As filed with the Securities and Exchange Commission on August 27, 2001
Registration No. 333-_______
============================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
EXELIXIS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 8731 04-3257395
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
170 HARBOR WAY
P.O. BOX 511
SOUTH SAN FRANCISCO, CA 94083
(650) 837-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
____________________
GEORGE A. SCANGOS, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
EXELIXIS, INC.
170 HARBOR WAY
P.O. BOX 511
SOUTH SAN FRANCISCO, CALIFORNIA 94083
(650) 837-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
____________________
Copies to:
ROBERT L. JONES, ESQ.
GIANNA M. BOSKO, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CA 94306-2155
(650) 843-5000
____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
_____________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
PROPOSED MAXIMUM
TITLE OF CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE (2) PRICE (2) REGISTRATION FEE
- ------------------------------ ----------------- --------------------------- -------------------- -----------------
- ------------------------------ ----------------- --------------------------- -------------------- -----------------
Common Stock, $0.001 par value 600,600 shares $ 9,387,378 $ 15.63 $ 2,347
=======================================================================================================================
(1) Also includes additional shares of common stock that may be issued as a
result of stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act. The price per share
and aggregate offering price are based on the average of the high and
low prices of the registrant's common stock on August 22, 2001 as
reported on the Nasdaq National Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON A DATE THAT THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
======
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS 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 IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 27, 2001
600,600 SHARES
EXELIXIS, INC.
COMMON STOCK
The selling stockholder listed on page 13 is offering up to 600,600 shares of
Exelixis, Inc. common stock. We will not receive any proceeds from the sale of
the shares by the selling stockholder.
Our common stock trades on the Nasdaq National Market under the symbol EXEL. On
August 24, 2001, the last reported sale price of our common stock was $17.09 per
share.
The selling stockholder may sell the shares described in this prospectus in a
number of different ways and at varying prices. See "Plan of Distribution" on
page 14 for more information about how it may sell its shares.
We will not be paying any underwriting discounts or commissions in this
offering.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
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.
__________ __, 2001.
TABLE OF CONTENTS
PAGE
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EXELIXIS 3
RISK FACTORS 4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 13
USE OF PROCEEDS 13
SELLING STOCKHOLDER 13
PLAN OF DISTRIBUTION 14
LEGAL MATTERS 16
EXPERTS 16
WHERE YOU CAN FIND MORE INFORMATION ABOUT EXELIXIS AND THIS OFFERING 16
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission. You should rely only on the information
contained or incorporated by reference in this prospectus. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. The selling stockholder is offering to sell, and seeking
offers to buy, shares of our common stock only in jurisdictions where such
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or any sale of our common stock.
Exelixis, Artemis Pharmaceuticals, ACTTAG, the Exelixis, Inc. logos and all
other Exelixis product and service names are registered trademarks or trademarks
of Exelixis, Inc. in the U.S. and in other selected countries. All other brand
names or trademarks appearing in this prospectus are the property of their
respective holders.
EXELIXIS
We believe that we are a leader in the discovery and validation of
high-quality novel targets for several major human diseases, and a leader in the
discovery of potential new drug therapies, specifically for cancer and other
proliferative diseases. Our mission is to develop proprietary products by
leveraging our integrated discovery platform to increase the speed, efficiency
and quality of pharmaceutical and agricultural product discovery and
development.
Through our expertise in biology and drug discovery, built upon a
foundation of comparative genomics and model system genetics, we are able to
find new drug targets that we believe would be difficult or impossible to
uncover using other experimental approaches. Our pharmaceutical research
identifies novel genes and proteins expressed by those genes that, when changed,
either decrease or increase the activity in a specific disease pathway in a
therapeutically relevant manner. These genes and proteins represent either
potential product targets or drugs that may treat disease, or prevent disease
initiation or progression.
Specifically in cancer, the remarkable evolutionary conservation of the
biochemical pathways between humans and "lower" organisms strongly supports the
use of simple model systems, such as fruit flies, nematode worms, zebrafish and
mice to identify key members of critical cancer pathways that can then be
targeted for drug discovery. We expect to develop new cancer drugs by exploiting
the underlying "genetic liabilities" of tumor cells to provide specificity in
targeting these cells for destruction, while leaving normal cells unharmed. We
have discovered and are further developing a number of small molecule drug
targets in addition to monoclonal antibody drug targets. Molecules developed
against these targets may selectively kill cancer cells while leaving normal
cells unharmed, and may provide alternatives to current cancer therapies.
While our proprietary programs focus on drug discovery and development, we
believe that our proprietary technologies are valuable to all other industries
whose products can be enhanced by an understanding of DNA or proteins, including
the agrochemical, agricultural and diagnostic industries. Many of these
industries have shorter product development cycles and lower risk than the
pharmaceutical industry, while at the same time generating significant sales
with double-digit product margins. By partnering with leading companies in
multiple industries, we are able to diversify our business risk, while at the
same time maximizing our future revenue stream.
We are a Delaware corporation. Our principal executive offices are located
at 170 Harbor Way, South San Francisco, California 94080, and our telephone
number is (650) 837-7000. In this prospectus, "Exelixis," "we," "us" and "our"
refer to Exelixis, Inc., unless the context otherwise requires.
RISK FACTORS
You should carefully consider the following risk factors, in addition to
other information included or incorporated by reference in this prospectus,
before making an investment decision. The risks described below are not the only
risks we face. Additional risks that we do not yet know of or that we currently
think are immaterial may also impair our business operations. If any of the
events or circumstances described in the following risks actually occurs, our
business may suffer, the trading price of our common stock could decline and you
may lose all or part of your investment.
WE HAVE A HISTORY OF NET LOSSES. WE EXPECT TO CONTINUE TO INCUR NET LOSSES, AND
WE MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY.
We have incurred net losses each year since our inception, including a net
loss of approximately $36.4 million for the six months ended June 30, 2001. As
of that date, we had an accumulated deficit of approximately $166.5 million. We
expect these losses to continue and anticipate negative cash flow for the
foreseeable future. The size of these net losses will depend, in part, on the
rate of growth, if any, in our license and contract revenues and on the level of
our expenses. Our research and development expenditures and general and
administrative costs have exceeded our revenues to date, and we expect to spend
significant additional amounts to fund research and development in order to
enhance our core technologies and undertake product development. As a result, we
expect that our operating expenses will increase significantly in the near term
and, consequently, we will need to generate significant additional revenues to
achieve profitability. Even if we do increase our revenues and achieve
profitability, we may not be able to sustain or increase profitability.
WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE, WHICH MAY NOT BE AVAILABLE TO US.
Our future capital requirements will be substantial, and will depend on
many factors including:
- payments received under collaborative agreements;
- the progress and scope of our collaborative and independent research and
development projects;
- our ability to successfully continue development of a recently acquired
cancer compound;
- our need to expand our other proprietary product development efforts as
well as develop manufacturing and marketing capabilities to
commercialize products; and
- the filing, prosecution and enforcement of patent claims.
We anticipate that our current cash and cash equivalents, short-term
investments and funding to be received from collaborators will enable us to
maintain our currently planned operations for at least the next two years.
Changes to our current operating plan may require us to consume available
capital resources significantly sooner than we expect. For example, our newly
acquired cancer product from our recent relationship with Bristol-Myers Squibb
will require significant resources for development that were not in our
operational plans prior to acquiring the cancer product. We may be unable to
raise sufficient additional capital when we need it, on favorable terms, or at
all. If our capital resources are insufficient to meet future capital
requirements, we will have to raise additional funds. The sale of equity or
convertible debt securities in the future may be dilutive to our stockholders,
and debt financing arrangements may require us to pledge certain assets and
enter into covenants that would restrict our ability to incur further
indebtedness. If we are unable to obtain adequate funds on reasonable terms, we
may be required to curtail operations significantly or to obtain funds by
entering into financing, supply or collaboration agreements on unattractive
terms.
DIFFICULTIES WE MAY ENCOUNTER MANAGING OUR GROWTH MAY DIVERT RESOURCES AND LIMIT
OUR ABILITY TO SUCCESSFULLY EXPAND OUR OPERATIONS.
We have experienced a period of rapid and substantial growth that has
placed, and our anticipated growth in the future will continue to place, a
strain on our administrative and operational infrastructure. As our operations
expand, we expect that we will need to manage multiple locations, including
additional locations outside of the United States, and additional relationships
with various collaborative partners, suppliers and other third parties. Our
ability to manage our operations and growth effectively requires us to continue
to improve our operational, financial and management controls, reporting systems
and procedures. We may not be able to successfully implement improvements to our
management information and control systems in an efficient or timely manner and
may discover deficiencies in existing systems and controls. In addition,
acquisitions involve the integration of different financial and management
reporting systems. We may not be able to successfully integrate the
administrative and operational infrastructure without significant additional
improvements and investments in management systems and procedures.
WE ARE DEPENDENT ON OUR COLLABORATIONS WITH MAJOR COMPANIES. IF WE ARE UNABLE TO
ACHIEVE MILESTONES, DEVELOP PRODUCTS OR RENEW OR ENTER INTO NEW COLLABORATIONS,
OUR REVENUES MAY DECREASE AND OUR ACTIVITIES MAY FAIL TO LEAD TO COMMERCIALIZED
PRODUCTS.
Substantially all of our revenues to date have been derived from
collaborative research and development agreements. Revenues from research and
development collaborations depend upon continuation of the collaborations, the
achievement of milestones and royalties derived from future products developed
from our research. If we are unable to successfully achieve milestones or our
collaborators fail to develop successful products, we will not earn the revenues
contemplated under such collaborative agreements. In addition, some of our
collaborations are exclusive and preclude us from entering into additional
collaborative arrangements with other parties in the area or field of
exclusivity.
We currently have continuing collaborative research agreements with Bayer,
Bristol-Myers Squibb (two agreements), Dow AgroSciences, Aventis and Protein
Design Labs. Our current collaborative agreement with Bayer is scheduled to
expire in 2008, after which it will automatically be extended for one-year terms
unless terminated by either party upon 12-month written notice. Our agreement
permits Bayer to terminate our collaborative activities prior to 2008 upon the
occurrence of specified conditions, such as the failure to agree on key
strategic issues after a period of years or the acquisition of Exelixis by
certain specified third parties. In addition, our agreements with Bayer are
subject to termination at an earlier date if two or more of our Chief Executive
Officer, Chief Scientific Officer, Agricultural Biotechnology Program Leader and
Chief Informatics Officer cease to have a relationship with us within six months
of each other and we are unable to find replacements acceptable to Bayer. The
first of our collaborative agreements with Bristol-Myers Squibb expires in
September 2002. The funded research term of the second collaborative
arrangement, entered into in July 2002, expires in July 2005. Our collaborative
agreement with Dow AgroSciences is scheduled to expire in July 2003, after which
Dow AgroSciences has the option to renew on an annual basis. Our collaborative
research arrangement with Aventis is scheduled to expire in June 2004. Aventis
has the right to terminate the research arrangement prior to the expiration
date, provided that it pays the annual research funding amount due for the year
following termination. Thereafter, the arrangement renews annually unless
Aventis terminates automatic renewal prior to the scheduled date of renewal. The
Aventis arrangement is conducted through a limited liability company,
Agrinomics, which is owned equally by Aventis and Exelixis. Aventis may
surrender its interest in Agrinomics and terminate the related research
collaboration prior to the scheduled expiration upon the payment of the
subsequent year's funding commitment. Bayer and Aventis recently announced an
exclusive negotiation period for the purchase of Aventis by Bayer. We have not
been advised of the status of those discussions nor are we able to predict the
impact of such an acquisition of Aventis, if the acquisition were to occur. Our
agreement with Protein Design Labs is scheduled to expire in May 2003. Protein
Design Labs has a unilateral right to renew for additional 12 and six month
periods thereafter. The five-year term of the convertible promissory note
entered into as part of this arrangement is unaffected by whether or not Protein
Design Labs renews. If these existing agreements are not renewed or if we are
unable to enter into new collaborative agreements on commercially acceptable
terms, our revenues and product development efforts may be adversely affected.
