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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 21, 2001
REGISTRATION NO. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CYBERONICS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0236465
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
16511 SPACE CENTER BLVD., SUITE 600
HOUSTON, TEXAS 77058
(281) 228-7200
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
PAMELA B. WESTBROOK
16511 SPACE CENTER BLVD., SUITE 600
HOUSTON, TEXAS 77058
(281) 228-7200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
DAVID P. OELMAN
VINSON & ELKINS L.L.P.
1001 FANNIN, SUITE 2300
HOUSTON, TEXAS 77002-6760
(713) 758-2222
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
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 registered on this Form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Class of Offering Aggregate Amount of
Securities to be Registered Amount to be Registered Price per Share (1) Offering Price (1) Registration Fee
--------------------------- ------------------------ ------------------- ------------------ ----------------
COMMON STOCK, par value $0.01 per share 2,518,000 shares $20.938 $52,721,884 $13,181
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, based upon the
average of the high and low prices reported in The NASDAQ National Market
on February 14, 2001.
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION
OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE IN WHICH THE OFFER OR SALE IS
NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 21, 2001
2,518,000 Shares
CYBERONICS, INC.
COMMON STOCK
This prospectus relates to the offer and sale from time to time of up to an
aggregate of 2,518,000 shares of our common stock for the account of our
stockholders named in this prospectus. These stockholders acquired the shares
directly from us in a private placement completed on February 16, 2001. We will
not receive any of the proceeds from the sale of these shares, although we have
paid the expenses of preparing this prospectus and the related registration
statement.
The shares are being registered to permit the selling stockholders to sell
the shares from time to time in the public market. The selling stockholders may
sell this common stock through ordinary brokerage transactions, directly to
market makers or through any other means described in the section entitled "Plan
of Distribution."
Our common stock is listed for trading on The NASDAQ National Market under
the trading symbol "CYBX." On February 20, 2001, the last reported sale price of
our common stock on NASDAQ was $21.625 per share. The shares covered by this
prospectus may be sold at market prices prevailing at the time of sale or at
negotiated prices.
The address of our principal executive offices is 16511 Space Center
Boulevard, Suite 600, Houston, Texas 77058, and our telephone number is (281)
228-7200.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS," BEGINNING ON PAGE 3.
-----------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2001.
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YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE COMMON STOCK
IS NOT BEING OFFERED IN ANY JURISDICTION WHERE THE OFFER IS NOT 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 THE COMMON STOCK.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS........................................... 1
OUR COMPANY.......................................................... 2
RISK FACTORS......................................................... 3
USE OF PROCEEDS...................................................... 8
SELLING STOCKHOLDERS................................................. 8
PLAN OF DISTRIBUTION................................................. 8
LEGAL MATTERS........................................................ 10
EXPERTS.............................................................. 10
WHERE YOU CAN FIND MORE INFORMATION.................................. 10
ADDITIONAL INFORMATION, INCLUDING OUR FINANCIAL STATEMENTS FOR THE FISCAL
YEAR ENDED JUNE 30, 2000 AND THE NOTES THERETO, AND OUR RECENT QUARTERLY
REPORTS, IS INCORPORATED IN THIS PROSPECTUS BY REFERENCE TO OUR REPORTS FILED
WITH THE SEC. SEE "WHERE YOU CAN FIND MORE INFORMATION." YOU ARE URGED TO READ
THIS PROSPECTUS, INCLUDING THE "RISK FACTORS," AND OUR SEC REPORTS IN THEIR
ENTIRETY.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
important factors. Factors that could cause actual results to differ materially
from the expectations reflected in the forward-looking statements include, among
other things:
- reliance on single product
- uncertainty of product development and expansion into other
indications, including depression and obesity
- uncertainty of ability to expand market acceptance
- fluctuations in quarterly operating results
- dependence on patents, licenses, and proprietary rights
- competition and rapid technological change
- volatility of stock price
- dependence on key suppliers and manufacturers
- risk of product recall
- limitations on third-party reimbursement
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We undertake no obligation to update or revise our forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
OUR COMPANY
Cyberonics, Inc. was founded in 1987 to design, develop, manufacture and
market the Neuro Cybernetic Prosthesis, or NCP (R) System, an implantable
medical device for the treatment of epilepsy and other debilitating
neurological, psychiatric diseases and other disorders.
