As filed with the Securities and Exchange Commission on February 14, 2002
Registration Statement No. 333-72166
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COLLAGENEX PHARMACEUTICALS, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 52-1758016
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
41 University Drive
Newtown, Pennsylvania 18940
(215) 579-7388
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Brian M. Gallagher, Ph.D.
President and Chief Executive Officer
CollaGenex Pharmaceuticals, Inc.
41 University Drive
Newtown, Pennsylvania 18940
(215) 579-7388
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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COPY TO:
Richard S. Mattessich, Esq.
Tod K. Reichert, Esq.
Hale and Dorr LLP
650 College Road East
Princeton, New Jersey 08540
(609) 750-7600
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities 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. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
[_] ______.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_] ______.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY 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),
MAY DETERMINE.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting offers to buy these securities
in any state where the offer or sale is not permitted.
Subject to completion, dated February 14, 2002
PROSPECTUS
COLLAGENEX PHARMACEUTICALS, INC.
964,880 Shares of common stock
This prospectus covers 964,880 shares of our common stock that we may offer
and sell from time to time to Kingsbridge Capital Limited pursuant to the terms
of a Common Stock Purchase Agreement, or equity line arrangement that we entered
into with Kingsbridge on February 14, 2002.
We will receive all of the proceeds from any shares sold to Kingsbridge.
Kingsbridge may then sell its shares, directly or through broker-dealers or
underwriters, in the over-the-counter market, in any securities exchange or
market in which our common stock may in the future be traded, in private
negotiated transactions or otherwise. Kingsbridge Capital Limited will be and
any broker-dealers or agents that are involved in selling the shares acquired by
Kingsbridge Capital Limited under the equity line may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with their sales.
Our common stock is traded on the Nasdaq National Market under the symbol
"CGPI." On February 13, 2002, the last reported sale price of our common stock
was $8.65 per share.
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THE SECURITIES OFFERED INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 4 FOR A DISCUSSION OF SOME IMPORTANT RISKS YOU SHOULD
CONSIDER BEFORE BUYING ANY SHARES OF OUR COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 14, 2002.
TABLE OF CONTENTS
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About this Prospectus..................................................... 2
CollaGenex Pharmaceuticals, Inc........................................... 3
The Equity Line........................................................... 3
Risk Factors.............................................................. 6
If Periostat is Not Adopted Routinely by Dental Professionals or if
Managed Care Providers Do Not Continue to Reimburse Patients, Our Sales
Growth Will Suffer...................................................... 6
We Rely on Periostat for Most of Our Revenue............................. 6
We Anticipate Future Losses.............................................. 6
We Have a Limited Marketing and Sales History and May Not be Able to
Successfully Market Our Product Candidates.............................. 7
Our Competitive Position in the Marketplace Depends on Enforcing and
Successfully Defending Our Intellectual Property Rights................. 7
If We Lose Our Sole Supplier of Doxycycline or Our Current Manufacturer
of Periostat, Our Commercialization of Periostat Will be Interrupted
or Less Profitable...................................................... 8
Our Products are Subject to Extensive Regulation by the FDA.............. 8
If Our Products Cause Injuries, We May Incur Significant
Expense and Liability................................................... 9
If We Need Additional Financing, and Financing is Unavailable, Our
Ability to Develop and Commercialize Products and Our Operations Will
be Adversely Affected................................................... 9
Because Our Executive Officers, Directors and Affiliated Entities Own
Approximately 32.6% of Our Capital Stock, They Could Control Our
Actions in a Manner That Conflicts With Our Interests and the Interests
of Our Other Stockholders............................................... 10
We Expect to Sell Shares of our Common Stock in the Future, Including
Shares Issued Under our Equity Line with Kingsbridge Capital Limited
and these Sales Will Dilute the Interests of Security Holders and
Depress the Price of our Common Stock................................... 10
Our Stock Price is Highly Volatile, and Therefore the Value of Your
Investment May Fluctuate Significantly................................... 10
Special Note Regarding Forward-Looking Information........................ 11
Use of Proceeds........................................................... 12
Plan of Distribution...................................................... 12
Legal Matters............................................................. 13
Experts................................................................... 13
Where You Can Find More Information...................................... 13
Information Incorporated By Reference..................................... 13
Indemnification of Directors and Officers................................. 15
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration or continuous
offering process. Pursuant to the terms of a Common Stock Purchase Agreement, or
equity line, that we entered into with Kingsbridge Capital Limited, we may from
time to time sell to Kingsbridge the shares of common stock set forth in this
prospectus in one or more offerings up to an aggregate of 924,880 shares of
common stock. An additional 40,000 shares of common stock underlying a warrant
we issued to Kingsbridge in connection with the equity line are also registered
hereunder.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities we will provide you with a prospectus
supplement containing specific information about the terms of each such sale.
