Filed Pursuant to Rule 424(b)(4)
Registration No. 333-45895
Prospectus supplement dated May 20, 1998
to Prospectus dated April 16, 1998
VIDAMED, INC.
4,342,504 Shares of Common Stock
Warrants to purchase 1,085,626 shares of Common Stock
VidaMed, Inc. ("VidaMed" or the "Company") is offering hereby 4,342,504
shares of its Common Stock, $.001 par value (the "Common Stock") and warrants to
purchase 1,085,626 shares of its Common Stock. The offering price per share of
Common Stock is $4.00 per share. The exercise price of the Warrants is $5.00 per
share.
Sale of Securities
On May 20, 1998, the Company issued a total of 4,342,504 shares of Common
Stock to a group of investors at a price of $4.00 per share in a negotiated
transaction. In connection with this transaction, the Company issued to the
purchasers of such shares of Common Stock Shelf Warrants to purchase an
aggregate of 1,085,626 shares of Common Stock at an exercise price of $5.00 per
share.
The Company has not entered into any underwriting arrangements with respect
to the above-referenced sales of shares of Common Stock and Shelf Warrants. The
Company engaged placement agents in connection with the above-referenced sales
of shares of Common Stock and Warrants and has agreed to issue to such placement
agents, as compensation for their placement agency services, an aggregate of
122,362 shares of Common Stock and Shelf Warrants to purchase 30,591 shares of
Common Stock. Such shares of Common Stock and Shelf Warrants are included among
the shares of Common Stock and Shelf Warrants offered hereby.
The Common Stock is quoted on the Nasdaq National Market under the symbol
VIDA. The Shelf Warrants are not quoted or listed on any securities exchange or
market, and the Company does not intend to apply for any listing of the Shelf
Warrants on any securities exchange or market. Accordingly, no public market
exists for the Shelf Warrants and it is not expected that any such market will
exist in the future.
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PROSPECTUS
VIDAMED, INC.
6,000,000 Shares of Common Stock
2,629,413 Warrants to Purchase Common Stock
2,000,000 Shares of Common Stock
Issuable Upon Exercise of Warrants
This Prospectus relates to (i) 6,000,000 shares (the "Shares") of
common stock, $.001 par value per share (the "Common Stock"), (ii) 2,000,000
Warrants to purchase Common Stock (the "Shelf Warrants"), (iii) 2,000,000 shares
of Common Stock issuable upon exercise of the Shelf Warrants (the "Shelf Warrant
Shares") and (iv) 629,413 Warrants to purchase Common Stock (the "Resale
Warrants") of VidaMed, Inc. (the "Company" or "VidaMed"). The Shares, the Shelf
Warrants and the Shelf Warrant Shares collectively are referred to herein as the
"Shelf Securities."
The Resale Warrants may be offered by certain stockholders of the
Company (the "Selling Warrant Holders") from time to time in privately
negotiated transactions, through the writing of options on the Resale Warrants,
or through a combination of such methods of sale, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices relating to
such prevailing market prices or at negotiated prices. The Selling Warrant
Holders may effect such transactions by selling the Resale Warrants to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Warrant Holders
and/or the purchasers of the Resale Warrants for whom such broker-dealers may
act as agents or to whom they may sell as principals, or both (which
compensation as to a particular broker-dealer might be in excess of customary
commissions). See "Selling Warrant Holders" and "Plan of Distribution."
None of the proceeds from the sale of the Resale Warrants by the
Selling Warrant Holders will be received by the Company. The Company has agreed
to bear all expenses (other than selling commissions and fees and expenses of
counsel and other advisers to the Selling Warrant Holders) in connection with
the registration and sale of the Resale Warrants being offered by the Selling
Warrant Holders. The Company has agreed to indemnify the Selling Warrant Holders
against certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act").
All the Resale Warrants were "restricted securities" under the
Securities Act prior to their registration hereunder. The Company sold 2,517,652
shares of Common Stock and 629,413 Warrants to the Selling Warrant Holders in
private transactions in September 1997. Such 629,413 Warrants are the Resale
Warrants registered hereunder. This Prospectus has been prepared so that future
sales of Resale Warrants by the Selling Warrant Holders will not be restricted
under the Securities Act. In connection with any sales, the Selling Warrant
Holders and any brokers participating in such sales may be deemed to be
"underwriters" within the meaning of the Securities Act. See "Selling Warrant
Holders."
The Company may from time to time offer the Shelf Securities in
amounts, at prices and on terms to be determined at the time of offering. The
Shelf Securities may be offered separately or together, in separate series in
amounts, at prices and on terms to be set forth in supplements to this
Prospectus (each a "Prospectus Supplement").
The specific terms of the Shelf Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of the Shares,
any public offering price and (ii) in the case of the Shelf Warrants, the terms
of issuance and exercise and any public offering price.
The applicable Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Shelf Securities
covered by such Prospectus Supplement.
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The Shelf Securities offered by this Prospectus may be sold by the
Company from time to time through agents or underwriters, or to dealers acting
as principals, or directly to purchasers in negotiated transactions, or any
combination of these methods of sale. Sales may be made at prevailing market
prices or at fixed prices determined at the time of each sale. See "Plan of
Distribution" regarding Prospectus Supplements to be appended to disclose
compensation by the Company to agents or underwriters that may be designated to
participate in the offering of the Shelf Securities. The Company may indemnify
any participating agent or underwriter against certain liabilities, including
liabilities under the Securities Act of 1933. Expenses of the offering of the
Shelf Securities, estimated at $80,000 (excluding compensation to agents or
underwriters), will be paid by the Company.
The Company's Common Shares are traded on the Nasdaq National Market
System under the symbol "VIDA."
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THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 16, 1998
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AVAILABLE INFORMATION
As used in this Prospectus, unless the context otherwise requires, the
terms "VidaMed" and the "Company" mean VidaMed, Inc. and its subsidiaries. The
Company is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed with the Commission pursuant to the informational requirements
of the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
New York Regional Office, 7 World Trade Center, Suite 1300, New York, New York
10048; and Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a World
Wide Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the site is http://www.sec.gov.
The Company's Common Stock is traded on the Nasdaq National Market.
Reports and other information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
This Prospectus constitutes part of a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement,
copies of which may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the
fees prescribed by the Commission. Statements contained in this Prospectus as to
the contents of any contract or any other document filed, or incorporated by
reference, as an exhibit to the Registration Statement, are qualified in all
respects by such reference.
INFORMATION INCORPORATED BY REFERENCE
The Company's Registration Statements on Form 8-A filed with the
Commission on May 17, 1995 and January 31, 1997, the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997 and the Company's Current Report on Form 8-K filed on
September 24, 1997 heretofore filed by the Company with the Commission pursuant
to the Exchange Act, are hereby incorporated by reference, except as superseded
or modified herein.
