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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 12, 2001
REGISTRATION NO. 333-64228
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST EFFECTIVE AMENDMENT NO. 1 ON
FORM S-3
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ATHEROGENICS, INC.
(Exact name of Registrant as specified in its charter)
GEORGIA 58-2108232
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8995 WESTSIDE PARKWAY
ALPHARETTA, GEORGIA 30004
(678) 336-2500
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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RUSSELL M. MEDFORD, M.D., PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATHEROGENICS, INC.
8995 WESTSIDE PARKWAY
ALPHARETTA, GEORGIA 30004
(678) 336-2500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
LEONARD A. SILVERSTEIN, ESQ.
LONG ALDRIDGE & NORMAN LLP
SUNTRUST PLAZA, SUITE 5300
303 PEACHTREE STREET
ATLANTA, GEORGIA 30308-3201
(404) 527-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THIS POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3 TO THE REGISTRATION
STATEMENT ON FORM S-1 IS BEING FILED PURSUANT TO RULE 401(C) UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, TO CONVERT THE REGISTRATION STATEMENT ON
FORM S-1 (REGISTRATION NO. 333-64228) INTO A REGISTRATION STATEMENT ON FORM S-3
AND TO REPORT CERTAIN RECENT DEVELOPMENTS. THE REGISTRANT SATISFIES THE
REGISTRANT REQUIREMENTS FOR THE USE OF FORM S-3, AND THE OFFERING SATISFIES THE
TRANSACTION REQUIREMENTS OF ITEM 3 OF GENERAL INSTRUCTION I.B. OF FORM S-3. THE
PROSPECTUS CONTAINED IN THIS FORM S-3 SUPERCEDES THE PROSPECTUS CONTAINED IN THE
FORM S-1.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDERS NAMED IN THIS PROSPECTUS 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 NEITHER WE NOR THE SELLING SHAREHOLDERS ARE SOLICITING OFFERS TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 12, 2001
PROSPECTUS
3,585,000 SHARES
[ATHEROGENICS LOGO]
COMMON STOCK
This prospectus relates to resales of up to 3,585,000 shares of common
stock previously issued by AtheroGenics, Inc. AtheroGenics will not receive any
proceeds from the sale of the shares.
The selling shareholders identified in this prospectus, or their
pledgees, donees, transferees or other successors-in-interest, may offer the
shares from time to time through public or private transactions at prevailing
market prices, at prices related to prevailing market prices or at privately
negotiated prices.
We do not know when or in what amount a selling shareholder may offer
shares for sale. The selling shareholders may not sell any or all of the shares
offered by this prospectus.
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Our common stock is traded on the Nasdaq National Market under the
symbol AGIX. On October 9, 2001, the closing sale price of our common stock on
Nasdaq was $2.99 per share. We urge you to obtain current market quotations for
our common stock.
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The principal executive offices of AtheroGenics are located at 8995
Westside Parkway, Alpharetta, Georgia 30004 and our telephone number is (678)
336-2500.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is October ____, 2001.
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TABLE OF CONTENTS
PAGE
DESCRIPTION OF ATHEROGENICS...............................................1
RECENT DEVELOPMENTS.......................................................2
SECURITIES OFFERED........................................................3
RISK FACTORS..............................................................3
FORWARD-LOOKING STATEMENTS...............................................10
USE OF PROCEEDS..........................................................11
SELLING SHAREHOLDERS.....................................................11
DILUTION.................................................................13
PLAN OF DISTRIBUTION.....................................................13
LEGAL MATTERS............................................................15
EXPERTS..................................................................15
WHERE YOU CAN FIND ADDITIONAL INFORMATION................................16
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE........................16
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DESCRIPTION OF ATHEROGENICS
AtheroGenics is an emerging pharmaceutical company focused on the
discovery, development and commercialization of novel drugs for the treatment of
chronic inflammatory diseases, such as atherosclerosis, rheumatoid arthritis and
asthma. We designed our lead product candidate, AGI-1067, as an oral drug to
benefit patients with coronary artery disease, which is atherosclerosis of the
blood vessels of the heart. Atherosclerosis is a common disease that results
from inflammation and the buildup of plaque in arterial blood vessel walls. We
recently completed testing AGI-1067 in a Phase II clinical trial for the
prevention and treatment of restenosis, the reoccurrence of narrowing of the
coronary arteries following angioplasty in patients with coronary artery
disease. We are also progressing with the development of our internally
discovered compound, AGIX-4207, as an agent to treat the signs and symptoms of
rheumatoid arthritis.
We have combined our basic research in the role of blood vessels in
inflammation with applied research techniques into an integrated process to
discover new drugs for treating diseases of chronic inflammation. We call this
technology our vascular protectant or v-protectant platform. Our first
v-protectant drug candidates from this platform technology block the production
of VCAM-1, a protein that binds to white blood cells that accumulate along the
walls of blood vessels and prolong inflammation. Inflammation normally protects
the body from infection, injury and disease, but chronic inflammation often
causes damage in a misdirected attempt at repair and healing. Diseases of
chronic inflammation that we are targeting with our v-protectants include:
- atherosclerosis, including coronary artery disease, which
affects more than 12.4 million people in the United States and
is the leading cause of death in the United States; physicians
perform more than one million angioplasties annually
worldwide;
- rheumatoid arthritis, which affects 2.1 million people in the
United States and is more common in women than men; the
economic cost of rheumatoid arthritis and related diseases
exceeds $65 billion annually in the United States;
- asthma, which affects more than 17 million people in the
United States; its prevalence and economic impact are both
increasing; and
- solid organ transplant rejection, which affects more than
200,000 people in the United States and is a major factor
contributing to organ shortage.
Our v-protectants are drugs that block a class of signals inside of
cells called oxidant signals. Oxidant signals inside of the cells that line
blood vessels lead to the production of selected proteins including VCAM-1.
These proteins attract white blood cells to the site of chronic inflammation.
White blood cells destroy infective agents and promote healing but can also
amplify chronic inflammation. Diseases marked by chronic inflammation are the
therapeutic targets of several classes of currently available drugs. Some drugs
are directed toward reduction of risk factors for the underlying disease, such
as high blood cholesterol in atherosclerosis. Other drugs provide symptomatic
relief. Among these agents are anti-inflammatory drugs and drugs that decrease
the body's natural defenses. These drugs, called immuno-suppressants, decrease
chronic inflammation, but increase the risk of infection. None of these drugs
treats the underlying cause of chronic inflammation. In contrast, we believe
that our v-protectants can suppress chronic inflammation by blocking production
of VCAM-1 without undermining the body's ability to protect itself against
infection.
AGI-1067 is our v-protectant candidate that is most advanced in
clinical development. We recently announced encouraging preliminary results of a
Phase II clinical trial, CART-1 (Canadian Antioxidant Restenosis Trial), that
assessed in 305 patients the safety and effectiveness of AGI-1067 for the
treatment of post-angioplasty restenosis. An analysis of the results indicated
that six months after angioplasty, the blood vessels of patients who received
AGI-1067 had larger openings, measured as luminal diameters of their coronary
arteries, than those who received placebo. Our Phase II clinical trial followed
the successful completion of seven Phase I clinical trials comprising more than
150 men and women.