During fiscal 2000, we began operating our business in three business
units. The three separate business units include the Epilepsy Business Unit, the
Depression Business Unit and the Obesity and Other New Indications Business
Unit. All three of these units are reported for accounting purposes as one
segment and involve designing, developing, manufacturing and marketing our
proprietary NCP System using Vagus Nerve Stimulation (VNS(TM)) for the treatment
of epilepsy and other debilitating neurological, psychiatric diseases and other
disorders. The identification and separation of the Indications Business Units
reflects the different phases of clinical development and product life cycle as
well as the different disorders amenable to treatment by VNS using our
proprietary NCP system. However, each Indication Business Unit has similar
economic characteristics, technology, manufacturing processes, customers,
distribution and marketing strategies, a similar regulatory environment and
shared infrastructures.
Our overall objectives are:
- to transition VNS from being considered a revolutionary new therapy
into being considered a primary adjunctive standard of care for
treating patients who suffer from epilepsy and
- to develop other indications for vagus nerve stimulation covered by
our method patents.
Our strategies to achieve our objectives are to:
- expand market acceptance of VNS by creating physician and patient
demand,
- expand reimbursement by third-party payors to hospitals and medical
professionals by communicating the safety and efficacy of the NCP
System, the debilitating nature and the annual cost of treating
epilepsy and the efficacy and cost of alternative treatments,
- expand the clinical study of the NCP System for the treatment of major
depression and
- continue the preliminary evaluation of VNS in new indications as
warranted by our extensive patent portfolio, research and studies and
market dynamics.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors, in addition to other
information contained in this prospectus and any other document incorporated by
reference into this prospectus, before purchasing our common stock.
WE RELY ON ONE PRODUCT FOR OUR REVENUE AND THE OTHER PRODUCTS WE ARE DEVELOPING
MAY NOT ULTIMATELY GENERATE REVENUES.
We rely on only one product for our revenues and if sales of this product
are not achieved, our operating results will be severely harmed. We have only
one product, the NCP System, which has been approved by the FDA for a single
indication: as an adjunctive therapy in reducing the frequency of seizures in
adults and adolescents over 12 years of age with partial onset seizures that are
refractory to antiepileptic drugs. We do not expect to have any other product or
approved indication for the NCP System in the United States for at least the
next two years. Although sales of our NCP System have been increasing, we cannot
assure you that sales will continue to increase at the same rate or at all. We
are currently requesting approval for the use of the NCP System for the
treatment of major depression in patients with unipolar and bipolar depressive
disorder. We do not yet have approvals necessary to commercialize the NCP System
for the treatment of depression. We cannot assure you that any approvals for the
treatment of depression with the NCP System will be granted, nor can we assure
you that even if the approval is granted, we will be successful in
commercializing the NCP System for the treatment of depression. The same
uncertainty surrounds our efforts in obesity and Alzheimer's Disease
applications. Our inability to commercialize successfully the NCP System for
depression, obesity and other indications will severely harm our business.
ACCEPTANCE OF OUR NCP SYSTEM IN THE MARKETPLACE IS UNCERTAIN.
We may not be able to continue to expand market acceptance of the use of
our NCP System to treat epilepsy, which could cause our sales to decrease.
Continued market acceptance of our NCP System will depend on our ability to
convince the medical community of the clinical efficacy and safety of vagus
nerve stimulation and the NCP System. While the NCP System has been used in
approximately 9,000 patients through June 30, 2000, many physicians are still
unfamiliar with this form of therapy. We believe that existing antiepileptic
drugs and surgery are the only other approved and currently available therapies
competitive with the NCP System in the treatment of epileptic seizures. These
therapies may be more attractive to patients or their physicians than the NCP
System in terms of efficacy, cost or reimbursement availability. We cannot
assure you that the NCP System will achieve market acceptance for the treatment
of epilepsy or for any other indication. Failure of the NCP System to gain
market acceptance would severely harm our business, financial condition and
results of operations.
OUR EFFORTS TO DEVELOP VNS FOR TREATMENT OF DEPRESSION, OBESITY, ALZHEIMER'S
DISEASE OR ANY OTHER INDICATIONS MAY PROVE UNSUCCESSFUL.
