Filed Pursuant to Rule 424(b)(5)
Registration No. 333-198142
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED AUGUST 25, 2014)
5,200,000 Shares
Common Stock
We are offering
5,200,000 shares of our common stock. Our common stock is listed on the Nasdaq Global Market under the symbol “CNAT.” On May 10, 2017, the last reported sale price of our common stock on the Nasdaq Global Market was $7.02 per
share.
We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as
such, have elected to comply with certain reduced public company reporting requirements for this prospectus supplement, the accompanying prospectus and future filings with the Securities and Exchange Commission.
We have entered into a stock purchase agreement with funds affiliated with Advent Private Equity to, immediately following the closing of this
offering, repurchase an aggregate of 2,166,836 shares of our common stock from them at a price equal to the net proceeds per share that we will receive from this offering, before expenses. We intend to use a portion of the net proceeds from this
offering to fund such repurchase.
Investing in our common stock involves risks. See “
Risk Factors
” beginning on page
S-5
of this prospectus supplement and the documents incorporated by reference into this prospectus supplement.
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Per
Share
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Total
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Public offering price
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$
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5.50
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$
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28,600,000
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Underwriting discounts and commissions
(1)
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$
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0.33
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$
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1,716,000
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Proceeds, before expenses, to us
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$
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5.17
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$
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26,884,000
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(1)
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We have agreed to reimburse the underwriters for certain expenses. See “Underwriting.”
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We have granted the underwriters an option for a period of 30 days to purchase up to an additional 780,000 shares of our common stock. If
the underwriters exercise their option in full, the total underwriting discounts and commissions payable by us will be $1,973,400 and the total proceeds to us, before expenses, will be $30,916,600.
The underwriters expect to deliver shares of common stock to purchasers on May 16, 2017.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
Joint
Book-Running Managers
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Stifel
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SunTrust Robinson Humphrey
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The date of this prospectus supplement is May 11, 2017.
TABLE OF CONTENTS
S-i
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying prospectus dated August 25, 2014 are part of a registration statement that we filed with
the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration process. This prospectus supplement and the accompanying prospectus relate to the offer by us of shares of our common stock to certain investors. We provide
information to you about this offering of shares of our common stock in two separate documents that are bound together: (1) this prospectus supplement, which describes the specific details regarding this offering; and (2) the accompanying
prospectus, which provides general information, some of which may not apply to this offering. Generally, when we refer to this “prospectus,” we are referring to both documents combined. If information in this prospectus supplement is
inconsistent with the accompanying prospectus, you should rely on this prospectus supplement. However, if any statement in one of these documents is inconsistent with a statement in another document having a later date—for example, a document
incorporated by reference in this prospectus supplement or the accompanying prospectus—the statement in the document having the later date modifies or supersedes the earlier statement as our business, financial condition, results of operations
and prospects may have changed since the earlier dates. You should read this prospectus supplement, the accompanying prospectus, the documents and information incorporated by reference in this prospectus supplement and the accompanying prospectus,
and any free writing prospectus that we have authorized for use in connection with this offering when making your investment decision. You should also read and consider the information in the documents we have referred you to under the headings
“Where You Can Find More Information; Information Incorporated by Reference.”
You should rely only on information contained in
or incorporated by reference into this prospectus supplement and the accompanying prospectus. We have not, and the underwriters have not, authorized anyone to provide you with information that is different. We are offering to sell and seeking offers
to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus supplement, the accompanying prospectus, the documents and information incorporated by reference in this
prospectus supplement and the accompanying prospectus, and any free writing prospectus that we have authorized for use in connection with this offering are accurate only as of their respective dates, regardless of the time of delivery of this
prospectus supplement or of any sale of our common stock.
When we refer to “Conatus,” “we,” “our,”
“us” and the “Company” in this prospectus, we mean Conatus Pharmaceuticals Inc., unless otherwise specified.
We use
our registered trademark, CONATUS PHARMACEUTICALS, in this prospectus. This prospectus also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to
in this prospectus appear without the
®
and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law,
our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.
S-1
PROSPECTUS SUPPLEMENT SUMMARY
The items in the following summary are described in more detail later in this prospectus supplement and in the accompanying prospectus.
This summary provides an overview of selected information and does not contain all the information you should consider before investing in our common stock. Therefore, you should read the entire prospectus supplement, the accompanying prospectus and
any free writing prospectus that we have authorized for use in connection with this offering carefully, including the “Risk Factors” section, and other documents or information included or incorporated by reference in this prospectus
supplement and the accompanying prospectus before making any investment decision.
Conatus Pharmaceuticals Inc.
Overview
We are a
biotechnology company focused on the development and commercialization of novel medicines to treat liver disease. We are developing emricasan, a
first-in-class,
orally
active
pan-caspase
protease inhibitor, for the treatment of patients with chronic liver disease. Emricasan is designed to reduce the activities of human caspases, which are enzymes that mediate inflammation
and apoptosis. We believe that by reducing the activity of these enzymes, emricasan has the potential to interrupt the progression of liver disease and potentially provide treatment options in multiple areas of liver disease.
We plan to continue advancing toward initial registration of emricasan for patients with cirrhosis due to nonalcoholic steatohepatitis, or
NASH, with parallel development toward registration of emricasan for patients with NASH fibrosis.
Our current clinical program for
emricasan includes the following randomized, double-blind, placebo-controlled Phase 2b clinical trials:
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Phase 2b
ENCORE-PH
(Portal Hypertension) Clinical Trial
: In November 2016, we initiated a clinical trial to evaluate the effect of emricasan in reducing hepatic venous
pressure gradient in approximately 240 compensated or early decompensated NASH cirrhosis patients with severe portal hypertension. We amended the trial protocol in April 2017 to integrate a treatment extension for clinical outcomes.
Top-line
results are expected in 2018.
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Phase 2b
ENCORE-LF
(Liver Function) Clinical Trial
: In May 2017, we initiated a clinical trial to evaluate emricasan using a composite clinical endpoint and a
time-to-event
analysis in approximately 210 patients with decompensated NASH cirrhosis.
Top-line
results are expected in 2019.
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Phase 2b
ENCORE-NF
(NASH Fibrosis) Clinical Trial
: In January 2016, we initiated a clinical trial to evaluate the effect of emricasan in reducing fibrosis in approximately
330 patients with liver fibrosis resulting from NASH.
Top-line
results are expected in the first half of 2019.
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Phase 2b
POLT-HCV-SVR
Clinical Trial
: In May 2014, we initiated a clinical trial in approximately 60 post-orthotopic liver
transplant, or POLT, recipients with reestablished liver fibrosis post-transplant as a result of recurrent hepatitis C virus, or HCV, infection who have successfully achieved a sustained viral response, or SVR, following HCV antiviral therapy, or
POLT-HCV-SVR,
patients with residual fibrosis or cirrhosis, classified as Ishak Fibrosis Score
2-6.
Top-line
results are expected in the first half of 2018.
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We also plan to expand our
development pipeline by developing our existing preclinical product candidates, by developing new product candidates or by purchasing or
in-licensing
product candidates. In addition to liver disease, we may
pursue the development of product candidates in other disease areas.
S-2
Recent Developments
In May 2017, Novartis Pharma AG, or Novartis, exercised its option under an Option, Collaboration and License Agreement, or the Collaboration
Agreement, we entered into with Novartis in December 2016. Pursuant to such exercise, we will grant Novartis an exclusive, worldwide license to our intellectual property rights relating to emricasan to collaborate with us and develop and
commercialize emricasan products, containing emricasan either as a single active ingredient or in combination with other Novartis compounds for liver cirrhosis or liver fibrosis, for the treatment, diagnosis and prevention of disease in all
indications in humans. Subject to customary closing conditions, including required anti-trust approvals, the license will become effective upon our receipt of a $7 million option exercise payment, which we expect to receive in
mid-2017.
The option exercise by Novartis followed notification by us of the initiation of the Phase 2b
ENCORE-LF
trial.
Pursuant to the Collaboration Agreement, we are responsible for completing the three ENCORE trials and the
POLT-HCV-SVR
trial described above. We and Novartis will share the costs of these four Phase 2b trials equally after the effective date of the license grant under the Collaboration Agreement. Novartis will be
responsible for 100% of certain expenses for required registration-supportive nonclinical activities. Novartis will be responsible for the development of emricasan beyond the four Phase 2b trials described above, including the Phase 3 development of
emricasan single agent products and all development for emricasan combination products, and Novartis has agreed to use commercially reasonable efforts to develop and commercialize emricasan products. A joint steering committee comprised of
representatives from our company and Novartis will oversee the collaboration, development and commercialization of emricasan products.
Under the Collaboration Agreement, Novartis paid us an upfront payment of $50 million. In addition to the $7 million option exercise
payment, we are eligible to receive up to an aggregate of $650 million in milestone payments over the term of the Collaboration Agreement, contingent on the achievement of certain development, regulatory and commercial milestones, as well as
royalties. We also have the right to elect to enter into a
co-commercialization
agreement with Novartis under which we would receive up to 30% of the commercial profits less the same percentage of the
commercial losses, subject to certain reductions in milestone and royalty payments.
Corporate Information
We were incorporated under the laws of the state of Delaware in 2005. Our principal executive offices are located at 16745 West Bernardo Drive,
Suite 200, San Diego, California 92127, and our telephone number is (858)
376-2600.
Our website address is www.conatuspharma.com. The information on, or accessible through, our website is not part of, and is
not incorporated into, this prospectus supplement or the accompanying prospectus and should not be considered part of this prospectus supplement or the accompanying prospectus.
S-3
THE OFFERING
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Common stock offered by us
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5,200,000 shares
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Common stock to be outstanding after
this offering and our repurchase of
2,166,836 shares of our
common
stock
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29,203,060 shares (or 29,983,060 shares if the underwriters exercise in full their option to purchase additional shares)
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Option to purchase additional shares
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We have granted the underwriters an option to purchase up to an additional 780,000 shares of our common stock. This option is exercisable, in whole or in part, for a period of 30 days from the date of this prospectus supplement.
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Use of proceeds
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We intend to use the net proceeds from this offering to fund pipeline expansion through the development of our existing preclinical product candidates or new product candidates or by purchasing or
in-licensing
product candidates, to repurchase 2,166,836 shares of our common stock from funds affiliated with Advent Private Equity at a price equal to the net proceeds per share that we receive from this
offering, before expenses, and for working capital and other general corporate purposes. See “Use of Proceeds” on page
S-7.
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Risk factors
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You should read the “Risk Factors” section of this prospectus supplement and in the documents incorporated by reference in this prospectus supplement for a discussion of factors to consider before deciding to invest in our common
stock.
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Nasdaq Global Market symbol
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CNAT
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The number of shares of common stock to be outstanding after this offering is based on 26,169,896 shares
outstanding as of March 31, 2017, and also excludes:
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4,175,635 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2017, at a weighted average exercise price of $5.00 per share;
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149,704 shares of common stock issuable upon the exercise of warrants outstanding as of March 31, 2017, at a weighted average exercise price of $7.43 per share;
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767,195 shares of common stock reserved for future issuance under our 2013 incentive award plan and employee stock purchase plan as of March 31, 2017; and
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2,626,713 shares of our common stock issuable as of March 31, 2017 upon the optional conversion of a convertible promissory note in the principal amount of $15.0 million (including accrued interest thereon)
that we issued to Novartis in February 2017, at a price per share equal to the fair market value of our common stock on the date of conversion.
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Except as otherwise indicated, all information in this prospectus supplement assumes no exercise by the underwriters of their option to
purchase up to an additional 780,000 shares of our common stock.
