 was also generally well-tolerated.
Biogen is currently planning additional Phase II intravenous trials in severe
CHF patients.
In October 1997, the Company raised net proceeds of $12.3 million in a private
placement of equity securities with Biotech Target S.A., a wholly owned
subsidiary of BB Biotech AG ("BB Biotech"). The net proceeds will be used to
continue the Company's research and development programs.
In October 1997, the Company initiated the first of multiple Phase III clinical
trials of ranolazine SR for the treatment of angina. In this first clinical
trial, patients undergo treadmill exercise to induce angina with the primary
endpoint being duration of exercise. This trial is a randomized, double-blind,
placebo controlled, monotherapy, four period crossover trial in approximately
150 stable angina patients. In the second trial, which is expected to begin in
1998, the Company plans to enroll approximately 350-450 angina patients
receiving other anti-anginal medications and add either placebo or ranolazine to
their therapy. Additional clinical pharmacology, open label and safety studies
are expected to begin in 1998 and be completed before the filing of a New Drug
Application ("NDA") with the Food and Drug Administration.
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
COMMON STOCK OFFERED........................ 1,700,000 shares
COMMON STOCK OUTSTANDING AFTER THE 10,158,066 shares (1)
OFFERING...................................
USE OF PROCEEDS............................. Research and development, including
preclinical testing and clinical trials, and
working capital and general corporate
purposes.
NASDAQ NATIONAL MARKET SYMBOL............... "CVTX"
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
NINE MONTHS ENDED
INCEPTION
(DEC. 11, 1990) YEAR ENDED DECEMBER 31, SEPTEMBER 30,
IN THOUSANDS, EXCEPT PER TO ------------------------------------------ --------------------
SHARE DATA DEC. 31, 1992 1993 1994 1995 1996 1996 1997
--------------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Contract revenue............. $ - $ - $ - $ - $ 250 $ 250 $ 2,236
Operating expenses:
Research and development... 1,167 4,731 8,823 12,856 7,141 5,834 6,992
General and
administrative............ 429 947 2,802 3,402 2,917 2,186 3,545
------- --------- --------- --------- --------- --------- ---------
Total operating expenses..... 1,596 5,678 11,625 16,258 10,058 8,020 10,537
------- --------- --------- --------- --------- --------- ---------
Loss from operations......... (1,596) (5,678) (11,625) (16,258) (9,808) (7,770) (8,301)
Interest income (expense),
net......................... (34) 161 258 (466) (557) (597) 503
------- --------- --------- --------- --------- --------- ---------
Net loss................... $ (1,630) $ (5,517) $ (11,367) $ (16,724) $ (10,365) $ (8,367) $ (7,798)
------- --------- --------- --------- --------- --------- ---------
------- --------- --------- --------- --------- --------- ---------
Net loss per share (2)....... $ (4.33) $ (2.25) $ (1.78) $ (1.15)
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in computing net
loss per share (2).......... 3,861 4,599 4,708 6,755
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
-------------------------
<S> <C> <C>
AT SEPTEMBER 30, 1997
-------------------------
AS ADJUSTED
IN THOUSANDS ACTUAL (3)
--------- --------------
<CAPTION>
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short- and long-term investments........................... $ 28,914 $ 55,915
Working capital....................................................................... 14,900 41,901
Total assets.......................................................................... 32,979 59,980
Total debt and capital lease obligations.............................................. 7,393 7,393
Accumulated deficit................................................................... (53,424) (53,424)
Total stockholders' equity............................................................ 17,499 44,500
</TABLE>
- ------------------------------
(1) Based on shares outstanding as of December 15, 1997. Excludes as of
December 15, 1997: (i) 1,028,127 shares of Common Stock issuable upon exercise
of outstanding stock options at a weighted average exercise price of $4.62 per
share; (ii) 549,504 shares of Common Stock issuable upon exercise of outstanding
warrants at exercise prices ranging from $2.50 to $25.00 per share and a
weighted average exercise price of $17.41; and (iii) 1,274,056 shares of Common
Stock available for future grant under the Company's 1992 Stock Option Plan,
1994 Equity Incentive Plan, Non-Employee Directors' Stock Option Plan and
Employee Stock Purchase Plan (the "Stock Plans"), including 1,000,000 shares
under the 1994 Equity Incentive Plan approved by the Board of Directors and
subject to stockholder approval. Includes 1,397,147 shares of Common Stock sold
to BB Biotech in a private placement in October 1997.
(2) Net loss per share for the years ended December 31, 1995 and 1996 and for
the nine months ended September 30, 1996 has been calculated on a pro forma
basis. See Note 1 of Notes to Consolidated Financial Statements incorporated
herein by reference for a description of the shares used in calculating pro
forma net loss per share.
(3) Adjusted to give effect to the receipt of $12.3 million in net proceeds
from a private placement of Common Stock with BB Biotech in October 1997 and the
receipt of the estimated net proceeds from the sale of 1,700,000 shares of
Common Stock offered by the Company hereby at an assumed public offering price
of $9.375 per share. See "Use of Proceeds."
6
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider, in addition to
the other information contained in this Prospectus, the following risk factors
in evaluating the Company and the Common Stock offered hereby.
UNCERTAINTIES RELATED TO EARLY STAGE OF DEVELOPMENT
The Company is at an early stage of development and must be evaluated in light
of the uncertainties and complications present in an early stage
biopharmaceutical company. In addition, all of the Company's products are at an
early stage of development. Since the Company's inception in 1990, substantially
all of the Company's resources have been dedicated to research and development,
and the Company has not generated any product revenue. Because all of the
Company's potential products are in research, preclinical or clinical
development, product revenues will not be realized for at least several years,
if at all. Drug discovery methods based upon molecular cardiology are relatively
new, and there can be no assurance that the Company will be able to employ these
methods of drug discovery successfully or that these methods will lead to the
development of commercially viable pharmaceutical products. Certain of the
Company's compounds within the Company's cell cycle and adenosine A(1) receptor
programs are in the early stages of research and development, and the Company
cannot predict when, if ever, it will commence clinical trials for such new
compounds. There can be no assurance that any of the Company's product
development efforts will be successfully completed, that any of the Company's
products will be proven to be safe and effective, that regulatory approvals will
be obtained at all or be as broad as sought, that the Company's products will be
capable of being produced in commercial quantities or that any products, if
introduced, will achieve market acceptance.
UNCERTAINTIES RELATED TO CLINICAL TRIALS
The Company's potential products are subject to the risks of failure inherent in
the development of pharmaceutical products and will require additional
development, preclinical studies, clinical trials and regulatory approval prior
to commercialization. The results from preclinical studies and early clinical
trials may not be predictive of results obtained in later clinical trials, and
there can be no assurance that clinical trials conducted by the Company or its
collaborators will demonstrate sufficient safety and efficacy to obtain the
requisite approvals or that marketable products will result. For example, in
November 1995, based on unfavorable efficacy data from a Phase II trial, the
Company terminated its development program for the CVT-1 product for treatment
of primary hypercholesterolemia.
The Company currently has only two products in clinical development, ranolazine
and CVT-124. The rate of completion of the Company's clinical trials may be
delayed by many factors, including slower than anticipated patient enrollment,
difficulty in finding a sufficient number of patients fitting the appropriate
trial profile or difficulty in obtaining sufficient supplies of clinical trial
materials or adverse events occurring during the clinical trials. Completion of
testing, studies and trials may take several years, and the length of time
varies substantially with the type, complexity, novelty and intended use of the
product. There can be no assurance that the Company's drug development efforts
will progress as expected or that such efforts will lead to the further
development and regulatory approval of any product. In addition, data obtained
from preclinical and clinical activities are susceptible to varying
interpretations, which could delay, limit or prevent regulatory approval. Delays
or rejections may be encountered based upon many factors, including changes in
regulatory policy during the period of product development. No assurance can be
given that any of the Company's development programs will be successfully
completed, that any investigational new drug ("IND") applications will become
effective or that additional clinical trials will be allowed by the Food and
Drug Administration ("FDA") or other regulatory authorities or that clinical
trials will commence as planned. As a result of FDA reviews or complications
that may arise in any phase of the clinical trial program, there can be no
assurance that the proposed schedules for IND and clinical protocol submissions
to the FDA, initiations of studies and completions of clinical trials can be
maintained. Any delays in the Company's clinical trials would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business - Ranolazine" and "- CVT-124."
DEPENDENCE ON COLLABORATIVE AND LICENSING ARRANGEMENTS
The Company's strategy for the research, development and commercialization of
its product candidates has required, and will continue to require, the Company
to enter into various arrangements with corporate and academic collaborators,
licensors, licensees and others, and the Company will therefore be dependent
upon the
7
<PAGE>
success of these parties in performing their responsibilities. There can be no
assurance that the Company will be able to enter into additional collaborative
arrangements or license agreements on acceptable terms, or at all, or that any
or all of the contemplated benefits from such collaborative arrangements or
license agreements will be realized. Failure to obtain and maintain such
arrangements or agreements would result in delays in the development of the
Company's proposed products, the inability to proceed with the development,
manufacture or sale of products or the loss of third party licenses or could
require the Company to fund development of a particular product candidate
internally. If the Company were required to fund development internally, its
future capital requirements would increase substantially. There can be no
assurance that the Company could obtain additional funds to meet such increased
capital requirements on acceptable terms, or at all.
Under the Company's collaborative arrangement with Biogen, Biogen is responsible
for pursuing all aspects of commercialization of CVT-124, including but not
limited to manufacturing clinical quantities of CVT-124, conducting additional
clinical trials, pursuing regulatory approvals, scaling-up manufacturing
processes and establishing marketing and sales capabilities. The Company's
relationship with Biogen may be terminated by Biogen upon notice ranging from 60
to 90 days. Any such termination would have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
certain of the collaborative arrangements that the Company may enter into in the
future may place responsibility on the collaborative partner for preclinical
testing and clinical trials, manufacturing and preparation and submission of
applications for regulatory approval of potential pharmaceutical products. The
Company cannot control the amount and timing of resources which its
collaborative partners devote to the Company's programs or potential products.
Should a collaborative partner fail to develop or commercialize successfully any
product candidate to which it has rights, the Company's business, financial
condition and results of operations may be materially and adversely affected.
There can be no assurance that collaborators will not pursue competing
technologies or product candidates either on their own or in collaboration with
others.
Collaborative arrangements may also require the Company to expend funds and to
meet certain milestones, and there can be no assurance that the Company will be
successful in doing so. The Company's agreement with the University of Florida
Research Foundation, Inc. in the area of adenosine receptors requires the
Company to reach certain preclinical and clinical milestones within defined time
periods to maintain exclusive rights under the license. The Company's agreement
with Syntex for ranolazine requires it to make a milestone payment to Syntex
upon FDA approval of an NDA for ranolazine. The Company's agreement with Biogen
requires the Company to meet certain development milestones in order to receive
or be entitled to retain certain payments. Failure of the Company to meet its
obligations under its collaborative arrangements could result in a termination
of those arrangements and the loss of rights to the compounds under development
and could have a material adverse effect on the Company's business, financial
condition and results of operations.
There can be no assurance that disputes will not arise in the future with
respect to the ownership of rights to any technology developed with or by third
parties. These and other possible disagreements between collaborators and the
Company could lead to delays in the collaborative research, development or
commercialization of certain product candidates or could require or result in
litigation or arbitration, which would be time consuming and expensive, and
would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business - Licenses and
Collaborations."
HISTORY OF LOSSES AND EXPECTATION OF FUTURE LOSSES; UNCERTAINTY OF FUTURE
PROFITABILITY; ACCUMULATED DEFICIT
Since its inception, the Company has been engaged in research and development
activities and has generated no product revenues. As of September 30, 1997, the
Company had an accumulated deficit of approximately $53.4 million. The process
of developing the Company's products will require significant additional
research and development, preclinical testing and clinical trials, as well as
regulatory approvals. These activities, together with the Company's general and
administrative expenses, are expected to result in operating losses for the
foreseeable future. The Company will not receive product revenues unless and
until it or its collaborative partners complete clinical trials and receive
regulatory approval for commercial sale with respect to one or more products and
successfully commercialize such products. There can be no assurance that the
Company will generate revenues or achieve and sustain profitability in the
future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
8
<PAGE>
NEED FOR ADDITIONAL FUTURE CAPITAL; UNCERTAINTY OF ADDITIONAL FUNDING
The Company will require substantial additional funding in order to complete its
research and development activities and commercialize any potential products.
The Company has financed its operations primarily through the sale of equity
securities, payments from its collaborators, equipment and leasehold improvement
financing and other debt financing. The Company has generated no product
revenue, and none is expected for at least several years. The Company
anticipates that its existing resources, the net proceeds of this Offering and
projected interest income will enable the Company to maintain its current and
planned operations through the third quarter of 1999. However, there can be no
assurance that the Company will not require additional funding prior to such
time. The Company's future capital requirements will depend on many factors,
including scientific progress in its research and development programs, the size
and complexity of such programs, the timing, scope and results of preclinical
studies and clinical trials conducted by the Company or its collaborators, the
ability of the Company to establish and maintain corporate partnerships, the
time and costs involved in obtaining regulatory approvals, the costs involved in
filing, prosecuting and enforcing patent claims, competing technological and
market developments, the cost of manufacturing or obtaining preclinical and
clinical material and other factors not within the Company's control. There can
be no assurance that such additional financing to meet the Company's capital
requirements will be available on acceptable terms or at all. Insufficient funds
may require the Company to delay, scale back or eliminate some or all of its
research or development programs or to lose rights under existing licenses or to
relinquish greater or all rights to product candidates at an earlier stage of
development or on less favorable terms than the Company would otherwise seek or
may adversely affect the Company's ability to operate as a going concern. If
additional funds are raised by issuing equity securities, substantial dilution
to existing stockholders may result. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources."
UNCERTAINTY OF MARKET ACCEPTANCE
The Company's future profitability is dependent on commercial acceptance of its
potential products. The Company believes that market acceptance of its potential
products will depend on the Company's or its collaborators' ability to provide
acceptable evidence of the safety, efficacy and cost effectiveness of its
products, as well as the effectiveness of its marketing strategy, which may
include its own marketing efforts as well as those of its collaborators. In
addition, third party payors can indirectly affect the demand for the Company's
potential products by regulating the maximum amount of reimbursement that will
be provided. There can be no assurance that potential products developed by the
Company or its collaborators will achieve market acceptance among patients,
physicians or third party payors, even if necessary regulatory and reimbursement
approvals are obtained. Failure to achieve market acceptance would have a
material adverse effect on the Company's business, financial condition and
results of operations.
INTENSE COMPETITION; RAPID TECHNOLOGICAL CHANGE
The pharmaceutical and biopharmaceutical industries are subject to intense
competition and significant, rapid technological change. If regulatory approvals
are received, certain of the Company's potential products will compete with well
established, FDA approved proprietary and generic therapies that have generated
substantial sales over a number of years and which are reimbursed from
government health administration authorities and private health insurers. In
addition, CVT is aware of companies which are developing products that will
compete in the same disease markets as its potential products. Many of the
Company's competitors and potential competitors have substantially greater
product development capabilities and financial, scientific, marketing and sales
resources than the Company. Other companies may succeed in developing products
earlier than the Company, obtaining approvals for such products from the FDA
more rapidly than the Company and its corporate partners, or developing products
that are safer or more effective than those under development or proposed to be
developed by the Company and its corporate partners. There can be no assurance
that research and development by others will not render the Company's technology
or its potential products obsolete or non-competitive. In addition, there can be
no assurance that the Company's competitors will not develop more effective or
more affordable products or achieve patent protection, regulatory approval or
product commercialization earlier than the Company. See "Business -
Competition."
UNCERTAINTY OF PATENT POSITION AND PROPRIETARY RIGHTS
The Company's success will depend to a significant degree on its ability to
obtain patents and licenses to patent rights, to maintain trade secrets and to
operate without infringing on the proprietary rights of others, both in the
9
<PAGE>
United States and other countries. The Company owns one United States issued
patent related to an inflammatory factor licensed to Bayer AG. The Company also
owns four pending patent applications in the United States relating to the
inflammatory factor licensed to Bayer AG, the A(1) agonist series of compounds,
CVT-313 and CVT-634, as well as four foreign patent applications with respect to
the inflammatory factor licensed to Bayer and single patent applications filed
pursuant to the Patent Cooperation Treaty (PCT) with respect to the A(1) agonist
series of compounds, CVT-313 and CVT-634. In addition, in connection with its
corporate and academic collaborations, the Company has received licenses to a
number of issued patents and patent applications for ranolazine and CVT-124. The
Company intends to continue to file applications as appropriate for patents
covering both its potential products and processes. There can be no assurance
that patents will issue from any of these applications, that any patent will
issue on technology arising from additional research or that patents that may
issue from such applications will be sufficient to protect the Company's
technology. In particular, in certain cases the Company is dependent upon third
parties for the prosecution of patents and patent applications. Failure of these
third parties to effectively prosecute such patents could have a material
adverse effect on the Company's ability to prevent competitors from developing
similar compounds. Patent applications in the United States are maintained in
secrecy until a patent issues, and the Company cannot be certain that others
have not filed patent applications for technology covered by the Company's
pending applications or that the Company was the first to invent the technology
that is the subject of such patent applications. Competitors may have filed
applications for, or may have received patents and may obtain additional patents
and proprietary rights relating to, compounds, products or processes that block
or compete with those of the Company. If any of its competitors have filed
patent applications in the United States that claim technology also invented by
the Company, the Company may have to participate in interference proceedings
declared by the Patent and Trademark Office in order to determine priority of
invention and, thus, the right to a patent for the technology in the United
States, all of which could result in substantial cost to the Company. In
addition, litigation, which would result in substantial cost to the Company, may
be necessary to enforce any patents issued to the Company or to determine the
scope and validity of the proprietary rights of third parties. There can be no
assurance that any patents issued to the Company or to licensors from whom the
Company has licensed rights will not be challenged, invalidated or circumvented,
or that the rights granted thereunder will provide proprietary protection or
commercial advantage to the Company.
The commercial success of the Company will depend in part on the Company not
infringing patents issued to competitors and not breaching the licenses that
might cover technology used in the Company's potential products. Failure by the
Company to obtain a license to any technology required to commercialize its
potential products could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company also relies on trade secrets to develop and maintain its competitive
position. Although the Company protects its proprietary technology in part by
confidentiality agreements with its employees, consultants, collaborators,
advisors and corporate partners, there can be no assurance that these agreements
will not be breached, that the Company will have adequate remedies for any
breach or that the Company's trade secrets will not otherwise become known or be
discovered independently by its competitors. See "Business - Patents and
Proprietary Technology."
DEPENDENCE ON KEY PERSONNEL; NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND
CONSULTANTS
The Company is highly dependent on certain members of its management and
scientific staff. In addition, the Company relies on consultants and advisors.
The loss of any of these persons could have a material adverse effect on the
Company's business, financial condition and results of operations. In order to
pursue its research and product development plans, the Company will be required
to attract and retain additional qualified scientific and other personnel. There
can be no assurance that the Company will be successful in attracting and
retaining these skilled persons who generally are in high demand by
pharmaceutical and biopharmaceutical companies and by universities and other
research institutions. The failure to successfully attract and retain qualified
personnel, consultants and advisors may impede the achievement of development
objectives and have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, a substantial
portion of the stock options currently held by many of the Company's key
employees are vested or may be fully vested over the next several years before
the Company achieves significant revenues or profitability. The Company intends
to grant additional options and provide other forms of incentive compensation to
attract and retain such key personnel.
10
<PAGE>
LIMITED MANUFACTURING, MARKETING AND SALES EXPERIENCE
The Company does not currently operate manufacturing facilities for clinical or
commercial production of its proposed products. The Company has no experience in
manufacturing, and currently lacks the resources or capability to manufacture
any of its potential products on a clinical or commercial scale. The Company is
currently, and will continue to be, dependent on corporate partners, licensees
or other third parties for the manufacturing of clinical and commercial scale
quantities of its products. For example, Biogen is responsible for the
manufacture of CVT-124 to supply clinical trials. In addition, the Company
acquired from Syntex a sufficient quantity of ranolazine SR tablets to supply
the first Phase III trial. The Company has an agreement with a third party
manufacturer for clinical scale production of ranolazine's active pharmaceutical
ingredient sufficient to support the remainder of the Phase III clinical
program, registration and commercialization. The Company is negotiating with
third party manufacturers for clinical scale production of ranolazine SR tablets
sufficient to support the remainder of the Phase III clinical program,
registration and commercialization. There can be no assurance that the Company
will be able to maintain existing agreements for manufacturing of clinical
quantities of potential products, that it will be able to establish or maintain
agreements with other third parties or that these parties will be able to
develop adequate manufacturing capabilities. In addition, prior to approval of
an NDA for ranolazine, the Company will be required to demonstrate to the FDA's
satisfaction the bioequivalence of the multiple sources of ranolazine used in
the Company's clinical trials.