We may not be successful in our efforts to develop VNS for the treatment of
depression, obesity, Alzheimer's Disease or any other indications. We are in the
process of conducting studies to help us evaluate, and ultimately obtain FDA
approval for, the use of VNS as a treatment for depression, obesity, Alzheimer's
Disease and other indications. While we are encouraged by test results to date,
we cannot assure you that our test results will continue to be as positive as we
currently anticipate or that we will receive FDA approval for the use of our
product for the treatment of any other indication. Even if we receive FDA
approval for another indication, we can provide no assurances with respect to
market acceptance. If our test results are not as we anticipate, if we receive
no additional FDA approvals or if alternative indications do not prove to be
commercially viable, our revenues will not experience the growth that we
currently anticipate.
FLUCTUATIONS IN OUR QUARTERLY OPERATIONS MAY ADVERSELY AFFECT THE MARKET PRICE
OF OUR COMMON STOCK.
Our quarterly operating results may fluctuate in the future, which may
cause our stock price to decline. Our results of operations may fluctuate
significantly from quarter to quarter and may be below the expectations of
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security analysts. If so, the market price of our shares may decline. Our
quarterly revenues, expenses and operating results may vary significantly from
quarter to quarter for several reasons including the extent to which our NCP
System gains market acceptance, the timing of obtaining marketing approvals for
our NCP System for other indications, the timing of any approvals for
reimbursement by third-party payors, the rate and size of expenditures incurred
as we expand our clinical, manufacturing, sales and marketing efforts, our
ability to retain qualified sales personnel and the availability of key
components, materials and contract services, which may depend on our ability to
forecast sales.
OUR PROJECTED EXPENSES ARE BASED ON ESTIMATES OF FUTURE SALES, WHICH MAY NOT BE
ACCURATE.
Our current and future expense estimates are based, in large part, on
estimates of future sales, which are difficult to predict. We may be unable to,
or may elect not to, adjust spending quickly enough to offset any unexpected
sales shortfall. If our expenses were not accompanied by increased sales, our
results of operations and financial condition for any particular quarter would
be harmed.
UNCERTAINTY OF THIRD-PARTY REIMBURSEMENT COULD AFFECT OUR PROFITABILITY.
We may be unable to obtain adequate third-party reimbursement on our
product. Our ability to commercialize the NCP System successfully depends in
part on whether third-party payors, including private health care insurers,
managed care plans, the United States government's Medicare and Medicaid
programs and others, agree both to cover the NCP System and associated
procedures and services and to reimburse at adequate levels for the costs of the
NCP System and the related services we have in the United States or
internationally. If we fail to achieve or expand favorable coverage decisions
for the NCP System in a timely manner, patients and their physicians could be
deterred from using the NCP System which could reduce our sales and severely
harm our business.
OUR SALES REQUIRE EXTENSIVE MARKETING AND SALES EFFORTS, WHICH MAY NOT BE
SUCCESSFUL.
We may not be successful in our marketing and sales efforts, which could
severely harm our business. We cannot assure you that our marketing and sales
efforts will succeed in promoting the NCP System to patients, health care
providers or third-party payors on a broad basis. In addition, due to limited
market awareness of the NCP System, we believe that the sales process could be
lengthy, requiring us to continue to educate patients, health care providers and
third-party payors regarding the clinical benefits and cost effectiveness of the
NCP System. In certain international territories, we rely, and intend to
continue to rely, upon independent distributors. We may not be able to recruit
and retain skilled marketing and sales personnel or foreign distributors to
support our marketing and sales efforts. Our failure to successfully market and
sell our NCP System or to retain our sales force would severely impair our sales
and our business.
WE RELY UPON THIRD PARTY SUPPLIERS FOR COMPONENTS, MATERIALS AND CONTRACT
SERVICES TO MANUFACTURE THE NCP SYSTEM.
If our suppliers and manufacturers are unable to meet our demand for
materials, components and contract services, we may be forced to qualify new
vendors or change our product design which would impair our ability to deliver
products to our customers on a timely basis. We rely upon sole source suppliers
for certain of the key components, materials and contract services used in
manufacturing the NCP System. We periodically experience discontinuation or
unavailability of components, materials and contract services which may require
us to qualify alternative sources or, if no such alternative sources are
identified, change our product design. We believe that pursuing and qualifying
alternative sources and/or redesigning specific components of the NCP System,
when necessary, could consume significant resources. In addition, such changes
generally require regulatory submissions and approvals. Any extended delays in
or an inability to secure alternative sources for these or other components,
materials and contract services could result in product supply and manufacturing
interruptions, which could significantly harm our business.
