AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 2005
REGISTRATION NO. 333-_______As filed with the Securities and Exchange Commission on November 10, 2008.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.Washington, DC 20549
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 AASTROM BIOSCIENCES, INC.
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)its charter)
| | | |
MICHIGAN
Michigan | | 94-3096597 |
(State or Other Jurisdictionother jurisdiction of
of Incorporationincorporation or Organization)organization) | | 94-3096597(I.R.S. Employer Identification
(IRS Employer
Identification Number) |
24 FRANK LLOYD WRIGHT DRIVEFrank Lloyd Wright Drive
P.O. BOXBox 376
ANN ARBOR, MICHIGANAnn Arbor, Michigan 48106
(734) 930-5555
(Address, Including Zip Code,including zip code, and Telephone Number, Including
Area Code,telephone number, including area code, of Registrant’s Principalregistrant’s principal executive offices)
George W. Dunbar, Jr.
President and Chief Executive Offices)ALAN M. WRIGHTOfficer
SENIOR VICE PRESIDENT,
ADMINISTRATIVE AND FINANCIAL OPERATIONS, CFO
AASTROM BIOSCIENCES, INC.
24 FRANK LLOYD WRIGHT DRIVEAastrom Biosciences, Inc.
P.O. BOXBox 376
ANN ARBOR, MICHIGANAnn Arbor, Michigan 48106
(734) 930-5555
(Name, Address, Including Zip Code,address, including zip code, and Telephone Number, Including
Area Code,telephone number, including area code, of Agentagent for Service)
COPIES TO:
service)
With a copy to:
DOUGLASAllan J. REIN, ESQ.Reich
DLA PIPER RUDNICK GRAY CARY US LLPSeyfarth Shaw
4365 EXECUTIVE DRIVE, SUITE 1100131 South Dearborn Street
SAN DIEGO, CA 92121-2133Suite 2400
TELEPHONE: (858) 677-1400Chicago, Illinois 60603
FACSIMILE: (858) 677-1477Telephone: (312) 460-5650
Facsimile: (312) 460-7650APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:Approximate date of commencement of proposed sale to the public: From time to time after
the effective date of this Registration
Statement.Statement becomes effective.
If the only securities being registered on this
Formform are being offered pursuant to dividend or interest reinvestment plans, please check the following box.
oIf any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following
box.box:þIf this
Formform 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.
oIf this
Formform is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
oIf
delivery ofthis 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
prospectus is expected to be madeCommission pursuant to Rule
434, please462(e) under the Securities Act, check the following box.
oIf 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.o
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):
| | | | | | |
| Large accelerated filero | | Accelerated filerþ | | Non-accelerated filero
(Do not check if a smaller reporting company) | | Smaller reporting companyþ |
CALCULATION OF REGISTRATION FEE
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| | TITLE OF | | | | | | | | PROPOSED | | | | PROPOSED | | | | | | |
| | SECURITIES | | | AMOUNT | | | | MAXIMUM | | | | MAXIMUM | | | | AMOUNT OF | | |
| | TO BE | | | TO BE | | | | AGGREGATE | | | | AGGREGATE | | | | REGISTRATION | | |
| | REGISTERED(1) | | | REGISTERED | | | | PRICE PER UNIT (2) | | | | OFFERING PRICE (2) | | | | FEE | | |
| |
| | Debt Securities (3) | | | | — | | | | | — | | | | | — | | | | | — | | |
| | Common Stock, $0 par value per share (4) | | | | — | | | | | — | | | | | — | | | | | — | | |
| | Preferred Stock, $0 par value per share (5) | | | | — | | | | | — | | | | | — | | | | | — | | |
| | Warrants (6) | | | | — | | | | | — | | | | | — | | | | | — | | |
| | Units (7) | | | | — | | | | | — | | | | | — | | | | | — | | |
| | | | | | | | | | | | | | | | | | |
| | Total | | | $ | 50,000,000 | | | | | | | | | $ | 50,000,000 | | | | $ | 5,885 | (8) | |
| |
| | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | Proposed | | | | |
| | | | | Amount to | | | Proposed Maximum | | | Maximum | | | | |
| | Title of Each Class of | | | be | | | Offering Price Per | | | Aggregate | | | Amount of | |
| | Securities To be Registered | | | Registered | | | Share(1) | | | Offering Price(1) | | | Registration Fee | |
| | Common Stock, no par value | | | 26,565,299 | | | $0.495 | | | 13,149,823 | | | $517 | |
| |
(1) This Registration Statement also covers contracts which may be issued by the Registrant under which the counterparty may be required to purchase Debt Securities, Common Stock, Preferred Stock, or Warrants.
(2) Not specified as to each class of securities to be registered hereunder pursuant to General Instruction II.D. of Form S-3. In no event will the aggregate maximum offering price of all securities registered under this Registration Statement exceed $50,000,000. Any securities registered hereunder may be sold separately or as units with other securities registered hereunder.
(3) Subject to footnote (2), there are being registered hereunder an indeterminate number of Debt Securities as may be sold from time to time by Aastrom Biosciences, Inc.
(4) Subject to footnote (2), there are being registered hereunder an indeterminate number of shares of Common Stock as may be sold, from time to time, by Aastrom Biosciences, Inc. There is also being registered hereunder an indeterminate number of shares of Common Stock that may be issued upon conversion, as applicable, of Preferred Stock or Debt Securities registered hereunder or upon exercise of Warrants registered hereunder, as the case may be.
(5) Subject to footnote (2), there are being registered hereunder an indeterminate number of shares of Preferred Stock, as may be sold, from time to time, by Aastrom Biosciences, Inc. or as may be issued upon conversion of Debt Securities registered hereunder or upon the exercise of Warrants registered hereunder, as the case may be.
(6) Subject to footnote (2), there are being registered hereunder an indeterminate number of Warrants representing rights to purchase Debt Securities, Preferred Stock or Common Stock (as shall be designated by the Company at the time of any such offering) registered hereunder.
(7) Units may consist of two or more of the securities listed in this table offered and sold together.
(8) Calculated pursuant to Rule 457(o) of the rules and regulations under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a) | | |
| (1) | | Estimated pursuant to Rule 457(c), solely for the purpose of calculating the registration fee based on the average of the high and low prices for the common stock, as reported on the Nasdaq Stock Market on November 6, 2008. Under the common stock purchase agreement, Fusion Capital has agreed to purchase up to $15.0 million of newly issued shares of the Company’s common stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT HAS FILED A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. |
SUBJECT TO COMPLETION, DATED MARCH 24, 2005
The information in this prospectus is not complete and may be changed. We may not sell these securities under this prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offerthese securities and we are not soliciting offers to buy these securities in any state where the offer andor sale wouldis not be permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER 10, 2008.
AASTROM BIOSCIENCES, INC.
26,565,299 Shares of Common Stock
Preferred StockDebt SecuritiesWarrants
We may from time
This prospectus relates to
time issue, in one or more series or classes,the sale of up to
$50,000,000 in aggregate principal amount26,565,299 shares of our common stock
preferred stock, debt securities and/by Fusion Capital Fund II, LLC. Fusion Capital is sometimes referred to in this prospectus as the selling shareholder. The prices at which Fusion Capital may sell the shares will be determined by the prevailing market price for the shares or
warrants. We may offer these securities separately or together.in negotiated transactions. We will
specify innot receive proceeds from the
accompanying prospectus supplement the termssale of
the securities being offered. We may sell these securities to or through underwriters and also to other purchasers or through agents. We will set forth the names of any underwriters or agents, and any fees, conversions, or discount arrangements, in the accompanying prospectus supplement. We may not sell any securities under this prospectus without delivery of the applicable prospectus supplement. You should read this document and any prospectus supplement or amendment carefully before you invest.
our shares by Fusion Capital.
Our common stock is
tradedregistered under Section 12(b) of the Securities Exchange Act of 1934 and quoted on the Nasdaq
SmallCapCapital Market under the symbol “ASTM.” On
March 23, 2005,November 3, the last reported sale price for our common stock
as reported on the Nasdaq Capital Market was
$2.33$0.63 per share.
________________ We have applied to have the shares of common stock offered pursuant to this prospectus approved for listing on the Nasdaq Capital Market.
Investing in the common stock involves certain risks. See “Risk Factors” beginning on page 5 for a discussion of these risks.
The selling shareholder is an “underwriter” within the meaning of the Securities Act of 1933, as amended.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this Prospectus is November 10, 2008.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 5 FOR A DISCUSSION OF MATERIAL RISKS YOU SHOULD CONSIDER BEFORE YOU INVEST IN OUR SECURITIES.
________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________
THE DATE OF THIS PROSPECTUS IS ____________, 2005.
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You should rely only on the information provided or incorporated by reference in this prospectus. We have not authorized anyone to provide you with additional or different information. This document may only be used where it is legal to sell these securities. You should not assume that any information in this prospectus is accurate as of any date other than the date of this prospectus.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within
You may rely only on the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements regarding, among other things, (a) our expectations about product development activities, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,”information provided or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” in the Form 10-K and other reports that are incorporated by reference into this prospectus as well as in this prospectus generally. Actual events or results may differ materiallyProspectus. Neither we nor the selling stockholder have authorized anyone to provide information different from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters describedthat contained in this prospectus generally. In lightProspectus. Neither the delivery of these risks and uncertainties,this Prospectus nor the events anticipatedsale of the securities means that the information contained in this Prospectus is correct after the forward-looking statements maydate of this Prospectus. This Prospectus is not occur.an offer to sell or solicitation to buy the securities in any circumstances under which the offer or solicitation is unlawful.
2
The following summary highlights
selected information
fromcontained elsewhere in this
prospectus and in information incorporated by reference. Because this is a summary, it doesProspectus. It may not contain all
of the information
about us that
may beis important to you. You should read
the entire Prospectus carefully, especially the discussion regarding the risks of investing in our common stock under the heading “Risk Factors,” before investing in our common stock. In this
entire prospectusProspectus, “Aastrom,” “we,” “us,” and
the other documents and the financial statements and related notes which are incorporated by reference in this prospectus.“our” refer to Aastrom Biosciences, Inc.
We are a late-stage developmentregenerative medicine company focused(a medical area that focuses on developing therapies that regenerate damaged or diseased tissues or organs)that incorporated in 1989 and focuses on the clinical development of processesautologous cell products(cells collected from a patient and products returned to that same patient)for theex vivoproduction and sale repair or regeneration of multiple human cell products for use in cell therapy and tissue regeneration.tissues, based on our proprietary Tissue Repair Cell (TRC) technology. Our pre-clinicalpreclinical and clinical product development programs utilize adultpatient-derived bone marrow stem and early progenitor cell mixturespopulations, and are being investigated for aidingtheir ability to aid in the growthregeneration of solid tissues such as cardiac, vascular, bone vascular tissue and cartilage, as well as bloodneural. TRC-based products have been used in over 290 patients, and immune system cells.are currently in the following stages of development:
Cardiac regeneration – Cardiac Repair Cells (CRCs):
| o | | Dilated cardiomyopathy (DCM) (severe chronic disease of the heart): |
| § | | U.S.: IMPACT-DCM Phase II clinical trial open for patient enrollment at one clinical site (The Methodist Hospital, Houston, TX); initiating four other clinical sites; patient treatments expected during the 4th quarter of calendar year 2008; Orphan Drug Designation from the FDA for use in treatment of DCM |
|
| § | | Germany: Encouraging data reported April 2008 from compassionate use treatment in patients |
Vascular regeneration – Vascular Repair Cells (VRCs):
| o | | Critical limb ischemia (CLI): |
| § | | U.S.: RESTORE-CLI Phase IIb clinical trial treated first 30 patients; 12-month interim data analyzed after the 30th patient followed for 12 months (expected to occur during the 4th quarter of calendar year 2009); patient enrollment continues |
|
| § | | Germany: Phase I/II investigator-sponsored clinical trial completed enrollment and patient follow-up ongoing; positive interim data reported October 2007 |
Bone regeneration – Bone Repair Cells (BRCs):
| o | | Osteonecrosis of the femoral head: |
| § | | U.S.: ON-CORE Phase III clinical trial active; not enrolling additional patients; Orphan Drug Designation from the FDA for use in treatment of osteonecrosis of the femoral head |
|
| § | | Spain: Clinical trial enrolling patients |
|
| § | | Germany: Positive data reported October 2007 from compassionate use treatment cases |
| § | | U.S.: Positive 12-month results from Phase I/II clinical trial reported by investigator October 2007 |
|
| § | | Spain: 24-month follow-up continuing on fully-enrolled 10-patient investigator-sponsored Phase II clinical trial |
Neural regeneration – Neural Repair Cells (NRCs):
| § | | Plans for clinical program on hold |
1
While cell therapies are emerging as potential new treatment options for several diseases and medical disorders, the success of cellular therapy
Our platform TRC technology is based
in part, on
the need for care providers to be able to access therapeutic quantities of biologically active cells necessary for patient treatment, cost-effectively and in compliance with regulatory requirements. Our patented AastromReplicell System and single-pass perfusion technology are intended to enable the manufacturing of patient specific1) autologous cell products
for clinical use. In the expanding fields of cell therapy and tissue regeneration, we develop proprietary adult stem cell-based products for the regenerative repair of damaged human tissues and other medical disorders, several of which are now in the clinical stage. Our lead products contain Tissue Repair Cells (TRCs), which are a unique cell mixture containing large numbers of bone marrow-derived stem and early progenitor cells produced outside of the body or “ex vivo” from a small amount of bone marrow taken from the patient. In previous multi-center clinical trials involving over 175 patients, our TRCs have been demonstratedpatient, and 2) the ability to be safe and reliable, and to regenerate certain normal healthy human tissues.
produce these products in an automated process that meets Good Manufacturing Practice (GMP) requirements.
We have
also developed
a manufacturing system to produce human cells for clinical use. This automated cell manufacturing system enables the “single-pass perfusion” cell culture process. Single-pass perfusion is our
proprietary AastromReplicell System, which is a patented
integrated system of instrumentation and single-use consumable kitsmanufacturing technology for
the commercial productiongrowing large numbers of human cells. The
AastromReplicell System was developed to provide a manufacturing platform for our proprietary cell
products, such as our TRCs. The AastromReplicellSystem technology has also been expanded for the productioncomponent of
dendritic cells and dendritic cell vaccines, by targeting academic and other third party therapeutic cell developers requiring automated cell production with GMP (Good Manufacturing Practice) compliance. Since this third-party development activity is minimal at present, active development and marketing activities have been halted. Our commercial production pathway for our TRCTRC-based products is in part enabled through the AastromReplicell System platform. This proprietary and automated clinical cell production system combines patented GMP-compliant automated cell production with patented “single-pass perfusion.” Single-pass perfusion is our technology for growing large quantities of highly robust human cells outside the body. These cells include adult stem and early progenitor cell mixtures — cells required forpopulations, which are capable of forming tissues such as cardiac, vascular, bone, vascular, cartilage, bloodneural, and the hematopoietic and immune system cells.
Our primary business model is to establish a core infrastructure for the manufacturing and distribution of TRC cell products for use in multiple medical indications. Initially, we intend to pursuesystem.
All TRC-based products
forare produced using our cell manufacturing system in centralized manufacturing facilities. We have one manufacturing site in the
following therapeutic areas: | Ÿ | Local bone regenerationU.S. located in Ann Arbor, MI and three contract facilities in fractures, spinal fusion and jaw bone reconstruction |
|
| Ÿ | Vascular (blood vessel) regeneration in limb ischemia resulting from diabetes and other diseases |
In the future, we may develop and/or support the development by third parties of TRC-based products for other areas such as cartilage regeneration and cardiac tissue regeneration.
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We do not have the sales or marketing organization that would be needed to commercialize our therapeutic products. We intend to seek partnerships with other companies who have this capability, as well as to develop our own ability to either support these relationships or to complete some pilot level of sales and marketing ourselves.
In the EU our business development activities are aided through Zellera AG, our wholly-owned subsidiary located in Berlin, Germany.
Stuttgart, Germany (Fraunhofer Institute for Interfacial Engineering and Biotechnology), Bad Oeynhausen, Germany (Institute of Laboratory and Transfusion Medicine at the Heart Center) and Barcelona, Spain (Tissue and Cell Therapy Center at the Blood and Tissue Bank).