We recently announced the reacquisition, effective February 2002, of future
rights to research programs in metabolism and Alzheimer's disease previously
licensed exclusively to Pharmacia Corporation. The existing agreement with
Pharmacia will terminate as of that date. Pharmacia will retain rights to
targets under the existing agreement selected prior to the reacquisition date,
subject to the payment of milestones for certain of those targets selected and
royalties for future development of products against or using those targets but
will have no other obligations to make payments to the Company, including
approximately $9.0 million in annual funding that would otherwise be payable for
two years if the Company had not elected to reacquire rights to the research at
this time. Although we anticipate entering into future collaborations involving
either or both of these programs, there can be no assurance that we will be able
to enter into new collaborative agreements or that such collaborations will
provide revenues equal to or exceeding those otherwise obtainable under the
Pharmacia collaboration.
CONFLICTS WITH OUR COLLABORATORS COULD JEOPARDIZE THE OUTCOME OF OUR
COLLABORATIVE AGREEMENTS AND OUR ABILITY TO COMMERCIALIZE PRODUCTS.
We intend to conduct proprietary research programs in specific disease and
agricultural product areas that are not covered by our collaborative agreements.
Our pursuit of opportunities in agricultural and pharmaceutical markets could,
however, result in conflicts with our collaborators in the event that any of our
collaborators takes the position that our internal activities overlap with those
areas that are exclusive to our collaborative agreements, and we should be
precluded from such internal activities. Moreover, disagreements with our
collaborators could develop over rights to our intellectual property. In
addition, our collaborative agreements may have provisions that give rise to
disputes regarding the rights and obligations of the parties. Any conflict with
our collaborators could lead to the termination of our collaborative agreements,
delay collaborative activities, reduce our ability to renew agreements or obtain
future collaboration agreements or result in litigation or arbitration and would
negatively impact our relationship with existing collaborators.
We have limited or no control over the resources that our collaborators may
choose to devote to our joint efforts. Our collaborators may breach or terminate
their agreements with us or fail to perform their obligations thereunder.
Further, our collaborators may elect not to develop products arising out of our
collaborative arrangements or may fail to devote sufficient resources to the
development, manufacture, market or sale of such products. Certain of our
collaborators could also become our competitors in the future. If our
collaborators develop competing products, preclude us from entering into
collaborations with their competitors, fail to obtain necessary regulatory
approvals, terminate their agreements with us prematurely or fail to devote
sufficient resources to the development and commercialization of our products,
our product development efforts could be delayed and may fail to lead to
commercialized products.
WE ARE DEPLOYING UNPROVEN TECHNOLOGIES, AND WE MAY NOT BE ABLE TO DEVELOP
COMMERCIALLY SUCCESSFUL PRODUCTS.
You must evaluate us in light of the uncertainties and complexities
affecting a biotechnology company. Our technologies are still in the early
stages of development. Our research and operations thus far have allowed us to
identify a number of product targets for use by our collaborators and our own
internal development programs. We are not certain, however, of the commercial
value of any of our current or future targets, and we may not be successful in
expanding the scope of our research into new fields of pharmaceutical or
pesticide research, or other agricultural applications such as enhancing plant
traits to produce superior crop yields, disease resistance or increased
nutritional content. Significant research and development, financial resources
and personnel will be required to capitalize on our technology, develop
commercially viable products and obtain regulatory approval for such products.
WE HAVE NO EXPERIENCE IN DEVELOPING, MANUFACTURING AND MARKETING PRODUCTS AND
MAY BE UNABLE TO COMMERCIALIZE PROPRIETARY PRODUCTS.
We recently acquired a development compound, an analog to rebeccamycin
("Rebeccamycin"), directed against cancer under our recent collaborative
arrangement with Bristol-Myers Squibb. Clinical development of Rebeccamycin to
date has been conducted by the National Cancer Institute, or the NCI, and
manufacturing of this product has been the responsibility of Bristol-Myers
Squibb. Rebeccamycin has recently completed Phase I clinical studies and is in
Phase I and early Phase II clinical trials being conducted by the NCI. We are
currently in negotiations with the NCI to use the results of the clinical
studies they have conducted and are conducting in order to determine what
additional studies, if any, will be conducted by the NCI or us. There can be no
assurance that we will successfully agree upon further development plans, the
respective rights and obligations of the parties to conduct additional clinical
studies or the timing of such studies. In addition, there can be no assurance
that the clinical studies conducted to date will support further clinical
development or be accepted by the Food and Drug Administration, or FDA, in
conjunction with any application for product approval submitted to the FDA for
Rebeccamycin. Moreover, although Bristol-Myers Squibb has provided the NCI with
sufficient quantities of Rebeccamycin to complete the existing Phase I and II
clinical studies, development necessary for further clinical studies and product
approval will require us to either develop internal manufacturing capabilities
or retain a third party to manufacture the product. In addition, we have
recently hired a new Senior Vice President responsible for clinical development
of this product, as well as any new potential products that we may develop. As
a result, we have limited experience in clinical development and no experience
in manufacturing potential drug products. Accordingly, the development of
Rebeccamycin is subject to significant risk and uncertainty, particularly with
respect to our ability to successfully develop, manufacture and market
Rebeccamycin as a product.
With respect to products developed against our proprietary drug targets, we
will rely on our collaborators to develop and commercialize products based on
our research and development efforts. We have limited or no experience in using
the targets that we identify to develop our own proprietary products. Our recent
success in applying our drug development capabilities to our proprietary targets
in cancer are subject to significant risk and uncertainty, particularly with
respect to our ability to meet currently estimated timelines and goals for
completing preclinical development efforts and filing an Investigational New
Drug Application, or IND, for compounds developed. In order for us to
commercialize products, we would need to significantly enhance our capabilities
with respect to product development, and establish manufacturing and marketing
capabilities, either directly or through outsourcing or licensing arrangements.
We may not be able to enter into such outsourcing or licensing agreements on
commercially reasonable terms, or at all.
SINCE OUR TECHNOLOGIES HAVE MANY POTENTIAL APPLICATIONS AND WE HAVE LIMITED
RESOURCES, OUR FOCUS ON A PARTICULAR AREA MAY RESULT IN OUR FAILURE TO
CAPITALIZE ON MORE PROFITABLE AREAS.
We have limited financial and managerial resources. This requires us to
focus on product candidates in specific industries and forego opportunities with
regard to other products and industries. For example, depending on our ability
to allocate resources, a decision to concentrate on a particular agricultural
program may mean that we will not have resources available to apply the same
technology to a pharmaceutical project. While our technologies may permit us to
work in both areas, resource commitments may require trade-offs resulting in
delays in the development of certain programs or research areas, which may place
us at a competitive disadvantage. Our decisions impacting resource allocation
may not lead to the development of viable commercial products and may divert
resources from more profitable market opportunities. Moreover, our recent
acquisition of Rebeccamycin will require that resources and management time be
directed to clinical development and manufacturing of this potential product.
There can be no assurance that allocating resources and time to these efforts
will allow us to remain competitive in existing programs and potential areas of
future research. The resources dedicated to the development of Rebeccamycin may
limit or hinder our ability to meet currently estimated timelines and goals for
completing preclinical development efforts and filing an IND for our proprietary
compounds.
OUR COMPETITORS MAY DEVELOP PRODUCTS AND TECHNOLOGIES THAT MAKE OURS OBSOLETE.
The biotechnology industry is highly fragmented and is characterized by
rapid technological change. In particular, the area of gene research is a
rapidly evolving field. We face, and will continue to face, intense competition
from large biotechnology and pharmaceutical companies, as well as academic
research institutions, clinical reference laboratories and government agencies
that are pursuing research activities similar to ours. Some of our competitors
have entered into collaborations with leading companies within our target
markets, including some of our existing collaborators. Our future success will
depend on our ability to maintain a competitive position with respect to
technological advances.
Any products that are developed through our technologies will compete in
highly competitive markets. Further, our competitors may be more effective at
using their technologies to develop commercial products. Many of the
organizations competing with us have greater capital resources, larger research
and development staffs and facilities, more experience in obtaining regulatory
approvals and more extensive product manufacturing and marketing capabilities.
As a result, our competitors may be able to more easily develop technologies and
products that would render our technologies and products, and those of our
collaborators, obsolete and noncompetitive.
IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, THIRD PARTIES
MAY BE ABLE TO USE OUR TECHNOLOGY, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO
COMPETE IN THE MARKET.
Our success will depend in part on our ability to obtain patents and
maintain adequate protection of the intellectual property related to our
technologies and products. The patent positions of biotechnology companies,
including our patent position, are generally uncertain and involve complex legal
and factual questions. We will be able to protect our intellectual property
rights from unauthorized use by third parties only to the extent that our
technologies are covered by valid and enforceable patents or are effectively
maintained as trade secrets. The laws of some foreign countries do not protect
intellectual property rights to the same extent as the laws of the U.S., and
many companies have encountered significant problems in protecting and defending
such rights in foreign jurisdictions. We will continue to apply for patents
covering our technologies and products as and when we deem appropriate. However,
these applications may be challenged or may fail to result in issued patents.
Our existing patents and any future patents we obtain may not be sufficiently
broad to prevent others from practicing our technologies or from developing
competing products. Furthermore, others may independently develop similar or
alternative technologies or design around our patents. In addition, our patents
may be challenged, invalidated or fail to provide us with any competitive
advantages.
We rely on trade secret protection for our confidential and proprietary
information. We have taken security measures to protect our proprietary
information and trade secrets, but these measures may not provide adequate
protection. While we seek to protect our proprietary information by entering
into confidentiality agreements with employees, collaborators and consultants,
we cannot assure you that our proprietary information will not be disclosed, or
that we can meaningfully protect our trade secrets. In addition, our competitors
may independently develop substantially equivalent proprietary information or
may otherwise gain access to our trade secrets.
LITIGATION OR THIRD PARTY CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT COULD
REQUIRE US TO SPEND SUBSTANTIAL TIME AND MONEY AND ADVERSELY AFFECT OUR ABILITY
TO DEVELOP AND COMMERCIALIZE PRODUCTS.
Our commercial success depends in part on our ability to avoid infringing
patents and proprietary rights of third parties, and not breaching any licenses
that we have entered into with regard to our technologies. Other parties have
filed, and in the future are likely to file, patent applications covering genes
and gene fragments, techniques and methodologies relating to model systems, and
products and technologies that we have developed or intend to develop. If
patents covering technologies required by our operations are issued to others,
we may have to rely on licenses from third parties, which may not be available
on commercially reasonable terms, or at all.
Third parties may accuse us of employing their proprietary technology
without authorization. In addition, third parties may obtain patents that relate
to our technologies and claim that use of such technologies infringes these
patents. Regardless of their merit, such claims could require us to incur
substantial costs, including the diversion of management and technical
personnel, in defending ourselves against any such claims or enforcing our
patents. In the event that a successful claim of infringement is brought against
us, we may be required to pay damages and obtain one or more licenses from third
parties. We may not be able to obtain these licenses at a reasonable cost, or at
all. Defense of any lawsuit or failure to obtain any of these licenses could
adversely affect our ability to develop and commercialize products.
