<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 2, 1999
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>
DELAWARE 43-1570294
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
3172 PORTER DRIVE, PALO ALTO, CALIFORNIA 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
CHIEF EXECUTIVE OFFICER
CV THERAPEUTICS, INC.
3172 PORTER DRIVE, PALO ALTO, CALIFORNIA 94304
(650) 812-0585
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
<TABLE>
<S> <C>
COPIES TO: COPIES TO:
ALAN C. MENDELSON, ESQ. MICHAEL W. HALL, ESQ.
ANDREA VACHSS, ESQ. LAURA I. BUSHNELL, ESQ.
COOLEY GODWARD LLP LATHAM & WATKINS
FIVE PALO ALTO SQUARE 135 COMMONWEALTH DRIVE
3000 EL CAMINO REAL MENLO PARK, CALIFORNIA 94025
PALO ALTO, CALIFORNIA 94306 (650) 328-4600
(650) 843-5000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
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 PROPOSED MAXIMUM
TITLE OF CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(1)(2) PRICE(1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per
share(3)............................ 4,600,000 shares $15.75 $72,450,000 $20,141.10
</TABLE>
(1) Includes 600,000 shares of common stock issuable upon exercise of the
underwriters' over-allotment option.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933 based on the average
of the high and low sales prices of the common stock as reported the Nasdaq
National Market on August 31, 1999.
(3) Each share of the registrant's common stock being registered hereunder, if
issued prior to the termination by the registrant of its preferred share
rights agreement, includes Series A junior participating preferred stock
purchase rights. Prior to the occurence of certain events, the Series A
junior participating preferred stock purchase rights will not be exercisable
or evidenced separately from the registrant's common stock and have no value
except as reflected in the market price of the shares to which they are
attached.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH WE ARE
PERMITTED BY U.S. FEDERAL SECURITIES LAWS TO OFFER THESE SECURITIES USING THIS
PROSPECTUS, WE MAY NOT SELL THEM UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SEC RELATING TO THESE SECURITIES IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES OR OUR SOLICITATION OF YOUR OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THAT WOULD NOT BE PERMITTED OR LEGAL.
<PAGE>
SUBJECT TO COMPLETION--DATED SEPTEMBER 2, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
, 1999
[CV THERAPEUTICS LOGO]
4,000,000 SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CV THERAPEUTICS: THE OFFERING:
- - CV Therapeutics is a - CV Therapeutics is offering
biopharmaceutical company engaged in 4,000,000 shares.
the discovery and development of new - The underwriters have an option to
small molecule drugs to treat purchase up to an additional 600,000
cardiovascular disease, the leading shares from CV Therapeutics to cover
cause of death in the United States. over-allotments.
- - CV Therapeutics, Inc. - There is an existing market for our
3172 Porter Drive shares. On September 1, 1999, the
Palo Alto, California 94304 last reported sale price of our
(650) 812-0585 common stock was $16.00 per share.
- - NASDAQ SYMBOL: CVTX - Closing: , 1999
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Per Share Total
<S> <C> <C>
- -------------------------------------------------------------------------
Public offering price: $ $
Underwriting fees:
Proceeds to CV Therapeutics:
- -------------------------------------------------------------------------
</TABLE>
INVESTING IN OUR COMMON STOCK INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE
BANCBOSTON ROBERTSON STEPHENS
J.P. MORGAN & CO.
SG COWEN
The undersigned is facilitating Internet distribution.
DLJDIRECT INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Where You Can Find More Information............ 3
Prospectus Summary............................. 4
Risk Factors................................... 9
Special Note Regarding Forward-Looking
Statements................................... 17
Use of Proceeds................................ 18
Price Range of Common Stock.................... 19
Capitalization................................. 20
Dilution....................................... 21
<CAPTION>
PAGE
<S> <C>
Selected Consolidated Financial Data........... 22
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 23
Business....................................... 28
Management..................................... 44
Principal Stockholders......................... 47
Underwriting................................... 49
Legal Matters.................................. 50
Experts........................................ 51
</TABLE>
------------------------
CV Therapeutics, Inc. and the CV Therapeutics logo are our service marks. All
brand names or trademarks appearing in this prospectus are the property of their
respective holders.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C., 20549.
You can request copies of these documents by contacting the SEC and paying a fee
for the copying cost. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from the SEC's website at www.sec.gov.
This prospectus is part of a registration statement on Form S-3, including
amendments, relating to the common stock offered by this prospectus with the
SEC. This prospectus does not contain all of the information set forth in the
registration statement, the exhibits and schedules, some portions of which the
SEC allows us to omit. 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 that contract or
other document filed as an exhibit to the registration statement. For further
information about us and the common stock offered by this prospectus we refer
you to the registration statement and its exhibits and schedules which may be
obtained as described above.
The SEC allows us to "incorporate by reference" the information contained in
documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC before the date of this prospectus, while information
that we file later with the SEC will automatically update and supersede prior
information. We incorporate by reference the documents listed below, any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act of 1934 and any filings we will make pursuant to the Exchange
Act after the date of the initial registration statement and prior to
effectiveness of the registration statement:
1. our Annual Report on Form 10-K for the fiscal year ended December 31,
1998;
2. our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 1999 and June 30, 1999;
3. our Current Reports on Form 8-K, dated February 2, 1999 and May 5, 1999;
and
4. the description of our common stock contained in our registration
statement on Form 8-A filed on October 30, 1996.
You may request copies of these filings, at no cost, by writing or
telephoning us at:
CV Therapeutics, Inc.
Attention: Investor Relations
3172 Porter Drive
Palo Alto, California 94304
Telephone (650) 812-0585
3
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
IT IS NOT COMPLETE, AND MAY NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER
BEFORE INVESTING IN OUR COMMON STOCK. TO FULLY UNDERSTAND THIS OFFERING AND ITS
CONSEQUENCES TO YOU, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING
THE "RISK FACTORS" SECTION, THE CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES
TO THOSE STATEMENTS AND THE DOCUMENTS THAT WE INCORPORATE BY REFERENCE INTO THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS
ASSUMES NO EXERCISE OF THE OVER-ALLOTMENT OPTION TO PURCHASE ADDITIONAL SHARES
OF COMMON STOCK GRANTED TO THE UNDERWRITERS. IN THIS PROSPECTUS WE REFER TO CV
THERAPEUTICS, INC. AS "CVT," "WE," "OUR" AND "US."
CV THERAPEUTICS
CV Therapeutics is a biopharmaceutical company engaged in the discovery and
development of new small molecule drugs to treat cardiovascular disease, the
leading cause of death in the United States. We have three drug candidates in
clinical trials, including ranolazine, which is currently in its second Phase
III trial. In addition, we have several research and preclinical development
programs designed to bring additional drug candidates into human clinical
testing. Our development efforts use an innovative biomedical discipline called
molecular cardiology, which is the application of molecular biology to
cardiovascular disease. We have developed expertise in a broad range of
scientific disciplines, including chemistry, molecular biology, genomics,
structure-based drug design, cell biology, pharmacology, clinical trial design
and others. We believe that by focusing these resources on a single therapeutic
area, cardiovascular disease, our drug discovery, development and
commercialization efforts will be more productive. Consistent with our business
strategy, we currently retain United States marketing rights to two of our
clinical candidates and to all of our research and preclinical candidates.
RECENT EVENTS
- RANOLAZINE PHASE III MARISA RESULTS. In August 1999, we announced initial
results from the first of two planned Phase III trials of ranolazine, our
anti-anginal drug candidate. The results of the trial, called Monotherapy
Assessment of Ranolazine In Stable Angina, or MARISA, indicated increases
in patients' treadmill exercise duration compared to placebo, the primary
endpoint for this trial. These results were statistically significant at
the 99.5% or greater level, or what is commonly referred to as p < or =
0.005. This means that, applying widely-used statistical methods, the
chance that these results could have occurred by accident is less than 1
in 200.
- RANOLAZINE PHASE III CARISA INITIATION. In July 1999, we initiated the
second of the two planned Phase III trials, called Combination Assessment
of Ranolazine In Stable Angina, or CARISA. Should results of this trial be
consistent with the results we found in the MARISA trial, we intend to
file a New Drug Application, or NDA, with the United States Food and Drug
Administration.
- SALES AND MARKETING ALLIANCE WITH INNOVEX. In May 1999, we entered into a
sales and marketing agreement with Innovex Inc., a subsidiary of Quintiles
Transnational Corp. Under this agreement, if the FDA approves ranolazine
for sale in the United States, Innovex will hire and train a dedicated
sales force for ranolazine and fund product launch and the first five
years of sales and marketing expenses. We will receive 100% of the
revenues from sales of ranolazine. In turn, we will pay Innovex a share of
those revenues that will not exceed 33% of sales in the first two years,
and that will decline to a maximum of 25% by the fourth and fifth years.
At the end of the five-year agreement, we can retain the sales force built
by Innovex.
- CVT-510 PHASE II DECISION. In June 1999, we announced our decision to
advance CVT-510, our potential treatment for atrial arrhythmias, into
Phase II trials. We based this decision on preliminary results from our
ongoing Phase I trial.
4
<PAGE>
PRODUCT PIPELINE
RANOLAZINE FOR THE POTENTIAL TREATMENT OF ANGINA:
Ranolazine, a potential treatment for angina, is currently in its second
Phase III trial. Angina is the heart pain, often quite debilitating, that
results from a shortage of oxygen-rich blood available to the heart relative to
the oxygen required for the amount of work the heart needs to do. For many
patients, this oxygen shortage occurs even when their hearts only need to do the
minimal work necessary to support routine activities such as climbing stairs or
carrying groceries from the car. Typically, this oxygen shortage is the result
of obstructions in the coronary arteries that prevent proper circulation of
oxygen-rich blood. According to the American Heart Association, there were
approximately 7.2 million patients in the United States in 1998 who suffered
from angina.
The key to treating angina is to bring the heart's need for oxygen into
balance with its available supply. Current pharmaceutical therapies, such as
beta blockers, calcium channel blockers and long-acting nitrates, all achieve
this result by forcing a reduction in the demand for oxygen by forcing a
lowering in one or more of heart rate, blood pressure or the strength of
contraction of the heart muscle. Many angina patients, such as those with
congestive heart failure, already have an impaired heart muscle. These patients
may be unable to tolerate further reductions in heart rate, blood pressure and
the strength of contraction, and therefore, current therapies may prove
unsatisfactory.
We believe ranolazine balances the oxygen supply/demand equation by causing
the heart to use oxygen more efficiently. In other words, ranolazine may allow a
diseased heart to do its work with a limited supply of oxygen. By improving the
heart's oxygen efficiency, ranolazine may be able to provide a treatment for
angina without forcing a reduction in the amount of work that the heart can do.
This may allow patients to reduce their angina without lowering heart rate,
blood pressure or cardiac contraction strength, an outcome not currently
available to patients.
In August 1999, we announced initial results from the MARISA trial, which
was designed to test ranolazine as a stand alone therapy for patients with
angina. At each of the three doses studied, ranolazine increased patients'
treadmill exercise duration compared to patients treated with placebo, a primary
endpoint of the trial, with statistical significance of 99.5%. The results also
confirmed past clinical trial data indicating that ranolazine's adverse events,
including dizziness, asthenia or weakness, and nausea, may be moderate. Our
CARISA trial is testing ranolazine in combination with other angina therapies
and is currently enrolling patients.
CVT-510 FOR POTENTIAL HEART RATE REDUCTION DURING ATRIAL ARRHYTHMIAS:
One of our other product candidates in clinical trials, CVT-510, is a
potential treatment to reduce the heart rate during atrial arrhythmias. When a
patient experiences an atrial arrhythmia, the heart beats too fast to
accommodate effective pumping of blood throughout the body. According to
hospital audit reports, atrial arrhythmias are involved in approximately 2.6
million hospital diagnoses in the United States each year.
Current therapies to control heart rate during these episodes may entail a
number of undesirable features. Digoxin may not work quickly enough. Beta
blockers and calcium channel blockers may reduce blood pressure in patients
whose blood pressure is already dangerously low due to the arrhythmia itself.
Finally, Adenocard, the branded name of adenosine, also reduces blood pressure
and may slow heart rate for too brief a time to be effective in treating many
arrhythmias.
CVT-510 is a new small molecule that we believe may address the shortcomings
of current therapies. CVT-510 selectively stimulates the adenosine A1 receptor,
which may slow heart rate. However, unlike Adenocard, CVT-510 does not stimulate
the adenosine A2 receptor, which may lower blood pressure. In animal studies,
CVT-510 slowed heart rate immediately and for several minutes.
5
<PAGE>
The Phase I trial for CVT-510, which is still ongoing, has already met our
previously established objectives of providing safety and tolerability data, as
well as data relating to slowing electrical conduction in the heart. We believe
these clinical data and the results of the prior animal studies suggest that
CVT-510 may act rapidly to slow heart rate during atrial arrhythmias without
decreasing blood pressure in patients. Based on these results, we intend to
advance CVT-510 into Phase II trials.
CVT-124 FOR THE POTENTIAL TREATMENT OF CONGESTIVE HEART FAILURE:
CVT-124, our third product currently in clinical trials, is a potential
treatment for congestive heart failure, or CHF. Patients with CHF have limited
heart pumping function, and the corresponding reduction in blood flow impairs
the kidneys' ability to clear fluid wastes from the body. In 1998, approximately
4.9 million people in the United States suffered from CHF. CHF is the leading
cause of hospital admissions among patients over 65 years of age.
We licensed our rights to CVT-124 to Biogen, Inc. in March 1997. As a result
of the agreements we signed, Biogen has an exclusive worldwide license to
develop, manufacture and commercialize CVT-124. As of June 1999, we have
received $20.5 million in payments from Biogen in connection with CVT-124.
Biogen is responsible for funding all development and commercialization expenses
related to CVT-124, and we may receive additional milestone payments upon
clinical progress and royalties from sales. Biogen is currently conducting a
Phase II trial in patients with CHF.
OUR COMPANY
We were incorporated in Delaware in December 1990 and changed our name to CV
Therapeutics, Inc. in June 1992. Our executive offices are located at 3172
Porter Drive, Palo Alto, California, 94304, and our telephone number is (650)
812-0585.