Since our inception, we have been in the development stage and engaged in research and product development, conducted principally on our own behalf, but also in connection with various collaborative research and development agreements with others.behalf. Our initial business plan was to pursue our targeted markets by commercializing our cell manufacturing system and supplies. Since 2004 we have phased out our marketing efforts promoting the bone marrow transplantation markets. At approximately the same time (late fiscal year 1999), thatcell manufacturing system as a commercial product. Currently, we intendedhave minimal product sales consisting of manufacturing supplies to commence our initial pilot-scale product launchacademic collaborators in the EU of the AastromReplicell System with the SC-I kit, data was released at international meetings that resulted in the majority of the patients who would otherwise have been candidates for the SC-I product,U.S. and cell-based products to no longer require the use of the product. This loss of market for the SC-I caused us to reorganize our operations and suspend all external activities in October 1999, pending the receipt of additional financing and the completion of the reorganization process. We expanded the capabilities of the AastromReplicell System to include dendritic cell production and initiated pilot marketing activities for the CE Marked DC-I, DCV-I and the DCV-II products. However, only very minor and irregular revenue has occurred from this business and as a result, it is not currently an active direction for us. Instead, ourEU-based physicians.
Our current focus is on
utilizing our TRC technology to produce autologous cell-based products for use in regenerative medicine applications. At such time as we satisfy applicable regulatory approval requirements, we expect the
developmentsales of our TRC-based products
for tissue regeneration.to constitute nearly all of our product sales revenues.
We do not expect to generate positive cash flows from our consolidated operations for at least the next several years and then only if more significant TRC-based cell product sales commence. Until that time, we expect that our revenue sources from our current activities will consist of only minor sales fromof our dendritic cell kitsproducts and manufacturing supplies to our academic and commercial research centers,collaborators, grant revenue, and research funding and potential licensing fees or other financial support from potential future corporate collaborators.
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In May 2008, we reprioritized our clinical development programs to primarily focus on cardiovascular applications, including dilated cardiomyopathy, and critical limb ischemia. We have discontinued further patient enrollment into our Phase III ON-CORE (osteonecrosis) bone regeneration trial. We do not anticipate initiating new clinical bone activity, reactivating the Phase III ON-CORE trial or initiating formal clinical trials in the neural area without additional financial resources. While the decision to reprioritize was driven by economic factors, the clinical programs were prioritized based on anticipated time to market and the relative clinical and market potential. We are also exploring the possibility of entering into complementary regenerative medicine business activities, whether through acquisition or otherwise. In addition to the reprioritizing our development and clinical programs, we also made reductions in our staff and reduced our overhead expenses.
We expect that we will need to raise significant additional funds or pursue strategic transactions or other strategic alternatives in order to complete our product development programs, complete clinical trials needed to market our products, and commercialize our products. To date, we have financed our operations primarily through public and private sales of our equity securities, and we expect to continue obtaining required capital in a similar manner. As a
development-stagedevelopment stage company, we have never been profitable and do not anticipate having net income unless and until significant product sales commence.
ThisWith respect to our current activities, this is not likely to occur until we obtain significant additional funding,
and complete the required clinical trials for regulatory approvals, and receive
thosethe necessary approvals to market our products. Through
December 31, 2004,September 30, 2008, we have accumulated
lossesa net loss of approximately
$119$183 million. We cannot provide any assurance that we will be able to achieve profitability on a sustained basis, if at all, obtain the required funding, obtain the required regulatory approvals, or complete additional corporate partnering or acquisition transactions.
Corporate Information
Aastrom is incorporated under the laws of the State of Michigan. Our principal executive offices are located at 24 Frank Lloyd Wright Drive,
P. O.P.O. Box 376, Ann Arbor,
MIMichigan 48106. Our telephone number is (734) 930-5555.
This Prospectus
This prospectus The address of our website is www.aastrom.com. Information on our website is not part of this Prospectus.
Our Common Stock
Our common stock trades on the Nasdaq Capital Market under the symbol “ASTM.”
The Offering
On October 27, 2008, we entered into a registration statementCommon Stock Purchase Agreement with Fusion Capital Fund II, LLC, an Illinois limited liability company. Under the Purchase Agreement, Fusion Capital is obligated, under certain conditions, to purchase shares from us in an aggregate amount of $15.0 million from time to time over a 25-month period. Under the terms of the Purchase Agreement, Fusion Capital has received a commitment fee consisting of 1,936,317 shares of our common stock. Also, we will issue to Fusion Capital an additional 1,936,317 shares as a commitment fee pro rata as we receive the $15.0 million of future funding. As of October 27, 2008, there were 132,826,495 shares outstanding (132,668,795 shares held by non- affiliates) excluding the 22,692,665 shares that Fusion Capital has not yet purchased and the 1,936,317 shares of additional commitment shares that Fusion Capital has not yet received from us. If all of such 24,628,982 shares offered hereby were issued and outstanding as of the date hereof, the 24,628,982 shares would represent 18.5% of the total common stock outstanding or 19% of the non-affiliates shares outstanding as of the date hereof.
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Under the Purchase Agreement and the Registration Rights Agreement we filed withare required to register and have included in the SEC utilizingoffering pursuant to this Prospectus (1) 1,936,317 shares which have already been issued, (2) an additional 1,936,317 shares which we may issue in the future as a “shelf” registration process. Under this shelf process,commitment fee pro rata as we receive the $15.0 million of future funding and (3) at least 22,692,665 shares which we may sell to Fusion Capital after this registration statement is declared effective. All 26,565,299 shares, 20.0% of our outstanding on October 27, 2008, the securities describeddate of the Purchase Agreement, are being offered pursuant to this Prospectus. Under the Purchase Agreement, we have the right but not the obligation to sell more than the 22,692,665 shares to Fusion Capital. As of the date hereof, we do not currently have any plans or intent to sell to Fusion Capital any shares beyond the 22,692,665 shares offered hereby. However, if we elect to sell more than the 22,692,665 shares (which we have the right but not the obligation to do), we must first register under the Securities Act any additional shares we may elect to sell to Fusion Capital before we can sell such additional shares, which could cause substantial dilution to our shareholders. In addition, in the event that we decide to issue more than 26,565,299, i.e. greater than 19.99% of our outstanding shares of common stock as of the date of the Purchase Agreement, we would first be required to seek shareholder approval in order to be in compliance with the Nasdaq Capital Market rules. The number of shares ultimately offered for sale by Fusion Capital is dependent upon the number of shares purchased by Fusion Capital under the Purchase Agreement.
We do not have the right to commence any sales of our shares to Fusion Capital until the SEC has declared effective the registration statement of which this
prospectusProspectus is a part. After the SEC has declared effective such registration statement, generally we have the right but not the obligation from time to time to sell our shares to Fusion Capital in
one or more offerings upamounts between $60,000 and $2.0 million depending on certain conditions. We have the right to
a total dollarcontrol the timing and amount of
$50 million. We have provided in this prospectus a general descriptionany sales of our shares to Fusion Capital. The purchase price of the
securities we may offer. Eachshares will be determined based upon the market price of our shares without any fixed discount at the time
we sell securities, we will provide a prospectus supplementof each sale. Fusion Capital shall not have the right nor the obligation to purchase any shares of our common stock on any business day that
will contain specific information about the
termsprice of
that offering. We may also add, updateour common stock is below $0.10. There are no negative covenants, restrictions on future fundings, penalties or
changeliquidated damages in the
prospectus supplementPurchase Agreement or the Registration Rights Agreement. The Purchase Agreement may be terminated by us at any
time at our discretion without any cost to us. The Purchase Agreement provides that neither party has the ability to amend the Purchase Agreement and the obligations of
the information contained in this prospectus. This prospectus, together with applicable prospectus supplements, includes all material information relating to this offering. You should read both
this prospectus and any prospectus supplement together with the additional information described under the heading “Where You Can Find More Information.”Risk Factors
You should consider carefully all of the information contained in and incorporated by reference in this prospectus, including the information set forth under the caption “Risk Factors,” before making an investment in the securities offered.
parties are non-transferable. 4
You should carefully consider the following risk factorsrisks described below before purchasing our common stock. TheOur most significant risks and uncertainties are described belowbelow; however, they are not the only onesrisks we face. There may be additionalIf any of the following risks and uncertainties that are not known to us or that we do not consider to be material at this time. If the events described in these risksactually occur, our business, financial condition, or results or operations could be materially adversely affected, the business of our common stock could decline, and you may lose all or part of your investment therein. You should acquire shares of our common stock only if you can afford to lose your entire investment.
The risk factors described below are not all inclusive. All risk factors should be considered carefully when evaluating our business, results of operations,
would likely suffer. This prospectus containsand financial position. We undertake no obligation to update forward-looking statements
that involveor risk factors. There may be other risks and
uncertainties. Our actual resultsuncertainties not highlighted herein that may
differ significantly from the results discussed in the forward-looking statements. This section discusses the riskbecome material factors
that might cause those differences. You should also consider the additional information set forth inaffecting our
SEC reports on Forms 10-K, 10-Qfinancial condition and
8-K and in the other documents considered a part of this prospectus. See “Where You Can Find More Information.”business operations.
Our past losses and expected future losses cast doubt on our ability to operate profitably. We were incorporated in 1989 and have experienced substantial operating losses since inception. As of December 31, 2004,September 30, 2008, we have incurred a cumulative net lossesloss totaling approximately $119 million.$183 million, and we have continued to incur losses since that date. These losses have resulted principally from costs incurred in the research and development of our cell culture technologies and the AastromReplicell System,our cell manufacturing system, general and administrative expenses, and the prosecution of patent applications. We expect to continue to incur significant operating losses over the next several years and at least until, and probably after, product sales increase, primarily owing to our research and development programs, including pre-clinicalpreclinical studies and clinical trials, and the establishment of marketing and distribution capabilities necessary to support commercialization efforts for our products. We cannot predict with any certainty the amount of future losses. Our ability to achieve profitability will depend, among other things, on successfully completing the development of our product candidates, timely initiation and completion of clinical trials, obtaining regulatory approvals, establishing manufacturing, sales and marketing arrangements with third parties, maintaining supplies of key manufacturing components, acquisition and development of complementary activities and raising sufficient fundscash to financefund our operating activities. WeIn addition, we may not be able to achieve or sustain profitability.
The current global economy and capital markets have been challenging for any issuer to raise capital through public offerings or private placements of its securities, and especially so with respect to the small cap biotech sector. This situation makes the timing and potential for future equity financings uncertain. As a result, we have taken actions intended to reduce our estimated average cash utilization to approximately $1.2 million per month for fiscal year ending June 30, 2009, through a combination of development and clinical program reprioritizations and adjustments focusing on our cardiac regeneration program, along with reductions in overhead and staff which occurred in May 2008.
5
Our stock may be delisted from Nasdaq, which could affect its market price and liquidity.
We are required to meet certain qualitative and financial tests (including a minimum bid price for our common stock of $1.00 per share) to maintain the listing of our common stock on the Nasdaq Capital Market. On December 20, 2007, we received a deficiency letter from the Nasdaq Stock Market indicating that for 30 consecutive trading days our common stock had a closing bid price below the $1.00 per share minimum closing bid as required for continued listing set forth in Nasdaq Marketplace Rule 4310(c)(4). In accordance with Nasdaq Marketplace Rule 4310(c)(8)(D), we were provided a compliance period of 180 calendar days, or until June 17, 2008, to regain compliance with this requirement. On June 17, 2008, we had not yet regained compliance with the requirement and were granted an additional 180-day compliance period, or until December 15, 2008 to regain compliance. On October 22, 2008, we received notice from Nasdaq that the period during which we were granted to gain compliance with the bid price requirement had been suspended and that, upon completion of the suspension period, we would have until March 20, 2009 to regain compliance with the requirement. We can regain compliance with the minimum closing bid price rule if the bid price of our common stock closes at $1.00 per share or higher for a minimum of ten consecutive business days during the 180-day compliance period, although Nasdaq may, in its discretion, require us to maintain a minimum closing bid price of at least $1.00 per share for a period in excess of ten consecutive business days (but generally no more than 20 consecutive business days) before determining that we have demonstrated the ability to maintain long-term compliance. If we do not regain compliance during the additional compliance period, Nasdaq will provide written notice that our securities will be delisted from the Nasdaq Capital Market. At such time, we would be able to appeal the delisting determination to a Nasdaq Listing Qualifications Panel.
We cannot provide any assurance that our stock price will again recover within the permitted grace period. If our common stock were delisted, it could be more difficult to buy or sell our common stock and to obtain accurate quotations, and the price of our stock could suffer a material decline. Delisting may also impair our ability to raise capital.
We may not be able to raise the required capital to conduct our operations and develop and commercialize our products.
In addition to our financing with Fusion, we will require substantial additional capital resources in order to conduct our operations and develop and commercialize our products and cell manufacturing facilities. In order to grow and expand our business, to introduce our new product candidates into the marketplace and to acquire or develop complementary business activities, we will need to raise a significant amount of additional funds. We will also need significant additional funds or a collaborative partner, or both, to finance the research and development activities of our cell product candidates for additional indications. Accordingly, we are continuing to pursue additional sources of financing.
6
Our future capital requirements will depend upon many factors, including:
| • | | continued scientific progress in our research, clinical and development programs; |
|
| • | | costs and timing of conducting clinical trials and seeking regulatory approvals; |
|
| • | | competing technological and market developments; |
|
| • | | our ability to establish additional collaborative relationships; |
|
| • | | the effect of commercialization activities and facility expansions, if and as required; and |
|
| • | | complementary business acquisition or development opportunities. |
Because of our long-term funding requirements, we intend to try to access the public or private equity markets if conditions are favorable to complete a financing, even if we do not have an immediate need for additional capital at that time, or whenever we require additional operating capital. This additional funding may not be available to us on reasonable terms, or at all. If adequate funds are not available in the future, we may be required to further delay or terminate research and development programs, curtail capital expenditures, and reduce business development and other operating activities.
The transaction with Fusion may provide us with some of the required capital to conduct our operations; however, we expect that we will need additional capital. In addition, under certain conditions, Fusion will not be required to purchase our shares, including if the market price of our common stock is less than $0.10, if we are not listed on a national exchange or the OTC Bulletin Board or if there is a material adverse change to our business, properties, operations, financial condition or results of operations. In addition, our ability to raise the entire $15 million will be dependent on the stock price of our common stock as we will not be able to sell greater than 19.99% of our outstanding shares of common stock as of the date of the Purchase Agreement without obtaining shareholder approval.
We only have the right to receive $60,000 every two business days under the Purchase Agreement unless our stock price equals or exceeds $0.25, in which case we can sell greater amounts to Fusion Capital as the price of our common stock increases. Since we will be limited to 22,692,665 shares sold to Fusion Capital, the selling price of our common stock to Fusion Capital will have to average at least $0.66 per share for us to receive the maximum proceeds of $15.0 million. Assuming a purchase price of $0.63 per share (the closing sale price of the common stock on November 3, 2008) and the purchase by Fusion Capital of the full 22,692,665 shares under the Purchase Agreement, proceeds to us would only be $9,077,066 unless we choose to register more than 22,692,665 shares, which we have the right, but not the obligation, to do. Subject to approval by our board of directors, we have the right but not the obligation to sell more than 22,692,665 shares to Fusion Capital. In the event we elect to sell more than 22,692,665 shares offered hereby, we will be required to file a new registration statement and have it declared effective by the U.S. Securities & Exchange Commission. In addition, in the event that we decide to issue more than 26,565,299, i.e. greater than 19.99% of our outstanding shares of common stock as of the date of the Purchase Agreement, we would first be required to seek shareholder approval in order to be in compliance with the Nasdaq Capital Market rules.
7
The extent we rely on Fusion Capital as a source of funding will depend on a number of factors including, the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources. Specifically, Fusion Capital shall not have the right nor the obligation to purchase any shares of our common stock on any business days that the market price of our common stock is less than $0.10. Even if we are able to access the full $15.0 million under the Purchase Agreement with Fusion Capital, we will need additional capital to fully implement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.
