As Filed with the Securities and
Exchange Commission on November 16, 2009
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Inhibitex, Inc.
(Exact name of Registrant as
specified in its charter)
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Delaware
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2836
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74-2708737
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(State or Other Jurisdiction of
Incorporation or Organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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9005 Westside
Parkway
Alpharetta, GA 30009
(678) 746-1100
(Address Including Zip Code, and
Telephone Number,
Including Area Code, of
Registrants Principal Executive Offices)
Russell H. Plumb
President and Chief Executive
Officer
9005 Westside
Parkway
Alpharetta, GA 30009
(678) 746-1100
(Name, Address Including Zip
Code and Telephone Number,
Including Area Code of Agent for
Service)
Copies to:
David S.
Rosenthal, Esq.
Dechert LLP
1095 Avenue of the
Americas
New York, New York
10036
(212) 698-3500
Approximate date of commencement of proposed sale to the
public:
From time to time after this Registration
Statement is declared effective.
If any of the securities being registered on this Form are to be
offered pursuant to dividend or interest reinvestment plans,
please check the following
box.
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, as amended (the
Securities Act), other than securities offered only
in connection with dividend or interest reinvestment plans,
check the following
box.
þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration number of the
earlier effective registration statement for the same
offering.
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If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to rule 462(e) under Securities Act, check the following
box.
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If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box.
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Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering
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Aggregate
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Registration
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Securities to be Registered
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Registered(1)
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Price per Share(2)
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Offering Price(2)
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Fee
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Common Stock, $0.001 par value per share
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17,968,747
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$1.00
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$17,968,747
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$1,002.63
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Common Stock, $0.001 par value per share, issuable upon
exercise of warrants to purchase shares of common stock
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8,085,932
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$1.00
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$8,085,932
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$451.20
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Total
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26,054,679
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$26,054,679
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$1,453.83
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(1)
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In accordance with Rule 416(a), the registrant is also
registering hereunder an indeterminate number of shares that may
be issued and resold resulting from stock splits, stock
dividends or similar transactions.
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(2)
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Estimated solely for the purpose of calculating the amount of
the registration fee pursuant to Rule 457 (c ) under the
Securities Act of 1933, as amended. The price per share and
aggregate offering price are based on the average of the high
and low prices of the registrants common stock on
November 5, 2009, as reported on the Nasdaq Capital Market.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
The
information in this prospectus is not complete and may be
changed. A registration statement relating to the shares has
been filed with the Securities and Exchange Commission. The
shares may not be sold, nor may offers to buy be accepted, prior
to the time the registration statement becomes effective.
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SUBJECT TO COMPLETION, DATED
NOVEMBER 16, 2009
PROSPECTUS
26,054,679 Shares of
Common Stock
The selling stockholders identified in this prospectus are
offering for sale for their own account, from time to time, up
to an aggregate of 26,054,679 shares of our common stock,
$0.001 par value per share, including up to an aggregate of
8,085,932 shares of our common stock issuable upon the
exercise of outstanding warrants. The selling stockholders
acquired their shares from us in a private placement of shares
of common stock and warrants to purchase shares of common stock
that closed on October 28, 2009 and is more fully described
on page 18 of this prospectus under the heading
Selling Stockholders.
We will not receive any of the proceeds from the sale of shares
by the selling stockholders. However, we will receive the
proceeds from the exercise of the warrants by the selling
stockholders, if any, to the extent that the warrants are not
exercised on a cashless basis. See Use of Proceeds
on page 18 of this prospectus.
Our Common Stock is quoted on the Nasdaq Capital Market under
the symbol INHX. On November 10, 2009, the last
reported sale price for our Common Stock was $1.01.
The selling stockholders may, from time to time, offer and sell
or otherwise dispose of any or all of the shares of common stock
described in this prospectus on any stock exchange, market or
trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices,
and may be to or through underwriters, broker-dealers or agents,
who may receive compensation in the form of discounts,
concessions or commissions. The selling stockholders will bear
all discounts, concessions, commissions and similar expenses, if
any, attributable to the sale of shares. We will bear all other
costs, expenses, and fees in connection with the registration of
the shares. See Plan of Distribution on
page 21 of this prospectus for more information about how
the selling stockholders may sell or dispose of their shares of
common stock.
Investing in our stock involves a high degree of risk. See
Risk Factors beginning on Page 3 for
information that you should be considered before investing in
our common stock.
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 November 16, 2009
TABLE OF
CONTENTS
Neither the delivery of this prospectus, nor any sale of the
shares, shall create any implication that the information in
this prospectus is correct after the date hereof.
This prospectus is not an offer to or solicitation of any
person in any jurisdiction in which such offer or solicitation
is illegal.
PROSPECTUS
SUMMARY
This summary does not contain all of the information you
should consider before investing in our common stock. Prior to
deciding to invest in our common stock, you should read this
entire prospectus carefully, including the section entitled
Risk Factors and other information incorporated
herein by reference. Unless otherwise specified, references in
this prospectus to Inhibitex, the
Company, we, our and
us refer to Inhibitex, Inc.
Our
Business
We are a biopharmaceutical company focused on the development of
differentiated anti-infective products to treat serious
infections. We are currently targeting our efforts and resources
on the development of small molecule antiviral compounds, and in
particular, oral therapies to treat shingles (also referred to
as herpes zoster) and infections caused by hepatitis C
virus (HCV). Many currently available antiviral
therapies have various limitations and shortcomings, such as
sub-optimal
potency, diminishing efficacy due to the emergence of
drug-resistant viruses, toxic or adverse side effects, complex
dosing schedules, and inconvenient routes of administration. We
believe that our product candidates have the potential to
address a number of these limitations and other unmet needs in
their intended indications.
Our lead product candidate, FV-100, is an orally available
nucleoside analogue prodrug being developed for the treatment of
shingles, which is caused by varicella zoster virus
(VZV). We initiated a Phase II clinical trial
of FV-100 in May 2009. Our preclinical pipeline includes
INX-189, the lead compound from our series of nucleotide
polymerase inhibitors, which we are developing to treat
infections caused by HCV, and we have also licensed to Wyeth the
rights to use certain intellectual property for its development
of staphylococcal vaccines.
We foresee completing our Phase II clinical trial of FV-100
around the middle of 2010. We are also engaged in various
preclinical Good Laboratory Practice (GLP) studies
with respect to INX-189. We currently plan to file an
investigational new drug application (IND) for
INX-189 in the first half of 2010 and initiate clinical trials.
We have neither received regulatory approval for any of our
product candidates, nor do we have any commercialization
capabilities; therefore, it is possible that we may never
successfully derive significant collaboration revenues or any
product revenues from any of our existing or future preclinical
development programs or product candidates. We expect to incur
losses for the foreseeable future as we intend to support the
development of our antiviral programs.
The
Offering
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Securities Offered
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Up to an aggregate of 26,054,679 shares of our common
stock, including up to an aggregate of 8,085,932 shares
issuable upon the exercise of outstanding warrants, may be sold
by selling stockholders from time to time pursuant to this
registration statement.
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Manner of Offering
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The selling stockholders may, from time to time, offer and sell
or otherwise dispose of any or all of the shares of common stock
described in this prospectus on any stock exchange, market or
trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices,
and may be to or through underwriters, broker-dealers or agents,
who may receive compensation in the form of discounts,
concessions or commissions. The selling stockholders will bear
all discounts, concessions, commissions and similar expenses, if
any, attributable to the sale of shares. We will bear all other
costs, expenses, and fees in connection with the registration of
the shares. See Plan of Distribution on
page 21 of this prospectus for more information about
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how the selling stockholders may sell or dispose of their shares
of common stock.
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Use of Proceeds
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We will not receive any of the proceeds from the sale of shares
by the selling stockholders. However, we will receive the
proceeds from the exercise of the warrants by the selling
stockholders, if any, to the extent that the warrants are
exercised on a cash basis. See Use of Proceeds on
page 18 of this prospectus.
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Risks
Affecting Us
We are subject to a number of risks that you should be aware of
before you decide to purchase our common stock. These risks are
discussed more fully in the section captioned Risk
Factors, beginning on page 3 of this prospectus.
Corporate
Information
We were incorporated in Delaware in May 1994. Our principal
executive offices are located at
9005 Westside Parkway, Alpharetta, Georgia 30009. Our
telephone number is
(678) 746-1100.
Our website is
www.inhibitex.com
. Information contained
on our website is not incorporated by reference into and does
not constitute part of this prospectus.
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RISK
FACTORS
If you purchase our common stock, you will be taking on a
high degree of financial risk. In deciding whether to purchase
our common stock, you should carefully consider the following
discussion of risks, together with the other information
contained in this prospectus. The occurrence of any of the
following risks could materially harm our business and financial
condition and our ability to raise additional capital in the
future. In that event, the market price of our common stock
could decline and you could lose part or all of your
investment.
Risks
Relating to our Development of our Product Candidates
All of
our product candidates are in the early stages of development
and their commercial viability remains subject to future
preclinical studies, clinical trials, regulatory approvals and
the risks generally inherent in these activities. If we are
unable to successfully advance or develop our product
candidates, our business will be materially
harmed.
In the near-term, failure to successfully advance the
development of one or more of our product candidates may have a
material adverse effect on us. To date, we have not successfully
developed or commercially marketed, distributed or sold any
product candidates. The success of our business depends
primarily upon our ability to successfully advance the
development of our product candidates through preclinical and
clinical studies, have these candidates approved for sale by the
U.S. Food and Drug Administration (the FDA) or
regulatory authorities in other countries, and ultimately, have
our product candidates successfully commercialized by us or a
strategic collaborator. In May 2009, we initiated a
Phase II trial for FV-100, our shingles product candidate,
and anticipate completing this trial around the middle of 2010.
Further, we currently plan to file an IND for INX-189, our HCV
compound in development, in the first half of 2010 and initiate
clinical trials. We cannot assure you that the results of
ongoing preclinical studies or clinical trials will support or
justify the continued development of one or both of these
product candidates.
Our product candidates must satisfy rigorous regulatory
standards of safety and efficacy before they can be approved for
sale. To satisfy these standards, we must engage in expensive
and lengthy testing, preclinical studies and clinical trials,
and obtain regulatory approval of our product candidates.
Despite our efforts, our product candidates may not:
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offer therapeutic or other benefits over existing comparable
drugs or other drug candidates in development;
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be proven to be safe and effective in clinical trials;
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have the desired effects (or may include undesirable or
unexpected effects);
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meet applicable regulatory standards;
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be capable of being produced in commercial quantities at
acceptable costs; or
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be successfully commercialized by us or by collaborators.