Each document filed subsequent to the date of this Prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering of the Resale Warrants and of the Shelf Securities
shall be deemed to be incorporated by reference into this Prospectus and shall
be part hereof from the date of filing of such document.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any document described above (other than
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exhibits). Requests for such copies should be directed to VidaMed, Inc. at its
principal offices located at 46107 Landing Parkway, Fremont, California 94538,
telephone (510) 492-4902, attention Investor Relations.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed to constitute a part of this Prospectus except as so modified, and any
statement so superseded shall not be deemed to constitute part of this
Prospectus.
VidaMed(R), the VidaMed logo and TUNA(TM) are trademarks of VidaMed,
Inc.
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THE COMPANY
VidaMed, Inc. (the "Company" or "VidaMed") was founded in July 1992 and
reincorporated in the State of Delaware in June 1995. VidaMed designs, develops,
manufactures and markets technologically and clinically advanced, cost effective
systems for urological applications. The Company's initial focus is on the
treatment of benign prostatic hyperplasia ("BPH"). The Company's first product,
the patented VidaMed TUNA System, is designed to offer a cost effective,
minimally invasive alternative therapy with compelling clinical advantages for
BPH treatment. The Company commenced manufacturing production and product sales
in 1993. On October 8, 1996, the Company received 510(k) clearance from the
United States Food and Drug Administration ("FDA") to market the TUNA System
commercially in the United States for the treatment of BPH. In the United
States, the Company sells its products primarily through direct sales personnel
and a network of specialty urology product dealers. International sales are
primarily to distributors who resell to physicians and hospitals.
VidaMed has designed and developed the TUNA System to be used in the
TUNA Procedure as the therapy of choice for BPH over watchful waiting, drug
therapy and current surgical therapies. The TUNA Procedure is designed to
restore and improve urinary flow while resulting in fewer complications and
adverse effects, shorter recovery time and greater cost effectiveness than other
therapies for treating BPH. The Company believes that the cost of treatment with
the TUNA Procedure will be less than the cost of many other interventional BPH
therapies because the procedure is designed to be performed on an outpatient
basis and to result in fewer complications.
The principal components of the TUNA System are (i) a single-use needle
ablation hand piece that delivers RF energy to the prostate, (ii) a low power RF
energy generator and (iii) an optical device that allows direct viewing during
the procedure.
TUNA Hand Piece. The single-use TUNA hand piece measures 22 French
(approximately seven millimeters) in diameter and contains laterally deployed
needles that extend at an angle of approximately 90 degrees. Each needle is
encased by a patented retractable shield which protects the urethra and is
adjusted by the urologist to selectively control the area of prostate tissue
ablated during the procedure. Controls on the hand piece handle allow for
independent advancement and retraction of the needle and shields. Thermocouples
located at the shield tip and at the hand piece tip record temperatures at the
lesion site and in the prostatic urethra. The hand piece allows for irrigation,
aspiration and bladder drainage during the procedure without removing the
handpiece from the bladder. These features improve visualization of the area of
treatment and reduce post-procedural urethral irritation. In addition, these
capabilities allow the physician to more closely control urethral tissue
temperature during the procedure.
TUNA RF Generator. The TUNA radio frequency ("RF") energy generator is
designed specifically for use with the TUNA hand piece. The RF generator has
digital displays indicating the temperature at each thermocouple, the RF power
being delivered to each needle, ablation time and electrical impedance. These
measurements are used by the physician to control tissue ablation. The generator
incorporates both automated and manual control modes. The generator has an
automatic shut-off activated by both temperature and impedance measurements to
ensure controlled tissue ablation.
TUNA Optics. The TUNA optical device allows precise positioning of the
hand piece between the verumontanum and the bladder neck during the procedure
using direct visualization. The optical device is reusable after sterilization
and is equipped with a three-way exchange adapter, which allows the unit to be
used with endoscopic light sources manufactured by other companies.
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The TUNA Procedure desiccates prostatic tissue, leading to improved
urinary flow, and can be performed in approximately 30 to 45 minutes with local
anesthesia, which may be supplemented by intravenous sedation. The TUNA hand
piece is inserted into the patient's urethra, and the two shielded needle
electrodes are then advanced into one of the two lateral lobes of the prostate.
Controlled RF energy delivered by the needle electrodes heats targeted portions
of the prostate lobe to temperatures of 90 to 100 degrees centigrade, creating a
localized area of desiccated tissue measuring approximately one to two
centimeters in diameter, while the shields protect the urethra from thermal
damage. Once a lesion of sufficient size has been created, the urologist
retracts the needles and places the hand piece at the next site to be ablated
and repeats the process. Typically, two treatments in each lateral prostate lobe
are performed depending upon the size of the prostate. If the patient is unable
to urinate due to temporary swelling or irritation of the urethra, a catheter
will be inserted into the patient's urethra. This catheter, if inserted, is
typically left in place for one to two days.
The Company believes that the design of the VidaMed TUNA System offers
significant advantages over other BPH therapies. Because the TUNA System shields
the urethra and delivers controlled RF energy directly into the interior of the
prostate, the procedure protects the prostatic urethra and reduces the risk of
unintended thermal damage to surrounding structures. In other procedures where
this control does not exist, the prostatic urethra and other structures can be
damaged or destroyed, causing significant patient discomfort and complications.
Clinical trials of the TUNA Procedure indicate that the TUNA Procedure results
in fewer of the complications associated with transurethral resection of
prostate ("TURP") surgery, including impotence, retrograde ejaculation and
incontinence. The Company believes that the cost of the TUNA Procedure in the
United States, including physician charges, will be significantly less than the
cost of TURP, which is the standard surgical procedure to treat BPH. The TUNA RF
generator is typically currently sold at approximately $35,000 in the United
States, which is less than the general surgical lasers required to perform laser
procedures and the ultrasound and microwave devices required for other surgical
procedures.
The Company believes the VidaMed TUNA Procedure will also provide
patients, physicians and health care payors with a clinically and economically
superior alternative to ongoing drug therapy, other minimally invasive surgeries
and watchful waiting. To date, the symptomatic relief experienced by patients in
the Company's clinical trials suggests that TUNA provides greater relief than
drug therapy or watchful waiting. The Company believes that if the relief
provided by TUNA proves to be sufficiently durable, TUNA may prove to be
economically superior to the noninvasive approaches. To date, the Company's
available two to three-year clinical follow-up data for TUNA Procedure patients
does not suggest the need for retreatment within this time frame. However, there
can be no assurance as to whether and how frequently TUNA Procedure patients
will require retreatment.
