This filing is made pursuant
to Rule 424(b)(3) under
the Securities Act of
1933 in connection with
Registration No. 333-81432
PROSPECTUS
[LJP LOGO]
LA JOLLA PHARMACEUTICAL COMPANY
7,000,000 Shares
Common Stock
This prospectus relates to 7,000,000 shares of our common stock that may be
sold from time to time by the selling stockholders named in this prospectus. The
selling stockholders acquired these shares of our common stock in private
transactions.
This offering is not being underwritten. The selling stockholders may offer
the shares through public or private transactions at the prevailing market price
for our common stock at the time of the sale, a price related to the prevailing
market price, a negotiated price or such other prices as the selling
stockholders determine from time to time. See "Plan of Distribution" on page 13.
All of the net proceeds from the sale of these shares of common stock will
go to the selling stockholders. We will not receive any proceeds from sales of
these shares.
Our common stock is traded on the Nasdaq National Market under the symbol
"LJPC." On February 1, 2002, the last reported sale price of our common stock
was $7.31 per share.
You should read this prospectus carefully before you invest.
INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 1.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
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The date of this prospectus is February 4, 2002
LA JOLLA PHARMACEUTICAL COMPANY
La Jolla Pharmaceutical Company is a biopharmaceutical company focused on
the research and development of therapeutic products for the treatment of
life-threatening antibody-mediated diseases. Antibody-mediated diseases are the
result of a malfunction of the body's immune system, in which cells in the
immune system produce disease-causing antibodies. These diseases include
autoimmune conditions such as lupus and antibody-mediated stroke. Current
treatments for these autoimmune disorders target the symptoms of the disease or
generally suppress the normal operation of the immune system, frequently
resulting in severe negative side effects and hospitalization. Our drug
candidates are designed to treat the underlying cause of many antibody-mediated
diseases without these side effects. Our current clinical drug candidates are
known as LJP 394, a lupus treatment drug which is currently in a Phase III
clinical study, and LJP 1082, an antibody-mediated stroke treatment drug which
is currently in a Phase I/II clinical study.
We are registering for resale 7,000,000 shares of our common stock
previously sold by us to investors in private transactions. These investors are
identified in the section headed "Selling Stockholders." We will not receive any
of the proceeds for the resale of these shares.
We are incorporated in the State of Delaware. Our principal executive
offices are located at 6455 Nancy Ridge Drive, San Diego, California 92121 and
our telephone number is (858) 452-6600.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the following risk factors related to our common stock
offered by this prospectus and to our business and operations. You should also
carefully consider the other information in this prospectus and in the documents
incorporated by reference. Some of these factors have affected our financial
condition and operating results in the past or are currently affecting us. All
of these factors could affect our future financial condition or operating
results. If any of the following risks actually occurs, our business could be
harmed. If that happens, the trading price of our common stock could decline,
and you may lose all or part of your investment.
I. RISK FACTORS RELATING TO LA JOLLA PHARMACEUTICAL AND THE INDUSTRY IN
WHICH WE OPERATE.
OUR DRUG CANDIDATES MAY NOT PERFORM WELL IN CLINICAL TRIALS AND WE MAY NOT BE
PERMITTED TO CONDUCT FURTHER CLINICAL TRIALS. WITHOUT SUCCESSFUL CLINICAL
TRIALS, WE WILL NOT BE ABLE TO MARKET OR SELL ANY PRODUCTS.
If LJP 394 or LJP 1082 are ultimately not found to be safe and effective, we
would be unable to obtain regulatory approval for their commercialization.
Because LJP 394 is our only drug candidate that has advanced to Phase III
clinical trials, and because there is no guarantee that we would be able to
develop an alternate drug candidate, our inability to commercialize LJP 394
would have a severe negative effect on our business, including revenues and
profits.
In order to sell our products that are under development, we must first
receive regulatory approval. To obtain regulatory approval, we must conduct
clinical studies demonstrating that our products are safe and effective.
Although LJP 394 and LJP 1082 appear promising, they may not be successful in
future clinical trials. Our prior clinical study of LJP 394, in collaboration
with Abbott, was halted. The ongoing Phase III clinical study of LJP 394 and the
ongoing Phase I/II
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clinical study of LJP 1082 may also be delayed or halted for various reasons,
including:
- the products are not effective,
- patients experience severe side effects during treatment,
- patients do not enroll in the studies at the rate we expect, or
- supplies of either product are not sufficient to treat the patients in
the studies.
In addition, the FDA and foreign regulatory authorities have substantial
discretion in the approval process. The FDA and foreign regulatory authorities
may not agree that we have demonstrated that LJP 394 or LJP 1082 are safe and
effective after we complete clinical trials. Even if the results of prior
clinical trials are positive, the FDA and foreign regulatory authorities may
require us to design and conduct additional studies, which may result in
significant expense and delay. The FDA and foreign regulatory authorities may
require new clinical trials because of inconclusive results from earlier
clinical trials, a possible failure to conduct prior clinical trials in complete
adherence to FDA good clinical practice standards and similar standards of
foreign regulatory authorities, and identification of new clinical trial
endpoints.
OUR PRODUCTS ARE IN VARIOUS STAGES OF DEVELOPMENT, AND THE TECHNOLOGY UNDERLYING
OUR PRODUCTS IS UNCERTAIN AND UNPROVEN. IF OUR PRODUCTS CANNOT BE SUCCESSFULLY
DEVELOPED, WE WILL NEVER BE ABLE TO GENERATE MEANINGFUL SALES.