The sale of our common stock to Fusion Capital may cause dilution and the sale of the shares of common stock acquired by Fusion Capital could cause the price of our common stock to decline
In connection with entering into the Purchase Agreement, we authorized the sale to Fusion Capital of up to 22,692,665 shares of our common stock. The number of shares ultimately offered for sale by Fusion Capital under this prospectus is dependent upon the number of shares purchased by Fusion Capital under the Purchase Agreement. The purchase price for the common stock to be sold to Fusion Capital pursuant to the Purchase Agreement will fluctuate based on the price of our common stock. All 26,595,299 shares registered in this offering are expected to be freely tradable. It is anticipated that shares registered in this offering will be sold over a period of up to 25 months from the date of this prospectus. Depending upon market liquidity at the time, a sale of shares under this offering at any given time could cause the trading price of our common stock to decline. Fusion Capital may ultimately purchase all, some or none of the 22,692,665 shares of common stock not yet issued but registered in this offering. After it has acquired such shares, it may sell all, some or none of such shares. Therefore, sales to Fusion Capital by us under the Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. The sale of a substantial number of shares of our common stock under this offering, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. However, we have the right to control the timing and amount of any sales of our shares to Fusion Capital and the Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.
We have experienced significant management turnover, and if we cannot attract and retain key personnel, then our business will suffer.
Our success depends in large part upon our ability to attract and retain highly qualified scientific and management personnel. We face competition for such personnel from other companies, research and academic institutions and other entities. Further, in an effort to conserve financial resources, we have implemented reductions in our work force on three previous occasions. As a result of these and other factors, we may not be successful in hiring or retaining key personnel. Our inability to replace any key employee could harm our operations.
8
Failure to obtain and maintain required regulatory approvals would severely limit our ability to sell our products. We must obtain the approval of the FDA before commercial sales of our cell product candidates may commence in the
United States,U.S., which we believe will ultimately be the largest market for our products. We will also be required to obtain additional approvals from
various foreign regulatory authorities
forto initiate sales
activities of
our TRC-basedcell products in those
jurisdictions.jurisdictions, including the EU under regulations of the EMEA. If we cannot demonstrate the safety
reliability and efficacy of our
cell product candidates,
or of the cells produced in our manufacturing system, we may not be able to obtain required regulatory approvals. If we cannot demonstrate the safety
orand efficacy of our
technologies and product candidates,
including long-term sustained engraftment, or if one or more patients die or suffer severe complications, the FDA or other regulatory authorities could delay or withhold regulatory approval of our product candidates.
Finally, even if we obtain regulatory approval of a product, that approval may be subject to limitations on the indicated uses for which it may be marketed. Even after granting regulatory approval, the FDA and regulatory agencies in other countries continue to review and inspect marketed products, manufacturers and manufacturing facilities, which may create additional regulatory burdens. Later discovery of previously unknown problems with a product, manufacturer or facility, may result in restrictions on the product or manufacturer, including a withdrawal of the product from the market. Further, regulatory agencies may establish additional regulations that could prevent or delay regulatory approval of our products.
Any changes in the governmental regulatory classifications of our products could prevent, limit or delay our ability to market or develop our products. The FDA establishes regulatory requirements based on the classification of a product.
Although the AastromReplicell System is currently considered to be unregulated manufacturing equipment in the U.S., the FDA may reconsider this and classify the System as a Class III medical device, or the FDA may ultimately choose to regulate the AastromReplicell System under another category. Because our product development programs are designed to satisfy the standards applicable to
medical devices and biological licensure for our
5
cellular products, any change in the regulatory classification or designation would affect our ability to obtain FDA approval of our products. The AastromReplicell System is used to produce different cell mixtures, and eachEach of these cell mixtures may,(such as our TRC-based products) is, under current regulations, be regulated as a biologic product, which requires a biologic license applicationBiological License Application (BLA).
New directives
EU Directives and regulations (laws) have recently become effective, inand have influenced the EU that affect therequirements for manufacturing of cell products and the conduct of clinical trials. These changes have delayed or in some cases temporarily halted clinical trials of cellular products in the EU, which has reduced the number of customer opportunities and affected our progress in our Cell Production Products business. The recentRecent changes to the European UnionEU Medicinal Products Prime Directive (including added annexes and new regulations) shifted patient-derived cells to the medicinal products category, which will require license approvalsMarketing Authorizations in order to market and sell these products. These new laws may delay some of our current planned clinical trials in the EU, andrequirements will require clinical trials with data submission and review by one or more European regulatory bodies. There is uncertainty as to the level of trialsabout which clinical trial activities and data neededare required, and because of the recent nature of these regulations;new directives, laws and regulations, there is no established precedent to understand the timeline or other requirements for licensure.Marketing Authorization.
9
Our inability to complete our product development activities successfully would severely limit our ability to operate or finance operations. Commercialization
In order to commercialize our cell product candidates in the
United StatesU.S. and
Europethe EU we must complete substantial clinical trials, and obtain sufficient safety and efficacy results to support required registration approval and market acceptance of our cell product
candidates will require substantial clinical trials and requirements to meet new and changing regulations for licensure.candidates. We may not be able to successfully complete
the development of our product candidates, or successfully market our technologies or product candidates. We, and any of our potential collaborators, may encounter problems and delays relating to research and development, regulatory approval and intellectual property rights of our technologies and product candidates. Our research and development programs may not be successful, and our cell culture technologies and product candidates may not facilitate the production of cells outside the human body with the expected result. Our technologies and
cell product candidates may not prove to be safe and efficacious in clinical trials, and we may not obtain the requisite regulatory approvals for our technologies or product candidates and the cells produced in such products. If any of these events occur, we may not have adequate resources to continue operations for the period required to resolve the issue delaying commercialization and we may not be able to raise capital to finance our continued operation during the period required for resolution of that issue.
We must successfully complete our clinical trials to be able to market certain of our products. To be able to market
cell-basedtherapeutic cell products in the
United StatesU.S. and
Europe,across the EU, we must demonstrate, through extensive preclinical studies and clinical trials, the safety and efficacy of our processes and product
candidates, for application in the treatment of humans.candidates. If our clinical trials are not successful, our products may not be marketable.
Our ability to complete our clinical trials in a timely manner depends on many factors, including the rate of patient enrollment. Patient enrollment can vary with the size of the patient population, the proximity of suitable patients to clinical sites, perceptions of the utility of cell therapy for the treatment of certain diseases and the eligibility criteria for the study, and the success of the investigator in enrolling patients.study. We have experienced delays in patient accrual in our previous and current clinical trials. If we experience future delays in patient accrual, we could experience increased costs and delays associated with clinical trials, which would impair our product development programs and our ability to market our products. Furthermore, the FDA monitors the progress of clinical trials and it may suspend or terminate clinical trials at any time due to patient safety or other considerations.
Our research programs are currently directed at improving TRC-based product functionality for certain clinical indications, improving product shelf life, and decreasing the cost of manufacturing our TRC-based products. These production process changes may alter the functionality of our cells, and require various additional levels of experimental and clinical testing and evaluation. Any such testing could lengthen the time before these products would be commercially available.
Even if successful clinical results are reported for a product from a completed clinical trial, this does not mean that the results will be sustained over time, or will be sufficient for a marketable or regulatory approvable product.
10
Failure of third parties to manufacture component parts or provide limited source supplies, or the imposition of additional regulation, would impair our new product development and our sales activities.
We rely solely on third parties such as Astro, Ethox, Moll and Lonza to manufacture or supply certain of our devices/manufacturing equipment, as well as component parts and other materials used in the cell product manufacturing process. We would not be able to obtain alternate sources of supply for many of these items on a short-term basis. If any of our key manufacturers or suppliers fails to perform their respective obligations or if our supply of components or other materials is limited or interrupted, we would not be able to conduct clinical trials or market our product candidates on a timely and cost-competitive basis, if at all.
Finally, we may not be able to continue our present arrangements with our suppliers, supplement existing relationships, establish new relationships or be able to identify and obtain the ancillary materials that are necessary to develop our product candidates in the future. Our dependence upon third parties for the supply and manufacture of these items could adversely affect our ability to develop and deliver commercially feasible products on a timely and competitive basis.
Manufacturing our cell products in centralized facilities may increase the risk that we will not have adequate quantities of our cell products for clinical programs.
We rely on third party manufacturers, Fraunhofer Institute for Interfacial Engineering and Biotechnology in Stuttgart, Germany, the Institute of Laboratory and Transfusion Medicine at the Heart Center in Bad Oeynhausen, Germany, and the Tissue and Cell Therapy Center at the Blood and Tissue Bank in Barcelona, Spain, to supply our TRC-based cell products for certain EU clinical activities. Reliance on third party manufacturers entails risks including regulatory compliance and quality assurance and the possible breach of the manufacturing agreement by the third party. We are subject to similar regulatory and compliance risks at our site in Ann Arbor, Michigan. All sites could be subject to ongoing, periodic, unannounced inspection by regulatory agencies to ensure strict compliance with GMP regulations and other governmental regulations and corresponding foreign standards. Our present and future manufacturers might not be able to comply with these regulatory requirements. We do not have redundant cell manufacturing sites in the U.S. In the event our cell manufacturing facilities are damaged or destroyed or are subject to regulatory restrictions, our clinical trial programs and other business prospects would be adversely affected.
Even if we obtain regulatory approvals to sell our products, lack of commercial acceptance could impair our business. We will be seeking to obtain regulatory approvals to market our TRC-based
cell products for tissue repair and regeneration treatments. Even if we obtain all required regulatory approvals, we cannot be certain that our products and processes will be
adoptedaccepted in the marketplace at a level that would allow us to operate profitably. Our
tissue repair6
products will face competition from existing, and/or potential other new treatments in the future which could limit revenue potential. It may be necessaryunable to increaseachieve commercial acceptance for a number of reasons, such as the yield and/availability of alternatives that are less expensive, more effective, or cell type purityeasier to use, the perception of a low cost-benefit ratio for certainthe product amongst physicians and hospitals, or an inadequate level of our AastromReplicell System cell processes to gainproduct support from ourselves or a commercial acceptance.partner. Our technologies or product candidates may not be employed in all potential applications being investigated, and any reduction in applications would limit the market acceptance of our technologies and product candidates.candidates, and our potential revenues.
11
The market for our products will be heavily dependent on third party reimbursement policies. Our ability to successfully commercialize our product candidates will depend on the extent to which government healthcare programs, such as Medicare and Medicaid, as well as private health insurers, health maintenance organizations and other third party payors will pay for our products and related treatments. Reimbursement by third party payors depends on a number of factors, including the payor’s determination that use of the product is safe and effective, not experimental or investigational, medically necessary, appropriate for the specific patient and cost-effective. Reimbursement in the
United StatesU.S. or foreign countries may not be available or maintained for any of our product candidates. If we do not obtain approvals for adequate third party reimbursements, we may not be able to establish or maintain price levels sufficient to realize an appropriate return on our investment in product development. Any limits on reimbursement
available from third party payors may reduce the demand for, or negatively affect the price of, our products. For example, in the past, published studies
have suggested that stem cell transplantation for breast cancer, which constituted a significant portion of the overall stem cell therapy market at the time, may have limited clinical benefit. The lack of reimbursement for these procedures by insurance payors
wouldhas negatively
affectaffected the marketability of our
products.products in this indication in the past.
Use of animal-derived materials could harm our product development and commercialization efforts. Some of the compoundsmanufacturing materials and/or components we use in, and are critical to, implementation of our TRC manufacturing processestechnology involve the use of animal-derived products. (However, such cells are not used as “feeder cells” in the growth of human TRCs).products, including fetal bovine serum. Suppliers or regulatory authoritieschanges may limit or restrict the availability of such compoundsmaterials for clinical and commercial use. We currently purchase all of our fetal bovine sera from protected herds in Australia and New Zealand. These sources are considered to be the safest and raise the least amount of concern from the global regulatory agencies. If, for example, the so-called “mad cow disease” occurs in New Zealand or in Australia, it may lead to a restricted supply of the serum currently required for the TRC-based product manufacturing processes. Any restrictions on these compoundsmaterials would impose a potential competitive disadvantage for our products or prevent manufacturing.our ability to manufacture TRC-based cell products. Regulatory authorities in the EU are reviewing the safety issues related to the use of animal derivedanimal-derived materials, which we currently use in our production process. It is unknown at this timeThe FDA has issued draft regulations for controls over bovine materials. These proposed regulations do not appear to affect our ability to purchase the manufacturing materials we currently use. However, the FDA may issue final regulations that could affect our operations. We do not know what actions, if any, the authorities may take as to animal derived materials specific to medicinal products distributed in the EU. Our inability to develop or obtain alternative compounds would harm our product development and commercialization efforts. There are certain limitations in the supply of certain animal-derived materials, which may lead to delays in our ability to complete clinical trials or eventually to meet the anticipated market demand for our cell products.
12
Given our limited internal manufacturing, sales, marketing and marketingdistribution capabilities, we need to develop increased internal capability or collaborative relationships to manufacture, sell, market and distribute our products. While we have previously commenced marketing on a very limited basis of the AastromReplicell System and SC-I, DC-I, DCV-I and DCV-II cell production kits in the EU and domestically for research and industrial use, we
We have only
very limited internal
or contractedmanufacturing, sales, marketing and distribution capabilities.
As market needs develop, we intend to establish and operate commercial-scale manufacturing facilities, which will need to comply with all applicable regulatory requirements. We will also need to develop new configurations of our cell manufacturing system for these facilities to enable processes and cost efficiencies associated with large-scale manufacturing. Establishing these facilities will require significant capital and expertise. We may need to make such expenditures when there are significant uncertainties as to the market opportunity. Any delay in establishing, or difficulties in operating, these facilities will limit our ability to meet the anticipated market demand for our cell products. We intend to get assistance to market
some of our
future cell products through collaborative relationships with companies with established sales, marketing and distribution capabilities. Our inability to develop and maintain those relationships would limit our ability to market, sell and distribute our products. Our inability to enter into successful, long-term relationships could require us to develop alternate arrangements at a time when we need sales, marketing or distribution capabilities to meet existing demand.
We may not be able to raise the required capital to conduct our operations and develop our products.
We will require substantial capital resources in order to conduct our operations and develop our products. We expect that our available cash and interest income, including that raised in the recent sale of common stock, will be sufficient to finance currently planned activities at least through the end of fiscal year 2006 (ending June 30, 2006). However, in order to grow and expand our business, and to introduce our new
7
product candidates into the marketplace, we will need to raise additional funds. We will also need additional fundsmarket one or a collaborative partner, or both, to finance the research and development activitiesmore of our product candidates for the expansion of additionalTRC-based products through our own sales force. Our inability to develop and retain a qualified sales force could limit our ability to market, sell and distribute our cell types. Accordingly, we are continuing to pursue additional sources of financing.
Our future capital requirements will depend upon many factors, including:
| Ÿ | continued scientific progress in our research and development programs; |
|
| Ÿ | costs and timing of conducting clinical trials and seeking regulatory approvals; |
|
| Ÿ | competing technological and market developments; |
|
| Ÿ | our ability to establish additional collaborative relationships; and |
|
| Ÿ | the effect of commercialization activities and facility expansions if and as required. |
Because of our long-term funding requirements, we are likely to access the public or private equity markets if and whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time. This additional funding may not be available to us on reasonable terms, or at all. If adequate funds are not available in the future, we may be required to further delay or terminate research and development programs, curtail capital expenditures, and reduce business development and other operating activities.
products.
The issuance of additional common stock for funding has the potential for substantial dilution. As noted above, we will need
significant additional equity funding,
in addition to the transaction with Fusion, to provide us with the capital to reach our objectives.
At such time, weWe may enter into financing transactions at prices which are at a substantial discount to market. Such an equity issuance would cause a substantially larger number of shares to be outstanding and would dilute the ownership interest of existing stockholders.
Our stock price has been volatile and future sales of substantial numbers of our shares could have an adverse effectaffect on the market price of our shares. The market price of shares of our common stock has been volatile, ranging in closing price between
$0.63$0.16 and
$1.72$1.04 during the twelve month period ended
DecemberOctober 31,
2004.2008. The price of our common stock may continue to fluctuate in response to a number of events and factors, such as:
| | Ÿ• | | clinical trial resultsresults; |
| |
| | Ÿ• | | the amount of our cash resources and our ability to obtain additional fundingfunding; |
| |
| | Ÿ• | | announcements of research activities, business developments, technological innovations or new products by us or our competitorscompetitors; |
| |
| | Ÿ• | | entering into or terminating strategic relationshipsrelationships; |
| |
| | Ÿ• | | changes in government regulationregulation; |
| |
| | Ÿ• | changes in government sponsored funding | disputes concerning patents or proprietary rights; |
| |
| | Ÿ• | disputes concerning patents or proprietary rights |
|
| Ÿ | changes in our revenues or expense levelslevels; |
|
13
| | Ÿ• | | public concern regarding the safety, efficacy or other aspects of the products or methodologies we are developingdeveloping; |
| |
| | Ÿ• | | news or reports by securities analystsfrom other stem cell, cell therapy or regenerative medicine companies; |
| |
| | Ÿ• | | reports by securities analysts; |
|
| • | | status of the investment marketsmarkets; |
|
| • | | concerns related to management transitions; and |
|
| • | | delisting from the Nasdaq Capital Market. |
Any of these events may cause the price of our shares to fall, which may adversely affect our business and financing opportunities. In addition, the stock market in general and the market prices for biotechnology companies in particular have experienced significant volatility
recently that often has been unrelated to the operating performance or financial conditions of such companies. These broad market and industry fluctuations may adversely affect the trading price of our stock, regardless of our operating performance or prospects.