S-4
RISK FACTORS
You should consider carefully the risks described below and discussed under the section captioned “Risk Factors” contained in our
annual report on Form
10-K
for the year ended December 31, 2016, as updated by our subsequent filings under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are incorporated by
reference in this prospectus supplement and the accompanying prospectus in their entirety, together with other information in this prospectus supplement, the accompanying prospectus and the information and documents incorporated by reference in this
prospectus supplement and the accompanying prospectus, and any free writing prospectus that we have authorized for use in connection with this offering before you make a decision to invest in our common stock. If any of the following events actually
occur, our business, operating results, prospects or financial condition could be materially and adversely affected. This could cause the trading price of our common stock to decline and you may lose all or part of your investment. The risks
described below are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business operations.
Risks Relating to this Offering
If you
purchase shares of our common stock sold in this offering, you will experience immediate and substantial dilution in the net tangible book value of your shares. In addition, we may issue additional equity or convertible debt securities in the
future, which may result in additional dilution to investors.
The offering price per share of common stock in this offering is
considerably more than the net tangible book value per share of our outstanding common stock. As a result, investors purchasing shares of common stock in this offering will pay a price per share that substantially exceeds the value of our tangible
assets after subtracting liabilities. Investors will incur immediate dilution of $4.03 per share, based on the public offering price of $5.50 per share and the net tangible book value as of March 31, 2017. For a more detailed discussion of the
foregoing, see the section entitled “Dilution” below. To the extent outstanding stock options or warrants are exercised, there will be further dilution to new investors. In addition, to the extent we need to raise additional capital in the
future and we issue additional equity or convertible debt securities, our then existing stockholders may experience dilution and the new securities may have rights senior to those of our common stock offered in this offering.
Our management team may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a significant
return.
Our management will have broad discretion over the use of proceeds from this offering. We intend to use the net proceeds from
this offering to fund pipeline expansion through the development of our existing preclinical product candidates or new product candidates or by purchasing or
in-licensing
product candidates, to repurchase
shares of our common stock from funds affiliated with Advent Private Equity, and for working capital and other general corporate purposes. Our management will have considerable discretion in the application of the net proceeds, and you will not have
the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not increase our operating results or enhance the value of our common
stock.
S-5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus, including the documents incorporated by reference herein and therein, and any free
writing prospectus that we have authorized for use in connection with this offering contain forward-looking statements. All statements other than statements of historical facts contained in this prospectus supplement, the accompanying prospectus and
the documents incorporated by reference herein are forward-looking statements, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and
development costs, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products. These statements involve known and unknown risks, uncertainties and other important factors
that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. This prospectus supplement, the accompanying
prospectus and the documents incorporated by reference herein also contain estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number
of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are
necessarily subject to a high degree of uncertainty and risk.
In some cases, you can identify forward-looking statements by terms such as
“may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus supplement, the accompanying prospectus and the
documents incorporated by reference herein are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business,
financial condition and results of operations. These forward-looking statements speak only as of the date of this this prospectus supplement and are subject to a number of risks, uncertainties and assumptions, which we discuss in greater detail in
the documents incorporated by reference herein, including under the heading “Risk Factors.” The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially
from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and
uncertainties. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained
in this prospectus supplement, the accompanying prospectus or the documents incorporated by reference herein, whether as a result of any new information, future events, changed circumstances or otherwise. For all forward-looking statements, we claim
the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
S-6
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately $26.6 million from the sale of the shares of common stock offered by us in
this offering, or approximately $30.6 million if the underwriters exercise in full their option to purchase 780,000 additional shares of common stock, after deducting the underwriting discounts and commissions and estimated offering costs
payable by us.
We intend to use approximately $15.4 million of the net proceeds from this offering to fund pipeline expansion through the
development of our existing preclinical product candidates or new product candidates or by purchasing or in-licensing product candidates and for working capital and other general corporate purposes, and approximately $11.2 million of the net
proceeds to repurchase 2,166,836 shares of our common stock from funds affiliated with Advent Private Equity.
We have entered into a
stock purchase agreement with funds affiliated with Advent Private Equity pursuant to which we will repurchase 2,166,836 shares of common stock at a price equal to the net proceeds per share that we receive from this offering, before expenses. The
closing of the share repurchase will be contingent on the closing of, and is expected to occur immediately following the closing of this offering. The shares that we repurchase will be retired and returned to the status of authorized, but unissued
shares.
The amounts and timing of our actual expenditures will depend on numerous factors, including interactions with and feedback from
regulatory authorities, the progress of our clinical trials, other development efforts for emricasan and other factors, as well as the amount of cash used in our operations. We therefore cannot estimate with certainty the amount of net proceeds to
be used for the purposes described above. We may find it necessary or advisable to use the net proceeds for other purposes, and we will have broad discretion in the application of the net proceeds. Pending the uses described above, we plan to invest
the net proceeds from this offering in short- and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
S-7
DILUTION
If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the public offering
price per share and the net tangible book value per share of our common stock after this offering. As of March 31, 2017, our historical net tangible book value was $19.5 million, or $0.74 per share, based on 26,169,896 shares of our common
stock outstanding as of March 31, 2017. Our historical net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of our common
stock outstanding as of March 31, 2017. After giving effect to our sale in this offering of 5,200,000 shares of common stock at the public offering price of $5.50 per share, and after deducting underwriting discounts and commissions and
estimated offering costs payable by us, our net tangible book value as of March 31, 2017, would have been $46.1 million, or $1.47 per share. This represents an immediate increase of net tangible book value of $0.73 per share to our existing
stockholders and an immediate dilution of $4.03 per share to investors purchasing shares in this offering. The following table illustrates this per share dilution.
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Public offering price per share
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$
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5.50
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Historical net tangible book value per share at March 31, 2017
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$
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0.74
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Increase per share attributable to investors purchasing shares in this offering
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0.73
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Pro forma net tangible book value per share, as adjusted to give effect to this offering
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1.47
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Dilution to investors in this offering
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$
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4.03
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If the underwriters exercise in full their option to purchase up to an additional 780,000 shares of our
common stock at the public offering price of $5.50 per share, the pro forma net tangible book value after this offering would be $1.56 per share, representing an increase in net tangible book value of $0.82 per share to our existing stockholders and
immediate dilution in net tangible book value of $3.94 per share to investors purchasing shares in this offering.
Assuming the repurchase
of an aggregate of 2,166,836 shares of our common stock from funds affiliated with Advent Private Equity at a price equal to the net proceeds per share that we will receive from this offering, before expenses, the pro forma net tangible book value
after this offering would be $1.19 per share, representing an increase in net tangible book value of $0.45 per share to our existing stockholders and immediate dilution in net tangible book value of $4.31 per share to investors purchasing shares in
this offering.
The above discussion and table are based on 26,169,896 shares outstanding as of March 31, 2017, and exclude:
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4,175,635 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2017, at a weighted average exercise price of $5.00 per share;
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149,704 shares of common stock issuable upon the exercise of warrants outstanding as of March 31, 2017, at a weighted average exercise price of $7.43 per share;
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767,195 shares of common stock reserved for future issuance under our 2013 incentive award plan and employee stock purchase plan as of March 31, 2017; and
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2,626,713 shares of our common stock issuable as of March 31, 2017 upon the optional conversion of a convertible promissory note in the principal amount of $15.0 million (including accrued interest thereon)
that we issued to Novartis in February 2017, at a price per share equal to the fair market value of our common stock on the date of conversion.
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To the extent that outstanding exercisable options or warrants are exercised, you may experience further dilution. In addition, we may choose
to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that we raise additional capital by issuing equity or convertible
debt securities, your ownership will be further diluted.
S-8
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement between us, Stifel, Nicolaus & Company, Incorporated and
SunTrust Robinson Humphrey, Inc., as representatives of the several underwriters, each of the underwriters named below has severally agreed to purchase from us the aggregate number of shares set forth opposite its name below:
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Underwriters
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Number of
Shares
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Stifel, Nicolaus & Company, Incorporated
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2,860,000
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SunTrust Robinson Humphrey, Inc.
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2,340,000
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Total
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5,200,000
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The underwriting agreement provides that the obligations of the several underwriters are subject to various
conditions, including approval of legal matters by counsel. The nature of the underwriters’ obligations commits the underwriters to purchase and pay for all of the shares listed above if any are purchased.
The underwriters expect to deliver the shares to purchasers on or about May 16, 2017.
Option to Purchase Additional Shares
We
have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus supplement, to purchase, from time to time, in whole or in part, up to an aggregate of 780,000 shares of our common stock from us, at the public
offering price, less the underwriting discount payable by us, as set forth on the cover page of this prospectus supplement. If the underwriters exercise this option in whole or in part, then each of the underwriters will be separately committed,
subject to the conditions described in the underwriting agreement, to purchase the additional shares of our common stock in proportion to their respective commitments set forth in the table above.
Commissions and Discounts
The
underwriters propose to offer the shares directly to the public at the public offering price set forth on the cover page of this prospectus supplement, and at this price less a concession not in excess of $0.198 per share of common stock to other
dealers. After this offering, the offering price and other selling terms may be changed by the representatives. Our shares are offered subject to receipt and acceptance by the underwriters and to other conditions, including the right to reject
orders in whole or in part.
The following table summarizes the compensation to be paid to the underwriters by us and the proceeds, before
expenses, payable to us:
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Per Share
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Total
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No Exercise
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Full Exercise
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No Exercise
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Full Exercise
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Public offering price
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$
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5.50
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$
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5.50
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$
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28,600,000
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$
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32,890,000
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Underwriting discount
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$
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0.33
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$
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0.33
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$
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1,716,000
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$
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1,973,400
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Proceeds, before expenses, to us
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$
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5.17
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$
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5.17
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$
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26,884,000
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$
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30,916,600
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The expenses of the offering, not including the underwriting discount, payable by us are estimated to be
$270,000, which includes up to $15,000 that we have agreed to reimburse the underwriters for certain of their
out-of-pocket
expenses.
S-9
Indemnification of Underwriters
We will indemnify the underwriters against some civil liabilities, including liabilities under the Securities Act. If we are unable to provide
this indemnification, we will contribute to payments the underwriters may be required to make in respect of those liabilities.
No Sales of Similar
Securities
We and our directors and executive officers have agreed that, without the prior written consent of each of Stifel,
Nicolaus & Company, Incorporated and SunTrust Robinson Humphrey, Inc., we and they will not directly or indirectly:
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offer, sell, contract to sell (including any short sale), pledge, hypothecate, establish an open “put equivalent position” within the meaning of Rule
16a-1(h)
under the
Exchange Act, grant any option, right or warrant for the sale of, purchase any option or contract to sell, sell any option or contract to purchase, or otherwise encumber, dispose of or transfer, or grant any rights with respect to, directly or
indirectly, any shares of common stock or securities convertible into or exchangeable or exercisable for any shares of common stock;
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enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock,
whether any such transaction is to be settled by delivery of the common stock or other securities, in cash or otherwise; or
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publicly disclose the intention to do any of the foregoing,
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for a period of 90 days after the date of this
prospectus supplement. However, in the case of our directors and executive officers, these
lock-up
restrictions will not apply to:
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bona fide gifts made by the holder;
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the surrender or forfeiture of shares of common stock to us to satisfy tax withholding obligations upon exercise or vesting of stock options or equity awards;
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transfers of common stock or any security convertible into or exercisable for common stock to an immediate family member, an immediate family member of a domestic partner or a trust for the benefit of the undersigned, a
domestic partner or an immediate family member;
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transfers of shares of common stock or any security convertible into or exercisable for common stock to any corporation, partnership, limited liability company or other entity all of the beneficial ownership interests
of which are held exclusively by the holder, a domestic partner and/or one or more family members of the holder or the holder’s domestic partner in a transaction not involving a disposition for value;
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transfers of shares of common stock or any security convertible into or exercisable for common stock upon death by will or intestate succession;
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distributions of shares of common stock or securities convertible into or exercisable for common stock to members, partners or stockholders of the holder;
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the exercise of any option, warrant or other right to acquire shares of common stock, the settlement of any stock-settled stock appreciation rights, restricted stock or restricted stock units, or the conversion of any
convertible security into our securities;
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securities transferred to one or more affiliates of the holder and distributions of securities to partners, members or stockholders of the holder;
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transactions relating to securities acquired in open market transactions after the date of this prospectus supplement;
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the entry into a trading plan established pursuant to Rule
10b5-1
under the Exchange Act, provided that such plan does not provide for any sales or other dispositions of shares of
common stock during the
90-day
restricted period; or
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any shares purchased by the holder in this offering.