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Even if we achieve success in preclinical studies and
early-stage clinical trials, there can be no assurance that
later-stage clinical trials will be successful and continue to
support the development of our product candidates. A number of
companies in the pharmaceutical and biopharmaceutical industries
have experienced significant setbacks and failure in all stages
of development, including late-stage clinical trials, even after
achieving promising results in preclinical testing or
early-stage clinical trials. Accordingly, results from completed
preclinical studies and early-stage clinical trials of our
product candidates may not be predictive of the results we may
obtain in later-stage trials.
Our product candidates will require significant additional
research and development efforts, the commitment of substantial
financial resources, and regulatory approvals prior to advancing
into further clinical development or being commercialized by us
or collaborators. We cannot be certain that any of our product
candidates will successfully progress through the drug
development process or will result in clinically or commercially
viable products. We do not expect any of our product candidates
to be commercialized by us or collaborators for at least several
years.
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If
preclinical studies or clinical trials for our product
candidates, including those that are subject to existing or
future collaboration agreements, are unsuccessful or delayed, we
could be delayed or precluded from further development and
commercialization of our product candidates.
In order to further advance the development of and ultimately
receive regulatory approval to sell our product candidates, we
must conduct extensive preclinical studies and clinical trials
to demonstrate their safety and efficacy to the satisfaction of
the FDA or regulatory authorities in other countries, as the
case may be. Preclinical studies and clinical trials are
expensive, complex, may take many years to complete, and have
highly uncertain outcomes. Delays, setbacks or failures may
occur at any time, or in any phase of preclinical or clinical
development, including concerns about safety or toxicity, a lack
of demonstrated efficacy or superior efficacy over other similar
products that have been approved for sale or are in more
advanced stages of development, poor study or trial design, and
issues related to the manufacturing process of the materials
used to conduct the trials. The results of prior preclinical
studies or clinical trials are not necessarily predictive of the
results we may see in later stage clinical trials. In many
cases, product candidates in clinical development may fail to
show desired safety and efficacy characteristics despite having
successfully demonstrated such characteristics in preclinical
studies or earlier stage clinical trials.
In addition, we may experience numerous unforeseen events
during, or as a result of, preclinical studies and the clinical
trial process that could delay or prevent our ability to receive
regulatory approval or commercialize our product candidates,
including: regulators or independent review boards
(IRBs) not authorizing us to commence a clinical
trial or conduct a clinical trial at a prospective trial site;
enrollment in our clinical trials being delayed or proceeding at
a slower pace than we expected, or participants dropping out of
our clinical trials at a higher rate than we anticipated,
resulting in significant delays; our third party contractors,
upon whom we rely for conducting preclinical studies and
clinical trials, may fail to comply with regulatory requirements
or meet their contractual obligations to us in a timely manner;
having to suspend or ultimately terminate our clinical trials if
participants are being exposed to unacceptable health risks;
IRBs or regulators requiring that we hold, suspend or terminate
our preclinical studies and clinical trials for various reasons,
including non-compliance with regulatory requirements; and the
supply or quality of drug material necessary to conduct our
preclinical studies or clinical trials being insufficient,
inadequate or unavailable.
Even if the data collected from preclinical studies or clinical
trials involving our product candidates satisfactorily
demonstrate safety and efficacy, such results may not be
sufficient to support the submission of an IND application and
the initiation of clinical trials in humans or a New Drug
Application (NDA) or Biologics License Application
(BLA) to obtain regulatory approval from the FDA in
the United States to sell the product.
We
must comply with extensive government regulations in order to
advance our product candidates through the clinical development
process and ultimately obtain and maintain marketing approval
for our products in the United States and abroad.
Product candidates for which we may receive regulatory FDA
approval to advance through clinical development and ultimately
sell are subject to extensive and rigorous domestic and foreign
government regulation. In the United States the FDA regulates,
among other things, the development, testing, manufacture,
safety, efficacy, record-keeping, labeling, storage, approval,
advertising, promotion, sale and distribution of pharmaceutical
and biopharmaceutical products. Our product candidates are also
subject to similar regulation by foreign governments to the
extent we seek to develop or market them in those countries. We,
or our collaborators, must provide the FDA and foreign
regulatory authorities, if applicable, with preclinical and
clinical data that appropriately demonstrate our product
candidates safety and efficacy before they can be approved
for the targeted indications. None of our product candidates
have been approved for sale in the United States or any foreign
market, and we cannot predict whether we will obtain regulatory
approval for any product candidate we are developing or plan to
develop. The regulatory review and approval process can take
many years, is dependent upon the type, complexity, novelty of,
and medical need for the product, requires the expenditure of
substantial resources, involves post-marketing surveillance and
vigilance and ongoing requirements for post-marketing studies or
Phase IV clinical trials. In addition, we or our
collaborators, may encounter delays in or fail to gain
regulatory approval for our product candidates based upon
additional
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governmental regulation resulting from future legislative or
administrative action or changes in FDA policy or interpretation
during the period of product development. Delays or failures in
obtaining regulatory approval to advance our product candidates
through clinical development and ultimately commercialize them
may:
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adversely affect our ability to further develop or commercialize
any of our product candidates;
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diminish any competitive advantages that we or our collaborators
may have or attain; and
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adversely affect the receipt of potential milestone payments and
royalties from the sale of our products or product revenues.
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Furthermore, any regulatory approvals, if granted, may later be
withdrawn. If we or our collaborators fail to comply with
applicable regulatory requirements at any time, or if
post-approval safety concerns arise, we or our collaborators may
be subject to restrictions or a number of actions, including:
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delays, suspension or termination of clinical trials related to
our products;
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refusal by the FDA to review pending applications or supplements
to approved applications;
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product recalls or seizures;
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suspension of manufacturing;
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withdrawals of previously approved marketing
applications; and
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fines, civil penalties and criminal prosecutions.
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Additionally, we or our collaborators may voluntarily halt the
development of a product candidate or withdraw any approved
product from the market if we believe that it may pose an
unacceptable safety risk to patients, or if the product
candidate or approved product no longer meets our business
objectives. The ability to develop or market a pharmaceutical
product outside of the United States is contingent upon
receiving appropriate authorization from the respective foreign
regulatory authorities. Foreign regulatory approval processes
typically include many, if not all, of the risks associated with
the FDA process, as described above and may include additional
risks.
We
have limited experience in the development of small molecule
antiviral product candidates and therefore may encounter
difficulties developing our product candidates or managing our
operations in the future.
Our two lead antiviral drug development programs are based upon
chemical compounds, also referred to as small molecules. We have
limited experience in the discovery, development and
manufacturing of small molecule antiviral compounds. In order to
successfully develop our antiviral pipeline we must supplement
our research, clinical development, regulatory, medicinal
chemistry, virology and manufacturing functions through the
addition of key employees, consultants or third-party
contractors to provide certain capabilities and skill sets that
we do not possess, including but not limited to virology,
medicinal chemistry, drug formulation and pharmacology. We
cannot assure you that we will be able to attract or retain such
qualified employees, consultants or third-party contractors with
appropriate small molecule antiviral drug development
experience. In the event we cannot attract such capabilities and
successfully develop or manage our antiviral pipeline, our
business could be materially harmed.
If we
are unable to retain or attract key employees, advisors or
consultants, we may be unable to successfully develop our
product candidates or otherwise manage our business
effectively.
Our success depends in part on our ability to retain qualified
management and personnel, and directors, academic scientists and
clinicians as advisors or consultants. We are currently highly
dependent upon the efforts of our senior and middle management.
In order to develop our product candidates, we need to retain or
attract certain personnel, consultants or advisors with
experience in a number of disciplines, including research and
development, clinical testing, government regulation of
pharmaceuticals, manufacturing and chemistry, business
development, accounting, finance, human resources and
information systems. Although we have not had material
difficulties in retaining key personnel in the past, we may not
be able to continue to do so in the
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future on acceptable terms, if at all. If we lose any key
employees, or are unable to attract and retain qualified
personnel, advisors or consultants, our business may be harmed.
If
third party vendors upon whom we rely to conduct our preclinical
studies or clinical trials do not perform or fail to comply with
strict regulations, these studies or trials for our product
candidates may be terminated, delayed, or fail.
We have limited resources dedicated to conducting and managing
GLP preclinical studies and clinical trials. We have
historically relied and intend to continue to rely on third
parties, including clinical research organizations, consultants
and principal investigators, to assist us in managing,
monitoring and conducting our preclinical studies and clinical
trials. We rely on these vendors and individuals to perform many
facets of the development process, including certain preclinical
studies, the recruitment of sites and patients for participation
in our clinical trials, maintenance of positive relations with
the clinical sites, and ensuring that these sites are conducting
our trials in compliance with the trial protocol and applicable
regulations. If these third parties fail to perform
satisfactorily or do not adequately fulfill their obligations
under the terms of our agreements with them, we may not be able
to enter into alternative arrangements without undue delay or
additional expenditures, and therefore the preclinical studies
and clinical trials of our product candidates may be delayed or
prove unsuccessful. Further, the FDA may inspect some of the
clinical sites participating in our clinical trials, or our
third-party vendors sites, to determine if our clinical
trials are being conducted according to good clinical practices
(CGP). If we or the FDA determine that our
third-party vendors are not in compliance with, or have not
conducted our clinical trials according to applicable
regulations, we may be forced to delay, repeat or terminate such
clinical trials. Any delay, repetition or termination of our
clinical trials and preclinical studies could be very costly,
result in the elimination of a development program, and
materially harm our business.
If
third-party contract manufacturers, upon whom we rely to
manufacture our product candidates, do not perform, fail to
manufacture according to our specifications or fail to comply
with strict regulations, our preclinical studies or clinical
trials could be adversely affected and the development of our
product candidates could be terminated or delayed.