6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by CVT...... 4,000,000 shares
Common stock to be
outstanding after this
offering....................... 16,310,571 shares
Use of proceeds.................. We intend to use the net proceeds of this offering to pay
third parties to complete our clinical trials for
ranolazine and CVT-510 and preclinical studies for another
product candidate, for operating expenses associated with
our research and development activities and for working
capital and other general corporate purposes.
Nasdaq National Market Symbol.... CVTX
</TABLE>
The number of shares outstanding after this offering excludes, as of August 15,
1999:
- 1,730,415 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $6.39 per share
- 443,078 shares of common stock issuable upon exercise of outstanding
warrants at exercise prices ranging from $8.90 to $25.00 and a weighted
average exercise price of $20.13
- 359,583 shares of common stock available for future grant under our 1992
Stock Option Plan, 1994 Equity Incentive Plan, Non-Employee Directors'
Option Plan and Employee Stock Purchase Plan.
7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The description of the shares used in calculating basic and diluted net loss
per share is detailed in Note 1 of Notes to Consolidated Financial Statements in
our Annual Report on Form 10-K for the fiscal year ended December 31, 1998
incorporated in this prospectus by reference. The as adjusted consolidated
balance sheet data give effect to the receipt of the estimated net proceeds from
the sale of 4,000,000 shares of common stock offered in this offering at an
assumed price of $16.00 per share.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Collaborative research
revenue....................... $ -- $ -- $ 250 $ 2,578 $ 4,509 $ 4,482 $ --
Operating expenses:
Research and development...... 8,823 12,856 7,141 10,568 14,578 6,925 8,676
General and administrative.... 2,802 3,402 2,917 4,169 4,158 2,117 2,357
--------- --------- --------- --------- --------- --------- ---------
Total operating expenses........ 11,625 16,258 10,058 14,737 18,736 9,042 11,033
--------- --------- --------- --------- --------- --------- ---------
Loss from operations............ (11,625) (16,258) (9,808) (12,159) (14,227) (4,560) (11,033)
Interest income................. 526 416 587 1,760 2,749 1,455 1,098
Interest and other expense...... (268) (882) (1,144) (926) (1,124) (796) (483)
--------- --------- --------- --------- --------- --------- ---------
Net loss...................... $ (11,367) $ (16,724) $ (10,365) $ (11,325) $ (12,602) $ (3,901) $ (10,418)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Basic and diluted net loss per
share......................... $ (45.83) $ (49.92) $ (9.83) $ (1.58) $ (1.16) $ (0.37) $ (0.90)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Shares used in computing basic
and diluted net loss per
share......................... 248 335 1,054 7,157 10,905 10,647 11,569
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1999
------------------------
ACTUAL AS ADJUSTED
(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities....................................... $ 38,127 $ 97,812
Working capital........................................................................ 35,325 95,010
Total assets........................................................................... 42,798 102,483
Long-term portion of debt and capital lease obligation................................. 7,795 7,795
Accumulated deficit.................................................................... (79,971) (79,971)
Total stockholders' equity............................................................. 29,751 89,436
</TABLE>
8
<PAGE>
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK OFFERING IS VERY RISKY. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN ADDITION TO THE INFORMATION IN
THE REMAINDER OF THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED BY
REFERENCE, BEFORE PURCHASING THE COMMON STOCK. THEY COULD MATERIALLY AND
ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THEY COULD
CAUSE THE TRADING PRICE OF OUR STOCK TO DECLINE, AND YOU MIGHT LOSE ALL OR PART
OF YOUR INVESTMENT.
THESE RISKS AND UNCERTAINTIES ARE NOT THE ONLY ONES WE FACE. OTHERS THAT WE
DO NOT KNOW ABOUT NOW, OR THAT WE DO NOT NOW THINK ARE IMPORTANT, MAY IMPAIR OUR
BUSINESS OR THE TRADING PRICE OF OUR STOCK.
OUR PRODUCT CANDIDATES WILL TAKE AT LEAST SEVERAL YEARS TO DEVELOP, AND WE
CANNOT ASSURE YOU THAT WE WILL SUCCESSFULLY DEVELOP, MARKET AND MANUFACTURE
THESE PRODUCTS.
Since our inception in 1990, we have dedicated substantially all of our
resources to research and development. We do not have any marketed products and
we have not generated any product revenue. Because all of our potential products
are in research, preclinical or clinical development, we will not realize
product revenues for at least several years, if at all.
We have not applied for or received regulatory approval in the United States
or any foreign jurisdiction for the commercial sale of any of our products. All
of our product candidates are either in clinical trials under an IND or
applicable foreign authority submission, or are in preclinical research and
development. We have not submitted an NDA to the FDA or equivalent application
to any other foreign regulatory authorities for any of our product candidates,
and the products have not been determined to be safe or effective in humans for
their intended uses.
Conducting clinical trials is a lengthy, time-consuming and expensive
process. Before obtaining regulatory approvals for the commercial sale of any
products, we must demonstrate through preclinical testing and clinical trials
that our product candidates are safe and effective for use in humans. We will
incur substantial expense for, and devote a significant amount of time to,
preclinical testing and clinical trials.
Drug discovery methods based upon molecular cardiology are relatively new.
We cannot be certain that these methods will lead to commercially viable
pharmaceutical products. In addition, some of our compounds within our cardiac
imaging, cell cycle inhibition, cardiac conduction, cardiac metabolism and
cholesterol transport programs are in the early stages of research and
development, and we have not submitted Investigational New Drug, or IND,
applications or commenced clinical trials for these new compounds. We cannot be
certain when these clinical trials will commence, if at all. Because these
compounds are in the early stages of product development, we could abandon
further development efforts before they reach clinical trials.
We cannot be certain that any of our product development efforts will be
successfully completed or that any of our products will be shown to be safe and
effective. Even if we believe that any product is safe and effective, we may not
obtain the required regulatory approvals. Furthermore, we may not be able to
manufacture our products in commercial quantities or market any products
successfully.
IF WE ARE UNABLE TO SATISFY THE REGULATORY REQUIREMENTS FOR OUR CLINICAL TRIALS,
WE WILL NOT BE ABLE TO COMMERCIALIZE OUR DRUG CANDIDATES.
All of our products may require additional development, preclinical studies,
clinical trials and regulatory approval prior to commercialization. Any delays
in our clinical trials would delay market launch and would increase our cash
requirements.
9
<PAGE>
We currently have only three products in clinical development: ranolazine,
CVT-510 and CVT-124. Many factors could delay completion of our clinical trials,
including:
- slower than anticipated patient enrollment
- difficulty in obtaining sufficient supplies of clinical trial materials
- adverse events occurring during the clinical trials.
For example, our first Phase III clinical trial of ranolazine had
challenging enrollment criteria. These criteria required patients who suffer
from angina to stop taking all of their other anti-anginal medications and
receive only placebo during segments of the clinical trial. This meant that they
received no medication to treat their angina when they received placebo. Given
the difficulty of identifying patients willing to completely stop taking
anti-anginal medications, enrollment for this trial was slower than anticipated.
We cannot assure you that enrollment for the second Phase III trial for
ranolazine will not also be delayed.
In addition, data obtained from preclinical and clinical activities are
susceptible to different interpretations, which could delay, limit or prevent
regulatory approval. Delays or rejections may be based upon many factors,
including changes in regulatory policy during the period of product development.
For example, the initial clinical trials with ranolazine used a different
formulation of ranolazine than we used in the MARISA trials and than we are
using in the CARISA trial. This means that the NDA will contain data from trials
using two different formulations and is subject to interpretation by the FDA. An
unfavorable interpretation could result in actions by the FDA that would delay
potential approval. We may be unable to maintain our proposed schedules for IND
applications and clinical protocol submissions to the FDA, initiations of
clinical trials and completions of clinical trials as a result of FDA reviews or
complications that may arise in any phase of the clinical trial program.
Furthermore, even if our clinical trials occur on schedule, the results may
differ from those obtained in preclinical studies and earlier clinical trials.
Clinical trials may not demonstrate sufficient safety and efficacy to obtain the
necessary approvals. For example, in November 1995, based on unfavorable
efficacy data from a Phase II trial, we terminated a prior development program.
IF WE ARE UNABLE TO SATISFY GOVERNMENTAL REGULATIONS RELATING TO THE DEVELOPMENT
OF OUR DRUG CANDIDATES, WE MAY BE UNABLE TO OBTAIN NECESSARY REGULATORY
APPROVALS TO COMMERCIALIZE OUR PRODUCTS.
The research, testing, manufacturing and marketing of drug products are
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. These include:
- warning letters
- civil penalties
- criminal penalties
- injunctions
- product seizure or detention
- product recalls
- total or partial suspension of production
- FDA refusal to approve pending NDAs or supplements to approved NDAs.
10
<PAGE>
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, this approval process is extremely expensive and uncertain. We
cannot guarantee that any of our products under development will be approved for
marketing by the FDA. Even if regulatory approval of a product is granted, we
cannot be certain that we will be able to obtain the labeling claims necessary
or desirable for the promotion of those products.
Even if we obtain regulatory approval, we may be required to undertake
postmarketing trials. In addition, identification of 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, changes in labeling of the product, and
additional marketing applications.
If we receive regulatory approval, we will also be subject to ongoing FDA
obligations and continued regulatory review. In particular, we or our third
party manufacturers will be required to adhere to regulations setting forth
current good manufacturing practices, known as cGMP. The regulations require
that we manufacture our products and maintain our records in a prescribed manner
with respect to manufacturing, testing and quality control activities.
Furthermore, we or our third party manufacturers must pass a preapproval
inspection of manufacturing facilities by the FDA before obtaining marketing
approval. We will also be subject to ongoing FDA requirements for submission of
safety reports and other postmarket information.
OUR PRODUCTS, EVEN IF APPROVED BY THE FDA OR FOREIGN REGULATORY AGENCIES, MAY
NOT BE ACCEPTED BY PHYSICIANS, INSURERS OR PATIENTS.
If any of our products after receiving FDA or other foreign regulatory
approval fail to achieve market acceptance, our ability to become profitable in
the future will be adversely affected. We believe that market acceptance will
depend on our ability to provide acceptable evidence of safety, efficacy and
cost effectiveness. In addition, we believe market acceptance depends on the
effectiveness of our marketing strategy and the availability of reimbursement
for our products.
WE HAVE NO MARKETING OR SALES EXPERIENCE, AND IF WE ARE UNABLE TO ENTER INTO
COLLABORATIONS WITH MARKETING PARTNERS OR IF WE ARE UNABLE TO DEVELOP OUR OWN
SALES AND MARKETING CAPABILITY, WE MAY NOT BE SUCCESSFUL IN COMMERCIALIZING OUR
PRODUCTS.
We currently have no sales, marketing or distribution capability. As a
result, we depend on collaborations with third parties, such as Innovex and
Biogen, which have established distribution systems and direct sales forces. In
particular, we have entered into a sales and marketing services agreement with
Innovex with respect to ranolazine. Innovex will market and sell ranolazine in
the United States using a dedicated sales force if and when FDA approval to
market ranolazine has been granted. Commercialization of ranolazine depends on
Innovex to perform their contractual obligations. Their failure to do so would
adversely affect commercialization of ranolazine. To the extent that we enter
into co-promotion or other licensing arrangements, our revenues will depend upon
the efforts of third parties, over which we may have little control. In
addition, Biogen is responsible for establishing marketing and sales activities
for CVT-124.
If we are unable to reach and maintain agreement with one or more
pharmaceutical companies or collaborative partners, we may be required to market
our products directly. We may elect to establish our own specialized sales force
and marketing organization to market our products to cardiologists. In order to
do this, we would have to develop a marketing and sales force with technical
expertise and with supporting distribution capability. Developing a marketing
and sales force is expensive and time consuming and could delay any product
launch. We cannot be certain that we will be able to develop this capacity.
11
<PAGE>
OUR BUSINESS DEPENDS ON ATTRACTING AND RETAINING COLLABORATORS AND LICENSORS.
We may not be able to retain current or attract new corporate and academic
collaborators, licensors, licensees and others. Our business strategy requires
us to enter into various arrangements with these parties, and we are dependent
upon the success of these parties in performing their obligations. If we fail to
obtain and maintain these arrangements, the development of our products would be
delayed. We may be unable to proceed with the development, manufacture or sale
of products or we might have to fund development of a particular product
candidate internally. If we have to fund development and commercialization of
all of our products internally, our future capital requirements will increase
substantially.
For example, under our collaborative arrangement with Biogen, Biogen is
responsible for pursuing all aspects of commercialization of CVT-124, including
manufacturing clinical quantities of CVT-124, conducting additional clinical
trials, pursuing regulatory approvals, scaling-up manufacturing processes and
establishing marketing and sales capabilities. Subject to only limited
conditions, Biogen determines the level of resources it will spend on CVT-124.
Decisions by Biogen which we cannot control can cause development of CVT-124 to
be slower than expected. Moreover, Biogen may terminate its relationship with us
upon 60 days notice.
The collaborative arrangements that we 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. We cannot control
the amount and timing of resources which our collaborative partners devote to
our programs. If a collaborative partner fails to successfully develop or
commercialize any product, product launch would be delayed. In addition,
collaborators may pursue competing technologies or product candidates.
Under our collaborative arrangements, we may also have to meet performance
milestones. If we fail to meet our obligations under our collaborative
arrangements, our collaborators could terminate their arrangements or we could
lose rights to the compounds under development. For example, under our agreement
with Innovex, we are required to launch the product by a specific date. If we
fail to reach this milestone, Innovex will no longer be obligated to provide
sales and marketing services for ranolazine. Under our agreement with Biogen, in
order for us to receive development milestone payments, Biogen must meet
development milestones. Under our license agreement with Syntex U.S.A., Inc., a
subsidiary of Roche, for ranolazine, we are required to make a milestone payment
to Syntex upon FDA approval of ranolazine or, under some situations, as early as
December 1, 2000.
In addition, collaborative arrangements in our industry are extremely
complex, particularly with respect to intellectual property rights. Disputes may
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 us and our collaborators could lead to delays in the collaborative
research, development or commercialization of product candidates. These disputes
could also result in litigation or arbitration, which is time consuming and
expensive.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS AND MAY NEVER ACHIEVE PROFITABILITY.
We cannot be certain that we will ever achieve and sustain profitability.
