<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
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PHARMACYCLICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-3148201
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
995 EAST ARQUES AVENUE
SUNNYVALE, CALIFORNIA 94086-4521
(408) 774-0330
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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RICHARD A. MILLER, M.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PHARMACYCLICS, INC.
995 EAST ARQUES AVENUE
SUNNYVALE, CALIFORNIA 94086-4521
(408) 774-0330
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
LAURA A. BEREZIN, ESQ.
COOLEY GODWARD LLP
5 PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94304-2155
(650) 843-5128
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time 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, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the
following box and list the Securities Act of 1933, as amended, registration
statement number of the earlier effective registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, as amended, check the following box and list
the Securities Act of 1933, as amended, 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
<TABLE>
<CAPTION>
================================================================================================================
PROPOSED PROPOSED PROPOSED
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM MAXIMUM
SECURITIES TO BE REGISTERED AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.0001 par value per share.. 820,000 $45.5313 $37,335,625.00 $9,857.00
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) based on the average of the high and low prices of the
Registrant's common stock as reported on the Nasdaq National Market on March
30, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 31, 2000
PROSPECTUS
820,000 SHARES
PHARMACYCLICS, INC.
COMMON STOCK
The selling stockholders listed on page 26 are offering up to 820,000
shares of Pharmacyclics, Inc. common stock. We sold the shares to the selling
stockholders on March 2, 2000 in a private transaction.
Our common stock is traded on the Nasdaq National Market under the
symbol "PCYC". On March 30, 2000 last reported sale price for our common stock
on the Nasdaq National Market was $43.625 per share.
We will not be paying any underwriting discounts
or commissions in this offering.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is March 31, 2000.
<PAGE> 3
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in the
prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by Pharmacyclics, and selling
stockholders or by any other person. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the shares offered
hereby to any person in any jurisdiction in which such offer or solicitation
would be unlawful. Neither the delivery of this prospectus nor any sale made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
AVAILABLE INFORMATION
This prospectus, which constitutes a part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by Pharmacyclics with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), omits certain of the information set forth in
the Registration Statement. Reference is hereby made to the Registration
Statement and to the exhibits thereto for further information with respect to
Pharmacyclics and the securities offered hereby. Copies of the Registration
Statement and the exhibits thereto are on file at the offices of the Commission
and may be obtained upon payment of the prescribed fee or may be examined
without charge at the public reference facilities of the Commission described
below.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facility maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices located at Seven World Trade Center, Suite
1300, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60621. The Commission maintains a website
that contains reports, proxy statements and information statements and other
information regarding registrants that file electronically with the Commission.
The address of such web site is http://www.sec.gov. Copies of such material can
be obtained in person from the Public Reference Section of the Commission at its
principal office located at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Company's common stock is quoted on the Nasdaq National
Market. Reports, proxy statements and other information concerning Pharmacyclics
may be inspected at the National Association of Securities Dealers, Inc. at 1735
K Street, N.W., Washington, D.C.
20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by Pharmacyclics (File
No. 0-27066) with the Commission are incorporated herein by reference: (a)
Annual Report on Form 10-K/A for the fiscal year ended June 30, 1999; (b)
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999; (c)
Quarterly Report on Form 10-Q for the quarter ended December 31, 1999; (d)
Definitive Proxy Statement dated November 9, 1999, filed in connection with
Pharmacyclics's 1999 Annual Meeting of Stockholders; and (e) the description of
Pharmacyclics common stock which is contained in Registration Statement on Form
8-A filed under the Exchange Act on October 20, 1995, including any amendment or
reports filed for the purpose of updating such description.
All reports and other documents subsequently filed by Pharmacyclics pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained or incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of the prospectus.
The Company will provide without charge to each person to whom this
prospectus is delivered a copy of any or all of such documents which are
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the documents that
this prospectus incorporates). Written or oral requests for copies should be
directed to Investor Relations, Pharmacyclics, Inc., at Pharmacyclics's
executive offices located at 995 East Arques Avenue, Sunnyvale, California
94086, (408) 774-0330.
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PHARMACYCLICS(R), the "pentadentate" logo, ANTRIN(R), LUTRIN(R), OPTRIN(TM) and
XCYTRIN(TM) are trademarks of Pharmacyclics, Inc. CITRA VU(TM) is the trademark
of E-Z-EM, Inc. for the oral contrast agent it has licensed from Pharmacyclics,
Inc. Other trademarks, trade names or service marks used herein are the property
of their respective owners.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data incorporated by reference in this prospectus.
This prospectus contains, in addition to historical information, forward looking
statements that involve risks and uncertainties. Investors should carefully
consider the information set forth under the heading "Risk Factors."
PHARMACYCLICS
INTRODUCTION
We are a pharmaceutical company developing products to improve upon current
therapeutic approaches to cancer, atherosclerosis and retinal disease. We
develop patented small molecules called texaphyrins which, when injected,
accumulate in cancerous tumors, in the diseased portions of major blood vessels
and in small blood vessel growths in the retina. When these molecules are
exposed to certain energy sources, such as X-ray, light or chemical, they are
activated and can destroy diseased tissue with minimal damage to healthy cells.
Our versatile texaphyrin-based technology platform can be designed for
activation by different types of energy and used to treat a variety of diseases.
OUR LEAD PRODUCTS
- XCYTRIN(TM) is a molecule that enhances the effects of radiation
and chemotherapy for the treatment of cancer. XCYTRIN selectively
accumulates in tumors and, when activated by radiation or
chemotherapy, increases the destructive effect of these therapies
on tumor cells, but not on healthy cells. XCYTRIN demonstrated
improved tumor response and patient survival rates in a Phase
I/II trial and is currently in an international Phase III
clinical trial for the treatment of patients with tumors that
have spread to the brain. Under an agreement with the National
Cancer Institute, XCYTRIN is also being tested in a variety of
other cancer types.
- LUTRIN(R) is a molecule that, when activated by light energy of
specific wavelengths, can be used to treat certain types of
cancers. When injected into the body, LUTRIN selectively
accumulates in tumors and, when exposed to the appropriate light
energy, destroys tumor cells. LUTRIN also readily clears from the
bloodstream, reducing the toxic effects it might have on healthy
tissues. We are now conducting a Phase IIb clinical trial for
LUTRIN as a photosensitizer for use in the photodynamic therapy
of patients with recurrent breast cancers to the chest wall that
have failed standard therapies.
- ANTRIN(R)is a molecule that accumulates selectively in and
reduces vascular plaque when activated by light energy.
Traditionally, this plaque is treated with mechanical devices
that physically reduce the plaque or maintain the blood vessel
opening. ANTRIN reduces or eliminates vascular plaque using a
non-mechanical technique we call photoangioplasty. In
photoangioplasty, ANTRIN is injected into the bloodstream and the
vessels are then exposed to light using an optical fiber inserted
into the vessel via a catheter. ANTRIN acts to reduce plaque,
opening blocked vessels for blood flow. Photoangioplasty with
ANTRIN does not appear to result in the complications often
associated with mechanical procedures and can be used to treat
longer segments of the diseased vessels. We are now conducting a
multicenter randomized Phase II clinical trial with ANTRIN in
patients with peripheral arterial disease. We are also conducting
a multicenter Phase I clinical trial of ANTRIN for the treatment
of coronary artery disease.
- OPTRIN(TM) is a molecule that selectively eliminates abnormal
small blood vessels in the retina when activated by light of
specific wavelengths. If left untreated, this condition, known as
age-related macular degeneration, can lead to blindness. OPTRIN
is currently in a Phase II clinical trial being conducted by our
corporate partner, Alcon.
We have retained worldwide product marketing rights for XCYTRIN and ANTRIN
and U.S., Canadian and Japanese marketing rights for LUTRIN. We have established
and will continue to establish relationships with third parties to expand our
research and development activities and to provide manufacturing capacity and
sales and marketing capabilities.
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RECENT DEVELOPMENTS
Private Placement. On March 7, 2000 we completed a $60.1 million private
placement with the selling stockholders, before offering costs, of 820,000
shares of our common stock. The common stock was issued to the selling
stockholders pursuant to the exemption from the registration requirements of the
Securities Act provided by Rule 506 of Regulation D thereof. The common stock is
being registered by Pharmacyclics on a Registration Statement on Form S-3, of
which this prospectus forms a part, pursuant to which all of the common stock
may be offered from time to time by the selling stockholders.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Some of the matters discussed under the captions "Prospectus Summary," "Risk
Factors," "Business" and elsewhere in this prospectus include forward-looking
statements. We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements include, but are not limited to, statements concerning our plans to:
- continue development of our current products under development;
- conduct clinical trials with respect to our products under
development;
- utilize our capital resources and the net proceeds from this
offering and the time periods related thereto;
- seek regulatory approvals;
- engage third-party manufacturers to supply our clinical trials
and commercial requirements;
- establish a marketing and distribution capability; and
- evaluate additional products under development for subsequent
clinical and commercial development.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "potential," "continue," "expects,"
"anticipates," "intends," "plans," "believes," "estimates" and similar
expressions. These statements are based on our current beliefs, expectations and
assumptions and are subject to a number of risks and uncertainties. Actual
results and events may vary significantly from those discussed in the
forward-looking statements. A description of certain risks that could cause our
results to vary appears under the caption "Risk Factors" and elsewhere in this
prospectus. These forward-looking statements are made as of the date of this
prospectus, and we assume no obligation to update them or to explain the reasons
why actual results may differ. In light of these assumptions, risks and
uncertainties, the forward-looking events discussed in this prospectus might not
occur.
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RISK FACTORS
An investment in our common stock is extremely risky. You should carefully
consider the following risks, in addition to the other information presented in
this prospectus, in evaluating us and our business. Any of the following risks,
as well as other risks not mentioned here, could seriously harm our business and
prospects and cause the price of our common stock to decline, which in turn
could cause you to lose all or part of your investment.
RISKS RELATED TO PHARMACYCLICS
ALL OF OUR PRODUCT CANDIDATES ARE IN DEVELOPMENT, AND WE CANNOT BE CERTAIN THAT
ANY OF OUR PRODUCTS UNDER DEVELOPMENT WILL BE COMMERCIALIZED
To be profitable, we must successfully research, develop, obtain regulatory
approval for, manufacture, introduce, market and distribute our products under
development. The time frame necessary to achieve these goals for any individual
product is long and uncertain. Before we can sell any of our products under
development, we must demonstrate through preclinical (animal) studies and
clinical (human) trials that each product is safe and effective for human use
for each targeted disease. We have conducted and plan to continue extensive and
costly clinical trials to assess the safety and effectiveness of our potential
products. We cannot be certain that we will be permitted to begin or continue
our planned clinical trials for our potential products, or if permitted, that
our potential products will prove to be safe and to produce their intended
effects.
The completion rate of our clinical trials depends upon, among other factors,
the rate of patient enrollment. We may fail to obtain adequate levels of patient
enrollment in our clinical trials. Delays in planned patient enrollment may
result in increased costs, delays or termination of clinical trials, which could
have a material adverse effect on us.
Additionally, demands on our clinical staff have been increasing and we
expect they will continue to increase as a result of later-stage clinical trials
of our products in development and our monitoring of additional clinical trials.
We may fail to effectively oversee and monitor these many simultaneous clinical
trials, which would result in increased costs or delays of our clinical trials.
Even if these clinical trials are completed, we may fail to complete and submit
a new drug application as scheduled. Even if we are able to submit a new drug
application as scheduled, the Food and Drug Administration may not clear our
application in a timely manner or may deny the application entirely.
Data already obtained from preclinical studies and clinical trials of our
products under development do not necessarily predict the results that will be
obtained from later preclinical studies and clinical trials. Moreover, data such
as ours is susceptible to varying interpretations which could delay, limit or
prevent regulatory approval. A number of companies in the pharmaceutical
industry, including biotechnology companies like us, have suffered significant
setbacks in advanced clinical trials, even after promising results in earlier
trials. The failure to adequately demonstrate the safety and effectiveness of a
product under development could delay or prevent regulatory clearance of the
potential product and would materially harm our business. Our clinical trials
may not demonstrate the sufficient levels of safety and efficacy necessary to
obtain the requisite regulatory approval or may not result in marketable
products.