8
Our stock could be delisted from Nasdaq, which would affect its market price and liquidity.
We are required to meet certain financial tests (including a minimum bid price for our common stock of $1.00) to maintain the listing of our common stock on the Nasdaq Stock Market. Our common stock may be recommended for delisting (subject to any appeal we would file) if we do not maintain compliance with the Nasdaq requirements within specified periods and subject to permitted extensions. In May 2003, and July 2004, we received notification from Nasdaq of potential delisting as a result of our stock trading below $1.00 for more than thirty consecutive business days. While in each case our stock price recovered within the grace periods and Nasdaq notified us that we were again in full compliance, we cannot provide any assurance that our stock price would again recover within the specified times if future closing bid prices below $1.00 triggered another potential delisting. If our common stock were delisted, it could be more difficult to buy or sell our common stock and to obtain accurate quotations, and the price of our stock could suffer a material decline. Delisting would also impair our ability to raise capital.
Failure of third parties to manufacture component parts or provide limited source supplies, or imposition of additional regulation, would impair our new product development and our sales activities.
We rely solely on third parties such as Astro, Moll, Cambrex and Amgen to manufacture the AastromReplicell System instruments and consumable components, growth factors and other materials used in the cell manufacturing process. We would not be able to obtain alternate sources of supply for many of these items on a short-term basis. If any of our key manufacturers or suppliers fail to perform their respective obligations, or if our supply of growth factors, components, or other materials is limited or interrupted, we would not be able to conduct clinical trials or market our product candidates on a timely and cost-competitive basis, if at all.
Finally, we may not be able to continue our present arrangements with our suppliers, supplement existing relationships, establish new relationships, or be able to identify and obtain the ancillary materials that are necessary to develop our product candidates in the future. Our dependence upon third parties for the supply and manufacture of these items could adversely affect our ability to develop and deliver commercially feasible products on a timely and competitive basis.
If we do not keep pace with our competitors and with technological and market changes, our products maywill become obsolete and our business may suffer.
The markets for our products are very competitive, subject to rapid technological changes, and vary for different candidates and processes that directly compete with our products. Our competitors may have developed, or could in the future develop, new technologies that compete with our products or even render our products obsolete. As an example, in the past, published studies have suggested that hematopoietic stem cell therapy use for bone marrow transplantation, following marrow ablation due to
chemo-therapy,chemotherapy, may have limited clinical benefit in the treatment of breast cancer, which was a significant portion of the overall hematopoietic stem cell transplant market. This resulted in the practical elimination of this market for our cell-based product for this application.
Our products arecell manufacturing system is designed to improve and automate the processes for producing cells used in therapeutic procedures. Even if we are able to demonstrate improved or equivalent results, the cost or process of treatment and other factors may cause researchers and practitioners to not use our products and we could suffer a competitive disadvantage. As a result, we may be unable to recover the net book value of our inventory. Finally, to the extent that others develop new technologies that address the targeted application for our products, our business will suffer.
If we cannot attract and retain key personnel, then our business will suffer.
Our success depends in large part upon our ability to attract and retain highly qualified scientific and management personnel. We face competition for such personnel from other companies, research and academic institutions, and other entities. Further, in an effort to conserve financial resources, we have previously needed to implement reductions in our work force on two separate occasions. As a result of these and other factors, we
914
may not be successful in hiring or retaining key personnel. The Company has a key man life insurance policy for R. Douglas Armstrong, Chief Executive Officer and Chairman of Aastrom. Our inability to replace any lost key employee could harm our operations.
If our patents and proprietary rights do not provide substantial protection, then our business and competitive position will suffer. Our success depends in large part on our ability to develop or license and protect proprietary products and technologies. However, patents may not be granted on any of our pending or future patent applications. Also, the scope of any of our issued patents may not be sufficiently broad to offer meaningful protection. In addition, our issued patents or patents licensed to us could be successfully challenged, invalidated or circumvented so that our patent rights would not create an effective competitive barrier.
Certain patent equivalents to the U.S. patents have also been issued in other jurisdictions including Australia, Japan, the Republic of Korea, Canada and under the European Convention. Certain of these foreign patents are due expire beginning in 2008. Furthermore, we rely on
three exclusive, world-wide licenses relating to the production of human cells granted to us by the University of Michigan for certain of our patent rights. If we materially breach such agreements or otherwise fail to materially comply with such agreements, or if such agreements expire or are otherwise terminated by us, we may lose our rights under the patents held by the University of Michigan. At the latest,
each of these licenses will terminate when the patent underlying the license expires. The first of these underlying patents will expire on March 21, 2012. We also rely on trade secrets and unpatentable know-how that we seek to protect, in part, by confidentiality agreements with our employees, consultants, suppliers and licensees. These agreements may be breached, and we might not have adequate remedies for any breach. If this were to occur, our business and competitive position would suffer.
Intellectual property litigation could harm our business. Our success will also depend in part on our ability to develop commercially viable products without infringing the proprietary rights of others. Although we have not been subject to any filed infringement claims, other patents could exist or could be filed which would prohibit or limit our ability to market our products or maintain our competitive position. In the event of an intellectual property dispute, we may be forced to litigate. Intellectual property litigation would divert management’s attention from developing our products and would force us to incur substantial costs regardless of whether we are successful. An adverse outcome could subject us to significant liabilities to third parties, and force us to curtail or cease the development and sale of our products and processes.
The government maintains certain rights in technology that we may develop using government grant money and we may lose the revenues from such technology if we do not commercialize and utilize the technology pursuant to established government guidelines. Certain of our and our licensors’ research
hashave been or
isare being funded in part by government grants. As a result of such funding, the U.S. Government has established guidelines and have certain rights in the technology developed with the grant. If we fail to meet these guidelines, we would lose our exclusive rights to these products, and we would lose potential revenue derived from the sale of these products.
Potential product liability claims could affect our earnings and financial condition. We face an inherent business risk of exposure to product liability claims in the event that the manufacture and/or use of the AastromReplicell SystemTRC-based products during research and development efforts, including clinical trials, or after commercialization, results in adverse affects.events. As a result, we may incur significant product liability exposure, which could exceed existing insurance coverage. We may not be able to maintain adequate levels of insurance at reasonable cost and/or reasonable terms. Excessive insurance costs or uninsured claims would increase our operating loss and affect our financial condition.
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Our corporate documents and Michigan law contain provisions that may make it more difficult for us to be acquired. Our Board of Directors has the authority, without shareholder approval, to issue additional shares of preferred stock
(but not common stock above the shareholder approved maximum) and to fix the rights,
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preferences, privileges and restrictions of these shares without any further vote or action by our shareholders. This authority together with certain provisions of our charter documents, may have the affecteffect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire control of our company.Company. This affecteffect could occur even if our shareholders consider the change in control to be in their best interest.
Failure In addition, we are subject to achieve and maintain effectivecertain anti-takeover provisions of Michigan law that could delay or make more difficult a merger or tender offer involving our company.
We are required to evaluate our internal control over financial reporting in accordance withunder Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could have a material adverse effect on our business and result in a negative market reaction. We are in the process of documenting and testing our internal control procedures in order
Pursuant to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act which requires annualof 2002 (Section 404), we are required to furnish a report by our management assessments of the effectiveness ofon our internal control over financial reporting. Additionally, our independent registered public accounting firm is required to audit bothThat report must contain, among other matters, an assessment of the design and operating effectiveness of our internal controlcontrols over financial reporting and management’s assessmentas of the design andend of the effectivenessfiscal year. This assessment must include disclosure of its internal control over financial reporting. Although no knownany material weaknesses exist at this time, this will be the first year that we have undergone an audit overin our internal control over financial reporting identified by management. That report must also contain a statement that our independent registered public accounting firm has issued an attestation report on the design and procedures,operating effectiveness of our system of internal accounting controls over financial reporting. If in the future we are unable to assert that our internal control over financial reporting is effective as of the end of the then current fiscal year (or, if our independent registered public accounting firm is unable to express an unqualified opinion on the design and it is possibleoperating effectiveness of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, which would have a negative effect on our stock price and our ability to raise capital.
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INCORPORATION BY REFERENCE
This prospectus incorporates by reference important business and financial information that material weaknesses couldwe file with the Securities and Exchange Commission and that we are not including in or delivering with this prospectus. As the SEC allows, incorporated documents are considered part of this prospectus, and we can disclose important information to you by referring you to those documents.
our annual report on Form 10-K for the fiscal year ended June 30, 2008, filed on August 29, 2008;
portions of our definitive Proxy Statement for the Annual Meeting of Shareholders held on October 17, 2008 that have been incorporated by reference into the Form 10-K;
our quarterly report on Form 10-Q for the quarter ended September 30, 2008, filed on November 7, 2008; and
our current reports on Form 8-K filed with the SEC on August 27, 2008, October 23, 2008 and October 29, 2008.
We also incorporate by reference all documents filed with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and prior to the completion or termination of this offering. Information in this prospectus supersedes related information in the documents listed above, and information in subsequently filed documents supersedes related information in both this prospectus and the incorporated documents.
You may request a copy of any or all of these filings, at no cost, by writing or telephoning us at: Aastrom Biosciences, Inc., 24 Frank Lloyd Wright Drive, P.O. Box 276, Ann Arbor, Michigan 48106, attention: Investor Relations. These filings may also be foundobtained through the evaluation. If such weaknesses are found, we mayCompany’s website located at http://www.aastrom.com.
You should rely only on the information incorporated by reference or provided in this prospectus or any supplement. We have not be ableauthorized anyone else to remediate such weaknessesprovide you with different information. You should not assume that information in time to meet the deadlines imposed by the Sarbanes-Oxley Act for compliance with requirements of Section 404. In such case, we would be required to publicly report the naturethis prospectus or any supplement is accurate as of any date other than the date on the front of these documents.
In accordance with these rules, we have incorporated by reference the description of our business, our securities, our properties, any legal proceedings, market price of and dividend’s with respect to our common stock, our financial statements and our management’s discussion and analysis of our financial condition and results of operations. We have also incorporated by reference disclosure with respect to our officers and directors, their compensation structure, any related transactions with our officers and directors and our shareholders
The Company advises that there have been no material weakness. Failure to achievechanges in the Company’s affairs that have occurred since the end of the latest fiscal year for which audited financial statements were included in the latest Form 10-K and maintain an effective internal control environment could resultthat have not been described in a negative market reaction.Form 10-Q or Form 8-K filed under the Exchange Act.
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Forward-looking statements
FORWARD-LOOKING STATEMENTS
This registration statement contains certainprospectus, including the documents that we incorporate by reference, contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but are not always, made through the use of words or phrases such as “anticipates,” “estimates,” “plans,” “projects,” “trends,” “opportunity,” “comfortable,” “current,” “intention,” “position,” “assume,” “potential,” “outlook,” “remain,” “continue,” “maintain,” “sustain,” “seek,” “achieve,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” and similar words or phrases, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this report, and in particular those factors listed under the section “Risk Factors.”
Because the factors referred to in the preceding paragraph could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements we make, you should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. These forward-looking statements include statements regarding:
| | Ÿ• | | potential strategic collaborations with othersothers; |
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| | Ÿ• | | future capital needsneeds; |
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| | Ÿ• | | adequacy of existing capital to support operations for a specified timetime; |
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| | Ÿ• | | product development and marketing plansplan; |
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| | Ÿ• | | clinical trial plans and anticipated resultsresults; |
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| | Ÿ• | | anticipation of future losseslosses; |
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| | Ÿ• | | replacement of manufacturing sourcessources; |
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| | Ÿ• | | commercialization plans |
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| Ÿ | revenue expectations and operating results |
These statements are subject to risks and uncertainties, including those set forth in this Risk Factors section and in the materials incorporated by reference into this prospectus, and actual results could differ materially from those expressed or implied in these statements. In some cases, you can identify these statements by our use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “expect,” “estimate,” “plan,” “believe,” “potential,” or “intend.” All forward-looking statements included in this registration statement or in any prospectus supplement are made as of the date hereof or thereof. We assume no obligation to update any such forward-looking statement or reason why actual results might differ.
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RATIO OF EARNINGS TO FIXED CHARGES(1)
The following table sets forth ratios of earnings to fixed charges for the periods shown.
| | | | | | | | | | | | | | | | | | | | | | | | |
| Twelve Months Ending |
| | Dec. 31, | | | | June 30, | | | | June 30, | | | | June 30, | | | | June 30, | | | | June 30, | | |
| | 2004 | | | | 2004 | | | | 2003 | | | | 2002 | | | | 2001 | | | | 2000 | | |
| | N/A(2) | | | | N/A(2) | | | | N/A(2) | | | | N/A(2) | | | | N/A(2) | | | | N/A(2) | | |
(1) The ratio of earnings to fixed charges was computed by dividing earnings by fixed charges. For this purpose, earnings consist of net loss before fixed charges. Fixed charges consist of interest expense plus the interest factor in lease expenses. During the fiscal years covered by this table, we did not have any material fixed charges or preferred stock dividends. However, our total lease expenses, which comprised most of our total commitments, were $622,000, $616,000, $602,000, $547,000, $495,000 and $485,000 for the twelve months ended December 31, 2004 and June 30, 2004, 2003, 2002, 2001 and 2000.
(2) Earnings have been inadequate to cover fixed charges and total commitments. The dollar amount of the coverage deficiency was approximately $10.3 million, $10.5 million, $9.6 million, $7.9 million, $5.9 million and $9.6 million for the twelve months ended December 31, 2004 and June 30, 2004, 2003, 2002, 2001 and 2000.
USE OF PROCEEDS
We cannot guarantee that we will receive any proceeds in connection with this offering because we may choose not to issue any securities covered by this prospectus.
Unless otherwise provided in a supplement or amendment to this prospectus, we intend to use any net proceeds from this offering, together with other available funds, for operating costs, capital expenditures and working capital needs and for other general corporate purposes.
We have not specifically identified the precise amounts we will spend on each of these areas or the timing of these expenditures. The amounts actually expended for each purpose may vary significantly depending upon numerous factors, including the amount and timing of the proceeds from this offering, progress with clinical product development and other cell therapy application programs. In addition, expenditures may also depend on the establishment of new collaborative arrangements with other companies, the availability of other financing, and other factors.
We anticipate that we will be required to raise substantial additional capital to continue to fund the clinical development of our cell therapy applications. We may raise additional capital through additional public or private financing, as well as collaborative relationships, incurring debt and other available sources.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s public reference rooms located at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our filings with the SEC are also available to the public on the SEC’s Internet web site at http://www.sec.gov. We also provide information on our website:http//www.aastrom.com/.
The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file with the SEC later will automatically update and supersede the information in this prospectus or incorporated by reference. The
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following documents filed by us and any future filings made by us with the SEC under Sections 13(a), 13(c) 14 or 15(d) of the Securities Exchange Act of 1934, until we sell all of the common stock offered hereby, are incorporated by reference in this prospectus:
| 1. | Our Annual Report on Form 10-K for the fiscal year ended June 30, 2004; |
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| 2. | Our Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 2004 and December 31, 2004; |
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| 3. | Our Current Reports on Form 8-K filed with SEC on July 8, 2004; July 13, 2004; July 30, 2004; October 19, 2004; October 21, 2004; October 28, 2004; January 13, 2005; January 14, 2005; February 1, 2005; February 4, 2005 (relating to the election of a new Director to our Board); and March 4, 2005;plans; and |
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| | 4. • | The description of our common stock set forth in our Registration Statement on Form 8-A filed with the SEC on April 11, 1997, as amended (Commission File No.: 000-22025). | revenue expectations and operating results. |
The information contained in this Prospectus, as well as in our SEC filings, identifies important factors that could adversely affect actual results and performance. Prospective investors are urged to carefully consider such factors.