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OUR PRODUCTS MAY BE SUBJECT TO CLAIMS OF DESIGN DEFECT AND PRODUCT RECALLS.
Our products may be found to have significant defects that could harm the
human body and result in product recalls. The NCP System includes a complex
electronic device and lead designed to be implanted in the human body. Component
failures, manufacturing or shipping errors or design defects could result in an
unsafe condition in patients. The occurrence of such problems or other adverse
reactions could result in a recall of our products, possibly requiring removal
and potential reimplantation of the NCP System or a component of the NCP System.
For example, in 1991, a failure of an NCP System caused permanent paralysis of
one patient's left vocal cord. In addition, several patients experienced bipolar
lead failures which, although not harmful to the patient, reduced the efficacy
of the treatment and required lead replacement. Since the occurrence of these
failures, changes have been made to our product designs and no similar failures
have been reported. However in the future, we may experience similar or other
product problems or may be required to recall products. Any product recall could
severely harm our business, financial condition and results of operations.
WE MAY NOT BE ABLE TO PREVENT UNAUTHORIZED USE OF OUR PRODUCTS.
We may not be able to protect our technology from unauthorized use, which
could diminish the value of our products and impair our ability to compete. Our
success depends upon our ability to obtain and maintain patent and other
intellectual property protection for the NCP System and its improvements, and
for vagus nerve stimulation therapy. To that end, we have acquired licenses
under certain patents and have patented and intend to continue to seek patents
on our own inventions used in our products and treatment methods. The process of
seeking patent protection can be expensive and time consuming and we cannot
assure you that patents will issue from our currently pending or future
applications or that, if patents are issued, they will be of sufficient scope or
strength to provide meaningful protection of our technology, or any commercial
advantage to us. Further, the protection offered by the licensed international
patents is not as strong as that offered by the licensed United States patents
due to differences in patent laws. In particular, the European Patent Convention
prohibits patents covering methods for treatment of the human body by surgery or
therapy.
We may have to engage in litigation to protect our proprietary rights, or
defend against infringement claims by third parties, causing us to suffer
significant expenses or prevent us from selling our products. There has been
substantial litigation regarding patent and other intellectual property rights
in the medical device industry. Litigation, which could result in substantial
cost to and diversion of effort by us, may be necessary to enforce patents
issued or licensed to us, to protect trade secrets or know-how owned by us or to
defend ourselves against claimed infringement of the rights of others and to
determine the scope and validity of the proprietary rights of others. Adverse
determinations in litigation could subject us to significant liabilities to
third parties, could require us to seek licenses from third parties and could
prevent us from manufacturing, selling or using the NCP System, any of which
could severely harm our business.
OUR INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND INTENSE COMPETITION.
Intense competition and rapid technological changes could reduce our
ability to market our products and achieve sales. We believe that existing and
future antiepileptic drugs will continue to be the primary competition for our
NCP System. We may also face competition from other medical device companies
that have the technology, experience and capital resources to develop
alternative devices for the treatment of epilepsy. Medtronic, Inc., for example,
continues to clinically assess an implantable signal generator used with an
invasive deep brain probe, or thalamic stimulator, for the treatment of
neurological disorders and has received FDA approval for the device for the
treatment of essential tremor, including that associated with Parkinson's
Disease. Many of our competitors have substantially greater financial,
manufacturing, marketing and technical resources than we do and have obtained
third-party reimbursement approvals for their therapies. In addition, the health
care industry is characterized by extensive research efforts and rapid
technological progress. Our competitors may develop technologies and obtain
regulatory approval for products that are more effective in treating epilepsy
than our current or future products. In addition, advancements in surgical
techniques may make surgery a more attractive therapy for epilepsy. The
development by others of new treatment methods with novel antiepileptic drugs,
medical devices or surgical
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techniques for epilepsy could render the NCP System non-competitive or obsolete.
We may not be able to compete successfully against current and future
competitors, including new products and technology, which could severely harm
our business, financial condition or results of operations.
WE MUST EFFECTIVELY MANAGE OUR GROWTH.
If we fail to effectively manage our growth, our ability to maintain our
costs or capture new business could suffer. In connection with the
commercialization of the NCP System in the United States, we have begun and
intend to continue to significantly expand the scope of our operations, in
particular in manufacturing and in marketing and sales. Such activities have
placed, and may continue to place, a significant strain on our resources and
operations. Our ability to effectively manage such growth will depend upon our
ability to attract, hire and retain highly qualified employees and management
personnel. We compete for such personnel with other companies, academic
institutions, government entities and other organizations and we may not be
successful in hiring or retaining qualified personnel. Our success will also
depend upon the ability of our officers and key employees to continue to
implement and improve our operational, management information and financial
control systems. If we fail to manage our growth effectively, our business would
suffer.
