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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 2, 2000
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CV THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 43-1570294
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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)
--------------------------------------
Copies to:
ANDREA VACHSS, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CALIFORNIA 94306
(650) 843-5000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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. |_|
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CALCULATION OF REGISTRATION FEE
--------------------------------------- --------------------- ------------------ ------------------ --------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT PRICE REGISTRATION FEE
--------------------------------------- --------------------- ------------------ ------------------ --------------------
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4 3/4% Convertible Subordinated
Notes due March 7, 2007.................. $196,250,000 100%(1)(2) $196,250,000(1) $51,810
--------------------------------------- --------------------- ------------------ ------------------ --------------------
Common Stock, par value $0.001 per share (3).. 3,074,091(4) -- (5) -- (5) -- (5)
--------------------------------------- --------------------- ------------------ ------------------ --------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(i) of the Securities Act of 1933.
(2) Exclusive of accrued interest and distributions, if any.
(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 occurrence 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.
(4) This number represents the number of shares of common stock that are
initially issuable upon conversion of the 4 3/4% Convertible Subordinated
Notes due March 7, 2007 registered hereby. For purposes of estimating the
number of shares of common stock to be included in each of the notes, the
registrant calculated the number of shares issuable upon conversion of the
notes based on a conversion price of $63.84 per share of common stock. In
addition to the shares set forth in the table, pursuant to Rule 416 under
the Securities Act of 1933, as amended, the amount to be registered
includes an indeterminate number of shares of common stock issuable upon
conversion of the notes, as this amount may be adjusted as a result of
stock splits, stock dividends and antidilution provisions.
(5) No additional consideration will be received for the common stock and
therefore, no registration fee is required pursuant to Rule 457(i).
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.
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SUBJECT TO COMPLETION, DATED JUNE 2, 2000
PROSPECTUS
CV THERAPEUTICS, INC.
$196,250,000
4 3/4% Convertible Subordinated Notes due March 7, 2007 and
Shares of Common Stock Issuable upon Conversion of the Notes
This prospectus covers resales by selling security holders of our 4 3/4%
Convertible Subordinated Notes due March 7, 2007 and shares of our common stock
into which the notes are convertible.
The holders of the notes may convert the notes into shares of our common stock
at any time at a conversion rate of 15.6642 shares per $1,000 principal amount
of notes, or $63.84 per share. We may redeem the notes, in whole or in part, at
any time before March 7, 2003 at the redemption prices set forth in the section
entitled "Description of the Notes--Optional Redemption by CV Therapeutics."
In the event of a Change of Control, as defined in the section entitled
"Description of the Notes--Repurchase at Option of Holders upon a Change in
Control," each holder of the note may require us to repurchase the notes at 100%
of the principal amount of the notes plus accrued interest. At our option, we
may repurchase the notes for cash or common stock.
The notes are general, unsecured obligations that are subordinated in right of
payment to all of our existing and future senior indebtedness. See "Description
of the Notes--Subordination".
Prior to this offering, the notes have been eligible for trading on the PORTAL
Market of the Nasdaq Stock Market. Notes sold by means of this prospectus are
not expected to remain eligible for trading on the PORTAL Market. We do not
intend to list the notes for trading on any national securities exchange or on
the Nasdaq National Market and can give no assurance about the development of
any trading market for the notes.
Our common stock currently trades on the Nasdaq National Market under the symbol
"CVTX". The last reported sale price on June 1, 2000 was $41.6875 per share.
See "Risk Factors" beginning on page 7 of this prospectus to read about factors
you should consider before buying the notes or our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2000
<PAGE>
We authorized no one to give any information or to make any representations
not contained in this prospectus. You should rely only on the information
provided in this prospectus or incorporated by reference therein. You must not
rely on any unauthorized information.
This prospectus does not offer to sell or buy any notes or shares of common
stock in any jurisdiction where it is unlawful. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of this document.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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SUMMARY ..................................................................3
RISK FACTORS..............................................................7
FORWARD-LOOKING STATEMENTS...............................................16
WHERE YOU CAN FIND MORE INFORMATION......................................17
USE OF PROCEEDS..........................................................18
RATIO OF EARNINGS TO FIXED CHARGES.......................................18
DIVIDEND POLICY..........................................................18
DESCRIPTION OF THE NOTES.................................................19
DESCRIPTION OF CAPITAL STOCK.............................................35
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS..........................37
SELLING SECURITY HOLDERS.................................................41
PLAN OF DISTRIBUTION.....................................................42
LEGAL MATTERS............................................................43
EXPERTS..................................................................43
</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
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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 SECURITIES. TO FULLY UNDERSTAND THIS OFFERING AND ITS
CONSEQUENCES TO YOU, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING
THE "RISK FACTORS" SECTION AND THE DOCUMENTS THAT WE INCORPORATE BY REFERENCE
INTO THIS PROSPECTUS. IN THIS PROSPECTUS WE REFER TO CV THERAPEUTICS, INC. AS
"CVT," "WE," "OUR" AND "US."
THE COMPANY
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 currently are conducting
clinical trials for two of our drug candidates, including ranolazine, which is
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. Consistent with our business strategy, we currently
retain United States marketing rights to our two lead clinical candidates,
ranolazine and CVT-510.
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. These patients may be unable to tolerate
further reductions in the 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 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.
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.
In May 1999, we entered into a sales and marketing agreement with Innovex
Inc., a subsidiary of Quintiles
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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 assist in funding product launch and fund 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 FOR POTENTIAL HEART RATE REDUCTION DURING ATRIAL ARRHYTHMIAS:
Our other product candidate 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 A1
adenosine receptor, which may slow heart rate. However, unlike Adenocard,
CVT-510 does not stimulate the A2 adenosine receptor, which may lower blood
pressure. In animal studies, CVT-510 slowed heart rate immediately and for
several minutes.
The Phase I trial for CVT-510 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.
CVT-510 is currently being evaluated in two Phase II trials for paroxysmal
supraventricular tachycardias, or PSVT, and atrial fibrillation. In May 2000, we
announced based on the successful completion of the first segment of the Phase
II clinical program of CVT-510 in patients with PSVT, the Company plans on
moving CVT-510 into Phase III clinical trials.
CVT-124 FOR THE POTENTIAL TREATMENT OF CONGESTIVE HEART FAILURE:
In February 2000, Biogen, Inc., the licensee of our A1 adenosine receptor
antagonist technology, patents and compounds, including CVT-124, which Biogen
refers to as the Adentri(TM) Program, announced that it had successfully
completed a Phase II trial of CVT-124 in patients with moderate-to-severe
congestive heart failure, or CHF. However, Biogen also announced its intention
to continue the Adentri(TM) program with a new molecule currently in preclinical
studies. Biogen also announced that it would make a milestone payment to us. In
April 2000, we received a $6.5 million milestone from Biogen consisting of $2.0
million in cash and a $4.5 million line of credit.
RESEARCH AND PRECLINICAL PROGRAMS:
We also have a number of preclinical and research programs. Three of our
preclinical programs have late stage data. These three programs are focused on
developing novel therapies for cardiac imaging, chronic atrial arrhythmias and
restenosis.
Our principal executive offices are located at 3172 Porter Drive, Palo
Alto, California, 94304, and our telephone number is (650) 812-0585.
4
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<CAPTION>
THE NOTES
<S> <C>
Maturity....................... March 7, 2007.
Interest....................... 4 3/4% per annum on the principal amount, payable semiannually on March 7 and September
7, beginning on September 7, 2000.
Conversion..................... The notes are convertible, at the option of the holder, at any time on or prior to maturity
into shares of our common stock at a conversion price of $63.84 per share, which is equal to a
conversion rate of 15.6642 shares per $1,000 principal amount of notes. The conversion rate is
subject to adjustment.
Subordination.................. The notes are unsecured and subordinated to our existing and future senior debt, as defined.
At March 31, 2000, we had approximately $5.7 million of senior debt outstanding. Because
the notes are subordinated, in the event of bankruptcy, liquidation, dissolution or
acceleration of payment on the senior debt, holders of the notes will not receive any
payment until holders of the senior debt have been paid in full. The indenture under
which the notes are issued does not prevent us or our subsidiaries from incurring
additional senior debt or other obligations.
Provisional redemption......... We may redeem the notes, in whole or in part, at any time before March 7, 2003, at a
redemption price equal to $1,000 per $1,000 principal amount of notes to be redeemed plus
accrued and unpaid interest, if any, to the date of redemption if (i) the closing price of
our common stock has exceeded 150% of the conversion price then in effect for at least
20 trading days within a period of 30 consecutive trading days ending on the trading
day before the date of mailing of the provisional redemption notice and (ii) the shelf
registration statement covering resales of the notes and the common stock issuable upon
conversion of the notes is effective and available for use and is expected to remain
effective and available for use for the 30 days following the provisional redemption date.
Upon any provisional redemption, we will make an additional payment in cash with respect to
the notes called for redemption in an amount equal to $107.14 per $1,000 principal
amount of notes, less the amount of any interest actually paid on the note before the call
for redemption. We will be obligated to make this additional payment on all notes called
(for provisional redemption, including any notes converted after the notice date and before
the provisional redemption date.
Optional redemption............ We may redeem all or a portion of the notes after March 7, 2003 at the redemption prices
listed in this prospectus, plus accrued and unpaid interest.
Change of control.............. Upon a change of control event, each holder of the notes may require us to repurchase
some or all of its notes at a purchase price equal to 100% of the principal amount of
the notes plus accrued and unpaid interest. We may, at our option, instead of paying the
change of control purchase price in cash, pay it in shares of our common stock valued at
95% of the average of the closing sales prices of our common stock for the five trading
days immediately preceding and including the third day prior to the date we are
required to repurchase the notes. We cannot pay the change of control purchase price in
common stock unless we satisfy the conditions described in the indenture under which the
notes are issued.
Use of proceeds................ We will not receive any proceeds from the sale of the notes or the shares of common
stock offered by this prospectus. See "Selling Security Holders."
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<TABLE>
<CAPTION>
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Trading........................ Prior to this offering, the notes have been eligible for trading on the PORTAL Market of the
Nasdaq Stock Market; notes sold by means of this prospectus are not expected to remain
eligible for trading on the PORTAL Market. We do not intend to list the notes for trading on
any national securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes. Our common stock is traded on the
Nasdaq National Market under the symbol "CVTX."
Risk factors................... See "Risk Factors" and the other information in this prospectus for a discussion of the
factors you should carefully consider before deciding to invest in the notes or our common
stock.
</TABLE>
6
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RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS IS VERY RISKY.
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN ADDITION TO THE
INFORMATION IN THE REMAINDER OF THIS PROSPECTUS BEFORE DECIDING TO PURCHASE THE
NOTES.
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 SECURITIES.
RISKS RELATED TO OUR BUSINESS
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
Investigational New Drug, or 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
Tangier drug discovery programs are in the early stages of research and
development, and we have not submitted 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.
We currently have only two products in clinical development: ranolazine and
CVT-510. Many factors could delay completion of our clinical trials, including:
- slower than anticipated patient enrollment
7
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- 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.
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
8
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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.