All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statements.
YOU MAY REQUEST A COPY OF THESE FILINGS, AT NO COST, BY WRITING OR TELEPHONING US AT AASTROM BIOSCIENCES, INC., 24 FRANK LLOYD WRIGHT DRIVE, P.O. BOX 376, ANN ARBOR, MICHIGAN 48106, TELEPHONE NUMBER (734) 930-5555, ATTENTION: CHIEF FINANCIAL OFFICER.
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THE SECURITIES WE MAY OFFER
The descriptions
USE OF PROCEEDS
This prospectus relates to shares of
our common stock that may be offered and sold from time to time by the
securities contained in this prospectus, together with the applicable prospectus supplements, summarize all the material terms and provisions of the various types of securities that we may offer.selling shareholder. We will
describe in the applicable prospectus supplement the particular terms of the securities offered by that prospectus supplement. If we indicate in the applicable prospectus supplement, the terms of the securities may differreceive no proceeds from the
terms we have summarized below. We will also include in the prospectus supplement information, where applicable, about material United States federal income tax considerations relating to the securities, and the securities exchange, if any, on which the securities will be listed.DESCRIPTION OF CAPITAL STOCK
The following descriptionsale of our capital stock and certain provisions of our articles of incorporation and bylaws is a summary and is qualified in its entirety by the provisions of our articles of incorporation and bylaws.
Our authorized capital stock consists of 150,000,000 shares of common stock no par value per share, and 5,000,000 shares of preferred stock, no par value per share.
Common Stock
Holdersin this offering. However, we may receive up to $15.0 million in proceeds from the sale of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders and do not have cumulative voting rights. Holders of common stock have no preemptive, redemption or conversion rights and are not subject to future calls or assessments. No sinking fund provisions apply to our common stock. All outstanding shares are fully-paid and non-assessable. InFusion Capital under the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in assets available for distribution, subject to prior distribution rights of any preferred stock then outstanding. Holders of common stock are entitled toPurchase Agreement. Any proceeds from Fusion Capital we receive proportionately any such dividends declared byunder the board of directors, out of legally available funds for dividends, subject to any preferences that may be applicable to any shares of preferred stock that may be outstanding at that time. The rights, preferences and privileges of holders of common stock are set forth in our restated articles of incorporation, which may be amended by the holders of at least two-thirds of the outstanding shares of common stock.
Preferred Stock
Our Board of Directors is authorized to issue up to 5,000,000 shares of preferred stock in one or more series without shareholder approval. Our Board of Directors may determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock.
The purpose of authorizing our Board of Directors to issue preferred stock in one or more series and determine the number of shares in the series and its rights and preferences is to eliminate delays associated with a shareholder vote on specific issuances. Examples of rights and preferences that the Board of Directors may fix are: (1) dividend rights, (2) dividend rates, (3) conversion rights, (4) voting rights, (5) terms of redemption, and (6) liquidation preferences. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, a majority of our outstanding voting stock. The rights of holders of our common stock described above,Purchase Agreement will be subjectused to conduct operations and may be adversely affected by, the rights of any preferred stock that we may designate and issue in the future.
We will incorporate by reference as an exhibitcontinue to the registration statement which includes this prospectus the form of any certificate of designation which describes the terms of the series of preferred stock we are offering. This description and the applicable prospectus supplement will include:
conduct our clinical development programs. 1419
THE FUSION TRANSACTION
General
On October 27, 2008, we entered into a Common Stock Purchase Agreement with Fusion Capital Fund II, LLC, an Illinois limited liability company. Under the Purchase Agreement, Fusion Capital is obligated, under certain conditions, to purchase shares from us in an aggregate amount of $15.0 million from time to time over a 25-month period. Under the terms of the Purchase Agreement, Fusion Capital has received a commitment fee consisting of 1,936,317 shares of our common stock. Also, we will issue to Fusion Capital an additional 1,936,317 shares as a commitment fee pro rata as we receive the $15.0 million of future funding. As of October 27, 2008, there were 132,826,495 shares outstanding (132,668,795 shares held by non-affiliates) excluding the 22,692,665 shares offered by Fusion Capital pursuant to this Prospectus which it has not yet purchased from us. If all of such 22,692,665 shares offered hereby were issued and outstanding as of the date hereof, the 22,692,665 shares would represent 17.1% of the total common stock outstanding or 17.1% of the non-affiliates shares outstanding as of the date hereof.
Under the Purchase Agreement and the Registration Rights Agreement we are required to register and have included in the offering pursuant to this Prospectus (1) 1,936,317 shares which have already been issued, (2) an additional 1,936,317 shares which we may issue in the future as a commitment fee pro rata as we receive the $15.0 million of future funding and (3) at least 22,692,665 shares which we may sell to Fusion Capital after this registration statement is declared effective. All 26,565,299 shares, 20% of our outstanding on October 27, 2008, the date of The Purchase Agreement, are being offered pursuant to this Prospectus. Under the Purchase Agreement, we have the right but not the obligation to sell more than the 22,692,665 shares to Fusion Capital. As of the date hereof, we do not currently have any plans or intent to sell to Fusion Capital any shares beyond the 22,692,665 shares offered hereby. However, if we elect to sell more than the 22,692,665 shares (which we have the right but not the obligation to do), we must first register under the Securities Act any additional shares we may elect to sell to Fusion Capital before we can sell such additional shares, which could cause substantial dilution to our shareholders. In addition, in the event that we decide to issue more than 26,565,299, i.e. greater than 19.99% of our outstanding shares of common stock as of the date of the Purchase Agreement, we would first be required to seek shareholder approval in order to be in compliance with the Nasdaq Capital Market rules. The number of shares ultimately offered for sale by Fusion Capital is dependent upon the number of shares purchased by Fusion Capital under the Purchase Agreement.
We do not have the right to commence any sales of our shares to Fusion Capital until the SEC has declared effective the registration statement of which this Prospectus is a part. After the SEC has declared effective such registration statement, generally we have the right but not the obligation from time to time to sell our shares to Fusion Capital in amounts between $60,000 and $2.0 million depending on certain conditions. We have the right to control the timing and amount of any sales of our shares to Fusion Capital. The purchase price of the shares will be determined based upon the market price of our shares without any fixed discount at the time of each sale. Fusion Capital shall not have the right nor the obligation to purchase any shares of our common stock on any business day that the price of our common stock is below $0.10. There are no negative covenants, restrictions on future fundings, penalties or liquidated damages in the Purchase Agreement or the Registration Rights Agreement. The Purchase Agreement may be terminated by us at any time at our discretion without any cost to us. The Purchase Agreement provides that neither party has the ability to amend the Purchase Agreement and the obligations of both parties are non-transferable.
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Purchase Of Shares Under The Purchase Agreement
Under the Purchase Agreement, on any business day selected by us, we may direct Fusion Capital to purchase up to $60,000 of our common stock. The purchase price per share is equal to the lesser of:
the lowest sale price of our common stock on the purchase date; or
the average of the 3 lowest closing sale prices of our common stock during the 12 consecutive business days prior to the date of a purchase by Fusion Capital.
The purchase price will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the business days used to compute the purchase price. We may direct Fusion Capital to make multiple purchases from time to time in our sole discretion; no sooner then every other business day.
Our Right To Increase the Amount to be Purchased
In addition to purchases of up to $60,000 from time to time, we may also from time to time elect on any single business day selected by us to require Fusion Capital to purchase our shares in an amount up to $100,000 provided that our share price is not below $0.25 during the 3 business days prior to and on the purchase date. We may increase this amount to up to $250,000 if our share price is not below $0.40 during the 3 business days prior to and on the purchase date. This amount may also be increased to up to $500,000 if our share price is not below $0.80 during the 3 business days prior to and on the purchase date. This amount may also be increased to up to $1.0 million if our share price is not below $1.60 during the 3 business days prior to and on the purchase date. This amount may also be increased to up to $2.0 million if our share price is not below $2.50 during the 3 business days prior to and on the purchase date. We may direct Fusion Capital to make multiple large purchases from time to time in our sole discretion; however, at least 1 business day must have passed since the most recent large purchase was completed. The price at which our common stock would be purchased in this type of larger purchase will be the lesser of (i) the lowest sale price of our common stock on the purchase date and (ii) the lowest purchase price (as described above) during the previous 10 business days prior to the purchase date.
Minimum Purchase Price
Under the Purchase Agreement, we have set a minimum purchase price (“floor price”) of $0.10. However, Fusion Capital shall not have the right nor the obligation to purchase any shares of our common stock in the event that the purchase price would be less the floor price. Specifically, Fusion Capital shall not have the right or the obligation to purchase shares of our common stock on any business day that the market price of our common stock is below $0.10.
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Events of Default
Generally, Fusion Capital may terminate the Purchase Agreement without any liability or payment to the Company upon the occurrence of any of the following events of default:
| | • | | the title and stated value; |
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| • | effectiveness of the numberregistration statement of shares authorized; |
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| • | the liquidation preference per share; |
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| • | the purchase price; |
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| • | the dividend rate, period and payment date, and methodwhich this prospectus is a part of calculation for dividends; |
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| • | whether dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate; |
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| • | the procedureslapses for any auction and remarketing, if any; |
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| • | reason (including, without limitation, the provisionsissuance of a stop order) or is unavailable to Fusion Capital for a sinking fund, if any; |
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| • | the provisions for redemption or repurchase, if applicable, and any restrictions on our ability to exercise those redemption and repurchase rights; |
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| • | any listingsale of the preferred stock on any securities exchange or market; |
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| • | whether the preferred stock will be convertible into our common stock offered hereby and if applicable, the conversion price,such lapse or how it will be calculated, and the conversionunavailability continues for a period of 10 consecutive business days or for more than an aggregate of 30 business days in any 365-day period; |
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| | • | whether the preferred | suspension by our principal market of our common stock will be exchangeable into debt securities, and, if applicable, the exchange price, or how it will be calculated, and the exchange period;from trading for a period of 3 consecutive business days; |
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| | • | voting rights, if any, | the de-listing of our common stock from our principal market provided our common stock is not immediately thereafter trading on the preferred stock;OTC Bulletin Board Market, the Nasdaq Global Market, the NYSE Alternext US, or the New York Stock Exchange; |
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| | • | preemptive rights, if any; | the transfer agent’s failure for 5 business days to issue to Fusion Capital shares of our common stock which Fusion Capital is entitled to under the Purchase Agreement; |
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| | • | restrictions on transfer, sale or other assignment, if any; |
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| | • | whether interests in the preferred stock will be represented by depositary shares; |
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| • | a discussion of any material United States federal income tax considerations applicable to the preferred stock; |
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| • | the relative ranking and preferencesbreach of the preferred stock as to dividend rights and rights if we liquidate, dissolverepresentations or wind up our affairs; |
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| • | any limitations on issuance of any classwarranties or series of preferred stock ranking senior to or on a parity with the series of preferred stock as to dividend rights and rights if we liquidate, dissolve or wind up our affairs; and |
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| • | any other specific terms, preferences, rights or limitations of, or restrictions on, the preferred stock. |
When we issues share of preferred stock under this prospectus, the shares will fully be paid and nonassessable and will not have, or be subject to, any preemptive or similar rights.
The Michigan Business Corporation Act provides that the holders of preferred stock will have the right to vote separately as a class on any proposal involving an increase or decrease in the authorized number of shares of that class, or changes in the powers, preferences or special rights of holders of that preferred stock so as to affect the class adversely. This right is in addition to any voting rights that may be provided for in the applicable certificate of designation.
Michigan Law and Certain Charter and By-Law Provisions
We are subject to certain anti-takeover provisions of the Michigan Business Corporation Act (the “MBCA”) which could delay or make more difficult a merger or tender offer involving Aastrom. Chapter 7A of the MBCA prevents, in general, an “interested shareholder” (defined generally as a person owning 10% or more of a corporation’s outstanding voting shares) from engaging in a “business combination” (as defined therein) with a Michigan corporation unless: (a) the Board of Directors issues an advisory statement, holders of 90% of the shares of each class of stock entitled to vote approve the transaction, and holders of two-thirds of the “disinterested” shares of each class of stock approve the transaction; or (b) the interested shareholder has been an interested shareholder for at least five years and has not acquired beneficial ownership of any additional shares of the corporation subsequent to the transaction which resulted in such shareholder being classified as an interested shareholder, and meets certain requirements, including provisions relating to the fairness of the price and the form of consideration paid; or (c) the Board of Directors, by resolution, exempts a particular interested shareholder from these provisions prior to the interested shareholder becoming an
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interested shareholder. The MBCA also contains certain other provisions which could have anti-takeover effects.
Our bylaws provide that the Board of Directors is divided into three classes of directors, with each class serving a staggered three-year term. The classification system of electing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of Aastrom and may maintain the incumbency of the Board of Directors, as it generally makes it more difficult for shareholders to replace a majority of the directors. Our restated articles of incorporation eliminate the right of shareholders to act without a meeting and do not provide for cumulative voting in the election of directors. The amendment of any of these provisions would require approval by holders of at least two-thirds of the shares of outstanding common stock.
These and other provisions of our restated articles of incorporation could have the effect of deterring certain takeovers or delaying or preventing certain changes in control or management of Aastrom, including transactions in which shareholders might otherwise receive a premium for their shares over then-current market prices.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company.
DESCRIPTION OF DEBT SECURITIES
The following description, together with the additional information we include in any applicable prospectus supplements, summarizes the material terms and provisions of the debt securities that we may offer under this prospectus. While the terms we have summarized below will apply generally to any future debt securities we may offer, we will describe the particular terms of any debt securities that we may offer in more detail in the applicable prospectus supplement. If we indicate in a prospectus supplement, the terms of any debt securities we offer under that prospectus supplement may differ from the terms we describe below.
We will issue any senior notes under the senior indenture which we will enter into with a trustee to be named in the senior indenture. We will issue any subordinated notes under the subordinated indenture which we will enter into with a trustee to be named in the subordinated indenture. We have filed forms of these documents as exhibits to the registration statement which includes this prospectus. We use the term “indentures” to refer to both the senior indenture and the subordinated indenture. The indentures will be qualified under the Trust Indenture Act. We use the term “debenture trustee” to refer to either the senior trustee or the subordinated trustee, as applicable.
The following summaries of material provisions of the senior notes, the subordinated notes and the indentures are subject to, and qualified in their entirety by reference to, all the provisions of the indenture applicable to a particular series of debt securities. Except as we may otherwise indicate, the terms of the senior indenture and the subordinated indenture are identical.
We conduct some of our operations through a subsidiary formed under the laws of Germany. Our rights and the rights of our creditors, including holders of debt securities, to the assets of any subsidiary of ours upon that subsidiary’s liquidation or reorganization or otherwise would be subject to the prior claims of that subsidiary’s creditors, except to the extent that we may be a creditor with recognized claims against the subsidiary. Our subsidiary’s creditors would include trade creditors, debt holders, secured creditors and taxing authorities. Except as we may provide in a prospectus supplement, neither the debt securities nor the indentures restrict us or our subsidiary from incurring indebtedness.
General
We will describe in each prospectus supplement the following terms relating to a series of notes:
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| • | the title; |
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| • | any limit on the amount that may be issued; |
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| • | whether or not we will issue the series of notes in global form, the terms and who the depository will be; |
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| • | the maturity date; |
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| • | the annual interest rate, which may be fixed or variable, or the method for determining the rate; |
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| • | the date interest will begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining such dates; |
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| • | whether or not the notes will be secured or unsecured, and the terms of any security; |
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| • | the terms of the subordination of any series of subordinated debt; |
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| • | the place where payments will be payable; |
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| • | our right, if any, to defer payment of interest and the maximum length of any such deferral period; |
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| • | the date, if any, after which, and the price at which, we may, at our option, redeem the series of notes pursuant to any optional redemption provisions; |
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| • | the date, if any, on which, and the price at which we are obligated, pursuant to any mandatory sinking fund provisions or otherwise, to redeem, or at the holder’s option to purchase, all or a portion of the series of notes; |
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| • | whether the indenture will restrict our ability to pay dividends, or will require us to maintain any asset ratios or reserves; |
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| • | whether we will be restricted from incurring any additional indebtedness; |
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| • | a discussion of any material United States federal income tax considerations applicable to the notes; |
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| • | the denominations in which we will issue the series of notes, if other than denominations of $1,000 and any integral multiple thereof; and |
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| • | any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities. |
Conversion or Exchange Rights
We will set forth in the prospectus supplement the terms on which a series of notes may be convertible into or exchangeable for common stock or other securities of ours. We will include in that prospectus supplement provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option. We may include provisions pursuant to which the number of shares of common stock or other securities of ours that the holders of the series of notes receive would be subject to adjustment.