The Company currently has no sales, marketing or distribution capability. The
Company may promote its products in collaboration with marketing partners or
rely on relationships with one or more companies with established distribution
systems and direct sales forces. In particular, Biogen is responsible for
establishing marketing and sales activities for CVT-124. Alternatively, in the
United States the Company may elect to establish its own specialized sales force
and marketing organization to market its products to cardiologists. In the event
that the Company is unable to reach and maintain agreement with one or more
pharmaceutical companies or collaborative partners to market its products, it
may be required to market its products directly and to develop a marketing and
sales force with technical expertise and with supporting distribution
capability. There can be no assurance that the Company will be able to establish
in-house sales and distribution capabilities or relationships with third
parties, or that it will be successful in commercializing any of its potential
products. To the extent that the Company enters into co-promotion or other
licensing arrangements, any revenues received by the Company will depend upon
the efforts of third parties, and there can be no assurance that such efforts
will be successful. See "Business - Marketing and Sales."
SIGNIFICANT GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL
The research, testing, manufacture and marketing of drug products is subject to
extensive regulation by numerous regulatory authorities in the United States and
other countries. Failure to comply with FDA or other applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions such as warning letters, civil penalties, criminal prosecution,
injunctions, product seizure or detention, product recalls, total or partial
suspension of production, and FDA refusal to approve pending new drug
applications ("NDAs") or supplements to approved NDAs. The Company has not
received regulatory approval in the United States or any foreign jurisdiction
for the commercial sale of any of its products. The process of obtaining FDA and
other required regulatory approvals, including foreign approvals, often takes
many years and can vary substantially based upon the type, complexity and
novelty of the products involved. Furthermore, such approval process is
extremely expensive and uncertain. There can be no assurance that the Company's
potential products will be approved for marketing by the FDA. Even if regulatory
approval of a product is granted, there can be no assurance that the Company
will be able to obtain the labeling claims necessary or desirable for the
promotion of those products. FDA requirements prohibit the marketing or
promotion of a drug for unapproved indications. Furthermore, regulatory
marketing approval may entail ongoing requirements for postmarketing studies. If
regulatory approval is obtained, the Company will be subject to ongoing FDA
obligations and continued regulatory review. In particular, the Company or its
third party manufacturer will be required to adhere to regulations setting forth
current Good Manufacturing Practices, which require that the Company manufacture
its products and maintain its records in a prescribed manner with respect to
manufacturing, testing and quality control activities. Further, the Company or
its third party manufacturer must pass a preapproval inspection of its
manufacturing facilities by the FDA before obtaining marketing approval. Failure
to comply with applicable regulatory requirements may result in penalties such
as restrictions on a product's marketing or withdrawal of the
11
<PAGE>
product from the market. In addition, identification of certain side effects
after a drug is on the market or the occurrence of manufacturing problems could
cause subsequent withdrawal of approval, reformulation of the drug, additional
preclinical testing or clinical trials and changes in labeling of the product.
Prior to the submission of an NDA, drugs developed by the Company must undergo
rigorous preclinical and clinical testing, which may take several years and the
expenditure of substantial resources. Before commencing clinical trials in
humans, the Company must submit to the FDA and receive clearance of an IND.
There can be no assurance that submission of an IND for future clinical testing
of any products under development or other future products of the Company would
result in FDA permission to commence clinical trials or that the Company will be
able to obtain the necessary approvals for future clinical testing in any
foreign jurisdiction. Success in preclinical studies or early stage clinical
trials does not assure success in later stage clinical trials. Data obtained
from preclinical and clinical activities are susceptible to varying
interpretations which could delay, limit or prevent regulatory approval.
Further, there can be no assurance that if such testing of products under
development is completed, any such drug compounds will be accepted for formal
review by the FDA or any foreign regulatory body, or approved by the FDA for
marketing in the United States or by any such foreign regulatory bodies for
marketing in foreign jurisdictions. Future federal, state, local or foreign
legislation or administrative acts could also prevent or delay regulatory
approval of the Company's products. See "Business-- Government Regulation."
UNCERTAINTY OF PRODUCT PRICING AND REIMBURSEMENT
The ability of the Company and its existing and potential corporate partners to
market and sell its potential products successfully will depend in part on the
extent to which reimbursement for the cost of such potential products and
related treatments will be available from government health administration
authorities, private health insurers and other organizations. Third party payors
are increasingly challenging the price of medical products and services.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products. In addition, for sales of the Company's products in
Europe, the Company will be required to seek reimbursement on a
country-by-country basis. If the Company or any existing or potential corporate
partners succeed in bringing any products to market, there can be no assurance
that these products will be considered cost effective, that reimbursement will
be available, or if available, that the payors' reimbursement policies will not
adversely affect the Company's or any such existing or potential corporate
partner's ability to sell such products on a profitable basis.
PRODUCT LIABILITY EXPOSURE; AVAILABILITY OF INSURANCE
The manufacture and sale of biopharmaceutical products involve an inherent risk
of product liability claims and associated adverse publicity. The Company
currently has only limited product liability insurance for clinical trials and
no commercial product liability insurance. There can be no assurance that it
will be able to maintain existing or obtain additional product liability
insurance on acceptable terms or with adequate coverage against potential
liabilities. Such insurance is expensive, difficult to obtain and may not be
available on acceptable terms, or at all. An inability to obtain sufficient
insurance coverage on reasonable terms or to otherwise protect against potential
product liability claims could prevent or inhibit the commercialization of the
Company's potential products. A successful product liability claim brought
against the Company in excess of its insurance coverage, if any, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business - Product Liability Insurance."
HAZARDOUS AND RADIOACTIVE MATERIALS; ENVIRONMENTAL MATTERS
The Company's research and development processes involve the controlled use of
hazardous materials, chemicals and radioactive materials, and produce waste
products. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and 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 contamination or
injury from these materials cannot be eliminated completely. In such event, the
Company could be held liable for any damages that result and any such liability
could exceed the resources of the Company. Although the Company believes that it
is in compliance in all material respects with applicable environmental laws and
regulations, there can be no assurance that it will not be required to incur
significant costs to comply with environmental laws and regulations
12
<PAGE>
in the future, or that the Company's business, financial condition or results of
operations will not be materially adversely affected by current or future
environmental laws or regulations. See "Business - Government Regulation -
Hazardous Materials."
VOLATILITY OF STOCK PRICE
The market price of the shares of Common Stock, like that of the common stock of
many other biopharmaceutical companies, is likely to continue to be highly
volatile. Factors such as the Company's operating results, developments in the
Company's relationships with corporate partners, developments affecting the
Company's corporate partners, results of preclinical studies and clinical trials
by the Company, its corporate partners or its competitors, negative regulatory
action or regulatory approval with respect to the Company or its competitors,
announcements of new products by the Company or its competitors, developments
related to patent or other proprietary rights by the Company or its competitors,
changes in the position of securities analysts with respect to the Common Stock,
and market conditions for biopharmaceutical or biotechnology stocks in general,
may cause the market price of the Common Stock to fluctuate, perhaps
substantially. In addition, in recent years the stock market in general, and the
shares of biopharmaceutical, biotechnology and healthcare companies in
particular, have experienced extreme price fluctuations. These broad market and
industry fluctuations may materially adversely affect the market price of the
Common Stock. In some future quarter the Company's operating results may be
below the expectations of public market analysts and investors, and, as a
result, the price of the Common Stock would likely be materially adversely
affected. See "Price Range of Common Stock."
POTENTIAL CONTROL BY EXISTING STOCKHOLDERS; ANTI TAKEOVER EFFECTS OF CERTAIN
CHARTER PROVISIONS AND DELAWARE LAW
As of December 15, 1997, the Company's officers, directors and principal
stockholders beneficially owned approximately 11.17% of the outstanding shares
of the Common Stock. As a result, such persons may have the ability to affect
the Company's affairs and business. Such concentration of ownership may also
have the effect of delaying, deferring or preventing a change in control of the
Company. In addition, the Company's Board of Directors has the authority to
issue up to 5,000,000 shares of Preferred Stock and to determine the price,
rights, preferences and privileges of those shares without any further vote or
action by the stockholders. The rights of the holders of Common Stock will be
subject to, and may be materially adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock could have the effect of making it more difficult for a third
party to acquire a majority of the outstanding voting stock of the Company.
Furthermore, certain provisions of the Company's Amended and Restated
Certificate of Incorporation may have the effect of delaying or preventing
changes in control or management of the Company, which could adversely affect
the market price of the Company's Common Stock. In addition, the Company is
subject to the provisions of Section 203 of the Delaware General Corporation
Law, an anti-takeover law. See "Principal Stockholders."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Future sales of Common Stock by existing stockholders under Rule 144 of the
Securities Act of 1933, as amended, or through the exercise of outstanding
registration rights or otherwise could have an adverse effect on the price of
the Common Stock. The 1,700,000 shares offered hereby will be freely tradeable.
In addition, substantially all of the remaining 8,458,066 shares outstanding as
of December 15, 1997 will be eligible for sale without restriction except that
approximately 1,189,569 shares will not be eligible for sale until 90 days after
the date of this Prospectus, upon expiration of lockup agreements with the
Underwriters and thereafter will be subject to the limitations applicable to
sales by affiliates or volume limitations under Rule 144. The Company has a
currently effective Registration Statement on Form S-3 covering the resale of
1,472,147 shares of Common Stock. In addition, the Company has granted certain
registration rights to the holders of an aggregate of 1,354,361 shares,
including shares issuable upon exercise of warrants. If such holders, by
exercising their demand or piggyback registration rights, cause a large number
of securities to be registered and sold in the public market, such sales could
have an adverse effect on the market price for the Company's Common Stock.
13
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be approximately $14.7 million (approximately
$16.9 million if the over-allotment option is exercised in full) at an assumed
public offering price of $9.375 per share after deducting the underwriting
discount and estimated offering expenses payable by the Company.
The Company anticipates using approximately $12.0 million of the net proceeds of
the Offering to fund research and development activities, including clinical
trials for ranolazine and preclinical testing and clinical trials for adenosine
A(1) agonists compounds and other product candidates. The balance of the net
proceeds of the Offering are expected to be used for working capital and general
corporate purposes. In addition, a portion of the net proceeds may be used for
the acquisition of complementary businesses, products or technologies. The
Company has no present understandings, commitments or agreements, nor is it
engaged in any negotiations, with respect to any acquisition. Pending
application of the net proceeds of the Offering as described above, the Company
intends to invest such proceeds in short-term, investment-grade,
interest-bearing financial instruments.
The Company anticipates that its existing resources, the net proceeds of the
Offering and projected interest income, will enable the Company to maintain its
current and planned operations through the third quarter of 1999. The Company's
forecast of the period of time through which its financial resources will be
adequate to support its operations is a forward-looking statement that involves
risks and uncertainties, and actual results could vary as a result of a number
of factors, including those described in "Risk Factors - Need for Additional
Future Capital; Uncertainty of Additional Funding" and elsewhere in this
Prospectus.
PRICE RANGE OF COMMON STOCK
The Common Stock commenced trading publicly on the Nasdaq National Market on
November 19, 1996 and is traded under the symbol CVTX. Prior to that date, there
was no public market for the Common Stock. The following table sets forth for
the periods indicated the high and low sale prices of the Common Stock.
<TABLE>
<CAPTION>
--------------------
HIGH LOW
--------- ---------
<S> <C> <C>
1996
Fourth Quarter (from November 19).......................................... $ 8.000 $ 6.250
1997
First Quarter.............................................................. $ 10.750 $ 6.500
Second Quarter............................................................. $ 8.875 $ 6.875
Third Quarter.............................................................. $ 10.000 $ 6.875
Fourth Quarter............................................................. $ 12.500 $ 8.125
</TABLE>
As of December 15, 1997, there were 289 holders of record of the Common Stock.
On December 31, 1997, the last sale price reported on the Nasdaq National Market
for the Common Stock was $9.375 per share. See "Risk Factors - Volatility of
Stock Price."
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its capital stock.
The Company currently intends to retain any future earnings to finance the
growth and development of its business and therefore does not anticipate paying
any cash dividends in the foreseeable future.
14
<PAGE>
CAPITALIZATION
The following table sets forth as of September 30, 1997 the (i) the pro forma
capitalization of the Company giving effect to the receipt of $12.3 million in
net proceeds from the sale of shares of Common Stock in a private placement to
BB Biotech in October 1997 and (ii) the pro forma capitalization as adjusted to
give effect to the receipt by the Company of the estimated net proceeds from the
sale of the shares of Common Stock offered hereby at an assumed public offering
price of $9.375 per share, after deducting the underwriting discount and
estimated offering expenses payable by the Company:
<TABLE>
<CAPTION>
----------------------
AT SEPTEMBER 30, 1997
----------------------
AS
IN THOUSANDS, EXCEPT PER SHARE DATA PRO FORMA ADJUSTED
---------- ----------
(UNAUDITED)
<S> <C> <C>
Total debt and capital lease obligations, less current portion...... $5,895 $5,895
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no
shares issued and outstanding, pro forma and as adjusted......... - -
Common stock, $0.001 par value; 30,000,000 shares authorized;
8,417,091 shares issued and outstanding, pro forma; 10,117,091
shares issued and outstanding, pro forma as adjusted (1)......... 83,439 98,120
Warrants to purchase common stock................................. 1,225 1,225
Notes receivable issued for stock................................. (108) (108)
Deferred compensation............................................. (1,331) (1,331)
Unrealized gain on investments.................................... 18 18
Accumulated deficit............................................... (53,424) (53,424)
---------- ----------
Total stockholders' equity.......................................... 29,819 44,500
---------- ----------
Total capitalization.............................................. $35,714 $50,395
---------- ----------
---------- ----------
</TABLE>
- ------------------------
(1) Excludes as of September 30, 1997: (i) 963,278 shares of Common Stock
issuable upon exercise of outstanding stock options at a weighted average
exercise price of $3.99 per share; (ii) 549,504 shares of Common Stock issuable
upon exercise of outstanding warrants at exercise prices ranging from $2.50 to
$25.00 per share and a weighted average exercise price of $17.41 per share; and
(iii) 385,054 shares of Common Stock available for future grant under the Stock
Plans. In November 1997, the Board of Directors reserved, subject to stockholder
approval, an additional 1,000,000 shares of Common Stock for issuance under the
1994 Equity Incentive Plan. Includes 1,397,147 shares of Common Stock sold to BB
Biotech in a private placement in October 1997 and the receipt of $12.3 million
in net proceeds therefrom.
15
<PAGE>
DILUTION
The pro forma net tangible book value of the Company as of September 30, 1997
was approximately $29,484,000 or $3.50 per share of Common Stock. Pro forma net
tangible book value per share is determined by dividing the net tangible book
value (tangible assets less total liabilities) of the Company by the number of
shares of Common Stock outstanding at that date after giving effect to the
issuance of of 1,397,147 shares of Common Stock to BB Biotech in a private
placement in October 1997 and the receipt of $12.3 million in net proceeds
therefrom. Without taking into account any other changes in the pro forma net
tangible book value after September 30, 1997, other than to give effect to the
receipt by the Company of the estimated net proceeds from the sale of the
1,700,000 shares of Common Stock offered by the Company hereby at a public
offering price of $9.375 per share, the pro forma net tangible book value of the
Company as of September 30, 1997 would have been $44,165,000 or $4.37 per share.
This represents an immediate increase in the pro forma net tangible book value
of $0.87 per share to existing stockholders and an immediate dilution of $5.01
per share to new investors. The following table illustrates this per share
dilution:
<TABLE>
<S> <C> <C>
Public offering price............................................... $9.38
Pro forma net tangible book value before the Offering............. $3.50
Increase attributable to new investors............................ .87
----------
Pro forma net tangible book value after the Offering................ $4.37
----------
Dilution to new investors........................................... $5.01
----------
----------
</TABLE>
The foregoing computations exclude as of September 30, 1997: (i) 963,278 shares
of Common Stock issuable upon exercise of outstanding stock options, at a
weighted average exercise price of $3.99 per share; (ii) 549,504 shares of
Common Stock issuable upon exercise of outstanding warrants, at exercise prices
ranging from $2.50 to $25.00 per share and a weighted average exercise price of
$17.41 per share; and (iii) 385,054 shares of Common Stock available for future
grant under the Stock Plans. In November 1997, the Board of Directors reserved,
subject to stockholder approval, an additional 1,000,000 shares of Common Stock
for issuance under the 1994 Equity Incentive Plan. To the extent that options or
warrants are exercised and shares of Common Stock are issued, there will be
further dilution to new investors.
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data set forth below with respect to the
consolidated statements of operations data for the years ended December 31,
1993, 1994, 1995, 1996 and for the period from inception (December 11, 1990) to
December 31, 1992 and the consolidated balance sheet data at December 31, 1992,
1993, 1994, 1995 and 1996 are derived from the consolidated financial statements
of the Company which have been audited by Ernst & Young LLP, independent
auditors and are not included in this Prospectus. The consolidated statements of
operations data for the nine months ended September 30, 1996 and 1997 and the
consolidated balance sheet data at September 30, 1997, are derived from
unaudited consolidated financial statements that have been prepared on the same
basis as the audited consolidated financial statements and in the opinion of
management contain all adjustments, consisting only of normal recurring
adjustments, necessary for fair presentation of the financial position at such
date and the results of operations for such periods. The historical results are
not necessarily indicative of the results of operations to be expected for the
entire year. The data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and the Notes thereto
incorporated herein by reference.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
INCEPTION
(DEC. 11, NINE MONTHS ENDED
1990) TO YEAR ENDED DECEMBER 31, SEPTEMBER 30,
DEC. 31, -------------------------------------------------- ------------------------
IN THOUSANDS, EXCEPT PER SHARE DATA 1992 1993 1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Contract revenue.................... $ - $ - $ - $ - $ 250 $ 250 $ 2,236
Operating expenses:
Research and development.......... 1,167 4,731 8,823 12,856 7,141 5,834 6,992
General and administrative........ 429 947 2,802 3,402 2,917 2,186 3,545
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses............ 1,596 5,678 11,625 16,258 10,058 8,020 10,537
----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss from operations................ (1,596) (5,678) (11,625) (16,258) (9,808) (7,770) (8,301)
Interest income (expense), net...... (34) 161 258 (466) (557) (597) 503
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net loss........................ $ (1,630) $ (5,517) $ (11,367) $ (16,724) $ (10,365) $ (8,367) $ (7,798)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net loss per share (1).............. $ (4.33) $ (2.25) $ (1.78) $ (1.15)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Shares used in computing net loss 3,861 4,599 4,708 6,755
per share (1)......................
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
AT DECEMBER 31,
-----------------------------------------------------
IN THOUSANDS 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- AT
SEPTEMBER
30,
1997
------------
(UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C> <C>
Cash, cash equivalents and short- and $ 28,914
long-term investments........................... $ 4,030 $ 5,466 $ 9,743 $ 5,569 $ 21,568
Working capital.................................. 3,904 5,196 7,686 271 20,278 14,900
Total assets..................................... 5,375 7,662 16,099 11,448 26,139 32,979
Long-term portion of debt and capital lease 5,895
obligations..................................... 500 745 2,698 3,402 5,000
Accumulated deficit.............................. (1,653) (7,170) (18,537) (35,261) (45,626) (53,424)
Total stockholders' equity....................... 4,568 6,363 10,561 1,804 18,676 17,499
</TABLE>
- --------------------------
(1) Net loss per share for the years ended December 31, 1995 and 1996 and for
the nine months ended September 30, 1996 has been calculated on a pro forma
basis. See Note 1 of Notes to Consolidated Financial Statements incorporated
herein by reference for a description of the shares used in calculating pro
forma net loss per share.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other parts of this Prospectus contain forward-looking statements
which involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, those
discussed in "Risk Factors."
OVERVIEW
CVT is an early stage biopharmaceutical company focused exclusively on the
application of molecular cardiology to the discovery, development and
commercialization of novel small molecule drugs for the treatment of chronic
cardiovascular disease. Since its inception in December 1990, substantially all
of the Company's resources have been dedicated to research and development. To
date, CVT has not generated any product revenue and does not expect to generate
any such revenues for at least several years. As of September 30, 1997, the
Company has an accumulated deficit of approximately $53.4 million. The Company
expects its sources of revenue, if any, for the next several years to consist of
payments under corporate partnerships and interest income. The process of
developing the Company's products will require significant additional research
and development, preclinical testing and clinical trials, as well as regulatory
approval. These activities, together with the Company's general and
administrative expenses, are expected to result in operating losses for the
foreseeable future. The Company will not receive product revenue unless it or
its collaborators complete clinical trials and successfully commercialize one or
more of its products.
CVT is subject to risks common to biopharmaceutical companies, including risks
inherent in its research and development efforts and clinical trials, reliance
on collaborative partners, enforcement of patent and proprietary rights, the
need for future capital, potential competition and uncertainty of regulatory
approval. In order for a product to be commercialized, it will be necessary for
CVT and its collaborators to conduct preclinical tests and clinical trials,
demonstrate efficacy and safety of the Company's product candidates, obtain
regulatory clearances and enter into manufacturing, distribution and marketing
arrangements, as well as obtain market acceptance. There can be no assurance
that the Company will generate revenues or achieve and sustain profitability in
the future.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
CONTRACT REVENUES The Company recognized contract revenues of $2.2 million for
the nine-month period ended September 30, 1997, compared to $250,000 during the
nine-month period ended September 30, 1996. Contract revenue for the nine-month
period ended September 30, 1997 was earned in connection with the Company's
collaboration with Biogen for the development and commercialization of CVT-124.