We do not own or operate any manufacturing facilities. We have
historically contracted with third-party contract manufacturers
to produce the clinical and preclinical materials we use to test
our product candidates in development, and we intend to continue
to rely on third-party contract manufacturers, at least for the
foreseeable future, to manufacture these clinical and
preclinical materials. Our reliance on third-party contract
manufacturers exposes us to a number of risks, any of which
could delay or prevent the completion of our preclinical studies
or clinical trials or the regulatory approval or
commercialization of our product candidates, result in higher
costs, or deprive us of potential product revenues. Some of
these risks include:
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our contract manufacturers failing to produce our product
candidates according to their own standards, our specifications,
current good manufacturing procedures (cGMP), or
otherwise manufacturing material that we or the FDA may deem to
be unusable in our clinical trials;
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our contract manufacturers may be unable to increase the scale
of, or increase the capacity for, our product candidates. We may
experience a shortage in supply, or the cost to manufacture our
products may increase to the point where it adversely affects
the cost of our product candidates. We cannot assure you that
our contract manufacturers will be able to manufacture our
products at a suitable scale, or we will be able to find
alternative manufacturers acceptable to us that can do so;
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our third-party contract manufacturers may place a priority on
the manufacture of their own products, or other customers
products;
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our contract manufacturers may fail to perform as agreed or may
not remain in the contract manufacturing business; and
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our manufacturers plants may be closed as a result of
regulatory sanctions or a natural disaster.
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Drug manufacturers are subject to ongoing periodic inspections
by the FDA, the United States Drug Enforcement Administration
(DEA) and corresponding state and foreign agencies
to ensure strict compliance with FDA-mandated cGMPs, other
government regulations and corresponding foreign standards.
While we are obligated to audit their performance, we do not
have control over our third-party contract manufacturers
compliance with these regulations and standards. Failure by our
third-party manufacturers, or us, to comply with applicable
regulations could result in sanctions being imposed on us or the
drug manufacturer from the production of other third-party
products. These sanctions include fines, injunctions, civil
penalties, failure of the government to grant pre-market
approval of drugs, delays, suspension or withdrawal of
approvals, seizures or recalls of product, operating
restrictions and criminal prosecutions, any of which could
significantly and adversely affect our business.
In the
event that we need to change our third-party contract
manufacturers, our preclinical studies or clinical trials, and
the development of our product candidates could be delayed,
adversely affected or terminated, or such a change may result in
higher costs.
Due to regulatory restrictions inherent in an IND, NDA or BLA,
the manufacture of our product candidates may be sole-sourced.
In accordance with cGMPs, changing manufacturers may require the
re-validation of the manufacturing processes and procedures and
may require further clinical trials or preclinical studies.
Changing our current or future contract manufacturers may be
difficult for us and could be costly, which could result in our
inability to manufacture our product candidates for an extended
period of time.
Our
product candidates may have undesirable side effects when used
alone or in combination with other products that may prevent
their regulatory approval or limit their use if
approved.
We must demonstrate the safety of our product candidates to
obtain regulatory approval to advance their clinical development
or to market them. In preclinical studies and clinical trials
conducted to date, our product candidates have generally been
well-tolerated, although these studies and trials have involved
a small number of subjects or patients. We may observe adverse
or significant adverse events in future preclinical studies or
clinical trials of these product candidates. Any side effects
associated with our product candidates in development may
outweigh their potential benefit and result in the termination
of the development program, prevent regulatory approval or limit
their market acceptance if they are ultimately approved.
Our
industry is highly competitive and subject to rapid
technological changes. As a result, we may be unable to compete
successfully or develop innovative products, which could harm
our business.
The biotechnology and pharmaceutical industries are highly
competitive and subject to significant and rapid technological
change as researchers learn more about genetics and develop new
technologies and scientific approaches to treat and prevent
disease. Our current and potential competitors generally
include, among others, major multi-national pharmaceutical
companies, large, medium and small biotechnology firms,
universities and other research institutions. Some of the large
pharmaceutical companies that currently market products or are
developing product candidates that could compete with our
product candidates include, but are not limited to:
GlaxoSmithKline, Novartis and Merck in the shingles market;
Roche, Schering-Plough and Merck in the hepatitis C market,
and Merck and Novartis in the vaccine market. In addition, there
are several other smaller competitors developing product
candidates, particularly in the HCV market, which may compete
with our product candidates in the future. Most of these
companies and institutions, either alone or together with their
collaborators, have substantially greater financial or corporate
resources and larger research and development staffs than we do.
In addition, many of these competitors, either alone or together
with their collaborators, have significantly greater experience
than we do in discovering, developing, manufacturing and
marketing products, particularly those based upon small
molecules. Future successful developments by others may render
our product candidates, technologies or intellectual property
obsolete or non-competitive.
We also face, and will continue to face, intense competition
from other companies for collaborative arrangements with
pharmaceutical and biopharmaceutical companies, and for
attracting investigators and clinical sites capable of
conducting our clinical trials. These competitors, either alone
or with their collaborators, may succeed in developing
technologies or products that are safer, more effective, less
expensive or easier
7
to administer than ours. Accordingly, our competitors may
succeed in obtaining FDA or other regulatory approvals for their
product candidates more rapidly than we can. Companies that
complete clinical trials, obtain required regulatory approvals
and commercialize their products before their competitors may
achieve a significant competitive advantage, including certain
patent and FDA marketing exclusivity rights that could delay the
ability of competitors to market certain products. We cannot
assure you that product candidates resulting from our research
and development efforts, or from joint efforts with our
collaborators, will be able to compete successfully with our
competitors existing products or products under
development.
We do
not have significant internal drug discovery capabilities, and
therefore, we are primarily dependent on in-licensing
intellectual property and early stage development programs from
third parties for additional product candidates for our
pipeline.
We do not have significant internal discovery capabilities and
at this time. Accordingly, in order to generate and expand our
development pipeline, we have relied, and will continue to rely,
on obtaining discoveries, new technologies and compounds from
third-parties through sponsored research or in-licensing
arrangements. We may face substantial competition from other
biotechnology and pharmaceutical companies, many of which may
have greater resources then we have, in obtaining these
in-licensing or sponsored research opportunities. Additional
in-licensing opportunities may not be available to us, or if
available, the terms may not be acceptable. In-licensed
compounds that appear promising in discovery or research studies
may fail to progress into product candidates, or ever advance
into preclinical development or clinical trials at all. Our
research and development efforts may not lead to the discovery
of any additional product candidates that would be suitable for
further preclinical or clinical development. The discovery of
additional product candidates requires significant time, as well
as a substantial commitment of personnel and financial
resources. There is a great deal of uncertainty inherent in our
research efforts and, as a consequence, our ability to fill our
product pipeline with additional product candidates may not be
successful.
If a
product-liability claim is brought against us, our ability to
assert a federal preemption defense may be
limited.
In the recent case of
Wyeth v. Levine
, decided on
March 4, 2009, the United States Supreme Court rejected a
pharmaceutical companys argument that certain failure to
warn-claims alleging deficiencies in its labeling were preempted
by federal law because the FDA approved the labels. Although the
courts decision was limited to the facts of that case, if
any of our products are approved for sale by the FDA and
commercialized, this decision may limit our ability to assert a
federal preemption defense in any product liability suit which
may be brought in the future against such product.
If a
product liability claim is successfully brought against us for
uninsured liabilities or such claim exceeds our insurance
coverage, we could be forced to pay substantial damage
awards.
The use of any of our existing or future product candidates in
clinical trials and the sale of any approved products may expose
us to product liability claims. We currently have product
liability insurance coverage for our clinical trials in the
amount of $5.0 million. In the event any of our product
candidates are approved for sale by the FDA and commercialized,
we may need to increase our product liability coverage. Such
insurance coverage may not protect us against any or all of the
product liability claims that may be brought against us in the
future. We may not be able to acquire or maintain adequate
insurance coverage at a commercially reasonable cost or in
sufficient amounts or scope to protect us against potential
losses. In the event a product liability claim is brought
against us, we may be required to pay legal and other expenses
to defend the claim, as well as uncovered damage awards
resulting from a claim brought successfully against us.
Defending any product liability claim or claims could require us
to expend significant financial and managerial resources, which
could have an adverse effect on our business.
8
If our
use of hazardous materials results in contamination or injury,
we could suffer significant financial loss.
Our research activities involve the controlled use of certain
hazardous materials and medical waste. Notwithstanding the
regulations controlling the use and disposal of these materials
and the safety procedures we undertake, we cannot eliminate the
risk of accidental contamination or injury from these materials.
In the event of an accident or environmental discharge or
exposure, we may be held liable for any resulting damages, which
may exceed our financial resources and have an adverse effect on
our business.
We may
be unable to successfully develop product candidates that are
the subject of collaborations if our collaborators do not
perform, terminate our agreements, or delay the development of
our product candidates.
We have in the past and expect to continue to enter into and
rely on license and collaboration agreements or other business
arrangements with third parties to further develop
and/or
commercialize our existing and future product candidates. Such
collaborators or partners may not perform as agreed, fail to
comply with strict regulations or elect to delay or terminate
their efforts in developing or commercializing our product
candidates, even though we have performed our obligations under
the arrangement. We cannot assure you that any product
candidates will emerge from our relationships with Pfizer
(Wyeth) or any other license or collaboration agreements we may
enter into in the future related to any of our product
candidates.
Risks
Relating to the Commercialization of our Product
Candidates
We may
delay or terminate the development of a product candidate if the
perceived market or commercial opportunity does not justify
further investment, which could materially harm our
business.
Even though the results of preclinical studies and clinical
trials that we conduct may support further development of one or
more of our drug candidates, we may delay, suspend or terminate
the future development of a product candidate at any time for
strategic, business, or financial reasons, including the
determination or belief that the emerging profile of the product
candidate is such that it may not gain meaningful acceptance,
not generate a significant return to shareholders, or otherwise
provide any competitive advantages in its intended indication or
market.
If the
actual or perceived therapeutic benefits of FV-100 are not
sufficiently different from existing generic drugs used to treat
shingles, we may terminate the development of FV-100 at any
time, or our ability to generate significant revenue from the
sale of FV-100, if approved, may be limited and our potential
profitability could be harmed.
Valacyclovir, famciclovir and acyclovir are existing drugs use
to treat shingles patients. Famciclovir and acyclovir are
generic drugs, and valacyclovir, will become a generic drug in
late 2009. Generic drugs are drugs whose patent protection has
expired, and generally have an average selling price
substantially lower than drugs protected by intellectually
property rights. Unless a patented drug can differentiate itself
from a generic drug treating the same condition or disease in a
meaningful manner, the existence of generic competition in any
indication can impose significant pricing pressure on competing
drugs. Accordingly, if at any time we believe that FV-100 may
not provide meaningful therapeutic benefits, perceived or real,
over these existing generic drugs, we may terminate or delay its
future development. We cannot provide any assurance that
later-stage clinical trials of FV-100 will demonstrate
therapeutic benefits over existing generic drugs.