THE LOSS OF KEY PERSONNEL OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL COULD IMPAIR OUR ABILITY TO EXPAND OUR OPERATIONS.
We are highly dependent on the principal members of our management and
scientific staff, the loss of whose services might adversely impact the
achievement of our objectives and the continuation of existing collaborations.
In addition, recruiting and retaining qualified scientific personnel to perform
future research and development work will be critical to our success. We do not
currently have sufficient executive management and technical personnel to fully
execute our business plan. There is currently a shortage of skilled executives
and employees with technical expertise, and this shortage is likely to continue.
As a result, competition for skilled personnel is intense and turnover rates are
high. Although we believe we will be successful in attracting and retaining
qualified personnel, competition for experienced scientists from numerous
companies, academic and other research institutions may limit our ability to do
so.
Our business operations will require additional expertise in specific
industries and areas applicable to products identified and developed through our
technologies. These activities will require the addition of new personnel,
including management and technical personnel and the development of additional
expertise by existing employees. The inability to attract such personnel or to
develop this expertise could prevent us from expanding our operations in a
timely manner, or at all.
OUR COLLABORATIONS WITH OUTSIDE SCIENTISTS MAY BE SUBJECT TO RESTRICTION AND
CHANGE.
We work with scientific advisors and collaborators at academic and other
institutions that assist us in our research and development efforts. These
scientists are not our employees and may have other commitments that would limit
their availability to us. Although our scientific advisors and collaborators
generally agree not to do competing work, if a conflict of interest between
their work for us and their work for another entity arises, we may lose their
services. In addition, although our scientific advisors and collaborators sign
agreements not to disclose our confidential information, it is possible that
valuable proprietary knowledge may become publicly known through them.
OUR POTENTIAL THERAPEUTIC PRODUCTS ARE SUBJECT TO A LENGTHY AND UNCERTAIN
REGULATORY PROCESS THAT MAY NOT RESULT IN THE NECESSARY REGULATORY APPROVALS,
WHICH COULD ADVERSELY AFFECT OUR ABILITY TO COMMERCIALIZE PRODUCTS.
The FDA must approve any drug or biologic product before it can be marketed
in the U.S. Any products resulting from our research and development efforts
must also be approved by the regulatory agencies of foreign governments before
the product can be sold outside the U.S. Before a new drug application or
biologics license application can be filed with the FDA, the product candidate
must undergo extensive clinical trials, which can take many years and may
require substantial expenditures. The regulatory process also requires
preclinical testing. Data obtained from preclinical and clinical activities are
susceptible to varying interpretations, which could delay, limit or prevent
regulatory approval. In addition, delays or rejections may be encountered based
upon changes in regulatory policy for product approval during the period of
product development and regulatory agency review. The clinical development and
regulatory approval process is expensive and time consuming. Any failure to
obtain regulatory approval could delay or prevent us from commercializing
products.
Our efforts to date have been primarily limited to identifying targets.
Significant research and development efforts will be necessary before any
products resulting from such targets can be commercialized. If regulatory
approval is granted to any of our products, this approval may impose limitations
on the uses for which a product may be marketed. Further, once regulatory
approval is obtained, a marketed product and its manufacturer are subject to
continual review, and discovery of previously unknown problems with a product or
manufacturer may result in restrictions and sanctions with respect to the
product, manufacturer and relevant manufacturing facility, including withdrawal
of the product from the market.
SOCIAL ISSUES MAY LIMIT THE PUBLIC ACCEPTANCE OF GENETICALLY ENGINEERED
PRODUCTS, WHICH COULD REDUCE DEMAND FOR OUR PRODUCTS.
Although our technology is not dependent on genetic engineering, genetic
engineering plays a prominent role in our approach to product development. For
example, research efforts focusing on plant traits may involve either selective
breeding or modification of existing genes in the plant under study. Public
attitudes may be influenced by claims that genetically engineered products are
unsafe for consumption or pose a danger to the environment. Such claims may
prevent our genetically engineered products from gaining public acceptance. The
commercial success of our future products will depend, in part, on public
acceptance of the use of genetically engineered products including drugs and
plant and animal products.
The subject of genetically modified organisms has received negative
publicity, which has aroused public debate. For example, certain countries in
Europe are considering regulations that may ban products or require express
labeling of products that contain genetic modifications or are "genetically
modified." Adverse publicity has resulted in greater regulation internationally
and trade restrictions on imports of genetically altered products. If similar
action is taken in the U.S., genetic research and genetically engineered
products could be subject to greater domestic regulation, including stricter
labeling requirements. To date, our business has not been hampered by these
activities. However, such publicity in the future may prevent any products
resulting from our research from gaining market acceptance and reduce demand for
our products.
LAWS AND REGULATIONS MAY REDUCE OUR ABILITY TO SELL GENETICALLY ENGINEERED
PRODUCTS THAT OUR COLLABORATORS OR WE DEVELOP IN THE FUTURE.
Our collaborators or we may develop genetically engineered agricultural and
animal products. The field-testing, production and marketing of genetically
engineered products are subject to regulation by federal, state, local and
foreign governments. Regulatory agencies administering existing or future
regulations or legislation may prevent us from producing and marketing
genetically engineered products in a timely manner or under technically or
commercially feasible conditions. In addition, regulatory action or private
litigation could result in expenses, delays or other impediments to our product
development programs and the commercialization of products.
The FDA has released a policy statement stating that it will apply the same
regulatory standards to foods developed through genetic engineering as it
applies to foods developed through traditional plant breeding. Genetically
engineered food products will be subject to premarket review, however, if these
products raise safety questions or are deemed to be food additives. Our products
may be subject to lengthy FDA reviews and unfavorable FDA determinations if they
raise questions regarding safety or our products are deemed to be food
additives.
The FDA has also announced that it will not require genetically engineered
agricultural products to be labeled as such, provided that these products are as
safe and have the same nutritional characteristics as conventionally developed
products. The FDA may reconsider or change its policies, and local or state
authorities may enact labeling requirements, either of which could have a
material adverse effect on our ability or the ability of our collaborators to
develop and market products resulting from our efforts.
WE USE HAZARDOUS CHEMICALS AND RADIOACTIVE AND BIOLOGICAL MATERIALS IN OUR
BUSINESS. ANY CLAIMS RELATING TO IMPROPER HANDLING, STORAGE OR DISPOSAL OF THESE
MATERIALS COULD BE TIME CONSUMING AND COSTLY.
Our research and development processes involve the controlled use of
hazardous materials, including chemicals, radioactive and biological materials.
Our operations produce hazardous waste products. We cannot eliminate the risk of
accidental contamination or discharge and any resultant injury from these
materials. Federal, state and local laws and regulations govern the use,
manufacture, storage, handling and disposal of hazardous materials. We may be
sued for any injury or contamination that results from our use or the use by
third parties of these materials, and our liability may exceed our insurance
coverage and our total assets. Compliance with environmental laws and
regulations may be expensive, and current or future environmental regulations
may impair our research, development and production efforts.
In addition, our collaborators may use hazardous materials in connection
with our collaborative efforts. To our knowledge, their work is performed in
accordance with applicable biosafety regulations. In the event of a lawsuit or
investigation, however, we could be held responsible for any injury caused to
persons or property by exposure to, or release of, these hazardous materials use
by these parties. Further, we may be required to indemnify our collaborators
against all damages and other liabilities arising out of our development
activities or products produced in connection with these collaborations.
WE EXPECT THAT OUR QUARTERLY RESULTS OF OPERATIONS WILL FLUCTUATE, AND THIS
FLUCTUATION COULD CAUSE OUR STOCK PRICE TO DECLINE, CAUSING INVESTOR LOSSES.
Our quarterly operating results have fluctuated in the past and are likely
to fluctuate in the future. A number of factors, many of which we cannot
control, could subject our operating results and stock price to volatility,
including:
- recognition of license, milestone or other fees;
- payments of licensing fees to third parties;
- acceptance of our technologies and platforms;
- the success rate of our discovery efforts leading to milestones and
royalties;
- the introduction of new technologies or products by our competitors;
- the timing and willingness of collaborators to commercialize our
products;
- our ability to enter into new collaborative relationships;
- the termination or non-renewal of existing collaborations;
- general and industry-specific economic conditions that may affect our
collaborators' research and development expenditures; and
- exposure to fluctuations in foreign currency.
A large portion of our expenses, including expenses for facilities,
equipment and personnel, are relatively fixed in the short term. In addition, we
expect operating expenses to increase significantly during the next year.
Accordingly, if our revenues decline or do not grow as anticipated due to the
expiration of existing contracts or our failure to obtain new contracts, our
inability to meet milestones or other factors, we may not be able to
correspondingly reduce our operating expenses. Failure to achieve anticipated
levels of revenues could therefore significantly harm our operating results for
a particular fiscal period.
Due to the possibility of fluctuations in our revenues and expenses, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance. As a result, in some future quarters,
our operating results may not meet the expectations of stock market analysts and
investors, which could result in a decline in the price of our stock.
OUR STOCK PRICE MAY BE EXTREMELY VOLATILE
.
We believe the trading price of our common stock will remain highly
volatile and may fluctuate substantially due to factors such as the following:
- the announcement of new products or services by us or our competitors;
- quarterly variations in our or our competitors' results of operations;
- failure to achieve operating results projected by securities analysts;
- changes in earnings estimates or recommendations by securities analysts;
- developments in the biotechnology industry;
- acquisitions of other companies or technologies; and
- general market conditions and other factors, including factors unrelated
to our operating performance or the operating performance of our
competitors. These factors and fluctuations, as well as general
economic, political and market conditions, may materially adversely
affect the market price of our common stock.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted. A securities class action suit against us could result in
substantial costs and divert management's attention and resources, which could
have a material and adverse effect on our business.
WE ARE EXPOSED TO RISKS ASSOCIATED WITH ACQUISITIONS.
We have made, and may in the future make, acquisitions of, or significant
investments in, businesses with complementary products, services and/or
technologies. Acquisitions involve numerous risks, including, but not limited
to:
- difficulties and increased costs in connection with integration of the
personnel, operations, technologies and products of acquired companies;
- diversion of management's attention from other operational matters;
- the potential loss of key employees of acquired companies;
- the potential loss of key collaborators of the acquired companies;
- lack of synergy, or the inability to realize expected synergies,
resulting from the acquisition;
- exposure to fluctuations in foreign currency;
- differences in foreign laws, business practices, statutes, regulations
and tax provisions; and
- acquired intangible assets becoming impaired as a result of
technological advancements or worse-than-expected performance of the
acquired company.
Mergers and acquisitions are inherently risky, and the inability to effectively
manage these risks could materially and adversely affect our business, financial
condition and results of operations.
IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE COULD FACE
SUBSTANTIAL LIABILITIES THAT EXCEED OUR RESOURCES.
We may be held liable if any product our collaborators or we develop causes
injury or is found otherwise unsuitable during product testing, manufacturing,
marketing or sale. Although we intend to obtain general liability and product
liability insurance, this insurance may be prohibitively expensive, or may not
fully cover our potential liabilities. Inability to obtain sufficient insurance
coverage at an acceptable cost or to otherwise protect ourselves against
potential product liability claims could prevent or inhibit the
commercialization of products developed by our collaborators or us.