All of our product development efforts are based on unproven technologies
and therapeutic approaches that have not been widely tested or used. LJP 394 and
LJP 1082 have not been proven to be effective in humans, and the technology on
which they are based has been used only in our preclinical tests and clinical
trials. If our products or technology are not effective, we will not generate
meaningful sales. Application of our technology to antibody-mediated diseases
other than lupus and antibody-mediated stroke is in earlier research stages.
LJP 394, LJP 1082 and our other potential drug candidates require
significant additional research and development and are subject to significant
risks. Potential products that appear to be promising at early stages of
development may nevertheless fail to reach market or become profitable for some
of the following reasons:
- products may be ineffective or cause harmful side effects during
preclinical testing or clinical trials,
- products may fail to receive necessary regulatory approvals,
- products may be difficult to manufacture,
- products may be uneconomical to produce particularly if high dosages are
required,
- products may fail to achieve market acceptance,
- physicians may think that the products are not effective,
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- products may be precluded from commercialization because of proprietary
rights of third parties, and
- competitors may develop superior products.
The technology underlying LJP 394 appears effective in humans. However, no
products have been developed to date that use our technology. There is no
guarantee that LJP 394 or LJP 1082 will work as intended. Furthermore, clinical
trials of LJP 394 and LJP 1082 may be viewed as a test of LJP's entire approach
to developing therapies for antibody-mediated diseases. If the data from our
clinical trials indicates that LJP 394 or LJP 1082 is ineffective, the
applicability of our technology to other antibody-mediated diseases will be
highly uncertain. Therefore, there is significant risk that our therapeutic
approaches will not prove to be successful, and there can be no guarantee that
our drug discovery technologies will result in any commercially successful
products.
OUR SUCCESS IN DEVELOPING OUR PRODUCTS AND MARKETING THEM SUCCESSFULLY DEPENDS
SIGNIFICANTLY UPON OUR ABILITY TO OBTAIN PATENT PROTECTION FOR LJP 394, LJP 1082
AND ANY OTHER DEVELOPED PRODUCTS. IN ADDITION, WE WILL NEED TO SUCCESSFULLY
PRESERVE OUR TRADE SECRETS AND OPERATE WITHOUT INFRINGING ON THE RIGHTS OF
OTHERS.
We will depend on patents and other unpatented intellectual property to
prevent others from profiting from products or technologies that we may have
developed. We own 95 issued patents and 82 pending patent applications covering
various technologies and drug candidates including LJP 394 and LJP 1082.
However, there can be no assurance that any additional patents will be issued,
or that the scope of any patent protection will be sufficient, or that any
current or future issued patent will be held valid if subsequently challenged.
There is a substantial backlog of biotechnology patent applications at the U.S.
Patent and Trademark Office that may delay the review and issuance of any
patents. The patent position of biotechnology firms like ours generally is
highly uncertain and involves complex legal and factual questions, and no
consistent policy has emerged regarding the breadth of claims covered in
biotechnology patents or protection afforded by these patents. Presently, we
have a number of patent applications pending in the United States relating to
our technology, as well as foreign counterparts to some of our U.S. patent
applications. We intend to continue to file applications as appropriate for
patents covering both our products and processes. There can be no assurance that
patents will be issued from any of these applications, or that the scope of any
issued patents will protect our technology.
We are aware of one U.S. patent grant that contains claims covering subject
matter that may conflict with some of our key patents and patent applications,
and that may affect our ability to develop and sell our products. Any conflict
between our patents and patent applications, and patents or patent applications
of third parties, could result in a significant reduction of the coverage of our
existing patents or any future patents that may be issued. This could have a
negative effect on our ability to prevent competitors from profiting from our
products and technologies, and this could affect our future sales. In addition,
we may have to incur significant expenses in defending our patents.
If the U.S. Patent and Trademark Office or any foreign counterpart issues or
has issued to a competitor patents containing competitive or conflicting claims,
and if these claims are valid, there can be no guarantee that we would be able
to obtain licenses to these patents, that any licensing fees would be
reasonable, or that we would be able to develop or obtain alternative
technology. We do not necessarily know if others, including competitors, have
filed patent applications for technology covered by our pending applications,
nor can we be certain that we were the first to invent or to file patent
applications for our technologies.
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Competitors may have patents or patent applications pending that relate to
compounds or processes that overlap or compete with our intellectual property.
We also rely on unpatented intellectual property such as trade secrets and
improvements, know-how, and continuing technological innovation. While we seek
to protect these rights, it is possible that:
- inventions relevant to our business will be developed by a person
not bound by a La Jolla Pharmaceutical invention assignment
agreement,
- our binding confidentiality agreements will be breached, and we will
not have adequate remedies for such a breach, or
- our trade secrets will otherwise become known or be independently
discovered by competitors.
We could incur substantial costs in defending suits brought against us by
others for infringement of intellectual property rights or in prosecuting suits
that we might bring against others to protect our intellectual property rights.
WE HAVE A HISTORY OF LOSSES AND MAY NOT BECOME PROFITABLE.