If the
actual or perceived therapeutic benefits of INX-189 are not
equal to or better than other early-stage HCV direct anti-viral
treatments in clinical development, or if INX-189 is not
amenable to combination with other existing or future anti-viral
therapies for the treatment of HCV, we may terminate the
development of INX-189 at any time, or our ability to generate
significant revenue from the sale of INX-189, if approved, may
be limited and our potential profitability could be
harmed.
We are aware of several competitors developing new HCV
anti-viral treatments that are of a similar class to INX-189.
Their HCV product candidates are further advanced in clinical
development than INX-189, therefore
9
their approval and commercialization timelines may be shorter
than ours. Accordingly, if at any time we believe that INX-189
may not provide meaningful therapeutic benefits, perceived or
real, equal to or better than our competitors compounds,
or we believe INX-189 would not be amendable to use in a
combination therapy with existing or future treatments, then we
may terminate or delay the future development of INX-189.
If we
fail to enter into collaborations or other sales, marketing and
distribution arrangements with third parties to commercialize
our product candidates, or otherwise fail to establish marketing
and sales capabilities, we may not be able to successfully
commercialize our products.
We currently have no infrastructure to support the
commercialization of any of our product candidates, and have
little, if any, experience in the commercialization of
pharmaceutical products. Therefore, if our product candidates
are approved, our future profitability will depend largely on
our ability to access or develop suitable sales and marketing
capabilities. We anticipate that we will need to establish
relationships with other companies, through license and
collaborations agreements to commercialize our product
candidates in North America and in other countries around
the world. To the extent that we enter into these license and
collaboration agreements, or marketing and sales arrangements
with other companies to sell, promote or market our products in
the United States or abroad, our product revenues, which may be
in the form of indirect revenue, a royalty, or a split of
profits, will depend largely on their efforts, which may not be
successful. The development of a third party sales force and
marketing capabilities may result in us incurring significant
costs before the time that we may generate significant revenues.
We may not be able to attract and retain qualified third parties
or marketing or sales personnel, or be able to establish
marketing capabilities or an effective sales force.
If
government and third-party payers fail to provide adequate
reimbursement or coverage for our products or those we develop
through collaborations, our revenues and potential for
profitability will be harmed.
In the United States and most foreign markets, our product
revenues, and therefore the inherent value of our product
candidates, will depend largely upon the reimbursement rates
established by third-party payers for such product candidates or
products. Such third-party payers include government health
administration authorities, managed-care organizations, private
health insurers and other organizations. These third-party
payers are increasingly challenging the price and examining the
cost effectiveness of medical products, services and
pharmaceuticals. In addition, significant uncertainty exists as
to the reimbursement status, if any, of newly approved drugs or
pharmaceutical products. We may need to conduct post-marketing
clinical trials in order to demonstrate the cost-effectiveness
of our products. Such studies may require us to commit a
significant amount of management time and financial and other
resources. We cannot assure you that any product candidates will
be reimbursed in part, or at all, by any third-party payers.
Domestic and foreign governments continue to propose and pass
legislation designed to expand the coverage yet reduce the cost
of healthcare, including pharmaceutical drugs. In some foreign
markets, governments control prescription drugs pricing
and profitability. In the United States, changes in federal
health care policy have been proposed by President Obama and a
bill, the Affordable Health Care for America Act
(H.R. 3962) was approved by the House of
Representatives on November 7, 2009. The Senate is expected
to consider its own version of the bill later this year. Some of
the proposed reforms included in H.R. 3962 could result in
reduced reimbursement rates. If the Presidents proposal is
not implemented, pursuant to H.R. 3962 or otherwise, we expect
that there will continue to be federal and state proposals to
implement more governmental control over reimbursement rates. In
addition, increasing emphasis on managed care and government
intervention in the United States healthcare system will
continue to put downward pressure on the pricing of
pharmaceutical products. Cost control initiatives could decrease
the price that we receive for any of our product candidates in
the future, which would limit our revenues and profitability.
Accordingly, legislation and regulations affecting the pricing
of pharmaceutical products may change before our product
candidates are approved for sale, which could further limit or
eliminate reimbursement rates for our product candidates.
10
If any
product candidates that we develop independently or through
collaborations are approved but do not gain meaningful
acceptance in their intended markets, we are not likely to
generate significant revenues or become
profitable.
Even if our product candidates are successfully developed and we
or collaborator obtain the requisite regulatory approvals to
sell them in the future, they may not gain market acceptance or
utilization among physicians, patients or third party payers.
The degree of market acceptance that any of our product
candidates may achieve will depend on a number of factors,
including:
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the therapeutic efficacy or perceived benefit of the product
relative to existing therapies, if they exist;
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the level of reimbursement provided by payers to cover the cost
of the product;
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the cost of the product to the user or payer;
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the products potential advantages over existing or
alternative therapies;
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the actual or perceived safety of similar classes of products;
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the effectiveness of sales, marketing and distribution
capabilities; and
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the scope of the product label approved by the FDA.
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There can be no assurance that physicians will choose to
administer our products, if approved, to the intended patient
population. If our products do not achieve meaningful market
acceptance, or if the market for our products proves to be
smaller than anticipated, we may not generate significant
revenues or ever become profitable.
Even
if we or our collaborator achieve market acceptance for our
products, we may experience downward pricing pressure on the
price of our products due to generic competition and social or
political pressure to lower the cost of drugs.
Several FDA-approved products are already available in generic
form, or face patent expiration in the next several years, in
certain markets and indications that we are developing our
product candidates for, including therapies for the treatment of
shingles. We expect to face competition from these generic
drugs, including significant price-based competition. Further,
pressure from social activist groups, whose goal it is to reduce
the cost of drugs, particularly in less developed nations, may
also put downward pressure on the prices of drugs, which could
result in downward pressure on those prices as well.
If
conflicts arise between our collaborators and us, our
collaborators may act in their best interest and not in ours,
which could adversely affect our business.
Conflicts may arise with our existing or future collaborators if
they pursue alternative therapies for the same diseases that are
targeted by intellectual property rights we have licensed to
them. Competing products developed by our existing or future
collaborators may result in development delays or the withdrawal
of their support for our product candidates. Additionally,
conflicts may arise if there is a dispute about the progress of,
or other activities related to, the clinical development of a
product candidate, the achievement and payment of a milestone
amount or the ownership of intellectual property that is
developed during the course of the collaborative arrangement.
Similarly, we may disagree with a collaborator as to which party
owns newly developed intellectual property. Should an agreement
be terminated as a result of a dispute and before we have
realized the benefits of the collaboration, we may not be able
to obtain revenues that we anticipated receiving.
If we
are unable to adequately protect or expand our intellectual
property related to our current or future product candidates,
our business prospects could be harmed.
Our success depends in part on our ability to:
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obtain and maintain intellectual property rights and patents, or
rights to intellectual property and patents, and maintain their
validity;
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11
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protect our trade secrets; and
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prevent others from infringing on our proprietary rights or
patents.
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We will be able to protect our proprietary intellectual property
rights from unauthorized use by third parties only to the extent
that our proprietary rights are covered by valid and enforceable
patents or are effectively maintained as trade secrets. The
patent position of pharmaceutical and biopharmaceutical
companies involves complex legal and factual questions, and,
therefore, we cannot predict with certainty whether we will be
able to ultimately enforce our patents or proprietary rights.
Therefore, any issued patents that we own or have rights to may
be challenged, invalidated or circumvented, and may not provide
us with the protection against competitors that we anticipate.
The degree of future protection for our proprietary intellectual
property rights is uncertain because issued patents and other
legal means afford only limited protection and may not
adequately protect our rights or permit us to gain or keep our
competitive advantage. For example:
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we or our licensors might not have been the first to make the
inventions covered by each of our or our licensors pending
patent applications and issued patents, and we may have to
engage in expensive and protracted interference proceedings to
determine priority of invention;
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our or our licensors pending patent applications may not
result in issued patents;
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our or our licensors issued patents may not provide a
basis for commercially viable products or may not provide us
with any competitive advantages or may be challenged by third
parties; and
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third parties may design around our or our licensors
patent claims to produce competitive products which fall outside
the scope of our or our licensors patents.
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Because of the extensive time required for the development,
testing and regulatory review of a product candidate, it is
possible that before any of our product candidates can be
approved for sale and commercialized, our relevant patent rights
may expire or such patent rights may remain in force for only a
short period following commercialization. Patent expiration
could adversely affect our ability to protect future product
development and, consequently, our operating results and
financial position. Also, patent rights may not provide us with
adequate proprietary protection or competitive advantages
against competitors with similar technologies. The laws of
certain foreign countries do not protect our intellectual
property rights to the same extent as do the laws of the United
States and those countries may lack adequate rules and
procedures for defending our intellectual property rights. For
example, we may not be able to prevent a third party from
infringing our patents in a country that does not recognize or
enforce patent rights, or that imposes compulsory licenses on or
restricts the prices of life-saving drugs. Changes in either
patent laws or in interpretations of patent laws in the United
States and other countries may diminish the value of our
intellectual property.
We may not develop or obtain rights to products or processes
that are patentable. Even if we or our licensors do obtain
patents, such patents may not adequately protect the products or
technologies we own or have licensed. In addition, we may not
have total control over the patent prosecution of subject matter
that we license from others. Accordingly, we may be unable to
exercise the same degree of control over this intellectual
property as we would over our own. Others may challenge, seek to
invalidate, infringe or circumvent any pending or issued patents
we own or license, and rights we receive under those issued
patents may not provide competitive advantages to us. We cannot
assure you as to the degree of protection that will be afforded
by any of our issued or pending patents, or those licensed by us.
In addition to patents, we rely on trade secrets and proprietary
know-how. We seek to protect these, in part, through
confidentiality and non-disclosure agreements. These agreements
may not provide meaningful protection for our technology or
adequate remedies in the event of unauthorized use or disclosure
of confidential and proprietary information. Failure to protect
our trade secrets and proprietary know-how could seriously
impair our competitive position and harm our business. We may
become involved in costly litigation in order to enforce patent
rights or protect trade secrets or know-how that we own or
license.
12
If a
third party claims we are infringing on its intellectual
property rights, we could incur significant expenses, or be
prevented from further developing or commercializing our product
candidates.
Our success will largely depend on our ability to operate
without infringing the patents and other proprietary
intellectual property rights of third parties. This is generally
referred to as having the freedom to operate. The
biotechnology and pharmaceutical industries are characterized by
extensive litigation regarding patents and other intellectual
property rights. The defense and prosecution of intellectual
property claims, United States Patent and Trademark Office
interference proceedings and related legal and administrative
proceedings, both in the United States and internationally,
involve complex legal and factual questions. As a result, such
proceedings are lengthy, costly and time-consuming and their
outcome is highly uncertain. We may become involved in
litigation in order to determine the enforceability, scope and
validity of the proprietary rights of others, or to determine
whether we have the freedom to operate with respect to the
intellectual property rights of others.