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Except for transfers related to
securities acquired on the open market or in this offering or to the surrender or forfeiture of shares of common stock to us to satisfy tax withholding obligations upon exercise or vesting of stock options or equity awards, as described above, any
transferee under the excepted transfers above must agree in writing, prior to the transfer, to be bound by the
lock-up
agreements.
Additionally, in our case, the
lock-up
restrictions will not apply to:
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shares sold in this offering;
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equity based awards granted pursuant to our equity incentive plans referred to in this prospectus supplement, including any amendments to those plans, and shares of common stock issued upon the exercise of any equity
based awards;
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shares of common stock issued upon the conversion of outstanding securities;
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the filing of a registration statement on Form
S-8
relating to the registration of shares issuable pursuant to our equity incentive plans; or
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shares of common stock issued in satisfaction of the accumulated dividend on our outstanding convertible preferred stock.
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Stifel, Nicolaus & Company, Incorporated and SunTrust Robinson Humphrey, Inc., in their sole discretion, may release the common stock
and other securities subject to the
lock-up
agreements described above in whole or in part at any time with or without notice. When determining whether or not to release common stock and other securities from
lock-up
agreements, Stifel, Nicolaus & Company, Incorporated and SunTrust Robinson Humphrey, Inc. will consider, among other factors, the holder’s reasons for requesting the release, the number of
shares of common stock and other securities for which the release is being requested and market conditions at the time.
Passive Market-Making
In connection with the offering, the underwriters may engage in passive market-making transactions in the common stock on the Nasdaq Global
Market in accordance with Rule 103 of Regulation M under the Exchange Act during the period before the commencement of offers or sales of common stock and extending through the completion and distribution. A passive market-maker must display its
bids at a price not in excess of the highest independent bid of the security. However, if all independent bids are lowered below the passive market-maker’s bid, that bid must be lowered when specified purchase limits are exceeded.
Short Sales, Stabilizing Transactions and Penalty Bids
In order to facilitate this offering, persons participating in this offering may engage in transactions that stabilize, maintain or otherwise
affect the price of our common stock during and after this offering. Specifically, the underwriters may engage in the following activities in accordance with the rules of the SEC.
Short sales
. Short sales involve the sales by the underwriters of a greater number of shares than they are required to purchase in the
offering. Covered short sales are short sales made in an amount not greater than the underwriters’ option to purchase additional shares from us in this offering. The underwriters may close out any covered short position by either exercising
their option to purchase additional shares or by purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will
S-11
consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option to purchase additional
shares. Naked short sales are any short sales in excess of such option to purchase additional shares. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be
created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering.
Stabilizing transactions
. The underwriters may make bids for or purchases of the shares for the purpose of pegging, fixing, or
maintaining the price of the shares, so long as stabilizing bids do not exceed a specified maximum.
Penalty bids
. If the
underwriters purchase shares in the open market in a stabilizing transaction or syndicate covering transaction, they may reclaim a selling concession from the underwriters and selling group members who sold those shares as part of this offering.
Stabilization and syndicate covering transactions may cause the price of the shares to be higher than it would be in the absence of these transactions. The imposition of a penalty bid might also have an effect on the price of the shares if it
discourages presales of the shares.
The transactions above may occur on the Nasdaq Global Market or otherwise. Neither we nor the
underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of the shares. If these transactions are commenced, they may be discontinued without notice at any time.
Miscellaneous
Our common stock is traded
on the Nasdaq Global Market under the symbol “CNAT.”
The underwriters have in the past and may in the future provide various
investment banking and other financial services for us for which services they have received or may in the future receive, customary fees.
The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
European Economic Area
In relation to
each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state
(the relevant implementation date), an offer of securities described in this prospectus may not be made to the public in that relevant member state other than:
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to any legal entity that is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
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to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover
of more than €50,000,000, as shown in its last annual or consolidated accounts;
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to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives; or
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in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive,
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provided that no such offer of securities shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive. For
purposes of this provision, the expression an “offer of securities to the public” in any relevant member state means the communication in any form and by any means of sufficient
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information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that
member state by any measure implementing the Prospectus Directive in that member state, and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.
We have not authorized and do not authorize the making of any offer of securities through any financial intermediary on their behalf, other
than offers made by the underwriters with a view to the final placement of the securities as contemplated in this prospectus supplement and the accompanying prospectus. Accordingly, no purchaser of the securities, other than the underwriters, is
authorized to make any further offer of the securities on behalf of us or the underwriters.
United Kingdom
This prospectus supplement and the accompanying prospectus are only being distributed to, and are only directed at, persons in the United
Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Qualified Investors) that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the Order) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as
relevant persons). This prospectus supplement and the accompanying prospectus and their contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the
United Kingdom. Any person in the United Kingdom who is not a relevant person should not act or rely on this document or any of its contents.
Canada
This prospectus supplement constitutes an “exempt offering document” as defined in and for the purposes of applicable
Canadian securities laws. No prospectus has been filed with any securities commission or similar regulatory authority in Canada in connection with the offer and sale of the common stock. No securities commission or similar regulatory authority in
Canada has reviewed or in any way passed upon this prospectus supplement or on the merits of the common stock and any representation to the contrary is an offence.
Canadian investors are advised that this prospectus supplement has been prepared in reliance on section 3A.3 of National Instrument
33-105
Underwriting Conflicts
(“NI
33-105”).
Pursuant to section 3A.3 of NI
33-105,
this prospectus
supplement is exempt from the requirement that the Company and the underwriter(s) provide investors with certain conflicts of interest disclosure pertaining to “connected issuer” and/or “related issuer” relationships that may
exist between the Company and the underwriter(s) as would otherwise be required pursuant to subsection 2.1(1) of NI
33-105.
Resale Restrictions
The offer and sale
of the common stock in Canada is being made on a private placement basis only and is exempt from the requirement that the Company prepares and files a prospectus under applicable Canadian securities laws. Any resale of the common stock acquired by a
Canadian investor in this offering must be made in accordance with applicable Canadian securities laws, which may vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with Canadian prospectus
requirements, pursuant to a statutory exemption from the prospectus requirements, in a transaction exempt from the prospectus requirements or otherwise under a discretionary exemption from the prospectus requirements granted by the applicable local
Canadian securities regulatory authority. These resale restrictions may under certain circumstances apply to resales of the common stock outside of Canada.
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Representations of Purchasers
Each Canadian investor who purchases the common stock will be deemed to have represented to the Company and the underwriter(s) that the
investor (i) is purchasing the common stock as principal, or is deemed to be purchasing as principal in accordance with applicable Canadian securities laws, for investment only and not with a view to resale or redistribution; (ii) is an
“accredited investor” as such term is defined in section 1.1 of National Instrument
45-106
Prospectus Exemptions
or, in Ontario, as such term is defined in section 73.3(1) of the
Securities
Act
(Ontario); and (iii) is a “permitted client” as such term is defined in section 1.1 of National Instrument
31-103
Registration Requirements, Exemptions and Ongoing Registrant
Obligations
.
Taxation and Eligibility for Investment
Any discussion of taxation and related matters contained in this prospectus supplement does not purport to be a comprehensive description of
all of the tax considerations that may be relevant to a Canadian investor when deciding to purchase the common stock and, in particular, does not address any Canadian tax considerations. No representation or warranty is hereby made as to the tax
consequences to a resident, or deemed resident, of Canada of an investment in the common stock or with respect to the eligibility of the common stock for investment by such investor under relevant Canadian federal and provincial legislation and
regulations.
Rights of Action for Damages or Rescission
Securities legislation in certain of the Canadian jurisdictions provides certain purchasers of securities pursuant to an offering memorandum
(such as this prospectus supplement), including where the distribution involves an “eligible foreign security” as such term is defined in Ontario Securities Commission Rule
45-501
Ontario
Prospectus and Registration Exemptions
and in Multilateral Instrument
45-107
Listing Representation and Statutory Rights of Action Disclosure Exemptions
, as applicable, with a remedy for damages or
rescission, or both, in addition to any other rights they may have at law, where the offering memorandum, or other offering document that constitutes an offering memorandum, and any amendment thereto, contains a “misrepresentation” as
defined under applicable Canadian securities laws. These remedies, or notice with respect to these remedies, must be exercised or delivered, as the case may be, by the purchaser within the time limits prescribed under, and are subject to limitations
and defenses under, applicable Canadian securities legislation. In addition, these remedies are in addition to and without derogation from any other right or remedy available at law to the investor.
Language of Documents
Upon receipt of
this document, each Canadian investor hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or
any notice) be drawn up in the English language only.
Par la réception de ce document, chaque investisseur Canadien confirme par les présentes qu’il a expressément exigé que tous les documents faisant foi ou se
rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en
anglais seulement.
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LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be passed upon by our counsel, Latham & Watkins LLP, San Diego,
California. The underwriters are being represented in connection with this offering by Goodwin Procter LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial
statements included in our Annual Report on Form
10-K
for the year ended December 31, 2016, as set forth in their report, which is incorporated by reference in this prospectus supplement. 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.
WHERE YOU CAN FIND MORE INFORMATION; INFORMATION INCORPORATED BY REFERENCE
Available Information
We have filed with
the SEC a registration statement on Form
S-3
under the Securities Act, of which this prospectus supplement forms a part. The rules and regulations of the SEC allow us to omit from this prospectus supplement
and the accompanying prospectus certain information included in the registration statement. For further information about us and the securities we are offering under this prospectus supplement, you should refer to the registration statement and the
exhibits and schedules filed with the registration statement. With respect to the statements contained in this prospectus supplement and the accompanying prospectus regarding the contents of any agreement or any other document, in each instance, the
statement is qualified in all respects by the complete text of the agreement or document, a copy of which has been filed as an exhibit to the registration statement.
We file reports, proxy statements and other information with the SEC. Information filed with the SEC by us can be inspected and copied at the
Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference facilities of the SEC at prescribed rates. Further information on the
operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at
1-800-SEC-0330.
The
SEC also maintains a website that contains reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is http://www.sec.gov.
Our website address is www.conatuspharma.com. The information on, or accessible through, our website is not part of, and is not incorporated
into, this prospectus supplement or the accompanying prospectus and should not be considered part of this prospectus supplement or the accompanying prospectus.