OUR FACILITIES ARE LOCATED NEAR KNOWN EARTHQUAKE FAULT ZONES, AND THE OCCURRENCE
OF AN EARTHQUAKE OR OTHER CATASTROPHIC DISASTER COULD CAUSE DAMAGE TO OUR
FACILITIES AND EQUIPMENT, WHICH COULD REQUIRE US TO CEASE OR CURTAIL OPERATIONS.
Given our location, our facilities are vulnerable to damage from
earthquakes. We are also vulnerable to damage from other types of disasters,
including fire, floods, power loss, communications failures and similar events.
If any disaster were to occur, our ability to operate our business at our
facilities would be seriously, or potentially completely, impaired. In addition,
the unique nature of our research activities could cause significant delays in
our programs and make it difficult for us to recover from a disaster. The
insurance we maintain may not be adequate to cover our losses resulting from
disasters or other business interruptions. Accordingly, an earthquake or other
disaster could materially and adversely harm our ability to conduct business.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market, the market price of our common stock could fall. These sales
also might make it more difficult for us to sell equity or equity-related
securities in the future at a time and price that we deemed appropriate. In
October 2000, a significant number of shares of our common stock held by
existing stockholders became freely tradable, subject in some instances to the
volume and other limitations of Rule 144. Sales of these shares and other
shares of common stock held by existing stockholders could cause the market
price of our common stock to decline.
SOME OF OUR EXISTING STOCKHOLDERS CAN EXERT CONTROL OVER US, AND MAY NOT MAKE
DECISIONS THAT ARE IN THE BEST INTERESTS OF ALL STOCKHOLDERS.
Due to their combined stock holdings, our officers, directors and principal
stockholders (stockholders holding more than 5% of our common stock) acting
together, may be able to exert significant influence over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. In addition, this concentration of ownership
may delay or prevent a change in control of our company, even when a change may
be in the best interests of our stockholders. In addition, the interests of
these stockholders may not always coincide with our interests as a company or
the interests of other stockholders. Accordingly, these stockholders could cause
us to enter into transactions or agreements that you would not approve.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus and the documents incorporated by
reference are forward-looking statements. These statements are based on our
current expectations, assumptions, estimates and projections about our business
and our industry, and involve known and unknown risks, uncertainties and other
factors that may cause our or our industry's results, levels of activity,
performance or achievement to be materially different from any future results,
levels of activity, performance or achievements expressed or implied in or
contemplated by the forward-looking statements. Words such as "believe,"
"anticipate," "expect," "intend," "plan," "will," "may," "should," "estimate,"
"predict," "potential," "continue" or the negative of such terms or other
similar expressions, identify forward-looking statements. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. Our actual
results could differ materially from those anticipated in such forward-looking
statements as a result of several factors more fully described under the caption
"Risk Factors" and in the documents incorporated by reference. The
forward-looking statements made in this prospectus relate only to events as of
the date on which the statements are made.
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 stockholder. We will not
receive any proceeds from the sale of these shares of common stock.
SELLING STOCKHOLDER
We are registering the shares covered by this prospectus on behalf of the
selling stockholder named in the table below. We issued all of the shares to the
selling stockholder in a private placement transaction. We have registered the
shares to permit the selling stockholder and its pledgees, donees, transferees
or other successors-in-interest that receive their shares from the selling
stockholder as a gift, partnership distribution or other non-sale related
transfer after the date of this prospectus to resell the shares. The selling
stockholder has agreed not to offer, sell, contract to sell, pledge, grant any
option to purchase, make any short sale or otherwise dispose of the shares
covered by this prospectus without our consent until July 17, 2002.
The following table sets forth the name of the selling stockholder, the
number of shares owned by it, the number of shares that may be offered under
this prospectus, the number of shares of our common stock owned by the selling
stockholder as of July 31, 2001, and the number of shares of our common stock
owned by the selling stockholder after this offering is completed. On July 17,
2001, in connection with the issuance of the shares covered by this prospectus,
the selling stockholder entered into a cancer research collaboration and license
agreement with us, and thus is one of our corporate partners. The number of
shares in the column "Number of Shares Being Offered" represents all of the
shares that the selling stockholder may offer under this prospectus. The selling
stockholder may sell some, all or none of the shares registered hereunder.
Except for the lockup described above, we do not know how long the selling
stockholder will hold the shares before selling them. The shares offered by this
prospectus may be offered from time to time by the selling stockholder.
Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the SEC under the Securities Exchange Act of 1934. Unless
otherwise noted, none of the share amounts set forth below represent more than
1% of our outstanding stock as of July 31, 2001, adjusted as required by rules
promulgated by the SEC. The percentages of shares owned prior to the offering
are based on 49,161,649 shares of our common stock outstanding on July 31, 2001,
giving effect to the sale of 600,600 shares to the selling stockholder in the
private placement.
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE OWNED AFTER THE
OFFERING NUMBER OF OFFERING (1)
----------------- SHARES BEING ---------------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
- ---------------------------- ------- -------- ------------ ------ -------
Bristol-Myers Squibb Company . . . . . 600,600 1.22% 600,600 0 *
(1) Does not constitute a commitment to sell any or all of the stated number of
shares of common stock. The number of shares offered shall be determined from
time to time by the selling stockholder at its sole discretion. The number of
shares to be owned by the selling stockholder after the offering, assuming the
sale of all of the stated number of shares of common stock, will be less than
one percent of its outstanding shares after the offering.
PLAN OF DISTRIBUTION
The selling stockholder may sell the shares from time to time. The selling
stockholder will act independently of us in making decisions regarding the
timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
privately negotiated transactions. The selling stockholder may effect these
transactions by selling the shares to or through broker-dealers. The selling
stockholder may sell its shares in one or more of, or a combination of:
- a block trade in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker-dealer as principal and resale by a broker-dealer
for its account under this prospectus;
- an exchange distribution in accordance with the rules of an exchange; -
ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, the amendment or supplement
will disclose:
- the name of the selling stockholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which the shares were sold;
- the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
- that a broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
- other facts material to the transaction.
The selling stockholder has agreed not to offer, sell, contract to sell,
pledge, grant any option to purchase, make any short sale or otherwise dispose
of the shares covered by this prospectus without our consent until July 17,
2002. From time to time, the selling stockholder may transfer, pledge, donate or
assign its shares of common stock to lenders or others and each of such persons
will be deemed to be a "selling stockholder" for purposes of this prospectus.
The number of shares of common stock beneficially owned by the selling
stockholder will decrease as and when it takes such actions. The plan of
distribution for the selling stockholder's shares of common stock sold under
this prospectus will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be selling stockholders hereunder.
Upon being notified by a selling stockholder that a donee or pledgee intends to
sell more than 500 shares, we will file a supplement to this prospectus.
The selling stockholder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with the selling stockholder.
The selling stockholder also may sell shares short and redeliver the shares to
close out short positions. The selling stockholder may enter into option or
other transactions with broker-dealers that require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer the shares under this prospectus. The selling stockholder also may loan
or pledge the shares to a broker-dealer. The broker-dealer may sell the loaned
shares, or upon a default the broker-dealer may sell the pledged shares under
this prospectus.
In effecting sales, broker-dealers engaged by the selling stockholder may
arrange for other broker-dealers to participate in the resales. Broker-dealers
or agents may receive compensation in the form of commissions, discounts or
concessions from the selling stockholder. Broker-dealers or agents may also
receive compensation from the purchasers of the shares for whom they act as
agents or to whom they sell as principals, or both. Compensation as to a
particular broker-dealer might be in excess of customary commissions and will be
in amounts to be negotiated in connection with the sale. A broker-dealer or
agent and any other participating broker-dealer or the selling stockholder may
be deemed to be an "underwriter" within the meaning of Section 2(11) of the
Securities Act in connection with sales of the shares. Accordingly, any
commission, discount or concession received by them and any profit on the resale
of the shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act. Because the selling stockholder may be
deemed to be an "underwriter" within the meaning of Section 2(11) of the
Securities Act, the selling stockholder will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities covered
by this prospectus that qualify for sale under Rule 144 promulgated under the
Securities Act may be sold under Rule 144 rather than under this prospectus. The
selling stockholder has advised that it has not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of the shares. There is no underwriter or coordinating broker acting in
connection with the proposed sale of shares by the selling stockholder.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in some
states the shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of the distribution. In addition, the
selling stockholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholder. We will make copies of
this prospectus available to the selling stockholder and have informed the
selling stockholder of the need to deliver copies of this prospectus to
purchasers at or prior to the time of any sale of the shares.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholder will pay all commissions and
discounts, if any, attributable to the sales of the shares. The selling
stockholder may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against specific liabilities,
including liabilities arising under the Securities Act. We have agreed to
indemnify the selling stockholder against specific liabilities in connection
with the offering of the shares, including liabilities arising under the
Securities Act.
We have agreed to maintain the effectiveness of this registration statement
until the earlier of such time as all the shares have been sold by the selling
stockholder or such time as all of the shares may be sold pursuant to Rule
144(k) under the Securities Act. The selling stockholder may sell all, some or
none of the shares offered by this prospectus.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Cooley Godward LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
2000, 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.
WHERE YOU CAN FIND MORE INFORMATION ABOUT EXELIXIS
You should rely only on the information provided or incorporated by
reference in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of the document.
We have filed with the SEC a resale registration statement on Form S-3 to
register the common stock offered by this prospectus. However, this prospectus
does not contain all of the information contained in the registration statement
and the exhibits and schedules to the registration statement. We strongly
encourage you to carefully read the registration statement and the exhibits and
schedules to the registration statement.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549 or
at the SEC's other public reference rooms located in New York, New York and
Chicago, Illinois. You can request copies of these documents by contacting the
SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-
0330 for further information on the public reference rooms. Our SEC filings are
also available to the public from the SEC's website at www.sec.gov.
-----------
The SEC allows us to "incorporate by reference" the information contained
in documents that we file with them, which means that we can disclose important
information to you by referring to those documents. The information incorporated
by reference is considered to be part of this prospectus. Information in this
prospectus supersedes information incorporated by reference that we filed with
the SEC prior to the date of this prospectus, while information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 2000;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2001;
4. Our Current Reports on Form 8-K, filed on May 15, 2001 pursuant to Item
2 of such report, and filed on July 18, 2001 and July 26, 2001 pursuant
to Item 5 of such report; and
5. The description of our common stock set forth in our registration
statement on Form 8-A, filed with the SEC on April 6, 2000.
We will furnish without charge to you, on written or oral request, a copy
of any or all of the documents incorporated by reference, including exhibits to
these documents. You should direct any requests for documents to Exelixis, Inc.,
Attention: Investor Relations, 170 Harbor Way, P.O. Box 511, South San
Francisco, California 94083, telephone: (650) 837-7000.
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU SHOULD
RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. YOU SHOULD NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS
DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE ON THE
COVER.
600,600 SHARES
EXELIXIS, INC.
COMMON STOCK
_________________________________
---------------------------------
PROSPECTUS
_________________________________
________ ___, 2001
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All of the amounts shown are estimates except the SEC registration fee.
SEC registration fee $ 2,347
Legal fees and expenses 75,000
Accounting fees and expenses 10,000
Miscellaneous expenses 27,653
________
Total $115,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, Exelixis has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act.
Exelixis' bylaws also provide that Exelixis will indemnify its directors and
executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by Delaware law.
As permitted by Delaware law, Exelixis' amended and restated certificate of
incorporation provides that no director of Exelixis will be personally liable to
Exelixis or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability:
- for any breach of duty of loyalty to Exelixis or to its stockholders;
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
- for unlawful payment of dividends or unlawful stock repurchases or
redemptions under Section 174 of the Delaware General Corporation Law;
or
- for any transaction from which the director derived an improper personal
benefit.