Patent applications in the United States are, in most cases,
maintained in secrecy until approximately 18 months after
the patent application is filed. The publication of discoveries
in the scientific or patent literature frequently occurs
substantially later than the date on which the underlying
discoveries were made. Therefore, patent applications relating
to products similar to our product candidates may have already
been filed by others without our knowledge. In the event an
infringement claim is brought against us, we may be required to
pay substantial legal fees and other expenses to defend such a
claim and, if we are unsuccessful in defending the claim, we may
be prevented from pursuing the development and commercialization
of a product candidate and may be subject to injunctions
and/or
damage awards.
It is fairly common and becoming prevalent for third parties to
challenge patent claims on any successful or perceived
successful product candidate or approved drug. If we become
involved in any patent litigation, interference or other legal
proceedings, we will incur substantial expense, and the efforts
of our technical and management personnel will be significantly
diverted. A negative outcome of such litigation or proceedings
may expose us to loss of our proprietary position or to
significant liabilities, or require us to seek licenses that may
not be available from third parties on commercially acceptable
terms, if at all. We may be restricted or prevented from
developing, manufacturing and selling our product candidates in
the event of an adverse determination in a judicial or
administrative proceeding, or if we fail to obtain necessary
licenses.
Our current and future product candidates may be covered by
third-party patents or other intellectual property rights, in
which case we would need to obtain a license or sublicense to
these rights in order to have the appropriate freedom to further
develop or commercialize them. Any required licenses may not be
available to us on acceptable terms, if at all. If we do not
obtain the required licenses or sublicenses, we could encounter
delays in the development of our product candidates, or be
prevented from developing, manufacturing and commercializing our
product candidates at all. If it is determined that we have
infringed an issued patent and do not have the freedom to
operate, we could be subject to injunctions,
and/or
compelled to pay significant damages, including punitive
damages. In cases where we have in-licensed intellectual
property, our failure to comply with the terms and conditions of
such agreements could harm our business.
Risks
Related to Owning Our Common Stock
We
have experienced operating losses since our inception. We expect
to continue to incur such losses for the foreseeable future and
we may never become profitable.
Since inception (May 13, 1994) and through
September 30, 2009, we have incurred a cumulative deficit
of approximately $240 million. Our losses to date have
resulted principally from:
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costs related to our research programs and the clinical
development of our product candidates; and
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general and administrative costs relating to supporting our
operations.
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We anticipate incurring losses from operations for the
foreseeable future, as we continue to conduct significant
laboratory and preclinical testing, conduct extensive and
expensive clinical trials, and seek regulatory approvals. We
cannot assure you that we will ever generate direct or royalty
revenue from the sale of products,
13
or ever become profitable. Based on our current strategy, our
quarterly and annual operating costs and revenues may become
highly volatile, and comparisons to previous periods will be
difficult to make.
Our
revenues, expenses and results of operations will be subject to
significant fluctuations, which will make it difficult to
compare our operating results from period to
period.
Until we, or our collaborators, have successfully developed one
of our product candidates, we expect that substantially all of
our revenue will result from payments we receive under
collaborative arrangements or license agreements where we grant
others the right to use our intellectual property or know-how.
We may not be able to generate additional revenues under
existing or future collaborative agreements. Furthermore,
payments potentially due to us under our existing and any future
collaborative arrangements, including any milestone and up-front
payments, are intermittent in nature and are subject to
significant fluctuation in both timing and amount, or may never
be earned or paid. Further, our existing collaboration
arrangement allows our partner to terminate the agreement on
relatively short notice. Therefore, our historical and current
revenues may not be indicative of our ability to achieve
additional payment-generating milestones or events in the
future. We expect that our operating results will also vary
significantly from quarter to quarter and year to year as a
result of the initiation, success or failure of preclinical
studies or clinical trials, the timing of the manufacture of our
product candidates or other development related factors.
Accordingly, our revenues and results of operations for any
period may not be comparable to the revenues or results of
operations for any other period.
The
reporting requirements of being a publicly-traded company
increase our overall operating costs and subject us to increased
regulatory risk.
As a publicly-traded company, we are subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the Exchange Act), the Sarbanes-Oxley Act of 2002
(the Sarbanes-Oxley Act) and the listing
requirements of the NASDAQ Stock Market LLC. Section 404 of
the Sarbanes-Oxley Act requires that we maintain effective
internal control over financial reporting and disclosure
controls and procedures. In particular, we must perform system
and process evaluation and testing of our internal control over
financial reporting to allow management to assess the
effectiveness of our internal control over financial reporting,
which is expensive and requires the attention of our limited
management resources. The various financial reporting, legal,
corporate governance and other obligations associated with being
a publicly-traded company require us to incur significant
expenditures and place additional demands on our management,
administrative, operational, and financial resources. If we are
unable to comply with these requirements in a timely and
effective manner, we
and/or
our
executive officers may be subject to sanctions by the SEC, and
our ability to raise additional funds in the future maybe
impaired and ultimately affects our business. We will continue
to incur additional expenses as a result of being a publicly
traded company.
In
order to develop our product candidates and support our
operations beyond 2011, we expect that we will need to raise
additional capital. Such capital may not be available to us on
acceptable terms, if at all, which could materially harm our
business and business prospects, and the price of our common
stock could suffer a decline in value.
We anticipate that our existing cash and cash equivalents and
short-term investments from the date of this filing, together
with proceeds we expect to receive from our existing license and
collaboration agreement and the recent completed private
placement in October 2009 will enable us to operate through
2011. We have no other committed sources of additional capital
at this time. We cannot assure you that funds will be available
to us in the future on acceptable terms, if at all. If adequate
funds are not available to us at all or, on terms that we find
acceptable we may be required to delay, reduce the scope of, or
eliminate research and development efforts or clinical trials on
any or all of our product candidates. We may also be forced to
curtail, restructure, sell, or merge our operations, or obtain
funds by entering into arrangements with licensees,
collaborators or partners on unattractive terms, or sell or
relinquish rights to certain technologies, product candidates or
our intellectual property that we would not otherwise sell or
relinquish in order to continue operations or the development of
our product candidates, assuming any such arrangements are
available at all.
14
The timing and extent of our future financing needs will depend
on many factors, some of which are very difficult to predict and
others that are beyond our control, including:
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our development plans for our product candidates, including any
changes in our strategy;
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the variability, timing and costs associated with conducting
clinical trials, the rate of enrollment in such clinical trials
and the results of these clinical trials;
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the variability, timing and costs associated with conducting
preclinical studies;
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the cost of manufacturing preclinical and clinical trial
materials for our product candidates;
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the cost to obtain and the timing of regulatory approvals
required to advance the development of our product candidates;
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the terms and timing of any collaborative, licensing and other
arrangements that we may establish;
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future payments we may receive or make under existing or future
license or collaboration agreements, if any;
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the cost to maintain a corporate infrastructure to support being
a publicly-traded company; and
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the cost of filing, prosecuting, and enforcing patent and other
intellectual property claims.
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The
price of our common stock price has been highly volatile, and
your investment in us could suffer a decline in
value.
The market price of our common stock has been highly volatile
since the completion of our initial public offering in June
2004. The market price of our common stock is likely to continue
to be highly volatile and could be subject to wide fluctuations
in response to various factors and events, including but not
limited to:
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our ability to successfully advance our product candidates
through preclinical and clinical development activities;
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disclosure of any favorable or unfavorable data from our
clinical trials or preclinical studies, or other regulatory
developments concerning our clinical trials, manufacturing or
product candidates or those of our competitors;
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our ability to manage our cash burn rate at an acceptable or
planned level;
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the approval or commercialization of new products by us or our
competitors, and the disclosure thereof;
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announcements of scientific innovations by us or our competitors;
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rumors relating to us or our competitors;
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public concern about the safety of our product candidates, or
similar classes of products;
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litigation to which we may become subject;
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actual or anticipated variations in our annual and quarterly
operating results;
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changes in general conditions or trends in the biotechnology and
pharmaceutical industries;
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changes in drug reimbursement rates or government policies
related to such reimbursement;
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announcements by us or our competitors of significant
acquisitions, strategic partnerships, joint ventures or capital
commitments;
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new regulatory legislation adopted in the United States or
abroad;
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changes in patent legislation in the United States or abroad
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15
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our failure to achieve or meet equity research analysts
expectations or their estimates of our business or prospects, or
a change in their recommendations concerning us, the value of
our common stock or our industry in general;
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termination or delay in any of our existing or future
collaborative arrangements;
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future sales of equity or debt securities in connection with
raising capital;
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the sale of shares held by our directors or management;
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the loss of our eligibility to have shares of our common stock
traded on the NASDAQ Capital Market due to our failure to
maintain minimum listing standards;
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changes in accounting principles;
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failure to comply with the periodic reporting requirements of
publicly-owned companies, under the Exchange Act, as amended,
and the Sarbanes-Oxley Act of 2002; and
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general economic conditions.
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In addition, the stock market in general, and more specifically
the NASDAQ Capital Market, on which our common stock trades, and
the market for smaller biotechnology stocks in particular, have
historically experienced significant price and volume
fluctuations. Volatility in the market price for a particular
biotechnology companys stock has often been unrelated or
disproportionate to the operating performance of that company.
Market and industry factors may seriously harm the market price
of our common stock, regardless of our operating performance.
Due to this volatility, investors may be unable to sell their
shares of our common stock at or above the price they paid,
which could generate sizable losses.
Future
issuances of shares of our common stock may cause our stock
price to decline, even if our business is doing
well.
The issuance of a significant number of shares of our common
stock, or the perception that such future sales could occur,
particularly with respect to sales by our directors, executive
officers, and other insiders or their affiliates, could
materially and adversely affect the market price of our common
stock and impair our ability to raise capital through the sale
of additional equity securities at a price we deem appropriate.
If we
raise additional capital in the future, your ownership in us
could be diluted.
Any issuance of additional equity we may undertake in the future
could cause the price of our common stock to decline, or require
us to issue shares at a price that is lower than that paid by
holders of our common stock in the past, which would result in
those shares being dilutive. If we obtain funds through a credit
facility or through the issuance of debt or preferred
securities, these securities would likely have rights senior to
your rights as a common stockholder, which could impair the
value of our common stock.