In September 1997, VidaMed announced a restructuring program designed
to reduce costs and improve operating efficiencies by closing the Company's
United Kingdom manufacturing facility. The Company anticipates that following a
short transition period, all future manufacturing of the VidaMed TUNA System
hand pieces will occur in the United States. In this regard, the Company moved
into its new headquarters facility in Fremont, California in July 1997. The
facility is approximately 35,000 square feet and provides the necessary capacity
to manufacture the VidaMed TUNA hand piece. The Company is currently qualifying
the facility as an FDA, GMP and ISO9001 site.
RECENT DEVELOPMENTS
On January 21, 1998, the Company reported its financial results of the
fourth quarter and for the year ended December 31, 1997. The Company's revenue
for the fourth quarter of 1997 was $2.0 million, compared to $2.4 million for
the fourth quarter of 1996. The loss for the fourth quarter of 1997 was $3.1
million, or $0.20 per share, compared to a net loss of $3.1 million, or $0.29
per share, for the fourth quarter of 1996. The Company reported that in the
fourth quarter of 1997, sales in the United States increased 9% from the third
quarter of 1997 and sales in Japan remained constant at almost $500,000.
Revenue for the year ended December 31, 1997 was $9.8 million, compared
to $3.8 million for the year ended December 31, 1996. The loss for 1997 was
$16.5 million, or $1.29 per share on 12.8 million average shares outstanding,
compared to a net loss of $13.5 million, or $1.30 per share on 10.4 million
average shares outstanding for 1996. The 1997 results include a one-time $2.1
million cost of goods charge relating to the consolidation of manufacturing
facilities to the Company's California headquarters, which was completed in the
fourth quarter of 1997. There were approximately 15.2 million shares outstanding
at December 31, 1997.
As of December 31, 1997, VidaMed's cash and cash equivalents stood at
$8.0 million. In January 1998, the Company arranged a $1.5 million 42-month term
loan with Silicon Valley Bank to finance the costs incurred in 1997 of
establishing the Company's manufacturing facility in California. In addition,
the Company has established a $3 million working capital line of credit facility
with Silicon Valley Bank.
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RISK FACTORS
An investment in the Securities being offered by this Prospectus
involves a high degree of risk. The following factors, in addition to those
discussed elsewhere in this Prospectus, should be carefully considered in
evaluating the Company and its business prospects before purchasing Securities
offered by this Prospectus.
Limited Operating History; History of Losses and Expectation of Future
Losses; Fluctuations in Operating Results. The Company has a limited history of
operations. Since its inception in July 1992, the Company has been primarily
engaged in research and development of the VidaMed TUNA System. The Company has
experienced significant operating losses since inception and, as of December 31,
1997, had an accumulated deficit of $68.3 million.
The development and commercialization by the Company of the TUNA System
and other new products, if any, will require substantial product development,
clinical, regulatory, marketing and other expenditures. The Company expects its
operating losses to continue for at least the next 9 to 18 months as it
continues to expend substantial resources in expanding marketing and sales
activities, funding clinical trials in support of regulatory and reimbursement
approvals and research and development. There can be no assurance that the TUNA
System will be successfully commercialized or that the Company will achieve
significant revenues from either international or domestic sales. In addition,
there can be no assurance that the Company will achieve or sustain profitability
in the future. Results of operations may fluctuate significantly from quarter to
quarter and will depend upon numerous factors, including actions relating to
regulatory and reimbursement matters, progress of clinical trials, the extent to
which the TUNA System gains market acceptance, varying pricing promotions and
volume discounts to distributors, introduction of alternative therapies for BPH
and competition.
Uncertainty of Market Acceptance. VidaMed's TUNA Procedure represents a
new therapy for BPH, and there can be no assurance that the TUNA System will
gain any significant degree of market acceptance among physicians, patients and
health care payors, even if necessary international and United States
reimbursement approvals are obtained. Physicians will not recommend the TUNA
Procedure unless they conclude, based on clinical data and other factors, that
it is an attractive alternative to other methods of BPH treatment, including
more established methods such as TURP and drug therapy. In particular,
physicians may elect not to recommend the TUNA Procedure until such time, if
any, as the duration of the relief provided by the procedure has been
established. Broad use of the TUNA System will require the training of numerous
physicians, and the time required to complete such training could result in a
delay or dampening of market acceptance. Even with the clinical efficacy of the
TUNA Procedure established, physicians may elect not to recommend the procedure
unless acceptable reimbursement from health care payors is available. Health
care payor acceptance of the TUNA Procedure will require evidence of the cost
effectiveness of TUNA as compared to other BPH therapies, which will depend in
large part on the duration of the relief provided by the TUNA Procedure. A
thorough analysis of multi-year patient follow-up data will be necessary to
assess the durability of the relief provided by TUNA therapy. Patient acceptance
of the procedure will depend in part on physician recommendations as well as
other factors, including the degree of invasiveness and rate and severity of
complications associated with the procedure as compared to other therapies.
Uncertainty Relating to Third Party Reimbursement. The Company's
success will be dependent upon, among other things, its ability to obtain
satisfactory reimbursement from health care payors for the TUNA Procedure. In
the United States and in international markets, third party reimbursement is
generally available for existing therapies used for treatment of BPH. In the
United States, third party reimbursement for the TUNA Procedure will be
dependent upon decisions by the local Medicare Medical Directors who adopt
Medicare reimbursement guidelines based on current procedure terminology ("CPT")
codes effective January 1, 1998, as well as by individual health maintenance
organizations, private insurers and other payors.
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Reimbursement systems in international markets vary significantly by
country. Many international markets have governmentally managed health care
systems that govern reimbursement for new devices and procedures. In most
markets, there are private insurance systems as well as governmentally managed
systems. The Company has recently received approvals by the Ministry of Health
and Welfare in Japan, and by the British Provident Association Ltd.
("BUPA"), the largest private health care insurer in the United Kingdom.