WE MAY BE NEGATIVELY AFFECTED IF OUR PRODUCT LIABILITY INSURANCE COVERAGE IS
INADEQUATE.
We are subject to claims of product liability and we may not have the
resources or insurance to cover the cost for losses under these claims. As an
implantable medical device, the manufacture and sale of the NCP System entails
the risk of product liability claims. Our product liability coverage may not be
adequate to cover any of these claims. Product liability insurance is expensive
and in the future may not be available on acceptable terms, if at all. A
successful claim brought against us in excess of our insurance coverage could
significantly harm our business and financial condition.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH CAN BE COSTLY, TIME
CONSUMING AND SUBJECT US TO UNANTICIPATED DELAYS.
If we do not continue to comply with changing government regulations, we
could lose our ability to market and sell our product. The preclinical and
clinical testing, manufacturing, labeling, sale, distribution and promotion of
the NCP System are subject to extensive and rigorous regulation in the United
States by federal agencies, primarily the FDA, and by comparable state agencies.
In the future, it will be necessary for us to obtain additional government
approvals for other applications of the NCP System and for modified or
future-generation products. Commercial distribution in certain foreign countries
is also subject to obtaining regulatory approvals from the appropriate
authorities in such countries. The process of obtaining FDA and other required
regulatory approvals is lengthy, expensive and uncertain. Moreover, regulatory
approvals may include regulatory restrictions on the indicated uses for which a
product may be marketed. Failure to comply with applicable regulatory
requirements can result in, among other things, fines, suspension or withdrawal
of approvals, confiscations or recalls of products, operating restrictions and
criminal prosecution. Furthermore, changes in existing regulations or adoption
of new regulations could prevent us from obtaining, or affect the timing of,
future regulatory approvals. We may not be able to obtain additional future
regulatory approvals on a timely basis or at all. Delays in receipt of or
failure to receive such future approvals, suspension or withdrawal of previously
received approvals, or recalls of the NCP System could severely harm our ability
to market and sell our current and future products and improvements.
OUR EXPANSION INTO INTERNATIONAL MARKETS MAY CREATE NEW RISKS AND REGULATORY
APPROVALS THAT COULD ADVERSELY AFFECT OUR BUSINESS.
Our international operations are subject to risks not generally associated
with commercialization efforts in the United States. We may not be successful in
increasing our international market sales or in obtaining reimbursement or any
regulatory approvals required in foreign countries. The anticipated
international nature of our business is also expected to subject us and our
representatives, agents and distributors to laws and regulations of the foreign
jurisdictions in which we operate or where the NCP System is sold. The
regulation of medical devices in a number
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of such jurisdictions, particularly in the European Union, continues to develop
and new laws or regulations may impair our ability to market and sell our
products in those jurisdictions.
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USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the sale of
the common stock offered under this prospectus.
SELLING STOCKHOLDERS
We are registering all 2,518,000 shares covered by this prospectus on
behalf of the selling stockholders named in the table below. We issued all of
these shares to the selling stockholders in a private placement transaction. We
are registering the shares in order to permit the selling stockholders to offer
these shares for resale from time to time. The selling stockholders may sell
all, some or none of the shares covered by this prospectus. See "Plan of
Distribution."
The table below lists the selling stockholders and other information
regarding the ownership of common stock by each of the selling stockholders.
PERCENTAGE
OF
NUMBER OF NUMBER OF SHARES
SHARES SHARES OWNED SHARES
OWNED PRIOR TO BEING PRIOR TO OWNED AFTER OFFERING (2)
Selling Stockholder OFFERING (1) OFFERED OFFERING (3) NUMBER PERCENT (3)
-------------------
State of Wisconsin Investment Board 2,010,300 800,000 9.4% 1,210,300 5.7%
John Hancock Advisers, Inc. 702,500 625,000 3.3 77,500 *
Massachusetts Financial Services Co. 1,820,571 475,000 8.5 1,345,571 6.3
The Kaufman Fund, Inc. 200,000 200,000 * 0 *
Special Situations Funds 200,000 200,000 * 0 *
Framlington Group, PLC 303,000 150,000 1.4 153,000 *
Evergreen Investment Management 75,000 50,000 * 25,000 *
Robert P. Cummins 593,538 12,500 2.8 581,038(4)(5)(6) 2.7
Richard P. Kuntz 43,000 5,500 * 37,500(4)(7) *
------- ------- ----- --------- -----
TOTAL 5,947,909 2,518,000 3,429,909
* Less than 1.0%.