Since our inception, we have been engaged in research and development
activities. We have generated no product revenues. As of June 30, 1999, we had
an accumulated deficit of $80.0 million. The process of developing our products
requires significant additional research and development, preclinical testing
and clinical trials, as well as regulatory approvals. These activities, together
with our general and administrative expenses, are expected to result in
operating losses for the foreseeable future.
12
<PAGE>
WE MUST SECURE ADDITIONAL FINANCING TO MEET OUR FUTURE NEEDS.
We will require substantial additional funding in order to complete our
research and development activities and commercialize any products. In the past,
we have financed our operations primarily through the sale of equity securities,
payments from our collaborators, equipment and leasehold improvement financing
and other debt financing. We have generated no product revenue, and none is
expected for at least several years. We anticipate that our existing resources,
projected interest income and proceeds from this offering will enable us to
maintain our current and planned operations through the first quarter of 2001.
However, we may require additional funding prior to that time.
Additional financing may not be available on acceptable terms or at all. If
we are unable to raise additional funds, we may:
- have to delay, scale back or eliminate some or all of our research or
development programs
- lose rights under existing licenses
- have to relinquish more of, or all of, our rights to product candidates at
an earlier stage of development or on less favorable terms than we would
otherwise seek
- be unable to operate as a going concern.
Our future capital requirements will depend on many factors, including:
- scientific progress in our research and development programs
- the size and complexity of our programs
- the timing, scope and results of preclinical studies and clinical trials
- our ability 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.
There may be additional factors that could affect our need for additional
financing. Many of these factors are not within our control.
INABILITY TO COMPETE SUCCESSFULLY IN OUR MARKET WILL HARM OUR BUSINESS.
The pharmaceutical and biopharmaceutical industries, and the market for
cardiovascular drugs in particular, are intensely competitive. If regulatory
approvals are received, some of our products will compete with well-established,
proprietary and generic cardiovascular therapies that have generated substantial
sales over a number of years. Many of these therapies are reimbursed from
government health administration authorities and private health insurers.
In addition, we are aware of companies which are developing products that
may compete in the same markets as our products. Many of these potential
competitors have substantially greater product development capabilities and
financial, scientific, marketing and sales resources. Other companies may
succeed in developing products earlier or obtain approvals from the FDA more
rapidly than either we or our corporate partners are able to achieve.
Competitors may also develop products that are safer or more effective than
those under development or proposed to be developed by us and our corporate
partners. In addition, research and development by others could render our
technology or our products obsolete or non-competitive.
13
<PAGE>
WE MAY BE UNABLE TO EFFECTIVELY PROTECT OUR INTELLECTUAL PROPERTY.
Our success will depend to a significant degree on our ability to:
- obtain patents and licenses to patent rights
- maintain trade secrets
- operate without infringing on the proprietary rights of others.
We cannot be certain that patents will issue from any of our pending or
future patent applications or that any issued patent will be sufficient to
protect our technology.
Patent applications in the United States are maintained in secrecy until a
patent issues. As a result, we can never be certain that others have not filed
patent applications for technology covered by our pending applications or that
we were the first to invent the technology. There may be third party patents,
patent applications and other intellectual property relevant to our products and
technology which are not known to us and that block or compete with our
compounds, products or processes.
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 ours. We may have to
participate in interference proceedings declared by the Patent and Trademark
Office. These proceedings determine the priority of invention and, thus, the
right to a patent for the technology in the United States. In addition,
litigation may be necessary to enforce any patents issued to us or to determine
the scope and validity of the proprietary rights of third parties. Litigation
and interference proceedings, even if they are successful, are expensive to
pursue, and we could use a substantial amount of our limited financial resources
in either case.
Just as it is important to protect our proprietary rights, we also must not
infringe patents issued to competitors and not breach the licenses that might
cover technology used in our potential products. If our competitors own or have
rights to technology that we need in our product development efforts, we will
need to obtain a license to those rights. If we fail to obtain any necessary
licenses, we may be unable to complete product development.
We also rely on trade secrets to develop and maintain our competitive
position. Although we protect our proprietary technology in part by
confidentiality agreements with employees, consultants, collaborators, advisors
and corporate partners, these agreements may be breached. We cannot assure you
that these agreements will provide this meaningful protection or adequate
remedies in the event of unauthorized use or disclosure of this information. We
also cannot assure you that the parties to these agreements will not breach
them. In that event, we may not have adequate remedies for any breach. As a
result, third parties may gain access to our trade secrets, and third parties
may disclose our trade secrets and confidential technology to the public. In
addition, it is possible that our trade secrets will otherwise become known or
be discovered independently by our competitors.
Patent litigation is becoming more widespread in the biopharmaceutical
industry. Although no third party has asserted a claim of infringement against
us, we cannot assure you that third parties will not assert patent or other
intellectual property infringement claims against us with respect to our
products or technology or other matters. If they do, we may not prevail and we
may not be able to obtain any necessary licenses on reasonable terms, if at all.
Any such claims against us, with or without merit, as well as claims initiated
by us against third parties, can be time-consuming and expensive to defend or
prosecute.
WE HAVE NO MANUFACTURING EXPERIENCE AND WILL DEPEND ON THIRD PARTIES TO
MANUFACTURE OUR PRODUCTS.
We do not currently operate manufacturing facilities for clinical or
commercial production of our products under development. We have no experience
in manufacturing, and we currently lack the
14
<PAGE>
resources or capability to manufacture any of our products on a clinical or
commercial scale. As a result, we are dependent on corporate partners, licensees
or other third parties for the manufacturing of clinical and commercial scale
quantities of our products.
For example, we are negotiating 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. We cannot be certain that we will be able to
enter into an agreement for the manufacture of the active ingredient in
ranolazine. If we are unable to do so, our Phase III trials of ranolazine will
be delayed. We have entered into an agreement with third party manufacturers for
clinical scale production of ranolazine tablets sufficient to support the
remainder of the Phase III clinical program and are negotiating with them for
registration and commercialization supply of ranolazine tablets. If we are
unable to negotiate an agreement to supply ranolazine tablets, commercial launch
of ranolazine may be delayed. In addition, because we have used various
manufacturers for ranolazine in different clinical trials prior to FDA approval
of ranolazine, we will be required to demonstrate to the FDA's satisfaction the
bioequivalence of the multiple sources of ranolazine used in our clinical
trials. In addition, Biogen is responsible for the manufacture of CVT-124.
FAILURE TO OBTAIN ADEQUATE REIMBURSEMENT FROM GOVERNMENT HEALTH ADMINISTRATION
AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER ORGANIZATIONS WILL MATERIALLY
ADVERSELY AFFECT OUR FUTURE BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.
Our ability and the ability of our existing and future corporate partners to
market and sell our products will depend in part on the extent to which
reimbursement for the cost of our 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 our products in Europe,
we will be required to seek reimbursement on a country-by-country basis. We
cannot be certain that any products approved for marketing will be considered
cost effective or that reimbursement will be available or that allowed
reimbursement in foreign countries will be adequate. In addition, payors'
reimbursement policies could adversely affect our or any corporate partner's
ability to sell our products on a profitable basis.
OUR OPERATIONS INVOLVE HAZARDOUS MATERIALS, WHICH COULD SUBJECT US TO
SIGNIFICANT LIABILITY.
Our research and development activities involve the controlled use of
hazardous materials, including hazardous chemicals, radioactive materials and
pathogens. Accordingly, we are subject to federal, state and local laws
governing the use, handling and disposal of these materials. We may incur
significant costs to comply with additional environmental and health and safety
regulations in the future. Although we believe that our safety procedures for
handling and disposing of hazardous materials comply with regulatory
requirements, we cannot eliminate the risk of accidental contamination or injury
from these materials. In the event of an accident or environmental discharge, we
may be held liable for any resulting damages, which may exceed our financial
resources and may materially adversely affect our business, financial condition
and results of operations.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS IF OUR PRODUCTS HARM PEOPLE, AND
WE HAVE ONLY LIMITED PRODUCT LIABILITY INSURANCE.
We currently have only limited product liability insurance for clinical
trials and no commercial product liability insurance. We do not know if we will
be able to maintain existing or obtain additional product liability insurance on
acceptable terms or with adequate coverage against potential liabilities.
15
<PAGE>
This type of insurance is expensive and may not be available on acceptable
terms. If we are unable to obtain or maintain sufficient insurance coverage on
reasonable terms or to otherwise protect against potential product liability
claims, we may be unable to commercialize our products. A successful product
liability claim brought against us in excess of our insurance coverage, if any,
may require us to pay substantial amounts. This could adversely affect our
results of operations and our need for and the timing of additional financing.
THE MARKET PRICE OF OUR STOCK MAY CONTINUE TO BE HIGHLY VOLATILE.
Within the last 12 months, our common stock has traded between $3.69 and
$19.00. The market price of the shares of common stock for our company has been
and may continue to be highly volatile. Announcements may have a significant
impact on the market price of our common stock. These announcements may include:
- results of our clinical trials and preclinical studies, or those of our
corporate partners or our competitors
- our operating results
- developments in our relationships with corporate partners
- developments affecting our corporate partners
- negative regulatory action or regulatory approval with respect to our
announcement or our competitors' announcement of new products
- developments related to our patents or other proprietary rights or those
of our competitors
- changes in the position of securities analysts with respect to our stock
- operating results below the expectations of public market analysts and
investors
- market conditions for biopharmaceutical or biotechnology stocks in
general.
The stock market has from time to time experienced extreme price and volume
fluctuations, which have particularly affected the market prices for emerging
biotechnology and biopharmaceutical companies, and which have often been
unrelated to their operating performance. These broad market fluctuations may
adversely affect the market price of our common stock. In addition, sales of
substantial amounts of our common stock in the public market following this
offering could lower the market price of our common stock.
DELAWARE LAW, PROVISIONS IN OUR CHARTER AND OUR RIGHTS PLAN COULD MAKE THE
ACQUISITION OF OUR COMPANY BY ANOTHER COMPANY MORE DIFFICULT.
Provisions of the our certificate of incorporation may have the effect of
delaying or preventing changes in control or management or limit the price that
investors may be willing to pay for shares of our common stock. In addition, we
are subject to the provisions of Section 203 of the Delaware General Corporation
Law, an anti-takeover law, which could delay a merger, tender offer or proxy
contest or make a similar transaction more difficult. In addition, our board of
directors has the authority to issue up to 5,000,000 shares of preferred stock
without stockholders' approval. The rights of the holders of common stock will
be subject to, and may be 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 our outstanding voting stock.
Furthermore, in February 1999, the board of directors enacted anti-takeover
provisions, including a stockholder rights plan, or "poison pill," and severance
agreements in the event of a change of control for key executives.
16
<PAGE>
WE FACE UNCERTAINTY WITH YEAR 2000 COMPLIANCE.
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of our computer
programs or hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This may
result in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to receive supplies from
our vendors, or operate our accounting and other internal systems. If our
software vendors are unable to address the Year 2000 compliance of their
products, or should our suppliers' operations be disrupted by the Year 2000
issue, then our ability to serve collaborative partners and develop products may
be affected.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements relate
to future events or our future clinical or product development or financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of those terms and other comparable terminology.
These statements reflect only management's current expectations. In
evaluating these statements, you should specifically consider various factors,
including the risks outlined above. These factors may cause our actual results
to differ materially from any forward-looking statements.
17
<PAGE>
USE OF PROCEEDS
The net proceeds to CVT from the sale of the 4,000,000 shares of common
stock from this offering, are estimated to be approximately $64.0 million, or
$73.6 million if the underwriters' over-allotment option is exercised in full,
after deducting underwriting discounts and commissions and estimated offering
expenses, based upon an assumed offering price of $16.00 per share.
We intend to use the net proceeds of this offering, together with our
current cash balances, cash equivalents and marketable securities as follows:
- approximately $15 million for payments to third parties for completion of
CARISA, the second Phase III trial for ranolazine, and other trials for
ranolazine;
- approximately $5 million for payments to third parties for clinical trials
for CVT-510 and for preclinical studies associated with an additional IND
candidate;
- approximately $25 million for operating expenses associated with
conducting our various research and development activities; and
- the balance for working capital and other general corporate purposes.
We may also use a portion of the net proceeds to acquire technologies or
products complementary to our business, although no material expenditures in
connection with any acquisitions are anticipated as of the date of this
prospectus. Pending application of the net proceeds as described above, we
intend to invest the net proceeds from this offering in investment grade,
interest-bearing instruments.
18
<PAGE>
PRICE RANGE OF COMMON STOCK
Our common stock commenced trading publicly on the Nasdaq National Market on
November 19, 1996 and is traded under the symbol CVTX. The following table sets
forth, for the periods indicated, the high and low sale prices of our common
stock as reported on the Nasdaq National Market:
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997
First Quarter ended March 31, 1997........................................................... $ 10.75 $ 6.63
Second Quarter ended June 30, 1997........................................................... 8.88 6.88
Third Quarter ended September 30, 1997....................................................... 10.00 6.88
Fourth Quarter ended December 31, 1997....................................................... 12.50 8.13
YEAR ENDED DECEMBER 31, 1998
First Quarter ended March 31, 1998........................................................... $ 10.25 $ 8.25
Second Quarter ended June 30, 1998........................................................... 10.88 8.25
Third Quarter ended September 30, 1998....................................................... 9.06 5.75
Fourth Quarter ended December 31, 1998....................................................... 7.50 4.25
YEAR ENDED DECEMBER 31, 1999
First Quarter ended March 31, 1999........................................................... $ 7.25 $ 3.69
Second Quarter ended June 30, 1999........................................................... 6.38 4.00
Third Quarter (through September 1, 1999).................................................... 19.00 5.38
</TABLE>
As of September 1, 1999, there were 213 holders of record of our common
stock. On September 1, 1999, the last sale price reported on the Nasdaq National
Market for the common stock was $16.00 per share.
Since our initial public offering, we have not paid cash dividends on our
common stock. We currently anticipate that all of our earnings will be retained
for the continued development of our business and we do not anticipate paying
any cash dividends in the foreseeable future.
19
<PAGE>
CAPITALIZATION
The following table sets forth as of June 30, 1999 unaudited information
about (i) our capitalization and (ii) the capitalization as adjusted to give
effect to the receipt by us of the estimated net proceeds from the sale of the
shares of common stock from this offering at an assumed public offering price of
$16.00 per share, after deducting the underwriting discount and our estimated
offering expenses.