Consolidation, Merger or Sale
The indentures do not contain any covenant which restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of all or substantially all of our assets. However, any successor to or acquirer of such assets must assume all of our obligations under the indentures or the notes, as appropriate.
Events of Default Under the Indenture
The following are events of default under the indentures with respect to any series of notes that we may issue:
| • | if we fail to pay interest when due and our failure continues for 60 days and the time for payment has not been extended or deferred; |
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| • | if we fail to pay the principal, or premium, if any, when due and the time for payment has not been extended or delayed; |
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| • | if we fail to observe or perform any other covenantcovenants contained in the notesPurchase Agreement or the indentures, other thanany related agreements which has or which could have a covenant specifically relating to another series of notes, and our failure continues for 60 days after we receive notice from the debenture trustee or holders of at least 50% in aggregate principal amount of the outstanding notes of the applicable series; and |
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| • | if specified events of bankruptcy, insolvency or reorganization occur as to us. |
If an event of default with respect to notes of any series occurs and is continuing, the debenture trustee or the holders of at least 50% in aggregate principal amount of the outstanding notes of that series, by notice tomaterial adverse effect on us in writing, and to the debenture trustee if notice is given by such holders, may declare the unpaid principal of, premium, if any, and accrued interest, if any, due and payable immediately.
The holders of a majority in principal amount of the outstanding notes of an affected series may waive any default or event of default with respect to the series and its consequences, except defaults or events of default regarding payment of principal, premium, if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver shall cure the default or event of default.
Subject to the terms of the indentures, if an event of default under an indenture shall occur and be continuing, the debenture trustee will be under no obligation to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of the applicable series of notes, unless such holders have offered the debenture trustee reasonable indemnity. The holders of a majority in principal amount of the outstanding notes of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the debenture trustee, or exercising any trust or power conferred on the debenture trustee, with respect to the notes of that series, provided that:
| • | the direction so given by the holder is not in conflict with any law or the applicable indenture; and |
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| • | subject to its duties under the Trust Indenture Act, the debenture trustee need not take any action that might involve it in personal liability or might be unduly prejudicial to the holders not involved in the proceeding. |
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| • | a holdercure period of the notes of any series will only have the right to institute a proceeding under the indentures or to appoint a receiver or trustee, or to seek other remedies if: |
| • | the holder has given written notice to the debenture trustee of a continuing event of default with respect to that series; |
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| • | the holders of at least 50% in aggregate principal amount of the outstanding notes of that series have made written request, and such holders have offered reasonable indemnity to the debenture trustee to institute the proceeding as trustee; and |
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| • | the debenture trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount of the outstanding notes of that series other conflicting directions within 60 days after the notice, request and offer. |
These limitations do not apply to a suit instituted by a holder of notes if we default in the payment of the principal, premium, if any, or interest on, the notes.
We will periodically file statements with the debenture trustee regarding our compliance with specified covenants in the indentures.
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Modification of Indenture; Waiver
We and the debenture trustee may change an indenture without the consent of any holders with respect to specific matters, including:
| • | to fix any ambiguity, defect or inconsistency in the indenture; and |
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| • | to change anything that does not materially adversely affect the interests of any holder of notes of any series. |
In addition, under the indentures, the rights of holders of a series of notes may be changed by us and the debenture trustee with the written consent of the holders of at least a majority in aggregate principal amount of the outstanding notes of each series that is affected. However, we and the debenture trustee may only make the following changes with the consent of each holder of any outstanding notes affected:
| • | extending the fixed maturity of the series of notes; |
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| • | reducing the principal amount, reducing the rate of or extending the time of payment of interest, or any premium payable upon the redemption of any notes;5 business days; or |
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| | • | reducing the percentage of notes, the holders of which are required to consent to any amendment. |
Discharge
Each indenture provides that we can elect to be discharged from our obligations with respect to one or more series of debt securities, except for obligations to:
| | • | register the transferany participation or exchange of debt securities of the series;threatened participation in insolvency or bankruptcy proceedings by or against us; |
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| | • | replace stolen, lost or mutilated debt securities of the series; |
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| | • | maintain paying agencies; |
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| • | hold monies for paymenta material adverse change in trust; |
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| • | compensate and indemnify the trustee; and |
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| • | appoint any successor trustee. |
In order to exercise our rights to be discharged, we must deposit with the debenture trustee money or government obligations sufficient to pay all the principal of, any premium, if any, and interest on, the debt securities of the series on the dates payments are due.
Form, Exchange, and Transfer
We will issue the notes of each series only in fully registered form without coupons and, unless we otherwise specify in the applicable prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indentures provide that we may issue notes of a series in temporary or permanent global form and as book-entry securities that will be deposited with, or on behalf of, The Depository Trust Company or another depository named by us and identified in a prospectus supplement with respect to that series. See “Legal Ownership of Securities” for a further description of the terms relating to any book-entry securities.
At the option of the holder, subject to the terms of the indentures and the limitations applicable to global securities described in the applicable prospectus supplement, the holder of the notes of any series can
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exchange the notes for other notes of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of the indentures and the limitations applicable to global securities set forth in the applicable prospectus supplement, holders of the notes may present the notes for exchange or for registration of transfer, duly endorsed or with the form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the security registrar or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the notes that the holder presents for transfer or exchange, we will make no service charge for any registration of transfer or exchange, but we may require payment of any taxes or other governmental charges.
We will name in the applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar, that we initially designate for any notes. We may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required to maintain a transfer agent in each place of payment for the notes of each series.
If we elect to redeem the notes of any series, we will not be required to:
| • | issue, register the transfer of, or exchange any notes of that series during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any notes that may be selected for redemption and ending at the close of business on the day of the mailing;our business; or |
| |
| | • | register the transfer of or exchange any notes so selected for redemption, in whole or in part, except the unredeemed portion of any notes we are redeeming in part. |
Information Concerning the Debenture Trustee
The debenture trustee, other than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only those duties as are specifically set forth in the applicable indenture. Upon an event of default under an indenture, the debenture trustee must use the same degree of care as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the debenture trustee is under no obligation to exercise any of the powers given it by the indentures at the request of any holder of notes unless it is offered reasonable security and indemnity against the costs, expenses and liabilities that it might incur.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any notes on any interest payment date to the person in whose name the notes, or one or more predecessor securities, are registered at the close of business on the regular record date for the interest.
We will pay principal of and any premium and interest on the notes of a particular series at the office of the paying agents designated by us, except that unless we otherwise indicate in the applicable prospectus supplement, will we make interest payments by check which we will mail to the holder. Unless we otherwise indicate in a prospectus supplement, we will designate the corporate trust office of the debenture trustee in the City of New York as our sole paying agent for payments with respect to notes of each series. We will name in the applicable prospectus supplement any other paying agents that we initially designate for the notes of a particular series. We will maintain a paying agent in each place of payment for the notes of a particular series.
All money we pay to a paying agent or the debenture trustee for the payment of the principal of or any premium or interest on any notes which remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and the holder of the security thereafter may look only to us for payment of those amounts.
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Governing Law
The indentures and the notes will be governed by and construed in accordance with the laws of the State of New York, except to the extent that the Trust Indenture Act is applicable.
Subordination of Subordinated Notes
The subordinated notes will be unsecured and will be subordinate and junior in priority of payment to some or all of our other indebtedness to the extent described in a prospectus supplement. The subordinated indenture does not limit the amount of subordinated notes which we may issue. It also does not limit us from issuing any other secured or unsecured debt.
DESCRIPTION OF WARRANTS
The following description, together with the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. While the terms summarized below will apply generally to any warrants that we may offer, we will describe the particular terms of any series of warrants in more detail in the applicable prospectus supplement. If we indicate in the prospectus supplement, the terms of any warrants offered under that prospectus supplement may differ from the terms described below. Specific warrant agreements will contain additional important terms and provisions and will be incorporated by reference as an exhibit to the registration statement which includes this prospectus.
General
We may issue warrants for the purchase of common stock, preferred stock and/or debt securities in one or more series. We may issue warrants independently or together with common stock, preferred stock and/or debt securities, and the warrants may be attached to or separate from these securities.
We will evidence each series of warrants by warrant certificates that we will issue under a separate warrant agreement. We will enter into the warrant agreement with a warrant agent. Each warrant agent will be a bank that we select which has its principal office in the United States and a combined capital and surplus of at least $50,000,000. We will indicate the name and address of the warrant agent in the applicable prospectus supplement relating to a particular series of warrants.
We will describe in the applicable prospectus supplement the terms of the series of warrants, including:
| | • | the offering price andissuance of more than an aggregate number of warrants offered; |
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| • | 26,565,299 shares to Fusion Capital under the currency for whichPurchase Agreement if we fail to obtain the warrants may be purchased; |
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| • | if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security; |
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| • | if applicable, the date on and after which the warrants and the related securities will be separately transferable; |
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| • | in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise; |
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| • | in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise; |
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| • | the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants; |
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| • | the terms of any rights to redeem or call the warrants; |
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| • | any provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;requisite shareholder approval. |
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| • | the dates on which the right to exercise the warrants will commence and expire; |
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| • | the manner in which the warrant agreement and warrants may be modified; |
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| • | federal income tax consequences of holding or exercising the warrants; |
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| • | the terms of the securities issuable upon exercise of the warrants; and |
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| • | any other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
Before exercising their warrants, holders of warrants will notOur Termination Rights
We have
any of the
rights of holders of the securities purchasable upon such exercise, including: | • | in the case of warrants to purchase debt securities, theunconditional right to receive payments of principal of, or any premium or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture; or |
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| • | in the case of warrants to purchase common stock or preferred stock, the right to receive any dividends or payments upon our liquidation, dissolution or winding up or to exercise any voting rights. |
Exercise of Warrants
Each warrant will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise price that we describe in the applicable prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants at any time upfor any reason to 5:00 P.M. New Yorkgive notice to Fusion Capital terminating the Purchase Agreement without any cost to us.
No Short-Selling or Hedging by Fusion Capital
Fusion Capital has agreed that neither it nor any of its affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time
onprior to the
expiration date that we set forth in the applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants will become void. Holderstermination of the warrants may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with specified information, and paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus supplement. We will set forth on the reverse side of the warrant certificate and in the applicable prospectus supplement the information that the holder of the warrant will be required to deliver to the warrant agent upon exercise.
Upon receipt of the required payment and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable upon such exercise. If fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue a new warrant certificate for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise price for warrants.
Enforceability of Rights By Holders of Warrants
Each warrant agent will act solely as our agent under the applicable warrant agreement and will not assume any obligation or relationship of agency or trust with any holder of any warrant. A single bank or trust company may act as warrant agent for more than one issue or series of warrants. A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant agreement or warrant, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate legal action its right to exercise, and receive the securities purchasable upon exercise of, its warrants.
LEGAL OWNERSHIP OF SECURITIES
We can issue securities in registered form or in the form of one or more global securities. We describe global securities in greater detail below. We refer to those persons who have securities registered in their own names on the books that we or any applicable trustee maintain for this purpose as the “holders” of those securities. These persons are the legal holders of the securities. We refer to those persons who,
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indirectly through others, own beneficial interests in securities that are not
Effect of Performance of the Purchase Agreement on Our Stockholders
All 26,565,299 shares registered in
their own names, as “indirect holders” of those securities. As we discuss below, indirect holdersthis offering are
not legal holders, and investorsexpected to be freely tradable. It is anticipated that shares registered in
securities issued in book-entry form or in street namethis offering will be
indirect holders.Book-Entry Holders
sold over a period of up to 25 months from the date of this prospectus. The sale by Fusion Capital of a significant amount of shares registered in this offering at any given time could cause the market price of our common stock to decline and to be highly volatile. Fusion Capital may ultimately purchase all, some or none of the 26,565,299 shares of common stock not yet issued but registered in this offering. After it has acquired such shares, it may sell all, some or none of such shares. Therefore, sales to Fusion Capital by us under the Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. However, we have the right to control the timing and amount of any sales of our shares to Fusion Capital and the Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.
In connection with entering into the Purchase Agreement, we authorized the sale to Fusion Capital of up to 22,692,665 shares of our common stock (17.1% of our outstanding on October 27, 2008 the date of the Purchase Agreement). We
estimate that we will sell no more than 22,692,665 shares to Fusion Capital under the Purchase Agreement (exclusive of the 1,936,317 shares issued to Fusion Capital as the commitment fee and 1,936,317 shares which we may issue
securities in
book-entry form only,the future as a commitment fee pro rata as we
will specifyreceive the $15.0 million), all of which are included in this offering. We have the right to terminate the Purchase Agreement without any payment or liability to Fusion Capital at any time, including in the
applicable prospectus supplement. This means securities mayevent that all 22,692,665 shares are sold to Fusion Capital under the Purchase Agreement. Subject to approval by our board of directors, we have the right but not the obligation to sell more than 22,692,665 shares to Fusion Capital. In the event we elect to sell more than the 22,692,665 shares offered hereby, we will be
representedrequired to file a new registration statement and have it declared effective by
one or more global securities registeredthe U.S. Securities & Exchange Commission. In addition, in the
nameevent that we decide to issue more than 26,565,299 shares, i.e. greater than 19.99% of
a financial institution that holds themour outstanding shares of common stock as
depositary on behalf of other financial institutions that participate in the depositary’s book-entry system. These participating institutions, which are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers. Only the person in whose name a security is registered is recognized as the holder of that security. Securities issued in global form will be registered in the name of the depositary or its participants. Consequently, for securities issued in global form, we will recognize only the depositary as the holderdate of the securities, andPurchase Agreement, we will make all payments onwould first be required to seek shareholder approval in order to be in compliance with the securities toNasdaq Capital Market rules. The number of shares ultimately offered for sale by Fusion Capital under this prospectus is dependent upon the depositary. The depositary passes along the payments it receives to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do sonumber of shares purchased by Fusion Capital under the termsPurchase Agreement. The following table sets forth the amount of the securities.
As a result, investors in a book-entry security will not own securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest through a participant. As long as the securities are issued in global form, investors will be indirect holders, and not holders, of the securities.
Street Name Holders
We may terminate a global security or issue securities in non-global form. In these cases, investors may choose to hold their securities in their own names or in “street name.” Securities held by an investor in street name would be registered in the name of a bank, broker or other financial institution that the investor chooses, and the investor would hold only a beneficial interest in those securities through an account he or she maintains at that institution.
For securities held in street name, we will recognize only the banks, brokers and other financial institutions in whose names the securities are registered as the holders of those securities, and we will make all payments on those securities to them. These institutions pass along the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold securities in street name will be indirect holders, not holders, of those securities.
Legal Holders
Our obligations, as well as the obligations of any applicable trustee and of any third parties employed by us or a trustee, run only to the holders of the securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security or has no choice because we are issuing the securities only in global form.