WE HAVE A HISTORY OF OPERATING LOSSES AND WE EXPECT TO CONTINUE TO HAVE LOSSES
IN THE FUTURE
We have incurred significant operating losses since our inception in 1991
and, as of December 31, 1999, had an accumulated deficit of approximately $76.2
million. We expect to continue to incur significant operating losses over the
next several years as we continue to incur increasing costs for research and
development, clinical trials and manufacturing. Our ability to achieve
profitability depends upon our ability, alone or with others, to successfully
complete the development of our proposed products, obtain the required
regulatory clearances and manufacture and market our proposed products. To date,
we have not generated revenue from the commercial sale of our products and do
not expect to receive any such revenue in the near future. All revenues to date
are primarily from license and milestone payments and, to a lesser extent,
funding from one government research grant.
FAILURE TO OBTAIN PRODUCT APPROVALS OR COMPLY WITH ONGOING GOVERNMENTAL
REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS
The manufacture and marketing of our products and our research and
development activities are subject to extensive regulation for safety, efficacy
and quality by numerous government authorities in the United States and abroad.
Before receiving FDA clearance to market a product, we will have to demonstrate
that the product is safe and effective on the patient population and for the
diseases that
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will be treated. Clinical trials, manufacturing and marketing of products are
subject to the rigorous testing and approval process of the FDA and equivalent
foreign regulatory authorities. The Federal Food, Drug and Cosmetic Act and
other federal, state and foreign statutes and regulations govern and influence
the testing, manufacture, labeling, advertising, distribution and promotion of
drugs and medical devices. As a result, clinical trials and regulatory approval
can take a number of years to accomplish and require the expenditure of
substantial resources. Data obtained from clinical trials are susceptible to
varying interpretations which could delay, limit or prevent regulatory
clearances. We compared the results of our Phase Ib/II clinical trial of XCYTRIN
to historical data using a 528-patient database containing information on
clinical features and outcomes in comparable patients receiving treatment with
identical doses of radiation alone. Historical analyses have many limitations
and, while supportive, are not considered proof that XCYTRIN improved the
outcome of patients enrolled in the study.
In addition, we may encounter delays or rejections based upon additional
government regulation from future legislation or administrative action or
changes in FDA policy during the period of product development, clinical trials
and FDA regulatory review. We may encounter similar delays in foreign countries.
We may be unable to obtain requisite approvals from the FDA and foreign
regulatory authorities, and even if obtained, such approvals may not be on a
timely basis, or they may not cover the clinical uses that we specify.
Marketing or promoting a drug for an unapproved use is subject to very strict
controls. Furthermore, clearance may entail ongoing requirements for
post-marketing studies. The manufacture and marketing of drugs are subject to
continuing FDA and foreign regulatory review and later discovery of previously
unknown problems with a product, manufacturer or facility may result in
restrictions, including withdrawal of the product from the market. Any of the
following events, if they were to occur, could delay or preclude us from further
developing, marketing or realizing full commercial use of our products, which in
turn would have a material adverse effect on our business, financial condition
and results of operations:
- failure to obtain or maintain requisite governmental approvals;
- failure to obtain approvals of clinically intended uses of our
products under development; or
- identification of serious and unanticipated adverse side effects
in our products under development.
Manufacturers of drugs also must comply with the applicable FDA good
manufacturing practice regulations, which include quality control and quality
assurance requirements as well as the corresponding maintenance of records and
documentation. Manufacturing facilities are subject to ongoing periodic
inspection by the FDA and corresponding state agencies, including unannounced
inspections, and must be licensed before they can be used in commercial
manufacturing of our products. We or our present or future suppliers may be
unable to comply with the applicable good manufacturing practice regulations and
other FDA regulatory requirements. We have not been subject to a GMP inspection
by the FDA or any state agency.
We may be subject to delays in commercializing our products for photodynamic
therapies due to delays in approvals of the third-party light sources required
for these products. E-Z-EM will not be able to market our CITRA VU product until
we satisfactorily address FDA issues, which may involve performing an additional
pivotal clinical trial.
ACCEPTANCE OF OUR PRODUCTS IN THE MARKETPLACE IS UNCERTAIN, AND FAILURE TO
ACHIEVE MARKET ACCEPTANCE WILL HARM OUR BUSINESS
Even if approved for marketing, our products may not achieve market
acceptance. The degree of market acceptance will depend upon a number of
factors, including:
- the receipt of regulatory approvals for the uses that we are
studying;
- the establishment and demonstration in the medical community of
the safety and clinical efficacy of our products and their
potential advantages over existing therapeutic products and
diagnostic and/or imaging techniques; and
- pricing and reimbursement policies of government and third-party
payors such as insurance companies, health maintenance
organizations and other plan administrators.
Physicians, patients, payors or the medical community in general may be
unwilling to accept, utilize or recommend any of our products.
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WE MAY FAIL TO ADEQUATELY PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS OR
SECURE RIGHTS TO THIRD-PARTY PATENTS
A number of third-party patent applications have been published, and some
have issued, relating to biometallic and expanded porphyrin chemistries. It is
likely that competitors and other third parties have and will continue to file
applications for and receive patents relating to similar or even the same
compositions, methods or designs as those of our products. If any third-party
patent claims are asserted against the company's products and are upheld as
valid and infringed, we could be prevented from practicing the subject matter
claimed in such patents, require license(s) or have to redesign our products or
processes to avoid infringement. Such licenses may not be available or, if
available, may not be on terms acceptable to us. Alternatively, we may be
unsuccessful in any attempt to redesign our products or processes to avoid
infringement. Litigation or other legal proceedings may be necessary to defend
against claims of infringement, to enforce our patents, or to protect our trade
secrets, and could result in substantial cost to the company, and diversion of
our efforts.
We are aware of several U.S. patents owned or licensed to Schering AG that
relate to pharmaceutical formulations and methods for enhancing magnetic
resonance imaging. We have obtained the opinion of special patent counsel that
the technologies we employ for our imaging product under development and
magnetic resonance imaging detectable compounds do not infringe the claims of
such patents. Nevertheless, Schering AG may still choose to assert one or more
of those patents. If any of our products were legally determined to be
infringing a valid and enforceable claim of any such patents, our business could
be materially adversely affected. Further, any allegation by Schering AG that we
infringed their patents would likely result in significant legal costs and
require the diversion of substantial management resources. Schering AG sent
communications to us suggesting that our oral magnetic resonance imaging
contrast agent, CITRA VU, may infringe certain of their patents. We are aware
that Schering AG has asserted patent rights against at least one other company
in the contrast agent imaging market and that a number of companies have entered
into licensing arrangements with Schering AG with respect to one or more of such
patents. We cannot be certain that we would be successful in defending a lawsuit
or able to obtain a license on commercially reasonable terms from Schering AG,
if required.
We also rely upon trade secrets, technical know-how and continuing
technological innovation to develop and maintain our competitive position. We
require our employees, consultants, advisors and collaborators to execute
appropriate confidentiality and assignment-of-inventions agreements with us.
These agreements typically provide that all materials and confidential
information developed or made known to the individual during the course of the
individual's relationship with us is to be kept confidential and not disclosed
to third parties except in specific circumstances, and that all inventions
arising out of the relationship with Pharmacyclics shall be our exclusive
property. These agreements may be breached, and in some instances, we may not
have an appropriate remedy available for breach of the agreements. Furthermore,
our competitors may independently develop substantially equivalent proprietary
information and techniques, reverse engineer our information and techniques, or
otherwise gain access to our proprietary technology. We may be unable to
meaningfully protect our rights in unpatented proprietary technology.
WE RELY HEAVILY ON THIRD PARTIES
We currently depend heavily and will depend heavily in the future on third
parties for support in product development, manufacturing, marketing and
distribution. We have a collaboration agreement with Nycomed. We rely on Nycomed
for a portion of our LUTRIN development costs in the form of milestone payments,
and for the commercialization, when and if LUTRIN is approved, of this product
outside the United States, Canada and Japan. In the field of retinal
degeneration, we depend on Alcon for preclinical and clinical studies,
regulatory filings and sales and marketing of OPTRIN for ophthalmology uses
worldwide. We have entered into agreements with E-Z-EM, Ltd. and E-Z-EM, Inc.
(together "E-Z-EM") for sales, marketing and distribution of CITRA VU in Europe
and North America. E-Z-EM, Alcon or Nycomed may terminate their agreements with
us at their election. We cannot be certain that any of these parties will
fulfill their obligations in a manner that maximizes our revenues. Our failure
to receive milestone payments or any reduction or discontinuance of efforts by
our partners or the termination of these alliances could have a material adverse
effect on our business, financial condition and results of operations.
We also depend upon the National Cancer Institute for the sponsoring and
funding of certain of the clinical trials of our XCYTRIN radiation enhancer and
LUTRIN photosensitizer products in development. We cannot be certain that the
National Cancer Institute will enlist support for all such trials or that it
will continue our funding. If the National Cancer Institute did not support such
trials, we may have to fund the continuation of such trials ourselves or reduce
the number of disease types in our clinical trials.
We may be unsuccessful in entering into additional strategic alliances for
the development or commercialization of other product candidates. Even if we did
enter into any such alliances, they may not be on terms favorable to us or they
may ultimately be unsuccessful. See "Business -- Research, Clinical Development
and Marketing Collaborations."
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We have no expertise in the development of light sources and associated light
delivery devices required for our photoangioplasty and photodynamic therapy
products under development. Successful development, manufacturing, approval and
distribution of our photosensitization products will require third party
participation for the required light sources, associated light delivery devices
and other equipment. We currently obtain lasers from Diomed, Inc., light
emitting diodes from Quantum Devices, Inc. and cylindrically diffusing light and
micro lens fibers from CardioFocus on a purchase order basis, and such entities
are under no obligation to continue to deliver light devices on an ongoing
basis. Failure to maintain such relationships may require us to develop
additional supply sources which may require additional clinical trials and
regulatory approvals and could materially delay commercialization of our LUTRIN
and ANTRIN products under development. We may be unable to establish or maintain
relationships with other supply sources on a commercially reasonable basis, if
at all, or alternatively, the enabling devices may not receive regulatory
approval for use in photoangioplasty or photodynamic therapy. See "Business
- -Research, Clinical Development and Marketing Collaborations" and "--
Manufacturing and Suppliers."
WE HAVE LIMITED MANUFACTURING EXPERIENCE AND THUS RELY HEAVILY UPON CONTRACT
MANUFACTURERS
We must manufacture our products in commercial quantities, either directly or
through third parties, in compliance with regulatory requirements and at an
acceptable cost. We do not own manufacturing facilities necessary to provide
clinical and commercial quantities of our products.
In September 1996, we entered into an agreement with Hoechst Celanese
Corporation, a manufacturer of chemicals and pharmaceutical components, to
optimize and scale up a manufacturing process for and supply of our
texaphyrin-based products. In October 1997, Hoechst Celanese assigned the
agreement to Celanese, Ltd., in connection with Hoechst Celanese's corporate
restructuring. This agreement granted Celanese exclusive worldwide manufacturing
rights and required Celanese to supply all of our texaphyrin-based products for
late-stage clinical and commercial use. As a result of the change in its
business focus, Celanese requested that we pursue alternative supply sources. On
August 27, 1999, we entered into an agreement which terminated the manufacturing
and supply agreement with Celanese. Pursuant to that agreement, Celanese
assigned to us all right, title and interest in and to the manufacturing
technology and intellectual property for our texaphyrin-based products.
During discussions with Celanese that resulted in termination of the
manufacturing and supply agreement, we entered into agreements with three new
manufacturers to evaluate their ability to supply us with the components of the
texaphyrin-based products. One of these manufacturers has delivered commercial
quantities of the components or drug substance to us, but we cannot be certain
that the other two will be able to deliver commercial quantities of the
components or drug substance on a timely basis. Because each of these
manufacturers will supply a component of the bulk drug substance, if either of
these manufacturers fails to perform its obligations in a timely fashion, our
business could be materially harmed. Due to the addition of alternative
manufacturers, we must demonstrate to the FDA the substantial chemical
equivalence of the materials produced by these manufacturers to the materials
used in our clinical trials to date. Failure to demonstrate chemical equivalence
of the material produced by these manufacturers could involve performing
additional clinical trials and could have a material adverse effect on our
business, financial condition and results of operations. In addition, we are in
the process of negotiating commercial-scale supply agreements with the same
group of manufacturers, but we cannot be certain that we will be able to
successfully negotiate these agreements at all or on commercially acceptable
terms.