The table excludes as of June 30, 1999:
- 1,735,315 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $6.39 per share
- 443,078 shares of common stock issuable upon exercise of outstanding
warrants at exercise prices ranging from $8.90 to $25.00 and a weighted
average exercise price of $20.13
- 354,683 shares of common stock available for future grant under our 1992
Stock Option Plan, 1994 Equity Incentive Plan, Non-Employee Directors'
Option Plan and Employee Stock Purchase Plan.
<TABLE>
<CAPTION>
JUNE 30, 1999
----------------------
AS
ACTUAL ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
Total debt and capital lease obligation, less current portion............................. $ 7,795 $ 7,795
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and
outstanding, actual and as adjusted................................................... -- --
Common stock, $0.001 par value; 30,000,000 shares authorized; 12,310,571 shares issued
and outstanding, actual; 16,310,571 shares issued and outstanding as adjusted......... 109,410 169,095
Warrants to purchase common stock....................................................... 1,225 1,225
Notes receivable issued for stock....................................................... (87) (87)
Deferred compensation................................................................... (727) (727)
Accumulated deficit..................................................................... (79,971) (79,971)
Cumulative other comprehensive income................................................... (99) (99)
---------- ----------
Total stockholders' equity................................................................ $ 29,751 $ 89,436
---------- ----------
Total capitalization...................................................................... $ 37,546 $ 97,231
---------- ----------
---------- ----------
</TABLE>
20
<PAGE>
DILUTION
The net tangible book value of CVT as of June 30, 1999 was approximately
$29,751,000 or $2.42 per share of common stock. Net tangible book value per
share is determined by dividing the net tangible book value, which consists of
tangible assets less total liabilities, of CVT by the number of shares of common
stock outstanding at that date. Without taking into account any other changes in
the net tangible book value after June 30, 1999, other than to give effect to
the receipt by CVT of the estimated net proceeds from the sale of the 4,000,000
shares of common stock from this offering at a public offering price of $16.00
per share, the net tangible book value of CVT as of June 30, 1999 would have
been $89,436,000 or $5.48 per share. This represents an immediate increase in
the net tangible book value of $3.06 per share to existing stockholders and an
immediate dilution of $10.52 per share to new investors. The following table
illustrates this per share dilution:
<TABLE>
<CAPTION>
Per Share
<S> <C> <C>
Assumed public offering price................................................ $ 16.00
Net tangible book value before the offering................................ $ 2.42
Increase attributable to new investors..................................... 3.06
---------
Net tangible book value after the offering................................... $ 5.48
---------
Dilution to new investors.................................................... $ 10.52
---------
---------
</TABLE>
The foregoing computations exclude as of June 30, 1999:
- 1,735,315 shares of common stock issuable upon exercise of outstanding
stock options at a weighted average exercise price of $6.39 per share
- 443,078 shares of common stock issuable upon exercise of outstanding
warrants at exercise prices ranging from $8.90 to $25.00 and a weighted
average exercise price of $20.13
- 354,683 shares of common stock available for future grant under our 1992
Stock Option Plan, 1994 Equity Incentive Plan, Non-Employee Directors'
Option Plan and Employee Stock Purchase 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.
21
<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,
1994, 1995, 1996, 1997 and 1998 and the consolidated balance sheet data at
December 31, 1994, 1995, 1996, 1997 and 1998 are derived from the consolidated
financial statements of CVT 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 six months ended June 30, 1998 and 1999
and the consolidated balance sheet data at June 30, 1999, 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 presentation of the financial position at that date
and the results of operations for these periods. The historical results are not
necessarily indicative of 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 to the Consolidated
Financial Statements. The description of the shares used in calculating basic
and diluted net loss per share is detailed in Note 1 of Notes to Consolidated
Financial Statements in our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 incorporated in this prospectus by reference.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Collaborative research revenue............. $ -- $ -- $ 250 $ 2,578 $ 4,509 $ 4,482 $ --
Operating expenses:
Research and development................. 8,823 12,856 7,141 10,568 14,578 6,925 8,676
General and administrative............... 2,802 3,402 2,917 4,169 4,158 2,117 2,357
--------- --------- --------- --------- --------- --------- ---------
Total operating expenses................... 11,625 16,258 10,058 14,737 18,736 9,042 11,033
--------- --------- --------- --------- --------- --------- ---------
Loss from operations....................... (11,625) (16,258) (9,808) (12,159) (14,227) (4,560) (11,033)
Interest income............................ 526 416 587 1,760 2,749 1,455 1,098
Interest and other expense................. (268) (882) (1,144) (926) (1,124) (796) (483)
--------- --------- --------- --------- --------- --------- ---------
Net loss................................. $ (11,367) $ (16,724) $ (10,365) $ (11,325) $ (12,602) $ (3,901) $ (10,418)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Basic and diluted net loss per share....... $ (45.83) $ (49.92) $ (9.83) $ (1.58) $ (1.16) $ (0.37) $ (0.90)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Shares used in computing basic and diluted
net loss per share....................... 248 335 1,054 7,157 10,905 10,647 11,569
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------- JUNE 30,
1994 1995 1996 1997 1998 1999
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities..... $ 9,743 $ 5,569 $ 21,568 $ 38,090 $ 44,804 $ 38,127
Working capital...................................... 7,686 271 20,278 32,904 40,698 35,325
Total assets......................................... 16,099 11,448 26,139 42,644 49,330 42,798
Long-term portion of debt and capital lease
obligation......................................... 2,698 3,402 5,000 5,052 7,838 7,795
Accumulated deficit.................................. (18,537) (35,261) (45,626) (56,951) (69,553) (79,971)
Total stockholders' equity........................... 10,561 1,804 18,676 26,557 34,738 29,751
</TABLE>
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
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. Our 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
CV Therapeutics is a biopharmaceutical company engaged in the discovery and
development of new small molecule drugs for the treatment of cardiovascular
diseases. Since our inception in December 1990, substantially all of our
resources have been dedicated to research and development. To date, we have not
generated any product revenue and do not expect to generate any product revenues
for at least several years. As of June 30, 1999, we had an accumulated deficit
of $80.0 million. We expect our sources of revenue, if any, for the next several
years to consist of payments under corporate partnerships and interest income.
The process of developing our products will require significant additional
research and development, preclinical testing and clinical trials, as well as
regulatory approval. These activities, together with our general and
administrative expenses, are expected to result in operating losses for the
foreseeable future. We will not receive product revenue unless we or our
collaborative partners complete clinical trials and successfully commercialize
one or more of our products.
We are subject to risks common to biopharmaceutical companies, including
risks inherent in our 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 us and, in some cases, our collaborators, to conduct preclinical
tests and clinical trials, demonstrate efficacy and safety of our product
candidates, obtain regulatory clearances and enter into manufacturing,
distribution and marketing arrangements, as well as obtain market acceptance. We
cannot assure that we will generate revenues or achieve and sustain
profitability in the future.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
COLLABORATIVE RESEARCH REVENUES. There were no collaborative research
revenues for the quarter ended June 30, 1999, compared to $299,000 for the
quarter ended June 30, 1998. There were also no collaborative research revenues
for the six-month period ended June 30, 1999, compared to $4.5 million for the
six-month period ended June 30, 1998. The collaborative research revenue for
both the three and six-month periods ended June 30, 1998 was primarily the
result of our completion of the research component of our collaboration with
Biogen during the first quarter of 1998.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $4.5 million for the quarter ended June 30, 1999, compared to $3.6
million for the quarter ended June 30, 1998. Research and development expenses
increased to $8.7 million for the six-month period ended June 30, 1999, compared
to $6.9 million for the six-month period ended June 30, 1998. The increases for
both the three and the six-month periods ended June 30, 1999, compared to the
same periods in 1998, were primarily due to hiring additional employees to
provide support for an increased level of activity in the research, development
and clinical programs. We expect research and development expenses to continue
to increase over the next several years as we further expand product development
efforts and clinical trials.
23
<PAGE>
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $1.2 million for the quarter ended June 30, 1999, compared to $1.1
million for the quarter ended June 30, 1998. General and administrative expenses
increased to $2.4 million for the six-month period ended June 30, 1999, compared
to $2.1 million for the six-month period ended June 30, 1998. The increases for
both the three and the six-month periods ended June 30, 1999, compared to the
same periods in 1998, were primarily due to an increase in outside legal
expenses for a variety of administrative and corporate issues. We expect general
and administrative expenses to increase in the future in line with our research
and development activities.
INTEREST INCOME AND INTEREST AND OTHER EXPENSE. Interest income was
$523,000 for the quarter ended June 30, 1999, compared to $738,000 for the
quarter ended June 30, 1998. Interest income was $1.1 million for the six-month
period ended June 30, 1999, compared to $1.5 million for the six-month period
ended June 30, 1998. The decreases for both the three and the six-month periods
ended June 30, 1999, compared to the same periods in 1998, were due to lower
average investment balances. Interest and other expense was $238,000 for the
quarter ended June 30, 1999 compared to $185,000 for the quarter ended June 30,
1998. Interest and other expense was $483,000 for the six-month period ended
June 30, 1999 compared to $796,000 for the six-month period ended June 30, 1998.
The increase for the quarter ended June 30, 1999, compared to the same period in
1998, was primarily due to interest expense associated with a $4.5 million
addition to the loan balance with Biogen, Inc. in December 1998. The decrease
for the six-month period ended June 30, 1999, compared to the same period in
1998, was primarily due to a charge of $371,000 recognized during the first
quarter of 1998 related to the early retirement of a capital lease obligation.
We expect that interest income/interest and other expense will fluctuate with
average investment and loan balances.
YEARS ENDED DECEMBER 31, 1998 AND 1997
COLLABORATIVE RESEARCH REVENUES. We recognized collaborative research
revenues of $4.5 million for the year ended December 31, 1998, compared to $2.6
million during year ended December 31, 1997. The increase was primarily the
result of $4.0 million of deferred revenue being recognized during 1998, in
conjunction with our completion of the research component of our collaboration
with Biogen.
RESEARCH AND DEVELOPMENT EXPENSES. Our research and development expenses
increased to $14.6 million for the year ended December 31, 1998, compared to
$10.6 million for the year ended December 31, 1997. The increase during 1998 was
primarily due to increased outside service expenses associated with ranolazine
clinical trials. We expect research and development expenses to increase
significantly over the next several years as we expand research and product
development efforts. We have taken, and are continuing to take, extra measures
to stimulate faster enrollment in our ongoing Phase III monotherapy clinical
trial of ranolazine due to slower than originally projected enrollment. These
measures resulted in an increase in enrollment in the second half of 1998, and
are expected to result in further enrollment increases, and hence an increase in
clinical trial expenses. Two other Phase III clinical trials with ranolazine are
expected to begin in 1999, which will likely result in a further increase in
research and development expenses. Research and development expenses will also
increase due to activities associated with CVT-510, which entered a Phase I
clinical trial in September 1998.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $4.2 million for the year ended December 31, 1998, which were the same as
for the year ended December 31, 1997. We expect general and administrative
expenses to increase in the future in support of our research and development
activities.
INTEREST INCOME AND INTEREST AND OTHER EXPENSE. Interest and other income
(expense), net increased to $1.6 million for the year ended December 31, 1998,
compared to $834,000 for the year ended December 31, 1997. The increase in 1998
was due to higher average investment balances as a result of net proceeds of
$19.6 million from our follow-on public offering of 2,575,000 shares of
24
<PAGE>
common stock that was completed in January 1998. The increase was partially
offset by a $303,000 charge for the early retirement of a capital lease
obligation. We expect that interest and other income, net will fluctuate with
average investment balances.
TAXES. We have not generated taxable income to date. At December 31, 1998,
the net operating losses available to offset future taxable income for federal
income tax purposes were approximately $61.5 million. Because we have
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 2008 through 2018 if not
utilized. As a result of the annual limitation, a portion of these carryforwards
may expire before becoming available to reduce our federal income tax
liabilities.
YEARS ENDED DECEMBER 31, 1997 AND 1996
COLLABORATIVE RESEARCH REVENUES. We recognized collaborative research
revenues of $2.6 million for the year ended December 31, 1997, compared to
$250,000 during year ended December 31, 1996. Collaborative research revenue for
the year ended December 31, 1997 was earned in connection with our collaboration
with Biogen for the development and commercialization of CVT-124.
RESEARCH AND DEVELOPMENT EXPENSES. Our research and development expenses
increased to $10.6 million for the year ended December 31, 1997, compared to
$7.1 million for the year ended December 31, 1996. The higher expenses in 1997
were primarily due to increased activity associated with the development of
ranolazine as well as a $1.0 million milestone payment to Syntex payable under
the original license agreement for ranolazine and the issuance of shares of our
common stock to Syntex valued at $544,000 under an amendment to the license
agreement. These expenses were partially offset by a decrease in our use of
outside contract services.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $4.2 million for the year ended December 31, 1997, compared to $2.9
million for the year ended
December 31, 1996, primarily due to the amortization of deferred compensation
expense, personnel recruiting expenses and new administrative expenses
associated with becoming a public company.
INTEREST INCOME AND INTEREST AND OTHER EXPENSE. Interest and other income
(expense), net increased to $834,000 for the year ended December 31, 1997,
compared to $(557,000) for the year ended December 31, 1996. The increase in
1997 was a result of higher average investment balances resulting from the
proceeds of our initial public offering completed in November 1996, payments
received in connection with our collaboration and license agreements with Biogen
entered into in March 1997 and proceeds from the private placement of shares of
common stock with Biotech Target S.A., an affiliate of BB Biotech AG of
Switzerland, in October 1997. In contrast, during the year ended December 31,
1996, we had lower average investment balances and incurred prepayment penalties
associated with a restructuring of our debt.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations since inception primarily through private
placements of preferred and common stock, public offerings of common stock,
equipment and leasehold improvement financing, other debt financing and payments
under corporate collaborations. In November 1996, we completed an initial public
offering and raised net proceeds of approximately $12.0 million. In March 1997,
we entered into two research collaboration and license agreements with Biogen
that together resulted in cash receipts of $16.0 million. In October 1997, we
raised net proceeds of $12.3 million in a private placement of equity securities
with BB Biotech. In January 1998, we completed a follow-on public offering and
raised net proceeds of approximately $19.6 million. In December 1998, we drew
down an additional $4.5 million under a general purpose loan facility with
Biogen. As of June 30, 1999 the
25
<PAGE>
outstanding balance for this note was $7,500,000. Interest on this note is
payable at prime plus one and one-half percent (1.5%), or 9.25% at June 30,
1999, payable annually, in arrears, each March 10th. In May 1999, we entered
into a sales and marketing services agreement with Innovex Inc. pursuant to
which Innovex's parent, Quintiles Transnational Corp., purchased 1,043,705
shares of our common stock for a total investment of $5.0 million. In addition,
we entered into two promissory notes with Quintiles. The first promissory note
in the amount of $10.0 million may be drawn down by us at NDA filing of
ranolazine. The second promissory note shall be for a cash amount to be
determined after commercial launch of ranolazine. Both notes are convertible
into shares of common stock at the option of Quintiles upon certain events.