We have incurred operating losses each year since our inception in 1989 and
had an accumulated deficit of approximately $103.6 million as of September 30,
2001. Our losses are likely to exceed those experienced in prior years due to
the termination of a collaborative relationship with Abbott, unless we are
successful in establishing additional collaborative relationships to help
finance our research and development costs. To achieve profitability we must,
among other things, complete the development of our products, obtain all
necessary regulatory approvals and establish commercial manufacturing and
marketing capabilities. We expect to incur significant losses each year for at
least the next several years as our clinical trial, research, development and
manufacturing activities increase. The amount of losses and the time required by
us to reach sustained profitability are highly uncertain, and we do not expect
to generate revenues from the sale of products, if any, for at least several
years. We may never achieve product revenues or profitability.
WE WILL NEED ADDITIONAL FUNDS TO SUPPORT OPERATIONS AND MAY NEED TO REDUCE
OPERATIONS, SELL STOCK OR ASSETS, OR MERGE WITH ANOTHER ENTITY TO CONTINUE
OPERATIONS.
Our operations to date have consumed substantial capital resources, and we
will continue to expend substantial and increasing amounts of capital for
research, product development, preclinical testing and clinical trials of drug
candidates, to establish commercial-scale manufacturing capabilities, and to
market potential products. We will need to raise additional funds. If we are not
able to do so, we will not be able to fund our operations.
Our future capital requirements will depend on many factors, including:
- continued scientific progress in our research and development programs,
- the size and complexity of our research and development programs,
- the scope and results of preclinical testing and clinical trials,
- the time and costs involved in applying for regulatory approvals,
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- the costs involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims,
- competing technological and market developments,
- our ability to establish and maintain collaborative research and
development arrangements, and
- the cost of manufacturing scale-up and product commercialization.
We expect to incur substantial and increasing losses each year for at least
the next several years as our clinical trial, research, development and
manufacturing activities increase. We expect our existing capital resources,
including the capital raised through the sale of stock that may be offered for
resale under this prospectus, will be sufficient to fund our activities, as
currently planned and assuming that we do not engage a collaborative partner,
into the fourth quarter of 2003. However, the amounts expended by us for various
purposes may vary significantly, and it is possible that our cash requirements
will exceed current projections and that we will therefore need additional
financing sooner than currently expected. In the future, it is possible that we
will not have adequate resources to support our business activities.
We actively seek additional funding, including through collaborative
arrangements and public and private financings. Our choice of financing
alternatives may vary from time to time depending upon various factors,
including the market price of our securities, conditions in the financial
markets, and the interest of other entities in strategic transactions with us.
There can be no guarantee that additional financing will be available on
acceptable terms, if at all, whether through collaborative arrangement, issuance
of securities, or otherwise. If adequate funds are not available, we may be
required to delay, scale back or eliminate one or more of our research and
development programs or obtain funds through arrangements with collaborative
partners or others that require us to relinquish rights to certain technologies
or potential products. This could have a negative impact on our ability to
develop products, or to achieve profitability if our products are brought to
market. If we obtain additional funding through sales of securities, your
investment in us will be diluted.
WE MAY NOT EARN AS MUCH INCOME AS WE HOPE DUE TO POSSIBLE CHANGES IN HEALTHCARE
REIMBURSEMENT POLICIES.
The continuing efforts of government and healthcare insurance companies to
reduce the costs of healthcare may reduce the amount of income we can generate
from our products. For example, in certain foreign markets, pricing and
profitability of prescription drugs are subject to government control. In the
United States, we expect that there will continue to be a number of federal and
state proposals to implement similar government controls. In addition,
increasing emphasis on managed care in the United States will continue to put
pressure on drug manufacturers to keep prices down. Cost control initiatives
could reduce the revenue that we receive for any products we may develop and
sell in the future. These cost control measures may also affect the
profitability of companies with whom we may transact business, such as
manufacturers of our products, and thus may have a negative effect on our
ability to continue to work with these companies.
5
BECAUSE A NUMBER OF COMPANIES COMPETE WITH US, MANY OF WHICH HAVE GREATER
RESOURCES THAN WE DO, AND BECAUSE WE FACE RAPID CHANGES IN TECHNOLOGY IN OUR
INDUSTRY, WE CANNOT BE CERTAIN THAT OUR PRODUCTS WILL BE ACCEPTED IN THE
MARKETPLACE OR CAPTURE MARKET SHARE.
Competition from domestic and foreign biotechnology companies, large
pharmaceutical companies and other institutions is intense and is expected to
increase. A number of companies and institutions are pursuing the development of
pharmaceuticals in our targeted areas, many of which are very large, and have
financial, technical, sales and distribution and other resources substantially
greater than ours. The greater resources of these competitors could enable them
to develop competing products more quickly than we are able to, and to market
any competing product more quickly so as to make it extremely difficult for us
to develop a share of the market for these products. These competitors include
companies that are conducting clinical trials and preclinical studies for the
treatment of lupus. Our competitors may develop or obtain regulatory approval
for products more rapidly than we do. Also, the biotechnology and pharmaceutical
industries are subject to rapid changes in technology. Our competitors may
develop and market technologies and products that are more effective than those
being developed by us, or that would render our technology and proposed products
obsolete or noncompetitive.
WE MAY NEED TO ESTABLISH COLLABORATIVE AGREEMENTS, AND THIS COULD HAVE A
NEGATIVE EFFECT ON OUR FREEDOM TO OPERATE OUR BUSINESS, OR PROFIT FULLY FROM
SALES OF OUR PRODUCTS.
We may seek to collaborate with pharmaceutical companies to gain access to
their research, drug development, manufacturing, marketing and financial
resources. However, we may not be able to negotiate arrangements with any
collaborative partners on acceptable terms, if at all. Any collaborative
relationships that we enter into may include restrictions on our freedom to
operate our business or to profit fully from the sales of our products.