Any failure by these third parties to supply our requirements or the
National Cancer Institute's requirements for clinical trial materials would
jeopardize the completion of such trials and could therefore have a material
adverse effect on us. We are engaged in preliminary discussions with a number of
manufacturers regarding process development and validation, filling, labeling
and packaging of the finished dosage form of XCYTRIN, LUTRIN and ANTRIN. A
failure to successfully complete any such agreement could, if we could not
locate alternate manufacturing capabilities, have a material adverse effect on
our business, financial condition and results of operations.
E-Z-EM has assumed manufacturing responsibility for CITRA VU through its
affiliate, Therapex. Because of the change in our manufacturing source for CITRA
VU, we must obtain approval of the new source and must demonstrate the
substantial equivalence of the new source to the sources that we used in our
previous clinical trials, which could involve performing additional clinical
trials. Failure to demonstrate equivalence of these sources could have a
material adverse effect on our business, financial condition and results of
operations.
Prior to regulatory approval of our products under development, we intend to
negotiate supply agreements with manufacturers who will have the ability to
manufacture, fill, label and package such materials prior to commercial
introduction of these products. However, only a limited number of contract
manufacturers that operate under current federal and state good manufacturing
practice
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<PAGE> 10
regulations and are capable of manufacturing our products exist. Accordingly, we
cannot be certain that we will be able to enter into supply agreements on
commercially acceptable terms with manufacturers or that we will enter into
supply agreements with manufacturers who will be able to deliver supplies in
appropriate quantity and quality to develop and commercialize our products. Any
interruption of supply of our products could have a material adverse effect on
our business, financial condition and results of operations.
WE LACK MARKETING AND SALES EXPERIENCE
We currently do not have marketing, sales or distribution experience.
Therefore, to service markets in which we have retained sales and marketing
rights and in the event that any of our agreements with Alcon, Nycomed, or
E-Z-EM is terminated, we must develop a sales force with technical expertise. We
have no experience in developing, training or managing a sales force. We will
incur substantial additional expenses in developing, training and managing such
an organization. We may be unable to build such a sales force, the cost of
establishing such a sales force may exceed any product revenues, or our direct
marketing and sales efforts may be unsuccessful. In addition, we compete with
many other companies that currently have extensive and well-funded marketing and
sales operations. Our marketing and sales efforts may be unable to compete
successfully against such other companies.
OUR CAPITAL REQUIREMENTS ARE UNCERTAIN AND WE MAY HAVE DIFFICULTY RAISING NEEDED
CAPITAL IN THE FUTURE
We have expended and will continue to expend substantial funds to complete
the research, development and clinical testing of our products. We will require
additional funds for these purposes, to establish additional clinical-and
commercial-scale manufacturing arrangements and to provide for the marketing and
distribution of our products. Additional funds may not be available on
acceptable terms, if at all. If adequate funds are unavailable from operations
or additional sources of financing, we may have to delay, reduce the scope of or
eliminate one or more of our research or development programs which would
materially and adversely affect our business, financial condition and
operations.
We believe that our cash, cash equivalents and investments will be adequate
to satisfy our capital needs through at least calendar year 2001. However, our
actual capital requirements will depend on many factors, including:
- continued progress of our research and development programs;
- our ability to establish additional collaborative arrangements;
- changes in our existing collaborative relationships;
- progress with preclinical studies and clinical trials;
- the time and costs involved in obtaining regulatory clearance;
- the costs involved in preparing, filing, prosecuting, maintaining
and enforcing patent claims;
- competing technological and market developments; and
- our ability to market and distribute our products and establish
new collaborative and licensing arrangements.
We may seek to raise any necessary additional funds through equity or debt
financings, collaborative arrangements with corporate partners or other sources
which may be dilutive to existing stockholders. In addition, in the event that
additional funds are obtained through arrangements with collaborative partners
or other sources, such arrangements may require us to relinquish rights to some
of our technologies, product candidates or products under development that we
would otherwise seek to develop or commercialize ourselves.
RISKS RELATED TO OUR INDUSTRY
WE FACE RAPID TECHNOLOGICAL CHANGE AND INTENSE COMPETITION
The pharmaceutical industry is subject to rapid and substantial technological
change. Developments by others may render our products under development or
technologies noncompetitive or obsolete, or we may be unable to keep pace with
technological
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<PAGE> 11
developments or other market factors. Technological competition in the industry
from pharmaceutical and biotechnology companies, universities, governmental
entities and others diversifying into the field is intense and is expected to
increase. Many of these entities have significantly greater research and
development capabilities than we do, as well as substantially more marketing,
manufacturing, financial and managerial resources. These entities represent
significant competition for us. Acquisitions of, or investments in, competing
pharmaceutical or biotechnology companies by large corporations could increase
such competitors' financial, marketing, manufacturing and other resources.
We are a relatively new enterprise and are engaged in the development of
novel therapeutic technologies. As a result, our resources are limited and we
may experience technical challenges inherent in such novel technologies.
Competitors have developed or are in the process of developing technologies
that are, or in the future may be, the basis for competitive products. Some of
these products may have an entirely different approach or means of accomplishing
similar therapeutic, diagnostic and imaging effects than our products. We are
aware that one of our competitors in the market for photodynamic therapy drugs
has received marketing approval of a product for certain uses in the United
States and other countries. Our competitors may develop products that are safer,
more effective or less costly than our products and, therefore, present a
serious competitive threat to our product offerings.
The widespread acceptance of therapies that are alternatives to ours may
limit market acceptance of our products even if commercialized. The diseases for
which we are developing our therapeutic products can also be treated, in the
case of cancer, by surgery, radiation and chemotherapy, and in the case of
atherosclerosis, by surgery, angioplasty, drug therapy and the use of devices to
maintain and open blood vessels. These treatments are widely accepted in the
medical community and have a long history of use. The established use of these
competitive products may limit the potential for our products to receive
widespread acceptance if commercialized.
WE ARE SUBJECT TO UNCERTAINTIES REGARDING HEALTH CARE REIMBURSEMENT AND REFORM
The continuing efforts of government and insurance companies, health
maintenance organizations and other payors of healthcare costs to contain or
reduce costs of health care may affect our future revenues and profitability,
and the future revenues and profitability of our potential customers, suppliers
and collaborative partners and the availability of capital. For example, in
certain foreign markets, pricing or profitability of prescription
pharmaceuticals is subject to government control. In the United States, given
recent federal and state government initiatives directed at lowering the total
cost of health care, the U.S. Congress and state legislatures will likely
continue to focus on health care reform, the cost of prescription
pharmaceuticals and on the reform of the Medicare and Medicaid systems. While we
cannot predict whether any such legislative or regulatory proposals will be
adopted, the announcement or adoption of such proposals could have a material
adverse effect on our business, financial condition and results of operations.
Our ability to commercialize our products successfully will depend in part on
the extent to which appropriate reimbursement levels for the cost of our
products and related treatment are obtained by governmental authorities, private
health insurers and other organizations, such as HMOs. Third-party payors are
increasingly challenging the prices charged for medical products and services.
Also, the trend toward managed health care in the United States and the
concurrent growth of organizations such as HMOs, which could control or
significantly influence the purchase of health care services and products, as
well as legislative proposals to reform health care or reduce government
insurance programs, may all result in lower prices for or rejection of our
products. The cost containment measures that health care payors and providers
are instituting and the effect of any health care reform could materially
adversely affect our ability to operate profitably.
OUR BUSINESS EXPOSES US TO PRODUCT LIABILITY CLAIMS
The testing, manufacture, marketing and sale of our products involve an
inherent risk that product liability claims will be asserted against us.
Although we are insured against such risks up to a $10,000,000 annual aggregate
limit in connection with clinical trials and commercial sales of our products,
our present product liability insurance may be inadequate. A successful product
liability claim in excess of our insurance coverage could have a material
adverse effect on our business, financial condition and results of operations.
Any successful product liability claim may prevent us from obtaining adequate
product liability insurance in the future on commercially desirable or
reasonable terms. In addition, product liability coverage may cease to be
available in sufficient amounts or at an acceptable cost. An inability to obtain
sufficient insurance coverage at an acceptable cost or otherwise to protect
against potential product liability claims could prevent or inhibit the
commercialization of our pharmaceutical products. A product liability claim or
recall would have a material adverse effect on our reputation, business,
financial condition and results of operations.
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OUR BUSINESS INVOLVES ENVIRONMENTAL RISKS
In connection with our research and development activities and our
manufacture of materials and products, we are subject to federal, state and
local laws, rules, regulations and policies governing the use, generation,
manufacture, storage, air emission, effluent discharge, handling and disposal of
certain materials, biological specimens and wastes. Although we believe that we
have complied with the applicable laws, regulations and policies in all material
respects and have not been required to correct any material noncompliance, we
may be required to incur significant costs to comply with environmental and
health and safety regulations in the future. Our research and development
involves the controlled use of hazardous materials, including but not limited to
certain hazardous chemicals and radioactive materials. Although we believe that
our safety procedures for handling and disposing of such materials comply with
the standards prescribed by state and federal regulations, we cannot completely
eliminate the risk of accidental contamination or injury from these materials.
In the event of such an occurrence, we could be held liable for any damages that
result and any such liability could exceed our resources.
YEAR 2000 ISSUES COULD DISRUPT OUR BUSINESS OPERATIONS
We have assessed our exposure to year 2000-related problems, focusing on four
potential areas of exposure: internal information systems, scientific equipment,
facility support systems and the readiness of significant third parties with
whom we have material business relationships. We have completed the
implementation of all necessary upgrades and believe that the year 2000 issue
will not pose significant operational problems for our internal computer
systems. After an inventory of our major pieces of scientific equipment and of
our major facility support systems such as communications, security and building
maintenance systems, we believe them to be Year 2000-compliant. We have
contacted our significant suppliers and service providers to determine the
extent to which our systems which interact with systems of third parties would
be vulnerable if those third parties failed to address their own year 2000
issues. We cannot be certain that the systems of other companies on which our
systems rely will be timely converted and any failure by these companies to do
so may have an adverse impact on our systems. We estimate that the cost of the
required upgrades and conversions will not have a significant impact on our
results of operations. Following the change from 1999 to year 2000, we have not
experienced any material year 2000 difficulties.
RISKS RELATED TO THIS OFFERING
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE
The market prices for securities of small capitalization biotechnology
companies, including ours, have historically been highly volatile. The market
has from time to time experienced significant price and volume fluctuations
unrelated to the operating performance of particular companies. The market price
of our common stock may fluctuate significantly due to a variety of factors,
including:
- the results of preclinical testing and clinical trials by us or
our competitors;
- technological innovations or new therapeutic products;
- governmental regulation;
- developments in patent or other proprietary rights;
- litigation;
- public concern as to the safety of products developed by us or
others;
- comments by securities analysts; and
- general market conditions in our industry.
In addition, if any of the risks described in these "Risk Factors" actually
occurred, it could have a dramatic and material adverse impact on the market
price of our common stock.
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<PAGE> 13
USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling stockholders. We will not
receive any proceeds from the sale of these shares of common stock.
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<PAGE> 14
BUSINESS
OVERVIEW
We are a pharmaceutical company developing products to improve upon current
therapeutic approaches to the treatment of cancer, atherosclerosis and retinal
disease. We use our expertise in the chemistry of biologically-active
metal-containing compounds to develop patented molecules called texaphyrins
which, when injected, accumulate in tumor growths, in the diseased portions of
major blood vessels and in small blood vessel growths in the retina. When we
expose these molecules to various energy sources, such as X-ray, light or
chemical, these metallic molecules energize and by doing so are able to destroy
diseased tissue with minimal damage to surrounding healthy cells. Our lead
texaphyrin-based product candidates are:
- XCYTRIN, a molecule to enhance the effects of radiation and
chemotherapy in treating cancer;
- LUTRIN, a molecule for use in photodynamic therapy of cancer;
- ANTRIN, a molecule to treat atherosclerosis via photoangioplasty;
and
- OPTRIN, a molecule to treat age-related macular degeneration, a
disease of the retina caused by growth of small blood vessels,
which can lead to blindness.