Cash, cash equivalents and marketable securities at June 30, 1999 totaled
$38.1 million compared to $44.8 million at December 31, 1998. The decrease in
the first six months of 1999 was due to the funding of ongoing operations offset
by the $5.0 million received from the Quintiles stock purchase.
Net cash used in operations for the six months ended June 30, 1999 was $9.1
million compared to $6.3 million for the six months ended June 30, 1998. The
increase in cash used in operations for the first six months of 1999, compared
to the first six months of 1998, was primarily due to increased research and
development efforts.
As of June 30, 1999, we have invested $8.2 million in property and equipment
with the rate of investment having increased last year in line with increased
research and development efforts. This trend should continue for the foreseeable
future.
We will require substantial additional funding in order to complete our
research and development activities and commercialize any potential products. We
currently estimate that our existing resources and projected interest income,
including the proceeds of this offering, will enable us to maintain our current
and planned operations through the first quarter of 2001. However, we cannot
assure that we will not require additional funding prior to then or that
additional financing will be available on acceptable terms or at all.
Our forecast of the period of time through which our financial resources
will be adequate to support our operations is a forward-looking statement that
involves risks and uncertainties, and actual results could vary as a result of a
number of factors. Our future capital requirements will depend on many factors,
including scientific progress in our research and development programs, the size
and complexity of these programs, the scope and results of preclinical studies
and clinical trials, our ability 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 our control. We cannot assure
that the additional financing to meet our capital requirements will be available
on acceptable terms or at all. Insufficient funds may require us 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 we
would otherwise choose or may adversely affect our ability to operate as a going
concern. If additional funds are raised by issuing equity securities,
substantial dilution to existing stockholders may result.
YEAR 2000
Many computer systems, applications, information technologies and equipment
containing computer related components are unable to differentiate between the
year 2000 and the year 1900 because they were programmed with two-digit, rather
than four-digit, date fields. Accordingly, older computer systems that have
time-sensitive applications may not properly recognize the year 2000 and beyond.
This could cause system or equipment shut downs, failures or miscalculations
resulting in inaccuracies in computer output or disruptions of operations,
including, among other things, inaccurate
26
<PAGE>
processing of financial information and/or temporary inabilities to process
transactions, manufacture products, or engage in similar normal business
activities.
We have formed a committee to assess the impact of the problem on our
operations; however, the committee's assessment of the Year 2000 issue is not
yet complete. We tested our key computer systems and equipment, including
financial, informational and operational systems, and determined that these
systems were largely Year 2000 compliant. We completed upgrades to the systems
which we determined were not Year 2000 compliant. We believe that with these
upgrades, the Year 2000 issue will not pose significant operational problems for
our computer systems and equipment. We currently have no contingency plans to
deal with major Year 2000 failures.
In addition to risks associated with our own computer systems and equipment,
we have relationships with, and are to varying degrees dependent upon, a large
number of third parties that provide us with information, goods and services.
These include financial institutions, suppliers, vendors, research partners and
governmental entities. If significant numbers of these third parties experience
failures in their computer systems, or equipment due to the Year 2000 issue,
these failures could affect our ability to process transactions, manufacture
products, or engage in similar normal business activities. While some of these
risks are outside of our control, we have instituted programs, including
internal records review and use of external questionnaires, to identify key
third parties, assess their level of Year 2000 compliance, update contracts and
address any non-compliance issues. As of June 30 1999 a majority of the key
third parties have responded that they are or will be Year 2000 compliant by
December 31, 1999. The remaining key third parties were sent a follow-up
questionnaire in June 1999.
The total cost of the Year 2000 systems assessment and upgrades is funded
through operating cash flows and we are expensing these costs. The financial
impact of making the required systems changes is minimal and currently expected
to be approximately $30,000. The actual financial impact could, however, exceed
this estimate.
27
<PAGE>
BUSINESS
OVERVIEW
CV Therapeutics is a biopharmaceutical company engaged in the discovery and
development of new small molecule drugs to treat cardiovascular disease, the
leading cause of death in the United States. As the result of our drug
development efforts to date, we have three drug candidates in clinical trials,
one each in Phase III, Phase II and Phase I. For two of these drug candidates we
continue to retain marketing rights in the United States and Europe. In
addition, we have several research and preclinical programs, with marketing
rights fully retained by us, designed to bring additional drug candidates into
clinical testing. Our development efforts use an innovative biomedical
discipline, molecular cardiology, which is the application of molecular biology
to cardiovascular disease.
CARDIOVASCULAR DISEASE BACKGROUND
Cardiovascular disease is the leading cause of death in the United States,
claiming more than 960,000 lives in 1995. This is more than 165% of the number
of deaths attributed to AIDS and cancer combined. The American Heart Association
estimated the total amount spent on cardiovascular medications in the United
States for 1998 at $14.8 billion.
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 chemicals, such as
sodium, potassium and chloride, in the blood, and the lungs put oxygen in 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 factors such as heart rate and blood pressure, which in turn are
controlled by a variety of hormones such as adrenaline, angiotensin and
adenosine. These hormones 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 diseases, including atherosclerosis, which is the hardening
of the arteries, hypertension, which is high blood pressure, and others, may
cause permanent damage to the heart and blood vessels, leading to CHF, angina
and myocardial infarction. In 1998, in the United States, there were 7.2 million
patients with angina and 4.9 million patients with CHF. In 1997, there were 2.6
million hospital diagnoses of acute atrial arrhythmias in the United States.
More than 20 years ago, drugs such as nitrates, beta blockers, calcium channel
blockers and ACE inhibitors were developed to treat cardiovascular diseases.
These drugs have contributed to an increase in the survival of patients who
suffer from cardiovascular disease. However, these drugs also can cause a
variety of undesirable side effects, including fatigue, depression, impotence,
headaches, palpitations and edema. They also may lack effectiveness in various
segments of the cardiovascular market. Molecular cardiology has provided new
insight into the mechanisms underlying cardiovascular diseases, thus creating
the opportunity for improved therapies.
28
<PAGE>
BUSINESS STRATEGY
The key elements of our business strategy are as follows:
IDENTIFY AND DEVELOP NEW DRUGS FOR THE TREATMENT OF CARDIOVASCULAR
DISEASES--A SINGLE THERAPEUTIC AREA
By being focused on one therapeutic area, cardiovascular disease, we believe
that we can be relatively efficient in our drug discovery, development and
commercialization efforts. Our concentrated focus on cardiovascular disease may
add to our efficiency, including in the following areas:
- Research--focus is on the molecular mechanisms of the cardiovascular
system
- Regulatory--discussions are with the same FDA division
- Clinical investigators--investigators in one trial are candidates for
future trials
- Consultants--thought leaders are tapped for numerous internal programs
- Clinical need--key employees are experienced in cardiovascular and/or
clinical science
- Sales force efficiency--detailing is to the same cardiologists and
high-volume prescribing doctors.
FOCUS ON SMALL MOLECULE DRUG CANDIDATES
Small molecule therapeutics can frequently be administered orally on an
outpatient basis. By contrast, to date, "large molecule" therapeutics, such as
proteins or monoclonal antibodies, can very rarely be formulated to accommodate
oral outpatient administration. In addition, our emphasis on small molecule
therapeutics means that our drug candidates can be produced by conventional
pharmaceutical manufacturing methods. There is an extensive, and well
established, contract pharmaceutical manufacturing industry, which provides us
the opportunity to use outside production capabilities.
COMMERCIALIZE PRODUCTS, IN PART, THROUGH A CONCENTRATED MARKETING EFFORT
TARGETED TO CARDIOLOGISTS
A focused commercialization effort can provide marketing cost efficiencies.
Patients that have severe cardiovascular conditions are generally treated by
cardiologists. In 1996 there were approximately 20,000 cardiologists in the
United States. Cardioligists are generally concentrated in metropolitan
communities near major medical centers. We believe that this small number of
subspecialists is responsible for a significant portion of the patient visits
associated with prescriptions written for severe cardiovascular conditions.
These market dynamics make it possible to approach the sales of the drugs in our
pipeline with a focused sales force, like the one to be provided for ranolazine
through our sales and marketing services agreement with Innovex.
PARTICIPATE IN THE SALES AND MARKETING IN THE UNITED STATES OF AT LEAST SOME
OF THE DRUGS WE DEVELOP
In the biopharmaceutical industry, a substantial percentage of the profits
generated from successful drug development are typically retained by the entity
directly involved in the sales and marketing of the drug. Licensing our drug
candidates to a third party who will complete development and provide sales and
marketing resources in exchange for a sales royalty may reduce some of our
risks. However, we believe that the risk-return tradeoff typically favors
developing and then marketing and selling products ourselves. Therefore, a key
element of our business strategy is to be involved, when practical, in the sales
and marketing of our products in the United States. Though we may eventually
become involved in direct sales and marketing activities in other parts of the
world, our initial direct efforts will be in the United States.
29
<PAGE>
PRODUCT PORTFOLIO
We have the following portfolio of product candidates:
<TABLE>
<CAPTION>
DEVELOPMENT
PRODUCT TARGET INDICATION STATUS
- ---------- --------------------------------- ---------------------------- ------------
<S> <C> <C> <C>
Ranolazine Fatty acid oxidation inhibition Angina Phase III
CVT-124 Adenosine A1 receptor in the Congestive heart failure Phase II
kidney
CVT-510 Adenosine A1 receptor in the Acute heart rate control Phase I
heart during atrial arrhythmias
CVT-3146 Adenosine A2A receptor in the Cardiac imaging Preclinical
heart
CVT-2584 CDK2 Restenosis, arterial bypass Preclinical
graft
CVT-2501 Adenosine A1 receptor in the Chronic heart rate control Preclinical
heart during atrial arrhythmias
CVT-2511 Fatty acid oxidation inhibition Angina Research
Cholesterol Tangier disease gene/HDL Atherosclerosis Discovery
Transport elevation
</TABLE>
In the table, under the heading "Development Status," "Phase III" indicates
evaluation of clinical efficacy and safety within an expanded patient population
at geographically dispersed clinical trial sites. "Phase II" indicates safety
testing and initial efficacy testing in healthy volunteers and a limited patient
population. "Phase I" indicates initial safety testing in healthy volunteers and
a limited patient population. "Preclinical" indicates lead compound selected for
possible development which meets predetermined criteria for potency,
specificity, manufacturability and pharmacologic activity in animal and/or in
vitro models. "Research" indicates lead candidate being tested against
predetermined criteria. "Discovery" indicates efforts to identify drug
candidates for further evaluation.
RANOLAZINE
Ranolazine is a new small molecule for the potential treatment of angina.
Research indicates that ranolazine may cause a partial shift in the source of
energy for the heart from fatty acid toward glucose, which is a more oxygen
efficient source of energy. We are developing ranolazine to potentially treat
angina because we believe ranolazine may significantly improve exercise
tolerance, the standard clinical measurement for angina treatment. However,
unlike current anti-anginal medicines, ranolazine may allow blood pressure and
heart rate to remain essentially unchanged, and as a result, may have an
improved tolerability profile compared to currently available therapies. We
licensed ranolazine from Syntex in March 1996.
POTENTIAL INDICATION--ANGINA
Angina is heart pain. Angina sufferers often describe their pain as a
crushing, strangling and/or burning sensation in the chest. These attacks can
occur anytime or anywhere, but in most patients with angina, they are often
triggered by daily physical exertion or emotional stress.
Angina is caused when the heart muscle does not get enough oxygen-carrying
blood to meet its need, generally because of obstructions in the coronary
arteries feeding blood to the heart. These obstructions typically are caused by
a buildup of cholesterol deposits in the coronary arteries. All the
30
<PAGE>
body's organs and tissues need oxygen to extract energy from the foods we eat.
The heart also needs oxygen in order to fuel its mechanical work of pumping
blood throughout the body. Angina occurs when the blood supply cannot provide
enough oxygen to meet the heart muscle's demand.
In the United States, approximately 7.2 million patients in 1998 had angina.
Based on published data, we estimate that over half of these patients are
currently being treated with multiple medications, including nitrates, beta
blockers and calcium channel blockers.
CURRENT APPROACHES TO ANGINA TREATMENT
Currently available drugs to treat angina include beta blockers, calcium
channel blockers, and long-acting nitrates. These drugs treat angina by
decreasing the heart's demand for oxygen by reducing the work it is asked to
perform. These drugs work by lowering heart rate, blood pressure and/or the
strength of the heart's contraction. 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 may not provide relief of angina without unacceptable effects.
PFOX INHIBITION--A POTENTIAL NEW APPROACH BY RANOLAZINE
Cardiac metabolism is the process by which the heart extracts the energy it
needs to pump blood from either fat or glucose by combining them with oxygen.
Under normal conditions, cardiac metabolism uses both fat and glucose on a
roughly 60% fat and 40% glucose basis. If fatty acid oxidation, which is the
combination of fatty acids and oxygen into energy, is inhibited, cardiac
metabolism shifts to utilizing more glucose. Since the heart gets more energy
from a unit of oxygen combined with glucose than it does from that same unit of
oxygen combined with fat, causing a shift in cardiac metabolism from fat to
glucose should improve cardiac efficiency. However, a complete shift away from
metabolizing fatty acids could potentially lead to unwanted side effects.
Consequently, only a partial inhibition of fatty acid oxidation is likely to be
desirable.