RESEARCH AND DEVELOPMENT EXPENSES The Company's research and development
expenses increased to $7.0 million for the nine-month period ended September 30,
1997, compared to $5.8 million for the nine-month period ended September 30,
1996. The increase in research and development expenses for the nine-month
period ended September 30, 1997 over the same period in 1996 was primarily due
to a $1.0 million milestone payment to Syntex payable under the original license
agreement for ranolazine and the issuance of shares of the Company's Common
Stock to Syntex valued at $544,000 under an amendment to the license agreement.
These expenses were partially offset by a decrease in other research and
development expenses primarily as a result of decreased use of outside contract
services by the Company. The Company expects research and development expenses
to increase significantly over the next several years as the Company expands
research and product development efforts.
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses
increased to $3.5 million for the nine-month period ended September 30, 1997,
compared to $2.2 million for the nine-month period ended September 30, 1996. The
increase for the nine-month period ended September 30, 1997 over the same period
in 1996 was primarily due to the amortization of deferred compensation expense,
personnel recruiting expenses and new administrative expenses associated with
becoming a public company. The Company expects general and administrative
expense to increase in the future due to increases in the Company's development
activities.
18
<PAGE>
INTEREST INCOME (EXPENSE), NET Interest income (expense), net increased to
$503,000 for the nine-month period ended September 30, 1997, compared to
$(597,000) for the nine-month period ended September 30, 1996. The increases for
the nine-month period ended September 30, 1997 over the same period in 1996 was
a result of higher average investment balances resulting from the proceeds of
the Company's initial public offering completed in November 1996 and payments
received in connection with the Company's collaboration and license agreements
with Biogen entered into in March 1997, compared to the nine-month period ended
September 30, 1996 in which the Company had lower average investment balances
and incurred prepayment penalties associated with a restructuring of the
Company's debt. The Company expects that interest income (expense), net will
fluctuate with average investment balances.
The Company records and amortizes over the related vesting periods deferred
compensation representing the difference between the exercise price of options
granted and the deemed fair value of its common stock at the time of grant.
Options generally vest over four years. Deferred compensation of approximately
$2.3 million has been recorded and is being amortized to both research and
development expenses as well as general and administrative expenses over the
related vesting periods of the options granted.
YEARS ENDED DECEMBER 31, 1996 AND 1995
CONTRACT REVENUES The Company recognized contract revenues of $250,000 for the
year ended December 31, 1996, due to a non-refundable, up-front fee earned from
a license agreement with Bayer AG.
RESEARCH AND DEVELOPMENT EXPENSES The Company's research and development
expenses decreased to $7.1 million for the year ended December 31, 1996,
compared to $12.9 million for the year ended December 31, 1995. The higher
expenses in 1995 were largely due to higher development expenditures associated
with the CVT-1 hypercholesterolemia program, which was terminated in late 1995
and for which minimal costs were incurred in 1996. In addition, research and
development expenses decreased in 1996 as a result of a decrease in research
personnel and related expenses resulting from a reduction in headcount in
November 1995. This was partially offset by a $750,000 license fee paid in
equity securities to a collaborative partner in March 1996.
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses
decreased to $2.9 million for the year ended December 31, 1996, compared to $3.4
million for the year ended December 31, 1995, due to decreases in personnel and
related expenses.
INTEREST INCOME (EXPENSE), NET Interest income (expense), net decreased to
$(557,000) for the year ended December 31, 1996, compared to $(466,000) for the
year ended December 31, 1995, as a result of higher loan balances and prepayment
penalties associated with a restructuring of the Company's debt, partially
offset by higher average cash balances.
The Company has not generated taxable income to date. At December 31, 1996, the
net operating losses available to offset future taxable income for federal
income tax purposes were approximately $41.0 million. Because the Company has
experienced ownership changes, future utilization of the carryforwards may be
limited in any one fiscal year pursuant to Internal Revenue Code regulations.
The carryforwards expire at various dates beginning in 2007 through 2011 if not
utilized. As a result of the annual limitation, a portion of these carryforwards
may expire before becoming available to reduce the Company's federal income tax
liabilities.
YEARS ENDED DECEMBER 31, 1995 AND 1994
RESEARCH AND DEVELOPMENT EXPENSES The Company's research and development
expenses increased to $12.9 million for the year ended December 31, 1995,
compared to $8.8 million for the year ended December 31, 1994. Research and
development expenses increased as a result of higher development expenses
primarily associated with the CVT-1 program which was terminated in late 1995,
along with higher expenses associated with the hiring of additional personnel to
support the Company's expanding research and product development efforts.
GENERAL AND ADMINISTRATIVE EXPENSES The Company's general and administrative
expenses increased to $3.4 million for the year ended December 31, 1995,
compared to $2.8 million for the year ended December 31, 1994, primarily as a
result of costs associated with the increasing level of the Company's
activities, including increased headcount and related expenses.
19
<PAGE>
INTEREST INCOME (EXPENSE), NET Interest income (expense), net decreased to
$(466,000) for the year ended December 31, 1995, compared to $258,000 for the
year ended December 31, 1994. These changes relate primarily to increased debt
balances and decreased cash and investment balances.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations since inception primarily through
private placements of preferred and common stock, an initial public offering of
common stock, equipment and leasehold improvement financing, other debt
financing and payments under corporate collaborations. In November 1996, the
Company completed an initial public offering and raised net proceeds of
approximately $12.0 million. On March 7, 1997, the Company entered into two
research collaboration and license agreements with Biogen that together resulted
in cash receipts of $16.0 million. In addition, Biogen agreed to make
significant development milestones and equity investments and provide funding
under a general purpose loan facility, all of which are subject to achievement
of certain clinical development and commercialization milestones. Biogen will
also pay royalties from any future product sales. As of September 30, 1997 the
Company had received approximately $68.7 million in net proceeds from the sale
of equity securities, and approximately $16.2 million, before repayment, from
loans and equipment financings. See "Business - Licenses and Collaborations."
Cash, cash equivalents and short- and long-term investments at September 30,
1997 totaled $28.9 million compared to $21.6 million at December 31, 1996. The
increase in 1997 was due to the receipt of the upfront payment of $16.0 million
associated with the Company's collaborations with Biogen. The Company's funds
are currently invested in short- and long-term, investment grade,
interest-bearing debt obligations.
Net cash used in operations for the nine-month period ended September 30, 1997
was $503,000, compared to $6,152,000 for the nine-month period ended September
30, 1996. The decrease in cash used in operating activities in 1997 was
primarily the result of deferred revenue of $6.0 million recorded in conjunction
with the upfront payment under the collaboration with Biogen.
Through September 30, 1997, the Company had invested approximately $6.1 million
in property and equipment, of which approximately $4.4 million was financed
through equipment and leasehold financings.
Subsequent to September 30, 1997, the Company raised net proceeds of $12.3
million in a private placement of equity securities with BB Biotech.
The Company will require substantial additional funding in order to complete its
research and development activities and commercialize any potential products.
The Company currently estimates that its existing resources, the net proceeds
from this Offering and projected interest income will enable the Company to
maintain its current and planned operations through the third quarter of 1999.
However, there can be no assurance that the Company will not require additional
funding prior to such time.
The Company's forecast of the period of time through which its financial
resources will be adequate to support its operations is a forward-looking
statement that involves risks and uncertainties, and actual results could vary
as a result of a number of factors, including those described in "Risk Factors -
Need for Additional Future Capital Uncertainty of Additional Capital" and
elsewhere in this Prospectus. The Company's future capital requirements will
depend on many factors, including scientific progress in its research and
development programs, the size and complexity of such programs, the scope and
results of preclinical studies and clinical trials, the ability of the Company
to establish and maintain corporate partnerships, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing, prosecuting and
enforcing patent claims, competing technological and market developments, the
cost of manufacturing preclinical and clinical material and other factors not
within the Company's control. There can be no assurance that such additional
financing to meet the Company's capital requirements will be available on
acceptable terms or at all. Insufficient funds may require the Company to delay,
scale back or eliminate some or all of its research or development programs, to
lose rights under existing licenses or to relinquish greater or all rights to
product candidates at an earlier stage of development or on less favorable terms
than the Company would otherwise choose. If additional funds are raised by
issuing equity securities, substantial dilution to existing stockholders may
result.
20
<PAGE>
BUSINESS
OVERVIEW
CV Therapeutics, Inc. is a biopharmaceutical company focused exclusively on the
application of molecular cardiology to the discovery, development and
commercialization of novel, small molecule drugs for the treatment of chronic
cardiovascular diseases. Molecular cardiology was developed, in part, by CVT
scientists and their academic collaborators and is based upon the application of
molecular biology and genetics to cardiovascular diseases. This discipline has
yielded new insights into the mechanisms underlying chronic cardiovascular
diseases and has enhanced the search for innovative cardiovascular drugs by
providing an increasing number of new molecular targets for drug discovery. Two
of the Company's drug candidates, ranolazine for the treatment of angina and
CVT-124 for the treatment of edema due to CHF are in clinical trials.
The Company initiated a Phase III clinical trial of ranolazine, a novel small
molecule, in October 1997 for the treatment of angina. The trial is a placebo
controlled, double-blind, cross-over study of ranolazine SR in approximately 150
patients with chronic stable angina. Ranolazine was licensed from Syntex, an
indirect subsidiary of Roche, in March 1996. Its novel metabolic mechanism of
action was discovered, in part, by cardiovascular researchers now at or
associated with CVT. In Phase I and Phase II clinical trials conducted by
Syntex, ranolazine IR was administered to over 1,200 patients. These clinical
trials have indicated that ranolazine IR improved exercise tolerance in angina
patients without adversely affecting heart rate or decreasing blood pressure, a
clinical profile absent from currently available drugs. The Company believes
ranolazine could particularly benefit angina patients who also suffer from CHF
or remain symptomatic despite maximal doses of currently available anti-anginal
drugs. In the United States, approximately 7.1 million patients are currently
diagnosed with angina. Based on published studies, approximately one-third, or
2.3 million, are either diagnosed with both angina and CHF or are resistant to
currently available treatments. The Company believes these patients would
represent the initial target market for ranolazine.
CVT-124, which is currently in Phase II clinical trials, is an adenosine A(1)
receptor antagonist discovered by CVT through its application of molecular
cardiology. Adenosine A(1) receptor antagonists block certain actions of
adenosine, a hormone that modulates different functions of the cardiovascular
system. CVT-124 has potential applications in the treatment of edema (fluid
accumulation) associated with CHF and the prevention and treatment of acute
renal failure. A recently completed Phase II trial in moderately severe CHF
patients indicated that CVT-124 is generally well-tolerated and produces
clinically useful and statistically significant increases in urine, sodium and
chloride excretion compared to placebo, with clinically minimal increases in
potassium excretion. This is an improved clinical profile compared to currently
available therapies. In March 1997, the Company entered into two research
collaboration and license agreements with Biogen granting Biogen an exclusive
worldwide license to develop, manufacture and commercialize CVT-124 for all
indications. Approximately one-quarter of the 875,000 patients in the United
States hospitalized with a primary diagnosis of CHF exhibit resistance to
current diuretic treatments. The Company believes that these patients would
represent the initial target market for CVT-124 in this indication.
In addition to ranolazine and CVT-124, the Company has several product
candidates that are currently in preclinical studies. The Company has developed
and synthesized a series of adenosine A(1) agonist compounds that it believes
may have potential application in treating supraventricular tachycardias.
Supraventricular tachycardias are among the most common cardiac arrhythmias
complicating ischemic heart disease and cardiac surgical procedures and account
for over 300,000 new hospital admissions in the United States each year. The
Company believes that compared to current therapies, its compounds may offer an
improved clinical profile for immediate treatment of these arrhythmias without
lowering blood pressure. CVT-313, also in preclinical studies, is a selective
inhibitor of the cell cycle enzyme, cyclin-dependent kinase 2 ("CDK2"). The
Company believes that CVT-313 may be useful in a variety of cellular
proliferative disorders, including the prevention of restenosis, as an adjunct
to coronary artery bypass surgery and as a treatment for cardiomyopathy (heart
muscle damage). CVT-634, an inhibitor of another cell cycle regulating enzyme,
is also being evaluated in animal models of chronic cardiovascular disease.
21
<PAGE>
BACKGROUND
The cardiovascular system is comprised of the heart, the blood vessels, the
kidneys and the lungs. Together, the components of the cardiovascular system
deliver oxygen and other nutrients to the tissues of the body and remove waste
products. The heart propels blood through a network of arteries and veins. The
kidneys closely regulate the blood volume and the balance of electrolytes (such
as sodium, potassium and chloride) in the blood, and the lungs oxygenate the
blood and remove carbon dioxide. To accomplish these tasks, the cardiovascular
system must maintain adequate blood flow, or cardiac output. Cardiac output is
determined by such factors as heart rate and blood pressure, which in turn are
controlled by a variety of hormones such as adrenaline, angiotensin and
adenosine. These hormones are small molecules which exert their effects by
binding to specific receptors on the surfaces of a variety of cell types in the
heart, lungs, blood vessels and kidneys. Any significant disruption of this
system results in cardiovascular disease.
Cardiovascular disease is the leading cause of death in the United States,
claiming more than 950,000 lives in 1994. The American Heart Association
projects the total cost of cardiovascular medications in the United States for
1997 at $13.8 billion.
Chronic cardiovascular diseases, including atherosclerosis (hardening of the
arteries), hypertension (high blood pressure) and others, may cause permanent
damage to the heart and blood vessels, leading to CHF (4.7 million patients),
angina (7.1 million patients) and myocardial infarction (1.5 million patients).
CHF occurs when the heart becomes weakened and, as a result, can no longer
maintain adequate blood circulation throughout the body. The kidneys respond to
this decrease in blood flow by increasing the retention of salt and water,
leading to chronic symptoms such as shortness of breath and edema (fluid
retention) in the legs and lungs.
Over the past twenty years, drugs such as nitrates, beta blockers, calcium
channel blockers and ACE inhibitors have been developed to treat cardiovascular
diseases. These drugs have contributed to an increase in the survival of
patients who suffer from chronic cardiovascular disease; however, they also can
cause a variety of undesirable side effects, including fatigue, depression,
impotence, headaches, palpitations and edema. Molecular cardiology has provided
new insight into the mechanisms underlying chronic cardiovascular diseases, thus
creating the opportunity for improved therapies.
Patients that have severe cardiovascular conditions, including those that are
intolerant or refractory to traditional therapeutic options and those that have
concurrent diseases, are generally treated by cardiologists. There are
approximately 20,000 cardiologists in the United States and these physicians are
generally concentrated in metropolitan communities near major medical centers.
This limited physician subspecialty is responsible for approximately half of the
patient visits associated with prescriptions written for these cardiovascular
conditions.
BUSINESS STRATEGY
Key elements of the Company's business strategy are:
- - the identification of novel drug candidates for the treatment of chronic
cardiovascular diseases through internal discovery efforts, in-licensing and
academic collaborations. The Company is focused on small molecule product
candidates designed to utilize novel mechanisms of action through specific
targets, address segments of the cardiovascular patient population which are
either underserved or not treated by existing therapies and offer the
currently served cardiovascular patient population the potential for improved
efficacy with fewer side effects than currently available drugs.
- - the internal development of product candidates for which significant effects
upon well defined and accepted clinical trial end points can be demonstrated
with hundreds rather than thousands of patients.
- - the commercialization of products through a focused marketing effort aimed at
cardiologists who manage these currently underserved patients. This could
include strategic partnerships, collaborations or establishment of a
specialized domestic sales force.
- - the opportunistic evaluation of strategic alliances at various stages of
product development.
DRUG DISCOVERY PLATFORM
CVT's drug discovery platform supports several programs, including those focused
on the adenosine A(1) receptor, the cell cycle, molecular mechanisms of
atherosclerosis and chronic inflammation in the cardiovascular system.
22
<PAGE>
These programs have produced compounds currently in clinical or preclinical
development or outlicensed for use in third party drug discovery programs. CVT's
expertise in molecular cardiology and drug development has been critical to the
identification of these drug candidates.
The Company believes that its drug discovery platform allows it to efficiently
select novel, clinically relevant drug candidates that have a significant
probability of commercial potential. CVT first evaluates new targets with
respect to clinical relevance and suitability for small molecule inhibition. CVT
then utilizes a highly integrated, multidisciplinary approach to produce novel
small molecules as drug candidates for these targets. The Company combines
molecular modeling and combinatorial chemistry to assemble targeted libraries of
new chemical entities, an approach which the Company believes expedites the
identification of potential drug leads. The Company has developed a
comprehensive proprietary database correlating biological activity of candidate
drugs with their structures. From this database, CVT identifies final lead
compounds based on predetermined development criteria including potency,
specificity, manufacturability, and pharmacologic activity in animal and in
vitro models. The Company determines the proper selection of cell-based assays
and animal models of disease to enhance development of the drug candidate based
on its projected use in the clinical setting.
PRODUCTS UNDER DEVELOPMENT
The Company's products under development include:
<TABLE>
<CAPTION>
PRODUCT TARGET INDICATION DEVELOPMENT STATUS (1)
- ------------- ----------------- ----------------------------- -----------------------
<S> <C> <C> <C>
Ranolazine Glucose Angina Phase III
metabolism
CVT-124 (2) A(1) receptor Edema associated with CHF Phase II
(antagonist)
A(1) Agonist A(1) receptor Supraventricular Tachycardia Preclinical
(agonist)
CVT-313 CDK2 Restenosis, Arterial Bypass Preclinical
Graft, Cardiomyopathy
CVT-634 Proteasomal Restenosis, Arterial Bypass Preclinical
protease Graft, Cardiomyopathy
</TABLE>
- ------------------------
(1) "Phase III" indicates further evaluation of clinical efficacy and safety
within an expanded patient population at geographically dispersed clinical study
sites. "Phase II" indicates initial efficacy testing in a limited patient
population. "Preclinical" indicates lead compound selected for development which
meets predetermined criteria for potency, specificity, manufacturability and
pharmacologic activity in animal and IN VITRO models.
(2) Licensed to Biogen.
RANOLAZINE
Ranolazine is a novel small molecule which is in Phase III clinical trials for
the treatment of angina. The compound fits the Company's criteria for
development candidates as it is a small molecule which works through a novel
mechanism of action. The Company obtained a license for ranolazine from Syntex
in March 1996, after the acquisition of Syntex by Roche. The Company is
developing ranolazine to treat angina because the Company believes it does not
significantly impair blood pressure or heart rate and has an improved
tolerability profile as compared to currently available therapies.
23
<PAGE>
Ranolazine acts by modulating the body's metabolism to shift the source of
energy for the heart from fatty acid toward glucose. Ranolazine decreases the
heart's oxygen demand for a given level of cardiac work because less oxygen is
required to produce an equivalent amount of energy from glucose than from fatty
acids. The Company believes this effect on muscle metabolism may also benefit
patients suffering from intermittent claudication.
INDICATIONS
ANGINA Angina is a clinical syndrome manifested by chest pain caused by
myocardial ischemia (insufficient blood flow to the heart muscle) due to
blockage of the coronary arteries. Patients usually experience chest pain on
exertion which can become more severe over time. In the United States,
approximately 7.1 million patients are currently diagnosed with angina. Based on
a published multicenter study involving over 5,000 angina patients, the Company
estimates over half of the 7.1 million patients are currently being treated with
multiple medications, including nitrates, beta blockers and calcium channel
blockers. These anti-anginal drugs accounted for over $3.0 billion in U.S. sales
in 1996. Based on published studies, approximately one-third, or 2.3 million, of
angina patients are either diagnosed with both angina and CHF or are resistant
to currently available treatments. The Company believes these patients would
represent the initial target market for ranolazine.
All currently available drugs to treat angina reduce the heart's oxygen demand
by reducing cardiac work via hemodynamic mechanisms (reduction of pump function,
heart rate, and/or blood pressure). These hemodynamic effects can limit or
prevent the use of currently available drugs in patients whose blood pressure or
cardiac function is already decreased. These effects can be particularly
pronounced when these drugs are used in combination. Additional adverse effects
include lower extremity edema associated with calcium channel blockers,
impotence and depression associated with beta blockers and headaches associated
with nitrates. Consequently, for some patients, presently available medical
treatment cannot provide complete relief of angina without unacceptable adverse
effects. The following table sets forth the mechanisms through which
anti-anginal drugs operate.