If we receive regulatory approval and if any of our products or services
become reimbursable by a government health care program, such as Medicare or
Medicaid, we may become subject to certain federal and state health care fraud
and abuse and reimbursement laws. These laws include the federal "Anti-Kickback
Statute," "False Claims Act," and "Physician Self-Referral Law," and their state
counterparts. If and when we become subject to such laws, our arrangements with
third parties, including health care providers, physicians, vendors, and
Innovex, will need to comply with these laws as applicable. We do not know
whether our existing or future arrangements will be found to be compliant.
Violations of these statutes could result in criminal and civil penalties and
exclusion from governmental health care programs.
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 OR
MAINTAIN 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 any product that results from the Adentri program.
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.
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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.
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 or our collaborative partners 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 milestone payments to Syntex following FDA approval of ranolazine and
following regulatory approval of ranolazine in Europe. These payments are due no
later than March 31, 2005 and March 31, 2006, respectively.
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 March 31, 2000, we had
an accumulated deficit of $99.8 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.
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 for at least the next 24 months.
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:
10
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- 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.
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
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- 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, that any issued patent will be sufficient to protect
our technology or that we will be able to obtain extensions of patents beyond
the initial term. For example, a primary patent 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.
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 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 have entered into an agreement with a third party
manufacturer for clinical scale production of an amount of ranolazine's active
pharmaceutical ingredient that we believe will be sufficient to support the
remainder of the Phase III clinical program. We cannot be certain that we will
be able to enter into an agreement for the commercial scale manufacture of the
active ingredient in ranolazine. If we are unable to do so, our Phase III
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trials of ranolazine will be delayed. We have entered into an agreement with a
third party manufacturer 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 for registration and commercialization, 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
and their bioequivalence to the product to be commercially supplied.
FAILURE TO OBTAIN ADEQUATE REIMBURSEMENT FROM GOVERNMENT HEALTH ADMINISTRATION
AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER ORGANIZATIONS COULD 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.
The manufacture and sale of human therapeutic products involve an inherent
risk of product liability claims and associated adverse publicity. 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. 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 $4.69 and
$69.00. 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:
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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
- government regulations, reimbursement changes and governmental
investigations or audits related to us or to our 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, including the common stock we may issue upon conversion of the notes
offered by this prospectus, 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 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.
RISKS RELATING TO THE NOTES
THE NOTES ARE SUBORDINATED TO ANY EXISTING AND FUTURE SENIOR DEBT.
The notes are contractually subordinated in right of payment to our
existing and future senior debt. As of March 31, 2000, we had approximately $5.7
million of senior debt. The indenture does not limit the creation of additional
senior debt (or any other indebtedness). Any significant additional senior debt
incurred may materially adversely impact our ability to service our debt,
including the notes. Due to the subordination provisions, in the event of our
insolvency, funds which we would otherwise use to pay the holders of the notes
will be used to pay the holders of senior debt to the extent necessary to pay
the senior debt in full. As a result of these payments, our general creditors
may recover less, ratably, than the holders of our senior debt and such general
creditors may recover more, ratably, than the holders of our notes or our other
subordinated indebtedness. In addition, the holders of our senior debt may,
under certain circumstances, restrict or prohibit us from making payments on the
notes.
OUR OUTSTANDING INDEBTEDNESS INCREASED SUBSTANTIALLY WITH THE ISSUANCE OF THE
NOTES.
As of March 31, 2000, following the issuance of the convertible notes we
had approximately $201.5 million in long-term debt. Upon closing of the offering
of the notes, our long-term debt increased by approximately $196.3 million. This
increased indebtedness has and will continue to impact us by:
- significantly increasing our interest expense and related debt service
costs;
- making it more difficult to obtain additional financing; and
- constraining our ability to react quickly in an unfavorable economic
climate.
WE DO NOT GENERATE SUFFICIENT CASH FLOW TO PAY INTEREST AND MAKE OTHER PAYMENTS
ON THE NOTES.
Currently, we are not generating sufficient cash flow to pay interest and
make other payments that are required as a result of the consummation of sale of
the notes. This may require us to use a portion of the proceeds from the sale of
the notes to pay interest or borrow additional funds or sell additional equity
to meet our debt service obligations. If we are unable to satisfy our debt
service requirements, substantial liquidity problems could result, which would
negatively impact our future prospects.
OUR ABILITY TO REPURCHASE NOTES, IF REQUIRED, MAY BE LIMITED.
In certain circumstances involving a change of control of the Company, the
holders of the notes may require us to repurchase some or all of the holder's
notes. We cannot assure you that we will have sufficient financial resources at
such time or would be able to arrange financing to pay the repurchase price of
the notes. Our ability to repurchase the notes in such event may be limited by
law, the indenture, by the terms of other agreements relating to our senior debt
and as such indebtedness and agreements may be entered into, replaced,
supplemented or amended from time to time. We may be required to refinance our
senior debt in order to make such payments.
AN ACTIVE TRADING MARKET FOR THE NOTES MAY NOT DEVELOP.
There is no public market for the notes, and we cannot predict whether an
active trading market for the notes will develop or be sustained. If an active
market for the notes fails to develop or be sustained, the trading price of the
notes could fall. If an active trading market were to develop, the notes could
trade at prices that may be lower than the initial offering price of the notes.
Whether or not the notes will trade at lower prices depends on many factors,
including:
- prevailing interest rates and the markets for similar securities;
- general economic conditions; and
- our financial condition, historic financial performance and future
prospects.
ANY RATING OF THE NOTES MAY CAUSE THEIR TRADING PRICE TO FALL.
In the future, one or more rating agencies may rate the notes. If the
rating agencies rate the notes, they may assign a lower rating than expected by
investors. Rating agencies may also lower ratings on the notes in the future. If
the rating agencies assign a lower than expected rating or reduce their ratings
in the future, the trading price of the notes could decline.
<PAGE>
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.
We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
Form 10-Q, 8-K and 10-K reports to the SEC. Also note that we provide a
cautionary discussion of risks and uncertainties under "Risk Factors" on page 7
of this prospectus. These are factors that we think could cause our actual
results to differ materially from expected results.
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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 and any
future filings we will make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, prior to the
termination of the offering:
1. our Annual Report on Form 10-K for the fiscal year ended December 31, 1999;
2. our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2000;
3. our Current Reports on Form 8-K, dated February 25, 2000 and March 1, 2000;
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
If at any time during the two-year period following March 7, 2000, we are
not subject to the information requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, we will furnish to holders of the
notes, to holders of common stock issued upon conversion thereof and to
prospective purchasers thereof the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act in order to permit compliance with
Rule 144A in connection with resales of the notes and common stock issued upon
conversion thereof.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the notes or the shares
of common stock offered by this prospectus. See "Selling Security Holders."
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
each of the last five years and for the three months ended March 31, 2000:
<TABLE>
<CAPTION>
Three months
Years ended December 31, ended March 31,
-------------------------------------------------------------------- -------------------
1995 1996 1997 1998 1999 2000
------------- ------------- ------------ -------------- ------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (1)......................... - - - - - -
</TABLE>
(1) Earnings for the periods 1995, 1996, 1997, 1998, 1999 and the three months
ended March 31, 2000 were insufficient to cover fixed charges by an amount
equal to the net loss for the period.
DIVIDEND POLICY
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.
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DESCRIPTION OF THE NOTES
The notes are issued under the indenture between us and Norwest Bank,
Minnesota, N.A., as trustee. Copies of the form of indenture, notes and
registration rights agreement will be made available to prospective investors in
the notes upon request to us.
We have summarized portions of the indenture below. This summary is not
complete. We urge you to read the indenture because it defines your rights as a
holder of the notes. Terms not defined in this description have the meanings
given them in the indenture. In this section, "CV Therapeutics", "we", "our" and
"us" each refers only to CV Therapeutics, Inc. and not to any existing or future
subsidiary.
GENERAL
The notes are unsecured, subordinated obligations of CV Therapeutics and
are convertible into our common stock as described under "Conversion Rights"
below. The notes are limited to an aggregate principal amount of $196,250,000
and will mature on March 7, 2007.
The notes bear interest at the rate of 4 3/4% per year from the date of
issuance of the notes, or from the most recent date to which interest had been
paid or provided for, subject to adjustment upon the occurrence of a Reset
Transaction. See "-Interest Rate Adjustments" below. Interest is payable
semi-annually on March 7 and September 7 of each year, commencing September 7,
2000, to holders of record at the close of business on the preceding February 20
and August 20, respectively. Interest is computed on the basis of a 360-day year
comprised of twelve 30-day months. In the event of the maturity, conversion,
purchase by us at the option of the holder or redemption of a note, interest
ceases to accrue on the note under the terms of and subject to the conditions of
the indenture.
Principal is payable, and notes may be presented for conversion,
registration of transfer and exchange, without service charge, at our office or
agency in New York City, which is initially the office or agency of the trustee
in New York, New York. See "-Form, Denomination and Registration."
The indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the incurrence of Senior Debt or other
indebtedness, or the issuance or repurchase of securities by us. The indenture
contains no covenants or other provisions to protect holders of the notes in the
event of a highly leveraged transaction or a change in control, except to the
extent described under "-Change of Control Permits Purchase of Notes at the
Option of the Holder" below.
INTEREST RATE ADJUSTMENTS
If a Reset Transaction occurs, the interest rate will be adjusted to equal
the Adjusted Interest Rate from the effective date of such Reset Transaction to,
but not including, the effective date of any succeeding Reset Transaction.
A "Reset Transaction" means:
- a merger, consolidation or statutory share exchange to which the
entity that is the issuer of the common stock into which the notes are
then to be convertible into is a party;
- a sale of all or substantially all the assets of that entity;
- a recapitalization of that common stock; or
- a distribution described in clause (4) of the fourth paragraph under
"-Conversion Rights" below,
after the effective date of which transaction or distribution the notes
would be convertible into:
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- shares of an entity the common stock of which had a dividend yield for
the four fiscal quarters of such entity immediately preceding the
public announcement of the transaction or distribution that was more
than 2.5% higher than the dividend yield on our common stock (or other
common stock then issuable upon conversion of the notes) for the four
fiscal quarters preceding the public announcement of the transaction
or distribution; or
- shares of an entity that announces a dividend policy prior to the
effective date of the transaction or distribution which policy, if
implemented, would result in a dividend yield on that entity's common
stock for the next four fiscal quarters that would result in such a
2.5% increase.
The "Adjusted Interest Rate" with respect to any Reset Transaction will be
the rate per year that is the arithmetic average of the rates quoted by two
dealers engaged in the trading of convertible securities selected by us or our
successor as the rate at which interest should accrue so that the fair market
value, expressed in dollars, of a note immediately after the later of:
- the public announcement of the Reset Transaction; or
- the public announcement of a change in dividend policy in connection
with the Reset Transaction,
will equal the average Trading Price of a note for the 20 trading days preceding
the date of public announcement of the Reset Transaction. However, the Adjusted
Interest Rate will not be less than 4 3/4% per year.
For purposes of the definition of Reset Transaction, the dividend yield on
any security for any period means the dividends paid or proposed to be paid
pursuant to an announced dividend policy on the security for that period divided
by, if with respect to dividends paid on that security, the average Closing
Price (as defined in the indenture) of the security during that period and, if
with respect to dividends proposed to be paid on the security, the Closing Price
of such security on the effective date of the related Reset Transaction.