Research indicates that ranolazine may cause such a partial shift, and that
ranolazine may be a partial fatty acid oxidation, or pFOX, inhibitor.
Specifically, ranolazine may cause a partial, and reversible, inhibition of
fatty acid oxidation during conditions of a shortage of oxygen. Inhibition of
fatty acid oxidation results in a shift to more glucose oxidation, which
produces more energy per unit of available oxygen. Such an improvement in
cardiac efficiency could contribute to a treatment for angina by reducing the
imbalance between oxygen demand and oxygen supply.
As a pFOX inhibitor, ranolazine potentially operates via a completely
different pathway than the existing anti-anginal drugs. Ranolazine does not
appear to work by lowering heart rate or blood pressure to reduce oxygen demand.
Rather, ranolazine may affect cardiac metabolism, the process by which energy is
extracted from glucose and fatty acids by combining them with oxygen. Ranolazine
appears to improve the efficiency of cardiac metabolism by allowing the
otherwise limited supply of oxygen to produce more energy. This metabolic shift
toward glucose metabolism and away from fatty acid metabolism does not affect
heart rate, blood pressure or the contraction strength of the heart.
Consequently, patients taking ranolazine may be able to maintain these
hemodynamic measures at or near baseline levels, which they are unable to do if
they take any of the currently available anti-anginal medications.
31
<PAGE>
The following table sets forth the mechanisms and effects of ranolazine and
anti-anginal drugs.
<TABLE>
<CAPTION>
Heart Blood
Rate Pressure Mechanism
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ranolazine: -- -- Improves oxygen
pFOX Inhibitor metabolism
- --------------------------------------------------------------------------------------
Beta Decreased
Blockers [DOWN ARROW] [DOWN ARROW] pump function
- --------------------------------------------------------------------------------------
Calcium Decreased
Channel [DOWN ARROW] [DOWN ARROW] pump function,
Blockers vasodilation
- --------------------------------------------------------------------------------------
Long-Acting Vasodilation
Nitrates [UPWARD ARROW] [DOWN ARROW]
</TABLE>
For the above table, the data and the reflected mechanism of action
indicated for ranolazine is based on clinical trials to date. Unlike beta
blockers, calcium channel blockers and long-acting nitrates, ranolazine has not
yet been approved by the FDA as safe or effective, and clinical trials are
currently underway to confirm this hypothesis.
RANOLAZINE CLINICAL TRIAL STATUS
In August 1999, we announced initial results from MARISA, the first of two
planned Phase III clinical trials of ranolazine in angina. MARISA was a
randomized, double-blind, placebo-controlled trial of a sustained release
formulation of ranolazine used in patients who were not receiving other
anti-anginal drugs. Patients were evaluated by treadmill exercise testing during
treatment with placebo and each of three doses of ranolazine, 500mg twice daily,
1000mg twice daily, and 1500mg twice daily. The results of the trial are
summarized below:
- The MARISA primary endpoint was treadmill exercise duration approximately
12 hours after the previous dose and just before the next dose. At this
time, ranolazine plasma concentrations are at their lowest point during
the dosing cycle, or at trough. Data from 175 patients appear to show that
compared to placebo, ranolazine taken twice a day increased exercise
duration at trough plasma concentrations, at all three active doses
studied. These results were statistically significant at the 99.5% or
greater level, or p < or = 0.005.
- Key secondary endpoints, exercise time to onset of angina and exercise
time to the electrocardiographic appearance of ischemia were increased at
all three ranolazine doses studied compared to placebo. These results were
statistically significant at the 99.5% or greater level, or p < or =
0.005.
- The lack of clinically relevant hemodynamic effects was consistent with
results observed in prior clinical trials of a different formulation of
ranolazine. While increases in exercise duration were observed, ranolazine
had no clinically meaningful impact on heart rate or blood pressure,
either at rest or following exercise.
- Adverse events, including dizziness, asthenia or weakness, and nausea, and
the electrocardiographic changes observed in this trial, were consistent
with those observed in prior trials of a different formulation of
ranolazine. Adverse event frequency increased as dose increased.
In July 1999, we initiated our second pivotal Phase III clinical trial. The
CARISA trial is a randomized, double-blind, placebo controlled trial of
ranolazine used in combination with other anti-
32
<PAGE>
anginal drugs in approximately 460 patients. Should results of this trial be
consistent with the results we found in the first Phase III trial, we intend to
submit an NDA to the FDA.
Three Phase II trials completed by Syntex prior to 1994 indicated that an
immediate release formulation of ranolazine increased, with p < 0.05, the
exercise duration of angina patients during exercise testing at peak dosage
levels, compared to placebo. This result was observed both when ranolazine was
given alone and in combination with beta blockers or calcium channel blockers.
In these trials, ranolazine was administered on a three times daily schedule. To
achieve a more commercially attractive product with a twice-daily dosing
schedule, Syntex developed a sustained release formulation of ranolazine which
we are using in our Phase III clinical trials. To date, ranolazine has been
tested in more than 2,100 patients and volunteers in the United States and
Europe.
COMMERCIALIZATION OF RANOLAZINE
In May 1999, we entered into a sales and marketing alliance with Innovex.
Under this agreement, if ranolazine is approved for sale in the United States by
the FDA, Innovex will hire and train a dedicated sales force for ranolazine,
fund product launch and the first five years of sales and marketing expenses. We
will receive 100% of the revenues of ranolazine, and we will pay Innovex a share
of those revenues that will not exceed 33% in the first two years of sales that
will decline to a maximum of 25% by the fourth and fifth years. Further, in
exchange for giving us the option to retain this trained sales force at the end
of the contract, Innovex will receive a royalty on sales of 7% in the sixth and
4% in the seventh year after launch.
Innovex provides sales and marketing services to the pharmaceutical industry
worldwide. As of December 31, 1998, Innovex reported that it had 2,700 sales
people in various United States pharmaceutical sales teams.
CVT-510
We are developing CVT-510 for the potential acute control of heart rate.
Atrial arrhythmias are abnormally rapid heart rates which include the conditions
of atrial fibrillation, atrial flutter and paroxysmal atrial tachycardias.
CVT-510 is an adenosine A(1) agonist which may act selectively on the conduction
system of the heart to slow electrical impulses. CVT-510 may offer a new
approach to rapid and sustained control of acute atrial arrhythmias by reducing
heart rate without lowering blood pressure. We are currently conducting a Phase
I trial in the United States, to assess the safety and initial efficacy of
CVT-510. To date, we have retained all development and marketing rights for
CVT-510.
POTENTIAL INDICATION--ACUTE HEART RATE CONTROL DURING ATRIAL ARRHYTHMIAS
Atrial arrhythmias occur when the atria of the heart beat rapidly, or
uncontrollably, sending multiple electrical impulses to the ventricles of the
heart. An excessive increase in ventricular rate reduces the heart's cardiac
output due to inadequate filling and emptying of the left ventricle. Potentially
damaging consequences include low blood pressure and damage to the brain, heart
and other vital organs. Thus, these arrhythmias can be life-threatening and
require rapid treatment. Because of the severity of these conditions and the
need to treat patients quickly, intravenous therapies are typically used.
In the United States, atrial arrhythmias are involved in approximately 2.6
million hospital diagnoses annually. They are a major complication of heart
attacks, heart failure and cardiac surgery. The acute treatment of atrial
arrhythmias involves slowing the heart rate. Later, when the heart rate is
controlled, additional steps can be taken to reverse the abnormal electrical
activity in the atria which underlie these arrhythmias.
33
<PAGE>
CURRENT APPROACHES TO ACUTE HEART RATE CONTROL DURING ATRIAL ARRHYTHMIAS
Current medical therapies, which include digitalis, calcium channel
blockers, beta blockers and Adenocard, 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.
This can be dangerous in patients whose condition requires prompt heart rate
control to restore normal cardiac output. Calcium channel blockers, beta
blockers and Adenocard act quickly but are themselves associated with reductions
in blood pressure and depressed cardiac function. These drugs could potentially
exacerbate the condition of patients already experiencing cardiac dysfunction as
a complication of the arrhythmia. Furthermore, the effect of Adenocard persists
only for a few seconds, and as a result, is not indicated for treatment in
patients with atrial fibrillation or flutter.
CARDIAC CONDUCTION SYSTEM
During an atrial arrhythmia, the atria of the heart beat too rapidly,
sending excessive electrical impulses to the ventricles of the heart. These
electrical impulses are initiated at a set of specialized cells in the atria,
known as the sinus node, and then run to another set of specialized cells known
as the atrio-ventricular node. It is this AV node which controls the
transmission of the electrical impulses to the ventricles. Since the rate at
which electrical impulses pass through the AV node determines ventricular heart
rate, slowing AV nodal transmission will result in a reduction in ventricular
heart rate. Since ventricular rate is a primary determinant of cardiac output,
prompt slowing of rapid AV nodal conduction is one treatment approach to slowing
the abnormally rapid heart rate of an atrial arrhythmia.
POTENTIAL TREATMENT BY CVT-510
CVT-510 is designed to selectively stimulate the adenosine A(1) receptor.
Stimulation of the adenosine A(1) receptor in the AV node slows the speed of
electrical conduction across the AV node. Data from slowing of AV nodal
conduction, in turn, reduces the number of electrical impulses that reach the
ventricle. Stimulation of the A(2) receptor may lower blood pressure. Since
CVT-510 may selectively stimulate the adenosine A(1) receptor without
significantly stimulating the adenosine A(2) receptor, it may be possible to
intervene immediately in the arrhythmia process without the unwanted effect of
lowering blood pressure. CVT-510 may offer cardiac patients and clinicians
alternatives to current therapies available today that are either relatively
slow to act or reduce blood pressure.
CVT-510 CLINICAL TRIAL STATUS
We are currently studying CVT-510 in a Phase I, open-label, dose-escalation
safety trial, designed to measure the response to CVT-510 of electrical
conduction through the AV node. Data from this trial has already met our
previously established primary objective of identifying apparently well
tolerated doses of CVT-510 which also appear to slow AV nodal conduction. We
believe these data support moving CVT-510 into Phase II clinical trials.
CVT-124
CVT-124, our third product currently in clinical trials, is a potential
treatment for CHF. Patients with CHF have limited heart pumping function, and
the corresponding reduction in blood flow impairs the kidneys' ability to clear
fluid wastes from the body. Current therapies tend to negatively impact other
activities of the kidneys. Preclinical studies and clinical trials indicate that
CVT-124 may increase the kidneys' ability to clear fluid wastes without
decreasing other functions of the kidneys. Thus, we believe that CVT-124 has the
potential to be a new therapy for treatment of CHF.
We licensed our rights to CVT-124 to Biogen in March 1997. As a result of
the agreements we signed, Biogen has an exclusive worldwide license to develop,
manufacture and commercialize CVT-124.
34
<PAGE>
As of June 1999, we have received $20.5 million in payments from Biogen in
connection with CVT-124. As long as Biogen retains its license for CVT-124,
Biogen is responsible for funding all development and commercialization expenses
related to CVT-124. Moreover, we may receive additional milestone payments upon
clinical progress and royalties from sales.
POTENTIAL INDICATION--CONGESTIVE HEART FAILURE
CHF occurs when the heart muscle is weakened by disease so it cannot
adequately pump blood throughout the body. As a result of this pump failure,
fluid accumulates throughout the body, including in the lungs. This results in
shortness of breath. Fluid also accumulates in the body because of adaptations
by the kidneys during CHF.
Approximately 4.9 million people in the United States in 1998 suffer from
CHF, with an estimated 400,000 new cases each year. Approximately 875,000
patients in 1995 were hospitalized in the United States with a primary diagnosis
of CHF. CHF is the leading cause of hospital admissions among patients over 65.
CURRENT APPROACHES TO TREATING CONGESTIVE HEART FAILURE
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 kidneys.
However, current diuretic therapies such as furosemide, thiazides and
spironolactone become less effective over time as the disease progresses.
Approximately one quarter of hospitalized CHF patients are resistant to current
intravenous diuretic therapies. The dosage for the most commonly prescribed
diuretics for CHF are often increased as the disease progresses, which can be
associated with toxic side effects. One side effect is potassium loss, which may
lead to an increased incidence of cardiac arrhythmias if potassium is not
monitored and replaced. A second side effect is a decline in kidney function.
POTENTIAL TREATMENT BY CVT-124
CVT-124 is a potent and selective adenosine A1 receptor antagonist, which
means that CVT-124 blocks the action of the adenosine A1 receptors. Since the A1
receptor plays an important role in the kidneys to cause the kidneys to retain
sodium and fluids, blocking the action of this receptor may reduce the amount of
fluid that the kidneys retain.
CVT-124 CLINICAL TRIAL STATUS
In Phase I and Phase II trials, CVT-124 appeared to be generally well
tolerated and produced increases in urine, sodium and chloride excretion
compared to placebo. This was observed both in healthy volunteers and in
moderately severe CHF patients. Moreover, trials to date indicate that CVT-124
may be able to treat fluid overload without an associated reduction in the
filtration function of the kidneys. Furosemide, which is currently the most
commonly used treatment for fluid overload caused by CHF, has been shown in
prior trials to be associated with a reduction in the filtration function of the
kidneys. Biogen is currently conducting a placebo-controlled Phase II trial
evaluating various doses of CVT-124 in comparison to, and in combination with,
the diuretic, furosemide.
PRECLINICAL PIPELINE
Our research and development team is creating new product opportunities
through our expertise in molecular cardiology. We have preclinical research
programs in the areas of:
- cardiac imaging
- cell cycle inhibition
35
<PAGE>
- cardiac conduction
- cardiac metabolism
- cholesterol transport.
CARDIAC IMAGING PROGRAM
The goal of our cardiac imaging program is to develop new drug candidates
that are useful in cardiac imaging studies. Cardiac imaging studies play an
integral part in the detection and characterization of coronary artery disease.
Images are obtained at rest and under stress conditions, which are created
either by exercise or by the application of a pharmacological agent.
Based on our understanding of adenosine receptor pharamacology, we expect
that a selective, short-acting adenosine A(2A) receptor agonist may be an ideal
coronary stressing agent for use in cardiac imaging studies. We are developing
CVT-3146 as a short-acting selective adenosine A(2A) receptor agonist.
Preclinical studies have shown that CVT-3146 stimulates the adenosine A(2A)
receptor without lowering blood pressure.