<TABLE>
<CAPTION>
MECHANISMS FOR ANTI-ANGINAL AGENTS
CHANGE IN CHANGE IN BLOOD
THERAPY HEART RATE PRESSURE MECHANISM
<S> <C> <C> <C>
Nitrates None down arrow Vasodilation
Beta Blockers down arrow down arrow Decreased Pump Function
Calcium Channel Blockers down arrow down arrow Decreased Pump Function, Vasodilation
Ranolazine None None Metabolic Modulation
</TABLE>
Ranolazine IR has been administered to over 200 healthy human volunteers and
over 1,200 patients with ischemic heart disease or CHF in clinical trials
conducted by Syntex. Placebo controlled ranolazine IR trials involving treadmill
testing in patients with chronic stable angina have demonstrated statistically
significant and clinically meaningful increases in (i) exercise time to onset of
angina, (ii) total exercise duration, and (iii) exercise time to onset of an
electrocardiographic change associated with insufficient blood flow to the heart
muscle. The anti-anginal effect of ranolazine IR was observed in these trials
regardless of whether the drug was given alone or in combination with beta
blockers or calcium channel blockers, and the drug was generally well tolerated
without a significant incidence of adverse events.
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In initial clinical trials, ranolazine IR was administered on a three times
daily schedule. To achieve a more commercially attractive product with a
twice-daily dosing schedule, Syntex developed ranolazine SR. In volunteer trials
conducted by Syntex, the SR formulation maintained ranolazine plasma
concentrations in the range associated with increased exercise times in the
stable angina trials of ranolazine IR.
Although CVT intends to pursue regulatory approval for treatment of all patients
with chronic angina, the Company believes angina patients who are resistant to
currently available treatments and those with angina and CHF would represent the
initial market for ranolazine.
INTERMITTENT CLAUDICATION Intermittent claudication is a clinical syndrome
manifested by pain in the legs during exercise. Like angina, this syndrome is
caused by blockage or narrowing of arteries. These patients generally either
limit their activity or in severe cases undergo vascular surgery. Over two
million people in the United States suffer from intermittent claudication. Only
one drug is approved by the FDA to treat this condition in the United States,
and worldwide sales in 1996 were approximately $419 million.
A pilot trial of ranolazine SR in patients with intermittent claudication was
completed by Syntex in 1994. Ranolazine SR was generally well tolerated and
exhibited a trend toward prolongation of exercise duration and time to onset of
claudication. This clinical trial was not intended to be large enough to
demonstrate statistical significance. Further trials will be required to
demonstrate the utility of ranolazine SR for this indication. However, the
Company has no current plans to conduct clinical trials for ranolazine for
intermittent claudication.
CLINICAL STATUS OF RANOLAZINE
In October 1997, the Company initiated the first of multiple Phase III clinical
trials of ranolazine SR for the treatment of angina. In this first clinical
trial, patients will undergo treadmill exercise to induce angina with the
primary endpoint being duration of exercise. This trial is a randomized, double
blind, placebo controlled, monotherapy, four period crossover trial in
approximately 150 stable angina patients. In the second trial, which is expected
to begin in 1998, the Company plans to enroll approximately 350-450 angina
patients receiving other anti-anginal medications and add either placebo or
ranolazine to their therapy. Additional clinical pharmacology, open label and
safety studies are expected to begin in 1998 and be completed before the filing
of an NDA with the FDA.
The Company's current estimate of the commencement of various clinical trials
included in this Prospectus are forward-looking statements that involve risks
and uncertainties. The actual clinical trial dates could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including timing and results of earlier clinical trials and other
factors set forth under "Risk Factors -- Uncertainties Related to Clinical
Trials" and elsewhere in this Prospectus. There can be no assurance that
ranolazine will prove to be safe or efficacious in humans or that ranolazine
will obtain FDA approval or other regulatory or foreign marketing approval for
any indication.
CVT-124
The Company believes that CVT-124 is the most potent and selective adenosine
A(1) receptor antagonist reported to date. Preclinical studies and clinical
trials have shown statistically significant increases in sodium excretion in
response to CVT-124. Thus, the Company believes that CVT-124 has the potential
to be an effective new therapy for treatment of edema due to CHF.
CVT-124 was identified in the Company's adenosine A(1) receptor program. This
program is focused on the development of agents that are highly selective for
the adenosine A(1) receptor and has produced both antagonists and agonists to
this class of receptors. The Company continues to explore additional
applications of the technology developed in the adenosine A(1) receptor program.
Adenosine is a naturally occurring hormone that modulates different functions of
the heart, brain, kidney and blood vessels. Its actions are mediated in these
organs by two classes of receptors, A(1) and A(2), that stimulate very different
physiological effects that can be separately targeted in drug development.
Adenosine A(1) receptors are located on the proximal tubules of the kidney where
they stimulate reabsorption of sodium and hence of water.
25
<PAGE>
The Company believes that it was among the first to identify the presence of
these adenosine A(1) receptors in the proximal tubule of the kidney. In contrast
to A(1) receptors, adenosine A(2) receptors stimulate the dilation of blood
vessels in the heart, muscles and kidney thereby lowering blood pressure.
CVT has focused on creating an adenosine A(1) receptor antagonist specific
enough to avoid blocking the A(2) receptor and thus avoiding unintended side
effects. This concept was developed based on the Company's insight into the
newly discovered role of the A(1) receptor on the proximal tubule cell of the
kidney and its potential importance in treatment of edema states, such as CHF,
which are characterized by excessive accumulation of sodium and water in the
body.
In March 1997, the Company entered into two research collaboration and license
agreements with Biogen granting Biogen an exclusive worldwide license to develop
and commercialize CVT-124 for all indications. In exchange, the Company received
a $16.0 million upfront payment, including an equity investment, advanced
funding of a development milestone and funding under a loan facility. In
addition, Biogen agreed to make significant milestone payments and equity
investments and provide funding under a general purpose loan facility, all of
which are subject to the achievement of certain clinical development and
commercialization milestones. Biogen will also pay royalties from any future
product sales.
INDICATIONS
EDEMA ASSOCIATED WITH CONGESTIVE HEART FAILURE Approximately 4.7 million people
in the United States suffer from CHF, with an estimated 400,000 new diagnoses
each year. These patients typically seek medical help because of edema, an
accumulation of fluid in the lungs and extremities. Approximately 875,000
patients are hospitalized each year in the United States with a primary
diagnosis of CHF, and CHF is the leading cause of hospital admissions among
patients over 65. Approximately one-quarter of these hospitalized patients
exhibit resistance to current diuretic treatments. The Company believes that
these patients would represent the initial target market for CVT-124 in this
indication.
Edema fluid accumulates in the body because of adaptations by the kidney during
CHF. Each kidney is comprised of approximately one million tiny blood filtering
units called nephrons. Normally in each nephron, blood is filtered at the renal
glomerulus and sodium and water are reabsorbed by the kidney at three locations
further along the nephron. Fifty to seventy percent of the filtered sodium is
reabsorbed at the proximal tubule, the portion of the nephron closest to the
glomerulus. Up to 40% is reabsorbed at the loop of Henle, and the remaining
portion, usually less than 10%, is reabsorbed at the distal tubule. The
filtered, non-reabsorbed impurities wash out into the urine. In patients
suffering from CHF, blood flow through the kidney decreases because of the poor
pumping function of the heart. The kidney interprets this event as blood loss
and attempts to increase its retention of salt and water to maintain blood
pressure. It does this by shifting more (up to 99%) of its reabsorption of
sodium to the proximal tubule. The result is the harmful build-up of salt and
water in the body, leading to edema.
[Chart titled "Most Sodium Absorption Occurs at the Proximal Tubule" showing the
kidney and the nephron and indicating rates of sodium absorption in both normal
and congestive heart failure states].
26
<PAGE>
Current treatment of CHF consists of therapy designed to improve the pumping
function of the heart combined with the administration of diuretics to eliminate
excess sodium and water from the body by blocking reabsorption in the kidney.
However, current diuretic therapies inhibit sodium reabsorption either at the
loop of Henle (furosemide) or the distal tubule (thiazides and spironolactone),
where as little as one percent of reabsorption of sodium can take place in
patients with advanced CHF. Since increasing amounts of sodium are reabsorbed
proximally as CHF worsens, distally acting drugs are correspondingly less
effective over time and patients become more symptomatic. Approximately one
quarter of hospitalized CHF patients exhibit resistance to current intravenous
diuretic therapies due to excessive fluid reabsorption in the proximal tubule,
and no therapy currently exists which targets this site of the disease process.
The dosage for the most commonly prescribed diuretics for edema associated with
CHF are often increased as the disease progresses, and therefore are
increasingly associated with toxic side effects, including potassium loss, which
may lead to an increased incidence of cardiac arrhythmias if potassium is not
monitored and replaced, and uric acid build-up which may lead to gout.
Preclinical studies conducted by the Company have indicated that CVT-124 acts as
a potent diuretic by blocking the adenosine A(1) receptors in the proximal
tubule that would ordinarily stimulate sodium reabsorption at that site. These
studies also indicated that CVT-124 acted at the distal tubule to reduce sodium
reabsorption and minimize potassium excretion. This combination of diuretic
mechanisms indicates a unique clinical profile as compared to currently
available drugs and suggests that CVT-124 may be particularly useful in the
treatment of edema associated with CHF on an acute and chronic basis.
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[Chart titled "Potential Advantages of CVT-124 over Existing Diuretics"
comparing the attributes of CVT-124 to existing diuretics in the treatment of
congestive heart failure]
ACUTE RENAL FAILURE Acute renal failure is a decline in kidney function that
may require temporary or chronic therapy with dialysis procedures. Acute renal
failure is a complication of certain general medical conditions associated with
low blood flow and certain commonly used medications or diagnostic agents, such
as cyclosporine, gentamicin, amphotericin, cisplatin, and radiocontrast dye used
in x-ray studies. Because the adenosine A(1) receptor may be relevant in this
type of kidney failure, CVT and Biogen are exploring the possibility of
conducting clinical trials in acute renal failure to assess the opportunity for
its treatment and prevention by CVT-124.
CLINICAL STATUS OF CVT-124
In 1996, CVT completed a double-blind, placebo-controlled Phase I/II trial of
intravenous CVT-124 in 26 healthy volunteers. Data from this trial support
CVT-124's combination of diuretic mechanisms. Statistically significant,
dose-related increases in sodium excretion were observed in response to CVT-124,
amounting to at least a doubling in the excretion of sodium compared to placebo.
In contrast, mean potassium excretion did not show clinically significant
increases. Uric acid excretion was also significantly increased by CVT-124
compared to placebo. CVT-124 was generally well-tolerated.
In October 1997, the Company and Biogen completed a randomized, double-blind,
placebo-controlled ascending dose crossover Phase II trial of intravenous
CVT-124. In 18 patients with moderately severe CHF, CVT-124 exhibited clinically
useful and statistically significant increases in urine, sodium, and chloride
excretion compared to placebo. The mean increases from baseline in both sodium
and chloride excretion during the first two hours following dosing were as high
as approximately 42 mEq in patients on CVT-124 compared to approximately 6 mEq
in patients on placebo. In contrast, there were statistically significant but
clinically minimal increases in potassium excretion. CVT-124 was also generally
well-tolerated by the patients, with no evident effect on blood pressure, heart
rates, EKG findings or routine laboratory tests.
While the Company's clinical trials to date have utilized an intravenous
formulation of CVT-124, the Company and Biogen intend to explore opportunities
to develop CVT-124 in intravenous and oral formulations for the treatment of
edema in fluid-retaining states like CHF and possibly for additional indications
such as the treatment or prevention of acute renal failure. Biogen is currently
planning additional Phase II intravenous trials in severe CHF patients.
28
<PAGE>
The Company's current estimate of the commencement of various clinical trials
included in this Prospectus are forward-looking statements that involve risks
and uncertainties. The actual clinical trial dates could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the timing and results of earlier clinical trials and the
other factors set forth under "Risk Factors - Uncertainties Related to Clinical
Trials" and elsewhere in this Prospectus. There can be no assurance that CVT-124
will prove to be safe or efficacious in humans or that CVT-124 will obtain FDA
or other regulatory or foreign marketing approval for any indication.
A(1) AGONISTS
The Company has designed and synthesized a series of adenosine A(1) agonist
compounds that the Company believes may have potential application in treating
supraventricular tachycardias, as well as additional applications. Based on
preclinical data, the Company believes these compounds are among the most
selective adenosine A(1) receptor agonists reported. Preclinical studies
conducted by the Company indicated that these compounds slowed electrical
impulses in the conduction tissue of the heart by stimulating the adenosine A(1)
receptor.
Supraventricular tachycardias (atrial fibrillation, atrial flutter and AV nodal
re-entrant tachycardias) are among the most common cardiac arrhythmias
complicating ischemic heart disease and cardiac surgical procedures and account
for over 300,000 new hospital admissions in the United States each year. They
originate in the atria as rapid and irregular heart beats that then spread to
the ventricles. The ventricular contractions stimulated by the atrial impulses
can be so fast and irregular that cardiac function can be severely compromised,
resulting in dangerously low blood pressure, fluid in the lungs and ischemic
damage to the heart, brain and other organs.
Because of the severity of these conditions and the need to treat patients
quickly, intravenous therapies are typically used. Current medical therapies aim
to slow the heart to a normal rate but have significant limitations in the acute
care setting. Digitalis is effective in controlling heart rate, but requires a
long time to take effect, which can be dangerous in patients with a failing
heart. Calcium channel blockers, beta blockers and adenosine act quickly but are
themselves associated with hypotension and depressed cardiac function,
potentially exacerbating the condition of patients already experiencing cardiac
dysfunction as a complication of the tachycardia.
For the treatment of supraventricular tachycardias, selective stimulation of the
A(1) receptor is required to slow the heart rate without significant stimulation
of the A(2) receptor which would lower blood pressure. The Company has
identified compounds as candidates for clinical development of intravenous
agents and is proceeding with preclinical studies.
CVT-313 AND CVT-634
CVT-313 and CVT-634 were designed and synthesized in the Company's cell cycle
inhibitor program. The goal of this program is to develop a new class of
therapeutics that suppresses abnormal cellular proliferation, which contributes
to progressive cardiovascular diseases. Excessive proliferation of
cardiovascular connective tissue cells or vascular smooth muscle cells causes
the scarring and loss of function that is characteristic of chronic diseases of
the heart, blood vessels and kidneys. Several of the Company's scientists and
scientific advisors have been among the leaders in identifying the role of cell
proliferation in causing a variety of cardiovascular diseases. As part of its
drug discovery strategy, the Company has focused upon newly discovered enzymes
referred to collectively as the cell cycle enzymes that regulate cellular
proliferation. In particular, two important targets identified by the Company,
CDK2 and the proteasomal protease, may have different clinical applications. The
Company is continuing to explore other cell cycle regulatory enzymes as
potential targets in this program.
CVT-313 is a novel compound which specifically inhibits CDK2, a critical
regulatory protein which participates in the control of the cell cycle. CDK2,
whose three dimensional structure was first determined by academic collaborators
of the Company, is central to cellular proliferation and was chosen as the
Company's first target in the cell cycle inhibitor program. Preclinical studies
have shown significant reduction of restenosis after vascular injury, both
confirming the appropriate selection of the target and identifying a potential
initial clinical application.
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<PAGE>
CVT-634, also identified in this program, has been shown to be a potent
inhibitor of proteasomal protease, which regulates both CDK2 activation and
macrophage activation. CVT-634 has been shown in preclinical studies to control
smooth muscle cell proliferation. This compound is undergoing further
preclinical testing.
LICENSES AND COLLABORATIONS
The Company has established and intends to establish strategic partnerships to
expedite development and commercialization of its drug candidates. For those
pre-clinical programs with potential application outside of chronic
cardiovascular disease, the Company intends to identify additional corporate
partners. In addition, CVT has licensed certain chemical compounds from academic
collaborators and other companies and has applied its drug discovery strategies
to analog and optimize these structures and to identify applications for
preclinical and clinical development. The Company's collaborations and licenses
currently in effect include:
BIOGEN
In March 1997, the Company entered into two research collaboration and license
agreements, one with Biogen, Inc. which covers the Americas and the other with a
wholly-owned subsidiary of Biogen, Inc., Biotech Manufacturing Ltd.
(collectively "Biogen"), which covers the rest of the world. The agreements
grant Biogen the exclusive worldwide right to develop and commercialize CVT-124
for all indications. In exchange, the Company received a $16.0 million upfront
payment consisting of $6.0 million in cash ($1 million of which was advanced
funding of a development milestone), a $7.0 million equity investment (of which
$1.8 million was accounted for as deferred revenue) and $3.0 million in funding
under a loan facility. In addition, Biogen agreed to make significant milestone
payments, equity investments and provide funding under a general purpose loan
facility, all of which are subject to achievement of certain clinical
development and commercialization milestones. Biogen will also pay royalties on
any future product sales. Biogen has control and responsibility for conducting,
funding and pursuing all aspects of the development, submissions for regulatory
approvals, manufacture and commercialization of the technology.
In connection with the agreements, Biogen paid the Company an initial
non-refundable payment of $5.0 million and Biotech Manufacturing Ltd. purchased
669,857 shares of Common Stock for a total purchase price of $7.0 million. In
addition, CVT received advance funding of a milestone payment and funding under
a credit facility totalling $4.0 million. Under the terms of the collaboration,
the Company will conduct research on aspects of the technology for a period of
three years, and Biotech Manufacturing Ltd. will fund such research through
purchases of the Company's Common Stock. Biogen may terminate the agreements for
any reason upon 90 days notice until a certain clinical milestone is achieved,
and then upon 60 days thereafter. If Biogen terminates the agreements, all
rights in the technology would revert to CVT. In addition, Biotech Manufacturing
Ltd. may terminate its obligation to fund the research conducted by the Company,
and CVT's obligation to conduct such research, without terminating the entire
collaboration, upon 90 days notice prior to each anniversary of the effective
date. CVT may also terminate its obligation to conduct such research, without
terminating the entire collaboration, after the achievement of a certain
milestone upon 90 days notice prior to each anniversary of the effective date.
There can be no assurance that Biogen will not terminate the agreements. Any
such termination would have a material adverse effect on the Company's business,
financial condition and results of operations.
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION
In June 1994, the Company entered into a license agreement with the University
of Florida Research Foundation, Inc. ("UFRFI") under which the Company received
exclusive worldwide rights to develop adenosine A(1) receptor antagonists for
the detection, prevention and treatment of human and animal diseases. In
consideration for the license, the Company paid UFRFI an initial license fee and
is obligated to pay royalties based on net sales of products which utilize the
licensed technology. Pursuant to the agreement, the Company must exercise
commercially reasonable efforts to develop and commercialize one or more
products covered by the licensed technology and is obligated to meet milestones
in completing certain preclinical work. In the event the Company fails to reach
those milestones, UFRFI may convert the exclusive license into a non-exclusive
license. As part of the license agreement with UFRFI, the Company entered into a
research agreement with the University of Florida.
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SYNTEX/ROCHE
In March 1996, the Company entered into a license agreement with Syntex for
United States and foreign patent rights to a compound having the generic name of
ranolazine for products treating angina and certain other cardiovascular
indications. The agreement provides for Syntex to also supply certain quantities
of the compound to the Company. The license agreement is exclusive and worldwide
except for the following countries which Syntex licensed exclusively to Kissei
Pharmaceuticals, Ltd. of Japan: Japan, Korea, China, Taiwan, Hong Kong, the
Philippines, Indonesia, Singapore, Thailand, Malaysia, Vietnam, Myanmar, Laos,
Cambodia and Brunei. Under the license agreement, the Company paid an initial
license fee. In addition, the Company is obligated to make payments on the
achievement of certain development milestones and to make royalty payments based
on net sales of products which utilize the licensed technology. The Company is
required to use commercially reasonable efforts to develop the compound for
angina within certain milestone guidelines. The license agreement also sets
milestones within which the Company must launch products in each country covered
by the license or lose exclusivity in such territories. The Company paid $1.5
million to Syntex in 1997 in a combination of cash and Common Stock and will owe
an additional milestone payment upon FDA approval of an NDA for ranolazine.
MARKETING AND SALES
The Company currently has no sales, marketing or distribution capability. The
Company may promote its products in collaboration with marketing partners or
rely on relationships with one or more companies with established distribution
systems and direct sales force. In particular, Biogen is responsible for
establishing marketing and sales activities for CVT-124. Alternatively, in the
United States, the Company may elect to establish its own specialized sales
force and marketing organization to market its products to cardiologists. In the
event that the Company elects to market its products directly, it will be
required to develop a marketing and sales force with technical expertise and
with supporting distribution capability. There can be no assurance that the
Company will be able to establish in-house sales and distribution capabilities
or relationships with third parties, or that it will be successful in
commercializing any of its potential products. To the extent that the Company
enters into co-promotion or other licensing arrangements, any revenues received
by the Company will depend upon the efforts of third parties, and there can be
no assurance that such efforts will be successful. See "Risk Factors - Limited
Manufacturing, Marketing and Sales Experience."