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In March 2001, we commenced a Phase I clinical trial to assess the
safety and tolerability of AGIX-4207, our second v-protectant clinical
candidate, in healthy volunteers. We are developing AGIX-4207, a novel oral
agent for the treatment of the signs and symptoms of rheumatoid arthritis. In
October 2001, we also commenced a Phase I clinical trial to assess the safety
and tolerability of AGIX-4207 I.V., a novel intravenously administered drug for
the treatment of rheumatoid arthritis. We have identified other potential
v-protectant product candidates to treat asthma and solid organ transplant
rejection. We are evaluating these v-protectant product candidates for clinical
development. We plan to develop these v-protectants rapidly and may seek, when
available, regulatory fast track status to expedite development and
commercialization. We will continue to expand upon our v-protectant technology.
In June 2001, we entered into a worldwide exclusive license agreement
with National Jewish Medical and Research Center of Denver, Colorado to discover
and develop novel therapeutics based on MEK kinases, enzymes that participate in
a broad range of cellular activities, including the response to cytokines, and
related technology for the treatment of inflammation. Cytokines are small
proteins or biological factors that are released by cells and have specific
effects on cell-to-cell interaction, communication and behavior of other cells.
Other licensed technology focuses on the application of several naturally
occurring substances in the development of a potential treatment for asthma. We
expect these new technologies to provide a second broad platform for the
discovery and development of a new class of anti-inflammatory drug candidates.
We base our competitive strategy on our ability to integrate the
following strengths:
- we have pioneered basic discoveries in vascular cell biology
that form the foundation of our v-protectant technology
platform;
- our scientific expertise coupled with our clinical and
regulatory expertise has enabled us to be the first company to
conduct Phase I and II clinical trials of an
orally-administered, small molecule v-protectant; and
- we believe that our scientific, development and licensing
expertise strongly positions us to acquire promising
technologies and products discovered outside AtheroGenics.
We believe that these competitive advantages are important to the
success of our business strategy, which is to:
- develop AGI-1067 for commercialization;
- extend our v-protectant technology platform into additional
therapeutic areas that address unmet medical needs;
- create value rapidly through innovative drug discovery coupled
with innovative development to produce useful drugs;
- expand our product candidate portfolio by acquiring
complementary product candidates and technologies; and
- commercialize our products based upon the size and other
relevant characteristics of the patient and physician
populations.
RECENT DEVELOPMENTS
On October 4, 2001, we agreed with Schering-Plough Corporation to
reacquire the rights to AGI-1067 and related compounds and to terminate the
exclusive license agreement between us and Schering-Plough. The reacquisition of
these rights will permit us to expedite the clinical development process for
AGI-1067. In addition, Schering-Plough will return all licensed technology to us
and return all materials related to that technology. With
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the termination of this license agreement, Schering-Plough will have no further
rights to the technology or financial obligations to us.
Under the license agreement, we had granted to Schering-Plough an
exclusive license under our patents and know-how to make, use and sell AGI-1067
and other specified compounds for the treatment of restenosis, coronary artery
disease and atherosclerosis. Schering-Plough paid us an initial nonrefundable
licensing fee of $5,000,000 upon signing the agreement and, pursuant to the
terms of the agreement, had assumed responsibility for all costs going forward
associated with the development, manufacturing and commercialization of products
containing AGI-1067 and any other licensed compound.
As a result of the reacquisition of the rights and termination of the
license agreement, we will now be responsible for all research and development
costs associated with AGI-1067, along with the manufacture and commercialization
of products that we develop containing AGI-1067. We currently plan to undertake
internally the development and commercialization of AGI-1067, although we may
decide to enter into future collaborative agreements with third parties for all
or part of that development and commercialization.
SECURITIES OFFERED
This prospectus relates to 3,585,000 shares of our common stock offered
for resale for the account of the selling shareholders who hold that common
stock. Our common stock trades on the Nasdaq National Market under the symbol
"AGIX."
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. You should also refer to the other information in this
prospectus, including the information incorporated by reference into this
prospectus. The risks and uncertainties we describe below are those that we
currently believe may materially affect our company. Additional risks and
uncertainties that we are unaware of or that we currently deem immaterial also
may become important factors that affect our company.
RISKS RELATED TO OUR COMPANY AND BUSINESS
IF AGI-1067 FAILS IN CLINICAL TRIALS, WE MAY NOT BE ABLE TO GENERATE FUTURE
REVENUES OR BECOME PROFITABLE.
AGI-1067 is our lead compound. This compound could fail in clinical
trials if we show it is ineffective or causes unacceptable side effects in the
patients we treated. Failure in clinical trials for AGI-1067 would have a
material adverse effect on our ability to generate revenue or become profitable.
WE HAVE A HISTORY OF OPERATING LOSSES, AND WE MAY NOT GENERATE REVENUE OR
ACHIEVE PROFITABILITY IN THE FUTURE.
Our ability to generate revenue and achieve profitability depends on
our ability, alone or with collaborators, to complete successfully the
development of our product candidates, conduct pre-clinical tests in animals and
clinical trials in human beings, obtain the necessary regulatory approvals, and
manufacture and market the resulting drugs. We have experienced operating losses
since we began operations in 1994. As of June 30, 2001, we had an accumulated
deficit of approximately $50.7 million. We expect to incur additional operating
losses over the next several years and expect cumulative losses to increase
substantially as our research and development, pre-clinical, clinical,
manufacturing and marketing efforts expand. Except for an initial licensing fee
and research and development revenue that Schering-Plough paid to us in
connection with our terminated license agreement, we have had no significant
revenue to date.
IF WE DO NOT SUCCESSFULLY DEVELOP OUR OTHER PRODUCT CANDIDATES, WE WILL HAVE
LIMITED ABILITY TO GENERATE REVENUE.
All of our other programs are in early stages of development, and
subject to the risks of failure inherent in developing drug products based on
new technologies. We do not expect any of our potential product candidates to
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be commercially available until at least 2005. In addition, other than AGIX-4207
and AGIX-4207 I.V., product candidates for which we recently commenced Phase I
clinical trials, our drug discovery efforts may not produce any other
proprietary product candidates.
WE WILL NOT BE ABLE TO COMMERCIALIZE OUR PRODUCT CANDIDATES IF WE FAIL TO
DEMONSTRATE ADEQUATELY THEIR SAFETY AND EFFICACY.
We cannot assure you that any product candidate we develop, alone or
with others, will prove safe and effective in clinical trials and will meet all
of the applicable regulatory requirements needed to receive regulatory approval.
We will need to conduct significant research, pre-clinical testing and clinical
trials before we can file product approval applications with the U.S. Food and
Drug Administration and similar regulatory authorities in other countries.
Pre-clinical testing and clinical trials are long, expensive and uncertain
processes. We may spend several years completing our testing for any particular
product candidate, and failure can occur at any stage.