(1) Based on total shares outstanding of 18,884,989 at February 15, 2001.
(2) Assumes that the selling stockholders dispose of all the shares of common
stock covered by this prospectus and do not acquire any additional shares
of common stock.
(3) The percentage of common stock beneficially owned is based on the
21,402,989 shares of common stock outstanding on February 20, 2001.
(4) Includes 537,288 and 37,500 shares of common stock owned by Messrs.
Cummins and Kuntz, respectively, subject to options exercisable on or
before April 15, 2001.
(5) Includes 10,000 shares of common stock held in trust for the benefit of
Mr. Cummins' children of which Mr. Cummins serves as trustee.
(6) Mr. Cummins is the President, Chief Executive Officer and a Director
of Cyberonics.
(7) Mr. Kuntz is the Vice President of Manufacturing for Cyberonics.
PLAN OF DISTRIBUTION
The selling stockholders (or, subject to applicable law, their pledges,
donees, distributes, transferees, or successors-in-interest) are offering shares
of our common stock that they acquired from us in a private placement
transaction. This prospectus covers the selling stockholders' resale of up to
2,518,000 shares of common stock.
In connection with our issuance to the selling stockholders of the common
stock, we are filing a Registration Statement on Form S-3 with the Securities
and Exchange Commission. The registration statement covers the resale of the
common stock from time-to-time as indicated in this prospectus. This prospectus
forms a part of that registration statement. We have also agreed to prepare and
file any amendments and supplements to the registration statement as may be
necessary to keep it effective for a period not to exceed two years and to
indemnify and hold the selling stockholders harmless against certain liabilities
under the Securities Act of 1933 that could arise in connection with the selling
stockholders' sale of the shares covered by this prospectus. We have agreed to
pay all reasonable fees and expenses incident to the filing of the registration
statement, but the selling stockholders will pay any brokerage commissions,
discounts or other expenses relating to the sale of the common stock.
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The selling stockholders may sell the shares of common stock described in
this prospectus directly or through underwriters, broker-dealers or agents. The
selling stockholders may also transfer, devise or gift these shares by other
means not described in this prospectus. As a result, pledges, donees,
transferees or other successors-in-interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer may offer shares of
the common stock covered by this prospectus. In addition, if any shares covered
by this prospectus qualify for sale pursuant to Rule 144 under the Securities
Act of 1933, the selling shareholders may sell such shares under Rule 144 rather
than pursuant to this prospectus.
The selling stockholders may sell shares of common stock from time-to-time
in one or more transactions:
- at fixed prices that may be changed;
- at market prices prevailing at the time of sale; or
- at prices related to such prevailing market prices or at negotiated
prices.
The selling stockholders may offer their shares of common stock in one or
more of the following transactions.
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including
the Nasdaq National Market;
- in the over-the-counter market;
- in privately negotiated transactions;
- through options;
- by pledge to secure debts and other obligations;
- by a combination of the above methods of sale; or
- to cover short sales made pursuant to this prospectus.
In effecting sales, brokers or dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate in the resales. The
selling stockholders may enter into hedging transactions with broker-dealers,
and in connection with those transactions, broker-dealers may engage in short
sales of the shares. The selling stockholders also may sell shares short and
deliver the shares to close out such short positions, provided that the short
sale is made after the registration statement has been declared effective and a
copy of this prospectus is delivered in connection with the short sale. The
selling stockholders also may enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the shares,
which the broker-dealer may resell pursuant to this prospectus. The selling
shareholders also may pledge the shares to a broker or dealer, and upon a
default, the broker or dealer may effect sales of the pledge shares pursuant to
this prospectus.
The Commission may deem the selling stockholders and any underwriters,
broker-dealers or agents that participate in the distribution of the shares of
common stock to the "underwriters" within the meaning of the Securities Act. The
Commission may deem any profits on the resale of the shares of common stock and
any compensation received by any underwriter, broker-dealer or agent to be
underwriting discounts and commissions under the Securities Act. Each selling
stockholder has purchased the common stock in the ordinary course of its
business, and at the time the selling stockholder purchased the common stock it
was not a party to any agreement or other understanding to distribute the
securities, directly or indirectly.