Insiders
and affiliates continue to have substantial control over us,
which could delay or prevent a change in control.
As of October 31, 2009, our directors and executive
officers, together with their affiliates, beneficially owned, in
the aggregate, approximately 25.5% of the outstanding shares of
our common stock. As a result, these stockholders, acting
together, may have the ability to delay or prevent a change in
control that may be favored by other stockholders and otherwise
exercise significant influence over all corporate actions
requiring stockholder approval, irrespective of how our other
stockholders may vote, including:
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the appointment of directors;
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the appointment, change or termination of management;
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any amendment of our certificate of incorporation or bylaws;
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16
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the approval of acquisitions or mergers and other significant
corporate transactions, including a sale of substantially all of
our assets; or
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the defeat of any non-negotiated takeover attempt that might
otherwise benefit the public stockholders.
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A
significant number of shares of our common stock are subject to
issuance upon exercise of outstanding warrants, which upon such
exercise would result in dilution to our security
holders.
On October 28, 2009, we issued warrants to purchase an
aggregate of 8,085,932 shares of our common stock at an
exercise price of $1.46 per share. In addition, as of
September 30, 2009, there were outstanding warrants to
purchase an aggregate of 8,000,597 shares of our common
stock, which warrants had a weighted average exercise price as
of September 30, 2009 of $2.85. The exercise price
and/or
the
number of shares issuable upon exercise of our outstanding
warrants may be adjusted in certain circumstances and subject to
certain limitations, including upon the occurrence of certain
reclassifications or mergers or certain subdivisions or
combinations of the common stock, and the issuance of certain
stock dividends. Although we cannot determine at this time which
of these warrants will ultimately be exercised, it is reasonable
to assume that a warrant will be exercised only if the exercise
price thereof is below the market price of our common stock at
the time of exercise. To the extent any of our outstanding
warrants are exercised, additional shares of our common stock
will be issued that will be eligible for resale in the public
market, which will result in dilution to our security holders.
The issuance of additional securities could also have an adverse
effect on the market price of our common stock.
Our
amended and restated certificate of incorporation, our amended
and restated bylaws and Delaware law contain provisions that
could discourage, delay or prevent a change in our control or
our management.
Provisions of our amended and restated certificate of
incorporation, bylaws and the laws of Delaware, the state in
which we are incorporated, may discourage, delay or prevent a
change in control of us or a change in management that
stockholders may consider favorable. These provisions:
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establish a classified, or staggered, Board of Directors, so
that not all members of our board may be elected at one time;
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set limitations on the removal of directors;
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limit who may call a special meeting of stockholders;
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establish advance notice requirements for nominations for
election to our Board of Directors or for proposing matters that
can be acted upon at stockholder meetings;
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prohibit stockholder action by written consent, thereby
requiring all stockholder actions to be taken at a meeting of
our stockholders; and
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provide our Board of Directors with the ability to designate the
terms of and issue new series of preferred stock without
stockholder approval.
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These provisions could discourage proxy contests and make it
more difficult for you and other stockholders to remove and
elect directors and take other corporate actions. These
provisions could also limit the price that investors might be
willing to pay in the future for shares of our common stock.
SPECIAL
NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated herein by
reference contain forward-looking statements. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied
by the forward-looking statements. In some cases, you can
identify forward-looking statements by terms such as
may, will, should,
could, would, expect,
plan, intend, anticipate,
believe, estimate, project,
predict, forecast,
potential, likely or
possible, as well as the negative of such
expressions, and similar expressions intended to identify
forward-looking
17
statements. There may be events in the future that we are unable
to predict accurately, or over which we have no control. Before
you purchase our securities, you should read this prospectus and
the documents that we reference or incorporate by reference in
this prospectus, or registration statement of which this
prospectus is a part, completely and with the understanding that
our actual future results may be materially different from what
we expect. Our business, financial condition, results of
operations, and prospects may change. We may not update these
forward-looking statements, even though our situation may change
in the future, unless we have obligations under the federal
securities laws to update and disclose material developments
related to previously disclosed information. We qualify all of
the information presented or incorporated by reference in this
prospectus, and particularly our forward-looking statements, by
these cautionary statements
USE OF
PROCEEDS
We will not receive any of the proceeds from the sale of the
shares being offered pursuant to this prospectus. The selling
stockholders will receive the proceeds of such sales. See
Selling Stockholders. If selling stockholders
exercise for cash all of the warrants underlying the
8,085,932 shares registered hereunder for sale upon the
exercise of warrants, we will receive approximately
$11.8 million of total proceeds. We intend to use these
proceeds, if any, for general working capital purposes.
SELLING
STOCKHOLDERS
On October 22, 2009, we entered into Stock and Warrant
Purchase Agreements with the selling stockholders named below,
pursuant to which, on October 28, 2009, we sold to the
selling stockholders in a private placement an aggregate of
17,968,747 shares of our common stock and warrants to
purchase an aggregate of 8,085,932 shares of our common
stock. This prospectus covers the sale or other disposition by
the purchasers under the Stock and Warrant Purchase Agreements
or their pledgees, donees, transferees and other
successors-in-interest,
collectively referred to throughout this prospectus as the
selling stockholders, of up to the total number of shares of
common stock issued to those selling stockholders pursuant to
the Stock and Warrant Purchase Agreements plus the total number
of shares of common stock issuable upon exercise of the warrants
issued to those selling stockholders thereunder.
The warrants issued to the purchasers under the Stock and
Warrant Purchase Agreements were immediately exercisable at an
exercise price of $1.46 per share and expire on October 28,
2013. The exercise price
and/or
the
number of shares of common stock issuable upon exercise of the
warrants may be adjusted in certain circumstances and subject to
certain limitations, including upon the occurrence of certain
reclassifications or mergers or certain subdivisions or
combinations of the common stock, and the issuance of certain
stock dividends.
We are registering the above-referenced shares to permit each of
the selling stockholders and their pledgees, donees, transferees
or other
successors-in-interest
that receive their shares after the date of this prospectus to
resell the shares in the manner contemplated under the
Plan of Distribution.
The following table sets forth the name of each selling
stockholder, the number of shares owned by each of the
respective selling stockholders, the number of shares that may
be offered under this prospectus and the number of shares of our
common stock owned by the selling stockholders assuming all of
the shares covered hereby are sold.
The number of shares in the column Number of
Shares Being Offered represents all of the shares
that a selling stockholder may offer under this prospectus, and
assumes the cash exercise of all the warrants for common stock.
The selling stockholders may sell some, all or none of their
shares. We do not know how long the selling stockholders will
hold the shares before selling them, and we currently have no
agreements, arrangements or understandings with the selling
stockholders regarding the sale or other disposition of any of
the shares. We also do not know if the selling stockholders will
exercise any warrants. The shares covered hereby may be offered
from time to time by the selling stockholders.
18
We have agreed with each selling stockholder to keep the
registration statement, of which this prospectus constitutes a
part, effective with respect to its shares until the earlier of
(1) December 28, 2013, (2) the date on which all
shares purchased from us by such selling stockholder (including
shares issued upon the exercise of warrants issued to the
selling stockholder pursuant to the Stock and Warrant Purchase
Agreements) may be sold without restriction or limitation
pursuant to Rule 144 and without the requirement to be in
compliance with Rule 144(c)(1) (or any successor thereto)
under the Securities Act and (3) such time as all of such
selling stockholders shares covered by this prospectus
(including shares issued upon the exercise of warrants issued to
the selling stockholder pursuant to the Stock and Warrant
Purchase Agreements) have been disposed of pursuant to and in
accordance with the prospectus.
Except as otherwise disclosed below or in the footnotes to the
following table, none of the selling stockholders has, or within
the past three years has had, any position, office or other
material relationship with us. New Enterprise Associates 10,
Limited Partnership (NEA 10) and New Enterprise
Associates 11, Limited Partnership (NEA 11),
individually or with their affiliates, hold more than 5% of our
outstanding capital stock. M. James Barrett, a member of the
Companys board of directors, is a general partner of the
general partner of NEA 10 and is a manager of the general
partner of the general partner of NEA 11.
Based on the information provided to us by the selling
stockholders, none of the selling stockholders is, or is
affiliated with, a broker-dealer. Each of the selling
stockholders has represented to us that it had no agreements or
understanding, directly or indirectly, with any person to
distribute the securities.
The information set forth below is based upon information
provided by each respective selling stockholder and information
filed by the selling stockholders with the SEC, including
information filed on Form 4, Schedule 13D or
Schedule 13G. The percentages of shares owned are based on
61,522,795 shares of our common stock outstanding as of
October 28, 2009, which includes the shares issued pursuant
to the Stock and Warrant Purchase Agreements.
19
In the table below, the number of shares of common stock owned
before and after the offering represent shares directly held by
each selling stockholder, except to the extent otherwise
indicated in the footnotes. The footnotes also disclose all
other shares beneficially owned by the selling stockholders.
Beneficial ownership is determined in accordance with
Rule 13d-3(d)
promulgated by the SEC under the Exchange Act, and the
information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rule, beneficial
ownership includes any shares as to which a selling stockholder
has sole or shared voting power or investment power and also any
shares that the selling stockholder has the right to acquire
within 60 days. The actual number of shares of common stock
issuable upon the exercise of the warrants is subject to
adjustment and could be materially less or more than the number
estimated in the table. Furthermore, certain selling
stockholders have contractually agreed to restrict their ability
to exercise their warrants and receive shares of our common
stock in the event that the number of shares of common stock
held by them in the aggregate and their affiliates after such
exercise would exceed between 4.99% and 19.9% of the then issued
and outstanding shares of common stock as determined in
accordance with Section 13(d) of the Exchange Act.
Accordingly, the number of shares of common stock set forth in
the table for the selling stockholders may exceed the number of
shares of common stock that the selling stockholders could own
beneficially at any given time through their ownership of shares
of common stock and warrants.
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Shares
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Owned
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Number of Shares
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Prior to
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Being Offered
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Shares Owned
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Offering
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Warrant
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after Offering
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Name
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Number(1)
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Shares
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Shares
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Number(2)
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Percent
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14159, L.P.
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44,291
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21,093
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9,491
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13,707
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*
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Baker Brothers Life Sciences, L.P.
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1,700,023
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(3)
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760,156
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342,070
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597,797
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1.0
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Biomedical Offshore Value Fund, Ltd.
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770,312
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531,250
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239,062
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*
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Biomedical Value Fund, L.P.