Exelixis' amended and restated certificate of incorporation further
provides that Exelixis must indemnify its directors and executive officers and
may indemnify its other officers, employees and agents to the fullest extent
permitted by Delaware law. Exelixis believes that indemnification under its
amended and restated certificate of incorporation covers negligence and gross
negligence on the part of indemnified parties.
Exelixis has entered into indemnification agreements with each of its directors
and certain officers. These agreements, among other things, require Exelixis to
indemnify each director and officer for certain expenses including attorneys'
fees, judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by or in the right of Exelixis,
arising out of the person's services as a director or officer to Exelixis, any
subsidiary of Exelixis or to any other company or enterprise for which the
person provides services at Exelixis' request.
At present, there is no pending litigation or proceeding involving a director or
officer of Exelixis as to which indemnification is being sought nor is Exelixis
aware of any threatened litigation that may result in claims for indemnification
by any officer or director.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Amended and Restated Certificate of Incorporation (1)
4.2 Restated Bylaws (1)
4.3 Specimen Stock Certificate (1)
5.1 Opinion of Cooley Godward LLP
10.29 Form of Stock Purchase Agreement, dated as of July 17, 2001, by and
between Exelixis, Inc. and Bristol-Myers Squibb Company
23.1 Consent of Independent Accountants
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
___________________
(1) Incorporated by reference to Exelixis' Registration Statement on Form
S-1, as amended (File No. 333-96335), originally filed with the SEC on February
7, 2000.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities it offers, and the offering of the
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of this
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act 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 the securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC this form of indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against these
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by a director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of this issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Exelixis, Inc.
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of South San Francisco, State of California, on August
27, 2001.
EXELIXIS, INC.
By: /s/ George A. Scangos
--------------------------------------
George A. Scangos, Ph.D.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints GEORGE A. SCANGOS and GLEN Y. SATO and
each or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments and registration statements filed pursuant to Rule
462) to this Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ George A. Scangos President, Chief Executive Officer August 27, 2001
- -------------------------- and Director
George A. Scangos,Ph.D. (Principal Executive Officer)
/s/ Glen Y. Sato Chief Financial Officer August 27, 2001
- -------------------------- (Principal Financial and Accounting
Glen Y. Sato Officer)
/s/Stelios Papadopoulos Chairman of the Board of Directors August 27, 2001
- --------------------------
Stelios Papadopoulos, Ph.D.
- -------------------------- Director
Charles Cohen, Ph.D.
- -------------------------- Director
Jurgen Drews, M.D.
/s/ Geoffrey Duyk Director August 27, 2001
- --------------------------
Geoffrey Duyk, M.D., Ph.D.
/s/ Jason S. Fisherman Director August 27, 2001
- --------------------------
Jason S. Fisherman, M.D.
/s/ Jean-Francois Formela Director August 27, 2001
- --------------------------
Jean-Francois Formela, M.D.
/s/ Vincent T. Marchesi Director August 27, 2001
- --------------------------
Vincent T. Marchesi,
M.D., Ph.D.
/s/ Peter Stadler Director August 27, 2001
- --------------------------
Peter Stadler, Ph.D.
- -------------------------- Director
Lance Willsey, M.D.
INDEX TO EXHIBITS
EXHIBIT NUMBER
-------
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.1 Amended and Restated Certificate of Incorporation (1)
4.2 Restated Bylaws (1)
4.3 Specimen Stock Certificate (1)
5.1 Opinion of Cooley Godward LLP
10.29 Form of Stock Purchase Agreement, dated as of July 17, 2001, by and
between Exelixis, Inc. and Bristol-Myers Squibb Company
23.1 Consent of Independent Accountants
23.2 Consent of Cooley Godward LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
___________________
(1) Incorporated by reference to Exelixis' Registration Statement on Form
S-1, as amended (File No. 333-96335), originally filed with the SEC on
February 7, 2000.
EXHIBIT 5.1
August 27, 2001
Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Exelixis, 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 600,600 shares of the Company's
common stock, $.001 par value (the "Shares"), issued in connection with the
Stock Purchase Agreement, dated as of July 17, 2001, by and between the Company
and Bristol-Myers Squibb Company.
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus included therein, your Amended and
Restated Certificate of Incorporation and Bylaws 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 have been validly issued, and are 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.
Very truly yours,
Cooley Godward LLP
By: /s/ Robert L. Jones
----------------------
Robert L. Jones
EXHIBIT 10.29
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of July 17, 2001 (the "Effective Date") by and between EXELIXIS, INC., a
Delaware corporation having its principal place of business at 170 Harbor Way,
P.O. Box 511, South San Francisco, California 94083 (including, its
subsidiaries, the "Company"), and BRISTOL-MYERS SQUIBB COMPANY, a Delaware
corporation having its principal place of business at Route 206 and Province
Line Road, Princeton, NJ 08543 ("Purchaser"). The Company and Purchaser are
sometimes referred to herein individually as a "Party" and collectively as the
"Parties."
RECITALS
WHEREAS, the Company and Purchaser have entered into an arrangement to
collaborate in certain business and technology matters pursuant to which they
are parties to a Cancer Collaboration Agreement and a License Agreement, each
dated of even date herewith (such Cancer Collaboration Agreement and such
License Agreement, together with all ancillary documents thereto and hereto, are
hereinafter collectively referred to as the "Transaction Documents") and desire
to further this relationship through the purchase of an equity investment in the
Company by Purchaser; and
WHEREAS, Purchaser and the Company have each determined that it is in the
best interests of their respective stockholders for Purchaser to purchase from
the Company newly issued shares of common stock, par value $.001 per share, of
the Company (the "Common Stock"), at a 100% premium to market with an aggregate
purchase price of approximately Twenty Million Dollars ($20,000,000) upon the
Closing (as defined in Section 2.1(a)).
AGREEMENT
NOW THEREFORE, the parties agree as follows:
1. AUTHORIZATION AND SALE OF SHARES
------------------------------------
1.1 AUTHORIZATION. The Company has authorized the issuance and sale of the
Shares pursuant to the terms and conditions hereof.
1.2 ISSUANCE AND SALE. Subject to the terms and conditions hereof, on the
Closing Date, the Company will issue and sell to Purchaser, and Purchaser will
purchase from the Company the number of shares of Common Stock (rounded down to
the nearest whole number) (the "Shares") equal to the number derived by dividing
(a) Twenty Million Dollars ($20,000,000) by (b) (i) the average closing price
for the Common Stock for the fifteen (15) trading day period commencing on the
twentieth (20th) trading day prior to and including the Closing Date (as defined
in Section 2.1(a)), as reported on the Nasdaq Stock Market (the "ACP"),
multiplied by (ii) two (such purchase being hereinafter referred to as the
"Purchase"). The purchase price per Share shall be the ACP multiplied by two.
$20,000,000
Thus, Shares = ----------------
(ACP * 2)
For example, if the ACP during the applicable period was $17.00, the number of
shares purchased pursuant to this Agreement would be:
$20,000,000
Sample shares = ---------------
($17 * 2)
or, 588,235.29, which rounds down to 588,235 Shares at an aggregate purchase
price of $19,999,990.00 (i.e., 588,235 x $34).
2. CLOSINGS; DELIVERY
-------------------
2.1 CLOSING.
(A) CLOSING DATE. The closing of the purchase and sale of the Shares
(the "Closing") shall be held at 10:00 a.m. California time on the Effective
Date (the "Closing Date"), or at such other time or date as the Company and
Purchaser may agree in writing.
(B) LOCATION. The Closing shall be held at the Company's principal
offices, 170 Harbor Way, South San Francisco, California or at such other place
as the Company and Purchaser may agree in writing.
2.2 DELIVERY. Subject to the terms and conditions of this Agreement, at the
Closing the Company will deliver to Purchaser a copy of correspondence from the
Company to the Company's stock transfer agent dated no later than the Closing
Date, which directs the Company's transfer agent to prepare and deliver a stock
certificate representing the Shares as soon as possible, and shall take such
further actions as are necessary to cause the stock certificate representing the
Shares to be delivered to Purchaser as soon as practicable following the
Closing. The purchase price as determined pursuant to Section 1.2 hereof shall
be paid by wire transfer in immediately available funds to the following
account:
Silicon Valley Bank, Santa Clara, CA
ABA Routing: 121-140-399
Acct Number: 33001-60643
FBO: Exelixis, Inc.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
--------------------------------------------------
The Company hereby represents and warrants to Purchaser as follows:
3.1 CORPORATE ORGANIZATION AND AUTHORITY. The Company:
(A) is a corporation duly organized, validly existing, authorized to
exercise all its corporate powers, rights and privileges, and in good standing
in the State of Delaware;
(B) has the corporate power and authority to own, lease and operate
its properties and to carry on its business as now conducted and as proposed to
be conducted; and
(C) is qualified as a foreign corporation and in good standing in the
State of California and in all other jurisdictions in which such qualification
is required; provided, however, that the Company need not be qualified in a
jurisdiction in which its failure to qualify would not have a Material Adverse
Effect. When used in connection with the Company, the term "Material Adverse
Effect" means any change or event that is or is reasonably likely to be
materially adverse to the financial condition or operations of the Company.
3.2 AUTHORIZATION. All necessary corporate action on the part of the
Company for the execution, delivery and performance of all obligations under
this Agreement, for the consummation of the transactions contemplated hereby and
for the issuance and delivery of the Shares has been taken, and this Agreement
constitutes a valid and legally binding obligation of the Company enforceable in
accordance with its terms.
3.3 VALIDITY OF SHARES. The Shares, when issued, sold and delivered in
accordance with the terms and for the consideration set forth in this Agreement,
shall be duly and validly issued and outstanding, fully paid, nonassessable, and
free and clear of all pledges, liens, encumbrances and restrictions other than
the restrictions on transfer set forth in Section 4.3.
3.4 NO CONFLICTS; REQUIRED FILINGS.
(A) The business and operations of the Company have been and are being
conducted in accordance with all applicable laws, rules and regulations of all
governmental authorities, except for such violations of applicable laws, rules
and regulations which would not, individually or in the aggregate, have a
Material Adverse Effect. The Company is not in violation of its Certificate of
Incorporation or Bylaws nor in violation of, or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangement,
except for such defaults which would not, individually or in the aggregate, have
a Material Adverse Effect, or subject to any restriction which would prohibit
the Company from entering into or performing its obligations under this
Agreement.
(B) The execution, delivery and performance of this Agreement by the
Company will not result in any violation of, be in conflict with, or constitute
a default under, with or without the passage of time (assuming no changes in
currently existing laws) or the giving of notice of (i) any provision of the
Company's Certificate of Incorporation or Bylaws as effective on the date hereof
and on the Closing Date; (ii) any provision of any judgment, decree or order to
which the Company is a party or by which it is bound; (iii) any material
contract, obligation or commitment to which the Company is a party or by which
it is bound; or (iv) to the Company's knowledge, any statute, rule or
governmental regulation applicable to the Company.
(C) The execution, delivery and performance of this Agreement by the
Company does not and will not require any consent, approval, authorization or
permit of, or filing with or without notification to, any governmental or
regulatory authority, United States or foreign, except (i) for applicable
requirements, if any, of the Securities and Exchange Act of 1934, as amended,
including the rules and regulations promulgated thereunder (the "Exchange Act"),
or securities laws of the various states of the United States (the "Blue Sky
Laws"), and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the transactions contemplated under this
Agreement, or otherwise prevent the Company from performing its obligations
under this Agreement, and would not individually or in the aggregate, have a
Material Adverse Effect.