Regardless of the type of reimbursement system, the Company believes
that physician advocacy of the VidaMed TUNA System will be required to obtain
reimbursement. Availability of reimbursement will depend not only on the
clinical efficacy and direct cost of the TUNA Procedure, but also on the
duration of the relief provided by the procedure. In the United States, TUNA
Procedures are currently being reimbursed by certain private payors. However,
due to the age of the typical BPH patient, Medicare reimbursement is
particularly critical for widespread market acceptance of the TUNA Procedure in
the United States. CPT Code #53852, covering the physician fee component of the
TUNA Procedure, was included in the 1998 edition of CPT codes which became
effective January 1, 1998. If adopted by local Medicare Medical Directors, this
code should enhance the reimbursement process for physicians performing the
VidaMed TUNA Procedure in an outpatient hospital environment. The CPT code is
active in over 30 states, although to date only a small number of the states has
a formal written policy guideline covering reimbursement of the VidaMed TUNA
Procedure. Further, national Medicare reimbursement of TUNA Procedure costs in
an office setting at an adequate level will require completion by the Health
Care Financing Administration ("HCFA") of a review of the cost and efficacy of
the TUNA Procedure. Such cost and efficacy review may involve an assessment of
clinical data with up to five-year patient follow-up. Accordingly, there can be
no assurance that office-based reimbursement for the Company's products will be
available in the United States or in international markets under either
governmental or private reimbursement systems at adequate levels, or that
physicians will support reimbursement for the VidaMed TUNA Procedure.
Furthermore, the Company could be adversely affected by changes in reimbursement
policies of governmental or private health care payors. Failure by physicians,
hospitals and other users of the Company's products to obtain sufficient
reimbursement from health care payors, including in particular Medicare
reimbursement in the United States, or adverse changes in governmental and
private third party payors' policies toward reimbursement for procedures
employing the Company's products would have a material adverse effect on the
Company's business, financial condition and results of operations.
Risk of Inadequate Funding. The Company plans to continue to expend
substantial funds for clinical trials in support of regulatory and reimbursement
approvals, expansion of sales and marketing activities, research and development
and establishment of commercial scale manufacturing capability. The Company may
be required to expend greater than anticipated funds if unforeseen difficulties
arise in the course of clinical trials of the TUNA Procedure, in connection with
obtaining necessary regulatory and reimbursement approvals or in other aspects
of the Company's business. Although the Company believes that the funds
available through the Company's existing bank credit facilities, its existing
cash reserves and cash generated from the future sale of products will be
sufficient to meet the Company's operating and capital requirements during the
next 12 months, there can be no assurance that the Company will not require
additional financing within this time frame. The Company's future liquidity and
capital requirements will depend upon numerous factors, including progress of
clinical trials, actions relating to regulatory and reimbursement matters, and
the extent to which the TUNA System gains market acceptance. Any additional
financing, if required, may not be available on satisfactory terms or at all.
Future equity financings may result in dilution to the holders of the Company's
Common Stock. Future debt financings may require the Company to pledge assets
and to comply with financial and operational covenants.
Possible Volatility of Stock Price. The stock market has from time to
time experienced significant price and volume fluctuations that are unrelated to
the operating performance of particular companies. These broad market
fluctuations may adversely affect the market price of the Company's Common
Stock. In addition, the
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market price of the shares of Common Stock is likely to be highly volatile.
Factors such as fluctuations in the Company's operating results, announcements
of technological innovations or new products by the Company or its competitors,
FDA and international regulatory actions, actions with respect to reimbursement
matters, developments with respect to patents or proprietary rights, public
concern as to the safety of products developed by the Company or others, changes
in health care policy in the United States and internationally, changes in stock
market analyst recommendations regarding the Company, other medical device
companies or the medical device industry generally and general market conditions
may have a significant effect on the market price of the Common Stock.
Competition and Technological Advances. Competition in the market for
treatment of BPH is intense and is expected to increase. The Company believes
its principal competition will come from invasive therapies, such as TURP, and
noninvasive courses of action, such as drug therapy and watchful waiting. The
Company may encounter competition from emerging therapies in attracting clinical
investigators as well as prospective clinical trial patients. Most of the
Company's competitors have significantly greater financial, technical, research,
marketing, sales, distribution and other resources than the Company. There can
be no assurance that the Company's competitors will not succeed in developing or
marketing technologies and products that are more effective or commercially
attractive than any which are being developed by the Company. Such developments
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Any product developed by the Company that gains regulatory approval
will have to compete for market acceptance and market share. An important factor
in such competition may be the timing of market introduction of competitive
products. Accordingly, the relative speed with which the Company can develop
products, complete clinical testing and regulatory approval processes, gain
reimbursement acceptance and supply commercial quantities of the product to the
market are expected to be important competitive factors. The Company expects
that competition in the BPH field will also be based, among other things, on the
ability of the therapy to provide safe, effective and lasting treatment, cost
effectiveness of the therapy, physician, health care payor and patient
acceptance of the procedure, patent position, marketing and sales capability,
and third party reimbursement policies.
Government Regulation. The Company's TUNA System is regulated in the
United States as a medical device by the FDA under the Federal Food, Drug, and
Cosmetic Act ("FDC Act"). Pursuant to the FDC Act, the FDA regulates the
manufacture, distribution and production of medical devices in the United
States. Noncompliance with applicable requirements can result in fines,
injunctions, civil penalties, recall or seizure of products, total or partial
suspension of production, failure of the government to grant approval for
devices, and criminal prosecution. Medical devices are classified into one of
three classes, class I, II or III, on the basis of the controls necessary to
reasonably ensure their safety and effectiveness. The safety and effectiveness
can be assured for class I devices through general controls (e.g., labeling,
premarket notification and adherence to GMPs) and for class II devices through
the use of special controls (e.g., performance standards, postmarket
surveillance, patient registries, and FDA guidelines). Generally, class III
devices are those which must receive premarket approval by the FDA to ensure
their safety and effectiveness (e.g., life-sustaining, life-supporting and
implantable devices, or new devices which have not been found substantially
equivalent to legally marketed devices).
Before a new device can be introduced into the market, the manufacturer
must generally obtain FDA clearance through either a 510(k) notification or a
premarket approval ("PMA"). A 510(k) clearance will be granted if the submitted
data establishes that the proposed device is "substantially equivalent" to a
legally marketed class I or II medical device, or to a class III medical device
for which the FDA has not called for a PMA. The FDA has recently been requiring
a more rigorous demonstration of substantial equivalence than in the past. It
generally takes from three to nine months from submission to obtain a 510(k)
clearance, but it may
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<PAGE>
take longer. The FDA may determine that the proposed device is not substantially
equivalent, or that additional data is needed before a substantial equivalence
determination can be made. A "not substantially equivalent" determination, or a
request for additional data, could delay the market introduction of new products
that fall into this category and could have a materially adverse effect on the
Company's business, financial condition and results of operations. There can be
no assurance that the Company will obtain 510(k) clearance within the above time
frames, if at all, for any device for which it files a future 510(k)
notification. Furthermore, there can be no assurance that the Company will not
be required to submit a PMA application for any device which it may develop in
the future. For any of the Company's products that are cleared through the
510(k) process, including the Company's TUNA System, modifications or
enhancements that could significantly affect safety or efficacy will require new
510(k) submissions.