Incorporation by Reference
The
SEC’s rules allow us to “incorporate by reference” information into this prospectus supplement, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus supplement and the accompanying prospectus, and subsequent information that we file with the SEC will automatically update and supersede that information. Any statement
contained in a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of this prospectus supplement and accompanying prospectus to the extent that a statement contained in this prospectus
supplement or the accompanying prospectus modifies or replaces that statement.
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We incorporate by reference our documents listed below and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” in this prospectus supplement, between the date of this prospectus supplement and the termination of
the offering of the securities described in this prospectus supplement. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the future, that are not deemed
“filed” with the SEC, including our Compensation Committee report and performance graph or any information furnished pursuant to Items 2.02 or 7.01 of Form
8-K
or related exhibits furnished pursuant
to Item 9.01 of Form
8-K.
This prospectus supplement and the accompanying prospectus incorporate
by reference the documents set forth below that have previously been filed with the SEC:
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our Annual Report on Form
10-K
for the year ended December 31, 2016, filed with the SEC on March 16, 2017;
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our Quarterly Report on Form
10-Q
for the quarter ended March 31, 2017, filed with the SEC on May 5, 2017;
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our Current Reports on Form
8-K
filed with the SEC on January 26, 2017, February 1, 2017, February 7, 2017. February 16, 2017, February 17, 2017,
March 21, 2017 and May 4, 2017;
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our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 28, 2017; and
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the description of our Common Stock contained in our registration statement on Form
8-A,
filed with the SEC on July 12, 2013, and any amendment or report filed with the SEC
for the purpose of updating the description.
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All reports and other documents we subsequently file pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering, including, but excluding any information furnished to, rather than filed with, the SEC, will also be incorporated by reference into this prospectus supplement
and the accompanying prospectus and deemed to be part of this prospectus supplement and the accompanying prospectus from the date of the filing of such reports and documents.
You may request a free copy of any of the documents incorporated by reference in this prospectus supplement and the accompanying prospectus
(other than exhibits, unless they are specifically incorporated by reference in the documents) by writing or telephoning us at the following address:
Conatus Pharmaceuticals Inc.
Attn: Corporate Secretary
16745
West Bernardo Drive, Suite 200
San Diego, California 92127
(858)
376-2600
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PROSPECTUS
$150,000,000
Common Stock
Preferred
Stock
Debt Securities
Warrants
Units
We may offer and sell up to $150.0 million in the aggregate of the securities identified above from time to time in one or more offerings.
This prospectus provides you with a general description of the securities.
Each time we offer and sell securities, we will provide a
supplement to this prospectus that contains specific information about the offering and the amounts, prices and terms of the securities. The supplement may also add, update or change information contained in this prospectus with respect to that
offering. You should carefully read this prospectus and the applicable prospectus supplement before you invest in any of our securities.
We may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus supplement. See the sections of this prospectus entitled “About this Prospectus” and
“Plan of Distribution” for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms of the offering of such securities.
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE THE “
RISK FACTORS
” ON PAGE 6 OF THIS PROSPECTUS AND
ANY SIMILAR SECTION CONTAINED IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Our common stock is listed on The Nasdaq Global Market under the symbol “CNAT.” On August 12, 2014, the last reported sale
price of our common stock on The Nasdaq Global Market was $7.76 per share.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is August 25, 2014.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission, or the SEC, using a
“shelf” registration process. By using a shelf registration statement, we may sell securities from time to time and in one or more offerings up to a total dollar amount of $150.0 million as described in this prospectus. Each time that we
offer and sell securities, we will provide a prospectus supplement to this prospectus that contains specific information about the securities being offered and sold and the specific terms of that offering. The prospectus supplement may also add,
update or change information contained in this prospectus with respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement, you should rely on the prospectus supplement.
Before purchasing any securities, you should carefully read both this prospectus and the applicable prospectus supplement, together with the additional information described under the heading “Where You Can Find More Information; Incorporation
by Reference.”
You should rely only on the information contained in or incorporated by reference in this prospectus or any related
prospectus supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We will not make an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the applicable prospectus supplement to this prospectus is accurate only as of the date on its
respective cover, and that any information incorporated by reference is accurate only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations and prospects may
have changed since those dates.
When we refer to “Conatus,” “we,” “our,” “us” and the
“Company” in this prospectus, we mean Conatus Pharmaceuticals Inc., unless otherwise specified. When we refer to “you,” we mean the holders of the applicable series of securities.
We use our registered trademark, CONATUS PHARMACEUTICALS, in this prospectus. This prospectus also includes trademarks, tradenames and service
marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this prospectus appear without the
®
and ™ symbols, but those
references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.
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WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
Available Information
We file
reports, proxy statements and other information with the SEC. Information filed with the SEC by us can be inspected and copied at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain
copies of this information by mail from the Public Reference facilities of the SEC at prescribed rates. Further information on the operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at
1-800-SEC-0330. The SEC also maintains a web site that contains reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The address of that website is
http://www.sec.gov
.
Our web site address is www.conatuspharma.com. The information on our web site, however, is not, and should
not be deemed to be, a part of this prospectus.
This prospectus and any prospectus supplement are part of a registration statement that
we filed with the SEC and do not contain all of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Forms of the indenture and other documents establishing the terms
of the offered securities are or may be filed as exhibits to the registration statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by reference to
the document to which it refers. You should refer to the actual documents for a more complete description of the relevant matters. You may inspect a copy of the registration statement at the SEC’s Public Reference Room in Washington, D.C. or
through the SEC’s website, as provided above.
Incorporation by Reference
The SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can disclose
important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and subsequent information that we file with the SEC will
automatically update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus modifies or replaces that statement.
We incorporate by reference our documents listed below and any future
filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” in this prospectus, between the date of this prospectus and the
termination of the offering of the securities described in this prospectus. We are not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the future, that are not deemed
“filed” with the SEC, including our Compensation Committee report and performance graph or any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits furnished pursuant to Item 9.01 of Form 8-K.
This prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been
filed with the SEC:
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our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 28, 2014;
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our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014, filed with the SEC on May 14, 2014 and August 14, 2014, respectively;
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our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 28, 2014;
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our Current Reports on Form 8-K filed with the SEC on February 10, 2014, April 16, 2014 and June 23, 2014; and
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the description of our Common Stock contained in our registration statement on Form 8-A, filed with the SEC on July 12, 2013 and any amendment or report filed with the SEC for the purpose of updating the
description.
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All reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the termination of this offering, including all such documents we may file with the SEC after the date of the initial registration statement and prior to the effectiveness of the registration statement, but excluding any
information furnished to, rather than filed with, the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from the date of the filing of such reports and documents.
You may request a free copy of any of the documents incorporated by reference in this prospectus (other than exhibits, unless they are
specifically incorporated by reference in the documents) by writing or telephoning us at the following address:
Conatus Pharmaceuticals
Inc.
Attn: Corporate Secretary
16745 West Bernardo Drive, Suite 200
San Diego, California 92127
(858)
376-2600
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THE COMPANY
We are a biotechnology company focused on the development and commercialization of novel medicines to treat liver disease. We are developing
our lead compound, emricasan, for the treatment of patients with chronic liver disease and acute exacerbations of chronic liver disease. Emricasan is a first-in-class, orally active pan-caspase protease inhibitor designed to reduce the activity of
all ten human caspases, which are enzymes that mediate inflammation and cell death, or apoptosis. We believe that by reducing the activity of these enzymes, emricasan has the potential to interrupt the progression of liver disease and potentially
provide treatment options in multiple areas of liver disease. We have observed compelling preclinical and clinical trial results that suggest emricasan may have clinical utility in slowing progression of liver diseases regardless of the original
cause of the disease. To date, emricasan has been studied in over 500 subjects in ten clinical trials. In a randomized Phase 2b clinical trial in patients with liver disease, emricasan demonstrated a statistically significant, consistent, rapid and
sustained reduction in elevated levels of two key biomarkers of inflammation and cell death, alanine aminotransferase, or ALT, and cleaved Cytokeratin 18, or cCK18, respectively, both of which are implicated in the severity and progression of liver
disease.
We have designed a comprehensive clinical program to demonstrate the therapeutic benefit of emricasan across the spectrum of
liver diseases. Our development strategy for emricasan targets indications with high unmet clinical need, such as patients with acute-on-chronic liver failure, or ACLF, and chronic liver failure, or CLF, and other chronic liver indications. The
other chronic liver indications we are targeting include patients who have developed liver fibrosis post-orthotopic liver transplant, or POLT, due to hepatitis C virus, or HCV, infection and have subsequently achieved sustained viral response, or
SVR, following anti-HCV therapy, or POLT-HCV-SVR, and patients with non-alcoholic fatty liver disease, or NAFLD, specifically non-alcoholic steatohepatitis, or NASH.
We are conducting three clinical trials of emricasan in patients with impaired organ function to support dose selection and prioritization for
advancement in our overall clinical development program: a Phase 2b clinical trial initiated in September 2013 in ACLF patients who may have simultaneous impairment of both liver and kidney function; a Phase 1 clinical trial initiated in January
2014 in patients with severe renal impairment; and a Phase 1 clinical trial initiated in April 2014 in patients with various degrees of hepatic impairment. Top-line pharmacokinetic, or PK, data from these three clinical trials are expected in the
second half of 2014. We expect to complete dosing in the ACLF clinical trial by the end of 2014. We do not expect to dose the maximum of 60 patients stipulated in the protocol, but we expect that enrollment and results will be sufficient to
determine the future direction for the clinical development of emricasan in this critically ill patient population by the end of 2014.
We
believe that emricasan may provide meaningful clinical benefit for CLF patients with long-term cirrhosis whose disease symptoms progress in severity over time. Patients with more advanced cirrhosis may include those on the transplant waiting list
and those not eligible for the transplant waiting list. We believe emricasan may help stabilize these patients long enough to get a liver transplant or improve their condition enough to qualify for a transplant. Dosing and PK information from the
severe renal impairment clinical trial and the hepatic impairment clinical trial is expected to support the design of a Phase 2 CLF clinical trial, which we expect to initiate in the second half of 2014.
In May 2014, we initiated a Phase 2b clinical trial in POLT-HCV-SVR patients with fibrosis. The primary endpoint in this exploratory
proof-of-concept clinical trial is the change in the Ishak Fibrosis Score compared to placebo. The clinical trial will also evaluate other histological markers, key serum biomarkers, and the safety and tolerability of emricasan in the target patient
population. Initial open-label data from the POLT-HCV-SVR Phase 2b clinical trial are expected in the first half of 2015. If, as expected, a subset of patients in this clinical trial also has histological evidence of fat in their livers (steatosis),
their baseline NAFLD Activity Scores (NAS) and subsequent changes will be evaluated.
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In March 2014, we initiated a Phase 2 clinical trial of emricasan in patients with NAFLD,
including patients with NASH. The clinical trial is intended to confirm the appropriate dosing in this patient population for potential future studies, to expand emricasan’s safety database, and to evaluate changes in relevant biomarkers of
liver damage. Announcement of top-line results from the Phase 2 NAFLD/NASH clinical trial is being deferred to the first quarter of 2015.
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Target Therapeutic Area
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Description of Patient Population
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Development Plans
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Acute-on-Chronic Liver Failure
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ACLF occurs in patients who have compensated or decompensated cirrhosis but are in relatively stable condition until an acute event sets off a rapid worsening of liver function.
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• In September 2013, we initiated a Phase 2b clinical trial in ACLF.
We expect to have top-line PK data from the ACLF clinical trial in the second half of 2014 and to determine the future direction for the clinical development in this population by the end of 2014.