The FDA or we may suspend our clinical trials at any time if either of
us believes that we are exposing the subjects participating in these trials to
unacceptable health risks. The FDA or institutional review boards at the medical
institutions and healthcare facilities where we sponsor clinical trials may
suspend any trial indefinitely if they find deficiencies in the conduct of these
trials. We must conduct clinical trials in accordance with the FDA's Good
Clinical Practices. The FDA and these institutional review boards have authority
to oversee our clinical trials and the FDA may require large numbers of test
subjects. In addition, we must manufacture the product candidates that we use in
our clinical trials under the FDA's Good Manufacturing Practices.
Even if we achieve positive results in early clinical trials, these
results do not necessarily predict final results. A number of companies in the
pharmaceutical industry have suffered significant setbacks in advanced clinical
trials, even after achieving positive results in earlier trials. Negative or
inconclusive results or adverse medical events during a clinical trial could
cause the FDA or us to terminate a clinical trial or require that we repeat it.
Also, even if the FDA approves a New Drug Application for any of our
product candidates, the resulting product may not be accepted in the
marketplace. Physicians, patients, payors or the medical community in general
may be unwilling to accept, utilize or recommend any of our products. In
addition, after approval and use in an increasing number of patients, our
products could show side effect profiles that limit their usefulness or require
their withdrawal although the drugs did not show the side effect profile in
Phase I through Phase III clinical trials.
WE MAY EXPERIENCE DELAYS IN OUR CLINICAL TRIALS THAT COULD ADVERSELY AFFECT OUR
FINANCIAL RESULTS AND OUR COMMERCIAL PROSPECTS.
We do not know whether planned clinical trials will begin on time or
whether we will complete any of our clinical trials on schedule or at all.
Product development costs to us and our collaborators will increase if we have
delays in testing or approvals or if we need to perform more or larger clinical
trials than planned. Significant delays may adversely affect our financial
results and the commercial prospects for our products, and delay our ability to
become profitable. We typically rely on third party clinical investigators at
medical institutions and healthcare facilities to conduct our clinical trials
and, as a result, we may face additional delaying factors outside our control.
BECAUSE WE CANNOT PREDICT WHETHER OR WHEN WE WILL OBTAIN REGULATORY APPROVAL TO
COMMERCIALIZE OUR PRODUCT CANDIDATES, WE CANNOT PREDICT THE TIMING OF ANY FUTURE
REVENUE FROM THESE PRODUCT CANDIDATES.
We cannot commercialize any of our product candidates, including
AGI-1067 or AGIX-4207 oral and I.V., until the appropriate regulatory
authorities have reviewed and approved the applications for the product
candidates. We cannot assure you that the regulatory agencies will complete
their review processes in a timely manner or that we will obtain regulatory
approval for any product candidate we or our collaborators develop. Satisfaction
of regulatory requirements typically takes many years, is dependent upon the
type, complexity and novelty of the product and requires the expenditure of
substantial resources. Regulatory approval processes outside the United States
include all of the risks associated with the FDA approval process. In addition,
we may experience delays or
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rejections based upon additional government regulation from future legislation
or administrative action or changes in FDA policy during the period of product
development, clinical trials and FDA regulatory review.
IF WE DO NOT COMPLY WITH APPLICABLE REGULATORY REQUIREMENTS IN THE MANUFACTURE
AND DISTRIBUTION OF OUR PRODUCTS, WE MAY INCUR PENALTIES THAT MAY INHIBIT OUR
ABILITY TO COMMERCIALIZE OUR PRODUCTS AND ADVERSELY AFFECT OUR REVENUE.
Our failure to comply with applicable FDA or other regulatory
requirements including manufacturing, quality control, labeling, safety
surveillance, promoting, and reporting may result in criminal prosecution, civil
penalties, recall or seizure of our products, total or partial suspension of
production or an injunction, as well as other regulatory action against our
potential products or us. Discovery of previously unknown problems with a
product, supplier, manufacturer or facility may result in restrictions on the
sale of our products, including a withdrawal of such products from the market.
WE WILL INCUR ADDITIONAL EXPENSES FOR RESEARCH AND DEVELOPMENT OF AGI-1067 AS A
RESULT OF THE TERMINATION OF OUR LICENSE AGREEMENT WITH SCHERING-PLOUGH, WHICH
COULD ADVERSELY IMPACT OUR DEVELOPMENT OF OTHER PRODUCT CANDIDATES AND COULD
MATERIALLY ADVERSELY AFFECT OUR FINANCIAL LIQUIDITY.
Because we have terminated our exclusive license agreement with
Schering-Plough, we will now be responsible for all of the costs related to the
continuing research and development of AGI-1067, which were previously
reimbursed by Schering-Plough under the terms of the license agreement. These
additional research and development expenses will result in the reduction of our
available cash, which could adversely impact our ability to commence or continue
other research and development projects, or could cause delays in the
development of AGI-1067 or other projects.
OUR FAILURE TO PROTECT ADEQUATELY OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS OR
SECURE RIGHTS TO THIRD PARTY PATENTS COULD MATERIALLY ADVERSELY AFFECT OUR
PROPRIETARY POSITION IN THE MARKETPLACE OR PREVENT THE COMMERCIALIZATION OF OUR
PRODUCTS.
Our patent position, like that of many pharmaceutical companies, is
uncertain and involves complex legal and factual questions for which important
legal principles are unresolved. In addition, we may not be able to obtain
patent rights on products, treatment methods or manufacturing processes that we
may develop or to which we may obtain license or other rights. Even if we do
obtain patents, they may not adequately protect the technology we own or
in-license. In addition, others may challenge, seek to invalidate, infringe or
circumvent any patents we own or in-license, and rights we receive under those
patents may not provide competitive advantages to us.
Our commercial success will depend in part on our ability to
manufacture, use, sell and offer to sell our product candidates and proposed
product candidates without infringing patents or other proprietary rights of
others. We may not be aware of all patents or patent applications that may
impact our ability to make, use or sell any of our product candidates or
proposed product candidates. For example, U.S. patent applications are
confidential while pending in the Patent and Trademark Office, and patent
offices in non-U.S. countries often publish patent applications for the first
time six months or more after filing. Further, we may not be aware of published
or granted conflicting patent rights. Any conflicts resulting from patent
applications and patents of others could significantly reduce the coverage of
our patents and limit our ability to obtain meaningful patent protection. If
others obtain patents with conflicting claims, we may need to obtain licenses to
these patents or to develop or obtain alternative technology. We may not be able
to obtain any licenses or other rights to patents, technology or know-how
necessary to conduct our business as described in this prospectus. Any failure
to obtain such licenses could delay or prevent us from developing or
commercializing our drug candidates or proposed product candidates, which would
adversely affect our business.
Litigation or patent interference proceedings may be necessary to
enforce any of our patents or other proprietary rights, or to determine the
scope and validity or enforceability of the proprietary rights of others. The
defense and prosecution of patent and intellectual property claims are both
costly and time consuming, even if the outcome is favorable to us. Any adverse
outcome could subject us to significant liabilities, require us to license
disputed rights from others, or require us to cease selling our future products.