The prospectus supplement also may add, update or change information in this
prospectus. If there is any inconsistency between the information in the
prospectus and the prospectus supplement, you should rely on the information in
the prospectus supplement. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find More Information" beginning on page 13 of this
prospectus.
You should rely only on the information contained in this prospectus or in
a prospectus supplement or amendment. We have not authorized anyone to provide
you with information different from that contained or incorporated by reference
in this prospectus. We may offer to sell, and seek offers to buy shares of our
common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus or a prospectus supplement or amendment
or incorporated herein by reference is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of common stock.
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COLLAGENEX PHARMACEUTICALS, INC.
CollaGenex Pharmaceuticals, Inc. and its subsidiaries is a specialty
pharmaceutical company focused on providing innovative medical therapies to the
dental market. In September 1998, the FDA approved our first product, Periostat,
a prescription pharmaceutical capsule to treat adult periodontitis.
Periodontitis, the leading cause of tooth loss, is a disease of the gums that is
initiated by the accumulation of bacterial plaque above and below the gum line.
The FDA approved Periostat as an adjunct to scaling and root planing, which is a
mechanical procedure that dentists use to remove bacterial plaque. In addition,
Periostat has been approved by the United Kingdom Medicines Control Agency for
marketing in the United Kingdom. We are marketing Periostat to the United States
dental community through our professional dental pharmaceutical sales force of
approximately 120 sales representatives and managers. This sales force also
co-promotes Vioxx(R), a prescription non-steroidal, anti-inflammatory drug
developed by Merck & Co., Inc. and Dentaplex(TM), our nutritional supplement
formulated to help maintain optimal oral health. Pursuant to an exclusive
Licensing and Marketing Agreement with Atrix Laboratories, Inc., we began
marketing Atrix's proprietary dental products, Atridox(R), Atrisorb(R)-Free Flow
and Atrisorb(R)-D, to the United States dental market in October 2001. We are
actively pursuing other prescription and non-prescription products to market to
the professional dental and medical communities and directly to the consumer.
We are a Delaware corporation. We were incorporated and began operations in
1992 under the name CollaGenex, Inc. and changed our name to CollaGenex
Pharmaceuticals, Inc. in April 1996. Our principal executive offices are located
at 41 University Drive, Newtown, Pennsylvania 18940, and our telephone number is
(215) 579-7388.
In this prospectus, the terms "CollaGenex," "we," "us" and "our" includes
CollaGenex Pharmaceuticals, Inc. and its subsidiaries.
Periostat(R), Metastat(R), IMPACS(TM), Dermostat(R) and Dentaplex(TM) are
United States trademarks of CollaGenex. CollaGenex(TM) and Periostat(R) are
trademarks of our wholly-owned subsidiary, CollaGenex International Limited.
All other trade names, trademarks or service marks appearing in this
prospectus are the property of their respective owners.
THE EQUITY LINE
On February 14, 2002, we entered into a Common Stock Purchase Agreement, or
equity line arrangement with Kingsbridge Capital Limited, pursuant to which we
may issue and sell, from time to time, shares of our common stock for cash
consideration up to an aggregate of $8.5 million. Commencing as of such date and
continuing for twelve (12) months thereafter, we may, from time to time, at our
sole discretion, and subject to certain conditions that we must satisfy, sell or
"draw down", shares of our common stock to Kingsbridge at a purchase price
having a discount of up to 10% off of the daily volume weighted average of the
price of our common stock for each of the fifteen (15) days during any specified
purchase period as set forth in the following schedule:
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VWAP* PERCENT OF VWAP
Equal to or greater than $15.00 94%
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Equal to or greater than $7.00 but less than $15.00 92%
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Greater than $3.34 but less than $7.00 90%
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* As set forth in the equity line arrangement, "VWAP" means the volume
weighted average price of our common stock during a trading day as reported by
Bloomberg, L.P. using the AQR function.