Our technology is based upon our expertise in developing biologically-active
molecules that are capable of being activated by energy. In nature, a class of
molecules called porphyrins, including heme found in hemoglobin and chlorophyll
found in plants, is found in tissues or organs responsible for energy
production, metabolism or transport functions. Our texaphyrins, which are
synthetic, expanded porphyrins, are designed to take advantage of two key
characteristics of naturally-occurring porphyrins: interaction with energy and
accumulation in tissues with high energy demands. Texaphyrins are capable of
binding larger metal atoms and of capturing, focusing and transforming X-ray,
light or chemical energy into other energy forms. This allows them to be used
for targeted destruction of diseased tissues. In each case, the type of metal
inserted and the form of energy applied determines the physical, chemical and
therapeutic characteristics of the texaphyrin.
Following accumulation at the disease site, which generally occurs in minutes
to a few hours, the appropriate energy form can activate the texaphyrins'
therapeutic effects. Texaphyrins are water soluble, which may make them safer
and easier to administer to patients.
MARKET OVERVIEW
Cancer
Cancer results from the uncontrolled multiplication of cells which invade and
interfere with the normal function of adjacent tissues and organs. Frequently,
cancer cells become dislodged from their primary site and spread, or
metastasize, to other places in the body. Approximately 1.2 million new cases of
cancer are diagnosed annually in the United States. The appropriate cancer
therapy for each patient depends on the cancer type and careful assessment of
the size, location and existence of spread of the tumor using diagnostic imaging
procedures. Therapy typically includes some combination of surgery, radiation
therapy or chemotherapy.
Chemotherapy and radiation therapy tend to indiscriminately destroy both
healthy and diseased cells and cause serious side effects. As a result,
substantial cancer research has been directed toward improving the effectiveness
of existing therapy while reducing toxicity. These approaches seek to identify
drugs which are capable of targeting the tumor and making the cancer cells more
sensitive and responsive to radiation therapy or chemotherapy. The following are
therapies used in the treatment of cancer:
Radiation Therapy. Approximately 3,000 physicians specializing in radiation
oncology administer radiation therapy to more than 700,000 patients annually in
the United States. The radiation is usually applied to the tumor site several
times per week over a period of two to six weeks. Radiation therapy often has
toxic effects on healthy tissue surrounding the tumor because the energy cannot
be adequately targeted. An estimated 50% of newly diagnosed cancer patients,
including those with cancers of the lung, breast, prostate, or head and neck
region, will receive radiation therapy as part of their initial treatment. In
addition, approximately 150,000 patients
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with persistent or recurrent cancer also will receive radiation therapy.
Depending on the complexity and duration of treatment, a course of radiation
therapy for cancer can cost between $10,000 and $25,000.
Chemotherapy. More than 350,000 patients each year in the United States
receive chemotherapy for treatment of many types of cancer. The serious or
life-threatening side effects of chemotherapy agents, many of which are due to
the drug's lack of selectivity, limit the effectiveness of this treatment.
Chemotherapy drugs tend to distribute themselves throughout the body in normal
tissues as well as in the tumor. Because of their toxicity to normal tissues,
chemotherapy drugs can be administered only in small dosages and accordingly,
the therapeutic benefits may be limited.
Photodynamic Therapy. Photodynamic therapy is a new cancer treatment based on
the use of light energy to activate certain types of drugs known as
photosensitizers. In this procedure, the photosensitizer, ideally one which
accumulates more readily in tumor cells, is injected into the patient. The tumor
site is then illuminated with visible light of a strength and wavelength that is
absorbed by the photosensitizer. Once so activated, the photosensitizer causes
tumor cell death. The FDA approved the first photosensitizing agent in early
1996 for the treatment of obstructing cancers of the esophagus and more recently
for the treatment of particular types of lung cancer. To date, use of such drugs
has been restricted to treatment of superficial or small lesions because these
photosensitizers have been unable to absorb light of a wavelength capable of
penetrating deeply into tissues. Other limitations of photosensitizers have
included unfavorable distribution, prolonged retention in the body, skin
toxicity and insolubility in water, complicating intravenous administration.
Atherosclerosis
Atherosclerosis, or hardening of the arteries, is a disease in which
cholesterol, other fatty materials and inflammatory cells are deposited in the
walls of blood vessels, forming a build-up known as plaque. The accumulation of
plaque narrows the interior of the blood vessels, reducing blood flow.
Atherosclerosis in the coronary arteries can lead to heart attack and death. In
other blood vessels, atherosclerosis can lead to decreased mobility, loss of
function, loss of limbs and other complications such as stroke. Current
treatments for atherosclerosis include surgery and other techniques aimed at
removing or relieving the plaque. Balloon angioplasty is a procedure using
catheter devices inserted inside the vessels to mechanically compress or remove
the obstruction. Currently, more than 600,000 patients per year in the United
States undergo these procedures for treatment of atherosclerosis in the coronary
arteries. These procedures require the use of anti-clotting drugs and,
frequently, the use of devices inserted inside the vessels to reduce the
incidence of reclosure, which results from traumatic damage to the vessel wall.
Generally, these techniques have been limited to treating only short sections of
the diseased vessel.
Blindness Caused by Retinal Degeneration
Age-related degeneration of the retina is the major cause of severe visual
loss in the elderly. There are approximately 1.1 million people with age-related
macular degeneration in the United States, with approximately 200,000 new cases
diagnosed annually. Patients with this disease develop blurred vision and
distortion, decreased vision and blind spots in the center of the visual field.
This disease is caused by the abnormal growth and proliferation of small blood
vessels in the retina. Although laser treatment can slow progression of disease
in some patients, it generally fails to prevent progression of the disease,
which ultimately leads to blindness.
OUR BUSINESS STRATEGY
The key elements of our business strategy include:
- Focusing on drugs that address the large markets for the
treatment of cancer and atherosclerosis. Although our technology
platform can be used to develop a wide range of drug substances,
we have focused our initial efforts on cancer and
atherosclerosis, and particularly on the treatment of
life-threatening cancers in which accelerated regulatory approval
and favorable pricing may be possible.
- Improving upon existing medical procedures. Our products are
designed to be used in conjunction with and to enhance the safety
and effectiveness of, standard medical treatments. We believe
this increases their likelihood of being rapidly adopted by
physicians.
- Creating diverse product opportunities based on our texaphyrin
technology. Our texaphyrin-based technology platform can
incorporate a variety of metals and can be used to target many
different types of disease. Our research and development efforts
are focused on developing new uses for texaphyrins.
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- Retaining rights to key products in advanced clinical testing. We
have retained worldwide rights to our XCYTRIN radiation enhancer,
U.S., Canadian and Japanese rights to our LUTRIN photosensitizer
for cancer treatment and worldwide rights to ANTRIN for
photoangioplasty of atherosclerosis. By maintaining product
rights through late-stage clinical development, we believe that
we can create greater value for our products and retain the
opportunity to sell and market our products.
PRODUCTS UNDER DEVELOPMENT
The table below summarizes our product candidates and their stage of
development:
<TABLE>
<CAPTION>
PRODUCT TARGETED DISEASE REGULATORY STATUS(1) MARKETING RIGHTS
- ------- ---------------- -------------------- ----------------
<S> <C> <C> <C>
CANCER THERAPY
XCYTRIN Brain metastases Phase III Pharmacyclics
Radiation Enhancer
Primary brain tumor Phase I, National Cancer Pharmacyclics
Pancreatic cancer Institute
Childhood gliomas
Lung cancer Pending, National Cancer Pharmacyclics
Prostate Cancer Institute(2)
XCYTRIN A variety of cancers Preclinical Pharmacyclics
Chemotherapy Enhancer
LUTRIN Breast cancer Phase IIb Pharmacyclics in the U.S.,
Photosensitizer Canada and Japan;
Nycomed in rest of world
Esophageal cancer Pending, National Cancer Pharmacyclics
Cervical cancer Institute(2)
Head and neck cancer
Prostate cancer
Lung cancer
Ovarian cancer
ATHEROSCLEROSIS THERAPY
ANTRIN Peripheral Phase II Pharmacyclics
Photosensitizer vascular disease
Coronary artery disease Phase I Pharmacyclics
MACULAR DEGENERATION
OPTRIN Degenerative disease Phase II Alcon
Photosensitizer of the retina
DIAGNOSTIC IMAGING
CITRA VU Oral magnetic resonance FDA approvable letter E-Z-EM in Europe and North
imaging contrast agent Received December 1996 America;
for abdomen and pelvis Pharmacyclics in rest of
world
</TABLE>
(1) As used in this prospectus, "Preclinical" means testing on animal models for
indications of safety and efficacy prior to the initiation of human clinical
trials. "Phase I" means initial human clinical trials designed to establish
the safety, dose tolerance and sometimes distribution of a compound. "Phase
I/II" means initial human clinical trials designed to establish the safety,
dose tolerance and, sometimes, distribution of a compound and which are, in
contrast to Phase I clinical trials, performed on patients with the targeted
disease. "Phase II" means human clinical trials designed to establish
safety, optimal dosage and preliminary activity of a compound. "Phase III"
means human clinical trials designed to lead to accumulation of data
sufficient to support a new drug application, including substantial evidence
of safety and efficacy. "FDA approvable letter" means that the FDA has
deemed the drug capable of registration for commercial use provided that
certain conditions relating to product formulation, stability and
manufacturing can be resolved to the agency's satisfaction.
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(2) The National Cancer Institute intends to sponsor clinical studies for these
cancer types and is currently in the process of establishing protocols for
these studies for submission to the FDA.
CANCER THERAPY
XCYTRIN for Radiation Enhancement
Radiation therapy of cancer destroys cancer cells through exposure to
relatively high doses of externally applied radiation. While cancer cells are
somewhat more sensitive to radiation exposure than healthy tissues, radiation
therapy has toxic effects on healthy tissue surrounding the tumor because the
energy cannot be adequately targeted. Our preclinical studies indicate that
XCYTRIN both accumulates in tumors and increases the local destructive effect of
radiation therapy in those targeted tissues. XCYTRIN's uptake in tumor cells
occurs within minutes of administration and persists for hours, effectively
concentrating the drug's effect on the tumor. XCYTRIN interacts with X-rays
forming substances that enhance the destruction of tumor cells. In preclinical
studies, animals receiving XCYTRIN in conjunction with radiation therapy had
greater tumor response rates as compared to the control group receiving
equivalent doses of radiation therapy alone. Preclinical studies further
indicate that XCYTRIN increases the effect of radiation therapy at the tumor
site, with no increased damage to surrounding healthy tissues. An additional
feature of XCYTRIN is that it is detectable by magnetic resonance imaging
scanning, providing an ongoing method of monitoring its distribution in
patients.
Initially, we intend to seek FDA approval of XCYTRIN for treatment of
patients with tumors which have spread to the brain who are receiving radiation
therapy. This condition occurs in approximately 15% to 20% of all cancer
patients, often in patients with primary lung or breast cancer, and is usually
treated with radiation therapy delivered to the whole brain. The median survival
of patients with tumors which have spread to the brain is about four months.
Patients with this condition develop devastating complications, including severe
headache, seizures, paralysis, blindness and impaired ability to think.
Radiation therapy for treatment of this problem is performed on approximately
170,000 patients per year in the United States and is intended to prevent or
reduce these complications. We believe that XCYTRIN could eventually be used in
many other tumor types and clinical situations requiring radiation therapy.
Clinical Status. We have completed a Phase I clinical trial of XCYTRIN in 38
adult patients with advanced cancer who received radiation therapy. This trial
was designed to determine the toxicity of a single dose of the drug. Reversible
kidney toxicity was found at the highest doses of drug tested. Accumulation of
XCYTRIN in lung cancer, breast cancer and other tumors has been confirmed using
magnetic resonance imaging.
We have also completed an international multicenter Phase Ib/II clinical
trial to evaluate the safety and efficacy of XCYTRIN in cancer patients
receiving radiation therapy for treatment of tumors which had spread to the
brain. We have compared the results from the Phase Ib/II trial to historical
data using a 528 patient database containing information on clinical features
and outcomes in comparable patients receiving treatment with identical doses of
radiation alone. After 6 months and 12 months, 41% and 25% of XCYTRIN-treated
patients were alive compared to 30% and 14% of the historical controls,
respectively. XCYTRIN treatment was a statistically significant independent
factor in determining survival. The effect of XCYTRIN treatment on neurologic
progression was determined by comparing the causes of death in the treated
patients to those of the control patients. Death due to tumor progression in the
brain was seen in 15% of XCYTRIN-treated patients compared to more than 35% in
the control group.