MANUFACTURING
CVT does not currently operate manufacturing facilities for clinical or
commercial production of its proposed products. The Company has no experience in
manufacturing, and currently lacks the resources and capability to manufacture
any of its proposed products on a clinical or commercial scale. Accordingly, the
Company is, and will continue to be, dependent on corporate partners, licensees
or other third parties for clinical and commercial scale manufacturing. For
example, Biogen is responsible for the manufacture of CVT-124 to supply clinical
trials. In addition, the Company acquired from Syntex a sufficient quantity of
ranolazine SR tablets to supply the first Phase III trial. The Company has an
agreement with a third party manufacturer for clinical scale production of
ranolazine's active pharmaceutical ingredient sufficient to support the
remainder of the Phase III clinical program, registration and commercialization.
The Company is negotiating with third party manufacturers for clinical scale
production of ranolazine SR tablets sufficient to support the remainder of the
Phase III clinical program, registration and commercialization. The Company does
have experience in the transfer of synthetic technology from discovery to
scale-up manufacturing facilities, having successfully executed technology
transfer for the manufacture of clinical supplies of one orally administered
agent and one intravenously administered agent. There can be no assurance that
the Company will be able to reach or maintain agreements with any third parties
or that such parties will be able to develop adequate manufacturing
capabilities. In addition, prior to approval of an NDA for ranalozine, the
Company will be required to demonstrate to the FDA's satisfaction the
equivalence of the multiple sources of supply used in the Company's clinical
trials. See "Risk Factors - Limited Manufacturing, Marketing and Sales
Experience."
PATENTS AND PROPRIETARY TECHNOLOGY
Patents and other proprietary rights are important to the Company's business.
The Company's policy is to file patent applications and to protect technology,
inventions and improvements to inventions that are commercially important to the
development of its business. The Company also relies on trade secrets,
confidentiality
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agreements and other protective measures to protect its technology and proposed
products. The Company's failure to obtain patent protection or otherwise protect
its proprietary technology or proposed products may have a material adverse
effect on the Company's competitive position and business prospects.
The Company owns one United States issued patent related to an inflammatory
factor licensed to Bayer AG. The Company also owns four pending patent
applications in the United States relating to the inflammatory factor licensed
to Bayer AG, the A(1) agonist series of compounds, CVT-313 and CVT-634, as well
as four foreign patent applications with respect to the inflammatory factor
licensed to Bayer and single patent applications filed pursuant to the Patent
Cooperation Treaty (PCT) with respect to the A(1) agonist series of compounds,
CVT-313 and CVT-634. In addition, the Company has acquired and, in turn has
granted to Biogen, an exclusive license to one United States issued patent, two
United States patent applications and related foreign patent applications
related to CVT-124. The Company also has acquired a license which is exclusive
in certain territories to three United States issued patents, one United States
patent application and related foreign patent applications related to
ranolazine. The patent application process takes several years and entails
considerable expense. There is no assurance that patents will issue from these
applications or, if patents do issue, that the claims allowed will be sufficient
to protect the Company's technology. One of the primary patents relating to
ranolazine will expire in May 2003 unless the Company is granted an extension
based upon delays in the FDA approval process.
Patent applications in the United States are maintained in secrecy until a
patent issues, and the Company cannot be certain that others have not filed
patent applications for technology covered by the Company's pending applications
or that the Company was the first to invent the technology that is the subject
of such patent application. Competitors may have filed applications for, or may
have received patents and may obtain additional patents and proprietary rights
relating to, compounds, products or processes that block or compete with those
of the Company. There can be no assurance that third parties will not assert
patent or other intellectual property infringement claims against the Company
with respect to its products or technology or other matters. There may be third
party patents and other intellectual property relevant to the Company's products
and technology which are not known to the Company.
Patent litigation is becoming more widespread in the biopharmaceutical industry.
Litigation may be necessary to defend against or assert claims of infringement,
to enforce patents issued to the Company, to protect trade secrets or know-how
owned by the Company, or to determine the scope and validity of the proprietary
rights of third parties. Although no third party has asserted that the Company
is infringing such third party's patent rights or other intellectual property,
there can be no assurance that litigation asserting such claims will not be
initiated, that the Company would prevail in any such litigation, or that the
Company would be able to obtain any necessary licenses on reasonable terms, if
at all. Any such claims against the Company, with or without merit, as well as
claims initiated by the Company against third parties, can be time-consuming and
expensive to defend or prosecute and to resolve. If other companies prepare and
file patent applications in the United States that claim technology also claimed
by the Company, the Company may have to participate in interference proceedings
to determine priority of invention which could result in substantial cost to the
Company even if the outcome is favorable to the Company.
The Company also relies on trade secrets, confidentiality agreements and other
protective measures to protect its technology and proposed products. There can
be no assurance that third parties will not independently develop equivalent
proprietary information or techniques, will not gain access to the Company's
trade secrets or disclose such technology to the public, or that the Company can
maintain and protect unpatented proprietary technology. The Company typically
requires its employees, consultants, collaborators, advisors and corporate
partners to execute confidentiality agreements upon commencement of employment
or other relationships with the Company. There can be no assurance, however,
that these agreements will provide meaningful protection or adequate remedies
for the Company's technology in the event of unauthorized use or disclosure of
such information, or that the parties to such agreements will not breach such
agreements. See "Risk Factors - Uncertainty of Patent Position and Proprietary
Rights."
GOVERNMENT REGULATION
FDA REQUIREMENTS FOR DRUG COMPOUNDS The research, testing, manufacture and
marketing of drug products are extensively regulated by numerous governmental
authorities in the United States and other countries. In the
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United States, drugs are subject to rigorous regulation by the FDA. The Federal
Food, Drug and Cosmetic Act, as amended (the "FDC Act"), and the regulations
promulgated thereunder, and other federal and state statutes and regulations,
govern, among other things, the research, development, testing, manufacture,
storage, recordkeeping, labeling, promotion and marketing and distribution of
pharmaceutical products. Failure to comply with applicable regulatory
requirements may subject a company to administrative or judicially imposed
sanctions such as warning letters, criminal prosecution, injunctions, product
seizure, product recalls, total or partial suspension of production, and FDA
refusal to approve pending NDA applications or NDA supplements to approved
applications.
The steps ordinarily required before a new pharmaceutical product may be
marketed in the United States include: (i) preclinical laboratory tests, IN VIVO
preclinical studies and formulation studies; (ii) the submission to the FDA of
an IND, which must become effective before clinical testing may commence; (iii)
adequate and well-controlled clinical trials to establish the safety and
effectiveness of the drug for each indication; (iv) the submission of an NDA to
the FDA; and (v) FDA review and approval of the NDA prior to any commercial sale
or shipment of the drug. Preclinical tests include laboratory evaluation of
product chemistry and formulation, as well as animal studies to assess the
potential safety and efficacy of the product. Preclinical tests must be
conducted in compliance with Good Laboratory Practice regulations and compounds
for clinical use must be formulated according to cGMP requirements. The results
of preclinical testing are submitted to the FDA as part of an IND. A 30-day
waiting period after the filing of each IND is required prior to the
commencement of clinical testing in humans. If the FDA has not commented on or
questioned the IND within this 30-day period, clinical studies may begin. If the
FDA has comments or questions, the questions must be answered to the
satisfaction of the FDA before initial clinical testing can begin. In addition,
the FDA may, at any time, impose a clinical hold on ongoing clinical trials. If
the FDA imposes a clinical hold, clinical trials cannot commence or recommence
without FDA authorization and then only under terms authorized by the FDA. In
some instances, the IND application process can result in substantial delay and
expense.
Clinical trials involve the administration of the investigational new drug to
healthy volunteers or patients under the supervision of a qualified principal
investigator. Clinical trials are conducted in accordance with Good Clinical
Practice, under protocols detailing the objectives of the study, the parameters
to be used in monitoring safety and the effectiveness criteria to be evaluated.
Each protocol must be submitted to the FDA as part of the IND. Further, each
clinical study must be conducted under the auspices of an Institutional Review
Board ("IRB") at the institution at which the study will be conducted. The IRB
will consider, among other things, ethical factors, the safety of human subjects
and the possible liability of the institution. Clinical trials to support NDAs
are typically conducted in three sequential phases, but the phases may overlap.
In Phase I, the initial introduction of the drug into healthy human subjects or
patients, the drug is tested to assess metabolism, pharmacokinetics and
pharmacological actions and safety, including side effects associated with
increasing doses. Phase II usually involves studies in a limited patient
population to (i) determine the efficacy of the drug in specific, targeted
indications, (ii) determine dosage tolerance and optimal dosage and (iii)
identify possible adverse effects and safety risks. If a compound is found to be
effective and to have an acceptable safety profile in Phase II evaluations,
Phase III trials are undertaken to further evaluate clinical efficacy and to
further test for safety within an expanded patient population at geographically
dispersed clinical study sites. There can be no assurance that Phase I, Phase II
or Phase III testing will be completed successfully within any specified time
period, if at all, with respect to any of the Company's products subject to such
testing.
After completion of the required clinical testing, generally an NDA is
submitted. FDA approval of the NDA is required before marketing may begin in the
United States. The NDA must include the results of extensive clinical and other
testing and the compilation of data relating to the product's chemistry,
pharmacology and manufacture, the cost of all of which is substantial. The FDA
reviews all NDAs submitted before it accepts them for filing and may request
additional information rather than accepting an NDA for filing. In such an
event, the NDA must be resubmitted with the additional information and, again,
is subject to review before filing. Once the submission is accepted for filing,
the FDA begins an in-depth review of the NDA. Under the FDC Act, the FDA has 180
days in which to review the NDA and respond to the applicant. The review process
is often significantly extended by FDA requests for additional information or
clarification regarding information already provided in the submission. The FDA
may refer the application to the appropriate advisory committee, typically a
panel of clinicians, for review, evaluation and a recommendation as to whether
the application should be approved. The FDA is not
33
<PAGE>
bound by the recommendation of an advisory committee. If FDA evaluations of the
NDA and the manufacturing facilities are favorable, the FDA may issue either an
approval letter or an approvable letter, which usually contains a number of
conditions that must be met in order to secure final approval of the NDA. When
and if those conditions have been met to the FDA's satisfaction, the FDA will
issue an approval letter, authorizing commercial marketing of the drug for
certain indications. As a condition of NDA approval, the FDA may require
postmarketing testing and surveillance to monitor the drug's safety or efficacy.
If the FDA's evaluation of the NDA submission or manufacturing facilities is not
favorable, the FDA may refuse to approve the NDA or issue a not approvable
letter, outlining the deficiencies in the submission and often requiring
additional testing or information. Notwithstanding the submission of any
requested additional data or information in response to an approvable or not
approvable letter, the FDA ultimately may decide that the application does not
satisfy the regulatory criteria for approval. Once granted, product approvals
may be withdrawn if compliance with regulatory standards is not maintained or
problems occur following initial marketing.
On November 11, 1997, Congress passed the Food and Drug Administration
Modernization Act of 1997. This new legislation is intended to speed the
approval of new drugs and medical devices by streamlining FDA's review
procedures to ensure timely review of applications. One of the key provisions of
the legislation reauthorizes FDA's authority to collect user fees for each new
drug application or supplement that is submitted to FDA. For fiscal year 1998,
the application fee for a new drug application will be $250,704; the fee will
increase to $267,606 in fiscal year 2001. Small businesses will be entitled to a
waiver of the application fee for the first application submitted.
MANUFACTURING Each domestic drug manufacturing facility must be registered with
FDA. Domestic drug manufacturing establishments are subject to periodic
inspection by the FDA and must comply with cGMP. Further, the Company or its
third party manufacturer must pass a preapproval inspection of its manufacturing
facilities by the FDA before obtaining marketing approval of any products. To
supply products for use in the United States, foreign manufacturing
establishments must comply with cGMP and are subject to periodic inspection by
the FDA or corresponding regulatory agencies in countries under reciprocal
agreements with the FDA. Drug product manufacturing establishments located in
California must be licensed by the State of California in compliance with local
regulatory requirements, and other states may have comparable regulations. The
Company uses and will continue to use third party manufacturers to produce its
products in clinical and commercial quantities. There can be no guarantee that
future FDA inspections will proceed without any compliance issues requiring the
expenditure of money or other resources.
FOREIGN REGULATION OF DRUG COMPOUNDS Whether or not FDA approval has been
obtained, approval of a product by comparable regulatory authorities may be
necessary in foreign countries prior to the commencement of marketing of the
product in such countries. The approval procedure varies among countries, can
involve additional testing, and the time required may differ from that required
for FDA approval. Although there are some procedures for unified filings for
certain European countries with the sponsorship of the country which first
granted marketing approval, in general each country has its own procedures and
requirements, many of which are time consuming and expensive. Thus, there can be
substantial delays in obtaining required approvals from foreign regulatory
authorities after the relevant applications are filed. In Europe, marketing
authorizations may be submitted at either a centralized, a decentralized or a
national level. The centralized procedure is mandatory for the approval of
biotechnology products and provides for the grant of a single marketing
authorization which is valid in all European Union member states. As of January
1995, a mutual recognition procedure is available at the request of the
applicant for all medicinal products which are not subject to the centralized
procedure. The Company will choose the appropriate route of European regulatory
filing to accomplish the most rapid regulatory approvals. There can be no
assurance that the chosen regulatory strategy will secure regulatory approvals
on a timely basis or at all.
HAZARDOUS MATERIALS The Company's research and development processes involve
the controlled use of hazardous materials, chemicals and radioactive materials
and produce waste products. The Company is subject to federal, state and local
laws and regulations governing the use, manufacture, storage, handling and
disposal of such materials and 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 eliminated
completely. In the event of such an
34
<PAGE>
accident, the Company could be held liable for any damages that result and any
such liability could exceed the resources of the Company. Although the Company
believes that it is in compliance in all material respects with applicable
environmental laws and regulations, there can be no assurance that it will not
be required to incur significant costs to comply with environmental laws and
regulations in the future, or that the operations, business or assets of the
Company will not be materially adversely affected by current or future
environmental laws or regulations.
COMPETITION
The pharmaceutical and biopharmaceutical industries are subject to intense
competition and rapid and significant technological change. While several of
CVT's products target diseases for which there are presently no effective
therapies, CVT nevertheless is aware of companies which are developing products
that will compete for the same disease markets. For example, Kyowa Hakko Co.,
Ltd., Fujisawa Pharmaceutical, Japan and Discovery Therapeutics, Inc., are each
developing adenosine A(1) receptor antagonists. In addition, Novartis AG and
GlaxoWellcome PLC both have adenosine A(1) receptor agonists under development.
If regulatory approvals are received, ranolazine may compete with several
classes of existing drugs for the treatment of angina, some of which are
available in generic form, including calcium channel blockers, beta blockers and
nitrates. There are also non-pharmacologic treatments such as coronary artery
bypass grafting ("CABG") and percutaneous transluminal coronary angioplasty
("PTCA"). However, for those patients who do not respond adequately to existing
therapies and remain symptomatic despite maximal treatment with existing
anti-anginal drugs and who are not candidates for CABG or PTCA, there is no
currently effective treatment. In refractory patients who are candidates for
CABG or PTCA, there is no effective pharmacologic treatment available.
CVT believes that the principal competitive factors in the markets for
ranolazine and CVT-124 will include the length of time to receive regulatory
approval, product performance, product price, product supply, marketing and
sales capability and enforceability of patent and other proprietary rights. CVT
believes that it and its collaborative partners are or will be competitive with
respect to these factors. Nonetheless, because the Company's products are still
under development, the relative competitive position of the Company in the
future is difficult to predict.
The Company expects that the pharmaceutical and biopharmaceutical industries
will continue to experience rapid technological development which may render the
Company's potential products non-competitive or obsolete. Many current and
potential competitors have substantially greater product development
capabilities and financial, marketing, scientific, and human resources than the
Company. Other companies may succeed in developing products earlier than the
Company, obtaining approvals for such products from the FDA more rapidly than
the Company or developing products that are safer and more effective than those
under development or proposed to be developed by the Company. While the Company
will seek to expand its technological capabilities in order to remain
competitive, there can be no assurance that research and development by others
will not render its technology or potential products obsolete or non-competitive
or result in treatments or cures superior to any therapy developed by the
Company, or that therapy developed by the Company will be preferred to any
existing or newly developed technologies.
PRODUCT LIABILITY INSURANCE
The manufacture and sale of human therapeutic products involve an inherent risk
of product liability claims and associated adverse publicity. The Company has
only limited product liability insurance for clinical trials and no commercial
product liability insurance. There can be no assurance that it will be able to
maintain existing or obtain additional product liability insurance on acceptable
terms or with adequate coverage against potential liabilities. Such insurance is
expensive, difficult to obtain and may not be available in the future on
acceptable terms, or at all. An inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims could prevent or inhibit the commercialization of the Company's
potential products. A product liability claim brought against the Company in
excess of its insurance coverage, if any, or a product withdrawal could have a
material adverse effect upon the Company's business, financial condition and
results of operations.
35
<PAGE>
EMPLOYEES
As of December 15, 1997, CVT employed 44 individuals, including 16 who hold
doctoral degrees. Of the Company's total work force, 29 employees are engaged in
or directly support research and development activities and 15 are engaged in
business development, finance and administrative activities. The Company's
employees are not represented by a collective bargaining agreement. The Company
believes its relations with its employees are good.
FACILITIES
The Company currently leases a 61,081 square foot building in Palo Alto,
California, of which approximately 33,783 square feet are subleased by the
Company to a third party. The initial term of the lease expires in February 2002
with an option to renew for five years, and the subleases expire in March 1998
and April 1999, respectively. CVT believes that this facility will be adequate
to meet the Company's needs for the foreseeable future.
SCIENTIFIC ADVISORY BOARD
CVT's Scientific Advisory Board ("SAB") consists of academic and industry
experts in the fields of medicine, chemistry and molecular and cellular biology.
The SAB reviews and evaluates the Company's research programs and advises the
Company with respect to technical matters. Each SAB member, with the exception
of Richard M. Lawn, has entered into a consulting agreement with the Company
specifying the terms and scope of the advisory relationship. All SAB members own
shares or have been granted options to acquire Common Stock of the Company. All
of the SAB members, with the exception of Dr. Lawn, are employed by employers
other than the Company and may have commitments and consulting contracts with
other entities which may compete with such members' obligations to the Company.
The Company's Scientific Advisory Board includes the following individuals:
VICTOR J. DZAU, M.D. is Chairman of the Scientific Advisory Board. Dr. Dzau is
one of the world's leading researchers in the molecular and cellular biology of
cardiovascular diseases. Since September 1996, he has served as Chairman of the
Department of Medicine and Physician-in-Chief at the Brigham and Women's
Hospital in Boston, and as Hersey Professor of the Theory and Practice of
Medicine at Harvard Medical School. Between 1990 and September 1996, he served
as the William G. Irwin Professor of Medicine and chief of cardiovascular
medicine at Stanford University School of Medicine. In early 1995, he was
promoted to Arthur L. Bloomfield Professor and Chairman of Medicine at Stanford.
Previously, Dr. Dzau held several clinical and research appointments in
cardiology at Massachusetts General Hospital and Harvard Medical School, where
he was a postdoctoral fellow. He received his M.D. degree from McGill
University.
STUART A. AARONSON, M.D. is director of the Derold H. Ruttenberg Cancer Center
at Mount Sinai School of Medicine, New York City, and is a world renowned growth
factor researcher and tumor biologist. He has established the role of numerous
cytokines in the function of blood vessels. He obtained his M.D. degree from the
University of California, San Francisco.
CHRISTOPHER FIELDING, PH.D. has been a faculty member at the University of
California, San Francisco over the past two decades, where he has served as the
Neider Professor of Cardiovascular Physiology since 1985. A recognized expert in
the field of cholesterol metabolism, Dr. Fielding received his Ph.D. from the
University of London and completed postdoctoral work in cell metabolism at
Oxford University.
RICHARD J. HAVEL, M.D. is a professor of medicine, Chief of Metabolism and past
Director of the Cardiovascular Research Institute at the University of
California, San Francisco. As a leader in both basic lipid research and clinical
lipid investigations for several decades, Dr. Havel is known for his pioneering
research on lipoprotein metabolism and for designing and conducting clinical
investigations of lipid reduction and coronary atherosclerosis. He recently
served on the Executive Committee of the Adult Treatment Panel of the National
Cholesterol Education Program. Dr. Havel is a member of the National Academy of
Sciences and received his M.D. degree from the University of Oregon.
RICHARD M. LAWN, PH.D. has served as Vice President, Discovery Research for the
Company since October 1997. From August 1992 until October 1997, he served on a
part-time basis as Vice President, Molecular Cardiology for the Company. Since
October 1990, Dr. Lawn has also served as a Professor of Medicine
36
<PAGE>
at Stanford University School of Medicine. From January 1980 until October 1990,
Dr. Lawn served as a senior scientist and later as a staff scientist at
Genentech, Inc. Dr. Lawn has been a pioneer in the cloning of genes involved in
coagulation and heart disease, including globin genes and genes for
anti-hemophilia factor VIII. He was a post-doctoral fellow at the California
Institute of Technology and received his Ph.D. in molecular, cellular and
developmental biology from the University of Colorado and his B.A. from Harvard
College.