3.5 SEC FILINGS; FINANCIAL STATEMENTS.
(A) The Company has filed all forms, reports and documents required to
be filed by it with the Securities and Exchange Commission (the "SEC") since
April 11, 2000 and has heretofore made available to Purchaser, in the form filed
with the SEC, its (i) Annual Report on Form 10-K, as amended, for the period
ended December 31, 2000, (ii) Quarterly Report on Form 10-Q for the period ended
March 31, 2001, (iii) proxy statement for the annual meeting of stockholders
held on May 22, 2001, (vi) Registration Statement on Form S-3 filed June 1,
2001, and (vii) Current Reports on Form 8-K filed on May 15, 2001. The Company
has filed additional reports with the SEC that may be accessed at www.sec.gov.
The forms, reports and other documents referred to in this subsection 3.5(a) are
referred to collectively as the "SEC Reports." The SEC Reports (A) were prepared
in accordance with the requirements of the Exchange Act, and (B) did not at the
time they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Furthermore, the SEC Reports, when read as a whole, as
updated by the Company's press releases and as of the date hereof, do not
contain any untrue statements of a material fact and do not omit to state a
material fact necessary to make the statements therein, not misleading. The
Company is eligible to register the offer and resale of the Shares by Purchaser
on a Registration Statement on Form S-3 or a successor form.
(B) Each of the financial statements (including, in each case, any
notes thereto) contained in the SEC Reports (collectively, the "Financial
Statements") was prepared (i) in the case of Quarterly Reports on Form 10-Q, in
accordance with United States generally accepted accounting principles as
promulgated under Regulation S-X by the SEC, with such principles applied on a
consistent basis throughout the periods indicated, and (ii) in the case of the
Annual Report on Form 10-K, in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and comply in all material respects with the rules and regulations of
the SEC, including without limitation Regulation S-X. The Financial Statements
comply in all material respects with applicable accounting requirements, and
each fairly presented the financial position, results of operations and changes
in the financial position of the Company as of the respective dates thereof and
for the respective periods indicated therein.
3.6 PRIVATE OFFERING. Neither the Company nor anyone acting on its behalf
has offered any of the Shares or any similar securities for issuance or sale to,
or solicited any offer to acquire any of the same from, anyone so as to make the
issuance and sale of the Shares subject to the registration requirements of
Section 5 of the Securities Act of 1933, as amended, including the rules and
regulations promulgated thereunder (the "Securities Act").
3.7 CHANGES. Except as set forth in the SEC Reports and as described
in the Schedule of Exceptions attached hereto, the Company has not, to the
extent material to the Company (i) incurred any debts, obligations or
liabilities, absolute, accrued or contingent, whether due or to become due,
other than in the ordinary course of business other than the convertible loan in
principal amount of $30 million issued to Protein Design Labs, Inc. on May 22,
2001, (ii) mortgaged, pledged or subjected to lien, charge, security interest or
other encumbrance any of its assets, tangible or intangible, other than pursuant
to certain equipment financing arrangements disclosed in its SEC Reports, (iii)
waived any debt owed to the Company, (iv) satisfied or discharged any lien,
claim or encumbrance or paid any obligation other than in the ordinary course of
business, (v) declared, set aside or paid any dividends or other distribution
with respect to the capital stock of the Company, (vi) changed any material
contract or arrangement by which the Company or any of its assets is bound,
(vii) sold, assigned or transferred any of its patents, trademarks, copyrights,
trade secrets or other intangible assets, or (viii) entered into any transaction
other than in the usual and ordinary course of business. Other than as may be
set forth in the SEC Reports, there has been no material adverse change in the
financial condition or business, assets or properties, liabilities or operating
results of the Company since the date of the financial statements contained in
the SEC Reports other than normal recurring operating losses, and there has not
occurred any loss, destruction or damage affecting the business, properties,
prospects or financial condition of the Company, whether or not insured, which
has or may have a Material Adverse Effect. For purposes of this Section 3.7
only, the term "material" shall mean a single transaction or event, or a group
of related transactions or events, involving debts, obligations, liabilities or
assets with a cost or value in excess of $1 million, or cumulative transactions
and events involving debts, obligations, liabilities and assets with a
cumulative total value or cost in excess of $5 million, with respect to those
items covered by this Section 3.7.
3.8 LITIGATION. Other than as described in the SEC Reports, there are no
legal actions, suits, arbitrations or other legal, administrative or
governmental proceedings pending or, to the Company's knowledge, threatened
against the Company or its properties, assets or business, and neither the
Company nor any of its officers is aware of any facts which might result in or
form the basis for any such action, suit or other proceeding, in each case
which, if adversely determined, would, individually or in the aggregate, affect
the execution and delivery of this Agreement or the performance by the Company
of its obligations hereunder, or have a Material Adverse Effect. The Company is
not in default with respect to any judgment, order or decree of any court or any
governmental agency or instrumentality, which default would have a Material
Adverse Effect.
3.9 CAPITAL STOCK. At May 31, 2001, the authorized capital stock of
the Company consisted of 100,000,000 shares of Common Stock, of which 48,533,903
shares were outstanding, and 10,000,000 shares of preferred stock, $.001 par
value per share, of which no shares were outstanding. As of May 31, 2001,
8,007,229 shares of Common Stock were reserved for issuance under the Company's
stock option and purchase plans, 621,068 shares were reserved for issuance in
connection with the Agritope 1997 Stock Award Plan and up to 929,478 shares were
reserved for issuance in connection with the Share Exchange and Assignment
Agreement by and among the Company and the stock and option holders of Artemis
Pharmaceuticals GmbH. Except as set forth in the SEC Reports (including
outstanding offer letters or commitments to issue Common Stock options under
existing employee benefits plans), there are no options, warrants, conversion
privileges, preemptive rights, or other rights or agreements issued or binding
on the Company for the purchase or acquisition of any shares of its capital
stock other than an aggregate of 496,220 shares of Common Stock reserved for
issuance pursuant to outstanding warrants. Except for shares of capital stock
issued pursuant to employee benefit plans, (a) no shares of capital stock of the
Company have been issued following May 31, 2001, and (b) all of the outstanding
shares of the Company's capital stock are validly issued, fully paid and
nonassessable and were issued in compliance with all applicable federal and
state securities laws. Except as set forth in the SEC Reports, the Company has
not agreed to register the sale of any of its securities under the Securities
Act, and there are no outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, conversion rights or other agreements or
arrangements of any character or nature whatever under which the Company is or
may be obligated to issue its Common Stock, preferred stock or warrants or
options to purchase Common Stock or preferred stock. Except as set forth in the
SEC Reports, no holder of any security of the Company is entitled to any rights
of first refusal, preemptive or similar rights to purchase any securities of the
Company (including, without limitation, the Shares).
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER; RESTRICTIONS ON TRANSFER OF
-------------------------------------------------------------------------
THE SHARES
-----------
4.1 REPRESENTATIONS AND WARRANTIES. Purchaser hereby represents and
warrants to the Company as follows:
(A) CORPORATE ORGANIZATION AND AUTHORITY. Purchaser is a corporation
duly organized, validly existing, authorized to exercise all its corporate
powers, rights and privileges, and in good standing under the laws of the state
of Delaware.
(B) AUTHORIZATION. Purchaser has taken all necessary corporate action
necessary for the execution, delivery and performance of all obligations under
this Agreement and the consummation of the transactions contemplated hereby and
upon execution and delivery, this Agreement constitutes a valid and legally
binding obligation of Purchaser enforceable in accordance with its terms.
(C) INVESTMENT ONLY. This Agreement is made with Purchaser in reliance
upon its representations to the Company, which by Purchaser's execution of this
Agreement Purchaser hereby confirms, that the Shares to be received by Purchaser
will be acquired for investment for Purchaser's own account, not as a nominee or
agent, and not with a view to the sale or distribution of any part thereof, and
that Purchaser has no present intention of selling, granting any participation
in, or otherwise distributing the same. By executing this Agreement, Purchaser
further represents that it has no contract, undertaking, agreement, or
arrangement with any person to sell, transfer, or grant participation to such
person or to any third person, with respect to any of the Shares.
(D) EXPERIENCE. Purchaser represents that it: (i) has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Shares; (ii) has
received all the information it has requested from the Company and considers
necessary or appropriate for deciding whether to purchase the Shares; (iii) has
had the opportunity to discuss the Company's business management, and financial
affairs with its management, (iv) has the ability to bear the economic risks of
its prospective investment; and (v) is able, without materially impairing its
financial condition, to hold the Shares for an indefinite period of time and to
suffer a complete loss on its investment.
(E) ACCREDITED PURCHASER. Purchaser presently qualifies, and will as
of the Closing Date qualify, as an "accredited investor" within the meaning of
Regulation D of the rules and regulations promulgated under the Securities Act.
4.2 NO REGISTRATION. Purchaser understands that the offering of the Shares
pursuant to this Agreement will not be registered under the Securities Act on
the grounds that the offering and sale of securities contemplated by this
Agreement are exempt from registration pursuant to Section 4(2) of the
Securities Act, and that the Company's reliance upon such exemption is
predicated upon Purchaser's representations set forth in this Agreement.
4.3 LIMITATIONS ON TRANSFERABILITY. Purchaser covenants that in no event
will it dispose of any of the Shares (other than pursuant to Rule 144
promulgated by the SEC under the Securities Act ("Rule 144") or any similar or
analogous rule) unless and until (a) Purchaser shall have notified the Company
of the proposed disposition, and (b) if requested by the Company, Purchaser
shall have furnished the Company with an opinion of counsel satisfactory in form
and substance to the Company and the Company's counsel, in the reasonable
exercise of their judgment, to the effect that (i) such disposition will not
require registration under the Securities Act and (ii) appropriate action
necessary for compliance with the Securities Act and any applicable state,
local, or foreign law has been taken.
4.4 LEGEND. Each certificate representing the Shares shall be endorsed with
substantially the following legends:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER OR
ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND DELIVERY REQUIREMENTS OF
SUCH ACT. THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A
LOCK-UP AGREEMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED PRIOR TO
JULY 17, 2002 WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER. The Company
need not register a transfer of any Shares and may instruct its transfer
agent not to register the transfer of the Shares, unless the conditions
specified in the foregoing legends are satisfied.
5. CONDITIONS TO CLOSING
-----------------------
5.1 CONDITIONS TO PURCHASE OBLIGATIONS OF PURCHASER. The obligation of
Purchaser to consummate the Purchase is subject to the satisfaction or
Purchaser's waiver, on or prior to the Closing Date, of each of the following
conditions:
(A) The Company shall have received an opinion of Cooley Godward LLP,
dated the Closing Date, in substantially the form attached hereto as Exhibit A.
(B) The Company and Purchaser shall have obtained all consents
(including all governmental or regulatory consents, approvals or authorizations
required in connection with the valid execution and delivery of this Agreement),
permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Purchase under this Agreement.
(C) No federal or state governmental authority or other agency or
commission or court of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any law, rule, regulation, executive order,
decree, injunction or other order which is then in effect and has the effect of
making illegal the purchase of, or payment for, the Shares by Purchaser or
otherwise preventing the consummation of any of the transactions contemplated
under this Agreement.
(D) There shall be no temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
the Purchase issued by any court which remains in effect, no litigation seeking
the issuance of such an order or injunction and no claims or actions threatened
or pending which have a reasonably likely prospect of resulting in such order or
injunction preventing the consummation of the Purchase.