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1,495,312
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1,031,250
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464,062
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*
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Caduceus Private Investments III, LP
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4,488,501
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3,095,518
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1,392,983
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*
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New Enterprise Associates 10, L.P.
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7,864,059
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(4)
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1,757,812
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791,015
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5,315,232
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8.6
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New Enterprise Associates 11, L.P.
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2,611,719
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(5)
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585,937
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263,671
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1,762,111
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2.8
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OrbiMed Associates III, LP
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42,747
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29,481
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13,266
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*
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Perceptive Life Sciences Master Fund, Ltd.
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1,464,933
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390,625
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175,781
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898,527
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1.5
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Quintessence Fund, L.P.
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1,153,769
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(6)
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795,703
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358,066
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*
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QVT Fund, LP
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10,740,762
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(6)
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7,407,422
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3,333,340
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*
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Visium Balanced Master Fund, Ltd
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3,565,625
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(7)
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1,562,500
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703,125
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1,300,000
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2.1
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TOTAL
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35,942,053
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17,968,747
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8,085,932
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9,887,374
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15.9
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*
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Represents less than 1%.
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(1)
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Includes shares which may be obtained upon the cash exercise of
outstanding warrants issued to the selling stockholders on
October 28, 2009 pursuant to the Stock and Warrant Purchase
Agreements between the selling stockholders and us.
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(2)
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Assumes the sale of all of the shares (including shares obtained
upon the cash exercise of outstanding warrants issued to the
selling stockholders pursuant to the Stock and Warrant Purchase
Agreements) offered by this prospectus.
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(3)
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Includes 464,959 shares which may be obtained upon the
exercise of outstanding warrants.
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(4)
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Includes 965,765 shares which may be obtained upon the
exercise of outstanding warrants. The shares directly held by
New Enterprise Associates 10, Limited Partnership (NEA
10) are indirectly held by NEA Partners 10, Limited
Partnership (NEA Partners 10), the sole general
partner of NEA 10, and the individual general partners of NEA
Partners 10. The individual general partners of NEA Partners 10
are M. James Barrett (a member of the Board of Directors of the
Company), Peter J. Barris, C. Richard Kramlich,
Charles W. Newhall, III, Mark W. Perry, Scott D. Sandell
and Eugene A. Trainor, III. All indirect holders of such
above referenced shares disclaim beneficial ownership of all
applicable shares except to the extent of their actual pecuniary
interest therein.
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20
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(5)
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Includes 670,312 shares which may be obtained upon the
exercise of outstanding warrants. The shares directly held by
New Enterprise Associates 11, Limited Partnership (NEA
11) are indirectly held by NEA Partners 11, Limited
Partnership (NEA Partners 11), which is the sole
general partner of NEA 11, NEA 11 GP, LLC (NEA 11
LLC), which is the sole general partner of NEA Partners
11, and each of the individual Managers of NEA 11 LLC. The
individual Managers of NEA 11 LLC are M. James Barrett (a member
of the Board of Directors of the Company), Peter J. Barris,
Forest Baskett, Ryan D. Drant, Krishna Kittu
Kolluri, C. Richard Kramlich, Charles M. Linehan, Charles W.
Newhall III, Mark W. Perry, Scott D. Sandell, and Eugene A.
Trainor III. All indirect holders of such above referenced
shares disclaim beneficial ownership of all applicable shares
except to the extent of their actual pecuniary interest therein.
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(6)
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QVT Financial LP is the investment manager for QVT Fund LP
and Quintessence Fund L.P. and shares voting and investment
control over the securities held by QVT Fund LP and
Quintessence Fund L.P. QVT Financial GP LLC is the general
partner of QVT Financial LP and as such has complete discretion
in the management and control of the business affairs of QVT
Financial LP. QVT Associates GP LLC is the general partner of
QVT Fund LP and Quintessence Fund L.P. and may be deemed to
beneficially own the securities. The managing members of QVT
Associates GP LLC are Daniel Gold, Arthur Chu, Tracy Fu and
Nicholas Brumm. Each of QVT Financial LP, QVT Financial GP LLC,
QVT Associates GP LLC, Daniel Gold, Arthur Chu, Tracy Fu and
Nicholas Brumm disclaim beneficial ownership of the securities
held by QVT Fund LP and Quintessence Fund L.P., except
to the extend of its pecuniary interest therein.
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The warrants held by QVT Fund LP and Quintessence
Fund L.P. contain an issuance limitation prohibiting the
holder of such warrants from exercising the warrants until such
time as the holder, together with certain related parties, would
not beneficially own after any such exercise more than 9.99% of
the then issued and outstanding Common Stock. The table above
does not reflect this limitation.
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(7)
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Visium Asset Management, LP: By virtue of its position as
investment manager, Visium Asset Management, LP may be deemed to
beneficially own the securities. JG Asset, LLC: By virtue of its
position as general partner of the investment manager, JG Asset,
LLC may be deemed to beneficially own the securities. Jacob
Gottlieb: By virtue of his position as managing member of the
investment manager, Jacob Gottlieb may be deemed to
beneficially own the securities.
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PLAN OF
DISTRIBUTION
The selling stockholders, which as used herein include donees,
pledgees, transferees or other
successors-in-interest
selling shares of our common stock received after the date of
this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to
time, sell, transfer or otherwise dispose of any or all of their
shares of common stock or interests in shares of common stock on
any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These dispositions
may be at fixed prices, at prevailing market prices at the time
of sale, at prices related to the prevailing market price, at
varying prices determined at the time of sale, or at negotiated
prices.
The selling stockholders may use any one or more of the
following methods when disposing of shares or interests therein:
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on the Nasdaq Capital Market (or any other exchange on which the
shares may be listed);
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on the
over-the-counter
market;
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ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
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at the market
or through market makers or
into an existing market for the shares;
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block trades in which the broker-dealer will attempt to sell the
shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
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purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
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an exchange distribution in accordance with the rules of the
applicable exchange;
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21
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privately negotiated transactions;
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short sales;
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through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
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broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
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sales pursuant to Rule 144;
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a combination of any such methods of sale; and
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any other method permitted pursuant to applicable law.
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Broker-dealers engaged by the selling stockholders may arrange
for other brokers-dealers to participate in sales.
Broker-dealers may receive commissions or discounts from the
selling stockholders (or, if any broker-dealer acts as agent for
the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the
types of transactions involved. Any profits on the resale of
shares of common stock by a broker-dealer acting as principal
might be deemed to be underwriting discounts or commissions
under the Securities Act. Discounts, concessions, commissions
and similar selling expenses, if any, attributable to the sale
of shares will be borne by a selling stockholder. The selling
stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales
of the shares if liabilities are imposed on that person under
the Securities Act.
The selling stockholders may, from time to time, pledge or grant
a security interest in some or all of the shares of common stock
owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer
and sell the shares of common stock, from time to time, under
this prospectus, or under a supplement or amendment to this
prospectus under Rule 424(b) or under any applicable
provision of the Securities Act supplementing or amending the
list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under
this prospectus. The selling stockholders also may transfer the
shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus.
To the extent required, this prospectus may be amended or
supplemented from time to time to describe a specific plan of
distribution.
In connection with the sale of our common stock or interests
therein, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial
institutions, which may, in turn, engage in short sales of the
common stock in the course of hedging the positions they assume.
The selling stockholders may also sell shares of our common
stock short and deliver these securities to close out their
short positions, or loan or pledge the common stock to
broker-dealers that in turn may sell these securities. The
selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which
require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares
such broker- dealer or other financial institution may resell
pursuant to this prospectus (as supplemented or amended to
reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale
of the common stock offered by them will be the purchase price
of the common stock less discounts or commissions, if any. Each
of the selling stockholders reserves the right to accept and,
together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be
made directly or through agents. We will not receive any of the
proceeds from this offering, except that we will receive the
exercise price of any warrants exercised for cash.
The selling stockholders also may resell all or a portion of the
shares in open market transactions in reliance upon
Rule 144 under the Securities Act, provided that they meet
the criteria and conform to the requirements of that rule.
22
The selling stockholders and any underwriters, broker-dealers or
agents that participate in the sale of the common stock or
interests therein may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act.
Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling stockholders who
are deemed to be underwriters within the meaning of
Section 2(11) of the Securities Act will be subject to the
prospectus delivery requirements of the Securities Act. The
selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under
the Securities Act.
We have borne and will bear all of the costs, expenses and fees
incurred in connection with the registration of the shares of
common stock hereunder, other than any commissions, discounts or
other fees payable to broker-dealers in connection with any sale
of shares, which will be borne by the selling stockholder
selling such shares of common stock. We have agreed to indemnify
the selling stockholders against certain liabilities, including
liabilities under the Securities Act and state securities laws,
in connection with the shares offered by this prospectus.
In order to comply with the securities laws of some states, if
applicable, the shares of common stock may be sold in these
jurisdictions only through registered or licensed brokers or
dealers. In addition, in some states the common stock may not be
sold unless it has been registered or qualified for sale or an
exemption from registration or qualification requirements is
available and is complied with.
The selling stockholders may be subject to the anti-manipulation
rules of Regulation M, which may limit the timing of
purchases and sales of shares of our common stock by such
selling stockholders.
The selling stockholders have advised us that they have not
entered into any agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of their
shares of common stock, nor is there an underwriter or
coordinating broker acting in connection with a proposed sale of
shares of common stock by any selling stockholder. If we are
notified by any selling stockholder that any material
arrangement has been entered into with a broker-dealer for the
sale of shares of common stock, if required, we will file a
supplement to this prospectus. If the selling stockholders use
this prospectus for any sale of the shares of common stock, they
will be subject to the prospectus delivery requirements of the
Securities Act.
We will make copies of this prospectus (as it may be
supplemented or amended from time to time) available to the
selling stockholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange
Commission (the SEC), as required. You may read and
copy any materials we file with the SEC at the public reference
room maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the
operation of the public reference room by calling the SEC at
1-800-SEC-0330.
In addition, the SEC maintains an Internet site
(http://www.sec.gov)
that contains reports, proxy and information statements and
other information regarding registrants who file electronically
with the SEC.
This prospectus is part of a registration statement that we
filed with the SEC. The registration statement contains more
information than this prospectus regarding us and our common
stock, including certain exhibits and schedules. You can obtain
a copy of the registration statement from the SEC at the address
listed above or from the SECs Internet site (
http://www.sec.gov
).