JEFFREY M. LEIDEN, M.D., PH.D. is the Frederick H. Rawson Professor of Medicine
and Pathology and Chief of the Section of Cardiology at the University of
Chicago and a former Howard Hughes medical investigator. He is a leading
researcher in the areas of transcriptional regulation during mammalian
development and the development of novel gene therapy approaches for
cardiovascular disease. Dr. Leiden received his M.D. and Ph.D. degrees from the
University of Chicago and completed his postdoctoral and cardiology fellowships
at the Brigham and Women's Hospital, Harvard University.
PETER SCHULTZ, PH.D. is a professor of chemistry at the University of
California, Berkeley. He is recognized as an expert in protein
structure/function and pioneered combinatorial methods and the development of
catalytic antibodies. Dr. Schultz has received numerous awards including the
National Science Foundation Alan T. Waterman Award, the American Chemical
Society Award in Pure Chemistry and the Wolf Price in Chemistry. He is a
founding scientific advisor of Affymax, N.V. In 1993, Dr. Schultz was elected to
the National Academy of Sciences. He received his Ph.D. from California
Institute of Technology and worked as a National Institutes of Health
postdoctoral fellow at the Massachusetts Institute of Technology.
ERIC J. TOPOL, M.D. is the Chairman, Department of Cardiology and the Director,
Joseph J. Jacobs Center for Thrombosis and Vascular Biology at the Cleveland
Clinic Foundation. A noted clinician and expert on ischemic/ atherosclerotic
heart disease, Dr. Topol is chairman of several large multicenter, randomized
clinical trials of specific interventional procedures and therapeutics. He has
also served as an advisor to the National Institutes of Health and currently
serves on the FDA's advisory panel on cardiology. Dr. Topol received his M.D.
degree from the University of Rochester and completed his cardiology fellowship
at Johns Hopkins University.
SIR JOHN VANE, D.SC., F.R.S. is the Director General of the William Harvey
Research Institute at St. Bartholomew's Hospital Medical College in London.
Prior to joining that institution, he spent 12 years as group research and
development director at the Wellcome Foundation, Ltd. He was awarded the Nobel
Prize in 1982 for his work in prostaglandins and for discovering the mode of
action of aspirin. Sir John was a research scientist for 18 years at the Royal
College of Surgeons of England. He is highly regarded for his continuing
research in the areas of cardiovascular disease and chronic inflammation. Sir
John holds both a D.Phil. and D.Sc. and is a Fellow of the Royal Society, the
Royal College of Physicians and the Royal College of Surgeons.
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MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of the Company as of January
6, 1997 and their ages are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Louis G. Lange, M.D., Ph.D. 49 Chairman of the Board and Chief Executive Officer
Daniel K. Spiegelman 39 Chief Financial Officer
Brent K. Blackburn, Ph.D. 37 Vice President, Developmental Research
Richard M. Lawn, Ph.D. 50 Vice President, Discovery Research
Andrew A. Wolff, M.D. 43 Vice President, Clinical Research and Development
Cynthia L. Clark, Esq. 35 General Counsel
Samuel D. Colella (1)(2) 58 Director
Thomas L. Gutshall (2) 59 Director
David P. Holveck 52 Director
Barbara J. McNeil, M.D., Ph.D. (2) 56 Director
J. Leighton Read, M.D. (1) 46 Director
Costa G. Sevastopoulos, Ph.D. (1) 55 Director
Isaac Stein (2) 51 Director
</TABLE>
- ------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
LOUIS G. LANGE, M.D., PH.D., was a founder of the Company and has served as its
Chairman of the Board and Chief Executive Officer since August 1992. From July
1980 to August 1992, Dr. Lange served on the faculty of Washington University
School of Medicine, including as Chief of Cardiology at Jewish Hospital in St.
Louis, Missouri from May 1985 to August 1992, and as a full Professor of
Medicine from July 1990 until August 1992. Dr. Lange is internationally
recognized as an expert in the field of molecular mechanisms of cardiovascular
disease. He holds an M.D. from Harvard Medical School and a Ph.D. in
biochemistry from Harvard University.
DANIEL SPIEGELMAN has served as Chief Financial Officer for the Company since
January 1998. From July 1991 to January 1998, Mr. Spiegelman has been employed
by Genentech, Inc., a biotechnology company, holding the position of treasurer
from December 1996 to January 1998, assistant treasurer from July 1992 to
December 1996, and treasury manager from July 1991 to July 1992. From September
1985 to June 1991, Mr. Spiegelman served as Chief Financial Officer of COMAC
Services, a national marketing services company. Mr. Spiegelman holds a B.A. in
economics from Stanford University and an M.B.A. from Stanford Graduate School
of Business.
BRENT K. BLACKBURN, PH.D., has served as Vice President, Developmental Research
since October 1997. From September 1989 until September 1997, Dr. Blackburn
served in the Research Department at Genentech, Inc. From September 1993 to
September 1997, Dr. Blackburn also served as the project team leader for the
GPII(b)III(a) antagonist project, an oral cardiovascular product, in the
Development Department at Genentech, Inc. Dr. Blackburn holds a Ph.D. from the
University of Texas in Austin and a B.S. from Texas Christian University.
RICHARD M. LAWN, PH.D., has served as Vice President, Discovery Research for the
Company since October 1997. From August 1992 until October 1997, he served on a
part-time basis as Vice President, Molecular Cardiology for the Company. Since
October 1990, Dr. Lawn has also served as a Professor of Medicine at Stanford
University School of Medicine. From January 1980 until October 1990, Dr. Lawn
served as a senior scientist and later as a staff scientist at Genentech, Inc.
Dr. Lawn has been a pioneer in the cloning of genes involved in coagulation and
heart disease, including globin genes and genes for anti-hemophilia factor VIII.
He was a post-doctoral fellow at the California Institute of Technology and
received a Ph.D. in molecular, cellular and developmental biology from the
University of Colorado and a B.A. from Harvard College.
ANDREW A. WOLFF, M.D., has served as Vice President of Clinical Research and
Development for the Company since September 1996. From September 1994 to
September 1996, Dr. Wolff served as Vice President of Clinical Research for the
Company. From June 1993 until September 1994, Dr. Wolff served as the Executive
Director of Medical Research and New Molecules Clinical Programs Leader for
Syntex, a pharmaceutical and healthcare
38
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company. From July 1990 until June 1993, Dr. Wolff served as the Director,
Department for Cardiovascular Therapy for Syntex. In addition, from August 1992
to February 1993, he served as the acting Associate Director for Europe for the
Institute for Cardiovascular and Central Nervous System Clinical Research,
Maidenhead, England. Since June 1988, Dr. Wolff has also served as an Assistant
Clinical Professor of Medicine in the Cardiology Division of the University of
California, San Francisco. He holds an M.D. from the Washington University
Medical School.
CYNTHIA L. CLARK, ESQ., has served as General Counsel for the Company since
October 1997. From December 1995 to September 1997, Ms. Clark served as a
consultant to start-up biotechnology companies and other technology companies,
including serving as President for Bell Atlantic Internet Solutions - North,
Inc., an Internet service provider, from June 1997 to present. From August 1994
to December 1995, Ms. Clark served as General Counsel to Univax Biologics, Inc.,
a biotechnology company. From June 1992 to March 1994, Ms. Clark served as
Senior Corporate Counsel for Comprehensive Technologies International, Inc., a
government contracts and technology company. Ms. Clark earned a B.A. in
mathematics and government from Wesleyan University and a J.D. from Washington
College of Law, American University.
SAMUEL D. COLELLA has served as a director of the Company since October 1992.
Since November 1984, Mr. Colella has been a General Partner of Institutional
Venture Partners, a private venture capital firm. He currently serves as
Chairman of the Board of Directors of ONYX Pharmaceuticals, Inc. He also serves
as a director of Imagyn Medical, Inc., Pharmacopeia, Inc. and Vivus, Inc. Mr.
Colella holds a B.S. in business and engineering from the University of
Pittsburgh and an M.B.A. from Stanford Graduate School of Business.
THOMAS L. GUTSHALL has served as a director of the Company since December 1994.
Since August 1996, Mr. Gutshall has served as the Chief Executive Officer of
Cepheid Corporation, a diagnostics company. From January 1995 to September 1996,
he served as President and Chief Operating Officer of the Company. From June
1989 until December 1994, Mr. Gutshall served as an Executive Vice President at
Syntex Corporation, a pharmaceutical and healthcare company. Mr. Gutshall earned
a B.S. in chemical engineering from the University of Delaware and completed the
Executive Marketing Management Program at Harvard Business School.
DAVID P. HOLVECK has served as a director of the Company since November 1997.
Mr. Holveck has served as the President and Chief Executive Officer of Centocor,
Inc., a biotechnology company, since November 1992 and has worked with Centocor,
Inc. since 1983. He has also served as a member of Centocor, Inc.'s board of
directors since 1994. Mr. Holveck holds a B.S. in education/science from West
Chester University.
BARBARA MCNEIL, M.D., PH.D., has served as a director of the Company since
December 1994. Since 1990, Dr. McNeil has served as the Ridley Watts Professor
of Health Care Policy at Harvard Medical School. In addition, since July 1988,
she has served as the Chair of the Department of Health Care Policy at Harvard
Medical School. Since 1983, she has been a professor of radiology at both
Harvard Medical School and Brigham and Women's Hospital in Boston. Dr. McNeil
holds an M.D. from Harvard Medical School and a Ph.D. in biological chemistry
from Harvard University.
J. LEIGHTON READ, M.D., has served as a director of the Company since September
1992. Dr. Read founded Aviron, a biopharmaceutical company, and has served as
its Chairman and Chief Executive Officer since April 1992. From July 1991 to
July 1993, Dr. Read was a principal with Interhealth Limited, an investment
partnership. From January 1989 to July 1991, Dr. Read served as a managing
director of Affymax N.V., a biopharmaceutical company, which he co-founded in
1989. Dr. Read holds a B.S. in biology and psychology from Rice University and
an M.D. from the University of Texas Health Science Center at San Antonio.
COSTA G. SEVASTOPOULOS, PH.D., has served as a director of the Company since
October 1992. Since May 1994, Dr. Sevastopoulos has been an independent
consultant and a limited partner of Delphi Ventures I and II, both venture
capital partnerships. From April 1988 to April 1994, he served as a general
partner of Delphi BioVentures, a venture capital partnership, which he
co-founded. Dr. Sevastopoulos currently serves as Chairman of the Board of
Directors and Chief Executive Officer of Ixsys, Inc., a privately held
biotechnology company. He holds a B.S. in physics from the University of Athens,
Greece, an M.S. in electrical engineering from the California Institute of
Technology, an M.B.A. from the European Institute of Business Administration in
Fontainebleau, France, and a Ph.D. in molecular biology from the University of
California at Berkeley.
39
<PAGE>
ISAAC STEIN has served as a director of the Company since March 1995. Since its
inception, Mr. Stein has served as the President of Waverly Associates, Inc., a
private investment firm, which he founded in 1983. In addition, Mr. Stein
currently serves as Chairman of Stanford Health Services and is a director of
Stanford University Hospital and a Trustee of Stanford University. From February
1993 to February 1994, Mr. Stein served as a special assistant to the President
of Stanford University. From July 1990 to December 1992, he served as Chairman
of Esprit de Corp., an apparel company, and from March 1991 to February 1992, he
served as its acting President and Chief Executive Officer. Mr. Stein currently
serves as a director of ALZA Corporation and Raychem Corporation. Mr. Stein
holds a B.A. in economics and mathematics from Colgate University, an M.B.A.
from Stanford Graduate School of Business and a J.D. from Stanford Law School.
40
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 15, 1997 and as adjusted
to reflect the sale of the Common Stock being offered hereby by: (i) each
stockholder who is known by the Company to own beneficially more than 5% of the
Common Stock; (ii) each executive officer of the Company; (iii) each director of
the Company; and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
----------------------------------
SHARES BENEFICIALLY OWNED(1)
----------------------------------
PERCENT PERCENT
PRIOR TO AFTER
NAME AND ADDRESS OF BENEFICIAL HOLDER NUMBER OFFERING OFFERING
- ------------------------------------------------------------------------- --------- ---------- -----------
<S> <C> <C> <C>
Biotech Target S.A. 1,450,647 17.15% 14.28%
Swiss Bank Tower
Panama 1
Republic of Panama
Zesiger Capital Group, LLC (2) 670,800 7.93 6.60
320 Park Avenue
New York, NY 10022
Entities affiliated with Biogen, Inc. 669,857 7.92 6.59
St. Paul's Gate
New Street
St. Helier Jersey JE48Z
Channel Islands
Louis G. Lange, M.D., Ph.D. (3) 335,077 3.87 3.23
Samuel D. Colella (4) 329,545 3.88 3.23
Andrew A. Wolff, M.D. (5) 68,260 * *
Kathleen A. Stafford (6) 67,439 * *
Thomas L. Gutshall (7) 55,339 * *
Isaac Stein (8) 40,999 * *
Richard M. Lawn, Ph.D. (9) 35,500 * *
J. Leighton Read, M.D. (10) 23,221 * *
Costa G. Sevastopoulos, Ph.D. (11) 22,750 * *
Barbara J. McNeil, M.D., Ph.D. (12) 18,499 * *
Daniel K. Spiegelman 1,500 * *
Cynthia L. Clark, Esq. - * *
Brent K. Blackburn, Ph.D. - * *
David P. Holveck - * *
All directors and executive officers as a group (14 persons)(13) 998,129 11.17 9.39
</TABLE>
- ------------------------------
* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Beneficial ownership also includes shares of
stock subject to options and warrants currently exercisable or convertible, or
exercisable or convertible within 60 days of the date of this table. Except as
indicated by footnote, and subject to community property laws where applicable,
to the knowledge of the Company, all persons named in the table above have sole
voting and investment power with respect to all shares of Common Stock, shown as
beneficially owned by them. Percentage of beneficial ownership is based on
8,458,066 shares of Common Stock outstanding as of December 15, 1997 and
10,158,066 shares of Common Stock outstanding after completion of the Offering.
(2) Zesiger Capital Group, LLC has dispositive power pursuant to authority
granted by its investment clients. Zesiger Capital Group, LLC disclaims
beneficial ownership of all such shares.
(3) Includes 203,950 shares issuable upon the exercise of options, 104,956 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued. Also includes 7,500 shares held in the Louis Lange Family Trust. Dr.
Lange disclaims beneficial ownership of the shares held in the Louis Lange
Family Trust, except to the extent of his pecuniary interests therein.
41
<PAGE>
(4) Includes 17,000 shares issuable upon the exercise of options, 8,696 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued. Also includes 5,828 shares held by Institutional Ventures Management V,
L.P. ("IVM"), 285,578 shares held by Institutional Venture Partners V, L.P.
("IVP"), 400 shares issuable upon the exercise of outstanding warrants held by
IVM exercisable within 60 days of December 15, 1997 and 19,600 shares issuable
upon the exercise of outstanding warrants held by IVP exercisable within 60 days
of December 15, 1997. Mr. Colella, a director of the Company, is a general
partner of IVM. IVM is the general partner of IVP. Mr Colella disclaims
beneficial ownership of the shares held by IVM and IVP, except to the extent of
his pecuniary interests therein.
(5) Includes 67,500 shares issuable upon the exercise of options, 40,225 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued.
(6) Includes 26,670 shares issuable upon the exercise of options, 21,518 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued. Also includes 8,157 shares held by her spouse and 2,500 shares issuable
upon the exercise of an outstanding warrant exercisable within 60 days of
December 15, 1997. Effective January 1998, Ms. Stafford resigned from her
position as Chief Financial Officer but will remain a consultant to the Company
through December 1998.
(7) Includes 27,714 shares issuable upon the exercise of options, 8,861 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued. Also includes 27,125 shares held in the Gutshall Family Trust and 500
shares issuable upon the exercise of an outstanding warrant held in the Gutshall
Family Trust exercisable within 60 days of December 15, 1997.
(8) Includes 26,000 shares issuable upon the exercise of options, 14,806 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued. Also includes 4,375 shares held in the Stein 1995 Revocable Trust and
625 shares issuable upon the exercise of an outstanding warrant held in the
Stein 1995 Revocable Trust exercisable within 60 days of December 15, 1997.
(9) Includes 30,500 shares issuable upon the exercise of options, 10,525 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued.
(10) Includes 15,500 shares issuable upon the exercise of options, 8,694 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued.
(11) Includes 22,458 shares issuable upon the exercise of options, 11,472 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued.
(12) Includes 16,000 shares issuable upon the exercise of options, 8,694 of
which would be subject to repurchase by the Company as of February 13, 1998, if
issued.
(13) Includes 476,917 shares issuable upon the exercise of options and warrants
held by all directors and executive officers that are exercisable within 60 days
of December 15, 1997, 238,447 of which would be subject to repurchase by the
Company as of February 13, 1998, if issued. See footnotes (3)-(12).
42
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date of this Prospectus (the "Underwriting Agreement"), the
Underwriters named below, for whom J.P. Morgan Securities Inc., UBS Securities
LLC and Invemed Associates, Inc. are acting as representatives (the
"Representatives"), have severally agreed to purchase, and the Company has
agreed to sell them, the respective numbers of shares of Common Stock set forth
opposite their names below. Under the terms and conditions of the Underwriting
Agreement, the Underwriters are obligated to take and pay for all such shares of
Common Stock, if any are taken. Under certain circumstances, the commitments of
nondefaulting Underwriters may be increased as set forth in the Underwriting
Agreement.
<TABLE>
<CAPTION>
------------
<S> <C>
NUMBER OF
UNDERWRITERS SHARES
- --------------------------------------------------------------------------------------------------- ------------
J.P. Morgan Securities Inc.........................................................................
UBS Securities LLC.................................................................................
Invemed Associates, Inc............................................................................
------------
Total.......................................................................................... 1,700,000
------------
------------
</TABLE>
Underwriters propose initially to offer the Common Stock directly to the public
at the price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the initial public offering of
the Common Stock, the public offering price and such concession may be changed.
The Company has granted to the Underwriters an option, expiring at the close of
business on the 30th day after the date of this Prospectus, to purchase up to
255,000 additional shares of Common Stock at the initial public offering price,
less the underwriting discount. The Underwriters may exercise such option solely
for the purpose of covering over-allotments, if any. To the extent the
Underwriters exercise the option, each Underwriter will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage of
such additional shares as the number set forth next to such Underwriter's name
in the preceding table bears to the total number of shares of Common Stock
offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Company's officers, directors and certain other stockholders of the Company
have agreed, subject to certain exceptions, not to, directly or indirectly, (i)
sell, grant any option to purchase or otherwise transfer or dispose of any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for shares of Common Stock or file a registration statement under
the Securities Act with respect to the foregoing or (ii) enter into any swap or
other agreement or transaction that transfers, in whole or in part, the economic
consequence of ownership of the Common Stock, without the prior written consent
of J.P. Morgan Securities Inc., for a period of 90 days after the date of this
Prospectus. The foregoing does not prohibit the Company's issuance of shares
pursuant to the exercise of the Underwriters over-allotment option or under the
Incentive Plan, the 1992 Stock Plan, the Directors' Plan or the Purchase Plan.
J.P. Morgan Securities Inc. may, in its sole discretion at any time or from time
to time, without notice, release all or any portion of the shares subject to the
lock-up agreements.
43
<PAGE>
In connection with the offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Underwriters may overallot the offering, creating a syndicate
short position. In addition, the Underwriters may bid for, and purchase, shares
of Common Stock in the open market to cover syndicate shorts or to stabilize the
price of the common Stock. Finally, the underwriting syndicate may reclaim
selling concessions allowed for distributing the Common Stock in the offering,
if the syndicate repurchases previously distributed Common Stock in syndicate
covering transactions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Common Stock above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.
The Underwriters and dealers may also engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Securities and Exchange Commission. In general, a passive
market maker may not bid for, or purchase, the Common Stock at a price that
exceeds the highest independent bid. In addition, the net daily purchases made
by any passive market maker generally may not exceed 30% of its average daily
trading volume in the Common Stock during a specified two month prior period, or
200 shares, whichever is greater. A passive market maker must identify passive
market making bids as such on the Nasdaq electronic inter-dealer reporting
system. Passive market making may stabilize or maintain the market price of the
Common Stock above independent market levels. Underwriters and dealers are not
required to engage in passive market making and may end passive market making
activities at any time.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward LLP ("Cooley"), Palo Alto, California. Certain legal
matters in connection with this Offering will be passed upon for the
Underwriters by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. As of the date of this Prospectus, Cooley owns a warrant to
purchase 2,500 units at a price of $.50 per unit with each unit consisting of 1
share of Common Stock and one warrant to purchase 1/2 share of Common Stock at
an exercise price of $20.00 per share. GC&H Investments, a general partnership
formed by the partners of Cooley for investment purposes, owns 10,675 shares of
the Company's Common Stock and a warrant to purchase 875 shares of the Company's
Common Stock at an exercise price of $20.00 per share. Alan C. Mendelson and
Deborah A. Marshall, partners at Cooley, are the Secretary and Assistant
Secretary of the Company, respectively.