Statisticians from the Radiation Therapy Oncology Group, a large U.S.
cooperative clinical trial group, performed a similar analysis using its
database. Using a case-matched control analysis, they found that XCYTRIN-treated
patients had better survival than controls, with 30% of XCYTRIN-treated patients
surviving 12 months compared to 11% in the control groups. Forty-nine percent of
control patients died due to tumor progression in the head compared to 15% in
the XCYTRIN group.
We are conducting a controlled Phase III trial with XCYTRIN for the treatment
of patients with tumors that have spread to the brain undergoing whole brain
radiation therapy. We are now enrolling patients at approximately 60 sites in
the U.S., Canada, Netherlands and France.
We plan to enroll approximately 425 adult patients in this study. Patients
will be randomly assigned to treatment with either standard whole-brain
radiation therapy or treatment with XCYTRIN plus standard whole-brain radiation
therapy. The XCYTRIN-treated group will receive ten intravenous injections of
XCYTRIN, each prior to ten daily doses of radiation therapy. We will follow all
patients for a minimum of 6 months after treatment or until death. The study
will measure survival, time-to-neurologic progression, tumor response by
magnetic resonance imaging and quality of life. The co-primary end-points of the
study are survival and time-to-neurologic progression assessed by neurological
examinations and neurocognitive testing. Statistically significant improvement
in
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either survival or time-to-neurologic progression will be considered as
satisfying the primary end point of the trial, and may provide the basis of a
marketing approval. An outside, independent Data Safety Monitoring Board will
monitor the study by reviewing and analyzing interim data two-thirds of the way
into the study for possible early termination of the trial in the event of
significant efficacy or unacceptable toxicity. The FDA has indicated that the
proposed Phase III trial will qualify for "Fast Track" review.
The median survival of patients with tumors that have spread to the brain is
approximately 3 to 4 months and depends on various clinical features such as
tumor type, performance status, age and presence of disease outside the brain.
Although most patients die from disease progression in the brain, many patients
will die due to progression of their disease in other locations in the body. The
trial's patient eligibility requirements are designed to enroll those patients
most likely to succumb to tumor growth in the brain. Improved local control of
tumor growth from radiation therapy in XCYTRIN-treated patients could result in
prolonged survival or time-to-progression compared to radiation therapy alone.
In addition to our studies in patients with tumors that have spread to the
brain, the National Cancer Institute has agreed to sponsor several clinical
trials with XCYTRIN for additional cancer types:
<TABLE>
<CAPTION>
TARGETED DISEASE LOCATION STATUS
<S> <C> <C>
Primary Brain Tumor UCLA Medical Center and University of Enrolling patients
Southern California
Primary Brain Tumor NABTT (New Approaches to Brain Tumor Therapy Pending
Consortium, comprised of ten centers)
Primary Brain Tumor University of Chicago Pending
Pediatric Brain Tumors, including Children's Cancer Group (CCG), a consortium of U.S Enrolling patients
Childhood Glioma Children's Hospitals
Lung Cancer Ohio State University Pending
Pancreatic Cancer University of Pittsburgh Enrolling patients
Pancreatic Cancer Johns Hopkins University Oncology Center Pending
Pancreatic Cancer University of Chicago Enrolling patients
Prostate Cancer Joint Center for Radiation Therapy, Harvard Medical Pending
School
</TABLE>
XCYTRIN for Chemotherapy Enhancement
We are conducting preclinical studies with XCYTRIN as a chemotherapy enhancer
for use in conjunction with certain chemotherapy agents. Chemotherapy destroys
cancer cells by interfering with their metabolism, protein synthesis or cell
division. Because these agents are not tissue-selective, cancer chemotherapy
agents produce serious or life-threatening side effects which compromise quality
of life and increase medical costs for cancer patients. Preclinical studies
conducted by us and our collaborators indicate that XCYTRIN increases the
activity of certain chemotherapy agents in tumors. We believe this effect is
related to XCYTRIN's ability to increase formation of cytotoxic substances
produced by certain chemotherapy agents, such as bleomycin and doxorubicin.
XCYTRIN's uptake in tumors enhances the activity of cancer chemotherapy agents
in tumor cells but not in normal tissues, thereby increasing the therapeutic
margin. In preclinical studies, animals receiving XCYTRIN and chemotherapy with
either bleomycin or doxorubicin had enhanced tumor responses and survival rates
as compared to control groups receiving equivalent doses of chemotherapy alone.
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LUTRIN for Photodynamic Therapy of Cancer
To date, photodynamic therapy has been approved for the treatment of
superficial or small lesions because existing photosensitizers have been unable
to absorb light capable of penetrating deeply into tissues. LUTRIN is activated
by light of 720 to 760 nanometers, wavelengths that are optimal for penetrating
through tissue, blood and skin pigmentation such as melanin. After absorbing
light of this wavelength, LUTRIN becomes activated to its tumor cell killing
state. Preclinical studies indicate that LUTRIN selectively accumulates in a
variety of cancer cells.
In October 1997, we entered into an agreement with Nycomed, which acquired
sales and marketing rights to LUTRIN for use in cancer treatment outside the
United States, Canada and Japan. In return for these rights, we received an
up-front licensing fee and will receive future payments based on achievement of
regulatory milestones and royalties on LUTRIN sales. See "-- Research, Clinical
Development and Marketing Collaborations" and "-- Manufacturing and Suppliers --
Photodynamic Therapy Light Production and Delivery Devices."
We intend initially to seek FDA approval for the use of LUTRIN in
photodynamic therapy for patients with invasive surface cancers that are
accessible to externally applied light, such as recurrent breast cancer to the
chest wall. This disease affects more then 10,000 patients per year in the
United States. Additional potential uses for LUTRIN include internal cancers
such as cancer of the lung, esophagus, cervix, colon, rectum, prostate, head and
neck region, ovary and genitourinary tract.
Clinical Status. At the May 1999 meeting of the American Society of Clinical
Oncology, we reported results from our Phase II study of LUTRIN. The Phase II
study was designed to evaluate the safety, tolerability and efficacy of LUTRIN
photosensitizer for photodynamic therapy in women with recurrent breast cancer
to the chest wall, for whom previous chemotherapy and radiation therapy had
failed. Fifty-eight treatment courses were given to 52 patients with advanced
disease. Eighty-two percent of these patients had failed three or more
chemotherapy regimens and all the patients had recurring or persistent tumors
following radiation therapy to the chest wall. The study evaluated the
administration of different doses of LUTRIN, followed by illumination of the
chest wall with light delivered at either 3 hours, 6 hours, 24 hours, 48 hours,
72 hours or 96 hours after intravenous injection of the drug. Each patient, in
the 11 groups tested, received illumination with light to large areas of the
chest wall (up to 240 cm(2)) encompassing both the tumor and adjacent uninvolved
skin. The purpose of the study was to identify treatment regimens that
demonstrated anti-tumor activity with an acceptable level of toxicity.
Tumor response was based on physical examinations and photographs of the
diseased chest wall. All lesions within the treatment field were evaluated and
an overall assessment of efficacy was made for each patient. Reduction in tumor
size was seen in 64% of patients. In 42% of patients tumors were either not
detectable (20%) or had significant decreases which were evident on physical
examination or photographs (22%).
Safety and tolerability appeared to be dependent on both drug dose and the
time interval between LUTRIN administration and illumination of the chest wall
with light. Patients receiving chest wall illumination 24 hours or more
following intravenous administration of LUTRIN experienced pain at the treatment
site that was manageable with standard narcotic pain medications. Patients
treated with light given at shorter intervals experienced more severe pain,
sometimes requiring conscious sedation. Skin toxicity, including scab formation
or destruction of skin, was seen in the skin overlying the tumors in patients
treated with light at time intervals of less than 24 hours. Only 2 of 18
patients receiving light illumination 24 hours or more after receiving LUTRIN
experienced this toxicity. Skin toxicity was limited to the tumor-involved areas
of skin except in patients receiving the highest doses of LUTRIN followed by
photoillumination given at the shortest intervals.
We are conducting a Phase IIb clinical trial for LUTRIN as a photosensitizer
for use in the photodynamic therapy of patients with recurrent breast cancers to
the chest wall that have failed standard therapies. In addition, the National
Cancer Institute intends to sponsor several clinical trials of LUTRIN for
additional types of cancer including cancer of the cervix, esophagus, head and
neck region, pancreas, prostate, lung and ovary. We expect some of these studies
to begin in 2000.
ATHEROSCLEROSIS THERAPY
ANTRIN for Photoangioplasty of Atherosclerosis.
Preclinical studies conducted by Pharmacyclics and our collaborators have
demonstrated that texaphyrins also accumulate in vascular plaque caused by
atherosclerosis. Preclinical studies indicated that following intravenous
injection of ANTRIN, light delivered into the blood vessel using an optical
fiber resulted in non-mechanical reduction or elimination of the plaque without
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damage to the lining of the vessel wall using a technique which we refer to as
photoangioplasty. Photoangioplasty with ANTRIN resulted in the elimination of
inflammatory cells from the diseased vessel wall. Current treatments of
atherosclerosis, such as balloon angioplasty, require anti-clotting drugs and
the use of devices inserted inside the vessels to reduce the incidence of
reclosure. We believe that these results suggest that photoangioplasty of
atherosclerosis with ANTRIN has the potential to eliminate or reduce plaque
without complications such as thrombosis and reclosure. Additional preclinical
studies further indicated that photoangioplasty of atherosclerosis with ANTRIN
could be used to treat longer segments of blood vessels, which is not possible
with other currently available techniques. ANTRIN's accumulation in plaque and
relatively rapid clearance from blood may provide advantages over alternative
treatments for atherosclerosis. Removal of inflammatory cells also suggests that
ANTRIN may reduce or stabilize vulnerable plaque. Vulnerable plaque is rich in
inflammatory cells and prone to rupture causing a sudden blood clot and closure
of the vessel. We also believe that photoangioplasty with ANTRIN has potential
use in peripheral arterial disease, coronary artery disease and in the treatment
of restenosis following balloon angioplasty.
Clinical Status. In April 1999, we completed enrollment in our Phase I study
with ANTRIN photoangioplasty for patients with peripheral arterial disease.
Fifty-one patients received an injection of ANTRIN and 47 qualified to receive
photoangioplasty of the lower extremities. The two-part study was designed to
first establish an optimum dose of ANTRIN by treating successive groups of
patients with increasing single doses of the drug. In the second part of the
study, we evaluated three doses of light at several drug dose levels. We gave
ANTRIN intravenously and delivered light to the inside of the diseased vessel
using a 0.89mm optical fiber. We evaluated patients for toxicity and local
arterial responses by follow-up angiograms and intravascular ultrasound
performed the day of and 28 days after photoangioplasty. Clinical activity was
evaluated using several well-established techniques. The ankle-brachial index
and the Rutherford-Becker standardized classification of clinical outcomes were
measured. The ankle-brachial index is a measurement of the impact of the
obstruction on blood pressure in the affected limb. The Rutherford-Becker
classification scores, which are based on standards for evaluating and reporting
the results of surgical or percutaneous therapy for peripheral arterial disease,
measure the change in clinical symptoms due to the treatment intervention.
In November 1999, we reported results of this trial at the American Heart
Association meeting. The study indicated that Antrin photoangioplasty was well
tolerated. There was no evidence of dose-limiting systemic or vascular
toxicities in the drug and light dose ranges tested. No skin phototoxicity was
reported. No treatment-related clinical laboratory abnormalities were noted.
There was no evidence of thrombus, emboli or vessel wall damage. Mild and
transient paresthesias, or tingling, in the fingertips was observed in patients
receiving higher doses of drug. Four patients reported mild and transient skin
rash. Baseline and day-28 paired angiograms were available for 43 patients.
Overall, these indicated improvement in minimal luminal diameter on day 28
compared to baseline. Of the 19 patients with minimal luminal diameter
improvement, 14 had improvement of 10 to 112 percent (mean = 35.6 percent).
Intravascular ultrasound data also indicated plaque regression in the arterial
lumen. Forty-seven patients were evaluated using Rutherford-Becker
classification and ankle-brachial index measurements. Sixty-two percent of these
patients had improved Rutherford-Becker scores, and 57 percent had improved
ankle-brachial index measurements at day 28.
We are conducting a 375-patient controlled Phase II study with ANTRIN for
patients with peripheral arterial disease of the lower extremities. The study is
designed to evaluate both prevention of restenosis following balloon angioplasty
and primary treatment of atherosclerosis. In February 2000, we began a Phase I
study of Antrin for the treatment of coronary artery disease.