Once a collaborative arrangement is established, the collaborative partner
may discontinue funding any particular program or may, either alone or with
others, pursue alternative technologies or develop alternative drug candidates
for the diseases we are targeting. Competing products, developed by a
collaborative partner or to which a collaborative partner has rights, may result
in the collaborative partner withdrawing support as to all or a portion of our
technology.
Without collaborative arrangements, we must fund our own research and
development activities, accelerating the depletion of our capital and requiring
us to develop our own marketing capabilities. Therefore, if we are unable to
establish and maintain collaborative arrangements, we could experience a
material adverse effect on our ability to develop products and, once developed,
to market them successfully.
OUR LIMITED MANUFACTURING CAPABILITIES COULD RESULT IN SHORTAGES OF PRODUCTS FOR
TESTING AND FUTURE SALE, AND OUR REVENUES AND PROFIT MARGIN COULD BE NEGATIVELY
AFFECTED.
While we are producing limited quantities of LJP 394 and LJP 1082 for
clinical trials, our current facilities are not FDA approved for commercial
production of our potential products. The manufacture of our potential products
for clinical trials and the manufacture of any resulting products for commercial
purposes are subject to certain FDA standards. Substantial capital investment in
the expansion and build-out of our manufacturing facilities will be required to
enable us to manufacture any products in commercial quantities. While we have
initiated the
6
process of obtaining FDA approval for our facilities, we have never operated an
FDA-approved manufacturing facility and may not obtain necessary approvals. We
have limited manufacturing experience, and we may be unable to successfully
transition to commercial production. We may enter into arrangements with
contract manufacturing companies to expand our own production capacity in order
to meet requirements for our products, or to attempt to improve manufacturing
efficiency. If we choose to contract for manufacturing services and encounter
delays or difficulties in establishing relationships with manufacturers to
produce, package and distribute our finished products, the clinical trials, the
introduction of our products into the market and the subsequent sales of these
products would be negatively affected by the lack of available products, and our
profit margins and our ability to develop and deliver products on a timely and
competitive basis may be negatively affected.
WE LACK EXPERIENCE IN MARKETING PRODUCTS FOR COMMERCIAL SALE AND THUS MAY HAVE
DIFFICULTY GAINING ACCEPTANCE FOR OUR PRODUCTS.
In order to commercialize any drug candidate approved by the FDA, we must
either develop a marketing and sales force or enter into marketing arrangements
with others. If we cannot do either of these, we may have difficulty generating
sales for our products. We currently have no marketing arrangements with others,
and there can be no guarantee that we will be able to enter into any marketing
agreements on favorable terms, or that any such agreements will result in
payments to us. To the extent that we enter into co-promotion or other marketing
and sales arrangements with other companies, any revenues that we may receive
will be dependent on the efforts of others. There can be no guarantee that these
efforts will be successful. If we attempt to develop our own marketing and sales
capabilities, we will compete with other companies that have experienced and
well-funded marketing and sales operations. Furthermore, if we attempt to
establish sales and distribution capabilities, we may experience delays and
expenditures and have difficulty in gaining market acceptance for our drug
candidates.
THE USE OF LJP 394, LJP 1082 AND OTHER POTENTIAL PRODUCTS IN CLINICAL TRIALS,
AND THE SALE OF ANY APPROVED PRODUCTS MAY EXPOSE US TO LAWSUITS RESULTING FROM
THE USE OF THESE PRODUCTS.
The use and possible sale of LJP 394, LJP 1082 and other potential products
may expose us to legal liability and generate negative publicity if we are
subject to claims that people were harmed by our products. These claims might be
made directly by consumers, pharmaceutical companies, or others. We maintain
$10.0 million of product liability insurance for claims arising from the use of
our products in clinical trials. However, coverage is becoming increasingly
expensive, and there can be no guarantee that we will be able to maintain
insurance or that insurance can be acquired at a reasonable cost or in
sufficient amounts to protect us against possible losses. Furthermore, it is
possible that our financial resources would be insufficient to satisfy potential
product liability claims. A successful product liability claim or series of
claims brought against us could negatively impact our business and financial
condition.
OUR RESEARCH AND DEVELOPMENT AND OPERATIONS DEPEND IN PART ON CERTAIN KEY
EMPLOYEES AND CONSULTANTS. LOSING THESE EMPLOYEES OR CONSULTANTS WOULD HAVE A
NEGATIVE EFFECT ON OUR PRODUCT DEVELOPMENT AND OPERATIONS.
We are highly dependent upon the principal members of our scientific and
management staff, the loss of whose services would delay the achievement of our
research and development objectives. This is because our key personnel,
including Steven Engle, Dr. Matthew Linnik, Dr. Paul Jenn and Dr. Andrew
Wiseman, have been involved in the development of LJP 394, LJP 1082 and other
drug candidates for several years and have unique knowledge of our drug
candidates and of the
7
technology on which they are based. Our anticipated growth and expansion into
areas requiring additional expertise, such as clinical trials, government
approvals, manufacturing, and marketing, is expected to place increased demands
on our resources and require the addition of new management personnel as well as
the development of additional expertise by existing management personnel.