EXPERTS
The consolidated financial statements of CV Therapeutics, Inc. appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
44
<PAGE>
[LOGO]
<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 and commissions, payable by the registrant in connection with the
distribution of the Common Stock being registered. All amounts are estimated,
except the SEC Registration Fee, the NASD Filing Fee and the Nasdaq National
Market Filing Fee:
<TABLE>
<S> <C>
SEC Registration Fee.............................................. 5,263
NASD Filing Fee................................................... 2,284
Nasdaq National Market Filing Fee................................. 17,500
Blue Sky Fees and Expenses........................................ 2,000
Accounting Fees................................................... 55,000
Legal Fees and Expenses........................................... 90,000
Printing and Engraving............................................ 101,000
Miscellaneous..................................................... 26,953
---------
Total......................................................... $ 300,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Certificate of Incorporation provides that directors
of the Registrant shall not be personally liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director, to
the fullest extent permitted by the General Corporation Law of the State of
Delaware. The Registrant's Restated Bylaws provide for indemnification of
officers and directors to the full extent and in the manner permitted by
Delaware law. Section 145 of the Delaware General Corporation Law makes
provision for such indemnification in terms sufficiently broad to cover officers
and directors under certain circumstances for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act").
The Registrant has entered into indemnification agreements with substantially
all of its officers and directors which provide indemnification under certain
circumstances for acts and omissions which may not be covered by any directors'
and officers' liability insurance.
The form of Underwriting Agreement, to filed as Exhibit 1.1 to the Registration
Statement, provides for indemnification of the Registrant and its controlling
persons against certain liabilities under the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<C> <S>
1.1 Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Registrant, as amended. (1)
3.2 Restated Bylaws of the Registrant. (1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate. (1)
5.1 Opinion of Cooley Godward LLP as to legality of the Common Stock.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-4).
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-3).
</TABLE>
- ------------------------
(1) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1 No. 333-12675, as amended, which became
effective November 19, 1996.
II-1
<PAGE>
(b) Financial Statement Schedules
Consolidated Schedules are omitted because they are not applicable, or because
the information is included in the Financial Statements or the Notes thereto
which are incorporated by reference.
ITEM 17. UNDERTAKINGS.
A. The Registrant hereby undertakes to provide to the underwriters at the
closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
B. 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 provisions described in Item 14 above, 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.
C. The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, 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 purposes of determining any liability under the Securities Act,
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.
D. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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, thereunto duly authorized, in the City
of Palo Alto, State of California, on January 5, 1998.
CV THERAPEUTICS, INC.
By: __________/S/____LOUIS G. LANGE, M.D., PH.D._________
Louis G. Lange, M.D., Ph.D.
Chairman of the Board & Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Louis G. Lange, M.D., Ph.D. his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments and registration statements filed pursuant to Rule 462(b)) to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents, in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed below by the following persons in the capabilities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ---------------------------------- ---------------------
<C> <S> <C>
Chairman of the Board & Chief
/S/LOUIS G. LANGE, M.D., PH.D. Executive Officer (Principal January 5, 1998
Louis G. Lange, M.D., Ph.D. Executive Officer)
/S/KATHLEEN A. STAFFORD Chief Financial Officer (Principal
Kathleen A. Stafford Financial and Accounting Officer) January 5, 1998
/S/SAMUEL D. COLELLA
Samuel D. Colella Director January 5, 1998
/S/THOMAS L. GUTSHALL
Thomas L. Gutshall Director January 5, 1998
/S/DAVID P. HOLVECK
David P. Holveck Director January 5, 1998
/S/BARBARA J. MCNEIL, M.D., PH.D.
Barbara J. McNeil, M.D., Ph.D. Director January 5, 1998
/S/J. LEIGHTON READ, M.D.
J. Leighton Read, M.D. Director January 5, 1998
/S/COSTA G. SEVASTOPOULOS, PH.D.
Costa G. Sevastopoulos, Ph.D. Director January 5, 1998
/S/ISAAC STEIN
Isaac Stein Director January 5, 1998
</TABLE>
II-3
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" in the Registration Statement (Form
S-3) and related Prospectus of CV Therapeutics, Inc. for the registration of
1,955,000 shares of its common stock and to the incorporation by reference
therein of our report dated March 4, 1997, with respect to the consolidated
financial statements of CV Therapeutics, Inc. included in its Annual Report
(Form 10-K), as amended, for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
January 5, 1998
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- --------- --------------------------------------------------------------------------
1.1 Underwriting Agreement.
<C> <S> <C>
3.1 Amended and Restated Certificate of Incorporation of the Registrant, as
amended. (1)
3.2 Bylaws of the Registrant. (1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Common Stock Certificate. (1)
5.1 Opinion of Cooley Godward LLP as to legality of the Common Stock.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-4).
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-3).
</TABLE>
- ------------------------
(1) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1 No. 333-12675, as amended, which became
effective November 19, 1996.
<PAGE>
UNDERWRITING AGREEMENT
CV THERAPEUTICS, INC.
__________ Shares of Common Stock
Underwriting Agreement
_____________, 1998
J.P. Morgan Securities Inc.
UBS Securities Inc.
Invemed Associates, Inc.
As Representatives of several underwriters
listed in Schedule I hereto
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
CV Therapeutics, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to the several Underwriters listed in Schedule I hereto
(the "Underwriters"), for whom you are acting as representatives(the
"Representatives") an aggregate of _________ shares of Common Stock, par
value $.001 per share, of the Company (the "Underwritten Shares") and, for
the sole purpose of covering over-allotments in connection with the sale of
the Underwritten Shares, at the option of the Underwriters, up to an
additional _________ shares of Common Stock, of the Company (the "Option
Shares"). The Underwritten Shares and the Option Shares are herein referred
to as the "Shares". The shares of Common Stock of the Company to be
outstanding after giving effect to the sale of the Shares are herein referred
to as the "Stock".
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it shall become effective including
information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "Registration Statement", and the
prospectus in the form first used to confirm sales of Shares is referred to
in this Agreement as the "Prospectus". If the Company
<PAGE>
has filed an abbreviated registration statement pursuant to Rule 462(b) under
the Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462 Registration Statement. Any reference in this
Agreement to the Registration Statement or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act, as of the date of the
Registration Statement or the Prospectus, as the case may be, and any
reference to any amendment or supplement to the Registration Statement or the
Prospectus shall be deemed to refer to and include any documents filed after
such date under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are
incorporated by reference in the Registration Statement, the Prospectus or
any other amendment or supplement thereto.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Company the respective number of Underwritten Shares set
forth opposite such Underwriter's name in Schedule I hereto at a purchase
price per share (the "Purchase Price") of $______.
In addition, the Company agrees to issue and sell the Option Shares to
the several Underwriters as hereinafter provided, and the Underwriters on the
basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, shall have the option to purchase,
severally and not jointly, from the Company up to an aggregate of ________
Option Shares at the Purchase Price, for the sole purpose of covering
over-allotments (if any) in the sale of Underwritten Shares by the several
Underwriters.
If any Option Shares are to be purchased, the number of Option Shares to
be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased
as the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares at
any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares
as to which the option is being exercised and the date and time when the
Option Shares are to be delivered and paid for which may be the same date and
time as the Closing Date (as hereinafter defined), but shall not be earlier
than the Closing Date nor later than the tenth full
-2-
<PAGE>
Business Day (as hereinafter defined) in the event the option is exercised
three or more days prior to the Closing Date after the date of such notice
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Any such notice shall be given at least three Business
Days prior to the date and time of delivery specified therein.
2. The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement
has become effective and (B) the parties hereto have executed and delivered
this Agreement, as in the judgment of the Representatives is advisable and
(ii) initially to offer the Shares upon the terms set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the
Representatives, no later than noon the Business Day (as defined below) prior
to the Closing Date (as defined below), in the case of the Underwritten
Shares, on _____________, 1997, or at such other time on the same or such
other date, not later than the third Business Day after the date of this
Agreement or thereafter, as the Representatives and the Company may agree
upon in writing or, in the case of the Option Shares, on the date and time
specified by the Representatives in the written notice of the Underwriters'
election to purchase such Option Shares. The time and date of such payment
for the Underwritten Shares is referred to herein as the "Closing Date" and
the time and date for such payment for the Option Shares, if other than the
Closing Date, are herein referred to as the "Additional Closing Date". As
used herein, the term "Business Day" means any day other than a day on which
banks are permitted or required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery
to the Representatives for the respective accounts of the several
Underwriters (including, without limitation, by "full-fast" electronic
transfer by Depository Trust Company) of the Shares to be purchased on such
date registered in such names and in such denominations as the
Representatives shall request in writing not later than three full Business
Days prior to the Closing Date or the Additional Closing Date, as the case
may be, with any transfer taxes payable in connection with the transfer to
the Underwriters of the Shares duly paid by the Company. The certificates
for the Shares will be made available for inspection and packaging by the
Representatives at the office of J.P. Morgan Securities Inc. set forth above
not later than 1:00 P.M., New York City time, on the Business Day prior to
the Closing Date or the Additional Closing Date, as the case may be.
4. The Company represents and warrants to each Underwriter that:
(a) The Company and the transactions contemplated by this Agreement
meet the requirements for using Form S-3 under the Securities Act; no order
preventing or suspending the use of any preliminary prospectus has been issued
by the Commission, and the preliminary prospectus filed as part of the
Registration Statement complied, at the time the Registration Statement was
declared effective, in all material respects with the Securities Act, and did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
-3-
<PAGE>
misleading; provided that this representation and warranty shall not apply to
any statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use therein;
(b) The Incorporated Documents heretofore filed, when they were
filed (or, if any amendment with respect to any such document was filed, when
such amendment was filed), conformed in all material respect with the
requirements of the Exchange Act and the rules and regulations thereunder,
any further Incorporated Documents so filed will, when they are filed,
conform in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder; no such document when it was filed
(or, if an amendment with respect to any such document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein in light of the circumstances under
which they were made not misleading; and no such further document, when it is
filed, will contain an untrue statement of a material fact or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading.
(c) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the Commission;
and the Registration Statement and Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto)
comply, or will comply, as the case may be, in all material respects with the
Securities Act and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of the date
of the Prospectus and any amendment or supplement thereto, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented, if applicable, at the Closing
Date or Additional Closing Date, as the case may be, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the foregoing
representations and warranties shall not apply to statements or omissions in
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly
for use therein;
(d) the financial statements, and the related notes thereto,
incorporated by reference in the Registration Statement and the Prospectus
present fairly the consolidated financial position of the Company as of the
dates indicated and the results of its operations and changes in its
consolidated cash flows for the periods specified; and said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and the supporting
schedules incorporated by reference in the Registration Statement present
fairly the information required to be stated therein;
(e) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, with the exception of option
grants made to employees of or
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consultants to the Company, there has not been any change in the capital
stock or long-term debt of the Company, or any material adverse change, in or
affecting the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus; and except as
set forth or contemplated in the Prospectus the Company has not entered into
any transaction or agreement (whether or not in the ordinary course of
business) material to the Company;
(f) the Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of its jurisdiction of
incorporation, with power and corporate authority to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company;
(g) the Company does not own or control, directly or indirectly,
any interest in any other corporation, association, or other business entity
other than CV Therapeutics International, a dormant subsidiary;
(h) this Agreement has been duly authorized, executed and delivered
by the Company;
(i) the Company has an authorized capitalization as set forth in
the Prospectus and such authorized capital stock conforms as to legal matters
to the description incorporated by reference in the Prospectus, and all of
the outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully-paid and non-assessable and are not
subject to any pre-emptive or similar rights; and, except as described in or
expressly contemplated by the Prospectus, there are no outstanding rights
(including, without limitation, pre-emptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company or any such subsidiary, any such convertible or exchangeable
securities or any such rights, warrants or options;
(j) the Shares to be issued and sold by the Company hereunder have
been duly authorized, and, when issued and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be duly
issued and will be fully paid and non-assessable and will conform to the
descriptions incorporated by reference in the Prospectus; and the issuance of
the Shares is not subject to any preemptive or similar rights;
(k) the Company is not, nor with the giving of notice or lapse of
time or both would be, in violation of or in default under, its Certificate
of Incorporation or By-Laws or any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the
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<PAGE>
Company is a party or by which it or any of its properties is bound, except
for violations and defaults which individually and in the aggregate are not
material to the Company; the issue and sale of the Shares and the performance
by the Company of its obligations under this Agreement and the consummation
of the transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument which is material to the Company to which the Company is a party
or by which the Company is bound or to which any of the property or assets of
the Company is subject, except where such breach would not have a material
adverse affect on the Company; nor will any such action result in any
violation of the provisions of the Certificate of Incorporation or the
By-Laws of the Company or any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company, or any of its properties; and no consent, approval,
authorization, order, license, registration or qualification of or with any
such court or governmental agency or body is required for the issue and sale
of the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except such consents, approvals,
authorizations, orders, licenses, registrations or qualifications as have
been obtained under the Securities Act and as may be required by the National
Association of Securities Dealers, Inc. (the "NASD"), or under state
securities or Blue Sky Laws in connection with the purchase and distribution
of the Shares by the Underwriters;
(l) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its properties or to which the Company is
or may be a party or to which any property of the Company is or may be the
subject which, if determined adversely to the Company, could individually or
in the aggregate have, or reasonably be expected to have, a material adverse
effect on the general affairs, business, prospects, management, financial
position, stockholders' equity or results of operations of the Company, and,
to the best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others; and there
are no statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement or any Incorporated Document that are
not described or filed as required by the Securities Act or the Exchange Act,
as the case may be;
(m) the Company owns no real property, has good and marketable
title to all personal property owned by it, in each case free and clear of
all liens, encumbrances and defects except such as are described or referred
to in the Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made or proposed to be made of
such property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, existing and enforceable leases with such exceptions as are
not material and do not interfere with the use made or proposed to be made of
such property and buildings by the Company or its subsidiaries;
(n) The Company owns or possesses adequate licenses or other rights
to use all patents, copyrights, trademarks, service marks, trade names,
technology and know-how (collectively, the "Intellectual Property") necessary
(in any material respect) to conduct its business in the manner
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<PAGE>
described in the Prospectus, the Company is not obligated (in any material
respect) to pay a royalty, grant a license, or provide other consideration to
any third party in connection with its patents, copyrights, trademarks,
service marks, trade names, or technology other than as disclosed in the
Prospectus, and, except as disclosed in the Prospectus, the Company has not
received any notice of infringement or conflict with (and the Company knows
of no infringement or conflict with) asserted rights of others with respect
to the Intellectual Property which could reasonably be expected to result in
any material adverse effect upon the Company and, except as disclosed in the
Prospectus, the discoveries, inventions, products or processes of the Company
referred to in the Prospectus do not, to the best knowledge of the Company,
infringe or conflict with any right or patent of any third party, or any
discovery, invention, product or process which is the subject of a patent
application filed by any third party, known to the Company which could have a
material adverse effect on the Company or its subsidiaries. Other than
pursuant to agreements with Syntex, the University of Florida Research
Foundation, Inc., Bayer AG, Biogen, Inc. and Biotech Manufacturing Ltd. and
other agreements that are not material, no third party including any academic
or governmental organization, possesses rights to the Intellectual Property
which, if exercised, could enable such third party to develop products
competitive to those of the Company or could have a material adverse effect
on the ability of the Company to conduct its business in the manner described
in the Prospectus.
(o) no relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required by
the Securities Act to be described in the Registration Statement or by the
Exchange Act to be described in any Incorporated Document and the Prospectus
which is not so described;
(p) no person has the right to require the Company to register any
securities for offering and sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the issue and
sale of the Shares;
(q) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(r) the Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing
business with the Government of Cuba or with any person or affiliate located
in Cuba;
(s) Ernst & Young LLP, who have certified certain financial
statements of the Company, are independent public accountants as required by
the Securities Act;
(t) the Company has filed all federal, state, local and foreign tax
returns which have been required to be filed and have paid all taxes shown
thereon and all assessments received by it to the extent that such taxes have
become due and are not being contested in good faith; and, except as
disclosed in the Registration Statement and the Prospectus, there is no tax
deficiency which has been asserted or threatened against the Company;
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<PAGE>
(u) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock;
(v) the Company owns, possesses or has obtained all material
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities (including foreign
regulatory agencies), all self-regulatory organizations and all courts and
other tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, and the Company not has received any actual
notice of any proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other
authorization, except as described in the Registration Statement and the
Prospectus; and the Company is in compliance with all laws and regulations
relating to the conduct of its business as conducted as of the date hereof;
the Company is not in violation of any foreign, state or local law, order,
rule, regulation, writ, injunction or decree of any court or governmental
agency or body, including, but not limited to, the United States Food and
Drug Administration (the "FDA"); all of the descriptions in the Registration
Statement and Prospectus of the legal and governmental proceedings by or
before the FDA or any foreign, state or local government body exercising
comparable authority are true, complete and accurate in all material respects;
(w) the human clinical trials conducted by the Company or in which
the Company has participated that are described in the Registration Statement
and Prospectus, or the results of which are referred to in the Registration
Statement and Prospectus, and, to the best of the Company's knowledge, such
studies and tests conducted on behalf of the Company, were and, if still
pending, are being, conducted in accordance with experimental protocols,
procedures and controls pursuant to accepted professional scientific
standards; the descriptions of the results of such studies, tests and trials
contained in the Registration Statement and Prospectus are accurate and
complete in all material respects; and the Company has not received any
notices or correspondence from the FDA or any other governmental agency
requiring the termination, suspension or modification of any clinical trials
conducted by, or on behalf of, the Company or in which the Company has
participated that are described in the Registration Statement and Prospectus
or the results of which are referred to in the Registration Statement and
Prospectus;
(x) there are no existing or, to the best knowledge of the Company,
threatened labor disputes with the employees of the Company which are likely
to have a material adverse effect on the Company;
(y) the Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and
(iii) is in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure
to
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<PAGE>
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company;
(z) in the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review, the
Company has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a material adverse effect on the
Company; and
(aa) each employee benefit plan, within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, ("ERISA")
that is maintained, administered or contributed to by the Company or any of
its affiliates for employees or former employees of the Company and its
affiliates has been maintained in compliance with its terms and the
requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended, ("Code"). No prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975 of the Code has occurred with respect to any
such plan excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan which is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA no "accumulated
funding deficiency" as defined in Section 412 of the Code has been incurred,
whether or not waived, and the fair market value of the assets of each such
plan (excluding for these purposes accrued but unpaid contributions) exceeded
the present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time and, if required, to file the
final Prospectus with the Commission within the time periods specified by
Rule 424(b) and Rule 430A under the Securities Act and to furnish copies of
the Prospectus to the Underwriters in New York City prior to 10:00 a.m., New
York City time, on the Business Day next succeeding the date of this
Agreement in such quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the Representatives
(i) four (4) signed copies of the Registration Statement (as originally filed)
and each amendment thereto, in each case including exhibits, and, upon request,
to each other Underwriter a conformed copy of the Registration Statement (as
originally filed) and each amendment thereto, in each case without exhibits,
(ii) four copies of the Incorporated Documents, without exhibits, as
you may request, (iii) three copies of the exhibits to the Incorporated
Documents, and (iv) during the period mentioned in paragraph (e) below, to each
of the Underwriters as many copies of the Prospectus (including all amendments
and supplements thereto) as the Representatives may reasonably request;
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<PAGE>
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, and, prior to the end of the period
of time referred to in subsection (e) below, before filing any document which
upon filing becomes an Incorporated Document, to furnish to the
Representatives a copy of the proposed document for review and not to file
any such proposed document to which the Representatives reasonably object;
(d) to advise the Representatives promptly, and to confirm such
advice in writing (i) when the Registration Statement has become effective,
(ii) when any amendment to the Registration Statement has been filed or
becomes effective, (iii) when any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus or
the Prospectus or the initiation or threatening of any proceeding for that
purpose, (vi) of the occurrence of any event, within the period referenced in
paragraph (e) below, as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, and (vii) of the receipt by the Company of any
notification with respect to any suspension of the qualification of the
Shares for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and to use its best efforts
to prevent the issuance of any such stop order, or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or of any
order suspending any such qualification of the shares, or notification of any
such order thereof and, if issued, to obtain as soon as possible the
withdrawal thereof;
(e) if, during such period of time after the first date of the
public offering of the Shares as in the opinion of counsel for the
Underwriters a prospectus relating to the Shares is required by law to be
delivered in connection with sales by the Underwriters or any dealer, any
event shall occur as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with law, or to file under the Exchange Act so as to comply therewith
an amendment to any Incorporated Document, forthwith to prepare and furnish,
at the expense of the Company, to the Underwriters and to the dealers (whose
names and addresses the Representatives will furnish to the Company) to which
Shares may have been sold by the Representatives on behalf of the
Underwriters and to any other dealers upon request, such amendments or
supplements to the Prospectus as may be necessary so that the statements in
the Prospectus as so amended or amendment to such Incorporated Document
supplemented will not, in the light of the circumstances when the Prospectus
is delivered to a purchaser, be misleading or so that the Prospectus will
comply with law;
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<PAGE>
(f) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives
shall reasonably request and to continue such qualification in effect so long
as reasonably required for distribution of the Shares; PROVIDED that the
Company shall not be required to file a general consent to service of process
in any jurisdiction;
(g) to make generally available to its security holders and to the
Representatives as soon as practicable an earnings statement covering a
period of at least twelve months beginning with the first fiscal quarter of
the Company occurring after the effective date of the Registration Statement,
which shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Commission promulgated thereunder;
(h) so long as the Shares are outstanding, to furnish to the
Representatives copies of all reports or other communications (financial or
other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
(i) for a period of 90 days after the date of the offering of the
Shares not to (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of Stock or any securities convertible
into or exercisable or exchangeable for Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Stock
or such other securities, in cash or otherwise without the prior written
consent of J.P. Morgan, other than the Shares to be sold hereunder and any
shares of Stock of the Company issued upon the exercise of options or
warrants outstanding as of the date hereof and additional options granted
under the Company's 1994 Equity Incentive Plan, as amended, 1992 Stock Option
Plan, as amended or Non-Employee Directors' Stock Option Plan, and any shares
of Stock issued under the Employee Stock Purchase Plan;
(j) to use the net proceeds received by the Company from the sale
of the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(k) to use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National
Market (the "Nasdaq National Market");
(l) whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations hereunder,
including without limiting the generality of the foregoing, all costs and
expenses (i) incident to the preparation, issuance, execution and delivery of
the Shares, (ii) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any preliminary
prospectus (including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or qualification of
the Shares under the laws of such jurisdictions as the Representatives may
designate
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(including fees of counsel for the Underwriters and its disbursements), (iv)
in connection with the listing of the Shares on the Nasdaq National Market,
(v) related to the filing with, and clearance of the offering by, the
National Association of Securities Dealers, Inc., (vi) in connection with the
printing (including word processing and duplication costs) and delivery of
this Agreement, the Preliminary and Supplemental Blue Sky Memoranda and the
furnishing to the Underwriters and dealers of copies of the Registration
Statement, the Prospectus and Incorporated Documents, including mailing and
shipping, as herein provided, (vii) any expenses incurred by the Company in
connection with a "road show" presentation to potential investors, (viii) the
cost of preparing stock certificates and (ix) the cost and charges of any
transfer agent and any registrar.