RETINAL DEGENERATION THERAPY
OPTRIN for Treatment of Retinal Degeneration.
Pharmacyclics and our collaborators have conducted preclinical studies with
OPTRIN for treatment of degeneration of the retina caused by abnormal growth of
blood vessels. These studies have indicated that OPTRIN selectively eliminates
abnormal retinal capillaries after activation by light of an appropriate
wavelength. We have entered into a development agreement with Alcon, a leading
ophthalmic products company. Under this agreement, we will provide OPTRIN to
Alcon for further preclinical and clinical development, regulatory submissions
and sales and marketing of OPTRIN for the treatment of ophthalmic diseases.
Clinical Status. Alcon is currently conducting a Phase II clinical trial with
OPTRIN for the photodynamic therapy of patients with retinal degeneration. Alcon
presented interim results from this trial at the June 1999 European Society of
Ophthalmology meeting in Stockholm, Sweden.
Alcon treated 58 patients with the wet form of macular degeneration in the
Phase I/II study, which was designed to evaluate various treatment regimens in
successive groups of patients. Clinical investigators examined increasing doses
of drug and light, and varying time intervals between drug administration and
light delivery in order to define the optimum treatment parameters. Although
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primarily a safety study to establish the highest tolerated dose, clinical
investigators assessed clinical activity by angiography and measurements of
vision. Patients received a single intravenous injection of OPTRIN, followed by
light delivered to the retina at various times up to 180 minutes after injection
of the drug. In a subset of patients, clinical investigators performed
angiography to evaluate distribution and drug uptake in the diseased vessels and
clearance from normal retinal tissues.
Clinical investigators found that OPTRIN accumulated selectively in the
abnormal vessels and, depending on the dose of drug and light and the interval
between them, resulted in complete or partial closure of diseased vessels after
activation with light. In patients treated with doses of drug less than or equal
to 2mg/kg, we saw complete or partial closure of diseased vessels in 1 of 19
patients. In the combined groups of patients receiving 2.5 or 3.0 mg/kg of drug,
clinical investigators observed complete or partial closure of diseased vessels
in 9 of 13 patients. Twenty of 26 patients had complete or partial closure when
treated with 4 mg/kg of drug.
Light dose was also an important factor. Clinical investigators saw complete
or partial closure of diseased vessels in 3 of 18 patients treated with light
doses of 50 or 75 Joules/cm(2). At a light dose of 100 Joules/cm(2), 19 of 31
patients had complete or partial closure of diseased vessels. In the combined
group receiving light doses of 125 or 150 Joules/cm(2), 8 of 9 patients had
complete or partial closure of diseased vessels.
Complete or partial closure of diseased vessels is an indicator for treatment
effect. In a preliminary analysis of the patients with complete or partial
closure, vision had improved when measured one week after treatment. In the
patients without complete or partial closure, vision had decreased when measured
one week after treatment. The difference was statistically significant.
Patients receiving higher doses of OPTRIN experienced transient tingling of
the fingertips. For example, in patients receiving less than or equal to 2 mg/kg
of drug, 1 of 19 experienced transient tingling of the fingertips, while in the
combined group of patients treated with 2.5 or 3 mg/kg, 3 of 13 experienced
transient tingling of the fingertips. In patients treated with 4 mg/kg, 20 of 26
experienced transient tingling of the fingertips. One patient developed facial
skin toxicity following sun exposure. Clinical investigators observed no other
toxicities. In 5 patients, clinical investigators observed damage to normal
retina. These patients either received the highest dose of drug (4mg/kg) or
received light within a short interval following drug administration. Clinical
investigators observed no retinal damage in patients who had received high (125
or 150 Joules/cm(2)) doses of light.
DIAGNOSTIC IMAGING AGENT
CITRA VU for Imaging the Gastrointestinal Tract.
Our oral magnetic resonance imaging contrast agent, CITRA VU, is not a
texaphyrin, but is based on one of our patented compounds. CITRA VU is used for
imaging the gastrointestinal tract in patients undergoing MRI procedures of the
abdomen or the pelvis. CITRA VU is an orange-flavored oral formulation designed
to fill the bowel uniformly to improve diagnosis of abdominal or pelvic
diseases.
Clinical Status. We submitted a new drug application for CITRA VU in
September 1995, based upon two multicenter, controlled Phase III studies in
patients receiving MRI scans for known or suspected diseases of the abdomen or
pelvis. We received an approvable letter in December 1996 which required us to
conduct additional product manufacturing and product stability studies. We are
in the process of addressing these issues. We cannot be certain that the new
drug application will satisfy the FDA's criteria for approval. In 1996, we
received approval from the Medicines Control Agency to market CITRA VU in the
United Kingdom. In April 1998, we received approval from the Health Protection
Branch of Health Canada to market CITRA VU in Canada. However, we will not
market CITRA VU in Europe or Canada until we resolve product manufacturing and
product stability issues. In addition, because we are changing the level of
preservatives in the formulation, we will not market CITRA VU in Europe or
Canada until we receive additional marketing approvals.
RESEARCH, CLINICAL DEVELOPMENT AND MARKETING COLLABORATIONS
We rely on relationships with third parties to expand certain research,
clinical development, process development, manufacturing, sales and marketing
functions. In the photodynamic therapy field, we have used outside
collaborations for development of light sources and delivery devices for use in
our preclinical studies and clinical trials so that we could focus on
development of our proprietary photosensitizing products.
National Cancer Institute Collaboration. In April 1997, the Decision Network
Committee of the National Cancer Institute Division of Cancer Treatment,
Diagnosis and Centers voted unanimously to sponsor and fund clinical development
of both XCYTRIN
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as a radiation enhancer and LUTRIN as a photosensitizer for cancer treatment.
Under this cooperative research and development agreement, Pharmacyclics and the
National Cancer Institute jointly select clinical trials which will be conducted
at leading medical centers for various types of cancer. For XCYTRIN, the
National Cancer Institute plans to conduct several separate clinical trials for
treatment of brain tumors and cancers involving the lung, pancreas and prostate.
For LUTRIN, the National Cancer Institute intends to sponsor several separate
clinical trials for the treatment of esophageal, cervical, lung, prostate and
ovarian cancers. We believe that these National Cancer Institute-sponsored
trials will supplement our own clinical development efforts for both XCYTRIN and
LUTRIN. Although third parties will be conducting the trials, we will provide
clinical supplies of our drugs and we intend to monitor the progression and
results of these trials.
The University of Texas Agreements. We collaborate with and sponsor research
and development programs at The University of Texas at Austin, through a group
headed by Jonathan Sessler, Ph.D., Professor of Chemistry at The University of
Texas at Austin. Such collaborations and programs extend our research
capabilities in the field of expanded porphyrin chemistry. We have entered into
two license agreements with The University of Texas at Austin that grant us the
worldwide, exclusive right to patents or patent applications that relate to or
result from research conducted at The University of Texas at Austin on the use,
development and syntheses of expanded porphyrin molecules, and research
conducted at The University of Texas at Dallas on the incorporation of
paramagnetic metals into zeolites for use as MRI contrast agents. These
agreements require us to pay royalties as a percentage of net sales to The
University of Texas for products incorporating the licensed technology,
including each of our current product candidates. In addition, we and The
University of Texas at Austin have entered into sponsored research agreements
which expand the products, inventions and discoveries developed by The
University of Texas at Austin to which our license rights apply. In connection
with The University of Texas license agreements, we also entered into a license
agreement with an individual co-inventor of CITRA VU, pursuant to which we have
been granted an exclusive royalty-bearing license to manufacture, use and sell
certain products that fall within the scope of The University of Texas at Dallas
license agreement.
Alcon Collaboration. In December 1997, we entered into an evaluation and
license agreement with Alcon Pharmaceuticals, Ltd. under which Alcon acquired
worldwide marketing rights to OPTRIN for ophthalmology uses. Alcon, a
wholly-owned subsidiary of Nestle S.A., is a global leader in the research,
development, manufacturing and marketing of ophthalmic products. Under the terms
of the agreement, we received an upfront fee for Alcon to evaluate OPTRIN for
ophthalmology uses for a specified time period. If the evaluation is successful,
we will receive an additional license fee, payments upon completion of certain
milestones and royalty payments on product sales. Alcon will conduct and bear
all costs for world-wide development and commercialization of OPTRIN for
ophthalmology uses, as well as costs for regulatory submissions, until the
agreement ends. We are required to supply bulk drug substance to Alcon, and
Alcon will be responsible for formulation and packaging.
E-Z-EM Marketing, Sales and Distribution Arrangement. In August 1995, we
entered into an agreement with E-Z-EM, Inc., a leading manufacturer and
worldwide distributor of oral contrast agents and other products for use in
gastrointestinal radiology, for the exclusive marketing and sale of CITRA VU in
North America. During fiscal 1997, we signed an additional agreement with
E-Z-EM's affiliate, E-Z-EM, Ltd., for marketing, sales and distribution in
Europe. Pharmacyclics and E-Z-EM will share equally in the operating profits
from the sale of CITRA VU in these regions, and we may also receive premium
payments if we achieve certain sales levels. During the term of the agreement,
E-Z-EM is prohibited from distributing products that are directly competitive
with CITRA VU, except for products that had been or were being developed by
E-Z-EM as of the date of our agreement with E-Z-EM and that contain specified
chemical compounds. E-Z-EM may terminate the agreement at any time upon six
months' notice.
Nycomed Collaboration. In October 1997, we entered into an agreement with
Nycomed, granting Nycomed exclusive sales and marketing rights to LUTRIN for
different types of cancer in all markets excluding the United States, Canada and
Japan. In exchange for these rights, Nycomed agreed to pay us up to
approximately $14.0 million in license fees and cost reimbursement, based upon
an agreed budget, milestone payments and development cost subsidies related to
the initial cancer uses for LUTRIN to be developed by us and Nycomed. In each
case, we must reach certain development, clinical or commercialization
milestones to receive payment. Nycomed may pay us approximately $14.0 million in
additional milestone payments and cost reimbursement, assuming similar costs and
agreement upon a similar budget, during the course of development for subsequent
cancer treatments, if such clinical trials are successfully completed. Nycomed
has agreed to bear a portion of the device and clinical development costs
required for regulatory submission for product approval in the United States. We
will then use this information as a basis for approvals in Europe. Pharmacyclics
and Nycomed will make regulatory submissions in our respective marketing
territories. We are required to supply bulk drug substance to Nycomed through
our manufacturing collaborations.
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PATENTS AND PROPRIETARY TECHNOLOGY
We believe our success depends upon our ability to protect our proprietary
technology. We, therefore, aggressively pursue, prosecute, protect and defend
patent applications, issued patents, trade secrets, and licensed patent and
trade secret rights covering certain aspects of our technology.
Our patents, patent applications, and licensed patent rights cover various
compounds, pharmaceutical formulations and methods of use. We own or have
license rights to:
- 65 issued U.S. patents; and
- 9 pending U.S. patent applications, of which
- 3 of the pending U.S. applications are allowed.
The issued U.S. patents expire between 2009 and 2017. We also own or license 85
issued non-U.S. patents including 65 patents issued throughout Europe and 101
pending non-U.S. patent applications filed regionally under the Patent
Cooperation Treaty and with the European Patent Office, and nationally in
Canada, Japan, Australia and certain other countries.
We may be unsuccessful in prosecuting our patent applications or patents may
not issue from our patent applications. Even if patents are issued and
maintained, these patents may not be of adequate scope to benefit us, or may
held invalid and unenforceable against third parties.
We also rely upon trade secrets, technical know-how and continuing
technological innovation to develop and maintain our competitive position. We
require all of our employees, consultants, advisors and collaborators to execute
appropriate confidentiality and assignment-of-inventions agreements. These
agreements typically provide that all materials and confidential information
developed or made known to the individual during the course of the individual's
relationship with us is to be kept confidential and not disclosed to third
parties except in specific circumstances, and these agreements provide that all
inventions arising out of the relationship with Pharmacyclics shall be our
exclusive property.
SUPPLY AGREEMENTS
We currently use third parties to manufacture various components of our
products under development.