Sales of medical devices outside the United States are subject to
regulatory requirements that vary widely from country to country. The time
required to obtain approval for sale in a foreign country may be longer or
shorter than that required for FDA approval, and the requirements may differ.
VidaMed has received regulatory approvals where required for commercial sale of
the TUNA System in all major international markets. In May 1994 the Company's
United Kingdom facility passed inspection by the United Kingdom Department of
Health and received GMP certification. In June 1994, the Company received a
report of compliance for the TUNA System from the British Standards Institute
("BSI") and in August 1994 the Company received a certificate of compliance with
IEC 601-1 and IEC 601-2 regulations from TUV Product Services. TUV and BSI
certifications, which are issued by organizations analogous to Underwriters
Laboratories in the United States, are focused on device safety and adherence of
the device to published electronic or mechanical specifications. In February
1995, the Company received ISO 9002 certification for its manufacturing facility
in the United Kingdom. ISO 9002 certification is based on adherence to
established standards in the areas of quality assurance and manufacturing
process control. These certifications allow the Company to affix the CE mark to
the VidaMed TUNA System, permitting the Company to commercially market and sell
the TUNA System in all countries of the European Economic Area. In order to
maintain these approvals, the Company is subject to periodic inspections.
Additional product approvals from foreign regulatory authorities may be required
for international sale of the Company's general electrosurgical device for which
an FDA 510(k) notification has been filed. Failure to comply with applicable
regulatory requirements can result in loss of previously received approvals and
other sanctions and could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's distributor in Japan, Century Medical, Inc., is
responsible for management of clinical trials and obtaining regulatory and
reimbursement approval for the TUNA System. Such regulatory approval was
received from the Japanese Ministry of Health and Welfare in July 1997. However,
failure to obtain market acceptance for the TUNA Procedure in Japan could
preclude the commercial viability of the Company's products in Japan and could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Limited Manufacturing Experience; Scale-Up Risk; Product Recall Risk.
VidaMed purchases components used in the TUNA System from various suppliers and
relies on single sources for several components. Delays associated with any
future component shortages, particularly as the Company scales up its
manufacturing activities in support of commercial sales, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's United Kingdom manufacturing of the VidaMed TUNA hand
piece had been only in limited quantities. The Company has limited experience in
manufacturing its products in commercial quantities. Manufacturers often
encounter difficulties in scaling up production of new products, including
problems involving production yields, quality control and assurance, component
supply and lack of qualified personnel.
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<PAGE>
Difficulties encountered by VidaMed in manufacturing scale-up could have a
material adverse effect on its business, financial condition and results of
operations. In mid-1994, the Company experienced problems at its United Kingdom
facility with respect to mechanical aspects of the TUNA System hand piece's
needle assembly. As a result, a substantial portion of hand pieces in the field
were returned for rework. The Company has modified its manufacturing process to
rectify these problems and has completed product rework. However, there can be
no assurance that future manufacturing difficulties or product recalls, either
of which could have a material adverse effect on the Company's business,
financial condition and results of operations, will not occur. In addition, the
Company's new Fremont facility has capacity to manufacture the TUNA System hand
piece and the Company is currently in the process of qualifying this facility
under FDA good manufacturing practice regulations and under ISO 9000 standards.
The Company is consolidating manufacturing in Fremont. Inability to obtain FDA
good manufacturing practice and ISO 9000 qualification for the Fremont facility,
or problems associated with the consolidation of manufacturing at such facility,
could have a material adverse effect on the Company's business.
Any products manufactured or distributed by the Company pursuant to FDA
clearances or approvals are subject to pervasive and continuing regulation by
FDA including recordkeeping requirements and reporting of adverse experience
with the use of the device. The Company's manufacturing facilities are subject
to periodic inspection by FDA, certain state agencies and foreign regulatory
agencies. Failure to comply with regulatory requirements could have a material
adverse effect on the Company's business. There can be no assurance that the
Company will not be required to incur significant costs to comply with laws and
regulations in the future or that laws or regulations will not have a material
adverse effect upon the Company's business.
Uncertainty Regarding Patents and Protection of Proprietary Technology.
The Company has been issued 34 United States patents and 34 foreign patents
covering a method of prostate ablation using the VidaMed TUNA System and the
design of the TUNA System. The Company currently has 21 patent applications
pending in the United States and 56 corresponding patent applications pending in
various foreign countries. In addition, the Company holds licenses to certain
technology used in the TUNA System. There can be no assurance that the Company's
issued United States patents, or any patents which may be issued as a result of
the Company's applications, will offer any degree of protection. There can be no
assurance that any of the Company's patents or patent applications will not be
challenged, invalidated or circumvented in the future. In addition, there can be
no assurance that competitors, many of which have substantial resources and have
made substantial investments in competing technologies, will not seek to apply
for and obtain patents that will prevent, limit or interfere with the Company's
ability to make, use or sell its products either in the United States or in
international markets.
Intellectual Property Litigation Risks. The medical device industry has
been characterized by extensive litigation regarding patents and other
intellectual property rights, and companies in the medical device industry have
employed intellectual property litigation to gain a competitive advantage. The
Company is aware of patents held by other participants in the BPH market, and
there can be no assurance that the Company will not in the future become subject
to patent infringement claims and litigation or United States Patent and
Trademark Office ("USPTO") interference proceedings. The defense and prosecution
of intellectual property suits, USPTO interference proceedings and related legal
and administrative proceedings are both costly and time consuming. Litigation
may be necessary to enforce patents issued to the Company, to protect trade
secrets or know-how owned by the Company or to determine the enforceability,
scope and validity of the proprietary rights of others.
Any litigation or interference proceedings could result in substantial
expense to the Company and significant diversion of effort by the Company's
technical and management personnel. An adverse determination in litigation or
interference proceedings to which the Company may become a party could subject
the Company to significant liabilities to third parties or require the Company
to seek licenses from third parties. Although
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<PAGE>
patent and intellectual property disputes in the medical device area have often
been settled through licensing or similar arrangements, costs associated with
such arrangements may be substantial and could include ongoing royalties.
Furthermore, there can be no assurance that necessary licenses would be
available to the Company on satisfactory terms or at all. Accordingly, an
adverse determination in a judicial or administrative proceeding or failure to
obtain necessary licenses could prevent the Company from manufacturing and
selling its products, which would have a material adverse effect on the
Company's business, financial condition and results of operations.