6. The several obligations of the Underwriters hereunder to purchase
the Shares on the Closing Date or the Additional Closing Date, as the case
may be, are subject to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) the Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than
5:00 P.M., New York City time, on the date hereof; and no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment shall be in effect, and no proceedings for such
purpose shall be pending before or threatened by the Commission; the
Prospectus shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by the rules and
regulations under the Securities Act and in accordance with Section 5(a)
hereof; and all requests for additional information shall have been complied
with to the satisfaction of the Representatives;
(b) the representations and warranties of the Company contained
herein are true and correct on and as of the Closing Date or the Additional
Closing Date, as the case may be, as if made on and as of the Closing Date or
the Additional Closing Date, as the case may be, and the Company shall have
complied with all agreements and all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date or the Additional
Closing Date, as the case may be;
(c) since the respective dates as of which information is given in
the Prospectus, with the exception of option grants to employees of or
consultants to the Company, there shall not have been any change in the
capital stock or long-term debt of the Company or any material adverse change
in or affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of the
Company, otherwise than as set forth or contemplated in the Prospectus, the
effect of which in the judgment of the Representatives makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Shares on the Closing Date or the Additional Closing Date, as the case may
be, on the terms and in the manner contemplated in the Prospectus; and the
Company has not sustained since the date of the latest audited financial
statements included in the Prospectus any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus;
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<PAGE>
(d) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, a
certificate of an executive officer of the Company, with specific knowledge
about the Company's financial matters, satisfactory to the Representatives to
the effect set forth in subsections (a) and (b) (with respect to the
respective representations, warranties, agreements and conditions of the
Company) of this Section and to the further effect that there has not
occurred any material adverse change in or affecting the general affairs,
business, prospects, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a whole
from that set forth or contemplated in the Prospectus, as amended or
supplemented if applicable;
(e) Cooley Godward LLP, counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Closing
Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Representatives, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation, corporate with power and authority to own its properties
and conduct its business as described in the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and to the best of such counsel's
knowledge is in good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so qualified
or in good standing would not have a material adverse effect on the Company
taken as a whole;
(iii) to the best of such counsel's knowledge, there are no
legal or governmental investigations, actions, suits or proceedings pending
or, to the best of such counsel's knowledge, threatened against or affecting
the Company or any of its properties; and such counsel does not know of any
contracts or other documents that are required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement or any Incorporated Document that are not described or
filed as required;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the authorized capital stock of the Company conforms as
to legal matters to the description thereof incorporated by reference in the
Prospectus;
(vi) the shares of capital stock of the Company outstanding
prior to the issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable;
(vii) the Shares have been duly authorized, and when delivered
to and paid for the Underwriters in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable and the
issuance of the Shares is not subject to any preemptive or to the best of
such counsel's knowledge similar rights;
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<PAGE>
(viii) the statements in the Prospectus under "Business --
Licenses and Collaborations," and in the Registration Statement in Item 15,
insofar as such statements constitute a summary of legal matters, documents
or proceedings referred to therein, fairly present the information required
to be presented under the Securities Act with respect to such terms, legal
matters, documents or proceedings;
(ix) such counsel is of the opinion that the Registration
Statement and the Prospectus and any amendments and supplements thereto
(other than the financial statements and related schedules and financial and
statistical data derived therefrom and included therein, as to which such
counsel need express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the rules and regulations of
the Commission thereunder; each of the Incorporated Documents (other than the
financial statements and related schedules and financial and statistical data
derived therefrom and included therein, as to which counsel need express no
opinion) complies as to form in all material respects with the Exchange Act
and the rules and regulations of the Commission thereunder; such counsel
believes that (other than the financial statements and related schedules and
financial and statistical data derived therefrom and included or incorporated
by reference in the Registration Statement Prospectus or any Incorporated
Document, as to which such counsel need express no belief), the Registration
Statement (including the Incorporated Documents) and the Prospectus included
therein at the time the Registration Statement became effective did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that the Prospectus, as amended or supplemented,
if applicable, does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(x) to the best knowledge of such counsel, the Company is
not, nor, or with the giving of notice or lapse of time or both would be, in
violation of or in default under, its Certificate of Incorporation or By-Laws
or, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to which the Company is a party or by which it or any of
its properties is bound, except for violations and defaults which
individually and in the aggregate are not material to the Company; the issue
and sale of the Shares being delivered on the Closing Date or the Additional
Closing Date, as the case may be; the performance by the Company of its
obligations under this Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, the Certificate of
Incorporation or the By-Laws of the Company or any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument known to such
counsel to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject, nor will
any such action result in any violation of the provisions of or any
applicable law or statute or any order, rule or regulation of any court or
governmental agency so far as is known to such counsel or body having
jurisdiction over the Company or any of its properties; other than as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters as to which such
counsel need express no opinion;
-14-
<PAGE>
(xi) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental agency or
body is required for the issue and sale of the Shares or the consummation of
the other transactions contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or qualifications
as have been obtained under the Securities Act and; except as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters as to which such counsel need
express no opinion;
(xii) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company", as such
terms are defined in the Investment Company Act;
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the States of California and Delaware, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws; (B) as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and certificates or other written
statements of officials of jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered in
subparagraph (ix) above counsel may state their opinion and belief is based
upon their participation in the preparation of the Registration Statement and
the Prospectus and any amendment or supplement thereto and review and
discussion of the contents thereof but is without independent check or
verification except as specified.
The opinion of Cooley Godward LLP described above and the opinions of
Saliwanchik & Saliwanchik and McDonnell, Boehnen, Hulbert & Berghoff, Ltd.
described below each shall be rendered to the Underwriters at the request of
the Company and shall so state therein;
(f) Saliwanchik & Saliwanchik, special intellectual property
counsel for the Company, shall have furnished to the Representatives their
written opinion, dated the Closing Date or the Additional Closing Date, as
the case may be, in form and substance satisfactory to the Representatives,
to the effect that:
(i) such counsel represents the University of Florida
(hereinafter, the "University") and the University of Florida Research
Foundation Inc. (hereinafter "UFRFI") in certain matters relating to
intellectual property, including patents related to CVT-124;
(ii) such counsel is familiar with CVT-124 as used by the Company
in its business and the manner of its use and has read the portions of the
Registration Statement and the Prospectus entitled "Risk Factors -- Uncertainty
of Patent Position and Proprietary Rights" and "Business -- Patents and
Proprietary Technology" (collectively, the "Intellectual Property Portion");
-15-
<PAGE>
(iii) the Intellectual Property Portion contains accurate
descriptions of the patent applications filed in the United States and
outside the United States related to CVT-124 (the "CVT-124 Applications") and
issued and allowed patents related to CVT-124 (the "CVT-124 Patents")
licensed to the Company by UFRFI, each of which CVT-124 Applications and
CVT-124 Patents shall be listed on exhibits to such opinion, and fairly
summarizes the legal matters, documents and proceedings relating thereto;
(iv) based upon a review of the third party rights made known
to counsel, namely, pending foreign or international applications EP-A 0 374
808; DE 4,324,944; and WO 94/26743, and discussions with scientific personnel
of the Company and the University, such counsel is not aware of any valid
United States or foreign patent that is or would be infringed by the
activities of the Company in the manufacture, use, or sale of any presently
proposed product, the technologies employed by the Company, or the method of
their use in any presently proposed product, each as described in the
Prospectus and solely as the foregoing relates to CVT-124. Such counsel has
made not independent search and therefore has not performed an infringement
analysis relating to CVT-124 based on such a search;
(v) such counsel has reviewed the CVT-124 Applications, which
CVT-124 Applications are described in the Intellectual Property Portion, and
in the opinion of such counsel the CVT-124 Applications have been properly
prepared and filed, and are being diligently pursued by UFRFI, and the
inventions described in the CVT-124 Applications are licensed to the Company;
(vi) to such counsel's knowledge, no entity or individual
other than the Company and UFRFI has any right or claim in any of the
inventions, the CVT-124 Patents, the CVT-124 Applications, or any patent to
be issued therefrom;
(vii) such counsel is aware of no pending or threatened claim,
suit, judicial or governmental proceedings relating to the CVT-124 Patents or
the CVT-124 Applications or the subject matter therein, based upon review of
the CVT-124 Patents and the CVT-124 Applications, such counsel is not aware
of any rights of third parties to any of the inventions described in the
CVT-124 Patents or the CVT-124 Applications which could reasonably be
expected to materially affect the ability of the Company to conduct its
business as described in the Prospectus, including the commercialization of
its products currently under development; and
(viii) such counsel has no reason to believe that the
information contained in the Intellectual Property Portion of the
Registration Statement or the Prospectus, solely as the foregoing relates to
the CVT-124 Patents and CVT-124 Applications, at the time it became
effective contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading or that, at the Closing Date, the
information contained in the Intellectual Property Portion of the Prospectus
or any amendment or supplement to the Intellectual Property Portion of the
Prospectus, solely as the foregoing relates to the CVT-124 Patents and
CVT-124 Applications, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
-16-
<PAGE>
(g) McDonnell, Boehnen, Hulbert & Berghoff, Ltd., intellectual
property counsel for the Company, shall have furnished to the Representatives
their written opinion, dated the Closing Date or the Additional Closing Date,
as the case may be, in form and substance satisfactory to the
Representatives, to the effect that:
(i) such counsel represents the Company in certain matters
relating to intellectual property, including patents, trade secrets and
certain trademark matters, related to the Company's products under
development as described in the Prospectus, other than CVT-124;
(ii) such counsel is familiar with the foregoing technology
and products as used by the Company in its business and the manner of its use
and has read the portions of the Registration Statement and the Prospectus
entitled "Risk Factors -- Uncertainty of Patent Position and Proprietary
Rights" and "Business -- Patents and Proprietary Technology" (collectively,
the "Intellectual Property Portion");
(iii) the Intellectual Property Portion contains accurate
descriptions of the patent applications filed in the United States and
outside the United States related to the foregoing technology and products
(the "CVT Applications") and issued and allowed patents related to the
foregoing technology and products (the "CVT Patents") and including those
patent applications licensed to the Company (the "Licensed Applications") and
the patents licensed to the Company (the "Licensed Patents"), (the CVT
Applications and the Licensed Applications are referred to collectively
herein as the "Company Applications," and the CVT Patents and the Licensed
Patents are referred to collectively herein as the "Company Patents") each of
which Company Applications, Company Patents shall be listed on exhibits to
such opinion, and fairly summarizes the legal matters, documents and
proceedings relating thereto;
(iv) based upon a review of the third party rights made known
to counsel and discussions with scientific personnel of the Company, such
counsel is not aware of any valid United States or foreign patent, that is or
would be infringed by the activities of the Company in the manufacture, use
or sale of any presently proposed product, the technologies employed by the
Company or the method of their use in any presently proposed product, each as
described in the Prospectus and as such are related to the foregoing
technology and products;
(v) such counsel has reviewed the Company Applications, which
Company Applications are described in the Intellectual Property Portion, and
in the opinion of such counsel the Company Applications have been properly
prepared and filed, and are being diligently pursued by the Company, and the
inventions described in the Company Applications are owned by, assigned or
licensed to the Company;
(vi) to such counsel's knowledge, no other party or individual
has any right or claim in any of the inventions, the Company Patents, the
Company Applications, or any patent to be issued therefrom, and in such
counsel's opinion each of the Company Applications discloses patentable
subject matter;
-17-
<PAGE>
(vii) such counsel is aware of no pending or threatened claim,
suit, judicial or governmental proceedings relating to the Company Patents or
the Company Applications or the subject matter therein, based upon review of
the Company Patents and the Company Applications, such counsel is not aware
of any rights of third parties to any of the inventions described in the
Company Patents or the Company Applications which could reasonably be
expected to materially affect the ability of the Company to conduct its
business as described in the Prospectus, including the commercialization of
its products currently under development; and
(viii) such counsel has no reason to believe that the
information contained in the Intellectual Property Portion of the
Registration Statement or the Prospectus at the time it became effective
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that, at the Closing Date, the
information contained in the Intellectual Property Portion of the Prospectus
or any amendment or supplement to the Intellectual Property Portion of the
Prospectus contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(h) on the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or Additional Closing
Date, as the case may be, Ernst & Young LLP shall have furnished to you
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, containing statements and information of the
type customarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus;
(i) the Representatives shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an opinion of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to the
Underwriters, with respect to the due authorization and valid issuance of the
Shares, the Registration Statement, the Prospectus and other related matters
as the Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(j) the Shares to be delivered on the Closing Date or Additional
Closing Date, as the case may be, shall have been approved for listing on the
Nasdaq National Market;
(k) on or prior to the Closing Date or Additional Closing Date, as
the case may be, the Company shall have furnished to the Representatives such
further certificates and documents as the Representatives shall reasonably
request; and
(l) the "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain stockholders, officers and
directors of the Company relating to sales and certain other dispositions of
shares of Stock or certain other securities, delivered to you on or before
-18-
<PAGE>
the date hereof, shall be in full force and effect on the Closing Date or
Additional Closing Date, as the case may be.
7. The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities
(including, without limitation, the legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused
by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use therein.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to each Underwriter,
but only with reference to information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any
person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall
promptly notify the person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request
of the Indemnified Person, shall retain counsel reasonably satisfactory to
the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees
and expenses of such counsel related to such proceeding. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties
in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all Indemnified Persons,
and that all such fees and expenses shall be reimbursed as they are incurred.
Any such separate firm for the Underwriters and such control persons of
Underwriters shall be
-19-
<PAGE>
designated in writing by J.P. Morgan Securities Inc. and any such separate
firm for the Company, its directors, its officers who sign the Registration
Statement and such control persons of the Company shall be designated in
writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the Indemnifying Person agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by the second and
third sentences of this paragraph, the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 90 days
after receipt by such Indemnifying Person of the aforesaid request, (ii) such
fees and expenses are in excess of $50,000 and (iii) such Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement. No Indemnifying Person shall,
without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand
and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other
shall be deemed to be in the same respective proportions as the net proceeds
from the offering (before deducting expenses) received by the Company and the
total underwriting discounts and the commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Company on the one hand and the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take
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<PAGE>
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no
event shall an Underwriter be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 7 are several in proportion to the respective number of Shares
set forth opposite their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares)
may be terminated in the absolute discretion of the Representatives, by
notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (or, in the case of the Option
Shares, prior to the Additional Closing Date) (i) trading generally shall
have been suspended or materially limited on or by, as the case may be, any
of the New York Stock Exchange or the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board Options Exchange,
the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading
of any securities of or guaranteed by the Company shall have been suspended
on any exchange or in any over-the-counter market, (iii) a general moratorium
on commercial banking activities in New York shall have been declared by
either Federal or New York State authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the
Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares being delivered
at the Closing Date or the Additional Closing Date, as the case may be, on
the terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
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<PAGE>
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder on such date, and
the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of Shares to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions that the
number of Shares set forth opposite their respective names in Schedule I
bears to the aggregate number of Underwritten Shares set forth opposite the
names of all such non-defaulting Underwriters, or in such other proportions
as the Representatives may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date; PROVIDED that in no event shall the number of Shares
that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If on
the Closing Date or the Additional Closing Date, as the case may be, any
Underwriter or Underwriters shall fail or refuse to purchase Shares which it
or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representatives and the Company for the
purchase of such Shares are not made within 36 hours after such default, this
Agreement (or the obligations of the several Underwriters to purchase the
Option Shares, as the case may be) shall terminate without liability on the
part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date
(or, in the case of the Option Shares, the Additional Closing Date), but in
no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if
for any reason the Company shall be unable to perform its obligations under
this Agreement or any condition of the Underwriters' obligations cannot be
fulfilled, the Company agrees to reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and expenses of
its counsel) reasonably incurred by the Underwriter in connection with this
Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Underwriters, any controlling persons referred to herein and
their respective successors and assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person,
firm or corporation any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. No purchaser of
Shares from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by J.P. Morgan Securities Inc. alone on behalf of
the Underwriters, and any such action taken by
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<PAGE>
the Representatives jointly or by J.P. Morgan Securities Inc. alone shall be
binding upon the Underwriters. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to
the Underwriters shall be given to the Representatives, c/o J.P. Morgan
Securities Inc., 60 Wall Street, New York, New York 10260 (telefax: (212)
648-5705); Attention: Syndicate Department. Notices to the Company shall be
given to it at 3172 Porter Drive, Palo Alto, CA 94304 (telefax: (415)
858-0390); Attention: President, with a copy to Cooley Godward LLP, 3000 El
Camino Real, Palo Alto, CA 94306; Attention: Alan C. Mendelson, Esq.
13. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws provisions thereof.
-23-
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
CV THERAPEUTICS, INC.
By:
---------------------------------------
Title: Louis Lange, Chief Executive
Officer
Accepted: _____________, 1997
J.P. Morgan Securities Inc.
Invemed Associates, Inc.
UBS Securities Inc.
Acting severally on behalf
of themselves and the
several Underwriters listed
in Schedule I hereto.
By: J.P. Morgan Securities Inc.
Acting on behalf of itself and the
several Underwriters listed in
Schedule I hereto.
By:
----------------------------------
Title:
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<PAGE>
SCHEDULE I
NUMBER OF SHARES
UNDERWRITER TO BE PURCHASED
- ------------------------------------------- -------------------
J.P. Morgan Securities Inc. . . . . . . .
UBS Securities LLC . . . . . . . . . . . .
Invemed Associates, Inc. . . . . . . . . .
__________
Total:
<PAGE>
[COOLEY GODWARD LLP LETTERHEAD]
EXHIBIT 5.1
January 5, 1998
CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Ladies and Gentleman:
You have requested our opinion with respect to certain matters in connection
with the filing by CV Therapeutics, Inc., a Delaware corporation (the
"Company"), of a Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission") on
January 5, 1998, covering the underwritten public offering of up to 1,955,000
shares of the Company's Common Stock with a par value of $0.001 (the "Shares")
(including 255,000 shares of Common Stock for which the underwriters will be
granted an over-allotment option). All of the Shares are to be sold by the
Company as described in the Registration Statement.
In connection with this opinion, we have (i) examined and relied upon the
Registration Statement and related Prospectus included therein, the Company's
Restated Certificate of Incorporation and Bylaws, and the originals or copies
certified to our satisfaction of such records, documents, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below and (ii) assumed that the
Shares will be sold by the underwriters at a price established by the Pricing
Committee of the Board of Directors of the Company. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, and
the conformity to originals of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold in accordance with the Registration Statement and
related Prospectus, will be validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Alan C. Mendelson
-----------------------------------
Alan C. Mendelson