The "Trading Price" of a security on any date of determination means:
- the closing sale price (or, if no closing sale price is reported, the
last reported sale price) of a security (regular way) on the New York
Stock Exchange ("NYSE") on that date;
- if that security is not listed on the NYSE on that date, the closing
sale price as reported in the composite transactions for the principal
U.S. securities exchange on which that security is listed;
- if that security is not so listed on a U.S. national or regional
securities exchange, the closing sale price as reported by the Nasdaq
National Market;
- if that security is not so reported, the last price quoted by
Interactive Data Corporation for that security or, if Interactive Data
Corporation is not quoting such price, a similar quotation service
selected by us;
- if that security is not so quoted, the average of the mid-point of the
last bid and ask prices for that security from at least two dealers
recognized as market-makers for that security; or
- if that security is not so quoted, the average of that last bid and
ask prices for that security from a dealer engaged in the trading of
convertible securities.
SUBORDINATION
The notes are unsecured obligations and are subordinated in right of
payment, as provided in the indenture, to the prior payment in full of all our
existing and future Senior Debt.
As of March 31, 2000 we had approximately $5.7 million of Senior Debt
outstanding. The indenture does not restrict the incurrence by us or our
subsidiaries of indebtedness or other obligations.
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The term "Senior Debt" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
termination payment with respect to or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, our
Indebtedness, whether outstanding on the date of the indenture or subsequently
created, incurred, assumed, guaranteed or in effect guaranteed by us (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), except for
- any Indebtedness that by its terms expressly provides that such
Indebtedness shall not be senior in right of payment to the notes or
expressly provides that such Indebtedness is equal with or junior to
the notes, and
- any Indebtedness between or among us or any of our subsidiaries, a
majority of the voting stock of which we directly or indirectly own,
or any of our affiliates.
The term "Indebtedness" means, with respect to any person:
1. all indebtedness, obligations and other liabilities (contingent
or otherwise) of that person for borrowed money (including
obligations in respect of overdrafts, foreign exchange contracts,
currency exchange agreements, interest rate protection
agreements, and any loans or advances from banks, whether or not
evidenced by notes or similar instruments) or evidenced by bonds,
debentures, notes or other instruments for the payment of money,
or incurred in connection with the acquisition of any property,
services or assets (whether or not the recourse of the lender is
to the whole of the assets of such person or to only a portion
thereof), other than any account payable or other accrued current
liability or obligation to trade creditors incurred in the
ordinary course of business in connection with the obtaining of
materials or services;
2. all reimbursement obligations and other liabilities (contingent
or otherwise) of that person with respect to letters of credit,
bank guarantees, bankers' acceptances, surety bonds, performance
bonds or other guaranty of contractual performance;
3. all obligations and liabilities (contingent or otherwise) in
respect of (A) leases of such person required, in conformity with
generally accepted accounting principles, to be accounted for as
capitalized lease obligations on the balance sheet of such
person, and (B) any lease or related documents (including a
purchase agreement) in connection with the lease of real property
which provides that such person is contractually obligated to
purchase or cause a third party to purchase the leased property
and thereby guarantee a minimum residual value of the leased
property to the landlord and the obligations of such person under
such lease or related document to purchase or to cause a third
party to purchase the leased property;
4. all obligations of such person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar
agreement or other similar instrument or agreement or foreign
currency hedge, exchange, purchase or similar instrument or
agreement;
5. all direct or indirect guaranties or similar agreements by that
person in respect of, and obligations or liabilities (contingent
or otherwise) of that person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of,
indebtedness, obligations or liabilities of another person of the
kind described in clauses (1) through (4);
6. any indebtedness or other obligations described in clauses (1)
through (4) secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by such
person, regardless of whether the indebtedness or other
obligation secured thereby shall have been assumed by such
person; and
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7. any and all deferrals, renewals, extensions, refinancings,
replacements, restatements and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or
liability of the kind described in clauses (1) through (6).
Any Senior Debt will continue to be Senior Debt and will be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any of its terms.
The indenture provides that in the event of any payment or distribution of
our assets upon our dissolution, winding up, liquidation or reorganization, the
holders of our Senior Debt shall first be paid in respect of all Senior Debt in
full in cash or other payment satisfactory to the holders of Senior Debt before
we make any payments of principal of, or premium, if any, and interest
(including liquidated damages, if any) on the notes. In addition, if the notes
are accelerated because of an event of default, the holders of any Senior Debt
would be entitled to payment in full in cash or other payment satisfactory to
the holders of Senior Debt of all obligations in respect of Senior Debt before
the holders of the notes are entitled to receive any payment or distribution.
Under the indenture, we must promptly notify holders of Senior Debt if payment
of the notes is accelerated because of an event of default.
The indenture further provides if any default by us has occurred and is
continuing in the payment of principal of, premium, if any, or interest on, rent
or other payment obligations in respect of, any Senior Debt, then no payment
shall be made on account of principal of, premium, if any, or interest on the
notes (including any liquidated damages), until all such payments due in respect
of that Senior Debt have been paid in full in cash or other payment satisfactory
to the holders of that Senior Debt.
During the continuance of any event of default with respect to any
Designated Senior Debt (other than a default in payment of the principal of or
premium, if any, or interest on, rent or other payment obligations in respect of
any Designated Senior Debt), permitting the holders thereof to accelerate the
maturity thereof (or, in the case of any lease, permitting the landlord either
to terminate the lease or to require us to make an irrevocable offer to
terminate the lease following an event of default thereunder), no payment may be
made by us, directly or indirectly, with respect to principal of or premium, if
any, or interest on the notes (including any liquidated damages, if any) for 179
days following written notice to us, from any holder, representative or trustee
under any agreement pursuant to which that Designated Senior Debt may have been
issued, that such an event of default has occurred and is continuing, unless
such event of default has been cured or waived or that Designated Senior Debt
has been paid in full in cash or other payment satisfactory to the holders of
that Designated Senior Debt. However, if the maturity of that Designated Senior
Debt is accelerated (or, in the case of a lease, as a result of such events of
default, the landlord under the lease has given us notice of its intention to
terminate the lease or to require us to make an irrevocable offer to terminate
the lease following an event of default thereunder), no payment may be made on
the notes until that Designated Senior Debt has been paid in full in cash or
other payment satisfactory to the holders of that Designated Senior Debt or such
acceleration (or termination, in the case of the lease) has been cured or
waived.
The term "Designated Senior Debt" means our Senior Debt which, at the date
of determination, has an aggregate amount outstanding of, or under which, at the
date of determination, the holders thereof are committed to lend up to, at least
$12.5 million and is specifically designated in the instrument evidencing or
governing that Senior Debt as "Designated Senior Debt" for purposes of the
indenture. However, the instrument may place limitations and conditions on the
right of that Senior Debt to exercise the rights of Designated Senior Debt. At
March 31, 2000, we had no Designated Senior Debt outstanding.
By reason of these subordination provisions, in the event of insolvency,
funds which we would otherwise use to pay the holders of notes will be used to
pay the holders of Senior Debt to the extent necessary to pay Senior Debt in
full in cash or other payment satisfactory to the holders of Senior Debt. As a
result of these payments, our general creditors may recover less, ratably, than
holders of Senior Debt and such general creditors may recover more, ratably,
than holders of notes.
The notes are effectively subordinated to all existing and future
liabilities of our subsidiaries. Any right we have to receive assets of our
existing subsidiary or any future subsidiaries upon the latter's liquidation or
reorganization (and the consequent right of the holders of the notes to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors, except to the extent that we are ourselves
recognized as a creditor of that subsidiary, in which case our claims would
still be subordinate to any security interests in the assets of that
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subsidiary and any indebtedness of that subsidiary senior to that held by us.
There are no restrictions in the indenture on the ability of our existing
subsidiary or any future subsidiaries to incur Indebtedness or other
liabilities. As of March 31, 2000, our existing subsidiary had no indebtedness
outstanding.
We are obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against any losses, liabilities or expenses incurred by it
in connection with its duties relating to the notes. The trustee's claims for
such payments will be senior to those of holders of the notes in respect of all
funds collected or held by the trustee.
CONVERSION RIGHTS
The holders of notes may, at any time prior to the close of business on the
final maturity date of the notes, convert any outstanding notes (or portions
thereof) into our common stock, initially at the conversion price set forth on
the cover page of this prospectus, subject to adjustment as described below.
Holders may convert notes only in denominations of $1,000 and whole multiples of
$1,000. Except as described below, no adjustment will be made on conversion of
any notes for interest accrued thereon or dividends paid on any common stock.
If notes are converted after a record date for an interest payment but
prior to the next interest payment date, those notes, other than notes called
for redemption, must be accompanied by funds equal to the interest payable on
the next interest payment date on the principal amount so converted. No payment
will be required from a holder if we exercise our right to redeem such notes on
a redemption date that is an interest payment date. We will not issue fractional
shares of common stock upon conversion of notes and instead will pay a cash
adjustment based upon the market price of our common stock on the last business
day before the date of the conversion. In the case of notes called for
redemption, conversion rights will expire at the close of business on the second
business day preceding the date fixed for redemption, unless we default in
payment of the redemption price.
A holder may exercise the right of conversion by delivering the note to be
converted to the specified office of a conversion agent, with a completed notice
of conversion, together with any funds that may be required as described in the
preceding paragraph. The conversion date will be the date on which the notes,
the notice of conversion and any required funds have been so delivered. A holder
delivering a note for conversion will not be required to pay any taxes or duties
relating to the issuance or delivery of the common stock for such conversion,
but will be required to pay any tax or duty which may be payable relating to any
transfer involved in the issuance or delivery of the common stock in a name
other than the holder of the note. Certificates representing shares of common
stock will be issued or delivered only after all applicable taxes and duties, if
any, payable by the holder have been paid. If any note is converted within two
years after its original issuance, the common stock issuable upon conversion
will not be issued or delivered in a name other than that of the holder of the
note unless the applicable restrictions on transfer, if any, have been
satisfied.
The initial conversion price will be adjusted for certain events,
including:
1. the issuance of our common stock as a dividend or distribution on
our common stock;
2. certain subdivisions and combinations of our common stock;
3. the issuance to all holders of our common stock of certain rights
or warrants to purchase our common stock (or securities
convertible into our common stock) at less than (or having a
conversion price per share less than) the current market price of
our common stock;
4. the dividend or other distribution to all holders of our common
stock of shares of our capital stock (other than common stock) or
evidences of our indebtedness or our assets (including
securities, but excluding those rights and warrants referred to
above and dividends and distributions in connection with a
reclassification, change, consolidation, merger, combination,
sale or conveyance resulting in a change in the conversion
consideration pursuant to the second succeeding paragraph or
dividends or distributions paid exclusively in cash);
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5. dividends or other distributions consisting exclusively of cash
to all holders of our common stock to the extent that such
distributions, combined together with (A) all other such all-cash
distributions made within the preceding 12 months for which no
adjustment has been made plus (B) any cash and the fair market
value of other consideration paid for any tender or exchange
offers by us or any of our subsidiaries for our common stock
concluded within the preceding 12 months for which no adjustment
has been made, exceeds 10% of our market capitalization on the
record date for such distribution; market capitalization is the
product of the then current market price of our common stock
times the number of shares of our common stock then outstanding;
and
6. payments to holders of our common stock pursuant to a tender or
exchange offer made by us or any of our subsidiaries to the
extent that the same involves an aggregate consideration that,
together with (A) any cash and the fair market value of any other
consideration paid in any other tender or exchange offer by us or
any of our subsidiaries for our common stock expiring within the
12 months preceding such tender or exchange offer for which no
adjustment has been made plus (B) the aggregate amount of any
all-cash distributions referred to in clause (5) above to all
holders of our common stock within 12 months preceding the
expiration of such tender or exchange offer for which no
adjustments have been made, exceeds 10% of our market
capitalization on the expiration of such tender or exchange
offer.