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Our commercial success will also depend on our ability to manufacture,
use, sell and offer to sell our product candidates and proposed product
candidates without breaching our agreements with our patent licensees. We have
obtained exclusive licenses to technologies from Emory University, covering
aspects of our v-protectant technology, The Regents of the University of
California, covering aspects of our diagnostic technology, and National Jewish
Medical and Research Center, covering aspects of our new MEKK technology
platform. Our exclusive license with Emory University requires us to take steps
to commercialize the licensed technology in a timely manner. If we fail to meet
these obligations, Emory University can convert our exclusive license to a
non-exclusive license, can grant others non-exclusive rights in the licensed
technology or can require us to sublicense aspects of the licensed technology.
Our license agreement with The Regents of the University of California also
includes a requirement that we develop the licensed technology within certain
time limits. If we fail to meet these time limits, they can terminate our
license. Further, The Regents of University of California are primarily
responsible for patent prosecution of the technology we license from them, and
we are required to reimburse them for the costs they incur in performing these
activities. As a result, we do not have the ability to control these activities.
Our license agreement with National Jewish requires us to develop the licensed
technology in a timely manner. If we fail to meet these obligations, some or all
of the licensed technology may revert to National Jewish.
We also rely upon trade secrets, proprietary know-how and technological
advances which we seek to protect through agreements with our collaborators,
employees and consultants. These persons and entities could breach our
agreements, for which we may not have adequate remedies. In addition, others
could become aware of our trade secrets or proprietary know-how through
independent discovery or otherwise.
IF OUR COMPETITORS DEVELOP AND MARKET ANTI-INFLAMMATORY PRODUCTS THAT ARE MORE
EFFECTIVE, HAVE FEWER SIDE EFFECTS OR ARE LESS EXPENSIVE THAN OUR CURRENT OR
FUTURE PRODUCT CANDIDATES, WE MAY HAVE LIMITED COMMERCIAL OPPORTUNITIES.
Our competitors include large pharmaceutical companies and more
established biotechnology companies. These competitors have significant
resources and expertise in research and development, manufacturing, testing,
obtaining regulatory approvals and marketing. Potential competitors also include
academic institutions, government agencies, and other public and private
research organizations that conduct research, seek patent protection and
establish collaborative arrangements for research, development, manufacturing
and commercialization. It is possible that any of these competitors could
develop technologies or products that would render our technologies or product
candidates obsolete or non-competitive, which could adversely affect our revenue
potential.
THIRD PARTIES' FAILURE TO SYNTHESIZE AND MANUFACTURE OUR PRODUCT CANDIDATES TO
OUR SPECIFICATIONS COULD DELAY OUR CLINICAL TRIALS OR HINDER OUR
COMMERCIALIZATION PROSPECTS.
We currently have no manufacturing facilities to synthesize or
manufacture our product candidates, nor do we intend to develop these
capabilities in the near future. Our reliance on third parties for these
services exposes us to several risks that could delay our clinical trials or
hinder our commercialization prospects. These risks include the following:
- A finding that a third party did not comply with applicable
governmental regulations. Manufacturers of pharmaceutical
products are subject to continual review and periodic
inspections by regulatory agencies. Failure of one of our
third party manufacturers to comply with applicable regulatory
requirements, whether or not related to our product
candidates, could result in sanctions against our potential
products, including recall or seizure, total or partial
suspension of production or injunction.
- A failure to synthesize and manufacture our product candidates
in accordance with our product specifications. For example, a
starting material used in the manufacturing process of
AGI-1067 is probucol, which physicians previously prescribed
as a cholesterol-lowering agent but which its manufacturer
withdrew from the market for efficacy reasons. The occurrence
of a rare side effect with chronic dosing of probucol requires
that we maintain a very low maximal amount of probucol in the
manufacture of AGI-1067.
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- A failure to deliver product candidates in sufficient
quantities or in a timely manner. Any failure by our third
party manufacturers to supply our requirements for clinical
trial materials or supply these materials in a timely manner
could jeopardize the scheduled initiation or completion of
these clinical trials and could have a material adverse effect
on our ability to generate revenue.
In addition, our continued dependence on third parties for the
synthesis and manufacture of our future products may subject us to costs outside
of our control, which could adversely affect our future profitability and our
ability to commercialize products on a timely and competitive basis.
IF WE ARE UNABLE TO CREATE SALES, MARKETING AND DISTRIBUTION CAPABILITIES OR
ENTER INTO AGREEMENTS WITH THIRD PARTIES TO PERFORM THESE FUNCTIONS, WE WILL NOT
BE ABLE TO COMMERCIALIZE OUR FUTURE PRODUCT CANDIDATES.
We currently have no sales, marketing or distribution capabilities.
Therefore, in order to commercialize our product candidates, we must either
develop our own sales, marketing and distribution capabilities or collaborate
with a third party to perform these functions. We have no experience in
developing, training or managing a sales force and will incur substantial
additional expenses in doing so. The cost of establishing and maintaining a
sales force may exceed its cost effectiveness. In addition, we will compete with
many companies that currently have extensive and well-funded marketing and sales
operations. Our marketing and sales efforts may be unable to compete
successfully against these companies.
To the extent we seek sales, marketing and distribution alliances for
our future products, we face risks including the following:
- we may not be able to find collaborators, enter into alliances
on favorable terms or enter into alliances that will be
commercially successful;
- any collaborator might, at its discretion, limit the amount of
resources and time it devotes to marketing our products; and
- any collaborator may terminate its agreement with us and
abandon our products at any time for any reason, regardless of
the terms of the agreement.
OUR FAILURE TO ATTRACT, RETAIN AND MOTIVATE SKILLED PERSONNEL AND CULTIVATE KEY
ACADEMIC COLLABORATIONS COULD MATERIALLY ADVERSELY AFFECT OUR RESEARCH AND
DEVELOPMENT EFFORTS.
We are a small company with 80 full-time employees. If we are unable to
continue to attract, retain and motivate highly qualified management and
scientific personnel and to develop and maintain important relationships with
leading academic institutions and scientists, we may not be able to achieve our
research and development objectives. Competition for personnel and academic
collaborations is intense. Loss of the services of any of our key scientific
personnel and, in particular, Dr. Russell M. Medford, our President and Chief
Executive Officer, could adversely affect progress of our research and
development programs. Dr. Medford is the only employee with whom we have an
employment agreement.
IF WE NEED ADDITIONAL FINANCING AND CANNOT OBTAIN IT, WE MAY NOT BE ABLE TO
DEVELOP OR MARKET OUR PRODUCTS.
We may encounter increased costs due to unanticipated changes in our
product development or commercialization plans. If these costs exceed our
available funds, we will need to seek additional financing. If additional funds
are not available, we may need to delay clinical studies, curtail operations or
obtain funds through collaborative arrangements that may require us to
relinquish rights to certain of our products or potential markets.
OUR FAILURE TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT OR ACCEPTABLE PRICES
FOR OUR PRODUCTS COULD DIMINISH OUR REVENUES.
Our ability to commercialize our future products successfully, alone or
with collaborators, will depend in part on the extent to which reimbursement for
the products will be available from:
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- government and health administration authorities;
- private health insurers; and
- other third party payors.
Government and other third party payors increasingly are attempting to
contain healthcare costs by limiting both coverage and the level of
reimbursement for new drugs. Third party private health insurance coverage may
not be available to patients for any of our future products.