The maximum number of shares that we may issue under the equity line is
924,880, all of which shares are registered hereunder. An additional 40,000
shares are registered hereunder in connection with a warrant that we issued to
Kingsbridge in connection with the equity line. Unless agreed to in writing, we
may not sell shares at a per share price of less than $3.00. In addition, and
with certain exceptions, in the event we do not draw down an aggregate minimum
of $1.5 million under the equity line within six (6) months of February 14,
2002, we shall pay to Kingsbridge a cash amount equal to 10% of the amount by
which $1.5 million exceeds the actual amount of our draw downs during such six
(6) month period. We will exercise our right to draw down the equity line, to
the extent available, at such times as there is a need for additional capital
and when sales of stock under the equity line provide the most effective means
of raising capital.
A draw down can be made after five (5) trading days have elapsed from the
date of expiration of the preceding draw down pricing period in amounts ranging
from a minimum of $250,000 to a maximum of $3,000,000, based upon our then
current market capitalization and as set forth in the following schedule:
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MARKET CAPITALIZATION MAXIMUM DRAW DOWN AMOUNT
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At least $150 million $3 million
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At least $120 million but less than $150 million $2.5 million
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At least $90 million but less than $120 million $2 million
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At least $65 million but less than $90 million $1.5 million
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At least $45 million but less than $65 million $1 million
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We may not deliver a draw down notice if the result to Kingsbridge would be
that, following the purchase of such shares, Kingsbridge or its affiliates would
beneficially own more than 9.9% of our common stock then outstanding.
The issuance of our common stock under the equity line arrangement will
have no effect on the rights or privileges of existing holders of common stock
except that the economic and voting interests of each stockholder will be
diluted as a result of such issuance. Although the number of shares of common
stock that stockholders presently own will not decrease, such shares will
represent a smaller percentage of our total shares that will be outstanding
after such events. If we satisfy the conditions that allow us to draw down the
entire $8.5 million available under the equity line, and we choose to do so,
then generally, as the market price of our common stock decreases, the number of
shares we will have to issue increases, to a maximum of 924,880 shares.
The following are all of the material additional conditions that must be
met before Kingsbridge Capital Limited is obligated to buy any shares of our
common stock upon delivery of a draw down notice, none of which are within the
control of Kingsbridge:
o Each of our representations and warranties in the equity line
agreement shall be true and correct in all material respects as of the
date when made and as of the draw down exercise date as though made at
that time, except for representations and warranties that are
expressly made as of a particular date.
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o The registration statement registering the offer and sale of our
common stock shall remain effective and shall thereafter be amended or
supplemented, as required, to disclose the then current sale of shares
of our common stock.
o Trading in our common stock shall not have been suspended by the
Securities and Exchange Commission, the Nasdaq Stock Market or the
National Association of Securities Dealers and trading in our common
stock shall not have been suspended or limited, and minimum prices
shall not have been established on securities whose trades are
reported by the American Stock Exchange or the New York Stock
Exchange.
o We shall have no knowledge of any event more likely than not to have
the effect of causing the registration statement registering the offer
and sale of the shares to be suspended or otherwise ineffective (which
event is more likely than not to occur within fifteen (15) trading
days following the trading day on which a draw down notice is
delivered).
o No material adverse effect shall have occurred.
There is no guarantee that we will be able to meet these or any other
conditions under the equity line agreement or that we will be able to draw down
on any portion of the $8,500,000 equity line.
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RISK FACTORS
Investing in our common stock involves a high degree of risk. You should
carefully consider the risks and uncertainties described below before purchasing
our common stock. The risks and uncertainties described below are all of the
material risks of which we are aware. If any of the following risks actually
occur, our business, financial condition or results of operations would likely
suffer. In that case, the trading price of our common stock could fall, and you
may lose all or part of the money you paid to buy our common stock.
IF PERIOSTAT IS NOT ADOPTED ROUTINELY BY DENTAL PROFESSIONALS OR IF MANAGED
CARE PROVIDERS DO NOT CONTINUE TO REIMBURSE PATIENTS, OUR SALES GROWTH WILL
SUFFER.
Our growth and success depends in large part on our ability to continue to
demonstrate the safety and effectiveness of Periostat for the treatment of gum
disease to dental practitioners. Periostat is the first long-term medical
therapy for any dental disease and dentists are not accustomed to prescribing
drugs for a minimum 90-day duration. Periostat works by suppressing certain
enzymes involved in the periodontal disease process, which is a new concept for
many dentists who believe that removing bacterial plaque is the only way to
treat this disease. Accordingly, our sales efforts are largely focused on
educating dental professionals about an entirely new approach to treating
periodontitis. Although over 34,000 dentists in the United States have written
at least one prescription for Periostat, a number of dentists have not adopted
Periostat routinely into their treatment of adult periodontitis. Other dentists
have prescribed Periostat for only a subset of their eligible patients,
typically their most advanced or refractory cases. If we are unable to initiate
and/or expand usage of Periostat by dentists, our sales growth will suffer.