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Chronic Liver Failure
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Patients with CLF suffer from compensated or decompensated cirrhosis.
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• Our planned clinical trials in CLF will assess whether emricasan can
delay or prevent disease progression. We expect to initiate a Phase 2 CLF clinical trial in the second half of 2014.
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Post Liver Transplant Clearance of Hepatitis C Virus Infection with Sustained Viral
Response
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In patients with POLT-HCV-SVR, liver fibrosis may persist for many years.
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• In May 2014, we initiated a placebo-controlled (open to sponsor)
Phase 2b clinical trial tracking biomarkers and histology in POLT patients who respond to antiviral therapy but still have underlying liver fibrosis. We expect to have initial data from the sponsor-open clinical trial in the first half of
2015
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Non-alcoholic Steatohepatitis
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NASH patients suffer from inflammation due to fat buildup in the liver.
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• In March 2014, we initiated a Phase 2 clinical trial in the United
States for NAFLD, and NASH. Our goal is to accumulate sufficient and relevant clinical data to allow rapid advancement of emricasan once appropriate regulatory pathways are defined. We expect to have top-line data from this clinical trial in the
first quarter of 2015.
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We were incorporated under the laws of the state of Delaware in 2005. Our principal executive offices are
located at 16745 West Bernardo Drive, Suite 200, San Diego, California 92127, and our telephone number is (858) 376-2600.
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RISK FACTORS
Investment in any securities offered pursuant to this prospectus and the applicable prospectus supplement involves risks. You should carefully
consider the risk factors incorporated by reference to our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K we file after the date of this prospectus, and all other information
contained or incorporated by reference into this prospectus, as updated by our subsequent filings under the Exchange Act, and the risk factors and other information contained in the applicable prospectus supplement before acquiring any of such
securities. The occurrence of any of these risks might cause you to lose all or part of your investment in the offered securities.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference herein contain
forward-looking statements. All statements other than statements of historical facts contained in this prospectus and the documents incorporated by reference herein are forward-looking statements. These statements involve known and unknown risks,
uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. This
prospectus and the documents incorporated by reference herein also contain estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number
of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are
necessarily subject to a high degree of uncertainty and risk.
In some cases, you can identify forward-looking statements by terms such as
“may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus and the documents incorporated by reference
herein are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of
operations. These forward- looking statements speak only as of the date of this this prospectus and are subject to a number of risks, uncertainties and assumptions, including those under “Risk Factors” and elsewhere in this prospectus. The
events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New
risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking
statements contained in this prospectus or the documents incorporated by reference herein, whether as a result of any new information, future events, changed circumstances or otherwise.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities as set forth in the applicable prospectus supplement.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We intend to retain future earnings, if any, to finance the operation
of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors after considering our financial condition,
results of operations, capital requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments. In addition, our ability to pay cash dividends is
currently prohibited by the terms of a promissory note in the principal amount of $1.0 million issued by us to Pfizer Inc. in July 2010.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed charges for Conatus for the periods indicated.
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Year Ended
December 31,
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Six Months
Ended
June 30, 2014
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2011
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2012
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2013
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Ratio of earnings to fixed charges (1)
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—
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—
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(1)
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Our earnings were inadequate to cover fixed charges for the years ended December 31, 2011, 2012 and 2013 by $12.0 million, $8.7 million and $15.6 million, respectively, and by $10.5 million for the six months ended
June 30, 2014.
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For purposes of calculating the ratio of earnings to fixed charges, earnings represent net income
(loss) before provision for income taxes plus fixed charges. Fixed charges consist of interest expense and an estimate of the interest factor inherent in our operating leases.
For the periods indicated above, we had no outstanding shares of preferred stock with required dividend payments. Therefore, the ratios of
earnings to combined fixed charges and preferred stock dividends are identical to the ratios presented in the tables above.
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DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is not complete and may not contain all the information you should consider before investing in
our capital stock. This description is summarized from, and qualified in its entirety by reference to, our amended and restated certificate of incorporation, which has been publicly filed with the SEC. See “Where You Can Find More Information;
Incorporation by Reference.”
Our authorized capital stock consists of:
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200,000,000 shares of common stock, $0.0001 par value; and
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10,000,000 shares of preferred stock, $0.0001 par value.
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Common Stock
As of August 1, 2014, there were 15,663,866 shares of our common stock outstanding and held of record by 53 stockholders. Under the terms
of our amended and restated certificate of incorporation, holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders, including the election of directors, and do not have cumulative
voting rights. Accordingly, the holders of a majority of the outstanding shares of common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they so choose, other than any directors that
holders of any preferred stock we may issue may be entitled to elect. Subject to preferences that may be applicable to any then outstanding preferred stock, holders of common stock are entitled to receive ratably those dividends, if any, as may be
declared by the board of directors out of legally available funds. In the event of our liquidation, dissolution or winding up, the holders of common stock will be entitled to share ratably in the assets legally available for distribution to
stockholders after the payment of or provision for all of our debts and other liabilities, subject to the prior rights of any preferred stock then outstanding. Holders of common stock have no preemptive or conversion rights or other subscription
rights and there are no redemption or sinking funds provisions applicable to the common stock. All outstanding shares of common stock are duly authorized, validly issued, fully paid and nonassessable. The rights, preferences and privileges of
holders of common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.
Transfer Agent and Registrar
The
transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
Preferred Stock
We currently have no outstanding shares of preferred stock. Under the terms of our amended and restated certificate of incorporation, our board
of directors has the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the
dividend, voting and other rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but not
below the number of shares of such series then outstanding. Prior to the issuance of shares of each series, the board of directors is required by the General Corporation Law of the State of Delaware, or the DGCL, and our amended and restated
certificate of incorporation to adopt resolutions and file a certificate of designation with the Secretary of State of the State of Delaware. The certificate of designation fixes for each class or series the designations, powers, preferences,
rights, qualifications, limitations and restrictions, including dividend rights, conversion rights, redemption privileges and liquidation preferences.
All shares of preferred stock offered by this prospectus will, when issued, be fully paid and nonassessable and will not have any preemptive
or similar rights. Our board of directors may authorize the issuance of preferred
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stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock, while providing
flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control and may adversely affect the market price of the common stock
and the voting and other rights of the holders of common stock.
We will describe in a prospectus supplement relating to the class or
series of preferred stock being offered the following terms:
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the title and stated value of the preferred stock;
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the number of shares of the preferred stock offered, the liquidation preference per share and the offering price of the preferred stock;
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the dividend rate(s), period(s) or payment date(s) or method(s) of calculation applicable to the preferred stock;
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whether dividends are cumulative or non-cumulative and, if cumulative, the date from which dividends on the preferred stock will accumulate;
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the procedures for any auction and remarketing, if any, for the preferred stock;
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the provisions for a sinking fund, if any, for the preferred stock;
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the provision for redemption, if applicable, of the preferred stock;
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any listing of the preferred stock on any securities exchange;
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the terms and conditions, if applicable, upon which the preferred stock will be convertible into common stock, including the conversion price or manner of calculation and conversion period;
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voting rights, if any, of the preferred stock;
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a discussion of any material or special U.S. federal income tax considerations applicable to the preferred stock;
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the relative ranking and preferences of the preferred stock as to dividend rights and rights upon the liquidation, dissolution or winding up of our affairs;
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any limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the class or series of preferred stock as to dividend rights and rights upon liquidation, dissolution or
winding up of our affairs; and
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any other specific terms, preferences, rights, limitations or restrictions of the preferred stock.
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Unless we specify otherwise in the applicable prospectus supplement, the preferred stock will rank, relating to dividends and upon our
liquidation, dissolution or winding up:
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senior to all classes or series of our common stock and to all of our equity securities ranking junior to the preferred stock;
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on a parity with all of our equity securities the terms of which specifically provide that the equity securities rank on a parity with the preferred stock; and
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junior to all of our equity securities the terms of which specifically provide that the equity securities rank senior to the preferred stock.
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The term equity securities does not include convertible debt securities.
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Warrants
As of August 1, 2014, there were outstanding warrants to purchase 149,704 shares of our common stock. The warrants contain customary
anti-dilution and net issuance provisions and are not callable by us.
Registration Rights
As of August 1, 2014, holders of 5,172,568 shares of our common stock, which includes 70,356 shares of common stock issuable upon the
exercise of warrants, or their transferees will be entitled to the following rights with respect to the registration of such shares for public resale under the Securities Act of 1933, as amended, or the Securities Act, pursuant to an investor rights
agreement by and among us and certain of our stockholders. The registration of shares of common stock as a result of the following rights being exercised would enable holders to trade these shares without restriction under the Securities Act when
the applicable registration statement is declared effective.
Demand Registration Rights
If at any time the holders of at least 30% of the registrable securities request in writing that we effect a registration with respect to at
least 30% of the registrable securities then outstanding or a lesser percentage if shares in an offering with an anticipated aggregate offering price of at least $5.0 million, we may be required to register their shares. We are obligated to effect
at most two registrations in any 12-month period for the holders of registrable securities in response to these demand registration rights. If the holders requesting registration intend to distribute their shares by means of an underwriting, the
managing underwriter of such offering will have the right to limit the numbers of shares to be underwritten for reasons related to the marketing of the shares.
Piggyback Registration Rights
If at any
time we propose to register any shares of our common stock under the Securities Act, subject to certain exceptions, the holders of registrable securities will be entitled to notice of the registration and to include their shares of registrable
securities in the registration. If our proposed registration involves an underwriting, the managing underwriter of such offering will have the right to limit the number of shares to be underwritten for reasons related to the marketing of the shares.
Form S-3 Registration Rights
If at
any time a holder of registrable securities requests in writing that we register their shares for public resale on Form S-3 and the reasonably anticipated price to the public of the offering is $1.0 million or more, we will be required to use our
best efforts to effect such registration; provided, however, that we will not be required to effect such a registration if, within the preceding 12 months, we have already effected two registrations on Form S-3 for the holders of registrable
securities.
Expenses
Ordinarily,
other than underwriting discounts and commissions, we will be required to pay all expenses incurred by us related to any registration effected pursuant to the exercise of these registration rights. These expenses may include all registration and
filing fees, printing expenses, fees and disbursements of our counsel, reasonable fees and disbursements of a counsel for the selling securityholders, blue sky fees and expenses and the expenses of any special audits incident to the registration.
Termination of Registration Rights
The registration rights terminate upon the earlier of July 24, 2020, or, with respect to the registration rights of an individual holder,
when the holder can sell all of such holder’s registrable securities in a three-month period in compliance with Rule 144 of the Securities Act.
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Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws
Some provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions
that could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that
these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions which provide for payment of a premium
over the market price for our shares.
These provisions, summarized below, are intended to discourage coercive takeover practices and
inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of the increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
Undesignated Preferred Stock
The ability
of our board of directors, without action by the stockholders, to issue up to 10,000,000 shares of undesignated preferred stock with voting or other rights or preferences as designated by our board of directors could impede the success of any
attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.
Stockholder Meetings
Our amended and
restated bylaws provide that a special meeting of stockholders may be called only by our chairman of the board, chief executive officer or president, or by a resolution adopted by a majority of our board of directors.
Requirements for Advance Notification of Stockholder Nominations and Proposals
Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals to be brought before a stockholder
meeting and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.
Elimination of Stockholder Action by Written Consent
Our amended and restated certificate of incorporation and amended and restated bylaws eliminate the right of stockholders to act by written
consent without a meeting.
Staggered Board
Our board of directors is divided into three classes. The directors in each class will serve for a three-year term, one class being elected
each year by our stockholders. This system of electing and removing directors may tend to discourage a third-party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for
stockholders to replace a majority of the directors.