The continuing efforts of government and other third party payors to
contain or reduce the costs of healthcare through various means may limit our
commercial opportunity. For example, in some countries other than the United
States, pricing and profitability of prescription pharmaceuticals are subject to
government control. In the United States, we expect proposals to implement
similar government control to continue. In addition, increasing emphasis on
managed care in the United States will continue to put pressure on the pricing
of pharmaceutical products. Cost control initiatives could decrease the price
that we or any potential collaborators could receive for any of our future
products and could adversely affect our profitability.
IF PLAINTIFFS BRING PRODUCT LIABILITY LAWSUITS AGAINST US, WE MAY INCUR
SUBSTANTIAL FINANCIAL LOSS OR MAY BE UNABLE TO OBTAIN FUTURE PRODUCT LIABILITY
INSURANCE AT REASONABLE PRICES, IF AT ALL, EITHER OF WHICH COULD DIMINISH OUR
ABILITY TO COMMERCIALIZE OUR FUTURE PRODUCTS.
The testing and marketing of medicinal products entail an inherent risk
of product liability. Clinical trial subjects, consumers, healthcare providers,
or pharmaceutical companies or others selling our future products could bring
product liability claims against us. We cannot assure you that we will be able
to acquire or maintain insurance coverage at a reasonable cost or in sufficient
amounts to protect us.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE CAUSING VOLATILITY IN OUR STOCK
PRICE.
Our product candidates are now in research and various stages of
development or clinical trials. Accordingly, we do not receive any revenues from
sales of these product candidates. Our results of operations historically have
fluctuated on a quarterly basis, which we expect to continue. Our results of
operations at any given time will be based primarily on the following factors:
- the status of development of our various product candidates;
- whether we enter into collaboration agreements and the timing
and accounting treatment of payments, if any, to us under
those agreements;
- whether and when we achieve specified development or
commercialization milestones; and
- the addition or termination of research programs or funding
support.
We believe that quarterly comparisons of our financial results are not
necessarily meaningful and should not be relied upon as an indication of future
performance. These fluctuations may cause the price of our stock to fluctuate,
perhaps substantially.
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RISKS RELATED TO THIS OFFERING
OUR STOCK PRICE HAS BEEN VOLATILE, AND YOUR INVESTMENT IN OUR STOCK COULD
DECLINE IN VALUE.
The market price of our common stock, and the market prices for
securities of pharmaceutical and biotechnology companies in general, have been
highly volatile and may continue to be highly volatile in the future. The
following factors, in addition to other risk factors described in this
prospectus, may have a significant impact on the market price of our common
stock:
- developments concerning any research and development,
manufacturing, and marketing collaborations;
- announcements of technological innovations or new commercial
products by our competitors or us;
- developments concerning proprietary rights, including patents;
- publicity regarding actual or potential results relating to
medicinal products under development by our competitors or us;
- regulatory developments in the United States and other
countries;
- litigation;
- economic and other external factors, including disasters or
crises; or
- period-to-period fluctuations in financial results.
BECAUSE A SMALL NUMBER OF EXISTING SHAREHOLDERS OWN A LARGE PERCENTAGE OF OUR
VOTING STOCK, YOU WILL HAVE MINIMAL INFLUENCE ON SHAREHOLDER DECISIONS.
As of the date of this prospectus, our executive officers, directors
and greater than five percent shareholders, along with their affiliates, in the
aggregate, owned approximately 35.3% of our outstanding common stock. As a
result, such persons, acting together, will have the ability to influence
substantially all matters submitted to the shareholders for approval, including
the election and removal of directors and any merger, consolidation or sale of
all or substantially all of our assets. These persons will also have the ability
to control our management and business affairs. This concentration of ownership
may have the effect of delaying, deferring or preventing a change in control,
impeding a merger, consolidation, takeover or other business combination
involving us, or discouraging a potential acquirer from making a tender offer or
otherwise attempting to obtain control of our business, even if such a
transaction would benefit other shareholders.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS MAY MAKE AN ACQUISITION OF US,
WHICH MAY BENEFIT OUR SHAREHOLDERS, MORE DIFFICULT.
Provisions of our amended and restated articles of incorporation and
amended and restated bylaws that could make it more difficult for a third party
to acquire us include provisions that:
- authorize the issuance of "blank check" preferred stock by our
board of directors without shareholder approval, which would
increase the number of outstanding shares and could thwart a
takeover attempt;
- limit who may call a special meeting of shareholders;
- require shareholder action without a meeting by unanimous
written consent;
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- establish advance notice requirements for nominations for
election to the board of directors or for proposing matters
that can be acted upon at shareholder meetings;
- establish a staggered board of directors whose members can
only be dismissed for cause;
- adopt the fair price requirements and rules regarding business
combinations with interested shareholders set forth in Article
11, Parts 2 and 3 of the Georgia Business Corporation Code;
and
- require approval by the holders of at least 75% of the
outstanding common stock to amend any of the foregoing
provisions.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain certain information regarding our financial projections,
plans and strategies that are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act
of 1934. These statements involve substantial risks and uncertainty. You can
identify these statements by forward-looking words such as "may," "will,"
"expect," "intend," "anticipate," "believe," "estimate," "plan," "could,"
"should" and "continue" or similar words. These forward-looking statements may
also use different phrases. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements, which are subject to risks, uncertainties, and
assumptions about us, may include, among other things, statements which address
our operating performance, events or developments that we expect or anticipate
will occur in the future, such as projections of our future results of
operations or of our financial condition, the status of any collaborative
agreements, the development of our product candidates and anticipated trends in
our business.
We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or which we do not fully control that could cause actual
results to differ materially from those expressed or implied in our
forward-looking statements. Because these forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements, including the following:
- competitive factors;
- general economic conditions;
- the ability to develop safe and effective drugs;
- ability to enter into future collaborative agreements;
- variability of royalty, license and other revenue;
- failure to achieve positive results in clinical trials;
- failure to receive regulatory approval to market our product
candidates;
- uncertainty regarding our owned and our licensed patents and
patent rights, including the risk that we may be forced to
engage in costly litigation to protect such patent rights and
the material harm to us if there were an unfavorable outcome
of any such litigation;
- governmental regulation and suspension;
- technological change;
- changes in industry practices; and
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- one-time events.
You should also consider carefully the statements under "Risk Factors"
in this prospectus and other sections of the documents incorporated by reference
into this prospectus, which address additional factors that could cause our
results to differ from those set forth in the forward-looking statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered
pursuant to this prospectus. All proceeds will be payable solely to the selling
shareholders.
The selling shareholders will pay any expenses incurred by the selling
shareholders for brokerage, accounting, tax or legal services or any other
expenses incurred by the selling shareholders in disposing of the shares covered
by this prospectus. We will bear all other costs, fees and expenses incurred in
effecting the registration of the shares covered by this prospectus, including,
but not limited to, all registration and filing fees, Nasdaq listing fees and
fees and expenses of our counsel and our accountants.