Approximately 65% of the large managed care providers in the United States
(defined as those that cover 100,000 or more lives) reimburse their patients for
Periostat, typically requiring a modest co-payment. Our goal is to achieve
reimbursement from approximately 75% of the large managed care providers, since
the remainder have policies that do not reimburse for drugs to treat dental
conditions. Patients who are not reimbursed by managed care providers may choose
not to accept Periostat as a treatment.
WE RELY ON PERIOSTAT FOR MOST OF OUR REVENUE.
During 1999, Periostat accounted for 95% of our total net revenues. During
2000, Periostat accounted for 84% of our total net revenues. During 2001,
Periostat accounted for approximately 87% of our total net revenues. Although we
currently derive additional revenue from co-promoting another product (Vioxx(R))
and from licensing fees from foreign marketing partners, our revenue and
profitability in the near future will depend on our ability to successfully
market and sell Periostat.
WE ANTICIPATE FUTURE LOSSES.
From our founding in 1992 through the commercial launch of Periostat in
November, 1998, we had no revenue from sales of our own products. During the
year ended December 31, 2000, we experienced a net loss of approximately $8.8
million. During the year ended December 31, 2001, we experienced a net loss of
approximately $8.1 million. From inception through December 31, 2001, we have
experienced an aggregate net loss of $69.5 million. Our historical losses have
resulted primarily from the expenses associated with our pharmaceutical
development program, clinical trials, the regulatory approval process associated
with Periostat and sales and marketing activities relating to Periostat. We
expect to incur significant future expenses, particularly with respect to the
sales and marketing of Periostat. As a result, we anticipate losses through the
second quarter of 2002.
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WE HAVE A LIMITED MARKETING AND SALES HISTORY AND MAY NOT BE ABLE TO
SUCCESSFULLY MARKET OUR PRODUCT CANDIDATES.
We have a limited history of marketing, distributing and selling
pharmaceutical products in the dental market. In January 1999, we first trained
a sales force of sales representatives and managers and began to promote
Periostat to the dental community. We market and sell our products in the United
States through this direct sales force. Furthermore, we have entered into
agreements to market Periostat, upon receipt of the necessary foreign regulatory
approvals, in certain countries in Europe, Israel, Japan, Canada and the Middle
East, and we continue to evaluate partnering arrangements in other countries
outside the United States. If we are unable to continue to recruit, train and
retain sales and marketing personnel, we will be unable to successfully expand
our sales and marketing efforts. Furthermore, if our foreign partners do not
devote sufficient resources to perform their contractual obligations with us, we
may not achieve our foreign sales goals. In June 2001, we announced the
availability of Dentaplex, our nutritional supplement formulated to help
maintain optimal oral health. Pursuant to an exclusive Licensing and Marketing
Agreement with Atrix Laboratories, Inc., we began marketing Atrix's proprietary
dental products, Atridox(R), Atrisorb(R)-Free Flow and Atrisorb(R)-D, to the
United States dental market in October 2001. It is too early to determine
whether there will be sufficient acceptance of these products to achieve or
maintain profitability.
OUR COMPETITIVE POSITION IN THE MARKETPLACE DEPENDS ON ENFORCING AND
SUCCESSFULLY DEFENDING OUR INTELLECTUAL PROPERTY RIGHTS.
In order to be competitive in the pharmaceutical industry, it is important
to establish, enforce, and successfully defend patent and trade secret
protection for our established and new technologies. We must also avoid
liability from infringing the proprietary rights of others.
Our core technology is licensed from The Research Foundation of the State
University of New York ("SUNY"), and other academic and research institutions
collaborating with SUNY. Under the license agreement with SUNY (the "SUNY
License") we have an exclusive worldwide license to SUNY's rights in certain
patents and patent applications to make and sell products employing
tetracyclines to treat certain disease conditions. The SUNY License imposes
various payment and reporting obligations on us and our failure to comply with
these requirements permits SUNY to terminate the SUNY License. If the SUNY
License is terminated, we would lose our right to exclude competitors from
commercializing similar products, and we could be excluded from marketing the
same products if SUNY licensed the underlying technology to a competitor after
terminating the SUNY License.