Removal of Directors
Our amended and restated certificate of incorporation provides that no member of our board of directors may be removed from office by our
stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of the total voting power of all of our outstanding voting stock then entitled to vote in the election of directors.
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Stockholders Not Entitled to Cumulative Voting
Our amended and restated certificate of incorporation does not permit stockholders to cumulate their votes in the election of directors.
Accordingly, the holders of a majority of the outstanding shares of our common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they choose, other than any directors that holders of our
preferred stock may be entitled to elect.
Delaware Anti-Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law, which prohibits persons deemed to be “interested
stockholders” from engaging in a “business combination” with a publicly held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction
in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or
within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation’s voting stock. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors.
Amendment of Charter Provisions
The
amendment of any of the above provisions, except for the provision making it possible for our board of directors to issue preferred stock, would require approval by holders of at least two-thirds of the total voting power of all of our outstanding
voting stock.
The provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws
could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover
attempts. These provisions may also have the effect of preventing changes in the composition of our board and management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise
deem to be in their best interests.
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DESCRIPTION OF DEBT SECURITIES
The following description, together with the additional information we include in any applicable prospectus supplement, summarizes certain
general terms and provisions of the debt securities that we may offer under this prospectus. When we offer to sell a particular series of debt securities, we will describe the specific terms of the series in a supplement to this prospectus. We will
also indicate in the supplement to what extent the general terms and provisions described in this prospectus apply to a particular series of debt securities. To the extent the information contained in the prospectus supplement differs from this
summary description, you should rely on the information in the prospectus supplement.
We may issue debt securities either separately, or
together with, or upon the conversion or exercise of or in exchange for, other securities described in this prospectus. Debt securities may be our senior, senior subordinated or subordinated obligations and, unless otherwise specified in a
supplement to this prospectus, the debt securities will be our direct, unsecured obligations and may be issued in one or more series.
The
debt securities will be issued under an indenture between us and a trustee named in the prospectus supplement. We have summarized select portions of the indenture below. The summary is not complete. The form of the indenture has been filed as an
exhibit to the registration statement and you should read the indenture for provisions that may be important to you. In the summary below, we have included references to the section numbers of the indenture so that you can easily locate these
provisions. Capitalized terms used in the summary and not defined herein have the meanings specified in the indenture.
General
The terms of each series of debt securities will be established by or pursuant to a resolution of our board of directors and set forth or
determined in the manner provided in a resolution of our board of directors, in an officer’s certificate or by a supplemental indenture. (Section 2.2) The particular terms of each series of debt securities will be described in a prospectus
supplement relating to such series (including any pricing supplement or term sheet).
We can issue an unlimited amount of debt securities
under the indenture that may be in one or more series with the same or various maturities, at par, at a premium, or at a discount. (Section 2.1) We will set forth in a prospectus supplement (including any pricing supplement or term sheet) relating
to any series of debt securities being offered, the aggregate principal amount and the following terms of the debt securities, if applicable:
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the title and ranking of the debt securities (including the terms of any subordination provisions);
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the price or prices (expressed as a percentage of the principal amount) at which we will sell the debt securities;
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any limit on the aggregate principal amount of the debt securities;
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the date or dates on which the principal on a particular series of debt securities is payable;
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the rate or rates (which may be fixed or variable) per annum or the method used to determine the rate or rates (including any commodity, commodity index, stock exchange index or financial index) at which the debt
securities will bear interest, the date or dates from which interest will accrue, the date or dates on which interest will commence and be payable and any regular record date for the interest payable on any interest payment date;
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the place or places where principal of, and interest, if any, on the debt securities will be payable (and the method of such payment), where the debt securities of such series may be surrendered for registration of
transfer or exchange, and where notices and demands to us in respect of the debt securities may be delivered;
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the period or periods within which, the price or prices at which and the terms and conditions upon which we may redeem the debt securities;
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any obligation we have to redeem or purchase the debt securities pursuant to any sinking fund or analogous provisions or at the option of a holder of debt securities and the period or periods within which, the price or
prices at which and the terms and conditions upon which the debt securities of a particular series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
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the dates on which and the price or prices at which we will repurchase debt securities at the option of the holders of debt securities and other detailed terms and provisions of these repurchase obligations;
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the denominations in which the debt securities will be issued, if other than denominations of $1,000 and any integral multiple thereof;
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whether the debt securities will be issued in the form of certificated debt securities or global debt securities;
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the portion of principal amount of the debt securities payable upon declaration of acceleration of the maturity date, if other than the principal amount;
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the currency of denomination of the debt securities, which may be U.S. dollars or any foreign currency, and if such currency of denomination is a composite currency, the agency or organization, if any, responsible for
overseeing such composite currency;
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the designation of the currency, currencies or currency units in which payment of principal of, and premium and interest on, the debt securities will be made;
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if payments of principal of, or premium or interest on, the debt securities will be made in one or more currencies or currency units other than that or those in which the debt securities are denominated, the manner in
which the exchange rate with respect to these payments will be determined;
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the manner in which the amounts of payment of principal of, and premium, if any, and interest on, the debt securities will be determined, if these amounts may be determined by reference to an index based on a currency
or currencies or by reference to a commodity, commodity index, stock exchange index or financial index;
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any provisions relating to any security provided for the debt securities;
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any addition to, deletion of or change in the Events of Default described in this prospectus or in the indenture with respect to the debt securities and any change in the acceleration provisions described in this
prospectus or in the indenture with respect to the debt securities;
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any addition to, deletion of or change in the covenants described in this prospectus or in the indenture with respect to the debt securities;
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any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to the debt securities;
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the provisions, if any, relating to conversion or exchange of any debt securities of such series, including if applicable, the conversion or exchange price and period, provisions as to whether conversion or exchange
will be mandatory, the events requiring an adjustment of the conversion or exchange price and provisions affecting conversion or exchange;
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any other terms of the debt securities, which may supplement, modify or delete any provision of the indenture as it applies to that series, including any terms that may be required under applicable law or regulations or
advisable in connection with the marketing of the securities; and
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whether any of our direct or indirect subsidiaries will guarantee the debt securities of that series, including the terms of subordination, if any, of such guarantees. (Section 2.2)
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We may issue debt securities that provide for an amount less than their stated principal amount to be due and payable upon declaration of
acceleration of their maturity pursuant to the terms of the indenture. We will provide you with information on the federal income tax considerations and other special considerations applicable to any of these debt securities in the applicable
prospectus supplement.
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If we denominate the purchase price of any of the debt securities in a foreign currency or
currencies or a foreign currency unit or units, or if the principal of, and premium, if any, and interest on, any series of debt securities is payable in a foreign currency or currencies or a foreign currency unit or units, we will provide you with
information on the restrictions, elections, general tax considerations, specific terms and other information with respect to that issue of debt securities and such foreign currency or currencies or foreign currency unit or units in the applicable
prospectus supplement.
Transfer and Exchange
Each debt security will be represented by either one or more global securities registered in the name of The Depository Trust Company (DTC or
the Depositary) or a nominee of the Depositary (we will refer to any debt security represented by a global debt security as a “book-entry debt security”), or a certificate issued in definitive registered form (we will refer to any debt
security represented by a certificated security as a “certificated debt security”) as set forth in the applicable prospectus supplement. Except as set forth under the heading “Global Debt Securities and Book-Entry System” below,
book-entry debt securities will not be issuable in certificated form.
Certificated Debt Securities. You may transfer or exchange
certificated debt securities at any office we maintain for this purpose in accordance with the terms of the indenture. (Section 2.4) No service charge will be made for any transfer or exchange of certificated debt securities, but we may require
payment of a sum sufficient to cover any tax or other governmental charge payable in connection with a transfer or exchange. (Section 2.7)
You may effect the transfer of certificated debt securities and the right to receive the principal of, premium and interest on certificated
debt securities only by surrendering the certificate representing those certificated debt securities and either reissuance by us or the trustee of the certificate to the new holder or the issuance by us or the trustee of a new certificate to the new
holder.
Global Debt Securities and Book-Entry System. Each global debt security representing book-entry debt securities will be deposited
with, or on behalf of, the Depositary, and registered in the name of the Depositary or a nominee of the Depositary. Please see the section entitled “Global Securities” for more information.
Covenants
We will set forth in the
applicable prospectus supplement any restrictive covenants applicable to any issue of debt securities. (Article IV)
No Protection in the Event of a
Change of Control
Unless we state otherwise in the applicable prospectus supplement, the debt securities will not contain any
provisions that may afford holders of the debt securities protection in the event we have a change in control or in the event of a highly leveraged transaction (whether or not such transaction results in a change in control) that could adversely
affect holders of debt securities.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our properties and assets to, any
person (a “successor person”) unless:
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we are the surviving corporation or the successor person (if other than Conatus) is a corporation organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes our obligations on
the debt securities and under the indenture;
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immediately after giving effect to the transaction, no Default or Event of Default, shall have occurred and be continuing; and
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certain other conditions are met.
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Notwithstanding the above, any of our subsidiaries may consolidate with, merge into or transfer
all or part of its properties to us. (Section 5.1)
Events of Default
“Event of Default” means with respect to any series of debt securities, any of the following:
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default in the payment of any interest upon any debt security of that series when it becomes due and payable, and continuance of such default for a period of 30 days (unless the entire amount of the payment is deposited
by us with the trustee or with a paying agent prior to the expiration of the 30-day period);
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default in the payment of principal of any debt security of that series at its maturity;
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default in the performance or breach of any other covenant or warranty by us in the indenture or any debt security (other than a covenant or warranty that has been included in the indenture solely for the benefit of a
series of debt securities other than that series), which default continues uncured for a period of 60 days after we receive written notice from the trustee or Conatus and the trustee receive written notice from the holders of not less than 25% in
principal amount of the outstanding debt securities of that series as provided in the indenture;
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certain voluntary or involuntary events of bankruptcy, insolvency or reorganization of Conatus; or
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any other Event of Default provided with respect to debt securities of that series that is described in the applicable prospectus supplement. (Section 6.1)
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No Event of Default with respect to a particular series of debt securities (except as to certain events of bankruptcy, insolvency or
reorganization) necessarily constitutes an Event of Default with respect to any other series of debt securities. (Section 6.1) The occurrence of certain Events of Default or an acceleration under the indenture may constitute an event of default
under certain indebtedness of ours or our subsidiaries outstanding from time to time.
We will provide the trustee written notice of any
Default or Event of Default within 30 days of becoming aware of the occurrence of such Default or Event of Default, which notice will describe in reasonable detail the status of such Default or Event of Default and what action we are taking or
propose to take in respect thereof. (Section 6.1)
If an Event of Default with respect to debt securities of any series at the time
outstanding occurs and is continuing, then the trustee or the holders of not less than 25% in principal amount of the outstanding debt securities of that series may, by a notice in writing to us (and to the trustee if given by the holders), declare
to be due and payable immediately the principal of (or, if the debt securities of that series are discount securities, that portion of the principal amount as may be specified in the terms of that series) and accrued and unpaid interest, if any, on
all debt securities of that series. In the case of an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization, the principal (or such specified amount) of and accrued and unpaid interest, if any, on all outstanding
debt securities will become and be immediately due and payable without any declaration or other act on the part of the trustee or any holder of outstanding debt securities. At any time after a declaration of acceleration with respect to debt
securities of any series has been made, but before a judgment or decree for payment of the money due has been obtained by the trustee, the holders of a majority in principal amount of the outstanding debt securities of that series may rescind and
annul the acceleration if all Events of Default, other than the non-payment of accelerated principal and interest, if any, with respect to debt securities of that series, have been cured or waived as provided in the indenture. (Section 6.2) We refer
you to the prospectus supplement relating to any series of debt securities that are discount securities for the particular provisions relating to acceleration of a portion of the principal amount of such discount securities upon the occurrence of an
Event of Default.