CELL CYCLE INHIBITION PROGRAM
The goal of our cell cycle inhibition program is to develop new therapeutics
that suppress abnormal cellular proliferation. Excessive proliferation of
cardiovascular connective tissue cells or vascular smooth muscle cells cause the
scarring and loss of function that is characteristic of chronic diseases of the
heart, blood vessels and kidneys. As part of our drug discovery strategy, we
have focused upon newly-discovered enzymes, called cell cycle enzymes, that
regulate cellular proliferation.
CVT-2584 is a new compound that selectively inhibits CDK2, a critical cell
cycle enzyme which participates in the control of the cell cycle. CDK2 has a
three dimensional structure that was first determined by our academic
collaborators. It is central to cellular proliferation, and we selected it as
our first target in the cell cycle inhibition program. Animal studies have shown
substantial reduction of blockages after vascular injury.
CARDIAC CONDUCTION PROGRAM
The goal of our cardiac conduction program is to develop new therapeutics to
manage the electrical conduction system in the heart. Electrical impulses within
the heart muscle play a key role in causing the heart muscle to sequentially
expand and then contract, which is required for the heart to pump blood
throughout the body in a controlled rhythm. Failure of this electrical system to
function properly will result in a poorly pumping heart, such as in atrial
arrhythmias.
We are developing CVT-2501 for potential treatment of chronic atrial
arrhythmias. Similar to CVT-510, which is targeting the acute atrial arrhythmia
market, CVT-2501 is a selective adenosine A(1) agonist; however CVT-2501 is
targeting the chronic atrial arrhythmia market. We have conducted preclinical
studies indicating that CVT-2501, when given orally, slowed electrical impulses
in the conduction tissue of the heart by stimulating the adenosine A(1)
receptor.
CARDIAC METABOLISM PROGRAM
The goals of our cardiac metabolism program are to further characterize the
therapeutic potential of ranolazine in the treatment of indications other than
angina, and to discover new, proprietary second generation ranolazine products.
Ranolazine's mechanism of action, pFOX inhibition, provides an opportunity for
us to examine its possible role in cardio-protection and its ability to increase
the mechanical performance of the heart.
36
<PAGE>
CVT-2511 is one of several compounds that may be more potent than ranolazine
in its inhibition of fatty acid oxidation. We are evaluating a series of
compounds, including CVT-2511, for their pharmacological and pharmaceutical
properties.
CHOLESTEROL TRANSPORT PROGRAM
The goal of our cholesterol transport program is to study the ways in which
excess cholesterol is removed from the walls of blood vessels, in an effort to
prevent or reverse the buildup of arterial plaques that cause heart attacks.
Roughly half of heart attacks occur in patients with low levels of high density
lipoproteins, known as the "good" form of cholesterol, or HDL. Patients with the
genetic disorder called Tangier disease have virtually no HDL in their blood,
and are at a greatly increased risk for developing cardiovascular disease. CVT
scientists have recently used a new strategy combining gene expression
microarrays, from our partner Incyte, and biochemical techniques to identify the
gene that is defective in patients with Tangier disease. Having identified the
gene that is responsible for the genetic disorder in Tangier disease patients,
we are now targeting this gene as part of a drug discovery program to identify
means to increase HDL.
COLLABORATIONS AND LICENSES
We have established, and intend to establish, strategic partnerships to
expedite development and commercialization of our drug candidates. For those
programs with potential application outside of cardiovascular disease, we intend
to identify additional corporate partners. In addition, we have licensed
chemical compounds from academic collaborators and other companies. Our
collaborations and licenses currently in effect include:
INNOVEX
In May 1999, we entered into a sales and marketing services agreement with
Innovex. Under this agreement, if ranolazine is approved for sale in the United
States by the FDA, Innovex will fund product launch and the first five years of
sales and marketing expenses. We will receive 100% of the revenues from sales of
ranolazine, and we will pay Innovex a share of those revenues.
The agreement calls for Innovex to conduct pre-launch activities, hire and
train a dedicated cardiology sales force to launch and promote ranolazine, and
provide post-launch marketing and sales services. To fund pre-launch activities,
Quintiles will provide us with a $10 million credit facility at the time we file
with the FDA for approval. Upon FDA approval, Quintiles will make a $10 million
milestone payment to us, which we are obligated to use to repay any amounts
outstanding under the credit facility. Should we file for approval and draw down
the credit facility, but never receive FDA approval, we are obligated to repay
the loan within 10 years of the date we received the loan.
Innovex has agreed to provide services for at least three years after launch
and to provide services in years four and five after launch if minimum sales
levels are met. The agreement also specifies the minimum number of sales
representatives and the minimum level of dollars to be spent on marketing by
Innovex during the first two years of the contract, regardless of sales levels.
The minimum size of the sales force and the marketing expenses in year three or
any subsequent year must be maintained by Innovex as long as minimum sales
levels are met.
In exchange for providing these sales and marketing services, Innovex will
receive up to an average of 33% of revenues in the first two years of sales,
declining to 30% for the third year and declining again to 25% in years four and
five. Further, in exchange for giving us the option to retain this trained sales
force at the end of the contract, Innovex will receive a royalty on sales in the
sixth and seventh years after launch.
37
<PAGE>
In connection with the agreement, Quintiles purchased 1,043,705 shares of
our common stock for a total purchase price of $5.0 million.
BIOGEN
In March 1997, we entered into two research collaboration and license
agreements with Biogen. The agreements grant Biogen the exclusive worldwide
right to develop and commercialize CVT-124 for all indications. In exchange, we
received a $16.0 million upfront payment consisting of cash, an equity
investment and funding under a loan facility. In addition, Biogen agreed to make
significant milestone payments, equity investments and provide a general purpose
loan facility, all of which are subject to achievement of clinical development
and commercialization milestones. In December 1998, Biogen released an
additional $4.5 million under the loan facility. 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 CVT-124.
In connection with the agreements, Biogen purchased 669,857 shares of common
stock for a total purchase price of $7.0 million. In addition, we received
advance funding of a milestone payment.
Biogen may terminate the agreements for any reason upon 60 days written
notice. If Biogen terminates the agreements, all rights to the technology will
revert to us, and we will pay Biogen a small royalty on future sales of CVT-124,
if any.
INCYTE
In September 1998, we entered into a joint research collaboration agreement
with Incyte to develop a prototype gene expression database in the area of
cardiovascular biology. We will contribute our molecular cardiology expertise
and Incyte will contribute its genomics capabilities. Incyte will own the data
produced, and we will receive a perpetual, non-exclusive license to use the data
in our drug development efforts. Each party will bear its own costs of the
research.
SYNTEX
In March 1996, we entered into a license agreement with Syntex to obtain
United States and foreign patent rights to ranolazine for the treatment of
angina and other cardiovascular indications. Pursuant to the agreement, Syntex
provided quantities of the compound to us. 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, we paid an initial license fee. In addition, we
are obligated to make a payment upon FDA approval of an NDA for ranolazine, or
under some circumstances, prior to FDA approval, but in no event, prior to
December 1, 2000. In addition, we will make royalty payments based on net sales
of products that utilize the licensed technology. We are required to use
commercially reasonable efforts to develop the compound for angina. The license
agreement also sets milestones within which we must either launch products in
each country covered by the license, make a cash payment or lose exclusivity in
that country. We paid $1.5 million to Syntex in 1997 in a combination of cash
and common stock.
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION
In June 1994, we entered into a license agreement with the University of
Florida Research Foundation, Inc. under which we received exclusive worldwide
rights to develop adenosine A1 receptor antagonists for the detection,
prevention and treatment of human and animal diseases. In consideration for the
license, we paid an initial license fee and are obligated to pay royalties based
on net sales of
38
<PAGE>
products that utilize the licensed technology. CVT-124 uses this technology.
Under the agreement, we must exercise commercially reasonable efforts to develop
and commercialize one or more products covered by the licensed technology.
MARKETING AND SALES
Except for our sales and marketing services agreement with Innovex, we
currently have no sales or distribution capabilities, and have only very limited
marketing capabilities. We may promote our products in collaboration with
marketing partners or rely on relationships with one or more companies with
established distribution systems and direct sales forces. For example, Innovex
will provide sales and marketing for ranolazine in the United States and Biogen
is responsible for establishing marketing and sales activities for CVT-124. For
our other products, and for ranolazine at the end of the term of our agreement
with Innovex, we may elect to establish our own specialized sales force and
marketing organization to market our products to cardiologists.
MANUFACTURING
We do not currently operate manufacturing facilities for clinical or
commercial production of our proposed products. We have no experience in
manufacturing, and currently lack the resources and capability to manufacture
any of our proposed products on a clinical or commercial scale. Accordingly, we
are, and will continue to be, dependent on corporate partners, licensees or
other third parties for clinical and commercial scale manufacturing. We are
negotiating with third party manufacturers for production of ranolazine to
support the remainder of the Phase III clinical program, product approval and
commercialization.
We do 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. In addition, prior to approval
of an NDA for ranolazine, we will be required to demonstrate to the FDA's
satisfaction the equivalence of the multiple sources of supply used in our
clinical trials and their equivalence to the product to be commercially
supplied.
PATENTS AND PROPRIETARY TECHNOLOGY
Patents and other proprietary rights are important to our business. Our
policy is to file patent applications and to protect technology, inventions and
improvements to inventions that are commercially important to the development of
our business. The evaluation of the patentability of United States and foreign
patent applications can take several years to complete and can entail
considerable expense.
We own several issued United States patents and pending United States and
foreign patent applications relating to our technology, including patents
related to our clinical programs, ranolazine and CVT-510. One of the primary
patents relating to ranolazine will expire in May 2003 unless we are granted an
extension based upon the Waxman-Hatch Act, which we anticipate would extend the
patent protection for an additional five years.
In addition, we have acquired, and in turn have granted to Biogen, an
exclusive license to two United States issued patents, one United States pending
application and corresponding foreign applications related to CVT-124. We also
have acquired a license, which is exclusive in specified territories, to four
United States issued patents, and corresponding foreign patents and patent
applications related to ranolazine.
39
<PAGE>
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 United States,
drugs are subject to rigorous regulation by the FDA. The Federal Food, Drug and
Cosmetic Act, 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
- civil penalties
- criminal prosecution
- injunctions
- product seizure
- product recalls
- total or partial suspension of production
- 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:
- preclinical laboratory tests, animal tests and formulation studies
- the submission to the FDA of an IND, which must become effective before
clinical testing may commence
- adequate and well-controlled clinical trials to establish the safety and
effectiveness of the drug for each indication
- the submission of an NDA to the FDA
- 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 trials 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 trials 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
40
<PAGE>
accordance with Good Clinical Practice, under protocols detailing the objectives
of the trial, 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. The study protocol and informed consent information for
patients in clinical trials must also be approved by the institutional review
board at each institution where the trials will be conducted.
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 trials
in a limited patient population to:
- determine dosage tolerance and optimal dosage
- identify possible adverse effects and safety risks
- preliminarily support the efficacy of the drug in specific, targeted
indications.
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 trial sites. There can
be no assurance that Phase I, Phase II or Phase III testing of our product
candidates will be completed successfully within any specified time period, if
at all.
After completion of the required clinical testing, generally an NDA is
prepared and submitted to the FDA. 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 the NDA is
substantial.
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 typically will 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 bound by the recommendation of an
advisory committee.
If FDA evaluations of the NDA and the manufacturing facilities are
favorable, the FDA may issue an approval letter, or, in some cases, an
approvable letter followed by an approval letter. Both letters usually contain 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. The approval letter authorizes commercial
marketing of the drug for specific indications. As a condition of NDA approval,
the FDA may require postmarketing testing and surveillance to monitor the drug's
safety or efficacy, or impose other conditions.
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. The not approvable letter outlines the deficiencies in the submission
and often requires 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.
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, we or our third party
manufacturer must pass a preapproval inspection of
41
<PAGE>
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. We use and will continue to use third party manufacturers to
produce our 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 those countries. The approval procedure varies among countries and
can involve additional testing. The time required may differ from that required
for FDA approval. Although there are some procedures for unified filings for
some 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 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. We 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. Our research and development processes involve the
controlled use of hazardous materials, chemicals and radioactive materials and
produce waste products. We are subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
hazardous materials and waste products. Although we believe that our safety
procedures for handling and disposing of hazardous materials comply with the
standards prescribed by laws and regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated completely. In
the event of an accident, we could be held liable for any damages that result.
This liability could exceed our resources. Although we believe that we are in
compliance in all material respects with applicable environmental laws and
regulations, there can be no assurance that we will not be required to incur
significant costs to comply with environmental laws and regulations in the
future. There can also be no assurance that our operations, business or assets
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. 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
surgical treatments such as coronary artery bypass grafting and percutaneous
transluminal coronary angioplasty. 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 these
surgical procedures, there is no currently effective treatment. In refractory
patients who are candidates for these surgical procedures, there is no effective
pharmacologic treatment available. We are aware of
42
<PAGE>
companies which are developing products that may compete with our other drug
candidates. For example, Kyowa Hakko Co., Ltd., Fujisawa Pharmaceutical, Japan
and Discovery Therapeutics, Inc., are each developing adenosine A(1) receptor
antagonists which could compete with CVT-124. In addition, Novartis AG,
GlaxoWellcome PLC, Discovery Therapeutics and Medco Research, Inc. have
adenosine A(1) receptor agonists under development which could compete with
CVT-510.
We believe that the principal competitive factors in the markets for
ranolazine, CVT-124 and CVT-510 will include:
- the length of time to receive regulatory approval
- product performance
- product price
- product supply
- marketing and sales capability
- enforceability of patent and other proprietary rights.
We believe that we and our collaborative partners are or will be competitive
with respect to these factors. Nonetheless, because our products are still under
development, our relative competitive position in the future is difficult to
predict.
EMPLOYEES
As of June 30, 1999, we employed 73 individuals full-time, including 21 who
hold doctoral degrees. Of our full-time work force, 57 employees are engaged in
or directly support research and development activities and 16 are engaged in
business development, finance and administrative activities. Our employees are
not represented by a collective bargaining agreement. We believe that our
relations with our employees are good.
PROPERTIES
We currently lease a 61,081 square foot building in Palo Alto, California,
of which 29,323 square feet are subleased 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 are on a month-to-month basis. We believe that this facility will
be adequate to meet our needs for the foreseeable future.