SUNY owns thirty (30) United States patents and three (3) United States
patent applications that are licensed to us. The patents licensed from SUNY
expire between 2004 and 2018. Two of the patents are related to Periostat and
expire in 2004 and 2007. Technology covered by these patents becomes available
to competitors as the patents expire.
Since many of our patent rights cover new treatments using tetracyclines,
which are generally available for their known use as antibiotics, we may be
required to bring expensive infringement actions to enforce our patents and
protect our technology. Although federal law prohibits making and selling
pharmaceuticals for infringing use, competitors and/or practitioners may provide
generic forms of tetracycline for treatment(s) which infringe our patents,
rather than prescribe our Periostat product. Enforcement of patents can be
expensive and time consuming.
Our success also depends upon know-how, trade secrets, and the skills,
knowledge and experience of our scientific and technical personnel. To that end,
we require all of our employees and, to the extent possible, all consultants,
advisors and research collaborators, to enter into confidentiality
-7-
agreements prohibiting unauthorized disclosure. With respect to information and
chemical compounds we provide for testing to collaborators in academic
institutions, we cannot guarantee that the institutions will not assert property
rights in the results of such tests nor that a license can be reasonably
obtained from such institutions which assert such rights. Failure to obtain the
benefit of such testing could adversely affect our commercial position and,
consequently, our financial condition.
IF WE LOSE OUR SOLE SUPPLIER OF DOXYCYCLINE OR OUR CURRENT MANUFACTURER OF
PERIOSTAT, OUR COMMERCIALIZATION OF PERIOSTAT WILL BE INTERRUPTED OR LESS
PROFITABLE.
We rely on a single supplier, Hovione International Limited ("Hovione"),
for doxycycline, the active ingredient in Periostat. There are relatively few
alternative suppliers of doxycycline and Hovione produces the majority of the
doxycycline used in the United States. Our current supply agreement with Hovione
expires on May 14, 2006 and thereafter automatically renews for successive
two-year periods unless, ninety (90) days prior to the expiration of any such
periods, either party gives the other party written notice of termination. In
addition, in the event of a default, uncured for ninety (90) days, the
non-defaulting party can terminate the supply agreement effective immediately at
the end of such 90-day period. We rely on Hovione as our sole supplier of
doxycycline and have no back-up supplier at this time. If we are unable to
procure a commercial quantity of doxycycline from Hovione on an ongoing basis at
a competitive price, or if we cannot find a replacement supplier in a timely
manner or with favorable pricing terms, our costs may increase significantly and
we may experience delays in the supply of Periostat.
We historically relied on a single third-party contract manufacturer,
Applied Analytical Industries, Inc., ("AAI") to produce Periostat in a capsule
formulation. AAI served notice of its intent to terminate its agreement to
supply Periostat capsules to us as of November 2001. The agreement with AAI
provided for AAI to commit to an additional twelve (12) months supply of product
at a price premium, should we be unable to qualify an alternative manufacturing
source subsequent to the termination of the AAI agreement. As an alternative,
and in an effort to capitalize on certain manufacturing cost advantages, in July
2001, we launched our new tablet formulation of Periostat which has now replaced
our capsule formulation of Periostat. The Company believes that the change to a
tablet formulation will positively impact its results of operations by improving
its gross margin on Periostat sales from approximately 78% to approximately 88%
of Periostat net sales. We have entered into an agreement with a contract
manufacturer, Pharmaceutical Manufacturing Research Services, Inc. ("PMRS"), for
such tablet formulation for Periostat, and we are, therefore, no longer
dependent upon, nor do we utilize, AAI. We have placed purchase orders with PMRS
and have committed to certain minimum purchases from PMRS through 2002.
Currently, PMRS is the sole third-party contract manufacturer to supply a tablet
formulation of Periostat to us. Any inability of PMRS to produce and supply
product on agreed upon terms could result in delays in the supply of Periostat.
We also intend to contract with additional manufacturers for the commercial
manufacture of Periostat tablets. We believe, however, that it could take up to
one (1) year to successfully transition from PMRS to a new manufacturer.
OUR PRODUCTS ARE SUBJECT TO EXTENSIVE REGULATION BY THE FDA.