Retaining our current key employees and recruiting additional qualified
scientific personnel to perform research and development work in the future will
also be critical to our success. Because competition for experienced scientists
among numerous pharmaceutical and biotechnology companies and research and
academic institutions is intense, we may not be able to attract and retain these
people. If we cannot attract and retain qualified people, our ability to conduct
necessary clinical trials and to develop our products may be negatively affected
because, for instance, the trials may not be conducted properly, or the trials
or our manufacturing of products may be delayed. In addition, we rely upon
consultants and advisors to assist us in formulating our research and
development, clinical, regulatory and manufacturing strategies. All of our
consultants and advisors have outside employment and may have commitments or
consulting or advisory contracts with other entities that may affect their
ability to contribute to our business.
IT IS POSSIBLE THAT WE MAY FACE ENVIRONMENTAL LIABILITIES RELATED TO CERTAIN
HAZARDOUS MATERIALS USED IN OUR OPERATIONS.
Due to the nature of our manufacturing processes, we are subject to
stringent federal, state and local laws governing the use, handling and disposal
of certain materials and wastes. It is possible that we may have to incur
significant costs to comply with environmental regulations as our manufacturing
increases to commercial volumes. Our operations may be significantly impacted by
current or future environmental laws because, for instance, our ability to
produce products may be slowed, thereby increasing our production costs. In our
research activities, we use radioactive and other materials that could be
hazardous to human health, safety, or the environment. These materials and
various wastes resulting from their use are stored at our facility pending
ultimate use and disposal. The risk of accidental injury or contamination from
these materials cannot be eliminated. In the event of such an accident, we could
be held liable for any resulting damages, and any such liability could exceed
our resources.
II. RISK FACTORS RELATED SPECIFICALLY TO OUR STOCK.
OUR COMMON STOCK PRICE IS VOLATILE AND MAY DECLINE EVEN IF OUR BUSINESS IS DOING
WELL.
The market price of our common stock has been and is likely to continue to
be highly volatile. Market prices for securities of biotechnology and
pharmaceutical companies, including ours, have historically been highly
volatile, and the market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. The following factors can have a significant effect on the
market price of our securities:
- announcements of technological innovations or new therapeutic
products by us or others,
- clinical trial results,
- developments concerning agreements with collaborators,
- government regulation,
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- developments in patent or other proprietary rights,
- public concern as to the safety of drugs discovered or developed by
us or others,
- future sales of substantial amounts of our common stock by existing
stockholders, and
- comments by securities analysts and general market conditions.
The realization of any of the risks described in these "Risk Factors" could
have a negative effect on the market price of our common stock.
IN THE FUTURE, OUR STOCK MAY BE REMOVED FROM LISTING ON THE NASDAQ QUOTATION
SYSTEM AND MAY NOT QUALIFY FOR LISTING ON ANY STOCK EXCHANGE, IN WHICH CASE IT
MAY BE DIFFICULT TO FIND A MARKET IN OUR STOCK.
If our stock is no longer traded on a national trading market it may be more
difficult for you to sell shares that you own, and the price of the stock may be
negatively affected. Currently our securities are traded on the Nasdaq National
Market. Nasdaq has several continued listing requirements, including a minimum
trading price. Previously, we have received notice from Nasdaq that our stock
price fell below this minimum trading price. While we have since come back into
compliance with this Nasdaq requirement, it is possible that we will fall out of
compliance with this and/or other Nasdaq continued listing criteria at some
point in the future. Failure to comply with any one of several Nasdaq
requirements may cause our stock to be removed from listing on Nasdaq. Should
this happen, we may not be able to secure listing on other exchanges or
quotation systems. This would have a negative effect on the price and liquidity
of our stock.
FUTURE SALES OF OUR STOCK BY EXISTING STOCKHOLDERS COULD NEGATIVELY AFFECT THE
MARKET PRICE OF OUR STOCK AND MAKE IT MORE DIFFICULT FOR US TO SELL STOCK IN THE
FUTURE.
Sales of our common stock in the public market, or the perception that such
sales could occur, could result in a drop in the market price of our securities
and make it more difficult for us to complete future equity financings. In
addition to the shares to be sold in this offering, we have outstanding the
following shares of common stock:
- 23,070,000 shares of common stock that have been issued in
registered offerings and are freely tradable in the public markets.
- Approximately 1,722,000 shares of common stock currently eligible
for resale in the public market pursuant to SEC Rule 144.
- In addition, as of January 11, 2002 there are an aggregate of
4,737,778 shares of common stock that may be issued on the exercise
of outstanding stock options granted under our various stock option
plans at a weighted average exercise price of $4.6843 per share.
- We have in effect registration statements under the Securities Act
registering approximately 6,000,000 shares of common stock reserved
under our incentive stock option and employee stock purchase plans.
Approximately 165,200 shares of common stock that may be issued on
the exercise of outstanding stock options will be available for
public resale under SEC Rule 144 pursuant to Rule 701 under the
Securities Act.
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We cannot estimate the number of shares of common stock that may actually be
resold in the public market since this will depend upon the market price for the
common stock, the individual circumstances of the sellers and other factors. We
also have a number of institutional stockholders that own significant blocks of
our common stock. If these stockholders sell large portions of their holdings in
a relatively short time, for liquidity or other reasons, the market price of our
common stock could drop significantly.
ANTI-TAKEOVER DEVICES MAY PREVENT CHANGES IN MANAGEMENT OF LJPC.