In addition to patents, the Company relies on trade secrets and
proprietary know-how, which it seeks to protect, in part, through proprietary
information agreements with employees, consultants and other parties. The
Company's proprietary information agreements with its employees and consultants
contain industry standard provisions requiring such individuals to assign to the
Company without additional consideration any inventions conceived or reduced to
practice by them while employed or retained by the Company, subject to customary
exceptions. There can be no assurance that proprietary information agreements
with employees, consultants and others will not be breached, that the Company
would have adequate remedies for any breach, or that the Company's trade secrets
will not otherwise become known to or independently developed by competitors.
Rights to Founder's Inventions Limited to Urology. The proprietary
information agreement between the Company and Stuart D. Edwards, one of the
Company's founders, obligates Mr. Edwards to assign to the Company his
inventions and related intellectual property only in the field of urology. Mr.
Edwards has assigned to Rita Medical Systems, Inc. ("RITA") his inventions in
the cancer field. Mr. Edwards has conceived of, and may continue to conceive of,
various medical device product concepts for other fields outside of urology,
including certain product concepts for the treatment of snoring and sleep apnea
that have been assigned to an unrelated third party and certain product concepts
in the gynecology field that have been licensed to another unrelated third
party. Such party also has an option to purchase all future technology developed
by Mr. Edwards in the gynecology field. Product concepts outside of urology
developed by Mr. Edwards will not be owned by or commercialized through VidaMed,
and VidaMed will have no rights or ownership interests with respect thereto.
Risks Relating to RITA. The Company has entered into a cross license
agreement with RITA, formerly ZoMed International, Inc. Under the cross license,
RITA has the right to use VidaMed technology in the cancer field and VidaMed has
the right to use RITA technology in the treatment of urological diseases and
disorders. The cross license between VidaMed and RITA allows both companies to
develop products for treatment of prostate cancer and cancers of the lower
urinary tract, and VidaMed and RITA may therefore become competitors in this
field.
Product Liability Risk; Limited Insurance Coverage. The business of the
Company entails the risk of product liability claims. Although the Company has
not experienced any product liability claims to date, any such claims could have
an adverse impact on the Company. The Company maintains product liability
insurance and evaluates its insurance requirements on an ongoing basis. There
can be no assurance that product liability claims will not exceed such insurance
coverage limits or that such insurance will be available on commercially
reasonable terms or at all.
Effect of Certain Charter, Bylaw and Other Provisions. Certain
provisions of the Company's Certificate of Incorporation and Bylaws may have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of the Company.
Such provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock. Certain of these
provisions allow the Company to issue Preferred Stock without any vote or
further action by the stockholders, eliminate the right of stockholders to act
by written consent without a meeting and eliminate cumu-
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lative voting in the election of directors. These provisions may make it more
difficult for stockholders to take certain corporate actions and could have the
effect of delaying or preventing a change in control of the Company.
No Public Market for the Resale Warrants or the Shelf Warrants;
Arbitrary Determination of Purchase Price; Price Volatility. The Company does
not intend to apply for the listing of the Resale Warrants or the Shelf Warrants
on any exchange. Accordingly, there has been no public market for the Resale
Warrants or the Shelf Warrants prior to the offering of the Resale Warrants and
the Shelf Warrants, and there can be no assurance that an active trading market
will develop in any of the Resale Warrants or the Shelf Warrants after any
offering thereof. The exercise price and terms of the Shelf Warrants may be
determined arbitrarily by negotiations between the Company and any purchaser
thereof. Factors considered in such negotiations, in addition to prevailing
market conditions, may include the history and prospects for the industry in
which the Company competes, an assessment of the Company's management, the
prospects of the Company, its capital structure and certain other factors as
were deemed relevant. Therefore, the exercise price and terms of the Shelf
Warrants may not necessarily bear any relationship to established valuation
criteria and therefore may not be indicative of prices that may prevail at any
time or from time to time in a public market for the Shelf Warrants. In
addition, the exercise price of the Resale Warrants may not be indicative of
prices that may prevail at any time or from time to time in a public market for
the Resale Warrants.
Legal Restrictions on Sales of Shares Underlying the Resale Warrants
and the Shelf Warrants. The Resale Warrants and the Shelf Warrants will not be
exercisable unless, at the time of the exercise, the Company has a current
prospectus covering the shares of Common Stock issuable upon exercise of the
Resale Warrants and the Shelf Warrants, and such shares have been registered,
qualified or deemed to be exempt under the securities laws of the state of
residence of the exercising holder of the Resale Warrants or the Shelf Warrants.
Although the Company has undertaken to use its best efforts to have all the
shares of Common Stock issuable upon exercise of the Resale Warrants and the
Shelf Warrants registered or qualified on or before the exercise date and to
maintain a current prospectus relating thereto until the expiration of the
Resale Warrants and the Shelf Warrants, there can be no assurance that it will
be able to do so. The Resale Warrants and the Shelf Warrants may be deprived of
value if a current prospectus covering the shares of Common Stock issuable upon
the exercise of the Resale Warrants and the Shelf Warrants is not kept
effective.
USE OF PROCEEDS
None of the proceeds from the sale of the Resale Warrants by the
Selling Warrant Holders will be received by the Company.
Unless otherwise specified in the applicable Prospectus Supplement for
any offering of Shelf Securities, the Company intends to use the net proceeds
for general corporate purposes.
Pending use of the proceeds in the Company's business, the funds will
be invested in short-term investment grade interest bearing instruments.
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<PAGE>
SELLING WARRANT HOLDERS
The Company sold 2,517,652 shares of Common Stock and the Resale
Warrants to the Selling Warrant Holders in private transactions in September
1997. Such shares of Common Stock, and the shares of Common Stock underlying the
Resale Warrants, were registered under a Registration Statement filed by the
Company on September 24, 1997 (File No. 333-36327) (the "Previous Registration
Statement"). The Resale Warrants offered hereby are registered under the
Registration Statement of which this Prospectus forms a part.
<TABLE>
The following table provides the names of the Selling Warrant Holders,
the number of shares of Common Stock held by each of them at the time the
Previous Registration Statement was declared effective and the number of Resale
Warrants being offered by each of them hereby. After completion of the offering
of the Resale Warrants, assuming all the Resale Warrants offered hereby are
sold, and, in the event any of the Resale Warrants are exercised, assuming the
shares of Common Stock issued upon such exercise are sold, and assuming all the
shares of Common Stock registered under the Previous Registration Statement are
sold, no Selling Warrant Holder will hold any securities of the Company, except
as set forth in the footnotes below.