SELLING SHAREHOLDERS
We issued the shares of common stock covered by this prospectus in a
private placement on June 19, 2001. The following table sets forth, to our
knowledge, certain information about the selling shareholders as of October 5,
2001.
We do not know when or in what amounts a selling shareholder may offer
shares for sale. The selling shareholders may not sell any or all of the shares
offered by this prospectus. Because the selling shareholders may sell all or
some of the shares offered by this prospectus, and because there are currently
no agreements, arrangements or understandings with respect to the sale of any of
the shares, we cannot estimate the number of shares that will be held by the
selling shareholders after completion of the offering. For purposes of this
table, however, we have assumed that, after completion of the offering, none of
the shares covered by this prospectus will be held by the selling shareholders.
The percent of beneficial ownership for each shareholder is based on 27,793,073
shares of common stock outstanding as of October 5, 2001.
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Shares of Common Shares of Common
Stock Beneficially Owned Number of Shares Stock to be Beneficially
Prior to Offering(2) of Common Stock Number of Shares Owned After the Offering
------------------------ Sold Pursuant to of Common Stock ------------------------
Name of Selling Shareholder (1) Number Percentage This Offering(3) Being Offered Number Percentage
------------------------------- --------- ---------- ---------------- ---------------- ------ ----------
Coralbasin & Co. (As nominee for
SAFECO Common Stock Trust - SAFECO
Growth Opportunities Fund).............. 1,160,000 4.2% -- 1,150,000 10,000 *
Coralrock & Co. FBO SAFECO Resource
Series Trust - Growth Opportunities
Portfolio............................... 555,000 2.0 -- 550,000 5,000 *
SEI Institutional Managed Trust......... 429,000 1.5 -- 429,000 -- *
Vulcan Ventures Inc..................... 900,147 3.2 -- 400,000 500,147 1.8%
Prudential Small Company Fund, Inc...... 351,400 1.3 42,200 229,800 79,400 *
SEI Institutional Investments Trust..... 309,100 1.1 -- 258,100 51,000 *
Prudential Insurance Company of
America VCA-6........................... 166,000 * 18,000 110,000 38,000 *
ProMed Partners, L.P.................... 133,700 * -- 46,700 87,000 *
Deutsche Asset Management Health
Sciences Fund I, Ltd.................... 96,300 * -- 38,300 58,000 *
Alfred I. DuPont Testamentary Trust..... 73,200 * -- 35,500 37,700 *
Ascension Health Daughters of Charity
Fund P.................................. 67,700 * -- 67,700 -- *
Undiscovered Managers Small Cap
Growth Fund............................. 63,300 * -- 40,800 22,500 *
Marin County Employment Retirement
Association............................. 59,700 * -- 59,700 -- *
Goldman Sachs GMMS, LLC................. 41,600 * -- 41,600 -- *
Les Schwab Profit Sharing Retirement
Trust................................... 37,200 * -- 37,200 -- *
Portland General Holdings, Inc.
Pension Plan Trust...................... 14,400 * -- 14,400 -- *
The Nemours Foundation.................. 9,900 * -- 9,900 -- *
Portland General Holdings, Inc.
Employees' Benefit Trust, Fund II....... 3,700 * -- 3,700 -- *
The Collins Foundation.................. 2,400 * -- 2,400 -- *
---------------
* Less than one percent
(1) The term "selling shareholders" includes donees, pledgees,
transferees or other successors-in-interest selling shares
received after the date of this prospectus from a selling
shareholder as a gift, pledge, partnership distribution or
other non-sale related transfer.
(2) Beneficial ownership has been determined in accordance with
Rule 13d-3 under the Exchange Act. Unless otherwise noted, we
believe that all persons named in the table have sole voting
and investment power with respect to the shares beneficially
owned by them.
(3) Indicates shares of common stock sold pursuant to the
prospectus included in the predecessor Registration Statement
on Form S-1 (Registration No. 333-64228).
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None of the selling shareholders has had a material relationship with
us within the past three years. The selling shareholders identified above may
have sold, transferred or otherwise disposed of all or a portion of their
shares, in transactions exempt from the registration requirements of the
Securities Act, since the date on which they provided the information regarding
their shares. If required, we may identify and provide additional selling
shareholders and information with respect to them in one or more prospectus
supplements.
DILUTION
This offering is for sales of stock by our existing shareholders on a
continuous or delayed basis in the future. Sales of common stock by shareholders
will not result in a change to the net tangible book value per share before and
after the distribution of shares by the selling shareholders. There will be no
change in net tangible book value per share attributable to cash payments made
by purchasers of the shares being offered. Prospective investors should be
aware, however, that the market price of our shares may not bear any rational
relationship to net tangible book value per share.
PLAN OF DISTRIBUTION
The term "selling shareholders" includes donees, pledgees, transferees
or other successors-in-interest selling shares received after the date of this
prospectus from a named selling shareholder as a gift, pledge, partnership
distribution or other non-sale related transfer. The selling shareholders may
offer all or part of the shares included in this prospectus from time to time in
one or more types of transactions, which may include block transactions, on
applicable exchanges or automated interdealer quotation systems, in negotiated
transactions, through put or call options transactions relating to the shares
offered by this prospectus, through short sales or a combination of such methods
of sale. These sales may be made at fixed prices that may be changed, at market
prices prevailing at the time of sale, at prices related to the prevailing
market prices or at negotiated prices. Each selling shareholder will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling shareholders may resell their shares by one or
more of the following methods:
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
- a cross or block trade in which the broker or dealer engaged
by a selling shareholder 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 or dealer as principal and resale by
such broker or dealer for its account;
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
- negotiated transactions;
- options transactions;
- short sales or borrowing, returns and reborrowings of the
shares pursuant to stock loan agreements to settle short
sales;
- pledge and hedging transactions with broker-dealers or other
financial institutions;
- delivery in connection with the issuance of securities by
issuers, other than us, that are exchangeable for (whether on
an optional or mandatory basis), or payable in, such shares
(whether such securities
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are listed on a national securities exchange or otherwise) or
pursuant to which such shares may be distributed; and
- a combination of any such methods of sale or distribution.
In effecting sales, brokers or dealers engaged by a selling shareholder
may arrange for other brokers or dealers to participate in such sales. Brokers
or dealers may receive commissions or discounts from a selling shareholder or
from the purchasers in amounts to be negotiated immediately prior to the sale. A
selling shareholder may also sell the shares in accordance with Rule 144 or Rule
144A under the Securities Act or pursuant to other exemptions from registration
under the Securities Act.
If the shares offered by this prospectus are sold in an underwritten
offering, the underwriters may acquire them for their own account and may
further resell these shares from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The names of the underwriters
with respect to any such offering and the terms of the transactions, including
any underwriting discounts, concessions or commissions and other items
constituting compensation of the underwriters and broker-dealers, if any, will
be set forth in a prospectus supplement relating to such offering. Any public
offering price and any discounts, concessions or commissions allowed or
reallowed or paid to broker-dealers may be changed from time to time. Unless
otherwise set forth in a prospectus supplement, the obligations of the
underwriters to purchase the shares will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all the shares
specified in such prospectus supplement if any such shares are purchased.