We have in place several anti-takeover devices, including a stockholder
rights plan, that may have the effect of delaying or preventing changes in our
management. For example, one anti-takeover device provides for a board of
directors that is separated into three classes, with their terms in office
staggered over three year periods. This has the effect of delaying a change in
control of the Board of Directors without the cooperation of the incumbent
board. In addition, our bylaws require stockholders to give written notice of
any proposal or director nomination to us within a certain period of time prior
to the stockholder annual meeting, establish certain qualifications for a person
to be elected or appointed to the Board of Directors during the pendency of
certain business combination transactions, and do not allow stockholders to call
a special meeting of stockholders.
We may also issue shares of preferred stock without stockholder approval and
upon terms that our Board of Directors may determine in the future. The issuance
of preferred stock could have the effect of making it more difficult for a third
party to acquire a majority of our outstanding stock, and the holders of such
preferred stock could have voting, dividend, liquidation and other rights
superior to those of holders of our common stock.
WE DO NOT PAY DIVIDENDS AND THIS MAY NEGATIVELY AFFECT THE PRICE OF OUR STOCK.
We have not paid any cash dividends since our inception and do not
anticipate paying any cash dividends in the foreseeable future. The future price
of our common stock may be depressed by the fact that we have not paid
dividends.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common stock
by the selling stockholders.
SELLING STOCKHOLDERS
In a series of private transactions completed on January 17, 2002, we issued
a total of 7,000,000 shares of our common stock to the stockholders listed
below. The selling stockholders may from time to time offer and sell pursuant to
this prospectus any or all of 7,000,000 shares of our common stock. The
following table describes, as of January 17, 2002, the number of shares of our
common stock that each selling stockholder owns and the number of
shares registered hereunder. The term "selling stockholders" includes the
holders listed below and their transferees, pledgees, donees or other
successors. We have prepared this table based upon information furnished to us
by or on behalf of the selling stockholders.
The selling stockholders confirmed at the time they acquired the shares
listed below that they acquired the shares for investment purposes only and not
with a view toward their resale, and acknowledged the existence of restrictions
on resale that apply to these shares. This offering relates only to the sale of
the 7,000,000 shares of common stock held or to be held by the selling
stockholders
10
named in the following table. Since the date on which they provided us with the
information below, the selling stockholders may have sold, transferred or
otherwise disposed of some or all of their shares of our common stock in
transactions exempt from the registration requirements of the Securities Act.
SHARES OF COMMON STOCK SHARES OF COMMON STOCK
OWNED PRIOR TO OFFERING OWNED AFTER OFFERING
-------------------------------------- -----------------------
NUMBER OF PERCENT OF SHARES TO BE NUMBER OF PERCENT OF
NAME OF SELLING STOCKHOLDER SHARES CLASS(%)(1) SOLD(2) SHARES(2) CLASS(%)(2)
------------------------------------- ---------- ----------- ------------ --------- -----------
SAFECO Growth Opportunities Fund -- 1,216,000 2.9 1,216,000 -- --
A series of SAFECO Common Stock
Trust
Deka-Team-Biotech 1,019,009 2.4 484,450 534,559 1.3
Deerfield Partners, L.P. 746,936 1.8 139,750 607,186 1.4
Deerfield International Limited 589,264 1.4 110,250 479,014 1.1
Growth Opportunities Fund -- A series 584,000 1.4 584,000 -- --
of SAFECO Resource Series Trust
Brookside Capital Partners Fund, L.P. 500,000 1.2 500,000 -- --
SEI Institutional Managed Trust 344,800 * 318,500 26,300 *
Compound Capital Growth Partners, Ltd. 320,294 * 320,294 -- --
EGS Private Healthcare Partnership 303,085 * 303,085 -- --
II, L.P.
Special Situations Fund III, L.P. 285,000 * 285,000 -- --
SEI Institutional Investments Trust 257,200 * 237,200 20,000 *
Zeke, LP 225,000 * 225,000 -- --
RS Smaller Company Growth Fund 210,600 * 75,000 135,600 *
SF Capital Partners, LTD 200,000 * 200,000 -- --
JP Morgan U.S. Small Company Fund 170,750 * 28,350 142,400 *
Compound Capital Growth Partners II, 153,900 * 153,900 -- --
LP
Utah Retirement Systems 141,000 * 130,100 10,900 *
Special Situations Private Equity 125,000 * 125,000 -- --
Fund, L.P.
Anvers Healthcare Investors, LP 124,000 * 63,000 61,000 *
Pierpont Small Company Opportunities 121,932 * 20,600 101,332 *
Fund
CCGrowth Global Life Sciences Ltd. 117,925 * 106,614 11,311 *
UBS Global Equity Arbitrage Master 100,000 * 100,000 -- --
Limited
O'Connor PIPES Corporate Strategies 100,000 * 100,000 -- --
Ltd.
Special Situations Cayman Fund, L.P. 90,000 * 90,000 -- --
JPMCB U.S. Small Company Equity I 84,200 * 13,175 71,025 *
Growth
G. Nicholas Farwell (3) 75,000 * 75,000 -- --
CCGrowth Global Life Sciences I, LP 71,559 * 64,706 6,853 *
RS Orphan Fund, L.P. 70,000 * 70,000 -- --
Compound Capital Growth Partners III, 68,073 * 68,073 -- --
LP
Ivory Opportunity Fund, LP 67,500 * 67,500 -- --
JPM Tax Aware Small Company 67,361 * 14,200 53,161 *
Opportunities Fund
Daughter's of Charity Fund P 61,900 * 57,100 4,800 *
Undiscovered Managers Small Cap 61,100 * 56,200 4,900 *
Growth Fund
Compound Capital Growth Partnership, 50,799 * 50,799 -- --
LP
AIG DKR Soundshore Holdings Ltd. 50,000 * 50,000 -- --
EGS Private Healthcare Investors II, 47,800 * 47,800 -- --
L.P.