Texaphyrin-based Products. In September 1996, we entered into an agreement
with Hoechst Celanese Corporation, a manufacturer of chemicals and
pharmaceutical intermediates, to optimize and scale up a manufacturing process
for and supply of our texaphyrin-based products. In October 1997, Hoechst
Celanese assigned the agreement to Celanese, Ltd. in connection with Hoechst
Celanese's corporate restructuring. This agreement granted Celanese exclusive
worldwide manufacturing rights and required Celanese to supply all of our
texaphyrin-based products for late-stage clinical and commercial use. As a
result of the change in its business focus, Celanese requested that we pursue
alternative supply sources. On August 27, 1999, we entered into an agreement to
terminate the manufacturing and supply agreement with Celanese. Pursuant to that
agreement, Celanese assigned to us all right, title and interest in and to the
manufacturing technology and intellectual property for our texaphyrin-based
products and agreed to make a cash payment of $750,000 to us. The termination
agreement also relieved us of all obligations to pay Celanese for shared
development costs incurred prior to termination of the agreement.
During discussions with Celanese that resulted in the termination of the
manufacturing and supply agreement, we entered into agreements with three new
manufacturers to evaluate their ability to supply us with the components of the
texaphyrin-based products. They are currently in the process of producing
initial supplies, which include commercial quantities, of such products for
delivery to us during fiscal year 2000. We have sufficient quantity of
texaphyrin-based products to supply our current clinical trial plans.
Photodynamic Therapy Light Production and Delivery Devices. In connection
with our development of LUTRIN and ANTRIN as photosensitizers, we have developed
certain light sources and delivery methods, such as lasers and light emitting
diodes. We have purchased light emitting diode devices capable of producing the
required wavelength of light for use in photodynamic therapy with LUTRIN. We
have also used light emitting diode devices in preclinical animal studies and
Phase I and Phase II trials. In addition, we have acquired from CardioFocus,
Inc. cylindrically diffusing light fibers for animal studies and for use in
Phase I and Phase II studies in cardiovascular disease. In October 1997, we
entered into a development agreement with Diomed, Inc. under which Diomed would
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develop a diode laser system for use in photodynamic therapy. This effort was
successful and we have used Diomed lasers in our ANTRIN and LUTRIN clinical
trials. In addition, we may seek other suppliers of light delivery devices for
clinical trials and commercial purposes, although we cannot be certain that any
agreements will be reached with such suppliers on terms commercially reasonable
to us, if at all.
COMPETITION
We face intense competition from pharmaceutical companies, universities,
governmental entities and others in the development of therapeutic and
diagnostic agents for the treatment of diseases which we target. Many of these
entities have significantly greater research and development capabilities than
us, as well as substantial marketing, manufacturing, financial and managerial
resources. Acquisitions of, or investments in, competing pharmaceutical
companies by large collaborating partners could increase such competitors'
financial, marketing, manufacturing and other resources. Developments by others
may render our products or technologies noncompetitive or obsolete, or we may be
unable to keep pace with technological developments or other market factors.
Competitors may be developing products that have an entirely different approach
or means of accomplishing similar diagnostic, imaging and therapeutic effects
than our products under development.
Although the FDA has not yet approved any agents for the enhancement of
radiation therapy or chemotherapy, we expect significant competition in these
fields, as we believe that one or more companies are developing and testing
products which compete directly with our products under development. These
companies may succeed in developing technologies and products that are more
effective than XCYTRIN or would render our products or technologies obsolete.
Moreover, certain existing chemotherapy agents also are used as radiation
enhancers. See "Risk Factors -- We face rapid technological change and intense
competition."
The FDA has approved Photofrin(R), a photosensitizer developed by QLT
Phototherapeutics, Inc., for the treatment of specific types of cancer. We are
aware of several other photosensitizers in various stages of development for a
number of uses. In addition to QLT Phototherapeutics, Inc., other companies are
developing products in this area. Some companies developing photodynamic therapy
products are developing specialized light delivery devices for their products,
which, when combined with their product offering, may give them a competitive
advantage over our strategy of obtaining such devices from third-party sources.
We also face intense competition in the treatment of atherosclerosis which
currently includes the use of pharmaceutical agents and devices. Various drugs
also have been shown to reduce or prevent atherosclerosis. Balloon angioplasty
and stents are widely-used and generally accepted techniques to reduce the
narrowing of vessels by atherosclerosis. We believe that photoangioplasty with
ANTRIN may provide advantages over these techniques.
We face substantial competition in the treatment of macular degeneration.
Several other approaches to treatment are being investigated, including the use
of other photosensitizers and drugs. Recently, QLT Phototherapeutics, Inc.
reported that their photosensitizer, VISUDYNE, produced positive clinical
results in a controlled phase III clinical trial in patients with age-related
macular degeneration. Although we believe our photosensitizer has advantages
over VISUDYNE, we expect that VISUDYNE will receive regulatory approval sooner
than OPTRIN.
We also expect competition in the development of improved oral MRI contrast
agents to increase substantially.
GOVERNMENT REGULATION
FDA Regulation and Product Approval
The FDA and comparable regulatory agencies in state and local jurisdictions
and in foreign countries impose substantial requirements upon the clinical
development, manufacture and marketing of pharmaceutical products. These
agencies and other federal, state and local entities regulate research and
development activities and the testing, manufacture, quality control, safety,
effectiveness, labeling, storage, record keeping, approval, advertising and
promotion of our products. We believe that our products will be regulated as
drugs by the FDA rather than as biologics or devices.
The process required by the FDA before our products may be marketed in the
U.S. generally involves the following:
- preclinical laboratory and animal tests;
- submission of an IND application which must become effective
before clinical trials may begin;
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- adequate and well-controlled human clinical trials to establish
the safety and efficacy of the proposed pharmaceutical in our
intended use; and
- FDA approval of a new drug application.
The testing and approval process requires substantial time, effort, and
financial resources and we cannot be certain that any approval will be granted
on a timely basis, if at all.
Preclinical tests include laboratory evaluation of the product, its
chemistry, formulation and stability, as well as animal studies to assess the
potential safety and efficacy of the product. We then submit the results of the
preclinical tests, together with manufacturing information and analytical data,
to the FDA as part of an IND, which must become effective before we may begin
human clinical trials. The IND automatically becomes effective 30 days after
receipt by the FDA, unless the FDA, within the 30-day time period, raises
concerns or questions about the conduct of the trials as outlined in the IND. In
such a case, the IND sponsor and the FDA must resolve any outstanding concerns
before clinical trials can begin. Our submission of an IND may not result in FDA
authorization to commence clinical trials. Further, an independent Institutional
Review Board at the medical center proposing to conduct the clinical trials must
review and approve any clinical study.
Human clinical trials are typically conducted in three sequential phases
which may overlap:
- PHASE I: The drug is initially introduced into healthy human
subjects or patients and tested for safety, dosage tolerance,
absorption, metabolism, distribution and excretion.
- PHASE II: Involves studies in a limited patient population to
identify possible adverse effects and safety risks, to determine
the efficacy of the product for specific targeted diseases and to
determine dosage tolerance and optimal dosage.
- PHASE III: When Phase II evaluations demonstrate that a dosage
range of the product is effective and has an acceptable safety
profile, Phase III trials are undertaken to further evaluate
dosage, clinical efficacy and to further test for safety in an
expanded patient population at geographically dispersed clinical
study sites.
In the case of products for severe or life-threatening diseases such as
cancer, the initial human testing is often conducted in patients rather than in
healthy volunteers. Since these patients already have the target disease, these
studies may provide initial evidence of efficacy traditionally obtained in Phase
II trials and thus these trials are frequently referred to as Phase I/II trials.
We cannot be certain that we will successfully complete Phase I, Phase II or
Phase III testing of our product candidates within any specific time period, if
at all. Furthermore, the FDA or the Institutional Review Board or the sponsor
may suspend clinical trials at any time on various grounds, including a finding
that the subjects or patients are being exposed to an unacceptable health risk.
The results of product development, preclinical studies and clinical studies
are submitted to the FDA as part of a new drug application for approval of the
marketing and commercial shipment of the product. The FDA may deny a new drug
application if the applicable regulatory criteria are not satisfied or may
require additional clinical data. Even if such data is submitted, the FDA may
ultimately decide that the new drug application does not satisfy the criteria
for approval. Once issued, the FDA may withdraw product approval if compliance
with regulatory standards is not maintained or if problems occur after the
product reaches the market. In addition, the FDA may require testing and
surveillance programs to monitor the effect of approved products which have been
commercialized, and the agency has the power to prevent or limit further
marketing of a product based on the results of these post-marketing programs.
On November 21, 1997, President Clinton signed into law the Food and Drug
Administration Modernization Act. That act codified the FDA's policy of granting
"Fast Track" approval for cancer therapies and other therapies intended to treat
severe or life-threatening diseases. Previously, the FDA approved cancer
therapies primarily based on patient survival rates and/or data on improved
quality of life. The FDA considered evidence of partial tumor shrinkage, while
often part of the data relied on for approval, insufficient by itself to warrant
approval of a cancer therapy, except in limited situations. Under the FDA's new
policy, which became effective on February 19, 1998, the FDA has broadened
authority to consider evidence of partial tumor shrinkage or other clinical
outcomes for approval. This new policy is intended to facilitate the study of
cancer therapies and shorten the total time for marketing approvals; however, it
is too early to tell what effect, if any, these provisions may actually have on
product approvals.
23
<PAGE> 26
In addition to the drug approval requirements applicable to our LUTRIN
product for photosensitization of certain cancers and ANTRIN for
photoangioplasty of atherosclerosis, we will also need to obtain FDA approval
for the laser and associated light delivery devices used in such treatments. To
obtain approval of such devices, Pharmacyclics and the manufacturers of such
devices must submit additional clinical data obtained from the use of such
devices with LUTRIN and ANTRIN, which may further delay or hinder the approval
process for these photosensitizers. Manufacturers of such light delivery devices
currently are under no obligation to us to file or pursue such applications, and
any delay or refusal on their part to do so could have a material adverse effect
on us.
Satisfaction of the above FDA requirements or similar requirements of state,
local and foreign regulatory agencies typically takes several years and the
actual time required may vary substantially, based upon the type, complexity and
novelty of the pharmaceutical product. Government regulation may delay or
prevent marketing of potential products for a considerable period of time and to
impose costly procedures upon our activities. We cannot be certain that the FDA
or any other regulatory agency will grant approval for any of our products under
development on a timely basis, if at all. Success in preclinical or early stage
clinical trials does not assure success in later stage clinical trials. Data
obtained from preclinical and clinical activities is not always conclusive and
may be susceptible to varying interpretations which could delay, limit or
prevent regulatory approval. Even if a product receives regulatory approval, the
approval may be significantly limited to specific indications. Further, even
after regulatory approval is obtained, later discovery of previously unknown
problems with a product may result in restrictions on the product or even
complete withdrawal of the product from the market. Delays in obtaining, or
failures to obtain regulatory approvals would have a material adverse effect on
our business. Marketing our products abroad will require similar regulatory
approvals and is subject to similar risks. In addition, we cannot predict what
adverse governmental regulations may arise from future U.S. or foreign
governmental action.
Any products manufactured or distributed by us pursuant to FDA clearances or
approvals are subject to pervasive and continuing regulation by the FDA,
including record-keeping requirements and reporting of adverse experiences with
the drug. Drug manufacturers and their subcontractors are required to register
their establishments with the FDA and certain state agencies, and are subject to
periodic unannounced inspections by the FDA and certain state agencies for
compliance with good manufacturing practices, which impose certain procedural
and documentation requirements upon us and our third party manufacturers. We
cannot be certain that we or our present or future suppliers will be able to
comply with the GMP regulations and other FDA regulatory requirements.
The FDA regulates drug labeling and promotion activities. The FDA has
actively enforced regulations prohibiting the marketing of products for
unapproved uses. Under the Modernization Act of 1997, the FDA will permit the
promotion of a drug for an unapproved use in certain circumstances, but subject
to very stringent requirements. We and our products are also subject to a
variety of state laws and regulations in those states or localities where our
products are or will be marketed. Any applicable state or local regulations may
hinder our ability to market our products in those states or localities. We are
also subject to numerous federal, state and local laws relating to such matters
as safe working conditions, manufacturing practices, environmental protection,
fire hazard control, and disposal of hazardous or potentially hazardous
substances. We may incur significant costs to comply with such laws and
regulations now or in the future.