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The indenture provides that the trustee may refuse to perform any duty or exercise any of its
rights or powers under the indenture, unless the trustee receives indemnity satisfactory to it against any cost, liability or expense that might be incurred by it in performing such duty or exercising such right or power. (Section 7.1(e)) Subject to
certain rights of the trustee, the holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the trustee with respect to the debt securities of that series. (Section 6.12)
No
holder of any debt security of any series will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture or for the appointment of a receiver or trustee, or for any remedy under the indenture, unless:
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that holder has previously given to the trustee written notice of a continuing Event of Default with respect to debt securities of that series; and
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the holders of not less than 25% in principal amount of the outstanding debt securities of that series have made written request, and offered indemnity or security satisfactory to the trustee, to the trustee to
institute the proceeding as trustee, and the trustee has not received from the holders of not less than a majority in principal amount of the outstanding debt securities of that series a direction inconsistent with that request and has failed to
institute the proceeding within 60 days. (Section 6.7)
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Notwithstanding any other provision in the indenture, the holder of
any debt security will have an absolute and unconditional right to receive payment of the principal of, and premium and any interest on, that debt security on or after the due dates expressed in that debt security and to institute suit for the
enforcement of payment. (Section 6.8)
The indenture requires us, within 120 days after the end of our fiscal year, to furnish to the
trustee a statement as to compliance with the indenture. (Section 4.3) If a Default or Event of Default occurs and is continuing with respect to the securities of any series and if it is known to a responsible officer of the trustee, the trustee
shall mail to each holder of the securities of that series notice of a Default or Event of Default within 90 days after it occurs or, if later, after a responsible officer of the trustee has knowledge of such Default or Event of Default. The
indenture provides that the trustee may withhold notice to the holders of debt securities of any series of any Default or Event of Default (except in payment on any debt securities of that series) with respect to debt securities of that series if
the trustee determines in good faith that withholding notice is in the interest of the holders of those debt securities. (Section 7.5)
Modification
and Waiver
We and the trustee may modify, amend or supplement the indenture or the debt securities of any series without the consent
of any holder of any debt security:
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to cure any ambiguity, defect or inconsistency;
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to comply with covenants in the indenture described above under the heading “Consolidation, Merger and Sale of Assets;”
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to provide for uncertificated securities in addition to or in place of certificated securities;
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to add guarantees with respect to debt securities of any series or secure debt securities of any series;
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to surrender any of our rights or powers under the indenture;
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to add covenants or Events of Default for the benefit of the holders of debt securities of any series;
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to comply with the applicable procedures of the applicable depositary;
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to make any change that does not adversely affect the rights of any holder of debt securities;
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to provide for the issuance of and establish the form and terms and conditions of debt securities of any series as permitted by the indenture;
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to effect the appointment of a successor trustee with respect to the debt securities of any series and to add to or change any of the provisions of the indenture to provide for or facilitate administration by more than
one trustee; or
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to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act. (Section 9.1)
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We may also modify and amend the indenture with the consent of the holders of at least a majority in principal amount of the outstanding debt
securities of each series affected by the modifications or amendments. We may not make any modification or amendment without the consent of the holders of each affected debt security then outstanding if that amendment will:
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reduce the amount of debt securities whose holders must consent to an amendment, supplement or waiver;
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reduce the rate of or extend the time for payment of interest (including default interest) on any debt security;
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reduce the principal of or premium on or change the fixed maturity of any debt security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation with respect to
any series of debt securities;
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reduce the principal amount of discount securities payable upon acceleration of maturity;
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waive a Default or Event of Default in the payment of the principal of, or premium or interest on, any debt security (except a rescission of acceleration of the debt securities of any series by the holders of at least a
majority in aggregate principal amount of the then outstanding debt securities of that series and a waiver of the payment default that resulted from such acceleration);
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make the principal of, or premium or interest on, any debt security payable in currency other than that stated in the debt security;
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make any change to certain provisions of the indenture relating to, among other things, the right of holders of debt securities to receive payment of the principal of, and premium and interest on, those debt securities
and to institute suit for the enforcement of any such payment and to waivers or amendments; or
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waive a redemption payment with respect to any debt security. (Section 9.3)
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Except for
certain specified provisions, the holders of at least a majority in principal amount of the outstanding debt securities of any series may on behalf of the holders of all debt securities of that series waive our compliance with provisions of the
indenture. (Section 9.2) The holders of a majority in principal amount of the outstanding debt securities of any series may on behalf of the holders of all the debt securities of such series waive any past default under the indenture with respect to
that series and its consequences, except a default in the payment of the principal of, or any interest on, any debt security of that series; provided, however, that the holders of a majority in principal amount of the outstanding debt securities of
any series may rescind an acceleration and its consequences, including any related payment default that resulted from the acceleration. (Section 6.13)
Defeasance of Debt Securities and Certain Covenants in Certain Circumstances
Legal Defeasance
. The indenture provides that, unless otherwise provided by the terms of the applicable series of debt securities, we
may be discharged from any and all obligations in respect of the debt securities of any series (subject to certain exceptions). We will be so discharged upon the deposit with the trustee, in trust, of money and/or U.S. government obligations or, in
the case of debt securities denominated in a single currency other than U.S. dollars, government obligations of the government that issued or caused to be issued such currency, that, through the payment of interest and principal in accordance with
their terms, will provide money or U.S. government obligations in an amount sufficient in the opinion of a nationally recognized firm of independent public accountants
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or investment bank to pay and discharge each installment of principal of, premium and interest on, and any mandatory sinking fund payments in respect of, the debt securities of that series on the
stated maturity of those payments in accordance with the terms of the indenture and those debt securities.
This discharge may occur only
if, among other things, we have delivered to the trustee an opinion of counsel stating that we have received from, or there has been published by, the U.S. Internal Revenue Service a ruling or, since the date of execution of the indenture, there has
been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the holders of the debt securities of that series will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of the deposit, defeasance and discharge and will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the deposit, defeasance
and discharge had not occurred. (Section 8.3)
Defeasance of Certain Covenants
. The indenture provides that, unless otherwise
provided by the terms of the applicable series of debt securities, upon compliance with certain conditions:
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we may omit to comply with the covenant described under the heading “Consolidation, Merger and Sale of Assets” and certain other covenants set forth in the indenture, as well as any additional covenants that
may be set forth in the applicable prospectus supplement; and
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any omission to comply with those covenants will not constitute a Default or an Event of Default with respect to the debt securities of that series (“covenant defeasance”).
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The conditions include:
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depositing with the trustee money and/or U.S. government obligations or, in the case of debt securities denominated in a single currency other than U.S. dollars, government obligations of the government that issued or
caused to be issued such currency, that, through the payment of interest and principal in accordance with their terms, will provide money in an amount sufficient in the opinion of a nationally recognized firm of independent public accountants or
investment bank to pay and discharge each installment of principal of, premium and interest on, and any mandatory sinking fund payments in respect of, the debt securities of that series on the stated maturity of those payments in accordance with the
terms of the indenture and those debt securities; and
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delivering to the trustee an opinion of counsel to the effect that we have received from, or there has been published by, the U.S. Internal Revenue Service a ruling or, since the date of execution of the indenture,
there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the holders of the debt securities of that series will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of the deposit and related covenant defeasance and will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the
deposit and related covenant defeasance had not occurred. (Section 8.4)
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No Personal Liability of Directors, Officers, Employees or
Stockholders
None of our past, present or future directors, officers, employees or stockholders, as such, will have any liability for
any of our obligations under the debt securities or the indenture or for any claim based on, or in respect or by reason of, such obligations or their creation. By accepting a debt security, each holder waives and releases all such liability. This
waiver and release is part of the consideration for the issue of the debt securities. However, this waiver and release may not be effective to waive liabilities under U.S. federal securities laws, and it is the view of the SEC that such a waiver is
against public policy.
Governing Law
The indenture and the debt securities, including any claim or controversy arising out of or relating to the indenture or the debt securities,
will be governed by the laws of the State of New York. (Section 10.10)
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DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of shares of our common stock or preferred stock or of debt securities. We may issue warrants
independently or together with other securities, and the warrants may be attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into between us and the investors
or a warrant agent. The following summary of material provisions of the warrants and warrant agreements is subject to, and qualified in its entirety by reference to, all the provisions of the warrant agreement and warrant certificate applicable to a
particular series of warrants. The terms of any warrants offered under a prospectus supplement may differ from the terms described below. We urge you to read the applicable prospectus supplement, as well as the complete warrant agreements and
warrant certificates that contain the terms of the warrants.
The particular terms of any issue of warrants will be described in the
prospectus supplement relating to the issue. Those terms may include:
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the number of shares of common stock or preferred stock purchasable upon the exercise of warrants to purchase such shares and the price at which such number of shares may be purchased upon such exercise;
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the designation, stated value and terms (including, without limitation, liquidation, dividend, conversion and voting rights) of the series of preferred stock purchasable upon exercise of warrants to purchase preferred
stock;
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the principal amount of debt securities that may be purchased upon exercise of a debt warrant and the exercise price for the warrants, which may be payable in cash, securities or other property;
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the date, if any, on and after which the warrants and the related debt securities, preferred stock or common stock will be separately transferable;
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the terms of any rights to redeem or call the warrants;
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the date on which the right to exercise the warrants will commence and the date on which the right will expire;
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U.S. federal income tax consequences applicable to the warrants; and
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any additional terms of the warrants, including terms, procedures, and limitations relating to the exchange, exercise and settlement of the warrants.
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Holders of equity warrants will not be entitled to:
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vote, consent or receive dividends;
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receive notice as stockholders with respect to any meeting of stockholders for the election of our directors or any other matter; or
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exercise any rights as stockholders of Conatus.
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Each warrant will entitle its holder to
purchase the principal amount of debt securities or the number of shares of preferred stock or common stock at the exercise price set forth in, or calculable as set forth in, the applicable prospectus supplement. Unless we otherwise specify in the
applicable prospectus supplement, holders of the warrants may exercise the warrants at any time up to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of business on the expiration
date, unexercised warrants will become void.
A holder of warrant certificates may exchange them for new warrant certificates of different
denominations, present them for registration of transfer and exercise them at the corporate trust office of the warrant agent or any
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other office indicated in the applicable prospectus supplement. Until any warrants to purchase debt securities are exercised, the holder of the warrants will not have any rights of holders of the
debt securities that can be purchased upon exercise, including any rights to receive payments of principal, premium or interest on the underlying debt securities or to enforce covenants in the applicable indenture. Until any warrants to purchase
common stock or preferred stock are exercised, the holders of the warrants will not have any rights of holders of the underlying common stock or preferred stock, including any rights to receive dividends or payments upon any liquidation, dissolution
or winding up on the common stock or preferred stock, if any.
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DESCRIPTION OF UNITS
We may issue units consisting of any combination of the other types of securities offered under this prospectus in one or more series. We may
evidence each series of units by unit certificates that we will issue under a separate agreement. We may enter into unit agreements with a unit agent. Each unit agent will be a bank or trust company that we select. We will indicate the name and
address of the unit agent in the applicable prospectus supplement relating to a particular series of units.