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price then in
effect at such time. Any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the conversion price will not be adjusted for the
issuance of our common stock or any securities convertible into or exchangeable
for our common stock or carrying the right to purchase any of the foregoing.
In the case of:
- any recapitalization, reclassification or change of our common stock
(other than changes resulting from a subdivision or combination),
- a consolidation, merger or combination involving us,
- a sale, conveyance or lease to another corporation of all or
substantially all of our property and assets, or
- any statutory share exchange,
in each case as a result of which holders of our common stock are entitled to
receive stock, other securities, other property or assets (including cash or any
combination thereof) with respect to or in exchange for our common stock, the
holders of the notes then outstanding will be entitled thereafter to convert
those notes into the kind and amount of shares of stock, other securities or
other property or assets (including cash or any combination thereof) which they
would have owned or been entitled to receive upon such recapitalization,
reclassification, change, consolidation, merger, combination, sale, conveyance
or statutory share exchange had such notes been converted into our common stock
immediately prior to such recapitalization, reclassification, change,
consolidation, merger, combination, sale, conveyance or statutory share
exchange. We may not become a party to any such transaction unless its terms are
consistent with the foregoing.
If a taxable distribution to holders of our common stock or other
transaction occurs which results in any adjustment of the conversion price, the
holders of notes may, in certain circumstances, be deemed to have received a
distribution subject to U.S. income tax as a dividend. In certain other
circumstances, the absence of an adjustment may result in a taxable dividend to
the holders of common stock. See "United States Federal Income Tax
Considerations."
We may from time to time, to the extent permitted by law, reduce the
conversion price of the notes by any amount for any period of at least 20 days.
In that case we will give at least 15 days' notice of such decrease. We may make
such reductions in the conversion price, in addition to those set forth above,
as our board of directors deems
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advisable to avoid or diminish any income tax to holders of our common stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
PROVISIONAL REDEMPTION
We may redeem the notes, in whole or in part, at any time prior to March 7,
2003, at a redemption price equal to $1,000 per $1,000 principal amount of notes
to be redeemed plus accrued and unpaid interest, if any, to the provisional
redemption date if:
- the closing price of our common stock has exceeded 150% of the
conversion price then in effect (as determined based on the then
effective Conversion Rate) for at least 20 trading days within a
period of 30 consecutive trading days ending on the trading day prior
to the date of mailing of the provisional redemption notice (which
date shall be at least 20 but not more than 60 days prior to the
provisional redemption date); and
- the shelf registration statement covering resales of the notes and the
common stock issuable upon conversion of the notes is effective and
available for use and is expected to remain effective for the 30 days
following the provisional redemption date.
Upon any provisional redemption, we will make an additional payment in cash
with respect to the notes called for redemption to holders on the notice date in
an amount equal to $107.14 per $1,000 principal amount of notes, less the amount
of any interest actually paid on the notes prior to the notice date. We will be
obligated to make this additional payment on all notes called for provisional
redemption, including any notes converted after the notice date and before the
provisional redemption date.
REDEMPTION OF NOTES AT OUR OPTION
There is no sinking fund for the notes. On and after March 7, 2003, we will
be entitled to redeem some or all of the notes on at least 20 but not more than
60 days' notice, at the redemption prices set out below, together with accrued
and unpaid interest to, but excluding, the date fixed for redemption. However,
if a redemption date is an interest payment date, the semi-annual payment of
interest becoming due on such date shall be payable to the holder of record as
of the relevant record date and the redemption price shall not include such
interest payment.
The table below shows redemption prices of a note per $1,000 principal
amount if redeemed during the periods described below.
<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
------------------------------------------------------------ ------------------
<S> <C>
March 7, 2003 through March 6, 2004......................... 102.714%
March 7, 2004 through March 6, 2005......................... 102.036%
March 7, 2005 through March 6, 2006......................... 101.357%
March 7, 2006 and thereafter................................ 100.679%
</TABLE>
If we do not redeem all of the notes, the trustee will select the notes to
be redeemed in principal amounts of $1,000 or whole multiples of $1,000 by lot,
on a pro rata basis or in accordance with any other method the trustee considers
fair and appropriate. If any notes are to be redeemed in part only, a new note
or notes in principal amount equal to the unredeemed principal portion thereof
will be issued. If a portion of a holder's notes is selected for partial
redemption and the holder converts a portion of its notes, the converted portion
will be deemed to be taken from the portion selected for redemption.
CHANGE OF CONTROL PERMITS PURCHASE OF NOTES AT THE OPTION OF THE HOLDER
If a Change of Control occurs, each holder of notes will have the right to
require us to repurchase some or all of that holder's notes not previously
called for redemption, or any portion of those notes that is equal to $1,000 or
a whole multiple of $1,000, on the date that is 45 days after the date we give
notice at a repurchase price equal to
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100% of the principal amount of the notes to be repurchased, together with
interest accrued and unpaid to, but excluding, the repurchase date.
Instead of paying the repurchase price in cash, we may pay the repurchase
price in common stock. The number of shares of common stock a holder will
receive will equal the repurchase price divided by 95% of the average of the
closing sales prices of our common stock for the five trading days immediately
preceding and including the third trading day prior to the repurchase date.
However, we may not pay in common stock unless we satisfy certain conditions
prior to the repurchase date as provided in the indenture.
Within 30 days after the occurrence of a Change of Control, we are required
to give notice to all holders of notes, as provided in the indenture, of the
occurrence of the Change of Control and of their resulting repurchase right. We
must also deliver a copy of our notice to the trustee. To exercise the
repurchase right, a holder of notes must deliver prior to or on the 30th day
after the date of our notice irrevocable written notice to the trustee of the
holder's exercise of its repurchase right, together with the notes with respect
to which the right is being exercised.
A "Change of Control" will be deemed to have occurred at such time after
the original issuance of the notes when the following has occurred:
- the acquisition by any person, including any syndicate or group deemed
to be a "person" under Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), of beneficial ownership,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions of shares of our
capital stock entitling that person to exercise 50% or more of the
total voting power of all shares of our capital stock entitled to vote
generally in elections of directors, other than any acquisition by us,
any of our subsidiaries or any of our employee benefit plans;
- our consolidation or merger with or into any other person, any merger
of another person into us, or any conveyance, transfer, sale, lease or
other disposition of all or substantially all of our properties and
assets to another person, other than: any transaction (A) that does
not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of our capital stock and (B)
pursuant to which holders of our capital stock immediately prior to
the transaction have the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power of all shares of our
capital stock entitled to vote generally in the election of directors
of the continuing or surviving person immediately after the
transaction; or any merger solely for the purpose of changing our
jurisdiction of incorporation and resulting in a reclassification,
conversion or exchange of outstanding shares of common stock solely
into shares of common stock of the surviving entity;
- during any consecutive two-year period, individuals who at the
beginning of that two-year period constituted our board of directors
(together with any new directors whose election to our board of
directors, or whose nomination for election by our stockholders, was
approved by a vote of a majority of the directors then still in office
who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease
for any reason to constitute a majority of our board of directors then
in office; or
- our stockholders pass a resolution approving a plan of liquidation or
dissolution.
The beneficial owner shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act. The term "person" includes any
syndicate or group which would be deemed to be a "person" under Section 13(d)(3)
of the Exchange Act.
Rule 13e-4 under the Exchange Act, as amended, requires the dissemination
of certain information to security holders if an issuer tender offer occurs and
may apply if the repurchase option becomes available to holders of the notes. We
will comply with this rule to the extent applicable at that time.
We may, to the extent permitted by applicable law, at any time purchase the
notes in the open market or by tender at any price or by private agreement. Any
note so purchased by us may, to the extent permitted by applicable
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law, be reissued or resold or may be surrendered to the trustee for
cancellation. Any notes surrendered to the trustee may not be reissued or resold
and will be canceled promptly.
The foregoing provisions would not necessarily protect holders of the notes
if highly leveraged or other transactions involving us occur that may adversely
affect holders.
Our ability to repurchase notes upon the occurrence of a Change of Control
is subject to important limitations. The occurrence of a Change of Control could
cause an event of default under, or be prohibited or limited by, the terms of
existing or future Senior Debt. As a result, any repurchase of the notes would,
absent a waiver, be prohibited under the subordination provisions of the
indenture until the Senior Debt is paid in full. Further, we cannot assure you
that we would have the financial resources, or would be able to arrange
financing, to pay the repurchase price for all the notes that might be delivered
by holders of notes seeking to exercise the repurchase right. Any failure by us
to repurchase the notes when required following a Change of Control would result
in an event of default under the indenture, whether or not such repurchase is
permitted by the subordination provisions of the indenture. Any such default
may, in turn, cause a default under existing or future Senior Debt. See
"-Subordination" above.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may, without the consent of the holders of notes, consolidate with,
merge into or transfer all or substantially all of our assets to any
corporation, limited liability company, partnership or trust organized under the
laws of the United States or any of its political subdivisions provided that:
- the surviving entity assumes all our obligations under the indenture
and the notes;
- at the time of such transaction, no event of default, and no event
which, after notice or lapse of time, would become an event of
default, shall have happened and be continuing; and
- an officers' certificate and an opinion of counsel, each stating that
the consolidation, merger or transfer complies with the provisions of
the indenture, have been delivered to the trustee.
INFORMATION REQUIREMENT
We have agreed that, during any period in which we are not subject to the
reporting requirements of the Securities Exchange Act of 1934, to make available
to holders of the notes, or beneficial owners of interests therein, or any
prospective purchaser of the notes, the information required by Rule 144A(d)(4)
to be made available in connection with the sale of notes or beneficial
interests in the notes.
EVENTS OF DEFAULT
Each of the following constitutes an event of default under the indenture:
1. our failure to pay when due the principal of or premium, if any,
on any of the notes at maturity, upon redemption or exercise of a
repurchase right or otherwise, whether or not such payment is
prohibited by the subordination provisions of the indenture;
2. our failure to pay an installment of interest (including
liquidated damages, if any) on any of the notes for 30 days after
the date when due, whether or not such payment is prohibited by
the subordination provisions of the indenture;
3. our failure to deliver shares of common stock, together with cash
instead of fractional shares, when those shares of common stock
or cash instead of fractional shares, are required to be
delivered following conversion of a note, and that failure
continues for 10 days;
4. our failure to perform or observe any other term, covenant or
agreement contained in the notes or the
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indenture for a period of 60 days after written notice of such
failure, requiring us to remedy the same, shall have been given
to us by the trustee or to us and the trustee by the holders of
at least 25% in aggregate principal amount of the notes then
outstanding;
5. our failure to make any payment by the end of the applicable
grace period, if any, after the maturity of any Indebtedness for
borrowed money in an amount in excess of $5 million, or there is
an acceleration of Indebtedness for borrowed money in an amount
in excess of $5 million because of a default with respect to such
Indebtedness without such Indebtedness having been discharged or
such acceleration having been cured, waived, rescinded or
annulled, in either case, for a period of 30 days after written
notice to us by the trustee or to us and the trustee by holders
of at least 25% in aggregate principal amount of the notes then
outstanding; and
6. certain events of our bankruptcy, insolvency or reorganization.