(E) The Company and Purchaser shall have executed and delivered the
Transaction Documents.
5.2 CONDITIONS TO PURCHASE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to sell and issue the Shares is subject to the satisfaction or the
Company's waiver, on or prior to the Closing Date, of each of the following
conditions:
(A) Purchaser's representations and warranties contained in this
Agreement are true and correct as of the Closing Date as though made on and as
of that date.
(B) The Company and Purchaser shall have obtained all consents
(including all governmental or regulatory consents, approvals or authorizations
required in connection with the valid execution and delivery of this Agreement),
permits and waivers necessary or appropriate for consummation of the
transactions contemplated by the Purchase under this Agreement.
(C) No state governmental authority or other agency or commission or
state court of competent jurisdiction shall have enacted, issued, promulgated,
enforced, or entered any law, rule, regulation, executive order, decree,
injunction or other order which is then in effect and has the effect of making
illegal the purchase of, or payment for, the Shares by Purchaser or otherwise
preventing the consummation of any of the transactions contemplated under this
Agreement.
(D) The Company and Purchaser shall have executed and delivered the
Transaction Documents.
6. ADDITIONAL AGREEMENTS; LOCKUP
-------------------------------
6.1 REGISTRATION REQUIREMENTS.
(A) REGISTRATION OF THE SHARES.
(I) Using its diligent best efforts, and as soon as
reasonably practicable after the Closing Date (but in no event later than
forty-five (45) days after the Closing Date), the Company shall file with the
SEC a Registration Statement on Form S-3 covering the Shares (the "Registration
Statement"), and shall secure the effectiveness of the Registration Statement as
soon as reasonably practicable thereafter.
(II) Subject to Section 6.1(c), the Company shall be
obligated to maintain the effectiveness of the Registration Statement until the
earlier of (A) the sale of all of the Shares or (B) the time all otherwise
unsold Shares may be sold pursuant to Rule 144(k).
(III) If the Company is unable to cause the Registration
Statement to become effective prior to the first anniversary of the Effective
Date, the Company shall, if Purchaser so requests in writing not later than
ninety (90) days after the expiration of such one year period, purchase from
Purchaser the Shares for a purchase price equal to the purchase price for the
Shares. Such purchase shall be effected not later than fifteen (15) days after
the Company's receipt of Purchaser's request therefor.
(B) REGISTRATION EXPENSES. The Company shall pay all Registration
Expenses (as defined below) in connection with any registration, qualification
or compliance hereunder, and Purchaser shall pay all Selling Expenses (as
defined below) that relate to the Shares of Purchaser to be registered.
"Registration Expenses" shall mean all expenses, except for Selling Expenses,
incurred by the Company in complying with the registration provisions herein
described, including, without limitation, all registration, qualification,
compliance and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and
accounting fees (including the expense of any special audits incident to or
required by any such registration). "Selling Expenses" shall mean all fees of
counsel for the Purchaser, selling commissions, underwriting fees and stock
transfer taxes applicable to the Shares.
(C) REGISTRATION SUSPENSION. The Company shall, upon (A) the issuance
by the SEC of a stop order suspending the effectiveness of the Registration
Statement or the initiation of proceedings with respect to the Registration
Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence
of any event or the existence of any fact (a "Material Event") as a result of
which the Registration Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or the related
prospectus (the "Prospectus") shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or existence
of any pending corporate development that, in the reasonable discretion of the
Company, makes it appropriate to suspend the availability of the Registration
Statement and the Prospectus,
(I) in the case of clause (B) above, subject to the next
sentence, as promptly as practicable prepare and file, if necessary pursuant to
applicable law, a post-effective amendment to the Registration Statement or a
supplement to the Prospectus or any document incorporated therein by reference
or file any other required document that would be incorporated by reference into
the Registration Statement and Prospectus so that the Registration Statement
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and such prospectus does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, as thereafter
delivered to the purchasers of the Shares being sold thereunder, and, in the
case of a post-effective amendment to the Registration Statement, subject to the
next sentence, use its reasonable efforts to cause it to be declared effective
as promptly as is practicable, and
(II) give notice to Purchaser that the availability of the
Registration Statement is suspended (a "Deferral Notice") and, upon receipt of
any Deferral Notice, Purchaser agrees not to sell any Shares pursuant to the
Registration Statement until such Purchaser's receipt of copies of the
supplemented or amended prospectus provided for in clause (i) above, or until it
is advised in writing by the Company that the Prospectus may be used, and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. The Company will use all
reasonable efforts to ensure that the use of the Prospectus may be resumed (x)
in the case of clause (A) and (B) above, as promptly as is practicable, and (y)
in the case of clause (C) above, as soon as, in the sole judgment of the
Company, public disclosure of such Material Event would not be prejudicial to or
contrary to the interests of the Company or, if necessary to avoid unreasonable
burden or expense, as soon as practicable thereafter. The Company shall be
entitled to exercise its right under this Section 6.1(d) to suspend the
availability of the Registration Statement or any Prospectus no more than three
(3) times in any twelve-month period, and any such period during which the
availability of the Registration Statement and any Prospectus is suspended (the
"Deferral Period") shall not exceed thirty (30) days. The period of any such
Deferral Period shall be added to the period of time the Company has agreed to
keep the Registration Statement effective. The Company shall use all
commercially reasonable efforts to limit the duration and number of any Deferral
Periods. Purchaser hereby agrees that upon receipt of any Deferral Notice from
the Company, Purchaser shall, and shall cause each of its officers, directors,
employees, affiliates, advisors, agents and representatives to, keep
confidential all nonpublic information set forth in such notice including the
existence or terms of such Deferral Notice.
(D) REGISTRATION PROCEDURES. In the case of any registration effected
by the Company pursuant to this Section 6.1, the Company will use all
commercially reasonable efforts:
(I) to respond promptly to any comments of the SEC relating
to the Registration Statement, and to prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement;
(II) to furnish such number of Registration Statements and
other documents incident thereto, including any amendment of or supplement to
the Registration Statement or prospectus, as any holder of securities covered by
the Registration Statement may reasonably request to facilitate the public sale
or other disposition of all or any of the Shares;
(III) list the class of Company stock in which the Shares are
included on the Nasdaq National Market.
(IV) to file the documents required of the Company and
otherwise use all commercially reasonable efforts to maintain requisite blue sky
clearance in (A) all U.S. jurisdictions in which any of the Shares are
originally sold and (B) all other states specified in writing by Purchaser;
provided, however, that, as to clause (B), the Company shall not be required to
- -------- --------
qualify to do business in any state in which it is not now so qualified or has
not so consented except as may be required by the Securities Act; and
(V) to keep Purchaser advised in writing as to the filing and
completion of each registration, qualification and compliance.
(VI) to advise Purchaser promptly at any time when the
prospectus (including any supplements thereto) contained in the Registration
Statement then in effect under this Section 6.1 includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
(E) INDEMNIFICATION.
(I) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless Purchaser (and its officers, directors, employees,
affiliates and agents), from and against any and all losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) to which
any of them may become subject (under the Securities Act or otherwise) with
respect to any registration, qualification or compliance under this Section 6.1
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of, or are based upon (i) any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, in any registration statement (on the effective date
thereof), prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or (ii) any violation by the Company
of any applicable rule or regulation under the Securities Act relating to any
action or inaction required of the Company in connection with such registration,
qualification or compliance, or (iii) any failure by the Company to fulfill any
undertaking included in the registration statement or related documents or to
fulfill any of its obligations under Section 6.1 hereof. The Company will, as
incurred, reimburse the indemnified parties herein for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such claims, actions or proceedings in respect thereof; provided, however,
-------- -------
that the Company shall not be liable in any such case to the extent that such
loss, claim, damage, liability or expense arises out of, or is based upon (A)
any untrue statement or omission of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in any registration
statement (on the effective date thereof), prospectus, offering circular or
other document (including any related registration statement, notification or
the like) incident to any such registration, qualification or compliance, made
in reliance upon and in conformity with written information furnished to the
Company by Purchaser specifically for use in preparation of such document, or
(B) an untrue statement or omission in any prospectus that is corrected in any
subsequent prospectus, or supplement or amendment thereto, that was delivered to
Purchaser prior to the sale or sales from which a loss or liability arose.
(II) INDEMNIFICATION BY PURCHASER. Purchaser agrees to
indemnify and hold harmless the Company (and its officers, directors, employees,
affiliates and agents), from and against any losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) to which
any of them may become subject (under the Securities Act or otherwise) with
respect to any registration, qualification or compliance under this Section 6.1
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of, or are based upon (A) any untrue
statement or omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, in any registration statement (on the effective
date thereof), prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
Purchaser specifically for use in preparation of such document; provided,
--------
however, that Purchaser shall not be liable in any such case for any (i) untrue
- -------
statement or omission in any registration statement, prospectus or other such
document which statement has been corrected, in writing, by Purchaser and
delivered to the Company ten (10) days before the sale from which such loss
occurred, (B) an untrue statement or omission in any prospectus delivered by
Purchaser that is corrected in any subsequent prospectus, or supplement or
amendment thereto, and delivered to Purchaser prior to the sale or sales from
which a loss or liability arose, or (C) any failure by Purchaser to fulfill any
of its obligations under Section 6.1 hereof. Purchaser will, as incurred,
reimburse the indemnified parties herein for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
claims, actions or proceedings in respect thereof.
(III) INDEMNIFICATION PROCEDURE. Promptly after receipt by
any indemnified party of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying party
pursuant to this Section 6.1, such indemnified party shall notify the
indemnifying party in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall have been brought against an indemnified party and the indemnifying
party shall have been notified thereof, the indemnifying party shall be entitled
to participate therein, and, to the extent that it shall wish, to assume the
defense of such action, with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to such indemnified party of the
indemnifying party's election to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof; provided, however, that if there exists or shall exist a conflict of
-------- -------
interest that would make it inappropriate in the reasonable judgment of the
indemnified party for the same counsel to represent both the indemnified party
and such indemnifying party or any affiliate or associate thereof, the
indemnified party shall be entitled to retain its own counsel at the expense of
such indemnifying party. Failure of any indemnifying party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this Section 6.1(e). No indemnifying party, in the defense of any such
claim or action, except with the consent of each indemnified party, shall
consent to entry of any judgment or enter into any settlement.
(IV) OTHER LIABILITY. The obligations of the Company and
Purchaser under this Section 6.1 shall be in addition to any liability which the
Company and Purchaser may otherwise have.
6.2 FILINGS. The Company covenants and agrees to use all commercially
reasonable efforts to: (i) make and keep public information available, as those
terms are understood and defined in Rule 144, until the date on which the Shares
may be sold pursuant to Rule 144(k) (or any successor rule); and (ii) file with
the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and Exchange Act.
6.3 OTHER ACTIONS. Upon the terms and subject to the conditions
hereof, each of the Parties hereto shall in good faith, use commercially
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the transaction
contemplated under this Agreement, including, without limitation, using
commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company as are necessary for the execution,
delivery and performance of this Agreement. The Company covenants and agrees to
use its best efforts to aid in the removal of all restrictive legends affixed to
stock certificates representing the Shares on an expedited basis in accordance
with applicable law, including without limitation: (i) upon the request of
Purchaser, causing the Company's counsel to render (at the Company's cost) an
opinion of counsel required to be delivered by Purchaser pursuant to Section 4.3
of this Agreement; and (ii) providing such information as requested by the
Company's registrar or transfer company.