For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with depositary participants or customers or by law, to pass the payment or notice along to the indirect holders but does not do so. Similarly, we may want to obtain the approval of the holders to amend an indenture, such as to relieve us of the consequences of a default or of our obligation to comply with a particular provision of the indenture or for other purposes. In such an event,proceeds we would seek approval onlyreceive from Fusion Capital from the holders, and not the indirect holders,sale of the securities. Whether and how the holders contact the indirect holders is up to the holders.
shares at varying purchase prices: | | | | | | | | | | | | | | | | | |
| | | | | | | | | Percentage of Outstanding | | Proceeds from the Sale of Shares |
| | | | | Number of Shares to | | Shares After Giving Effect to | | to Fusion Capital Under the |
| Assumed Average | | be Issued if Full | | the Issuance to Fusion | | Common Stock Purchase |
| Purchase Price | | Purchase | | Capital(1) | | Agreement |
| $ | 0.25 | | | | 22,692,665 | | | | 16.03 | % | | $ | 5,673,166 | | | |
| $ | 0.40 | | | | 22,692,665 | | | | 16.27 | % | | $ | 9,077,066 | | | |
| $ | 0.50 | | | | 22,692,665 | | | | 16.42 | % | | $ | 11,346,332 | | | |
| $ | 0.63 | (2) | | | 22,692,665 | | | | 16.62 | % | | $ | 14,296,379 | | | |
| $ | 0.66 | | | | 22,692,665 | | | | 16.67 | % | | $ | 14,977,159 | | | |
| $ | 0.75 | | | | 20,000,000 | | | | 15.23 | % | | $ | 15,000,000 | | | |
| $ | 1.00 | | | | 15,000,000 | | | | 12.44 | % | | $ | 15,000,000 | | | |
| | |
| (1) | | The denominator is based on 134,762,812 shares outstanding as of October 27, 2008, which includes the 1,936,317 shares previously issued to Fusion Capital, an additional pro rata amount of the 1,936,317 shares which we will issue in the future as a commitment fee as we receive future funding and the number of shares set forth in the adjacent column. The numerator is based on the number of shares issuable under the Purchase Agreement at the corresponding assumed purchase price set forth in the adjacent column. |
|
| (2) | | Closing sale price of our shares on November 3, 2008. |
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Special Considerations for Indirect HoldersTHE SELLING STOCKHOLDER If you hold securities through
The following table presents information regarding the selling stockholder. Neither the selling stockholder nor any of its affiliates has held a
bank, brokerposition or
office, or had any other
financial institution, either in book-entry form or in street name, you should checkmaterial relationship, with
your own institution to find out:us.
| | | | | | | | | | | | | | | |
| | | Shares | | Percentage of | | Shares to be Sold in the Offering | | Percentage of |
| | | Beneficially | | Outstanding Shares | | Assuming The Company Issues The | | Outstanding Shares |
| | | Owned Before | | Beneficially Owned | | Maximum Number of Shares | | Beneficially Owned After |
| Selling Stockholder | | Offering | | Before Offering (1) | | Under the Purchase Agreement (1) | | Offering |
| Fusion Capital Fund II, LLC (2) | | | 2,014,780 | (3) | | | 1.5 | % | | | 26,565,299 | | | * |
| | |
| * | | • | how it handles securities payments and notices;Less than 1%. |
| |
| (1) | • | whether it imposes feesApplicable percentage of ownership is based on 132,826,495 shares of our common stock outstanding as of October 27, 2008, together with securities exercisable or charges;convertible into shares of Common Stock within 60 days of October 27, 2008 for the selling stockholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. |
| |
| (2) | • | how it would handle a request forSteven G. Martin and Joshua B. Scheinfeld, the holders’ consent, if ever required;principals of Fusion Capital, are deemed to be beneficial owners of all of the shares of common stock owned by Fusion Capital. Messrs. Martin and Scheinfeld have shared voting and disposition power over the shares being offered under this Prospectus. |
| |
| (3) | • | whetherAs of the date hereof, 2,014,780 shares of our common stock have been previously acquired by Fusion Capital, consisting of 1,936,317 shares we issued to Fusion Capital as a commitment fee and how you can instruct it78,463 shares that were owned prior to send you securities registeredthe Purchase Agreement. The Company may elect in your own name so you canits sole discretion to sell to Fusion Capital up to an additional 22,692,665 shares under the Purchase Agreement and an additional 1,936,317 shares may be a holder, if that is permittedissued in the future; |
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| • | how it would exercise rights underfuture as a commitment fee pro rata as we receive the securities if there were a default or other event triggering$15.0 million of future funding. Fusion Capital does not presently beneficially own those shares as determined in accordance with the need for holders to act to protect their interests; and |
|
| • | ifrules of the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.SEC. |
Global Securities
A global security is a security held by a depositary which represents one or more individual securities. Generally, all securities represented by the same global securities will have the same terms.
Each security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all securities issued in book-entry form.
A global security may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor depositary, unless special termination situations arise. We describe those situations below under “—Special Situations When a Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that does. Thus, an investor whose security is represented by a global security will not be a holder of the security, but only an indirect holder of a beneficial interest in the global security.
If the prospectus supplement for a particular security indicates that the security will be issued in global form only, then the security will be represented by a global security at all times unless and until the global security is terminated. If termination occurs, we may issue the securities through another book-entry clearing system or decide that the securities may no longer be held through any book-entry clearing system.
Special Considerations for Global Securities
As an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize an indirect holder as a holder of securities and instead deal only with the depositary that holds the global security.
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If securities are issued only in the form of a global security, an investor should be aware of the following:
| • | An investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his or her interest in the securities, except in the special situations we describe below; |
|
| • | An investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection of his or her legal rights relating to the securities, as we describe under this section; |
|
| • | An investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are required by law to own their securities in non-book-entry form; |
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| • | An investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; |
|
| • | The depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in a global security. We and any applicable trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in any way; |
|
| • | The depositary may, and we understand that DTC will, require that those who purchase and sell interests in a global security within its book- entry system use immediately available funds, and your broker or bank may require you to do so as well; and |
|
| • | Financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a global security, may also have their own policies affecting payments, notices and other matters relating to the securities. There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries. |
Special Situations When a Global Security will be Terminated
In a few special situations described below, the global security will terminate and interests in it will be exchanged for physical certificates representing those interests. After that exchange, the choice of whether to hold securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in securities transferred to their own name, so that they will be direct holders. We have described the rights of holders and street name investors above.
The global security will terminate when the following special situations occur:
| • | if the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security and we do not appoint another institution to act as depositary within 90 days; |
|
| • | if we notify any applicable trustee that we wish to terminate that global security; or |
|
| • | if an event of default has occurred with regard to securities represented by that global security and has not been cured or waived. |
The prospectus supplement may also list additional situations for terminating a global security that would apply only to the particular series of securities covered by the prospectus supplement. When a global security terminates, the depositary, and not we or any applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct holders.
The
securitiescommon stock offered by this prospectus is being offered
by Fusion Capital Fund II, LLC, the selling shareholder. The common stock may be sold
inor distributed from time to time by the selling stockholder directly to one or more
transactionspurchasers or through brokers, dealers, or underwriters who may act solely as agents at
fixedmarket prices
at prevailing
market prices at the time of sale, at prices related to the prevailing market prices, at
varyingnegotiated prices,
determined25
at the time of sale, or at negotiated prices. These salesfixed prices, which may be changed. The sale of the common stock offered by this Prospectus may be effected at various times in one or more of the following transactions, or in other kinds of transactions:
methods:
| | • | through underwriters for resale to the public or investors: | ordinary brokers’ transactions; |
| |
| | • | | transactions on the Nasdaq Stock Marketinvolving cross or on any national securities exchange or U.S. inter-dealer system of a registered national securities association on which our common stock may be listed or quoted at the time of sale;block trades; |
| |
| | • | in the over-the-counter market; | through brokers, dealers, or underwriters who may act solely as agents |
| |
| | • | in private transactions and transactions otherwise than on these exchanges or systems or in | “at the over-the-counter market;market” into an existing market for the common stock; |
| |
| | • | | in connection with shortother ways not involving market makers or established business markets, including direct sales of the shares;to purchasers or sales effected through agents; |
| |
| | • | by pledge to secure debt and other obligations; |
|
| | • | through the writing of options, whether the options are listed on an options exchange or otherwise; |
|
| • | in connection with the writing of non-traded and exchange-traded call options, in hedge transactions and in settlement of other transactions in standardized or over-the-counter options; |
|
| • | through a combination of any of the aboveprivately negotiated transactions; or |
| |
| | • | | any other method permitted by law.combination of the foregoing. |
We
In order to comply with the securities laws of certain states, if applicable, the shares may sell our securities directly to onebe sold only through registered or more purchasers,licensed brokers or todealers. In addition, in certain states, the shares may not be sold unless they have been registered or throughqualified for sale in the state or an exemption from the registration or qualification requirement is available and complied with.
Brokers, dealers, underwriters, dealers or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or throughconcessions from the selling shareholder and/or purchasers of the common stock for whom the broker-dealers may act as agent. The compensation paid to a combinationparticular broker-dealer may be less than or in excess of those methods. The relatedcustomary commissions.
Fusion Capital is an “underwriter” within the meaning of the Securities Act.
Neither we nor Fusion Capital can presently estimate the amount of compensation that any agent will receive. We know of no existing arrangements between Fusion Capital, any other shareholder, broker, dealer, underwriter, or agent relating to the sale or distribution of the shares offered by this Prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the termsnames of eachany agents, underwriters, or dealers and any compensation from the selling shareholder, and any other required information.
We will pay all of the expenses incident to the registration, offering,
including: | • | the name or names of any agents, dealers, underwriters or investors who purchase the securities; |
|
| • | the purchase price of the securities being offered and the proceeds we will receive from the sale; |
|
| • | the amount of any compensation, discounts commissions or fees to be received by the underwriters, dealer or agents; |
|
| • | any over-allotment options under which underwriters may purchase additional securities from us; |
|
| • | any discounts or concessions allowed or reallowed or paid to dealers; |
|
| • | any securities exchanges on which such securities may be listed. |
|
| • | the terms of any indemnification provisions, including indemnification from liabilities under the federal securities laws; and |
|
| • | the nature of any transaction by an underwriter, dealer or agent during the offering that is intended to stabilize or maintain the market price of the securities. |
In addition, any securities covered by this prospectus which qualify for sale pursuant to Regulation S, may be sold pursuant to Regulation S rather than pursuant to this prospectus.
In connection with the sale of our common stock,the shares to the public other than commissions or discounts of underwriters, may receive compensation from usbroker-dealers, or from purchasers of our common stock in the form of discounts, concessions or commissions. Underwriters, dealers and agents that participate in the distribution of our common stock may be deemed to be underwriters. Discounts or commissions they receive and any profit on their resale of our common stock may be considered underwriting discounts and commissions under the Securities Act of 1933.
agents. We may agreehave also agreed to indemnify underwriters, dealersFusion Capital and agents who participate in the distribution of our common stockrelated persons against variousspecified liabilities, including liabilities under the Securities Act of 1933. We may also agree to contribute to payments whichAct.
Insofar as indemnification for liabilities arising under the underwriters, dealers or agentsSecurities Act may be requiredpermitted to makeour directors, officers, and controlling persons, we have been advised that in respectthe opinion of these liabilities. We may authorize dealersthe SEC this indemnification is against public policy as expressed in the Securities Act and is therefore, unenforceable.
25
Fusion Capital and its affiliates have agreed not to engage in any direct or other persons who act as our agents to solicit offers by various institutions to purchase our common stock from us under contracts which provide for payment and delivery on a future date. We may enter into these contracts with commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others. If we enter into these agreements concerning any seriesindirect short selling or hedging of our common stock we will indicateduring the term of the Purchase Agreement.
We have advised Fusion Capital that while it is engaged in a distribution of the shares included in this Prospectus it is required to comply with Regulation M promulgated under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the selling shareholder, any affiliated purchasers, and any broker-dealer or other person who participates in the prospectus supplementdistribution from bidding for or amendment.purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares offered hereby this Prospectus.
This offering will terminate on the date that all shares offered by this Prospectus have been sold by Fusion Capital.
26
In connection with an offering of our common stock, underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, underwriters may over-allot in connection with the offering, creating a syndicate short position in our common stock for their own account. In addition, underwriters may bid for, and purchase, our common stock in the open market to cover short positions or to stabilize the price of our common stock. Finally, underwriters may reclaim selling concessions allowed for distributing our common stock in the offering if the underwriters repurchase previously distributed common stock in transactions to cover short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of our common stock above independent market levels. Underwriters are not required to engage in any of these activities and may end any of these activities at any time. Agents and underwriters may engage in transactions with, or perform services for, us and our affiliates in the ordinary course of business.
The validity of the common stock offered herebyby this Prospectus will be passed upon for Aastromus by Dykema Gossett PLLC, Ann Arbor, Michigan, acting as special counsel to Aastrom. DLA Piper Rudnick Gray Cary US LLP, San Diego, California, has acted as counsel to Aastrom in connection with this offering.the Company.
The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended June 30, 2004,2008 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration statement on Form S-3 under the Securities Act of 1933, relating to the shares of our common stock being offered by this prospectus. For further information pertaining to our common stock and the shares of common stock being offering by this prospectus, reference is made to such registration statement. This prospectus constitutes the prospectus we filed as a part of the registration statement and it does not contain all information in the registration statement, certain portions of which have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission and certain portions of which have been incorporated by reference to our reports filed with the Securities and Exchange Commission.
In addition, we are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance with such requirements, we file reports, proxy statements and other information with the Securities and Exchange Commission relating to our business, financial statements and other matters.
Reports and proxy and information statements filed under Section 14(a) and 14(c) of the Securities Exchange Act of 1934 and other information filed with the Securities and Exchange Commission as well as copies of the registration statement can be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 100 F Street, N.E., Washington, D.C. 20549. Copies of such material can also be obtained at prescribed rates from the Public Reference Section of the Securities and Exchange Commission at its principal office at Judiciary Plaza, 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1.800.SEC.0330 for further information on the operation of the public reference room. Such material may also be obtained electronically by visiting the SEC’s web site on the Internet at http://www.sec.gov. Our common stock is traded on the Nasdaq Capital Market under the symbol “ASTM.”
Copies of our filings with the Securities and Exchange Commission are also available, free of charge, on our corporate website at http://www.aastrom.com. The other information found on our website is not incorporated by reference into this prospectus.
27
You should rely only on the information contained in this Prospectus or the documents incorporated by reference. Neither we nor the selling shareholder has authorized anyone to provide you with any information that is different from that contained in this Prospectus. The information contained in this Prospectus is accurate as of the date of this Prospectus. You should not assume that there have been no changes in the affairs of the Company since the date of this Prospectus or that the information in this Prospectus is correct as of any time after the date of this Prospectus, regardless of the time that this Prospectus is delivered or any sale of the common stock offered by this Prospectus is made. This Prospectus is not an offer to sell or a solicitation of an offer to buy the shares covered by this Prospectus in any jurisdiction where the offer or solicitation is unlawful.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
As permitted by the Michigan Business Corporation Act, our Bylaws contain provisions that permit us to indemnify our directors and officers to the full extent permitted by Michigan law and our Restated Articles of Incorporation, as amended, contain provisions that eliminate the personal liability of our directors in each case for monetary damages to us or our shareholders for breach of their fiduciary duties, except to the extent that Michigan law prohibits indemnification or elimination of liability. These provisions do not limit or eliminate our rights or the rights of any shareholder to seek an injunction or any other non-monetary relief in the event of a breach of a director’s or officer’s fiduciary duty. In addition, these provisions apply only to claims against a director or officer arising out of his or her role as a director or officer and do not relieve a director or officer from liability if he or she engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law.
The rights of indemnification provided in our Bylaws are not exclusive of any other rights that may be available under any insurance or other agreement, by vote of shareholders or disinterested directors or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission this type of indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
PART II28
No dealer, salesperson, or other person has been authorized to give any information or to make any representation not contained in this Prospectus, and, if given or made, such information and representation should not be relied upon as having been authorized by Aastrom Biosciences, Inc. or the selling shareholder. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered by this Prospectus in any jurisdiction or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the facts set forth in this Prospectus or in the affairs of Aastrom Biosciences, Inc. since the date hereof.
26,565,299 SHARES
AASTROM BIOSCIENCES, INC.
COMMON STOCK
PROSPECTUS
November 10, 2008
29
Part II—INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.Other Expenses of Issuance and Distribution
The expenses payable by the Registrant in connection with the registrationissuance and distribution of the common stock hereunder will be substantially as follows (all expenses othersecurities being registered (other than underwriting discounts and commissions, if any) are set forth below. Each item listed is estimated, except for the SEC Registration Fee are estimates):Securities and Exchange Commission registration fee and the American Stock Exchange additional listing fee.
| | | | | |
| | | Company | |
| Item | | Expense | |
| SEC Registration Fee | | $ | 5,885 | |
| Blue Sky fees and expenses | | $ | 5,000 | |
| Printing and engraving expenses | | $ | 15,000 | |
| Legal fees and expenses | | $ | 30,000 | |
| Accounting fees and expenses | | $ | 15,000 | |
| Nasdaq Filing Fees | | $ | 22,500 | |
| Miscellaneous | | $ | 6,615 | |
| | | | |
| Total | | $ | 100,000 | |
| | | | |
| | | | | |
| Securities and Exchange Commission registration fee | | $ | 517 | |
| Nasdaq Stock Market additional listing fees | | | 26,500 | |
| Accounting fees and expenses | | | 18,000 | |
| Legal fees and expenses | | | 45,000 | |
| Registrar and transfer agent’s fees and expenses | | | 5,000 | |
| Printing and engraving expenses | | | 2,500 | |
| Miscellaneous | | | 2,483 | |
| | | | |
| Total expenses | | | 100,000 | |
| | | | |
ITEM
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.Indemnification of Directors and Officers
Sections 1561 through 1571 of the Michigan Business Corporation Act (the “MBCA”) authorize a corporation to grant or a court to award, indemnity to directors, officers, employees and agents in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933.