If an event of default specified in clause (6) above occurs and is
continuing, then the principal of all the notes and the interest thereon shall
automatically become immediately due and payable. If an event of default shall
occur and be continuing, other than with respect to clause (6) above, the
trustee or the holders of at least 25% in aggregate principal amount of the
notes then outstanding may declare the notes due and payable at their principal
amount together with accrued interest, and thereupon the trustee may, at its
discretion, proceed to protect and enforce the rights of the holders of notes by
appropriate judicial proceedings. Such declaration may be rescinded and annulled
with the written consent of the holders of a majority in aggregate principal
amount of the notes then outstanding, subject to the provisions of the
indenture.
The holders of a majority in aggregate principal amount of notes at the
time outstanding through their written consent, or the holders of a majority in
aggregate principal amount of notes then outstanding represented at a meeting at
which a quorum is present by a written resolution, may waive any existing
default or event of default and its consequences except any default or event of
default:
- in any payment on the notes;
- in respect of the conversion rights of the notes; or
- in respect of the covenants or provisions in the indenture that
may not be modified or amended without the consent of the holder
of each note affected as described in "-Modification, Waiver and
Meetings" below.
Holders of a majority in aggregate principal amount of the notes then
outstanding through their written consent, or the holders of a majority in
aggregate principal amount of the notes then outstanding represented at a
meeting at which a quorum is present by a written resolution, may direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred upon the trustee, subject
to the provisions of the indenture. The indenture contains a provision entitling
the trustee, subject to the duty of the trustee during a default to act with the
required standard of care, to be indemnified by the holders of notes before
proceeding to exercise any right or power under the indenture at the request of
such holders. The rights of holders of the notes to pursue remedies with respect
to the indenture and the notes are subject to a number of additional
requirements set forth in the indenture.
The right of any holder:
- to receive payment of principal, premium, if any, the Change of
Control purchase price or interest in respect of the notes held by
that holder on or after the respective due dates expressed in the
notes;
- to convert those notes; or
- to bring suit for the enforcement of any such payment on or after the
respective due dates expressed in the notes and the right to convert;
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<PAGE>
will not be impaired or affected without that holder's consent.
The indenture provides that the trustee shall, within 90 days of the
occurrence of a default, give to the registered holders of the notes notice of
all uncured defaults known to it, but the trustee shall be protected in
withholding such notice if it, in good faith, determines that the withholding of
such notice is in the best interest of such registered holders, except in the
case of a default in the payment of the principal of, or premium, if any, or
interest on, any of the notes when due or in the payment of any redemption or
repurchase obligation.
We are required to furnish annually to the trustee a statement as to the
fulfillment of our obligations under the indenture. In addition, we are required
to file with the trustee a written notice of the occurrence of any default or
event of default within five business days of our becoming aware of the
occurrence of any default or event of default.
MODIFICATION, WAIVER AND MEETINGS
The indenture contains provisions for convening meetings of the holders of
notes to consider matters affecting their interests.
The indenture (including the terms and conditions of the notes) may be
modified or amended by us and the trustee, without the consent of the holder of
any note, for the purposes of, among other things:
- adding to our covenants for the benefit of the holders of notes;
- surrendering any right or power conferred upon us;
- providing for conversion rights of holders of notes if any
reclassification or change of our common stock or any consolidation,
merger or sale of all or substantially all of our assets occurs;
- providing for the assumption of our obligations to the holders of
notes in the case of a merger, consolidation, conveyance, transfer or
lease;
- reducing the conversion price, provided that the reduction will not
adversely affect the interests of holders of notes in any material
respect;
- complying with the requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust Indenture
Act of 1939, as amended;
- making any changes or modifications to the indenture necessary in
connection with the registration of the notes under the Securities Act
of 1933, as amended, as contemplated by the registration rights
agreement, provided that this action does not adversely affect the
interests of the holders of the notes in any material respect;
- curing any ambiguity or correcting or supplementing any defective
provision contained in the indenture, provided that such modification
or amendment does not, in the good faith opinion of our board of
directors and the trustee, adversely affect the interests of the
holders of the notes in any material respect; or
- adding or modifying any other provisions which we and the trustee may
deem necessary or desirable and which will not adversely affect the
interests of the holders of notes in any material respect.
Modifications and amendments to the indenture or to the terms and
conditions of the notes may also be made, and noncompliance by us with any
provision of the indenture or the notes may be waived, either:
- with the written consent of the holders of at least a majority in
aggregate principal amount of the notes at the time outstanding; or
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- by the adoption of a resolution at a meeting of holders at which a
quorum is present by at least a majority in aggregate principal amount
of the notes represented at such meeting.
However, no such modification, amendment or waiver may, without the written
consent or the affirmative vote of the holder of each note affected:
- change the maturity of the principal of or any installment of interest
on any note (including any payment of liquidated damages);
- reduce the principal amount of, or any premium, if any, on any note;
- reduce the interest rate or interest (including any liquidated
damages) on any note;
- change the currency of payment of principal of, premium, if any, or
interest on any note;
- impair the right to institute suit for the enforcement of any payment
on or with respect to, or the conversion of, any note;
- modify our obligations to maintain an office or agency in New York
City;
- except as otherwise permitted or contemplated by provisions of the
indenture concerning specified reclassifications or corporate
reorganizations, adversely affect the conversion rights of holders of
the notes;
- adversely affect the repurchase option of holders upon a Change of
Control;
- modify the subordination provisions of the notes in a manner adverse
to the holders of notes;
- reduce the percentage in aggregate principal amount of notes
outstanding necessary to modify or amend the indenture or to waive any
past default; or
- reduce the percentage in aggregate principal amount of notes
outstanding required for the adoption of a resolution or the quorum
required at any meeting of holders of notes at which a resolution is
adopted.
The quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the notes at
the time outstanding.
SATISFACTION AND DISCHARGE
We may discharge our obligations under the indenture while notes remain
outstanding, subject to certain conditions, if:
- all outstanding notes will become due and payable at their scheduled
maturity within one year; or
- all outstanding notes are scheduled for redemption within one year,
and, in either case, we have deposited with the trustee an amount sufficient to
pay and discharge all outstanding notes on the date of their scheduled maturity
or the scheduled date of redemption.
FORM, DENOMINATION AND REGISTRATION
The notes were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount and whole multiples of $1,000.
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GLOBAL NOTES: BOOK-ENTRY FORM. The notes were initially issued only to
qualified institutional buyers as defined in Rule 144A under the Securities Act
("QIBs"). The notes are evidenced by one or more global notes deposited with the
trustee as custodian for The Depository Trust Company, New York, New York
("DTC"), and registered in the name of Cede & Co. as DTC's nominee. Record
ownership of the global notes may be transferred, in whole or in part, only to
another nominee of DTC or to a successor of DTC or its nominee, except as set
forth below.
A QIB may hold its interests in a global note directly through DTC if such
QIB is a participant in DTC, or indirectly through organizations which are
direct DTC participants. Transfers between direct DTC participants will be
effected in the ordinary way in accordance with DTC's rules and will be settled
in same-day funds. QIBs may also beneficially own interests in the global notes
held by DTC through certain banks, brokers, dealers, trust companies and other
parties that clear through or maintain a custodial relationship with a direct
DTC participant, either directly or indirectly.
So long as Cede & Co., as nominee of DTC, is the registered owner of the
global notes, Cede & Co. for all purposes will be considered the sole holder of
the global notes. Except as provided below, owners of beneficial interests in
the global notes will not be entitled to have certificates registered in their
names, will not receive or be entitled to receive physical delivery of
certificates in definitive form, and will not be considered holders thereof. The
laws of some states require that certain persons take physical delivery of
securities in definitive form. Consequently, the ability to transfer a
beneficial interest in the global notes to such persons may be limited.
We will wire, through the facilities of the trustee, principal, premium, if
any, and interest payments on the global notes to Cede & Co., the nominee for
DTC, as the registered owner of the global notes. CV Therapeutics, the trustee
and any paying agent will have no responsibility or liability for paying amounts
due on the global notes to owners of beneficial interests in the global notes.
It is DTC's current practice, upon receipt of any payment of principal of
and premium, if any, and interest on the global notes, to credit participants'
accounts on the payment date in amounts proportionate to their respective
beneficial interests in the notes represented by the global notes, as shown on
the records of DTC, unless DTC believes that it will not receive payment on the
payment date. Payments by DTC participants to owners of beneficial interests in
notes represented by the global notes held through DTC participants will be the
responsibility of DTC participants, as is now the case with securities held for
the accounts of customers registered in "street name."
If you would like to convert your notes into common stock pursuant to the
terms of the notes, you should contact your broker or other direct or indirect
DTC participant to obtain information on procedures, including proper forms and
cut-off times, for submitting those requests.
Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of indirect DTC participants and other banks, your ability to pledge your
interest in the notes represented by global notes to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate.
Neither CV Therapeutics nor the trustee (nor any registrar, paying agent or
conversion agent under the indenture) will have any responsibility for the
performance by DTC or direct or indirect DTC participants of their obligations
under the rules and procedures governing their operations. DTC has advised us
that it will take any action permitted to be taken by a holder of notes,
including, without limitation, the presentation of notes for conversion as
described below, only at the direction of one or more direct DTC participants to
whose account with DTC interests in the global notes are credited and only for
the principal amount of the notes for which directions have been given.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created
to hold securities for DTC participants and to facilitate the clearance and
settlement of securities transactions between DTC participants through
electronic book-entry changes to the accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants
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include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations such as the initial
purchasers of the notes. Certain DTC participants or their representatives,
together with other entities, own DTC. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies that
clear through, or maintain a custodial relationship with, a participant, either
directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global notes among DTC participants, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will cause notes to be issued in definitive form in
exchange for the global notes. None of CV Therapeutics, the trustee or any of
their respective agents will have any responsibility for the performance by DTC,
direct or indirect DTC participants of their obligations under the rules and
procedures governing their operations, including maintaining, supervising or
reviewing the records relating to, or payments made on account of, beneficial
ownership interests in global notes.
According to DTC, the foregoing information with respect to DTC has been
provided to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty or contract modification of any kind.
CERTIFICATED NOTES. The notes represented by a global note will be
exchangeable for notes in definitive form of like tenor as that global note in
denominations of $1,000 and in any greater amount that is an integral multiple
of $1,000 if:
- DTC notifies us in writing that it is unwilling or unable to continue
as depositary for that global note or if at any time DTC ceases to be
a clearing agency registered under the Exchange Act and a successor
depositary is not appointed by us within 90 days;
- we, at our option, notify the trustee in writing that we elect to
issue the notes in definitive form in exchange for all or any part of
the notes represented by the global notes; or
- there is, or continues to be, an event of default and the registrar
has received a request from DTC for the issuance of definitive notes
in exchange for the global notes.
Any note that is exchangeable pursuant to the preceding sentence is
exchangeable for notes registered in the names which DTC will instruct the
Trustee. It is expected that DTC's instructions may be based upon directions
received by DTC from its participants with respect to ownership of beneficial
interests in that global note. Subject to the foregoing, a global note is not
exchangeable except for a global note or global notes of the same aggregate
denominations to be registered in the name of DTC or its nominee.