11
SHARES OF COMMON STOCK SHARES OF COMMON STOCK
OWNED PRIOR TO OFFERING OWNED AFTER OFFERING
--------------------------------------- -----------------------
NUMBER OF PERCENT OF SHARES TO NUMBER OF PERCENT OF
NAME OF SELLING STOCKHOLDER SHARES CLASS(%)(1) BE SOLD (2) SHARES(2) CLASS(%)(2)
------------------------------------ ----------- ----------- ----------- --------- -----------
EGS Private Healthcare Canadian 45,607 * 45,607 -- --
Partners, L.P.
Vision Small Cap Stock Fund 39,100 * 36,100 3,000 *
Alfred I. Dupont Testamentary Trust 33,300 * 30,700 2,600 *
Ivory Opportunity Fund, Ltd. 32,500 * 32,500 -- --
Les Schwab P/S Retirement Trust 30,300 * 28,000 2,300 *
RS Orphan Offshore Fund, L.P. 30,000 * 30,000 -- --
CCGrowth Global Life Sciences II, LP 26,927 * 24,345 2,582 *
East Bay Municipal Utility District 25,900 * 23,900 2,000 *
Met. Inv. Tr Small Cap Stock -- SSB 25,425 * 3,925 21,500 *
The Paisley Fund, LP 25,000 * 25,000 -- --
JP Morgan Global Healthcare Fund 22,709 * 3,850 18,859 *
Anvers Healthcare Investors 22,700 * 12,000 10,700 *
International, Ltd.
Philips Pensionenfondsen-Small Cap 22,225 * 3,725 18,500 *
Maximus Managed Offshore, Ltd. 21,340 * 21,340 -- --
Ret. Pl. For Union Carbide Corp. 20,029 * 3,800 16,229 *
Maximus Capital Investments, Ltd. 18,870 * 18,870 -- --
Westfiled Life Sciences Fund LP 15,900 * 15,900 -- --
JPMP Global Healthtech Fund 15,500 * 15,500 -- --
JPMCB U.S. Small Company Equity II 15,475 * 2,650 12,825 *
Growth
Memorial Hospital of South Bend, Inc. 12,500 * 11,500 1,000 *
PGH Pension 11,600 * 10,700 900 *
DSM NV PENS VERZ MIJ-Small Cap 11,025 * 1,825 9,200 *
JP Morgan Series Trust Small Company 10,825 * 2,125 8,700 *
Growth Portfolio
Westfiled Life Sciences Fund LP II 9,100 * 9,100 -- --
Nemours Foundation 8,000 * 7,400 600 *
Caddis Master Fund Ltd. 6,934 * 6,934 -- --
JP Morgan Diversified Fund 6,900 * 1,825 5,075 *
Maximus Managed Domestic, L.P. 5,090 * 5,090 -- --
The Baetis Fund, LP 4,799 * 4,335 464 *
Maximus Capital, L.P. 4,700 * 4,700 -- --
EGS Private Healthcare Presidents 3,508 * 3,508 -- --
Fund, L.P.
Wilshire U.S. Equity Fund 2,800 * 2,600 200 *
----------------------
* Less than 1%
(1) Computed based on 42,289,386 shares of common stock outstanding as of
January 23, 2002.
(2) Assumes all the shares of common stock that may be offered hereunder are
sold.
(3) 50,000 shares of common stock are held in the name of G. Nicholas Farwell
and Gail M. Farwell JTWROS, and 25,000 shares of common stock are held in
the name of G. Nicholas Farwell -- Sep. Pty.
The information regarding the selling stockholders may change from time to time.
If required, we will describe these changes in one or more prospectus
supplements.
12
PLAN OF DISTRIBUTION
The selling stockholders can use this prospectus to sell the shares at any
time while the prospectus is in effect, unless we have notified the selling
stockholders that the prospectus is not available at that particular time. The
selling stockholders will determine if, when and how they will sell the shares
they own. Any sales may occur in one or more of the following types of
transactions (including block transactions):
- transactions on the Nasdaq National Market or any other organized
market or quotation system where the shares may be traded,
- privately negotiated transactions between a selling stockholder and
a purchaser, or
- transactions effected with or through a broker-dealer acting as
either agent or principal.
These transactions may involve the transfer of the shares upon exercise or
settlement of put or call options, or the delivery of the shares to replace
shares that were previously borrowed from another stockholder or a combination
of such methods. If a broker-dealer is used in the sale of shares, that person
may solicit potential purchasers. The shares may also be transferred as a gift
or as a result of a pledge, or may be sold to a broker-dealer acting as
principal. These persons may then sell the shares to another person, either
directly or through another broker-dealer, subject to compliance with the
requirements of the Securities Act.
The price at which sales of the shares occur may be based on prevailing
market prices or may be negotiated between the parties, and the consideration
may be cash or another form negotiated between the parties. Broker-dealers
acting as agents or principals may be paid compensation in the form of
discounts, concessions or commissions from the selling stockholder and/or from
the purchasers of the shares, or both. Brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act. Any profits on the
resale of shares by a broker-dealer acting as principal might be deemed to be
underwriting discounts or commissions under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, that can be
attributed to the sale of shares will be paid by the selling stockholder and/or
the purchasers. We have agreed to pay certain of the costs, expenses and fees of
preparing, filing and maintaining this prospectus and the registration statement
of which this prospectus is a part, but we will not receive any proceeds from
the sale of these shares. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares if liabilities are imposed on it under the Securities Act.
The selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares, nor is there an underwriter
or coordinating broker acting in connection with a proposed sale of shares by
any selling stockholder. If we are notified by any selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares, if required, we will file a supplement to this prospectus.
If the selling stockholders use this prospectus for any sale of the shares,
they will be subject to the prospectus delivery requirements of the Securities
Act. For transactions effected on or through the Nasdaq, those requirements may
be satisfied by our delivery of copies of this prospectus to the Nasdaq in
compliance with Securities Act Rule 153. Instead of using this prospectus for
any sale of the
13
shares, a selling stockholder may resell shares in compliance with the criteria
and requirements of Securities Act Rule 144.
The anti-manipulation rules of Regulation M under the Securities Exchange
Act of 1934, as amended, may apply to sales of our common stock and activities
of the selling stockholder.
WHERE YOU CAN FIND
MORE INFORMATION
We file periodic reports, proxy statements and other information with the
Securities and Exchange Commission. You may inspect and copy these reports and
other information at the SEC's public reference room in Washington, D.C.,
located at 450 Fifth Street, N.W., Washington, D.C. 20549. You can also obtain
copies of these materials from the SEC's public reference room at prescribed
rates. Please call the SEC at 1-800-SEC-0330 for further information about its
public reference room. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov. This site contains reports, proxy and information statements
and other information about registrants that file electronically with the SEC.
The SEC permits us to "incorporate by reference" the information and reports
we file with it. This means that we can disclose important information to you by
referring to another document. The information that we incorporate by reference
is considered to be part of this prospectus, and later information that we file
with the SEC automatically updates and supersedes this information.
Specifically, we incorporate by reference:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 2000;
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001, June 30, 2001, and September 30, 2001;
3. Our Current Report on Form 8-K dated January 16, 2002;
4. The description of our common stock contained in our Registration
Statements on Form 8-A, filed on June 2, 1994 and December 4, 1998,
and on Form 8-A/A, filed on January 26, 2001; and
5. All documents we file with the SEC pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this
prospectus and prior to the termination of the offering of the
shares offered by this prospectus.
We have also filed a registration statement on Form S-3 with the SEC. This
prospectus does not contain all of the information set forth in the registration
statement. You should read the registration statement for further information
about us and our common stock.
We will provide a copy of these filings to each person, including any
beneficial owner, to whom we deliver this prospectus, upon written or oral
request. You may request a copy of these filings at no cost by writing or
telephoning us at the following address:
Corporate Secretary
La Jolla Pharmaceutical Company
6455 Nancy Ridge Drive
San Diego, California 92121
(858) 452-6600
14
You should rely only on the information contained in this prospectus. We
have not authorized anyone 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 is
accurate as of any date other than the date on the front of this prospectus.
FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this prospectus that are based on
our management's beliefs and assumptions and on information currently available
to our management. Forward-looking statements include information concerning our
possible or assumed future results of operations and statements preceded by,
followed by or that include the words "believes," "expects," "anticipates,"
"intends," "plans," "estimates" or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. You are cautioned not to put undue reliance on any
forward-looking statements. Except as may be required by law, we do not have any
intention or obligation to update forward-looking statements after we distribute
this prospectus. These statements appear in a number of places in this
prospectus and include statements regarding our intentions, plans, strategies,
beliefs or current expectations and those of our directors or our officers with
respect to, among other things:
- our financial prospects,
- our financing plans,
- trends affecting our financial condition or operating results,
- our strategies for growth, operations, and product development and
commercialization, and
- conditions or trends in or factors affecting the biotechnology
industry.
You should understand that a number of factors could cause our results to
differ materially from those expressed in the forward-looking statements. The
information incorporated by reference or provided in this prospectus identifies
important factors that could cause these differences. Those factors include,
among others, the high cost and uncertainty of technology and drug development,
which can result in loss of profitability and long delays in getting products to
market.
LEGAL MATTERS
The validity of the shares of common stock covered by this prospectus was
passed upon by Gibson, Dunn & Crutcher LLP, Irvine, California.
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 reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
15
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE UNDER
THIS PROSPECTUS TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US OR THE
SELLING STOCKHOLDERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
UNDER THIS PROSPECTUS WILL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THERE HAS BEEN
NO CHANGE IN OUR AFFAIRS OR THAT THE INFORMATION IN THIS PROSPECTUS IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE AS OF WHICH THE INFORMATION IS GIVEN. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED UNDER THIS PROSPECTUS TO ANYONE IN ANY
JURISDICTION IN WHICH THE OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE THE OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
RISK FACTORS ............................................................... 1
USE OF PROCEEDS ............................................................ 10
SELLING STOCKHOLDERS ....................................................... 10
PLAN OF DISTRIBUTION ....................................................... 13
WHERE YOU CAN FIND MORE INFORMATION ........................................ 14
FORWARD-LOOKING STATEMENTS ................................................. 15
LEGAL MATTERS .............................................................. 15
EXPERTS .................................................................... 15
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[LJP LOGO]
7,000,000 SHARES
COMMON STOCK
----------------
PROSPECTUS
----------------
FEBRUARY 4, 2002