43
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The names of our executive officers, directors and key employees as of
August 15, 1999 and their ages are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Louis G. Lange, M.D., Ph.D...................... 51 Chairman of the Board and Chief Executive Officer
Daniel K. Spiegelman............................ 41 Vice President, Chief Financial Officer
Brent K. Blackburn, Ph.D........................ 39 Vice President, Developmental Research
Richard M. Lawn, Ph.D........................... 52 Vice President, Discovery Research
Andrew A. Wolff, M.D............................ 44 Vice President, Clinical Research and Development
Cynthia L. Clark, Esq........................... 37 General Counsel
Thomas L. Gutshall(2)........................... 61 Director
David P. Holveck(1)............................. 54 Director
Barbara J. McNeil, M.D., Ph.D.(2)............... 58 Director
J. Leighton Read, M.D.(1)....................... 48 Director
Costa G. Sevastopoulos, Ph.D.(1)................ 56 Director
Isaac Stein(2).................................. 52 Director
</TABLE>
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
LOUIS G. LANGE, M.D., PH.D., was our founder and has served as its Chairman
of the Board and Chief Executive Officer since August 1992. Dr. Lange has served
as a trustee on the University of Rochester Board of Trustees since May 1997, a
member of the governing body of BIO's Emerging Company Section since February
1999 and a member of the Board of Directors of Cardiac Pathways Corporation from
February 1998 to May 1999. 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 K. SPIEGELMAN has served as our Vice President, Chief Financial
Officer since January 1998. From July 1991 to January 1998, Mr. Spiegelman was
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 our 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, a 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.
44
<PAGE>
RICHARD M. LAWN, PH.D., has served as our Vice President, Discovery Research
since October 1997. From August 1992 until October 1997, he served on a
part-time basis as our Vice President, Molecular Cardiology. 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. in astronomy from Harvard College.
ANDREW A. WOLFF, M.D., has served as our Vice President of Clinical Research
and Development since September 1996. From September 1994 to September 1996, Dr.
Wolff served as our Vice President of Clinical Research. From June 1993 until
September 1994, Dr. Wolff served as the Executive Director of Medical Research
and New Molecules Clinical Programs Leader for Syntex Corporation a
pharmaceutical and healthcare company. From July 1990 until June 1993, Dr. Wolff
served as the Director, Department for Cardiovascular Therapy for Syntex
Corporation. 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 our General Counsel 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 April 1998. 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.
THOMAS L. GUTSHALL has served as our director 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 our President and Chief Operating Officer. 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 our director 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 J. MCNEIL, M.D., PH.D., has served as our director 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.
45
<PAGE>
J. LEIGHTON READ, M.D., has served as our director 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
currently serves as a director of Axys Pharmaceuticals, Inc. 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 our director 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 of Ixsys,
Inc. and Idun Pharmaceuticals, Inc. both privately held biopharmaceutical
companies. 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.
ISAAC STEIN has served as our director 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, The Benham Group 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.
46
<PAGE>
PRINCIPAL STOCKHOLDERS
Information with respect to beneficial ownership provided in the following
table is as of August 15, 1999 and is based upon information furnished by each
director and executive officer or contained in filings made with the SEC.
Beneficial ownership is determined in accordance with the rules of the SEC 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 our knowledge all
persons named in the table below 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 12,310,571 shares of common stock
outstanding as of August 15, 1999 and 16,310,571 shares of common stock
outstanding after completion of this offering.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
------------------------------------------
PERCENT PRIOR PERCENT AFTER
BENEFICIAL OWNER NUMBER TO OFFERING OFFERING
<S> <C> <C> <C>
Biotech Target S.A. .................................................... 1,969,647 16.00% 12.08%
Swiss Bank Tower
Panama 1
Republic of Panama
Quintiles Transnational Corp. .......................................... 1,043,705 8.48% 6.40%
4709 Creekstone Dr.
Riverbirch Bldg., Suite 200
Durham, NC 27703
Entity affiliated with Biogen, Inc. .................................... 669,857 5.44% 4.11%
St. Paul's Gate
New Street
St. Helier Jersey JE48Z
Channel Islands
FMR Corp. .............................................................. 662,000 5.38% 4.06%
82 Devonshire Street
Boston, MA 02109
Louis G. Lange, M.D., Ph.D.(1).......................................... 322,593 2.58% 1.96%
Daniel K. Spiegelman(2)................................................. 33,719 * *
Andrew A. Wolff, M.D.(3)................................................ 70,301 * *
Cynthia L. Clark(4)..................................................... 16,800 * *
Thomas L. Gutshall(5)................................................... 72,053 * *
Isaac Stein(6).......................................................... 58,499 * *
David P. Holveck(7)..................................................... 27,500 * *
Costa G. Sevastopoulos, Ph.D.(8)........................................ 43,031 * *
J. Leighton Read, M.D.(9)............................................... 40,721 * *
Barbara J. McNeil, M.D., Ph.D.(10)...................................... 35,999 * *
All directors and executive officers as a group (10 persons)(11)........ 721,216 5.62% 4.28%
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1%.
47
<PAGE>
(1) Includes 182,266 shares issuable upon the exercise of options as of October
14, 1999. 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.
(2) Includes 28,083 shares issuable upon the exercise of options as of October
14, 1999.
(3) Includes 69,416 shares issuable upon the exercise of options as of October
14, 1999.
(4) Represents 16,800 shares issuable upon the exercise of options as of
October 14, 1999.
(5) Includes 44,714 shares issuable upon the exercise of options, 7,500 shares
of which would be subject to repurchase by CVT as of October 14, 1999, if
issued. Also includes 26,125 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 August 15, 1999.
(6) Includes 43,500 shares issuable upon the exercise of options, 7,500 shares
of which would be subject to repurchase by CVT as of October 14, 1999, 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 August 15,
1999.
(7) Includes 27,500 shares issuable upon the exercise of options, 13,334 shares
of which would be subject to repurchase by CVT as of October 14, 1999, if
issued.
(8) Includes 42,388 shares issuable upon the exercise of options, 7,500 shares
of which would be subject to repurchase by CVT as of October 14, 1999, if
issued.
(9) Includes 33,000 shares issuable upon the exercise of options, 7,500 shares
of which would be subject to repurchase by CVT as of October 14, 1999, if
issued.
(10) Includes 33,500 shares issuable upon the exercise of options, 7,500 shares
of which would be subject to repurchase by CVT as of October 14, 1999, if
issued.
(11) Includes 521,167 shares issuable upon the exercise of options and warrants
held by all directors and executive officers that are exercisable within
60 days of August 15, 1999, 50,834 shares of which would be subject to
repurchase by CVT as of October 14, 1999, if issued. See footnotes
(1)-(10).
48
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in an underwriting agreement
dated , 1999, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation, BancBoston Robertson
Stephens Inc., J.P. Morgan Securities Inc. and SG Cowen Securities Corporation
are acting as representatives, have severally agreed to purchase from us the
respective numbers of shares of common stock set forth opposite their names
below.
<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation........................
BancBoston Robertson Stephens Inc..........................................
J.P. Morgan Securities Inc.................................................
SG Cowen Securities Corporation............................................
-----------------
Total.................................................................. 4,000,000
-----------------
-----------------
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares of common stock
offered hereby are subject to approval by their counsel of legal matters and to
other customary conditions. The underwriters are obligated to purchase and
accept delivery of all shares of common stock offered hereby, other than those
shares covered by the over-allotment option described below, if any are
purchased.
The underwriters propose initially to offer some of the shares of common
stock directly to the public at the public offering price set forth on the cover
page of this prospectus and some of the shares of common stock to several
dealers at that price less a concession not in excess of $ per share. The
underwriters may allow, and these dealers may reallow, a concession not in
excess of $ per share to some other dealers. After the initial offering of
the common stock, the representatives of the underwriters may change the public
offering price and such concessions.
DLJDIRECT Inc., an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation and a member of the selling group, is facilitating the distribution
of the shares sold in this offering over the Internet. The underwriters have
agreed to allocate a limited number of shares to DLJDIRECT Inc. for sale to its
brokerage account holders.
The following table shows the underwriting fees we will pay to underwriters
in connection with this offering. These amounts are shown assuming both no
exercise and full exercise of the underwriters' option to purchase additional
shares of our common stock.
<TABLE>
<CAPTION>
PAID BY CVT
----------------------
FULL
NO EXERCISE EXERCISE
<S> <C> <C>
Per share............................................................. $ $
----------- ---------
Total................................................................. $ $
----------- ---------
</TABLE>
We will pay the offering expenses, estimated to be $475,000.
We granted to the underwriters an option, exercisable for 30 days after the
date of this prospectus, to purchase up to 600,000 additional shares of common
stock at the public offering price, less the underwriting discount. The
underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, made in connection with the offering. To the extent the
underwriters exercise the option, each underwriter will become obligated,
subject to conditions, to purchase a number of additional shares approximately
proportionate to that underwriter's initial purchase committment.
49
<PAGE>
We have agreed to indemnify the underwriters against some civil liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments that the underwriters may be required to make in respect of those
liabilities.
Each of CVT, our executive officers, directors and a stockholder has agreed
not to:
- 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 common stock or any securities convertible into
or exercisable or exchangeable for common stock, or
- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any common
stock
in either case, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation for a period of 90 days after the date of this
prospectus. Each of the foregoing transfer restrictions will apply regardless of
whether a covered transaction is to be settled by the delivery of common stock,
or such other securities, in cash or otherwise. In addition, during this 90 day
period, we have agreed not to file any registration statement with respect to,
and each of our executive officers and directors and several of our stockholders
have agreed not to make any demand for, or exercise any right with respect to,
the registration of any shares of common stock or any securities convertible
into or exercisable for common stock without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. The foregoing does not
prohibit our issuance of shares pursuant to the exercise of the underwriters
over-allotment option or under our 1994 Equity Incentive Plan, 1992 Stock Option
Plan, Non-Employee Directors' Stock Option Plan or Employee Stock Purchase Plan.
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. 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 CVT
by Cooley Godward LLP, Palo Alto, California. Some legal matters in connection
with this offering will be passed upon for the underwriters by Latham & Watkins,
Menlo Park, California. As of the date of this prospectus, Cooley Godward, LLP
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 Godward, LLP for investment
purposes, owns 10,675 shares of our common stock and a
50
<PAGE>
warrant to purchase 875 shares of our common stock at an exercise price of
$20.00 per share. Alan C. Mendelson, a partner at Cooley, is our Secretary.
EXPERTS
The consolidated financial statements of CV Therapeutics, Inc. appearing in
CV Therapeutics, Inc.'s Annual Report on Form 10-K for the year ended December
31, 1998, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
51
<PAGE>
- ---------------------------------------------------------
- ---------------------------------------------------------
, 1999
[CV THERAPEUTICS LOGO]
4,000,000 SHARES OF COMMON STOCK
----------------------
P R O S P E C T U S
----------------------
DONALDSON, LUFKIN & JENRETTE
BANCBOSTON ROBERTSON STEPHENS
J.P. MORGAN & CO.
SG COWEN
----------
DLJDIRECT, INC.
- ---------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of CV
Therapeutics have not changed since the date hereof.
- --------------------------------------------------------------------------------
<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.............................................. $ 20,141
NASD Filing Fee................................................... 7,745
Nasdaq National Market Filing Fee................................. 17,500
Blue Sky Fees and Expenses........................................ 7,500
Accounting Fees................................................... 70,000
Legal Fees and Expenses........................................... 200,000
Printing and Engraving............................................ 120,000
Miscellaneous..................................................... 32,114
---------
Total......................................................... $ 475,000
---------
---------
</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.
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-5).
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.
* To be filed by amendment.
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 of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Palo Alto, State of California, on September 2, 1999.
CV THERAPEUTICS, INC.
By: /s/ LOUIS G. LANGE
-----------------------------------------
Louis G. Lange, M.D., Ph.D
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Louis G
Lange, M.D., Ph.D and Cynthia L. Clark, Esq. his or her true and lawful
attorney-in-fact and agent, each acting alone, 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 or all amendments (including post-effective
amendments and registration statements filed pursuant to Rule 462 under the
Securities Act) to the Registration Statement on Form S-3, and to file the same,
with all exhibits thereto, and all 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 and about the premises, 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 or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board and
/s/ LOUIS G. LANGE Chief Executive Officer
- ------------------------------ (Principal Executive September 2, 1999
Louis G. Lange, M.D., Ph.D. Officer)
/s/ DANIEL K. SPIEGELMAN Chief Financial Officer
- ------------------------------ (Principal Financial and September 2, 1999
Daniel K. Spiegelman Accounting Officer)
/s/ THOMAS L. GUTSHALL
- ------------------------------ Director September 2, 1999
Thomas L. Gutshall
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ COSTA G. SEVASTOPOULOS
- ------------------------------ Director September 2, 1999
Costa G. Sevastopoulos, Ph.D.
/s/ ISAAC STEIN
- ------------------------------ Director September 2, 1999
Isaac Stein
- ------------------------------ Director September , 1999
David P. Holveck
/s/ BARBARA J. MCNEIL
- ------------------------------ Director September 2, 1999
Barbara J. McNeil, M.D., Ph.D.
/s/ J. LEIGHTON READ
- ------------------------------ Director September 2, 1999
J. Leighton Read, M.D.
</TABLE>
II-4
<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
4,600,000 shares of its common stock and to the incorporation by reference
therein of our report dated February 26, 1999, with respect to the consolidated
financial statements of CV Therapeutics, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
September 1, 1999
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
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-5).
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-3).
</TABLE>
<PAGE>
EXHIBIT 5.1
[COOLEY GODWARD LETTERHEAD]
September 2, 1999
CV Therapeutics, Inc.
3172 Porter Drive
Palo Alto, CA 94304
Ladies and Gentlemen:
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"),
which Registration Statement covers the underwritten public offering of up to
4,600,000 shares of the Company's Common Stock with a par value of $0.001 (the
"Shares") (including 600,000 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 examined and relied upon the
Registration Statement and related Prospectus included therein, the Company's
Amended and 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. 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.
Sincerely,
COOLEY GODWARD LLP
By: /s/ Alan C. Mendelson
- ------------------------
Alan C. Mendelson