6.4 LOCKUP. Purchaser agrees that for a period of twelve months following
the Closing Date, Purchaser and its affiliated entities shall not offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of any Shares held by Purchaser or grant any option or other
rights to any person to acquire any Shares without the prior written consent of
the Company; provided, however, this Section 6.4 will terminate and be of no
force and effect (a) in the event the Company is in default under this
Agreement, or (b) effective upon a Change in Control of the Company. A "Change
in Control" of the Company shall be deemed to occur if the Company sells,
conveys or otherwise disposes of all or substantially all of its property or
business, or merges or consolidates with any other corporation or business
entity (other than a wholly-owned subsidiary of the Company) or effects any
other transaction or series of transactions in which (I) the members of the
Board of Directors of the Company prior to the transaction or series of
transactions constituting the putative Change in Control event do not constitute
a majority of the members of the Board of Directors of the enterprise following
completion of the transaction or series of transactions constituting the
putative Change in Control event; and (II) the stockholders of the Company
immediately prior thereto own less than a majority of the outstanding voting
securities of the Company (or its successor or parent) immediately thereafter.
7. MISCELLANEOUS
-------------
7.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
Agreement between the parties hereto with respect to the within subject matter
and supersedes all previous Agreements, whether written or oral. This Agreement
shall not be changed or modified orally, but only by an instrument in writing
signed by both parties.
7.2 GOVERNING LAW; CHOICE OF LAW. This Agreement and the validity,
performance, construction and effect of this Agreement shall be governed in all
respects by the laws of the State of Delaware, with the exception of its
provisions governing the conflict of laws.
7.3 ASSIGNMENT. This Agreement may not be assigned by either Party without
the prior written consent of the other, except that the Company may assign this
Agreement to a party which acquires all or substantially all of the Company's
business, whether by merger, sale of assets or otherwise. A merger,
consolidation or other reorganization shall be deemed to constitute an
assignment.
7.4 NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be deemed to have been sufficiently given for all purposes if mailed by
first class certified or registered mail, postage prepaid, express delivery
service or personally delivered. Unless otherwise specified in writing, the
mailing addresses of the Parties shall be as described below.
For Exelixis: Exelixis, Inc.
170 Harbor Way
P.O. Box 511
South San Francisco, CA 94083
Attention: General Counsel
With a copy to: Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Robert L. Jones, Esq.
For BMS: Bristol-Myers Squibb Company
P.O. Box 4000
Route 206 and Province Line Road
Princeton, NJ 08543-4000
Attention: Vice President and Senior Counsel,
Pharmaceutical Research Institute and
Worldwide Business Development
Facsimile No. (609) 252-4232
With a copy to: Reed Smith LLP
Princeton Forrestal Village
136 Main Street - Suite 250
Princeton, NJ 08543-7839
Attn: Edward P. Bromley III
Facsimile No. (609) 951-0824
7.5 WAIVER. The failure of either Party to assert a right hereunder or to
insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other Party. None of the terms,
covenants and conditions of this Agreement can be waived except by the written
consent of the Party waiving compliance.
7.6 FINDER'S FEES.
(A) The Company (i) represents and warrants that it has retained no
investment bankers, finders or brokers in connection with the transactions
contemplated by this Agreement and (ii) hereby agrees to indemnify and to hold
Purchaser harmless of and from any costs, expenses or liability for any
commission or compensation in the nature of a finder's fee to any investment
banker, finder, broker or other person or firm (including legal fees and other
costs and expense of defending against such liability or asserted liability) for
which it, or any of its employees or representatives, are responsible.
(B) Purchaser (i) represents and warrants that it has retained no
investment bankers, finders or brokers in connection with the transactions
contemplated by this Agreement and (ii) hereby agrees to indemnify and hold the
Company harmless of and from any costs, expenses or liability for any commission
or compensation in the nature of a finder's fee to any investment banker,
finder, broker or other person or firm (including legal fees and other costs and
expense of defending against such liability or asserted liability) for which it,
or any of its employees or representatives, are responsible.
7.7 EXPENSES. The Company and Purchaser shall each bear its respective
expenses and legal fees incurred with respect to this Agreement and the
transaction contemplated hereby.
7.8 HEADINGS. The captions used herein are inserted for convenience of
reference only and shall not be construed to create obligations, benefits, or
limitations.
7.9 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which taken together shall be regarded as one and the same instrument. Execution
and delivery of this Agreement by exchange of facsimile copies bearing the
facsimile signature of a Party hereto shall constitute a valid and binding
execution and delivery of this Agreement by such Party. Such facsimile copies
shall constitute enforceable original documents.
7.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein shall survive the execution and delivery of this
Agreement, any investigation at any time made by or on behalf of Purchaser, and
the sale and purchase of the Shares and payment therefor until the earlier of
(a) the resale of any Shares issued pursuant to this Agreement, or (b) the first
anniversary of the Effective Date.
7.11 SEVERABILITY. If any provision of this Agreement is declared invalid
by a court of last resort or by any court from the decision of which an appeal
is not taken within the time provided by law, then and in such event, this
Agreement will be deemed to have been terminated only as to the portion thereof
which relates to the provision invalidated by that decision, but this Agreement,
in all other respects will remain in force; provided, however, that if the
provision so invalidated is essential to this Agreement as a whole, then the
Parties shall negotiate in good faith to amend the terms hereof as nearly as
practical to carry out the original intent of the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly
authorized representatives as of the date first written above.
Company: Purchaser:
Exelixis, Inc. Bristol-Myers Squibb Company
By: By:
----------------------------- ------------------------------
Title: Title:
-------------------------- ---------------------------
By:
------------------------------
Title:
---------------------------
Section 3.7 Schedule of Exceptions
The Company regularly enters into negotiations for and discussions regarding
collaborative arrangements, an acquisition or merger or other similar
transactions, which negotiations and discussions may include terms involving the
sale, assignment or transfer of the Company's patents, trademarks, copyrights,
trade secrets or other intangible assets, and may further include discussions
regarding a sale or transfer of substantial portions of its assets, properties
or business.
EXHIBIT A
FORM OF COOLEY GODWARD LLP OPINION
COOLEY GODWARD LLP
Broomfield, CO
ATTORNEYS AT LAW 720 566-4000
Five Palo Alto Square Denver, CO
3000 El Camino Real 303 606-4800
Palo Alto, CA
94306-2155 Kirkland, WA
Main 650 843-5000 425 893-7700
Menlo Park, CA
ROBERT L. JONES 650 843-5100
650 843-5034
jonesrl@cooley.com
July [___], 2001
Bristol-Myers Squibb Company
Route 206 and Providence Line Road
Princeton, New Jersey 08543
RE: EXELIXIS, INC. PRIVATE PLACEMENT
Ladies and Gentlemen:
We have acted as counsel for Exelixis, Inc., a Delaware corporation (the
"Company"), in connection with the issuance and sale to you of an aggregate of
[__________] shares (the "Shares") of the Company's common stock, par value
$.001 per share (the "Common Stock"), under the Stock Purchase Agreement, dated
as of the date hereof (the "Purchase Agreement"), by and between the Company and
you (the "Purchaser"). We are rendering this opinion pursuant to Section [___]
of the Purchase Agreement. Except as otherwise defined herein, capitalized
terms used but not defined herein have the respective meanings given to them in
the Purchase Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in, and made
pursuant to, the Purchase Agreement by the various parties thereto, and have
examined and relied upon the originals or copies of such records, documents,
certificates, opinions, memoranda and other instruments as in our judgment are
necessary or appropriate to enable us to render the opinions expressed below.
As to certain factual matters, we have relied upon certificates of officers of
the Company and have not sought to independently verify such matters. Where we
render an opinion "to the best of our knowledge" or concerning an item "known to
us" or our opinion otherwise refers to "our knowledge," it is based solely upon
(i) an inquiry of attorneys within this firm who perform legal services for the
Company; (ii) review of certificates executed by an officer of the Company
covering such matters; and (iii) such other investigation, if any, that we
specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Purchase Agreement) where authorization, execution and
delivery are prerequisites to the effectiveness of such documents. We have also
assumed: that all individuals executing and delivering documents in their
individual capacities had the legal capacity to so execute and deliver; that the
Purchase Agreement is an obligation binding upon you; that you have received all
documents that you were to receive under the Purchase Agreement; if you are a
corporation or other entity, that you have filed any required California
franchise tax or income tax returns and have paid any required California
franchise or income taxes; and that there are no extrinsic agreements or
understandings among the parties to the Purchase Agreement that would modify or
interpret the terms thereof or the respective rights or obligations of the
parties thereunder.
We express no opinion herein concerning any laws other than the laws of the
State of California, the General Corporation Law of the State of Delaware and
the federal securities laws of the United States. We express no opinion as to
whether the laws of any particular jurisdiction apply, and no opinion that the
laws of any jurisdiction other than those identified above are applicable to the
subject matter hereof. We are not rendering any opinion as to compliance with
any antifraud law, rule or regulation relating to securities or the sale or
issuance thereof.
With regard to our opinion in paragraph 1 below, we have relied solely on (i) a
certificate of an officer of the Company as to the states in which the Company
owns or leases property or otherwise has any assets, employees or
representatives authorized to bind it by contract and (ii) an examination of
certificates of good standing or documents of similar import issued by the
jurisdictions indicated in such officer's certificate; we have made no further
investigation.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware and is
duly qualified to transact business and is in good standing in California
and, to the best of our knowledge, in each United States jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect
on the Company.
2. The Company has the corporate power and authority to own or lease its
property and to conduct its business as currently conducted and as
described in the SEC Reports, and to enter into the Purchase Agreement,
issue the Shares and to carry out and perform its obligations under the
Purchase Agreement.
3. The Purchase Agreement has been duly authorized, executed and delivered by,
and is a legal, valid and binding agreement of, the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles
of equity and except as rights to indemnification and contribution in
Section [__] thereof may be limited under applicable law.
4. The Shares have been duly authorized and, when issued and delivered in
accordance with the terms of the Purchase Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or, to our knowledge, similar rights.
5. The execution and delivery of the Purchase Agreement by the Company and the
filing of the Registration Statement pursuant to the Purchase Agreement
(assuming such filing occurs at the time of Closing) will not result in any
violation of, be in conflict with, or constitute a default under, with or
without the passage of time (assuming no changes in currently existing
laws) or the giving of notice of (i) any provision of the Company's
Certificate of Incorporation or Bylaws; (ii) any provision of any judgment,
decree or order to which the Company is a party or by which it is bound and
of which we have knowledge; or (iii) any material contract, obligation or
commitment to which the Company is a party and which has been filed by the
Company as an exhibit to the SEC Reports.
6. Other than as described in the SEC Reports, to the best of our knowledge,
there are no legal actions, suits, arbitrations or other legal,
administrative or governmental proceedings pending or threatened against
the Company or its properties, assets or business, which, if adversely
determined, would, individually or in the aggregate, affect the execution
and delivery of the Purchase Agreement or have a material adverse effect on
the Company.
7. Based upon the representations, warranties and agreements of the Purchaser
in Section [4] of the Purchase Agreement, the offer and sale of the Shares
to the Purchaser under the Purchase Agreement are exempt from the
registration requirements of the Securities Act.
These opinions are limited to the matters expressly stated herein and are
rendered solely for your benefit and may not be quoted or relied upon for any
other purpose or by any other person, firm or entity without our prior written
consent.
Very truly yours,
Cooley Godward llp
Robert L. Jones
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 February 2, 2001 relating to the
consolidated financial statements, which appears in Exelixis, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2000. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
San Jose, California
August 23, 2001