23
INCORPORATION
BY REFERENCE
The SEC allows us to incorporate by reference
information that we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 after the date of this prospectus but
before the termination of any offering made under this
prospectus and accompanying prospectus:
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our annual report on
Form 10-K
for the fiscal year ended December 31, 2008, filed with the
SEC on March 23, 2009;
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|
our definitive proxy statement filed with the SEC on
April 27, 2009;
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our quarterly report on
Form 10-Q
for the quarter ended March 31, 2009, filed with the SEC on
May 13, 2009;
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|
our quarterly report on
Form 10-Q
for the quarter ended June 30, 2009, filed with the SEC on
August 12, 2009;
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our quarterly report on
Form 10-Q
for the quarter ended September 30, 2009, filed with the
SEC on November 13, 2009;
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our current reports on
Form 8-K,
filed with the SEC on January 5, 2009, February 9,
2009, March 16, 2009, March 25, 2009, April 3,
2009, May 8, 2009, May 12, 2009, June 11, 2009,
July 16, 2009, August 11, 2009, September 24,
2009, October 28, 2009, October 30, 2009, and
November 6, 2009 ; and
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the description of our Common Stock contained in the
registration statement on
Form 8-A,
filed on May 21, 2004, and all amendments and reports
updating such description.
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Upon oral or written request and at no cost to the requester, we
will provide to any person, including a beneficial owner, to
whom a prospectus is delivered, a copy of any or all the
information that has been incorporated by reference in this
prospectus but not delivered with this prospectus. All requests
should be made to: Inhibitex, Inc., 9005 Westside Parkway,
Alpharetta, GA 30009, Attn: Corporate Secretary. You should rely
only on the information incorporated by reference or provided to
you in this prospectus. We have not authorized anyone to provide
you with any other or different information. You should not
assume that the information in this prospectus or the documents
incorporated by reference is accurate as of any date other than
the date on the front of this prospectus or those documents.
LEGAL
MATTERS
The validity of the shares of common stock offered hereby has
been passed upon for us by Dechert LLP, New York, New York.
EXPERTS
The consolidated financial statements of Inhibitex, Inc.
appearing in Inhibitexs Annual Report
(Form 10-K)
for the year ended December 31, 2008, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their report thereon, included
therein, and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
24
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 14.
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Other
Expenses of Issuance and Distribution.
|
The following table sets forth the estimated costs and expenses
payable by us in connection with the distribution of the
securities being registered are set forth:
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SEC registration fee
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$
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1,453.83
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Accountants fees and expenses
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25,000.00
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Legal fees and expenses
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20,000.00
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Printing and engraving expenses
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5,000.00
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Miscellaneous
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3,000.00
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Total expenses
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$
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54,453.83
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Item 15.
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Indemnification
of Directors and Officers.
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Section 145 of the General Corporation Law of the State of
Delaware permits a corporation, under specified circumstances,
to indemnify its directors, officers, employees or agents
against expenses (including attorneys fees), judgments,
fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any threatened, pending or
completed action, suit or proceeding in which any such person is
made a party by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, if such
person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful. In a derivative action, i.e., one by
or in the right of the corporation, indemnification may be made
only for expenses actually and reasonably incurred by a
director, officer, employee or agent in connection with the
defense or settlement of an action or suit, and only with
respect to a matter as to which they shall have acted in good
faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable to the corporation, unless and only to the extent that
the Delaware Court of Chancery or the court in which such action
or suit was brought shall determine upon application that,
despite the adjudication but in light of all the circumstances
of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such
other court shall deem reasonable.
Our amended and restated certificate of incorporation provides
that we shall indemnify our directors, officers and employees
(and those serving at our request as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or as a trustee or
administrator under an employee benefit plan) against all
expenses (including attorneys fees), liability and loss in
any action, suit or proceeding arising out of his or her status
as a director, officer, employee or agent or activities in any
of those capacities. We shall pay expenses incurred by a
director, officer, employee or agent in defending an action,
suit or proceeding, or appearing as a witness at a time when he
or she has not been named as a defendant or a respondent, in
advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay the amount if it
shall ultimately be determined that he or she is not entitled to
be indemnified by us.
We have entered into separate, but identical, indemnity
agreements with each of our directors and executive officers and
we expect to enter into similar indemnity agreements with
persons who become directors or executive officers in the
future. These indemnity agreements provide that we will
indemnify our directors or executive officers, or the
indemnitees, against any amounts that he or she becomes legally
obligated to pay in connection with any claim against him or her
based upon any act, omission, neglect or breach of duty that he
or she may commit, omit or suffer while acting in his or her
capacity as a director
and/or
officer of Inhibitex; provided that such claim: (i) is not
based upon the indemnitees gaining any personal profit or
advantage to which he or she is not legally entitled;
(ii) is not for an accounting of profits made from the
purchase or sale by the indemnitee of our securities within the
meaning of Section 16(b) of the Securities Exchange Act of
II-1
1934, as amended, or similar provisions of any state law; and
(iii) is not based upon the indemnitees knowingly
fraudulent, deliberately dishonest or willful misconduct. The
indemnity agreements also provide that all costs and expenses
incurred by the indemnitee in defending or investigating any
such claim shall be paid by us in advance of the final
disposition thereof unless a majority of our directors who are
not parties to the action, independent legal counsel in a
written opinion, our stockholders or a court of competent
jurisdiction in a final, unappealable adjudication determine
that: (i) the indemnitee did not act in good faith and in a
manner that he or she reasonably believed to be in or not
opposed to our best interests or (ii) in the case of any
criminal action or proceeding, the indemnitee had reasonable
cause to believe his or her conduct was unlawful. Each
indemnitee has undertaken to repay us for any costs or expenses
so advanced if it shall ultimately be determined by a court of
competent jurisdiction in a final, non-appealable adjudication
that he or she is not entitled to indemnification under the
indemnity agreements. We also carry liability insurance covering
each of our directors and officers.
Our amended and restated certificate of incorporation states
that our directors will not have personal liability for monetary
damages for any breach of fiduciary duty as a director, except
for liability (i) for any breach of the directors
duty of loyalty to us or our stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of
Delaware, which makes directors liable for unlawful dividends or
unlawful stock repurchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal
benefit.
Exhibits
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Exhibit
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No.
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Description
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4
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.1
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Eighth Amended and Restated Certificate of Incorporation, as
amended on June 9, 2009 (incorporated by reference to
Exhibit 3.3 of the Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
August 12, 2009).
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4
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.2
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Amended and Restated Bylaws (incorporated by reference to
Exhibit 99.1 of the Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
December 10, 2007).
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4
|
.3
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|
Specimen certificate evidencing the Common Stock (incorporated
by reference to Exhibit 10.2 of Amendment No. 2 to the
Registration Statement on
Form S-1
filed with the Securities and Exchange Commission on May 6,
2004).
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5
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.1
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Opinion of Dechert LLP, as to the legality of the common stock.
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23
|
.1
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Consent of Ernst & Young LLP.
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23
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.2
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Consent of Dechert LLP (included in Exhibit 5.1).
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24
|
.1
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Power of Attorney (included on signature page).
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(a) The undersigned registrant hereby undertakes:
(1) To file, during any period during which offers or sales
are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate
offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement;
II-2
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
Provided, however
, that paragraphs (a)(1)(i), (a)(1)(ii)
and (a)(1)(iii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished to the
SEC by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by
reference in this registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) that is
part of the registration statement.
(2) That, for purposes of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities to be offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act to any purchaser:
(i) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(ii) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by
Section 10(a) of the Securities Act shall be deemed to be
part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide
offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act,
each filing of the registrants annual report pursuant to
section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plans
annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Alpharetta, State of Georgia, on November 16, 2009.
Inhibitex, Inc.
Russell H. Plumb
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
whose signature appears below constitutes and appoints Russell
H. Plumb and Michael A. Henos, his or her true and lawful
attorneys-in-fact, with full power of substitution and
re-substitution for him or her and on his or her behalf, and in
his or her name, place and stead, in any all capacities to
execute and sign any and all amendments or post-effective
amendments to this registration statement, and to file the same,
with all exhibits thereto, and other documents and in connection
therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorneys-in-fact or any
of them or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof and the Company hereby
confers like authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacity and on the dates indicated.
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Signature
|
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Title
|
|
Date
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|
|
|
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/s/ Russell
H. Plumb
Russell
H. Plumb
|
|
President, Chief Executive Officer, Chief
Financial Officer and Director
(Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer)
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|
November 16, 2009
|
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|
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|
|
/s/ Michael
A. Henos
Michael
A. Henos
|
|
Chairman of the Board of Directors
|
|
November 16, 2009
|
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/s/ M.
James Barrett, Ph.D.
M.
James Barrett, Ph.D.
|
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Director
|
|
November 16, 2009
|
|
|
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/s/ Gabriele
M. Cerrone
Gabriele
M. Cerrone
|
|
Director
|
|
November 16, 2009
|
|
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|
/s/ Russell
M. Medford, M.D., Ph.D.
Russell
M. Medford, M.D., Ph.D.
|
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Director
|
|
November 16, 2009
|
|
|
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/s/ Chris
McGuigan, M.Sc., Ph.D.
Chris
McGuigan, M.Sc., Ph.D.
|
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Director
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November 16, 2009
|
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/s/ Marc
L. Preminger
Marc
L. Preminger
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Director
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November 16, 2009
|
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/s/ A.
Keith Willard
A.
Keith Willard
|
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Director
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November 16, 2009
|
II-4
EXHIBIT INDEX
|
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|
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Exhibit
|
|
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No.
|
|
Description
|
|
|
4
|
.1
|
|
Eighth Amended and Restated Certificate of Incorporation, as
amended on June 9, 2009 (incorporated by reference to
Exhibit 3.3 of the Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on
August 12, 2009).
|
|
4
|
.2
|
|
Amended and Restated Bylaws (incorporated by reference to
Exhibit 99.1 of the Current Report on
Form 8-K
filed with the Securities and Exchange Commission on
December 10, 2007).
|
|
4
|
.3
|
|
Specimen certificate evidencing the Common Stock (incorporated
by reference to Exhibit 10.2 of Amendment No. 2 to the
Registration Statement on
Form S-1
filed with the Securities and Exchange Commission on May 6,
2004).
|
|
5
|
.1
|
|
Opinion of Dechert LLP, as to the legality of the common stock.
|
|
23
|
.1
|
|
Consent of Ernst & Young LLP.
|
|
23
|
.2
|
|
Consent of Dechert LLP (included in Exhibit 5.1).
|
|
24
|
.1
|
|
Power of Attorney (included on signature page).
|
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