The Bylaws of the
Registrant,Company provide that the
RegistrantCompany shall, to the fullest extent authorized or permitted by the MBCA, or other applicable law, indemnify a director or officer who was or is a party or is threatened to be made a party to any proceeding by or in the right of the
RegistrantCompany to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the
Registrant,Company, against expenses, including actual and reasonable attorneys’ fees, and amounts paid in settlement incurred in connection with the action or suit, if the indemnitee acted in good faith and in a manner the person reasonably believed to be in, or not opposed to, the best interests of the
RegistrantCompany or its shareholders. This section also authorizes the
RegistrantCompany to advance expenses incurred by any agent of the
RegistrantCompany in defending any proceeding prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified.
The Bylaws also authorize the RegistrantCompany to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the RegistrantCompany against any liability asserted against or incurred by such person in such capacity or arising out of such person’s status as such, regardless of whether the RegistrantCompany would have the power to indemnify such person against such liability under the provisions of the MBCA.
II-1
The
RegistrantCompany has entered into
an indemnification
agreementagreements with certain
of its directors, officers and other key personnel,individuals which
containscontain provisions that may in some respects be broader than the specific indemnification provisions contained under applicable law. The indemnification agreement may require the
Registrant,Company, among other things, to indemnify such directors, officers and key personnel against certain liabilities that may arise by reason of their status or service as directors, officers or employees of the
Registrant,Company, to advance the expenses incurred by such parties as a result of any threatened claims or proceedings brought against them as to which they could be indemnified, and to the maximum extent that insurance coverage of such directors, officers and key employees under the
Registrant’sCompany’s directors’ and officers’ liability insurance policies is maintained.
28
Section 1209 of the MBCA permits a Michigan corporation to include in its Articles of Incorporation a provision eliminating or limiting a director’s liability to a corporation or its shareholders for monetary damages for any action taken or any failure to take any action as a director.breaches of fiduciary duty. The enabling statute provides, however, that liability for (i)breaches of the amountduty of a financial benefit received by a director to which heloyalty, acts or she isomissions not entitled; (ii)in good faith or involving intentional inflictionmisconduct or knowing violations of harm on the corporationlaw, or the shareholders; (iii) a violationreceipt of Section 551 of the MBCA, or (iv) an intentional criminal actimproper personal benefits cannot be eliminated or limited in this manner. The Registrant’sCompany’s Restated Articles of Incorporation include a provision which eliminates, to the fullest extent permitted by the MBCA, director liability for monetary damages.
damages for breaches of fiduciary duty.
ITEMItem 16. EXHIBITS.Exhibits
| | | |
EXHIBITExhibit | | |
NUMBERNo. | | DESCRIPTION OF DOCUMENTDescription |
| | | |
1.13.1 | | *Restated Articles of Incorporation of Aastrom, as amended, attached as Exhibit 3.1 to Aastrom’s Current Report on Form of Underwriting Agreement8-K filed on October 23, 2008, incorporated herein by reference. |
4.1 | | |
| 3.2 | | Bylaws, as amended, attached as Exhibit 3.2 to Aastrom’s Current Report on Form 8-K filed on October 23, 2008, incorporated herein by reference. |
| | |
| 5 | | Opinion of Dykema Gossett PLLC. |
| | |
| 10.1 | | Form of Senior IndentureIndemnification Agreement, attached as Exhibit 10.1 to be entered into with a trustee to be namedAastrom’s Registration Statement on Form S-1 (No. 333-15415), filed on November 1, 1996, incorporated herein by reference. |
4.2 | | |
| 10.2# | | Amended and Restated 1992 Incentive and Non-Qualified Stock Option Plan and forms of agreements thereunder, attached as Exhibit 10.5 to Aastrom’s Registration Statement on Form S-1 (No. 333-15415), filed on November 1, 1996, incorporated herein by reference. |
| | |
| 10.3# | | Form of Subordinated IndentureEmployment Agreement, attached as Exhibit 10.8 to be entered into with a trustee to be named |
4.3 | | *Certificate of Designation of Preferred Stock |
4.4 | | *Form of Warrant Agreement |
5.1 | | Consent and Opinion of Dykema Gossett PLLC |
23.1 | | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm |
23.2 | | Consent of DLA Piper Rudnick Gray Cary US LLP |
23.3 | | Consent of Dykema Gossett PLLC (included in Exhibit 5.1) |
24.1 | | Power of Attorney (see Signature page) |
* | | To be filed by amendment or incorporated by reference from a Current ReportAastrom’s Registration Statement on Form 8-K |
ITEM 17. UNDERTAKING.
The undersigned Registrant hereby undertakes:
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| S-1 (No. 333-15415), filed on November 1, 1996, incorporated herein by reference. |
| | (2) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the “Securities Act”); |
| |
| 10.4 | (3) | 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 Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
|
| | (4) | To include any material information with respectLicense Agreement, dated July 17, 1992, between J.G. Cremonese and Aastrom and related addenda thereto dated July 14, 1992 and July 7, 1993, attached as Exhibit 10.11 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) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendmentAastrom’s Registration Statement on Form S-1 (No. 333-15415), filed on November 1, 1996, incorporated herein by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.reference. |
29II-2
| | (5) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| Exhibit | | |
| No. | | Description |
| | (6) | To remove from registration |
| 10.5 | | License Agreement, dated March 13, 1992, between Aastrom and the University of Michigan and amendments thereto dated March 13, 1992, October 8, 1993 and June 21, 1995, attached as Exhibit 10.17 to Aastrom’s Registration Statement on Form S-1 (No. 333-15415), filed on November 1, 1996, incorporated herein by meansreference. |
| | |
| 10.6# | | Aastrom Biosciences 2001 Stock Option Plan, attached as Exhibit 10.72 to Aastrom’s Annual Report on Form 10-K for the year ended June 30, 2002, incorporated herein by reference. |
| | |
| 10.7 | | Master Supply Agreement with Astro Instrumentation, LLC, attached as Exhibit 10.76 to Aastrom’s Annual Report on Form 10-K for the year ended June 30, 2003, incorporated herein by reference. |
| | |
| 10.8 | | Supply Agreement between Aastrom and Moll Industries, Inc., dated December 16, 2003, attached as Exhibit 10.77 to Aastrom’s Annual Report on Form 10-K for the year ended June 30, 2004, incorporated herein by reference. |
| | |
| 10.9# | | 2004 Equity Incentive Plan, attached as Exhibit 10.82 to Amendment No. 1 to Aastrom’s Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2004, incorporated herein by reference. |
| | |
| 10.10# | | Form of a post-effective amendment anyOption and Restricted Stock Award Agreements for Grants under 2004 Equity Incentive Plan, attached as Exhibit 10.84 to Aastrom’s Annual Report on Form 10-K for the year ended June 30, 2005, incorporated herein by reference. |
| | |
| 10.11# | | Employee Compensation Guidelines, attached as Exhibit 10.85 to Aastrom’s Annual Report on Form 10-K for the year ended June 20, 2005, incorporated herein by reference. |
| | |
| 10.12# | | Employment Agreement with Gerald D. Brennan, Jr. dated June 10, 2005, attached as Exhibit 10.86 to Aastrom’s Annual Report on Form 10-K for the year ended June 30, 2005, incorporated herein by reference. |
| | |
| 10.13 | | Amendment dated December 5, 2002 to License Agreement with the University of Michigan, attached as Exhibit 10.87 to Aastrom’s Annual Report on Form 10-K for the securities being registered which remain unsold atyear ended June 30, 2005, incorporated herein by reference. |
| | |
| 10.14# | | Employment Agreement with George W. Dunbar dated July 17, 2006, attached as Exhibit 99.1 to Aastrom’s Current Report on Form 8-K filed on July 18, 2006, incorporated herein by reference. |
| | |
| 10.15# | | Summary of Changes to Employee Compensation Guidelines, attached as Exhibit 10.94 to Aastrom’s Quarterly Report on Form 10-Q for the termination of the offering.quarter ended December 31, 2006, incorporated herein by reference. |
II-3
| | |
| Exhibit | | |
| No. | | Description |
| | |
| 10.16# | | 2004 Equity Incentive Plan, as amended, attached as Exhibit 99.1 to Aastrom’s Current Report on Form 8-K filed on November 8, 2006, incorporated herein by reference. |
| | |
| 10.17# | | Forms of Grant Notice and Stock Option Agreement for Grants under 2004 Equity Incentive Plan, as amended, attached as Exhibit 99.2 to Aastrom’s Current Report on Form 8-K filed on November 8, 2006, incorporated herein by reference. |
| | |
| 10.18 | | Placement Agency Agreement, dated October 15, 2007, by and between the Company and BMO Capital Markets Corp., attached as Exhibit 10.1 to Aastrom’s Current Report on Form 8-K filed on October 16, 2007, incorporated herein by reference. |
| | |
| 10.19 | | Escrow Agreement, dated as of October 15, 2007, among the Company, BMO Capital Markets Corp. and The Bank of New York, attached as Exhibit 10.2 to Aastrom’s Current Report on Form 8-K filed on October 16, 2007, incorporated herein by reference. |
| | |
| 10.20 | | Form of Purchase Agreement, attached as Exhibit 10.3 to Aastrom’s Current Report on Form 8-K filed on October 16, 2007, incorporated herein by reference. |
| | |
| 10.21 | | Form of Warrant, attached as Exhibit 10.2 to Aastrom’s Current Report on Form 8-K filed on October 16, 2007, incorporated herein by reference. |
| | |
| 10.22 | | Standard Lease between Aastrom and Domino’s Farms Office Park, L.L.C. dated January 31, 2007, attached as Exhibit 10.96 to Amendment No. 2 to Aastrom’s Annual Report on Form 10-K for the year ended June 30, 2007, incorporated herein by reference. |
| | |
| 10.23# | | Nonemployee Director Compensation Guidelines, attached as Exhibit 10.98 to Aastrom’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, incorporated herein by reference. |
| | |
| 10.24# | | Amendment to Employment Agreement, dated March 10, 2008, between Aastrom Biosciences, Inc. and Gerald D. Brennan, Jr., attached as Exhibit 10.99 to Aastrom’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, incorporated herein by reference. |
| | |
| 10.25 | | Common Stock Purchase Agreement between Aastrom and Fusion Capital Fund II, LLC dated October 27, 2008, attached as Exhibit 10.1 to Aastrom’s Form 8-K dated October 29, 2008, incorporated herein by reference. |
| | |
| 10.26 | | Registration Rights Agreement between Aastrom and Fusion Capital Fund II, LLC dated October 27, 2008, attached as Exhibit 10.2 to Aastrom’s Form 8-K dated October 29, 2008, incorporated herein by reference. |
| | |
| 21 | | Subsidiaries of Registrant. |
| | |
| 23 | | Consent of Independent Registered Public Accounting Firm. |
| | |
| 24 | | Powers of Attorney (included on signature page). |
| | |
| # | | Management contract or compensatory plan or arrangement covering executive officers or directors of Aastrom. |
II-4
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) (§ 230.424(b) of this chapter) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
Provided, however, That:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8 (§ 230. 16b of this chapter), and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by reference in this registration statement; and
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 (§ 239.13 of this chapter) or Form F-3 (§ 239.33 of this chapter) and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) (§ 230.424(b) of this chapter) that is part of the registration statement.
(C) Provided further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed securities on Form S-1 (§ 239.11 of this chapter) or Form S-3 (§ 239.13 of this chapter), and the information required to be included in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB (§ 229.1100(c)).
II-5
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(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.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant’s annual report pursuant to
sectionSection 13(a) or
sectionSection 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in
thethis 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.
The undersigned Registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
For the purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the registration statement as of the time it was declared effective.
For the purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
30II-6
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 of filing on Form S-3 and has duly caused this
Registration Statementregistration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Ann Arbor,
State of Michigan on
March 23, 2005.AASTROM BIOSCIENCES, INC.November 10, 2008.
| | | | | | |
| | | By: /s/ R. Douglas Armstrong, Ph.D.AASTROM BIOSCIENCES, INC. |
| | | | |
| |
By | | /s/ George W. Dunbar, Jr. |
| | | | |
| | R. Douglas Armstrong, Ph.D.George W. Dunbar, Jr. |
| | | | |
| | ChairmanPresident and Chief Executive Officer | | | | |
| | (Principal Executive Officer) | | | | |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each
Each person whose signature appears below hereby constitutes and appoints
R. Douglas ArmstrongGeorge W. Dunbar, Jr. his true and
Alan M. Wright, as his or herlawful attorney-in-fact
and agent, with full power of substitution
and resubstitution, for him
or herand in his name, place and stead, in any and all capacities, to sign any
andor all amendments
(including, without limitation, post-effective amendments) to this
Registration Statement and any subsequent registration statement
including, but not limited to, post-effective amendments and any and all new registration statements filed
by the Registrant pursuant to Rule
462 under462(b) of the Securities Act of 1933,
in connection with or relatedwhich relates to
the offer contemplated by this
registration statement, as amended,Registration Statement, and to file the same, with
all exhibits thereto, and
otherall documents in connection
therewith,herewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming
our signatures as theyall that said attorney-in-fact and agent, or his substitutes, may
lawfully do or cause to be
signeddone by
our said attorney to said registration statement and any and all amendment thereto.virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
| | | | | |
| Signature | | Title | | Date |
| | | | | |
/s/ R. Douglas Armstrong, Ph.D.
R. Douglas Armstrong, Ph.D.George W. Dunbar, Jr. | | President and CEO (Principal | | November 10, 2008 |
| | Chairman Executive, Financial and Chief Executive Officer, (Principal ExecutiveAccounting Officer) | | March 23, 2005 |
| | | | | |
/s/ AlanNelson M. Wright
AlanSims | | Chairman of the Board | | November 10, 2008 |
| | Senior Vice President, Administrative and Financial Operations, Chief Financial Officer (Principal Financial and Accounting Officer) | | March 23, 2005 |
| | | | | |
/s/ W. Chaunce Bogard, Jr.
W. Chaunce Bogard, Jr.Timothy M. Mayleben | | Director | | November 10, 2008 |
| | Director | | March 23, 2005 |
| | | | | |
/s/ Linda M. Fingerle
Linda M. FingerleAlan L. Rubino | | Director | | March 23, 2005November 10, 2008 |
| Alan L. Rubino | | | | |
| | | | | |
/s/ Arthur F. Staubitz
Arthur F. StaubitzStephen G. Sudovar | | Director | | March 23, 2005November 10, 2008 |
| | | | |
| | | | | |
/s/ Joseph A. Taylor
Joseph A. TaylorRobert L. Zerbe, M.D. | | Director | | March 23, 2005November 10, 2008 |
| | | | |
/s/ Susan L. Wyant
Susan L. Wyant | | Director | | March 23, 2005 |
31II-7
INDEX TO EXHIBITS
| | |
EXHIBIT | | |
NUMBER | | DESCRIPTION OF DOCUMENT |
1.1 | | *Form of Underwriting Agreement |
4.1 | | Form of Senior Indenture to be entered into with a trustee to be named |
4.2 | | Form of Subordinated Indenture to be entered into with a trustee to be named |
4.3 | | *Certificate of Designation of Preferred Stock |
4.4 | | *Form of Warrant Agreement |
5.1 | | Consent and Opinion of Dykema Gossett PLLC |
23.1 | | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm |
23.2 | | Consent of DLA Piper Rudnick Gray Cary US LLP |
23.3 | | Consent of Dykema Gossett PLLC (included in Exhibit 5.1) |
24.2 | | Power of Attorney (see Signature page) |
* | | To be filed by amendment or incorporated by reference from a Current Report on Form 8-K |
32