NOTICES
Except as otherwise provided in the indenture, notices to holders of notes
will be given by mail to the addresses of holders of the notes as they appear in
the note register.
GOVERNING LAW
The indenture, the notes and the registration rights agreement are governed
by, and construed in accordance with, the law of the State of New York.
INFORMATION REGARDING THE TRUSTEE
Norwest Bank, Minnesota, N.A., as trustee under the indenture, has been
appointed by us as paying agent, conversion agent, registrar and custodian with
regard to the notes. Norwest Bank, Minnesota, N.A. also is the transfer agent
and registrar for our common stock. The trustee or its affiliates may from time
to time in the future provide banking and other services to us in the ordinary
course of their business.
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REGISTRATION RIGHTS OF HOLDERS OF THE NOTES
We have, at our expense, filed with the SEC a shelf registration statement
on such form as we deem appropriate covering resales by holders of all notes and
the common stock issuable upon conversion of the notes. Under the terms of the
registration rights agreement, we agree to use our best efforts to:
- cause such registration statement to become effective as promptly as
is practicable, but in no event later than 150 days after the earliest
date of original issuance of any of the notes; and
- keep the registration statement effective until such date that is two
years after the last date of original issuance of any of the notes (or
such earlier date when the holders of the notes and the common stock
issuable upon conversion of the notes are able to sell all such
securities immediately without restriction pursuant to the volume
limitation provisions of Rule 144 under the Securities Act or any
successor rule thereto or otherwise).
We also agree to provide to each registered holder copies of the
prospectus, notify each registered holder when the shelf registration statement
has become effective and take certain other actions as are required to permit
unrestricted resales of the notes and the common stock issuable upon conversion
of the notes. A holder who sells those securities pursuant to the shelf
registration statement generally will be required to be named as a selling
stockholder in the related prospectus and to deliver a prospectus to purchasers
and will be bound by the provisions of the registration rights agreement, which
are applicable to that holder (including certain indemnification provisions). If
a shelf registration statement covering those securities is not effective, they
may not be sold or otherwise transferred except pursuant to an exemption from
registration under the Securities Act and any other applicable securities laws
or in a transaction not subject to those laws.
Each holder must notify us not later than three business days prior to any
proposed sale by that holder pursuant to the shelf registration statement. This
notice will be effective for five business days. We may suspend the holder's use
of the prospectus for a period not to exceed 45 days (60 days under certain
circumstances relating to a proposed or pending material business transaction,
the disclosure of which would impede our ability to consummate such transaction)
in any 90-day period, and not to exceed an aggregate of 90 days in any 12-month
period, if we, in our reasonable judgment, believe we may possess material
non-public information the disclosure of which would have a material adverse
effect on us and our subsidiaries taken as a whole. Each holder, by its
acceptance of a note, agrees to hold any communication by us in response to a
notice of a proposed sale in confidence.
If,
- on the 91st day following the earliest date of original issuance of
any of the notes, the shelf registration statement has not been filed
with the SEC; or
- on the 151st day following the earliest date of original issuance of
any of the notes, the shelf registration statement is not declared
effective; or
- the registration statement shall cease to be effective or fail to be
usable without being succeeded within five business days by a
post-effective amendment or a report filed with the SEC pursuant to
the Exchange Act that cures the failure of the registration statement
to be effective or usable; or
- on the 45th or 60th day, as the case may be, of any period that the
prospectus has been suspended as described in the preceding paragraph,
such suspension has not been terminated (each, a "registration
default"),
additional interest as liquidated damages will accrue on the notes, from and
including the day following the registration default to but excluding the day on
which the registration default has been cured. Liquidated damages will be paid
semi-annually in arrears, with the first semi-annual payment due on the first
interest payment date, as applicable, following the date on which such
liquidated damages begin to accrue, and will accrue at a rate per year equal to:
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- an additional 0.25% of the principal amount to and including the 90th
day following such registration default; and
- an additional 0.5% of the principal amount from and after the 91st day
following such registration default.
In no event will liquidated damages accrue at a rate per year exceeding
0.5%. If a holder has converted some or all of its notes into common stock, the
holder will be entitled to receive equivalent amounts based on the principal
amount of the notes converted.
We have agreed to distribute a questionnaire to each holder to obtain
certain information regarding the holder for inclusion in the prospectus.
Holders are required to complete and deliver the questionnaire within 20
business days after receipt of the questionnaire so that they may be named as
selling stockholders in the related prospectus at the time of effectiveness. A
holder will not be entitled to liquidated damages unless it has provided all
information requested by the questionnaire prior to the deadline.
The specific provisions relating to the registration described above are
contained in the registration rights agreement which was entered into on the
closing of the initial offering of the notes.
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DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
As of April 30, 2000, there were 18,367,831 shares of our common stock
outstanding held of record by approximately 133 stockholders.
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. The holder of
common stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of CVT,
holders of our common stock are entitled to share ratably in all assets
remaining after payment of liabilities. Holders of common stock have no
preemptive rights and no right to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are fully paid and
nonassessable.
PREFERRED STOCK
Our Board of Directors has the authority, without further action by the
stockholders, to issue up to 5,000,000 shares of Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, sinking fund terms and the number of shares
constituting any series or the designation of such series, without any further
vote or action by stockholders. The issuance of Preferred Stock could adversely
affect the voting power of holders of our common stock and the likelihood that
such holders will receive dividend payments and payments upon liquidation and
could have the effect of delaying, deferring or preventing a change in control.
We have no present plan to issue any shares of Preferred Stock.
WARRANTS
As of April 30, 2000, we had outstanding warrants to purchase 249,203
shares of common stock at exercise prices ranging from $8.90 to $25.00 per
share. Each warrant is exercisable immediately. Each warrant contains provisions
for the adjustment of the exercise price and the aggregate number of shares
issuable upon the exercise of the warrant under certain circumstances, including
stock dividends, stock splits, reorganizations and reclassifications. Each
warrant may be exercised, without the payment of cash, for a number of shares of
common stock determined pursuant to a net issue exercise formula contained in
the warrant. Each warrant holder has certain registration rights. See
"-Registration Rights of Certain Holders." Generally, the warrants expire at
various times from September 2000 to April 2005.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
Holders of approximately 1,714,000 shares of common stock and warrants to
purchase approximately 249,203 shares of common stock will be entitled to
certain rights with respect to the registration of their shares under the
Securities Act. These rights are provided under the terms of an Investors'
Rights Agreement, dated May 29, 1996, and certain other agreements. Pursuant to
the terms of these agreements, if we propose to register any of its securities
under the Securities Act of 1933, either for our own account or the account of
others, the holders are entitled to notice of such registration and are entitled
to include, at our expense, their shares of common stock; provided, among other
conditions, that the underwriters of any offering have the right to limit the
number of such shares included in such registration or exclude such shares
entirely. The holders may also require us, on no more than one occasion over any
twelve month period, at our expense, to register all or a portion of their
shares of common stock on Form S-3, subject to certain conditions and
limitations. All rights described in this paragraph terminate as to a holder at
such time as such shares of common stock may be sold by the holder in the public
market in a three month period.
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DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
CVT is subject to the provisions of Section 203 of the Delaware Law, an
anti-takeover law. In general, the statute prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner, For purposes of Section 203, a
"business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock.
Our Restated Certificate of Incorporation and Restated Bylaws also require
that any action required or permitted to be taken by our stockholders must be
effected at a duly called annual or special meeting of the stockholders and may
not be effected by a consent in writing. In addition, special meetings of our
stockholders may be called only by the Board of Directors, the Chairman of the
Board, the Chief Executive Officer or by any person or persons holding shares
representing at least 10% of the outstanding capital stock. Our Restated
Certificate of Incorporation also provides for a classified Board. These
provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of CVT.
RIGHTS PLAN
Our Board of Directors adopted a Share Purchase Rights Plan, pursuant to
which one preferred share was issued as a dividend for each outstanding share of
our common stock. Each Right entitles the registered holder to purchase from CVT
one one-hundredth of a share of Series A junior participating preferred stock at
a price of $35.00 per one one-hundredth of a preferred share, subject to
adjustment.
The Rights would become exercisable when a person or group acquires 20% or
more of our common stock or 10 business days after commencement or announcement
of a tender or exchange offer that would result in such ownership. After the
Rights become exercisable, the holder of each Right, other than the person or
group acquiring 20% or more of our stock, would be permitted to purchase, for
the exercise price, shares of CVT common stock having a market value of twice
the exercise price. The Rights will expire on February 1, 2009, unless earlier
redeemed or exchanged by CVT.
If, after the Rights become exercisable, we were to be acquired through a
merger or other business combination transaction or 50% or more of our assets or
earning power were sold, each Right would permit the holder to purchase, for the
exercise price, common stock of the acquiring company having a market value of
twice the exercise price.
Preferred shares purchasable upon exercise of the Rights will not be
redeemable. Each preferred share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 but will be entitled to an aggregate
dividend of 100 times the dividend declared per share of common stock. In the
event of liquidation, the holders of the preferred shares would be entitled to a
minimum preferential liquidation payment of $100 per share, but would be
entitled to receive an aggregate payment equal to 100 times the payment made per
share of common stock. Each preferred share will have 100 votes, voting together
with the common stock. Finally, in the event of any merger, consolidation or
other transaction in which shares of common stock are exchanged, each preferred
share will be entitled to receive 100 times the amount of consideration received
per share of common stock. These rights are protected by customary anti-dilution
provisions. The preferred shares rank junior to any other series of our
preferred stock.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain anticipated U.S.
federal income tax consequences to a U.S. holder with respect to the
purchase, ownership and disposition of the notes or our common stock acquired
upon conversion of a note as of the date hereof. This summary is generally
limited to U.S. holders who will hold the notes and the shares of common
stock into which the notes are convertible as "capital assets" within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code") and does not deal with special situations including those that may
apply to particular holders such as exempt organizations, non-U.S. holders,
holders subject to the U.S. federal alternative minimum tax, dealers in
securities, commodities or foreign currencies, financial institutions,
insurance companies, regulated investment companies, holders whose
"functional currency" is not the U.S. dollar and persons who hold the notes
or shares of common stock in connection with a "straddle," "hedging,"
"conversion" or other risk reduction transaction. PROSPECTIVE INVESTORS THAT
ARE NOT UNITED STATES PERSONS (WITHIN THE MEANING OF SECTION 7701(a)(30) OF
THE CODE) ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT IN THE NOTES, INCLUDING THE
POTENTIAL APPLICATION OF UNITED STATES WITHHOLDING TAXES. This discussion
does not address the tax consequences arising under any state, local or
foreign law.
The federal income tax considerations set forth below are based upon the
Internal Revenue Code of 1986, as amended, existing and proposed Treasury
Regulations, court decisions, and Internal Revenue Service ("IRS") rulings now
in effect, all of which are subject to change. We have not sought any ruling
from the IRS with respect to statements made and conclusions reached in this
discussion and there can be no assurance that the IRS will agree with such
statements and conclusions. Prospective investors should particularly note that
any such change could have retroactive application so as to result in federal
income tax consequences different from those discussed below.