<CAPTION>
Selling Security Holders No. of Shares of Common Stock Held(1) No. of Resale Warrants Offered
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESCO Trust Company(2) 1,052,632 263,158
Kane & Co. 147,400 36,850
for Arthur D. Little Employee Investment Plan
Westcoast & Co. 694,700 173,675
for State of Oregon PERS/ZCG
Mellon Bank N.A. 210,500 52,625
Custodian for PERSI - Zesiger Capital for Public
Employee Retirement System of Idaho
ProMed Partners, LP 55,264 13,816
David B. Musket 41,364 10,341
Augusta Capital Management 105,264 26,316
Circle F Ventures (3) 210,528 52,632
<FN>
- -----------------------------------
(1) At the time the Previous Registration Statement was declared effective.
(2) Consists of shares held by Global Health Sciences Fund. GHS is a mutual
fund company advised by INVESCO Funds Group, Inc., which is a subsidiary of
INVESCO PLC. INVESCO Trust Company is a subsidiary of INVESCO Funds Group,
Inc.
(3) At the time the Previous Registration Statement was declared effective,
Circle F Ventures owned 71,900 shares of Common Stock of the Company in
addition to the shares of Common Stock registered under the Previous
Registration Statement.
</FN>
</TABLE>
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<PAGE>
No Selling Warrant Holder has held any position, office or other
material relationship with the Company or any of its predecessors or affiliates
within the past three years.
Each Selling Warrant Holder has represented to the Company that it
purchased the Resale Warrants for investment, with no present intention of
distribution. However, in recognition of the fact that investors, even though
purchasing the Resale Warrants for investment, may wish to be legally permitted
to sell their Resale Warrants when they deem appropriate, the Company has filed
with the Commission under the Securities Act the Registration Statement with
respect to the resale of the Resale Warrants from time to time in privately
negotiated transactions, through the writing of options on the Resale Warrants,
or through a combination of the foregoing. The Company has agreed to prepare and
file such amendments and supplements to the Registration Statement as may be
necessary to keep the Registration Statement effective for four years from the
date of closing of the issuance of the Resale Warrants.
PLAN OF DISTRIBUTION
The sale of the Resale Warrants by the Selling Warrant Holders may be
effected from time to time in transactions in privately negotiated transactions,
through the writing of options on the Resale Warrants, or through a combination
of such methods of sale, at fixed prices, that may be changed, at market prices
prevailing at the time of sale, at prices relating to such prevailing market
prices or at negotiated prices. The Selling Warrant Holders may effect such
transactions by selling the Resale Warrants to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Warrant Holders and/or the
purchasers of the Resale Warrants for whom such broker-dealers may act as agents
or to whom they may sell as principals, or both (which compensation as to a
particular broker-dealer may be in excess of customary compensation). Any
broker-dealer may act as a broker-dealer on behalf of one or more of the Selling
Warrant Holders in connection with the offering of certain of the Resale
Warrants by the Selling Warrant Holders.
The Selling Warrant Holders and any broker-dealers who act in
connection with the sale of the Resale Warrants hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and profit on any resale of the Resale Warrants
as principal might be deemed to be underwriting discounts and commissions under
the Securities Act. The Company has agreed to indemnify the Selling Warrant
Holders against certain liabilities, including liabilities under the Securities
Act.
The Company may sell the Shelf Securities to or through one or more
underwriters, and also may sell Shelf Securities directly to other purchasers or
through agents.
The distribution of the Shelf Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
In connection with the sale of Shelf Securities, underwriters may
receive compensation from the Company or from purchasers of Shelf Securities,
for whom they may act as agents, in the form of discounts, concessions, or
commissions. Underwriters may sell Shelf Securities to or through dealers and
such dealers may receive compensation in the form of discounts, concessions, or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Any such underwriter or agent will be identified,
and any such compensation received from the Company will be described, in the
Prospectus Supplement.
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<PAGE>
Any Shares sold pursuant to a Prospectus Supplement and any Shelf
Warrant Shares issuable upon exercise of any Shelf Warrants issued pursuant to a
Prospectus Supplement are expected to be listed on the Nasdaq National Market.
Unless otherwise specified in the related Prospectus Supplement, each series of
Shelf Warrants will be a new issue with no established trading market. The
Company may elect to list any series of Shelf Warrants on an exchange, but is
not obligated to do so. It is possible that one or more underwriters may make a
market in a series of Shelf Warrants, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of the trading market of any Shelf
Securities.
Under agreements the Company may enter into, underwriters, dealers and
agents who participate in the distribution of Shelf Securities may be entitled
to indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Company in the ordinary course of
business.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock, $.001 par value per share, and 5,000,000 shares of
Preferred Stock, $.001 par value per share. As of February 5, 1998, 15,231,101
shares of Common Stock were outstanding, held of record by approximately 271
stockholders. No shares of the Preferred Stock were outstanding as of February
5, 1998, although 30,000 shares of the Preferred Stock had been designated
Series A Participating Preferred Stock, $.001 par value. In addition, each
outstanding share of Common Stock represented the Preferred Share Purchase Right
related thereto.
Resale Warrants
The following summary description of the Resale Warrants sets forth
certain general terms and provisions of the Resale Warrants, but such summary
does not purport to be complete and is qualified in all respects by reference to
the actual text of the Resale Warrant.
Exercise Price and Terms. Each Resale Warrant will entitle the
registered holder thereof to purchase, for three years commencing on the date of
issuance, a fixed number of shares of Common Stock at $6.33 per share, subject
to adjustment in accordance with the anti-dilution and other provisions referred
to below. The holder of any Resale Warrant will be able to exercise such Resale
Warrant by surrendering the certificate representing the Resale Warrant to
American Securities Transfer, Inc. (the "Warrant Agent"), with the subscription
form thereon properly completed and executed, together with payment of the
exercise price. The Resale Warrants may be exercised at any time in whole or in
part at the applicable exercise price until expiration of the Resale Warrants.
No fractional shares will be issued upon the exercise of the Resale Warrants.
The exercise price of the Resale Warrants may bear no relationship to
any objective criterion of value and should in no event be regarded as an
indication of any future market price of the Common Stock.
Adjustments. The exercise price and the number of shares of Common
Stock purchasable upon the exercise of the Resale Warrants will be subject to
adjustment upon the occurrence of certain events, including stock splits,
reverse stock splits or combinations of the Common Stock, or sale by the Company
of shares of its Common Stock or other securities convertible into Common Stock
at a price below the fair market value of the Common Stock. Additionally, an
adjustment may be made in the case of a reclassification or exchange of
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<PAGE>
Common Stock, consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation) or sale of all or substantially all of the assets of the
Company in order to enable warrant holders to acquire the kind and number of
shares of stock or other securities or property receivable in such event by a
holder of the number of shares of Common Stock that might otherwise have been
purchased upon the exercise of the Resale Warrant.