Drugs and medical devices generally require approval or clearance from the
FDA before they can be marketed in the United States. Periostat, Vioxx(R), and
Atridox(R) have been approved by the FDA as drugs. Atrisorb(R) - Free Flow and
Atrisorb(R)-D have been cleared by the FDA as medical devices. Our drug products
under development, however, will have to be approved by the FDA before they can
be marketed in the United States. If the FDA does not approve our products in a
timely fashion, or does not approve them at all, our financial condition may be
adversely affected.
-8-
In addition, drug and medical device products remain subject to
comprehensive regulation by the FDA while they are being marketed. The drug and
medical device regulatory schemes differ in detail, but they are essentially
similar. The FDA regulates, for example, the safety, manufacturing, labeling,
and promotion of both drug and medical device products. Although Dentaplex, a
dietary supplement, did not require FDA approval prior to marketing, it is also
subject to regulation while it is being marketed. If we or our partners who
manufacture our products fail to comply with regulatory requirements, various
adverse consequences can result, including recalls, civil penalties, withdrawal
of the product from the market and/or the imposition of civil or criminal
sanctions.
We are, and will increasingly be, subject to a variety of foreign
regulatory regimes governing clinical trials and sales of our products. Other
than Periostat, which has been approved by the Medicines Control Agency for
marketing in the United Kingdom, our products in development have not been
approved in any foreign country. Whether or not FDA approval has been obtained,
approval of drug products by the comparable regulatory authorities of foreign
countries must be obtained prior to the commencement of marketing of those
products in those countries. The approval process varies from country to country
and other countries may also impose post-approval requirements. Other countries
may also impose regulatory requirements on dietary supplements.
IF OUR PRODUCTS CAUSE INJURIES, WE MAY INCUR SIGNIFICANT EXPENSE AND
LIABILITY.
Our business may be adversely affected by potential product liability risks
inherent in the testing, manufacturing and marketing of Periostat and other
products developed by or for us or for which we have licensing or co-promotion
rights. We have $10.0 million in product liability insurance for Periostat. This
level of insurance may not adequately protect us against product liability
claims. Insufficient insurance coverage or the failure to obtain indemnification
from third parties for their respective liabilities may expose us to product
liability claims and/or recalls and could cause our business, financial
condition and results of operations to decline.
IF WE NEED ADDITIONAL FINANCING, AND FINANCING IS UNAVAILABLE, OUR ABILITY
TO DEVELOP AND COMMERCIALIZE PRODUCTS AND OUR OPERATIONS WILL BE ADVERSELY
AFFECTED.
We have historically financed our operations through public and private
equity financings. Our capital requirements depend on numerous factors,
including our ability to successfully commercialize Periostat, competing
technological and market developments, our ability to enter into collaborative
arrangements for the development, regulatory approval and commercialization of
other products, and the cost of filing, prosecuting, defending and enforcing
patent claims and other intellectual property rights. We anticipate that we may
be required to raise additional capital in order to conduct our operations.
Additional funding, if necessary, may not be available on favorable terms, if at
all. If adequate funds are not available, we may be required to curtail
operations significantly or to obtain funds through arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our technologies, product candidates, products or potential markets.
At December 31, 2001 we had cash, cash equivalents and short-term investments of
approximately $6.2 million. In March 2001, we raised approximately $6.8 million,
net of offering costs, through the sale of our common stock and warrants to
purchase shares of our common stock. In August 2001, we raised approximately
$3.0 million through the sale of unregistered shares of our common stock to
Atrix Laboratories, Inc. in connection with our entering into certain licensing
arrangements with Atrix. We anticipate that our existing working capital will be
sufficient to fund our current operations through at least the end of 2002.
However, we may seek additional funding to expand our current operations through
the acquisition of additional products or by investing in the development of our
research and development pipeline.
-9-
BECAUSE OUR EXECUTIVE OFFICERS, DIRECTORS AND AFFILIATED ENTITIES OWN
APPROXIMATELY 32.6% OF OUR CAPITAL STOCK, THEY COULD CONTROL OUR ACTIONS IN A
MANNER THAT CONFLICTS WITH OUR INTERESTS AND THE INTERESTS OF OUR OTHER
STOCKHOLDERS.
Currently, our executive officers, directors and affiliated entities
together beneficially own approximately 32.6% of the outstanding shares of our
common stock or equity securities convertible into common stock. As a result,
these stockholders, acting together, or in the case of our preferred
stockholders, in certain instances, as a class, will be able to exercise control
over corporate actions requiring stockholder approval, including the election of
directors. This concentration of ownership may have the effect of delaying or
preventing a change in control, including transactions in which our stockholders
might otherwise receive a premium for their shares over then current market
prices.