The following description,
together with the additional information included in any applicable prospectus supplement, summarizes the general features of the units that we may offer under this prospectus. You should read any prospectus supplement related to the series of units
being offered, as well as the complete unit agreements that contain the terms of the units. Specific unit agreements will contain additional important terms and provisions and we will file as an exhibit to the registration statement of which this
prospectus is a part, or will incorporate by reference from another report that we file with the SEC, the form of each unit agreement relating to units offered under this prospectus.
If we offer any units, certain terms of that series of units will be described in the applicable prospectus supplement, including, without
limitation, the following, as applicable:
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the title of the series of units;
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identification and description of the separate constituent securities comprising the units;
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the price or prices at which the units will be issued;
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the date, if any, on and after which the constituent securities comprising the units will be separately transferable;
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a discussion of certain U.S. federal income tax considerations applicable to the units; and
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any other terms of the units and their constituent securities.
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GLOBAL SECURITIES
Book-Entry, Delivery and Form
Unless we
indicate differently in a prospectus supplement, the securities initially will be issued in book-entry form and represented by one or more global notes or global securities, or, collectively, global securities. The global securities will be
deposited with, or on behalf of DTC and registered in the name of Cede & Co., the nominee of DTC. Unless and until it is exchanged for individual certificates evidencing securities under the limited circumstances described below, a global
security may not be transferred except as a whole by the depositary to its nominee or by the nominee to the depositary, or by the depositary or its nominee to a successor depositary or to a nominee of the successor depositary.
DTC has advised us that it is:
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a limited-purpose trust company organized under the New York Banking Law;
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a “banking organization” within the meaning of the New York Banking Law;
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a member of the Federal Reserve System;
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a “clearing corporation” within the meaning of the New York Uniform Commercial Code; and
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a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.
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DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among its participants of securities
transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. “Direct
participants” in DTC include securities brokers and dealers, including underwriters, banks, trust companies, clearing corporations and other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing
Corporation, or DTCC. DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries.
Access to the DTC system is also available to others, which we sometimes refer to as indirect participants, that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC
and its participants are on file with the SEC.
Purchases of securities under the DTC system must be made by or through direct
participants, which will receive a credit for the securities on DTC’s records. The ownership interest of the actual purchaser of a security, which we sometimes refer to as a beneficial owner, is in turn recorded on the direct and indirect
participants’ records. Beneficial owners of securities will not receive written confirmation from DTC of their purchases. However, beneficial owners are expected to receive written confirmations providing details of their transactions, as well
as periodic statements of their holdings, from the direct or indirect participants through which they purchased securities. Transfers of ownership interests in global securities are to be accomplished by entries made on the books of participants
acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in the global securities, except under the limited circumstances described below.
To facilitate subsequent transfers, all global securities deposited by direct participants with DTC will be registered in the name of
DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of securities with DTC and their registration in the name of Cede & Co. or such other nominee
will not change the beneficial ownership of the securities. DTC has no knowledge of the actual beneficial owners of the securities. DTC’s records reflect only the identity of the direct participants to whose accounts the securities are
credited, which may or may not be the beneficial owners. The participants are responsible for keeping account of their holdings on behalf of their customers.
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So long as the securities are in book-entry form, you will receive payments and may transfer
securities only through the facilities of the depositary and its direct and indirect participants. We will maintain an office or agency in the location specified in the prospectus supplement for the applicable securities, where notices and demands
in respect of the securities and the indenture may be delivered to us and where certificated securities may be surrendered for payment, registration of transfer or exchange.
Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any legal requirements in effect from time to time.
Redemption notices will be sent to DTC. If less than all of the securities of a particular series are being redeemed, DTC’s practice is
to determine by lot the amount of the interest of each direct participant in the securities of such series to be redeemed.
Neither DTC
nor Cede & Co. (or such other DTC nominee) will consent or vote with respect to the securities. Under its usual procedures, DTC will mail an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns the
consenting or voting rights of Cede & Co. to those direct participants to whose accounts the securities of such series are credited on the record date, identified in a listing attached to the omnibus proxy.
So long as securities are in book-entry form, we will make payments on those securities to the depositary or its nominee, as the registered
owner of such securities, by wire transfer of immediately available funds. If securities are issued in definitive certificated form under the limited circumstances described below, we will have the option of making payments by check mailed to the
addresses of the persons entitled to payment or by wire transfer to bank accounts in the United States designated in writing to the applicable trustee or other designated party at least 15 days before the applicable payment date by the persons
entitled to payment, unless a shorter period is satisfactory to the applicable trustee or other designated party.
Redemption proceeds,
distributions and dividend payments on the securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit direct participants’ accounts upon
DTC’s receipt of funds and corresponding detail information from us on the payment date in accordance with their respective holdings shown on DTC records. Payments by participants to beneficial owners will be governed by standing instructions
and customary practices, as is the case with securities held for the account of customers in bearer form or registered in “street name.” Those payments will be the responsibility of participants and not of DTC or us, subject to any
statutory or regulatory requirements in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is our
responsibility; disbursement of payments to direct participants is the responsibility of DTC; and disbursement of payments to the beneficial owners is the responsibility of direct and indirect participants.
Except under the limited circumstances described below, purchasers of securities will not be entitled to have securities registered in their
names and will not receive physical delivery of securities. Accordingly, each beneficial owner must rely on the procedures of DTC and its participants to exercise any rights under the securities and the indenture.
The laws of some jurisdictions may require that some purchasers of securities take physical delivery of securities in definitive form. Those
laws may impair the ability to transfer or pledge beneficial interests in securities.
DTC may discontinue providing its services as
securities depositary with respect to the securities at any time by giving reasonable notice to us. Under such circumstances, in the event that a successor depositary is not obtained, securities certificates are required to be printed and delivered.
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As noted above, beneficial owners of a particular series of securities generally will not receive
certificates representing their ownership interests in those securities. However, if:
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DTC notifies us that it is unwilling or unable to continue as a depositary for the global security or securities representing such series of securities or if DTC ceases to be a clearing agency registered under the
Exchange Act at a time when it is required to be registered and a successor depositary is not appointed within 90 days of the notification to us or of our becoming aware of DTC’s ceasing to be so registered, as the case may be;
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we determine, in our sole discretion, not to have such securities represented by one or more global securities; or
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an Event of Default has occurred and is continuing with respect to such series of securities,
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we will prepare
and deliver certificates for such securities in exchange for beneficial interests in the global securities. Any beneficial interest in a global security that is exchangeable under the circumstances described in the preceding sentence will be
exchangeable for securities in definitive certificated form registered in the names that the depositary directs. It is expected that these directions will be based upon directions received by the depositary from its participants with respect to
ownership of beneficial interests in the global securities.
We have obtained the information in this section and elsewhere in this
prospectus concerning DTC and DTC’s book-entry system from sources that are believed to be reliable, but we take no responsibility for the accuracy of this information.
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PLAN OF DISTRIBUTION
We may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or a combination
of these methods or through underwriters or dealers, through agents and/or directly to one or more purchasers. The securities may be distributed from time to time in one or more transactions:
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at a fixed price or prices, which may be changed;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices; or
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Each time that we sell securities covered by this prospectus, we will
provide a prospectus supplement or supplements that will describe the method of distribution and set forth the terms and conditions of the offering of such securities, including the offering price of the securities and the proceeds to us, if
applicable.
Offers to purchase the securities being offered by this prospectus may be solicited directly. Agents may also be designated
to solicit offers to purchase the securities from time to time. Any agent involved in the offer or sale of our securities will be identified in a prospectus supplement.
If a dealer is utilized in the sale of the securities being offered by this prospectus, the securities will be sold to the dealer, as
principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale.
If an underwriter is utilized in the sale of the securities being offered by this prospectus, an underwriting agreement will be executed with
the underwriter at the time of sale and the name of any underwriter will be provided in the prospectus supplement that the underwriter will use to make resales of the securities to the public. In connection with the sale of the securities, we or the
purchasers of securities for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter may sell the securities to or through dealers, and those dealers may receive
compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for which they may act as agent. Unless otherwise indicated in a prospectus supplement, an agent will be acting on a best
efforts basis and a dealer will purchase securities as a principal, and may then resell the securities at varying prices to be determined by the dealer.
Any compensation paid to underwriters, dealers or agents in connection with the offering of the securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers will be provided in the applicable prospectus supplement. Underwriters, dealers and agents participating in the distribution of the securities may be deemed to be underwriters within the
meaning of the Securities Act, and any discounts and commissions received by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions. We may enter into agreements to indemnify
underwriters, dealers and agents against civil liabilities, including liabilities under the Securities Act, or to contribute to payments they may be required to make in respect thereof and to reimburse those persons for certain expenses.
Any common stock or preferred stock will be listed on The Nasdaq Global Market, but any other securities may or may not be listed on a
national securities exchange. To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize, maintain or otherwise affect the price of the securities. This may include
over-allotments or short sales of the securities, which involve the sale by persons participating in the offering of more securities than were sold to them. In these circumstances, these persons would cover such over-allotments or short positions by
making purchases in the open market or by exercising their over-allotment option, if any. In addition, these persons may stabilize or maintain the price of the securities
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by bidding for or purchasing securities in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed if securities
sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in the open market.
These transactions may be discontinued at any time.
If indicated in the applicable prospectus supplement, underwriters or other persons
acting as agents may be authorized to solicit offers by institutions or other suitable purchasers to purchase the securities at the public offering price set forth in the prospectus supplement, pursuant to delayed delivery contracts providing for
payment and delivery on the date or dates stated in the prospectus supplement. These purchasers may include, among others, commercial and savings banks, insurance companies, pension funds, investment companies and educational and charitable
institutions. Delayed delivery contracts will be subject to the condition that the purchase of the securities covered by the delayed delivery contracts will not at the time of delivery be prohibited under the laws of any jurisdiction in the United
States to which the purchaser is subject. The underwriters and agents will not have any responsibility with respect to the validity or performance of these contracts.
We may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act. In
addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement so indicates, in connection with
those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others
to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions will
be an underwriter and, if not identified in this prospectus, will be named in the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a financial institution or other third
party that in turn may sell the securities short using this prospectus and an applicable prospectus supplement. Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection
with a concurrent offering of other securities.
The specific terms of any lock-up provisions in respect of any given offering will be
described in the applicable prospectus supplement.
In compliance with the guidelines of the Financial Industry Regulatory Authority,
Inc., or FINRA, the maximum consideration or discount to be received by any FINRA member or independent broker dealer may not exceed 8% of the aggregate proceeds of the offering.
The underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business for
which they receive compensation.
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LEGAL MATTERS
Latham & Watkins LLP, San Diego, California, will pass upon certain legal matters relating to the issuance and sale of the securities
offered hereby on behalf of Conatus Pharmaceuticals Inc. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2013, 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.
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5,200,000 Shares
Common Stock
PROSPECTUS
SUPPLEMENT
Joint Book-Running Managers
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Stifel
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SunTrust Robinson Humphrey
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May 11, 2017
Neither we
nor any of the underwriters have authorized anyone to provide information different from that contained in this prospectus supplement. When you make a decision about whether to invest in our common stock, you should not rely upon any information
other than the information in this prospectus supplement. Neither the delivery of this prospectus supplement nor the sale of shares of our common stock means that information contained in this prospectus supplement is correct after the date of this
prospectus supplement. This prospectus supplement is not an offer to sell or solicitation of an offer to buy shares of our common stock in any circumstances under which the offer or solicitation is unlawful.
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