The FDA's policies may change and additional government regulations may be
enacted which could prevent or delay regulatory approval of our potential
products. Moreover, increased attention to the containment of health care costs
in the U.S. and in foreign markets could result in new government regulations
which could have a material adverse effect on our business. We cannot predict
the likelihood, nature or extent of adverse governmental regulation which might
arise from future legislative or administrative action, either in the U.S. or
abroad.
EMPLOYEES
As of February 29, 2000, we had 121 employees, 9 of whom were part-time. One
hundred eleven of our employees are engaged in research, development,
preclinical and clinical testing, manufacturing, quality assurance and quality
control and regulatory affairs and 10 in finance, administration and operations.
Twenty-three of our employees have an M.D. or Ph.D. degree. Our future
performance depends in significant part upon the continued service of our key
scientific, technical and senior management personnel, none of whom is bound by
an employment agreement requiring service for any defined period of time. The
loss of the services of one or more of our key employees could harm our
business.
Our future success also depends on our continuing ability to attract, train
and retain highly qualified scientific and technical personnel. Competition for
these personnel is intense, particularly in the San Francisco Bay Area where we
are headquartered. Due to the limited number of people available with the
necessary scientific and technical skills, we can give no assurance that we can
retain or attract key personnel in the future. None of our employees is
represented by a labor union. We have not experienced any work stoppages and
consider our relations with our employees to be good.
24
<PAGE> 27
FACILITIES
Our corporate offices are located in Sunnyvale, California, where we lease
approximately 32,500 square feet under a lease that expires in January 2002. As
of August 31, 1999, the annual base rent for this facility was approximately
$384,000. This facility includes administrative and research and development
space. In April 1999, we entered into a 2 1/2 year lease, with a one year
automatic renewal option, for an 18,000 square feet facility also in Sunnyvale.
This facility is used for administrative space, and the annual base rent is
approximately $348,000. Both leases are non-cancelable operating leases. We
believe that the office space that we currently lease in Sunnyvale will be
sufficient to meet our needs through at least the next 12 months.
25
<PAGE> 28
SELLING STOCKHOLDERS
The following table sets forth certain information, as of the date hereof,
with respect to the number of shares of common stock owned by each of the
selling stockholders and as adjusted to give effect to the sale of the common
stock offered hereby. The common stock is being registered to permit public
secondary trading of the common stock, and the selling stockholders may offer
the common stock for resale from time to time. See "Plan of Distribution".
The common stock being offered by the selling stockholders was acquired from
Pharmacyclics under a private placement transaction pursuant to a Common Stock
Purchase Agreement dated March 2, 2000, at a purchase price of $73.25 per share.
The common stock was placed with the use of a placement agent and was issued
pursuant to the exemption from the registration requirements of the Securities
Act provided by Rule 506 of Regulation D thereof. See "Recent Developments ---
Private Placement." None of the selling stockholders has had a material
relationship with Pharmacyclics within the past three years other than as a
result of the ownership of the common stock registered by this registration
statement or other securities of Pharmacyclics.
Each selling stockholder that purchased common stock pursuant to the Common
Stock Purchase Agreement represented to Pharmacyclics that it was acquiring the
common stock for investment and with no present intention of distributing the
common stock. In lieu of granting the selling stockholders demand registration
rights, Pharmacyclics has filed with the Commission, under the Securities Act, a
Registration Statement on Form S-3, of which this prospectus forms a part, with
respect to the resale of the common stock from time to time on the Nasdaq
National Market or in privately-negotiated transactions and has agreed to use
its best efforts to keep such Registration Statement effective until the earlier
of (i) such date as all of the shares of common stock covered by the
Registration Statement have been resold or (ii) such time as all of the shares
of common stock purchased by each purchaser can be sold within a 90-day period
without compliance with the registration requirements of the Securities Act
pursuant to Rule 144 thereunder.
The common stock offered by this prospectus may be offered from time to time
by the selling stockholders named below:
<TABLE>
<CAPTION>
Number of Shares
Owned Ownership
Prior to Offering(1) Number of After Offering(1)
---------------------- Shares ----------------------
Name and Address of Number of Being Number of
Selling Stockholders Shares Percent Offered Shares Percent
--------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
AP Asset 205,000 1.3% 205,000 --- ---
31 West 52nd St. 9th Floor
New York, NY 10019
DWS Investment 517,000 3.2% 342,000 175,000 1.1%
31 West 52nd St. 9th Floor
New York, NY 10019
Metzler Investment 333,100 2.1% 205,000 128,100 *
59 Wall Street
New York, NY 10005
Investors Group 485,600 3.0% 68,000 417,600 2.6%
447 Portage Avenue
Winnipeg, Manitoba R3C-3B6
Canada
--------- ------- --------- --------- -------
Total 1,540,700 9.7% 820,000 720,700 4.5%
========= ======= ========= ========= =======
</TABLE>
- --------
* Less than 1%.
26
<PAGE> 29
(1) Percentage of beneficial ownership is calculated assuming 15,955,226 shares
of common stock were outstanding as of March 13, 2000. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to
securities.
PLAN OF DISTRIBUTION
The resale shares of common stock may be sold from time to time by the selling
stockholders in one or more transactions at:
- - fixed prices;
- - market prices at the time of sale;
- - varying prices determined at the time of sale; or
- - negotiated prices
The selling stockholders may offer their resale shares in one or more of the
following transactions:
- - on any national securities exchange or quotation service at which the
common stock of Pharmacyclics may be listed or quoted at the time of
sale, including the Nasdaq National Market;
- - in the over-the-counter market;
- - in private transactions;
- - through options; and
- - by pledge to secure debts and other obligations, or a combination of any
of the above transactions.
If required, we will distribute a supplement to this prospectus to describe
material changes in the terms of the offering.
The resale shares of common stock described in this prospectus may be sold
from time to time directly by the selling stockholders. Alternatively, the
selling stockholders may from time to time offer shares of common stock to or
through underwriters, broker/dealers or agents. The selling stockholders and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act. Any profits on the resale of shares of common stock and
any compensation received by any underwriter, broker/dealer or agent may be
deemed to be underwriting discounts and commissions under the Securities Act.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act of 1933 may be sold under rule 144 rather than
under the terms of this prospectus. The selling stockholders may transfer, will
or gift such shares by other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions, the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the common stock may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the common stock may not simultaneously engage in
market-making activities with respect to the common stock for nine business days
prior to the start of the distribution. In addition, each selling stockholder
and any other person participating in a distribution will be subject to
applicable provisions of the Exchange Act which may limit the timing of
purchases and sales of common stock by the selling stockholders or any other
person. These factors may affect the marketability of the common stock and the
ability of brokers or dealers to engage in market-making activities.
We will pay all costs and expenses associated with the registration of the
resale shares. These expenses include the SEC's filing fees and fees under state
securities or "blue sky" laws. We estimate that our expenses in connection with
this offering will be approximately $94,857. All expenses for the issuance of a
supplement to this prospectus, when requested by selling stockholder(s), will be
paid by the requesting stockholder(s). The selling stockholders will pay all
commissions, transfer taxes and other expenses associated with the sale of the
resale shares by them.
27
<PAGE> 30
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Pharmacyclics by Cooley Godward LLP, Palo Alto, California.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K/A for the year ended June 30, 1999 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
28
<PAGE> 31
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus and,
if given or made, such information or representations must not be relied upon as
having been authorized by Pharmacyclics or any of the Underwriters or by any
other person. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy a security other than the shares of common stock
offered hereby, nor does it constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby to any person in any
jurisdiction in which it is unlawful to make such offer or solicitation to such
person. Neither the delivery of this prospectus nor any sale made hereunder
shall under any circumstances create any implication that the information
contained herein is correct as of any date subsequent to the date hereof.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information ....................... 1
Incorporation of Certain Documents
By Reference .............................. 1
Prospectus Summary .......................... 2
Risk Factors ................................ 4
Use of Proceeds ............................. 11
Business .................................... 12
Selling Stockholders ........................ 26
Plan of Distribution ........................ 27
Legal Matters ............................... 28
Experts ..................................... 28
</TABLE>
820,000 SHARES
PHARMACYCLICS, INC.
COMMON STOCK
----------------
P R O S P E C T U S
----------------
________________ , 2000
================================================================================
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all costs and expenses, other than the
underwriting discounts and commissions, payable by the company in connection
with the sale of common stock being registered hereby. All of the amounts shown
are estimates except the SEC registration fee and the Nasdaq National Market
listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC registration fee ........................ $ 9,857
National Market listing fee ................. 17.500
Accounting fees and expenses ................ 10,000
Legal fees and expenses ..................... 50,000
Printing and engraving expenses ............. 5,000
Transfer Agent and registrar fees ........... 2,500
-------
Total ............................. $94,857
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended (the "DGCL"),
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal or investigative (other than an
action by or in the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses actually and
reasonably incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Amended and Restated Certificate of Incorporation provides
that the Registrant's directors shall not be liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that exculpation from liabilities is not permitted under
the DGCL as in effect at the time such liability is determined. The Registrant
has entered into indemnification agreements with all of its officers and
directors, as permitted by the DGCL.
II-1.
<PAGE> 33
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Independent Accountants.
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included in the signature page of this
Registration Statement, page II-4).
- ----------
(b) FINANCIAL STATEMENT SCHEDULES
None.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Pharmacyclics pursuant to the provisions described in Item 15, or otherwise,
Pharmacyclics has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Pharmacyclics of expenses incurred or paid by a director, officer or controlling
person of Pharmacyclics 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, Pharmacyclics 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 Act and will
be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(b) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2.
<PAGE> 34
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 on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Sunnyvale, State of California on this 30th day
of March, 2000.
PHARMACYCLICS, INC.
By: /s/ RICHARD A. MILLER
------------------------------------------
Richard A. Miller, M.D.
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Pharmacyclics, a Delaware
corporation, do hereby constitute and appoint jointly and severally, Richard A.
Miller, M.D., and Leiv Lea, and each of them, the lawful attorneys and agents,
with power and authority to do any and all acts and things and to execute any
and all instruments which said attorneys and agents determine may be necessary
or advisable or required to enable said corporation to comply with the
Securities Act, and any rules or regulations or requirements of the Securities
and Exchange Commission in connections with this Registration Statement. Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and authority to sign the names of the undersigned officers
and directions in the capacities indicated below to this Registration Statement,
to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement, and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents or any of them shall do or cause
to be done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ RICHARD A. MILLER President and Chief Executive Officer and Director March 30, 2000
- ------------------------------------- (Principal Executive Officer)
Richard A. Miller, M.D.
/s/ LEIV LEA Vice President, Finance and Administration and March 30, 2000
- ------------------------------------- Chief Financial and Accounting Officer
Leiv Lea (Principal Financial Officer)
/s/ PHYLLIS I. GARDNER Director March 30, 2000
- -------------------------------------
Phyllis I. Gardner
/s/ MILES R. GILBURNE Director March 30, 2000
- -------------------------------------
Miles R. Gilburne
/s/ WILLIAM R. ROHN Director March 30, 2000
- -------------------------------------
William R. Rohn
/s/ JOSEPH C. SCODARI Director March 30, 2000
- -------------------------------------
Joseph C. Scodari
/s/ CRAIG C. TAYLOR Director March 30, 2000
- -------------------------------------
Craig C. Taylor
</TABLE>
II-3.
<PAGE> 35
PHARMACYCLICS, INC.
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Independent Accountants
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included in the signature page of this
Registration Statement, page II-4).
II-4.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LETTERHEAD]
March 30, 2000
Pharmacyclics, Inc.
995 East Arques Avenue
Sunnyvale, CA 94086
Dear Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Pharmacyclics, Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering for resale of 820,000 shares of the
Company's Common Stock (the "Shares"), with a par value of $0.0001 per share,
issued in connection with that certain Common Stock Purchase Agreement by and
between the Company and the purchasers named therein.
In connection with this opinion, we have examined the Registration Statement,
the Company's Certificate of Incorporation and Bylaws, as amended, the
resolutions adopted by the Board of Directors of the Company on March 1, 2000,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares are duly authorized, validly issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus included in the Registration Statement.
Sincerely,
/s/ Laura A. Berezin
Laura A. Berezin
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated July 23, 1999 relating to the
financial statements, which appears in Pharmacyclics, Inc.'s Annual Report on
Form 10-K/A for the year ended June 30, 1999. We also consent to the reference
to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
San Jose, California
March 30, 2000