WE EXPECT TO SELL SHARES OF OUR COMMON STOCK IN THE FUTURE, INCLUDING
SHARES ISSUED UNDER OUR EQUITY LINE WITH KINGSBRIDGE CAPITAL LIMITED AND THESE
SALES WILL DILUTE THE INTERESTS OF SECURITY HOLDERS AND DEPRESS THE PRICE OF OUR
COMMON STOCK.
As of December 31, 2001, there were 10,999,573 shares of our common stock
outstanding, options to purchase approximately 2,452,609 shares of our common
stock outstanding, and there were outstanding warrants to purchase approximately
550,000 shares of our common stock outstanding. There are also 924,880 shares of
common stock which are issuable under the equity line with Kingsbridge and
40,000 shares issuable under the warrants which we granted to Kingsbridge in
connection with the equity line arrangement. We may also issue additional shares
in acquisitions, financings or in connection with the grant of additional stock
options to our employees, officers, directors or consultants under our stock
option plans.
The issuance or even the potential issuance of shares under the equity
line, in connection with any other additional financing, and upon exercise of
warrants, options or rights will have a dilutive impact on other stockholders
and could have a negative effect on the market price of our common stock. In
addition, if we draw down under the equity line, we will issue shares to
Kingsbridge at a discount to the daily volume weighted average prices of our
common stock during the fifteen (15) trading days after notification of a
drawdown. This will further dilute the interests of the other stockholders.
If we draw down on the equity line when share prices are decreasing, we
will need to issue more shares, which will lead to dilution and potentially
further price decrease.
As we sell shares of our common stock to Kingsbridge under the equity line
and then Kingsbridge sells the common stock to third parties, our common stock
price may decrease due to the additional shares in the market. If we decide to
draw down on the equity line as the price of our common stock decreases, we will
need to issue more shares of our common stock for any given dollar amount that
Kingsbridge invests, subject to the minimum selling price we specify. The
perceived risk of dilution from sales of stock to Kingsbridge may cause holders
of our common stock to sell their shares, or it may encourage short sales. This
could contribute to a decline in our share price. Kingsbridge has covenanted in
the equity line arrangement that neither Kingsbridge nor any of its affiliates
nor any entity managed by Kingsbridge will ever be in a net short position with
respect to shares of our common stock in any accounts directly or indirectly
managed by any such person or entity. The more shares that we issue under the
equity line of credit, the more diluted our shares will be and the more our
stock price may decrease. This may encourage short sales, which could place
further downward pressure on the price of our common stock.
OUR STOCK PRICE IS HIGHLY VOLATILE, AND THEREFORE THE VALUE OF YOUR
INVESTMENT MAY FLUCTUATE SIGNIFICANTLY.
The market price of our common stock has fluctuated and may continue to
fluctuate as a result of variations in our quarterly operating results. These
fluctuations may be exaggerated if the trading volume
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of our common stock is low. In addition, the stock market in general has
experienced dramatic price and volume fluctuations from time to time. These
fluctuations may or may not be based upon any business or operating results. Our
common stock may experience similar or even more dramatic price and volume
fluctuations which may continue indefinitely. The following table sets forth the
high and low closing market price for our common stock for each of the quarters
in the period beginning January 1, 1999 through December 31, 2001 as reported on
the Nasdaq National Market:
QUARTER ENDED HIGH LOW
March 31, 1999..................... $12.19 $8.25
June 30, 1999...................... $11.25 $8.25
September 30, 1999................. $22.38 $9.50
December 31, 1999.................. $25.00 $15.75
March 31, 2000..................... $27.13 $12.63
June 30, 2000...................... $15.50 $8.25
September 30, 2000................. $9.88 $8.06
December 31, 2000.................. $7.88 $3.13
March 31, 2001..................... $6.00 $4.47
June 30, 2001...................... $8.80 $5.06
September 30, 2001................. $10.00 $7.25
December 31, 2001.................. $9.50 $7.50
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated herein contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended. For this purpose, any statements contained herein or
incorporated herein that are not statements of historical fact may be
forward-looking statements. For example, the words "may," "will," "continue,"
"believes," "expects," "anticipates," "intends," "estimates," "should" and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause CollaGenex's results to
differ materially from those indicated by such forward-looking statements. These
factors include those set forth in the section entitled "Risk Factors." In
particular, CollaGenex's business of selling, marketing and developing
pharmaceutical products is subject to a number of significant risks, including
risks relating to the implementation of CollaGenex's sales and marketing plans
for Periostat(R) and other products that we market, risks inherent in research
and development activities, risks associated with conducting business in a
highly regulated environment and uncertainty relating to clinical trials of
products under development. CollaGenex's success depends to a large degree upon
the market acceptance of Periostat by periodontists, dental practitioners, other
health care providers, patients and insurance companies. There can be no
assurance that CollaGenex's product candidates (other than the FDA's approval of
Periostat for marketing in the United States and the United Kingdom Medicines
Control Agency's approval of Periostat for marketing in the United Kingdom) will
be approved by any regulatory authority for marketing in any jurisdiction or, if
approved, that any such products will be successfully commercialized by
CollaGenex. In addition, there can be no assurance that CollaGenex will
successfully commercialize Dentaplex(TM), Vioxx(R), Atridox(R), Atrisorb(R)-Free
Flow and Atrisorb(R)-D. As a result of such risks and others expressed from time
to time in CollaGenex's filings with the Securities and Exchange Commission,
CollaGenex's actual results may differ materially from the results discussed in
or implied by the forward-looking statements contained herein.