Brokers who borrow the shares to settle short sales of shares and who wish to
offer and sell the shares under circumstances requiring use of the prospectus or
making use of the prospectus desirable may use this prospectus. This prospectus
may be amended and supplemented from time to time to describe a specific plan of
distribution.
From time to time the shareholders may engage in short sales, short
sales against the box, puts, calls and other transactions in our shares, or
derivatives thereof, and may sell and deliver the shares offered by this
prospectus in connection with such transactions.
We will not receive any of the proceeds from the sales of the shares by
the shareholders pursuant to this prospectus. The selling shareholders will pay
any expenses incurred by the selling shareholders for brokerage, accounting, tax
or legal services or any other expenses incurred by the selling shareholders in
disposing of the shares covered in this prospectus. We will bear all other
costs, fees and expenses incurred in effecting the registration of the shares
covered by this prospectus, including, but not limited to, all registration and
filing fees, Nasdaq listing fees and expenses of our counsel and our
accountants. Our common stock is listed for trading on the Nasdaq National
Market, and the shares offered by this prospectus have been approved for
quotation on Nasdaq.
In order to comply with the securities laws of certain states, the
selling shareholders may only sell the shares through registered or licensed
brokers or dealers. In addition, in certain states, the selling shareholders may
only sell the shares if they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirements of such state is available and is complied with.
A selling shareholder, and any broker dealer who acts in connection
with the sale of shares hereunder, may be deemed an underwriter within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and profit on any resale of the shares as principal might be deemed
underwriting discounts and commissions under the Securities Act. We have agreed
to indemnify certain of the selling shareholders, underwriters and other
participants in an underwriting or distribution of the shares and their
directors, officers, employees and agents against certain liabilities including
liabilities arising under the Securities Act. The selling shareholders may also
agree to indemnify any broker-dealer that participates in transactions involving
the sales of the shares against certain liabilities, including liabilities
arising under the Securities Act. Because the selling shareholders may be deemed
underwriters within the meaning of Section 2(11) of the Securities Act, the
selling shareholders will be subject to the prospectus delivery requirements of
the Securities Act.
We have advised the selling shareholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales in the market
and to the activities of the selling shareholders and their affiliates. In
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addition, we will make copies of this prospectus available to the selling
shareholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act.
We are permitted to suspend the use of this prospectus in connection
with the sales of shares by selling shareholders upon the happening of certain
events. These include the existence of any fact that makes any statement of
material fact made in this prospectus untrue or that requires the making of
additions to or changes in this prospectus in order to make the statements
herein not misleading. The suspension will continue until such time as we advise
the selling shareholders that use of the prospectus may be resumed, in which
case the period of time during which we are required to maintain the
effectiveness of the registration statement shall be extended. AtheroGenics will
bear the expense of preparing and filing the registration statement and all
post-effective amendments.
We have agreed with the selling shareholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of:
- June 19, 2003;
- As to any selling shareholder, the date on which that selling
shareholder may sell all of the shares covered by this
prospectus held by that shareholder without restriction by the
volume limitations of Rule 144(e) under the Securities Act; or
- Such time as all of the shares covered by this prospectus have
been sold:
- Pursuant to and in accordance with the registration
statement,
- To or through a broker or dealer or underwriter in a
public distribution or public securities transaction,
and/or
- in a transaction exempt from the registration
requirements of the Securities Act pursuant to
Section 4(1) under the Securities Act so that any and
all restrictions on the shares are removed upon the
completion of the sale.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for us by Long Aldridge & Norman LLP, Atlanta, Georgia. As of the
date of this prospectus, Long Aldridge & Norman LLP is the beneficial owner of
33,332 shares of our common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 2000, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in this prospectus in
reliance on Ernst & Young LLP's report, given on their authority as experts in
accounting and auditing.
King & Spalding is our patent counsel. The statements in this
prospectus under the caption "Our failure to protect adequately or enforce our
intellectual property rights or secure rights to third party patents could
materially adversely affect our proprietary position in the marketplace or
prevent the commercialization of our products" in the risk factors section have
been reviewed and approved by King & Spalding, as experts in such matters. We
have included these statements in reliance upon that review and approval.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file periodic reports, proxy statements and other information with
the SEC. You may read and copy all or any portion of the documents we file at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of
these documents, upon payment of a duplication fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the SEC's public reference rooms. Also, the SEC maintains a World Wide Web
site on the Internet at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding us and our common stock, including certain exhibits and
schedules. You can obtain a copy of the registration statement from the SEC at
the addresses listed above or from the SEC's web site.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered part of this prospectus, and later information that we file with the
SEC will automatically update and supersede this information. We incorporate by
reference documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the selling
shareholders sell all their shares offered by this prospectus.
We have filed the following documents with the SEC:
- Our Annual Report on Form 10-K for the year ended December 31,
2000;
- Our Quarterly Report on Form 10-Q for the quarter ended March
31, 2001;
- Our Quarterly Report on Form 10-Q for the quarter ended June
30, 2001;
- Our Current Report on Form 8-K filed with the SEC on October
9, 2001; and
- Our description of our common stock included in Item 1 of the
Registration Statement on Form 8-A (Registration No. 0-31261),
as filed on August 4, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
8995 Westside Parkway
Alpharetta, Georgia 30004
Attention: Ms. Donna Glasky
Manager, Corporate Communications
Telephone: (678) 336-2500
We have not authorized anyone, including brokers and dealers, to give
any information or make any representation not contained in this prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by us or any other person. This prospectus does not
constitute an offer to sell or solicitation of any offer to buy any of the
securities offered hereby in any jurisdiction in which it is unlawful to make
such offer or solicitation.
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3,585,000 SHARES
[ATHEROGENICS LOGO]
COMMON STOCK
------------------
PROSPECTUS
---------------
OCTOBER ____, 2001
---------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. THE SELLING SHAREHOLDERS ARE OFFERING TO
SELL, AND SEEKING OFFERS TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS
WHERE 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 OF ANY SALE OF OUR COMMON STOCK.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES
TO PERMIT A PUBLIC OFFERING OF THE COMMON SHARES OR POSSESSION OR DISTRIBUTION
OF THIS PROSPECTUS IN THAT JURISDICTION. PERSONS WHO COME INTO POSSESSION OF
THIS PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO
INFORM THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING AND
THE DISTRIBUTION OF THIS PROSPECTUS APPLICABLE TO THAT JURISDICTION.