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Under the Securities Exchange Act of 1934, any person engaged in the
distribution of the shares of common stock may not simultaneously engage in
market-making activities with respect to the common stock for five business days
prior to the start of the distribution. In addition, each selling shareholder
and any other person participating in a distribution will be subject to the
Securities Exchange Act of 1934, which may limit the timing of purchases and
sales of common stock by the selling shareholder or any such other person.
LEGAL MATTERS
The validity of the shares offered by this prospectus has been passed upon
by Vinson & Elkins L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
report.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to this offering. This prospectus, which forms a
part of the registration statement, does not contain all the information
included in the registration statement and the attached exhibits.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's Website at Http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at Seven World
Trade Center, Suite 1300, New York, New York 10048. You may obtain information
on the operation of the SEC's public reference room in Washington D.C. by
calling the SEC at 1-800-SEC-0330.
We also file such information with the Nasdaq National Market. Our reports,
proxy and information statements and other information can be read and copied at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to documents previously filed. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until all of the securities described in this prospectus are sold:
- the description of our common stock contained in our registration
statement on Form 8-A dated February 10, 1993, including any amendment
to that form that we may have filed in the past, or may file in the
future, for the purpose of updating the description of our common
stock;
- our annual report on Form 10-K for the fiscal year ended June 30,
2000;
- our quarterly report on Form 10-Q for the quarter ended September 30,
2000;
- our quarterly report on Form 10-Q for the quarter ended December 31,
2000;
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- our current report on Form 8-K, filed with the SEC on September 12,
2000;
- our current report on Form 8-K, filed with the SEC on September 26,
2000; and
- our amendment to our current report on Form 8-K, filed with the SEC on
September 28, 2000.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Cyberonics, Inc.
16511 Space Center Boulevard, Suite 600
Houston, Texas 77058
Attn: Chief Financial Officer
(281) 228-7200
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with any information. You should not assume that the information in this
document is current as of any date other than the date on the front page of this
prospectus.
YOU SHOULD RELY 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 STATEMENTS AND REPRESENTATIONS CONTAINED
WITHIN THIS PROSPECTUS ARE TRUE AND CORRECT AS OF THE DATE INDICATED ON THE
COVER PAGE. THE DELIVERY OF THIS PROSPECTUS DOES NOT, UNDER ANY CIRCUMSTANCES,
CREATE THE IMPLICATION THAT THERE HAS BEEN NO CHANGE SINCE THAT DATE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THOSE REGISTERED SECURITIES TO WHICH THE PROSPECTUS
RELATES. MOREOVER, THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY IN ANY CIRCUMSTANCES IN WHICH SUCH AN OFFER OR
SOLICITATION IS UNLAWFUL.
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2,518,000 SHARES
CYBERONICS, INC.
COMMON STOCK
-------------------------------------
PROSPECTUS
--------------------------------------------
15
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by Cyberonics,
Inc. in connection with the registration of the shares of common stock covered
by this prospectus. All the amounts shown are estimates, except the registration
fee.
SEC Registration Fee $ 13,181
Legal Fees and Expenses 35,000
Accountant's Fees and Expenses 5,000
Printing Expenses 5,000
Miscellaneous 2,000
----------
Total $ 60,181
==========
We have agreed to pay all fees and expenses incident to the registration of
the shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VIII of Cyberonics' Amended and Restated Certificate of
Incorporation, a copy of which is filed as Exhibit 3.1, provides that directors,
officers, employees and agents shall be indemnified to the fullest extent
permitted by the Delaware General Corporation Law ("DGCL").