As used herein, the term "U.S. holder" means a beneficial owner of a note
(or our common stock acquired upon conversion of a note) that is for U.S.
federal income tax purposes:
- a citizen or resident of the United States;
- a corporation or partnership created or organized in or under the laws
of the United States or of any political subdivision thereof (other
than a partnership that is not treated as a U.S. person under any
applicable Treasury Regulations);
- an estate the income of which is subject to U.S. federal income
taxation regardless of its source;
- a trust, if a court within the U.S. is able to exercise primary
jurisdiction over its administration and one or more U.S. persons
within the meaning of Section 7701(a)(30) of the Code have authority
to control all of its substantial decisions, or if the trust has a
valid election in effect under applicable U.S. Treasury regulations to
be treated as a U.S. person; or
- certain trusts in existence on August 20, 1996 and treated as U.S.
persons under the Code and applicable Treasury Regulations that elect
to continue to be treated as U.S. persons.
As used herein, a "non-U.S. holder" means a holder that is not a U.S.
holder. Prospective investors are urged to consult their tax advisors regarding
the tax consequences, in their particular circumstances, of purchasing, holding
and disposing of the notes or our common stock, including the tax consequences
arising under any state, local or foreign laws. While the following does not
purport to discuss all tax matters relating to the notes or the common stock
acquired upon conversion of a note, the following are the material tax
consequences of the notes and common stock acquired upon conversion of a note,
subject to the qualifications set forth below.
Based on currently applicable authorities, we are treating the notes as
indebtedness for U.S. federal income tax purposes. However, since the notes have
certain equity characteristics, it is possible that the IRS will contend that
the notes should be treated as an equity interest in, rather than indebtedness
of CV Therapeutics. Except as otherwise noted, the remainder of this discussion
assumes that the notes constitute indebtedness for U.S. tax purposes.
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STATED INTEREST
The notes were not issued with more than a de minimis amount of original
issue discount within the meaning of Section 1273(a) of the Code. Consequently,
interest paid on a note will be includable in the income of a U.S. holder as
ordinary income at the time it accrues or is actually or constructively received
in accordance with the holder's method of accounting for U.S. federal income tax
purposes. The interest rate on the notes is subject to increase upon a Reset
Transaction. We are treating the possibility that we will pay such additional
interest as subject to a remote contingency, within the meaning of applicable
Treasury Regulations and, therefore, we believe that the potential for such an
increase in the interest rate will not affect the yield to maturity on the
notes. U.S. holders should consult their tax advisors as to the tax consequences
if the interest rate on the notes were increased upon a Reset Transaction.
Our determination regarding the remoteness and incidental nature of such
contingency is binding on each U.S. holder unless the holder explicitly
discloses in the manner required by applicable Treasury Regulations that its
determination is different from ours. Our determination is not, however, binding
on the IRS.
CONVERSION OR REPURCHASE FOR COMMON STOCK
A U.S. holder should not recognize income, gain or loss upon conversion of
the notes solely into our common stock or a repurchase for common stock of a
note pursuant to exercise of the repurchase right (except with respect to any
amounts attributable to accrued interest on the notes, which will be treated as
interest for federal income tax purposes), and except with respect to cash
received in lieu of fractional shares, and with respect to market discount, as
described below under "-Market Discount." Except possibly for common stock
attributable to accrued interest on the notes, the U.S. holder's basis in the
common stock received on conversion or repurchase of a note for common stock
pursuant to the repurchase right should be the same as the U.S. holder's
adjusted tax basis in the notes at the time of conversion or repurchase (reduced
by any basis allocable to a fractional share) and the holding period for the
common stock received on conversion or repurchase should include the holding
period of the notes that were converted or repurchased.
Cash received in lieu of a fractional share of common stock upon conversion
of the notes into common stock or upon a repurchase for common stock of a note
pursuant to exercise of the repurchase right will be treated as a payment in
exchange for the fractional share of common stock. Accordingly, the receipt of
cash in lieu of a fractional share of common stock generally will result in
capital gain or loss measured by the difference between the cash received for
the fractional share and the U.S. holder's adjusted tax basis in the fractional
share.
DIVIDENDS ON COMMON STOCK
Generally, distributions will be treated as a dividend, subject to tax as
ordinary income, to the extent of our current or accumulated earnings or
profits, then as a tax-free return of capital to the extent of such U.S.
holder's adjusted tax basis in the common stock and thereafter as gain from the
sale or exchange of such common stock. Additionally, a dividend distribution to
a corporate U.S. holder may qualify for a dividends received deduction.
DISPOSITION, REDEMPTION OR REPURCHASE FOR CASH
Except as set forth above under "-Conversion or Repurchase for Common
Stock," and below under "-Market Discount," U.S. holders generally will
recognize capital gain or loss upon the sale, redemption, including a repurchase
for cash pursuant to the repurchase right, or other taxable disposition of the
notes or on the sale or other taxable disposition of the common stock in an
amount equal to the difference between:
- the U.S. holder's adjusted tax basis in the notes or common stock (as
the case may be); and
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- the amount of cash and fair market value of any property received from
such disposition (other than amounts attributable to accrued interest
on the notes, which will be treated as interest for federal income tax
purposes).
A U.S. holder's adjusted tax basis in a note generally will equal the cost
of the note to such U.S. holder, increased by market discount previously
included in income by the U.S. holder and reduced by any amortized premium.
Such gain or loss from the taxable disposition of the notes or common stock
generally will be long-term capital gain or loss if the notes were held for more
than one year at the time of the disposition and, in the case of an individual
holder, will be taxed at a maximum rate of 20%. Short-term capital gains
realized by individual U.S. holders are taxed at a maximum rate of 39.6%.
Corporate U.S. holders are subject to a maximum regular income tax rate of 35%
on all capital gains and ordinary income. The deductibility of capital losses is
subject to limitations.
MARKET DISCOUNT
The resale of notes may be affected by the impact on a purchaser of the
"market discount" provisions of the Code. For this purpose, the market discount
on a note generally will be equal to the amount, if any, by which the stated
redemption price at maturity of the note immediately after its acquisition
exceeds the U.S. holder's adjusted tax basis in the note. Subject to a de
minimis exception, these provisions generally require a U.S. holder who acquires
a note at a market discount to treat as ordinary income any gain recognized on
the disposition of the note to the extent of the "accrued market discount" on
the note at the time of disposition, unless the U.S. holder elects to include
accrued market discount in income currently. This election to include market
discount in income currently, once made, applies to all market discount
obligations acquired on or after the first taxable year to which the election
applies and may not be revoked without the consent of the IRS. In general,
market discount will be treated as accruing on a straight-line basis over the
remaining term of the note at the time of acquisition, or, at the election of
the U.S. holder, under a constant yield method. A U.S. holder who acquires a
note at a market discount and who does not elect to include accrued market
discount in income currently may be required to defer the deduction of a portion
of the interest on any indebtedness incurred or maintained to purchase or carry
the note until the note is disposed of in a taxable transaction. If a U.S.
holder acquires a note with market discount and receives common stock upon
conversion of the note, the amount of accrued market discount not previously
included in income with respect to the converted note through the date of
conversion will be treated as ordinary income and will increase the U.S.
holder's basis in the note.
Under the President's fiscal 2001 budget proposal, accrual basis
taxpayers could be required to accrue market discount currently, subject to
certain limitations.
AMORTIZABLE PREMIUM
A U.S. holder who purchases a note at a premium over its stated principal
amount, plus accrued interest, generally may elect to amortize such premium for
U.S. federal income tax purposes under Section 171 of the Code. Potential U.S.
holders are advised to consult their tax advisors about the potential
application of Section 171 to the notes.
ADJUSTMENT OF CONVERSION PRICE
The conversion price of the notes is subject to adjustment under certain
circumstances. Under Section 305 of the Code and the Treasury Regulations issued
thereunder, adjustments or the failure to make such adjustments to the
conversion price of the notes may result in a taxable constructive distribution
to the U.S. holders of notes if, and to the extent that, certain adjustments or
failure to make adjustments in the conversion price that may occur in limited
circumstances (for example, an adjustment to reflect a taxable dividend to
holders of our common stock) increase the proportionate interest of a U.S.
holder in our assets or earnings and profits whether or not the U.S. holders
ever convert the notes. Such constructive distribution will be treated as a
dividend, resulting in ordinary income (and a possible dividends received
deduction in the case of corporate holders) to the extent of our current and
accumulated earnings and profits, with any excess treated first as a tax-free
return of capital which reduces the U.S. holder's tax
39
<PAGE>
basis in the notes to the extent thereof and thereafter as gain from the sale or
exchange of the notes. Generally, a U.S. holder's tax basis in a note will be
increased to the extent any such constructive distribution is treated as a
dividend. Moreover, if there is an adjustment (or a failure to make an
adjustment) to the conversion price of the notes that increases the
proportionate interest of the holders of outstanding common stock in our assets
or earnings and profits, then such increase in the proportionate interest of the
holders of the common stock generally will be treated as a constructive
distribution to such holders, taxable as described above. As a result, U.S.
holders of notes could have taxable income as a result of an event pursuant to
which they receive no cash or property.
DEDUCTIBILITY OF INTEREST
Under Section 163(1) of the Code, no deduction is permitted for interest
paid or accrued on any indebtedness of a corporation that is "payable in equity"
of the issuer or a related party. Debt is treated as debt payable in equity of
the issuer if the debt is part of an arrangement designed to result in payment
of the instrument with or by reference to the equity. Such arrangements could
include debt instruments that are convertible at the holder's option if it is
substantially certain that the option will be exercised (for example, where the
conversion price is lower than the market price of the stock on the date of the
debt issuance).
BACKUP WITHHOLDING AND INFORMATION REPORTING
We or our designated paying agent will, where required, report to U.S.
holders of notes or common stock and the IRS the amount of any interest paid on
the notes (or dividends paid with respect to the common stock or other
reportable payments) in each calendar year and the amount of tax, if any,
withheld with respect to such payments.
Under the backup withholding provisions of the Code and the applicable
Treasury Regulations, a U.S. holder of notes or our common stock acquired upon
the conversion of a note may be subject to backup withholding at the rate of 31%
with respect to dividends or interest paid on, or the proceeds of a sale,
exchange or redemption of, notes or common stock, unless:
- such holder is a corporation or comes within certain other exempt
categories and when required demonstrates this fact; or
- provides a correct taxpayer identification number, certifies as to no
loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules.
The amount of any backup withholding from a payment to a U.S. holder will
be allowed as a credit against the U.S. holder's federal income tax liability
and may entitle such holder to a refund, provided that the required information
is furnished to the IRS.
Treasury Regulations, generally effective January 1, 2001, subject to
certain transition rules, modify the currently effective information withholding
and backup withholding procedures and requirements. Prospective investors should
consult their own tax advisors concerning the application of the new withholding
regulations.
The preceding discussion of certain U.S. federal income tax consequences is
for general information only and is not tax advice. Accordingly, you should
consult your own tax adviser as to particular tax consequences to you of
purchasing, holding and disposing of the notes and our common stock, including
the applicability and effect of any state, local or foreign tax laws, and of any
proposed changes in applicable laws.
40
<PAGE>
SELLING SECURITY HOLDERS
The notes were originally issued by us and sold by the initial purchasers
in a transaction exempt from the registration requirements of the Securities Act
to persons reasonably believed by the initial purchasers to be qualified
institutional buyers. Selling holders, including their transferees, pledgees or
donees or their successors, may from time to time offer and sell pursuant to
this prospectus any or all of the notes and common stock into which the notes
are convertible.