Transfer, Exchange and Exercise. The Resale Warrants will be in
registered form and may be presented to the Warrant Agent for transfer, exchange
or exercise at any time on or prior to their expiration date, at which time the
Resale Warrants will become wholly void and of no value. If a market for the
Resale Warrants develops, the holder may sell the Resale Warrants instead of
exercising them. There can be no assurance, however, that a market for the
Resale Warrants will develop or continue and the Company does not intend to
apply for the listing of the Resale Warrants on any exchange.
Warrant Holder Not a Stockholder. The Resale Warrants will not confer
upon holders any voting, dividend or other rights as stockholders of the
Company.
The Resale Warrants will not be exercisable unless, at the time of the
exercise, the Company has a current prospectus covering the shares of Common
Stock issuable upon exercise of the Resale Warrants, and such shares have been
registered, qualified or deemed to be exempt under the securities laws of the
state of residence of the exercising holder of the Resale Warrants. Although the
Company has undertaken to use its best efforts to have all the shares of Common
Stock issuable upon exercise of the Resale Warrants registered or qualified on
or before the exercise date and to maintain a current prospectus relating
thereto until the expiration of the Resale Warrants, there can be no assurance
that it will be able to do so.
Shelf Warrants
The following summary description of the Shelf Warrants sets forth
certain general terms and provisions of the Shelf Warrants to which any
Prospectus Supplement may relate, but such summary does not purport to be
complete and is qualified in all respects by reference to the actual text of the
Shelf Warrant.
Exercise Price and Terms. Each Shelf Warrant will entitle the
registered holder thereof to purchase, for a fixed time period commencing on the
date of issuance, a fixed number of shares of Common Stock at a fixed price per
share, subject to adjustment in accordance with the anti-dilution and other
provisions referred to below. The holder of any Shelf Warrant will be able to
exercise such Shelf Warrant by surrendering the certificate representing the
Shelf Warrant to American Securities Transfer, Inc., (the "Warrant Agent"), with
the subscription form thereon properly completed and executed, together with
payment of the exercise price. The Shelf Warrants may be exercised at any time
in whole or in part at the applicable exercise price until expiration of the
Shelf Warrants. No fractional shares will be issued upon the exercise of the
Shelf Warrants.
The exercise price of the Shelf Warrants may bear no relationship to
any objective criterion of value and should in no event be regarded as an
indication of any future market price of the Common Stock.
Adjustments. The exercise price and the number of shares of Common
Stock purchasable upon the exercise of the Shelf Warrants will be subject to
adjustment upon the occurrence of certain events, including stock splits,
reverse stock splits or combinations of the Common Stock, or sale by the Company
of shares of its Common Stock or other securities convertible into Common Stock
at a price below the fair market value of the Common Stock. Additionally, an
adjustment may be made in the case of a reclassification or exchange of Common
Stock, consolidation or merger of the Company with or into another corporation
(other than a
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<PAGE>
consolidation or merger in which the Company is the surviving corporation) or
sale of all or substantially all of the assets of the Company in order to enable
warrant holders to acquire the kind and number of shares of stock or other
securities or property receivable in such event by a holder of the number of
shares of Common Stock that might otherwise have been purchased upon the
exercise of the Shelf Warrant.
Transfer, Exchange and Exercise. The Shelf Warrants will be in
registered form and may be presented to the Warrant Agent for transfer, exchange
or exercise at any time on or prior to their expiration date, at which time the
Shelf Warrants will become wholly void and of no value. If a market for the
Shelf Warrants develops, the holder may sell the Shelf Warrants instead of
exercising them. There can be no assurance, however, that a market for the Shelf
Warrants will develop or continue and the Company does not intend to apply for
the listing of the Shelf Warrants on any exchange.
Warrant Holder Not a Stockholder. The Shelf Warrants will not confer
upon holders any voting, dividend or other rights as stockholders of the
Company.
Modification of Shelf Warrant. Modification of the Shelf Warrants,
including the modification of the number of shares of Common Stock purchasable
upon the exercise of any Shelf Warrant, the exercise price and the expiration
date with respect to any Shelf Warrant, will require the consent of the holders
of a majority of the Shelf Warrants.
The Shelf Warrants will not be exercisable unless, at the time of the
exercise, the Company has a current prospectus covering the shares of Common
Stock issuable upon exercise of the Shelf Warrants, and such shares have been
registered, qualified or deemed to be exempt under the securities laws of the
state of residence of the exercising holder of the Shelf Warrants. Although the
Company has undertaken to use its best efforts to have all the shares of Common
Stock issuable upon exercise of the Shelf Warrants registered or qualified on or
before the exercise date and to maintain a current prospectus relating thereto
until the expiration of the Shelf Warrants, there can be no assurance that it
will be able to do so.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
VidaMed by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. As of the date of this Prospectus, members of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, who have represented the Company in
connection with the offering of the Resale Warrants and of the Shelf Securities,
beneficially own approximately [8,809] shares of the Company's Common Stock. J.
Casey McGlynn, Secretary of the Company, and Christopher D. Mitchell, Assistant
Secretary of the Company, are members of Wilson Sonsini Goodrich & Rosati,
Professional Corporation.
EXPERTS
The Consolidated Financial Statements of VidaMed, Inc. incorporated by
reference in VidaMed, Inc.'s Annual Report (Form 10-K) for the fiscal year ended
December 31, 1996, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon incorporated by reference therein and
incorporated herein by reference. Such Consolidated Financial Statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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No dealer, salesperson or other person has been authorized in connection
with any offering made hereby to give any information or to make any
representations other than those contained in or incorporated by reference in
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any security
other than the securities offered hereby, nor do they constitute an offer to
sell or a solicitation of any offer to buy any of the securities offered hereby
to any person in any jurisdiction in which such offer or solicitation would be
unlawful or to any person to whom it is unlawful. Neither the delivery of this
Prospectus nor any offer or sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company or that the information contained herein is correct as of any time
subsequent to the date hereof.
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TABLE OF CONTENTS
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Page
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Available Information......................... ii
Information Incorporated by Reference......... ii
The Company................................... 1
Recent Developments........................... 2
Risk Factors.................................. 3
Use of Proceeds .............................. 9
Selling Warrant Holders....................... 10
Plan of Distribution.......................... 11
Description of Securities..................... 12
Legal Matters................................. 14
Experts....................................... 14
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VIDAMED, INC.
6,000,000 Shares of Common Stock
2,629,413 Warrants to Purchase Common Stock
2,000,000 Shares of Common Stock Issuable Upon Exercise of Warrants
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PROSPECTUS
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April 16, 1998
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