21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with the
issuance and distribution of the securities being registered hereby:
Securities and Exchange Commission registration fee.... $ 5,310
Printing fees.......................................... 10,000
Legal fees and expenses................................ 50,000
Accounting fees and expenses........................... 15,000
Miscellaneous fees..................................... 10,000
--------
Total........................................ $ 90,310
========
The foregoing, except for the SEC registration fee, are estimates. We
will pay all of the above expenses. The selling shareholders will pay their own
expenses, including expenses of their own counsel, broker or dealer fees,
discounts and expenses, and all transfer and other taxes on the sale of the
shares of common stock offered by this prospectus.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Fourth Amended and Restated Articles of Incorporation eliminate, as
permitted by Section 14-2-202(b)(4) of the Georgia Business Corporation Code,
the personal liability of directors and officers for monetary damages to the
corporation or its shareholders for breach of their duty of care and other
duties; provided, however, that our Articles of Incorporation and Section
14-2-202(b)(4) of the Georgia Code do not permit us to eliminate or limit
liability for (1) a breach of duty involving appropriation of a business
opportunity of ours; (2) an act or omission which involves intentional
misconduct or a knowing violation of law; (3) any transaction from which an
improper personal benefit is derived; or (4) any payments of a dividend or any
other type of distribution that is illegal under Section 14-2-832 of the Georgia
Code. In addition, if at any time the Georgia Code is amended to authorize
further elimination or limitation of personal liability, then the liability of
each of our directors and officers shall be eliminated or limited to the fullest
extent permitted by such provisions, as so amended, without further action by
the shareholders, unless the provisions of the Georgia Code require such action.
Sections 14-2-850 to 14-2-859, inclusive, of the Georgia Code govern
the indemnification of directors, officers, employees and agents. Section
14-2-851 of the Georgia Code provides for indemnification of any of our
directors for liability incurred by him in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative and whether formal or informal, in
which he may become involved by reason of being a member of our board of
directors. Section 14-2-851 also provides such indemnity for directors who, at
our request, act as directors, officers, partners, trustees, employees or agents
of another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or another enterprise. Section 14-2-851 permits
indemnification if the director acted in a manner he believed in good faith to
be in or not opposed to our best interest and, in addition, in criminal
proceedings, if he had no reasonable cause to believe his conduct was unlawful.
If the required standard of conduct is met, indemnification may include
judgments, settlements, penalties, fines or reasonable expenses, including
attorneys' fees, incurred with respect to a proceeding. However, if the director
is adjudged liable to us in a derivative action or on the basis that personal
benefit was improperly received by him, the director will only be entitled to
such indemnification for reasonable expenses as a court finds to be proper in
accordance with the provisions of Section 14-2-854.
Section 14-2-852 of the Georgia Code provides that directors who are
wholly successful with respect to any claim brought against them, which claim is
brought because they are or were directors, are entitled to indemnification
against reasonable expenses as of right. Conversely, if the charges made in any
action are sustained, the determination of whether the required standard of
conduct has been met will be made, in accordance with the provisions of Section
14-2-855 of the Georgia Code, as follows: (1) if there are two or more
disinterested
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members of the board of directors, by the majority vote of a quorum of the
disinterested members of the board of directors, (2) by a majority of the
members of a committee of two or more disinterested directors, (3) by special
legal counsel or (4) by the shareholders, but, in such event, the shares owned
by or voted under the control of directors seeking indemnification may not be
voted.
Section 14-2-857 of the Georgia Code provides that an officer who is
not a director has the mandatory right of indemnification granted to directors
under Section 14-2-852, as described above. In addition, we may, as provided by
our Articles, Bylaws, general or specific actions by our board of directors, or
by contract, indemnify and advance expenses to an officer, employee or agent who
is not a director to the extent that such indemnification is consistent with
public policy.
Our officers and directors are presently covered by insurance which
(with certain exceptions and within certain limitations) indemnifies them
against any losses or liabilities arising from any alleged "wrongful act,"
including any alleged breach of duty, neglect, error, misstatement, misleading
statement, omissions or other act done or wrongfully attempted. We pay the cost
of such insurance as permitted by our Bylaws and the laws of the State of
Georgia.
Pursuant to Section 4(d) of the common stock purchase agreement between
us and the selling shareholders, the form of which is filed as Exhibit 10.16 to
our Registration Statement on Form S-1 (Registration No. 333-64228), declared
effective by the SEC on September 6, 2001, the selling shareholders have agreed
to indemnify our directors and officers and certain other persons against
certain civil liabilities in connection with, among other things, that
Registration Statement on Form S-1, this registration statement and sales of
common stock under both.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed herewith:
EXHIBIT NO. DESCRIPTION
----------- -----------
4.01** -- Form of Common Stock Certificate.
4.02** -- Amended and Restated Master Rights Agreement dated October 31, 1995, as
amended by First Amendment dated November 1, 1995; Second Amendment
dated July 30, 1996; Third Amendment dated April 13, 1999; Fourth
Amendment dated May 11, 1999; and Fifth Amendment dated August 30,
1999.
4.03** -- Applicable provisions of Fourth Amended and Restated Articles of
Incorporation and Third Amended and Restated Bylaws of AtheroGenics,
Inc. (to be incorporated by reference to Exhibits 3.01 and 3.02 of our
registration statement on Form S-1, Registration No. 333-31140,
declared effective by the SEC on August 8, 2000 and incorporated herein
by reference).
5.01* -- Opinion of Long Aldridge & Norman LLP (including consent).
23.01 -- Consent of Ernst & Young LLP.
23.02* -- Consent of Long Aldridge & Norman LLP (contained in Exhibit 5.01).
23.03 -- Consent of King & Spalding.
24.01* -- Powers of Attorney.
* Previously filed.
** Filed as the exhibit of the same number with AtheroGenics' registration
statement on Form S-1, Registration No. 333-31140, declared effective
by the SEC on August 8, 2000, and incorporated herein by reference.
(b) Financial Statement Schedules
No financial statement schedules are provided, because the information
called for is not required or is incorporated by reference to our Annual Report
on Form 10-K for the year ended December 31, 2000.
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ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in the
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrants pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15 (d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Post-effective Amendment No. 1 on Form S-3 to Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Alpharetta, State of Georgia, on October 12, 2001.
ATHEROGENICS, INC.
By: /s/ RUSSELL M. MEDFORD
----------------------------------------
RUSSELL M. MEDFORD, M.D., PH.D.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-effective Amendment No. 1 on Form S-3 to Registration Statement on Form S-1
has been signed by the following persons in the capacities and on the dates
indicated:
NAME TITLE DATE
---- ----- ----
PRINCIPAL EXECUTIVE OFFICER:
/s/ RUSSELL M. MEDFORD President and Chief Executive October 12, 2001
------------------------------------ Officer, Director
RUSSELL M. MEDFORD
PRINCIPAL FINANCIAL AND PRINCIPAL
ACCOUNTING OFFICER:
/s/ MARK P. COLONNESE Vice President of Finance and October 12, 2001
------------------------------------ Administration and Chief
MARK P. COLONNESE Financial Officer
ADDITIONAL DIRECTORS:
* Director October 12, 2001
------------------------------------
MICHAEL A. HENOS
* Director October 12, 2001
------------------------------------
R. WAYNE ALEXANDER
* Director October 12, 2001
------------------------------------
VAUGHN D. BRYSON
* Director October 12, 2001
------------------------------------
T. FORCHT DAGI
(Signatures continued on next page)
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* Director October 12, 2001
-------------------------------------
ARTHUR M. PAPPAS
* Director October 12, 2001
-------------------------------------
WILLIAM A. SCOTT
* Director October 12, 2001
-------------------------------------
STEPHEN G. SUDOVAR
*BY: /s/ MARK P. COLONNESE
---------------------------------
MARK P. COLONNESE
ATTORNEY-IN-FACT
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