The following table sets forth information with respect to the selling
holders and the principal amounts of notes beneficially owned by each selling
holder that may be offered under this prospectus. The information is based on
information provided by or on behalf of the selling holders. The selling holders
may offer all, some or none of the notes or common stock into which the notes
are convertible. Because the selling holders may offer all or some portion of
the notes or the common stock, no estimate can be given as to the amount of the
notes or the common stock that will be held by the selling holders upon
termination of any sales. In addition, the selling holders identified below may
have sold, transferred or otherwise disposed of all or a portion of their notes
since the date on which they provided the information regarding their notes in
transactions exempt from the registration requirements of the Securities Act.
<TABLE>
<CAPTION>
PRINCIPAL COMMON
AMOUNT OF COMMON STOCK NOTES STOCK
NOTES ISSUABLE OWNED OWNED
BENEFICIALLY UPON AFTER AFTER
OWNED AND CONVERSION COMMON STOCK COMPLETION COMPLETION
NAME OFFERED(1) OF THE NOTES OFFERED OF OFFERING OF OFFERING
---------------------------------------------- ---------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
AAM/Zazove Institutional Income Fund, L.P. $650,000 10,181 10,181 0 0
Aftra Health Fund 750,000 11,748 11,748 0 0
AL-Bank AL-Saudi AL-Alami Saudi
International Bank 750,000 11,748 11,748 0 0
Argent Classic Convertible Arbitrage Fund L.P. 2,500,000 39,160 39,160 0 0
Argent Classic Convertible Arbitrage Fund
(Bermuda) L.P. 3,000,000 46,992 46,992 0 0
Arthur D. Little Employee Investment Fund 700,000 10,964 10,964 0 0
Bancroft Convertible Fund, Inc. 250,000 3,916 3,916 0 0
The Bank of New York, as Trustee 1,100,000 17,230 17,230 0 0
The Bank of New York,
Trustee for Mark T. Ewing 50,000 783 783 0 0
Bear Stearns & Co., Inc. 1,000,000 15,664 15,664 0 0
Brown & Williamson Tobacco Master
Retirement Trust 250,000 3,916 3,916 0 0
The Common Fund FAO Absolute Return Fund 400,000 62,65 62,65 0 0
DeepRock & Co. 715,000 11,199 11,199 0 0
Deutsche Bank Securities, Inc. 18,440,000 288,847 288,847 0 0
Diane D. Goodrich 50,000 783 783 0 0
Donaldson, Lufkin & Jenrette Securities
Corp. 3,450,000 54,041 54,041 0 0
Douglas D. Duke 25,000 391 391 0 0
Duckbill & Co. 1,285,000 20,128 20,128 0 0
Ellsworth Convertible Growth and Income
Fund, Inc. 250,000 3,916 3,916 0 0
Helix Convertible Opportunities Fund Ltd. 1,230,000 19,226 19,266 0 0
Helix Convertible Opportunities L.P. 2,370,000 37,124 37,124 0 0
JP Morgan Securities Inc. 3,125,000 48,950 48,950 0 0
James H. Hamersley Rev. Trust UA 6/23/99 30,000 469 469 0 0
Julius Baer Securities 650,000 10,181 10,181 0 0
Lipper Convertibles, L.P. 11,000,000 172,306 172,306 0 0
Mainstay Strategic Value Fund 200,000 3,132 3,132 0 0
Michael FT Maude Discretionary Trust 10,000 156 156 0 0
Morgan Stanley Dean Witter Convertible
Securities Trust 1,500,000 23,496 23,496 0 0
New York Life Separate Account #7 1,500,000 23,496 23,496 0 0
Norwalk Employees Pension Plan 800,000 12,531 12,531 0 0
San Diego County Employees Retirement
Association 1,253,750 19,638 19,638 0 0
The Sylvan C. Coleman Foundation 70,000 1,096 1,096 0 0
Tribeca Investments LLC 38,495,000 602,991 602,991 0 0
United Capital Management, Inc. 250,000 3,916 3,916 0 0
White River Securities, LLC 1,000,000 15,664 15,664 0 0
Zurich HFR Master Hedge Fund Index Ltd. 200,000 3,132 3,132 0 0
</TABLE>
41
<PAGE>
(1) Amounts indicated may be in excess of the total amount registered due to
sales or transfers exempt from the registration requirements of the
Securities Act since the date upon which the selling holders provided to us
the information regarding their notes.
With the exception of JP Morgan Securities, Inc., none of the selling
holders nor any of their affiliates, officers, directors or principal equity
holders has held any position or office or has had any material relationship
with us within the past three years. JP Morgan Securities, Inc. acted as
managing underwriter in an underwritten public offering of CVT's common stock in
October 1999 and was an initial purchaser of the notes. The selling holders
purchased the notes in private transactions on or after March 1, 2000. All of
the notes were "restricted securities" under the Securities Act prior to this
registration.
Information concerning the selling holders may change from time to time and
any changed information will be set forth in supplements to this prospectus if
and when necessary. In addition, the conversion rate and therefore, the number
of shares of common stock issuable upon conversion of the notes, is subject to
adjustment under certain circumstances. Accordingly, the aggregate principal
amount of notes and the number of shares of common stock into which the notes
are convertible may increase or decrease.
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and the common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at prices related to the prevailing market prices, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions, which may involve crosses or block transactions:
- on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which the notes or the common
stock may be listed or quoted at the time of sale;
- in the over-the-counter market;
- in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
- through the writing of options, whether the options are listed on an
options exchange or otherwise; or
- through the settlement of short sales.
In connection with the sale of the notes and the common stock into which
the notes are convertible or otherwise, the selling holders may enter into
hedging transactions with broker-dealers or other financial institutions, which
may in turn engage in short sales of the notes or the common stock into which
the notes are convertible in the course of hedging the positions they assume.
The selling holders may also sell the notes or the common stock into which the
notes are convertible short and deliver these securities to close out their
short positions, or loan or pledge the notes or the common stock into which the
notes are convertible to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of the notes or
common stock into which the notes are convertible offered by them will be the
purchase price of the notes or common stock less discounts and commissions, if
any. Each of the selling holders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of notes or common stock to be made directly or through agents. We will
not receive any of the proceeds from this offering.
42
<PAGE>
Our outstanding common stock is listed for trading on the Nasdaq National
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.
In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the notes and common stock into which the notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933, as amended. Any discounts, commissions, concessions or
profit they earn on any resale of the shares may be underwriting discounts and
commissions under the Securities Act of 1933, as amended. Selling holders who
are "underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, as amended, will be subject to the prospectus delivery requirements of the
Securities Act of 1933, as amended. The selling holders have acknowledged that
they understand their obligations to comply with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules thereunder relating
to stock manipulation, particularly Regulation M.
In addition, any securities covered by this prospectus that qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act of 1933, as
amended, may be sold under Rule 144 or Rule 144A rather than pursuant to this
prospectus. A selling holder may not sell any notes or common stock described in
this prospectus and may not transfer, devise or gift these securities by other
means not described in this prospectus.
To the extent required, the specific notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws under specific circumstances and at specific times.
The registration rights agreement provides for cross-indemnification of the
selling holders and us and their and our respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the notes and the common stock, including liabilities under the
Securities Act. We will pay substantially all of the expenses incurred by the
selling holders incident to the offering and sale of the notes and the common
stock.
LEGAL MATTERS
Cooley Godward LLP will pass upon legal matters for us regarding the
validity of the notes and the shares of common stock issuable upon conversion
of the notes. Debevoise & Plimpton, special New York counsel to us, will pass
upon legal matters for us regarding the validity of the notes. Cooley Godward
LLP may rely upon Debevoise & Plimpton with respect to matters of New York
law as to the validity of the notes. 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 one 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 155 shares of our common
stock and a warrant to purchase 875 shares of our common stock at an exercise
price of $20.00 per share. Certain Cooley Godward LLP attorneys own in the
aggregate approximately 1,008 shares of our common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
43
<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>
<CAPTION>
<S> <C>
SEC Registration Fee........................................... $51,810
Nasdaq National Market Filing Fee.............................. 17,500
Accounting Fees................................................ 10,000
Legal Fees and Expenses........................................ 85,000
Printing and Engraving......................................... 10,000
Miscellaneous.................................................. 10,690
Total.......................................................... $185,000
--------
</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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
3.1 Amended and Restated Certificate of Incorporation of the Registrant, as
amended.(1)
3.2 Restated Bylaws of the Registrant.(1)
4.1 Indenture dated as of March 7, 2000 between the Registrant and Norwest
Bank Minnesota, N.A., including therein the forms of the notes. (2)
4.2 Registration Rights Agreement dated as of March 7, 2000 between the
Registrant and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, J.P. Morgan Securities Inc., Fleetboston Robertson
Stephens Inc. and SG Cowen Securities Corporation (2)
5.1* Opinion of Cooley Godward LLP.
5.2* Opinion of Debevoise & Plimpton.
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2* Consent of Cooley Godward LLP (included in Exhibit 5.1).
23.3* Consent of Debevoise & Plimpton (included in Exhibit 5.2).
24.1 Power of Attorney (see page II-3).
25.1 Form T-1. Statement of Eligibility under the Trust Indenture Act of
Norwest Bank Minnesota N.A.
(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.
(2) Incorporated by reference to exhibits filed with the Registrant Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 2000.
* 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.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included is a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act, that are incorporated by
reference in this Registration Statement.
(2) That, for the 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 the time shall be deemed
to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions described herein, 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 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.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under Subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
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 June 2, 2000.
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 Daniel K. Spiegelman 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>
SIGNATURES TITLE DATE
-------------------------------------- -------------------------------------------- --------------
<S> <C> <C>
/S/ LOUIS G. LANGE Chairman of the Board and Chief Executive June 2, 2000
--------------------------------------
Louis G. Lange, M.D., Ph.D. Officer (Principal Executive Officer)
/S/ DANIEL K. SPIEGELMAN Chief Financial Officer (Principal June 2, 2000
--------------------------------------
Daniel K. Spiegelman Financial and Accounting Officer)
/S/ THOMAS L. GUTSHALL Director June 2, 2000
--------------------------------------
Thomas L. Gutshall
/S/ COSTA G. SEVASTOPOULOS Director June 2, 2000
--------------------------------------
Costa G. Sevastopoulos, Ph.D.
/S/ ISAAC STEIN Director June 2, 2000
--------------------------------------
Isaac Stein
/S/ BARBARA J. MCNIEL Director June 2, 2000
--------------------------------------
Barbara J. McNeil, M.D., Ph.D.
/S/ J. LEIGHTON READ Director June 2, 2000
--------------------------------------
J. Leighton Read, M.D.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C>
5.1* Opinion of Cooley Godward LLP.
5.2* Opinion of Debevoise & Plimpton.
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Cooley Godward LLP (included in Exhibit 5.1).
23.3* Consent of Debevoise & Plimpton (included in Exhibit 5.2).
24.1 Power of Attorney (see page II-3).
25.1 Form T-1. Statement of Eligibility under the Trust Indenture Act of
Norwest Bank Minnesota N.A.
</TABLE>
* To be filed by amendment.
II-4