Section 145 of the DGCL authorizes, inter alia, a corporation to indemnify
any person ("indemnitee") who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding, by or
in the right of the corporation), by reason of the fact that such person is or
was an officer or director of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided that he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. A Delaware corporation
may indemnify past or present officers and directors of such corporation or of
another corporation or other enterprise at the former corporation's request, in
an action by or in the right of the corporation to procure a judgment in its
favor under the same conditions, except that no indemnification is permitted
without judicial approval if such person is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in defense of any action referred to above, or in defense of any
claim, issue or matter therein, the corporation must indemnify him against the
expenses (including attorney's fees) which he actually and reasonably incurred
in connection therewith. Section 145 further provides that any indemnification
shall be made by the corporation only as authorized in each specific case upon a
determination by the (i) stockholders, (ii) board of directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding or (iii) independent counsel if a quorum of disinterested
directors so directs. Section 145 provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 145 of the DGCL also empowers Cyberonics to purchase and maintain
insurance on behalf of any person who is or was an officer or director of
Cyberonics against liability asserted against or incurred by him in any such
capacity, whether or not Cyberonics would have the power to indemnify such
officer or director against such liability under the provisions of Section 145.
Cyberonics intends to purchase and maintain a directors' and officers' liability
policy for such purposes.
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ITEM 16. EXHIBITS.
The following documents are filed as exhibits to this Registration
Statement, including those exhibits incorporated herein by reference to a prior
filing of the Company under the Securities Act or the Exchange Act as indicated
in parentheses:
EXHIBIT NO. EXHIBITS
*3.1 -- Amended and Restated Certificate of Incorporation of the
Company, dated January 28, 2000.
3.2 -- By-Laws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Report on Form 8-K filed on September
12, 2000).
4.1 -- Second Amended and Restated Preferred Shares Rights
Agreement, dated as of August 21, 2000 between Cyberonics,
Inc. and Fleet National Bank, including the Certificate of
Designation, the Form of Rights Certificate and the Summary
of Rights attached thereto as Exhibits A, B and C,
respectively (incorporated by reference to Exhibit 4.1 to
the Company's Report on Form 8-K filed on September 12,
2000).
*5.1 -- Opinion of Vinson & Elkins L.L.P.
*10.1 -- Form of Stock Purchase Agreement dated February 13, 2001.
*23.1 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1)
*23.2 -- Consent of Arthur Andersen LLP.
*24.1 -- Powers of Attorney (included on the signature pages of this
Registration Statement).
* Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(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 a
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(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;
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Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment 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; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
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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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on February 21, 2001.
CYBERONICS, INC.
By: /s/ ROBERT P. CUMMINS
------------------------------------
Robert P. Cummins
President and Chief Executive Officer
POWER OF ATTORNEYS
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert P. Cummins and Pamela B. Westbrook, and
each of them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign on
his behalf individually and in each capacity stated below any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on February 21, 2001.
SIGNATURE TITLE
--------- -----
/s/ ROBERT P. CUMMINS President, Chief Executive Officer and
------------------------------ Director (Principal Executive Officer)
Robert P. Cummins
/s/ PAMELA B. WESTBROOK Vice President, Chief Financial Officer (Principal
------------------------------ Financial Officer and Principal Accounting Officer)
Pamela B. Westbrook
/s/ REESE S. TERRY, JR. Chairman of the Board of Directors and Secretary
------------------------------
Reese S. Terry, Jr.
/s/ STANLEY H. APPEL, M.D. Director
------------------------------
Stanley H. Appel, M.D.
/s/ TONY COELHO Director
------------------------------
Tony Coelho
/s/ THOMAS A. DUERDEN, PH.D. Director
------------------------------
Thomas A. Duerden, Ph.D.
/s/ MICHAEL J. STRAUSS, M.D. Director
------------------------------
Michael J. Strauss, M.D.
/s/ ALAN J. OLSEN Director
------------------------------
Alan J. Olsen
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EXHIBIT INDEX
EXHIBIT NO. EXHIBITS
*3.1 -- Amended and Restated Certificate of Incorporation of the
Company, dated January 28, 2000.
3.2 -- By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Report on Form 8-K filed on
September 12, 2000).
4.1 -- Second Amended and Restated Preferred Shares Rights
Agreement, dated as of August 21, 2000 between Cyberonics,
Inc. and Fleet National Bank, including the Certificate of
Designation, the Form of Rights Certificate and the Summary
of Rights attached thereto as Exhibits A, B and C,
respectively (incorporated by reference to Exhibit 4.1 to
the Company's Report on Form 8-K filed on September 12,
2000).
*5.1 -- Opinion of Vinson & Elkins L.L.P.
*10.1 -- Form of Stock Purchase Agreement dated February 13, 2001.
*23.1 -- Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1)
*23.2 -- Consent of Arthur Andersen LLP.
*24.1 -- Powers of Attorney (included on the signature pages of this
Registration Statement).
* Filed herewith.
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