-11-
USE OF PROCEEDS
We will receive all of the net proceeds from the sale of our securities
registered under the registration statement of which this prospectus is a part.
Unless the applicable prospectus supplement states otherwise, we will
retain broad discretion in the allocation of the net proceeds of this offering.
We currently intend to use the net proceeds of this and any future issuances
for:
o research and development of additional products;
o expansion of our sales and marketing capabilities;
o potential product acquisitions; and
o other general corporate purposes, including principally working
capital and capital expenditures.
We have not determined the amount of net proceeds to be used for each of
the specific purposes indicated. The amounts and timing of the expenditures may
vary significantly depending on numerous factors, such as the progress of our
research and development efforts, technological advances and the competitive
environment for our products. Accordingly, we will have broad discretion to use
the proceeds as we see fit. Pending such uses, we intend to invest the net
proceeds in interest-bearing, investment grade securities.
PLAN OF DISTRIBUTION
We have not yet issued or sold any shares of our common stock under this
Registration Statement on Form S-3.
We are offering up to 924,880 shares of our common stock to Kingsbridge
Capital Limited which has obligated itself, subject to certain conditions, to
purchase such shares pursuant to this registration statement. The common stock
will be purchased pursuant to the terms of a Common Stock Purchase Agreement, or
equity line arrangement that we entered into with Kingsbridge on February 14,
2002. The terms and conditions of the equity line arrangement are more fully
described herein beginning on page 3 under the title "The Equity Line." An
additional 40,000 shares of common stock underlying a warrant we issued to
Kingsbridge in connection with the equity line are also registered hereunder.
Kingsbridge Capital Limited will be and any brokers-dealers or agents that
are involved in selling shares acquired by Kingsbridge under the equity line may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933
in connection with their sales. Prior to entering into the equity line
arrangement with us, Kingsbridge did not own any shares of our common stock.
Upon the sale of shares under this registration statement, the securities
registered by this registration statement will be freely tradable in the hands
of persons other than our affiliates. Kingsbridge has covenanted in the equity
line arrangement that neither Kingsbridge nor any of its affiliates nor any
entity managed by Kingsbridge will ever be in a net short position with respect
to shares of our common stock in any accounts directly or indirectly managed by
any such person or entity.
We agreed, under the terms of the Common Stock Purchase Agreement by and
between us and Kingsbridge Capital Limited to indemnify and hold harmless
Kingsbridge Capital Limited, each person, if
-12-
any, who controls Kingsbridge Capital Limited within the meaning of Section 15
of the Securities Act of 1933, as amended, and each officer, director, employee
and agent of Kingsbridge Capital Limited and of any such controlling person
against any and all liabilities, claims, damages or expenses whatsoever, as
incurred, arising out of or resulting from any breach or alleged breach or other
violation of any representation, warranty, covenant or undertaking by us
contained in such Common Stock Purchase Agreement. We have agreed to reimburse
Kingsbridge Capital Limited for its reasonable legal and other expenses
(including the reasonable cost of any investigation and preparation, and
including the reasonable fees and expenses of counsel) incurred in connection
therewith.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Hale and Dorr LLP, Princeton, New Jersey.
EXPERTS
The consolidated financial statements and schedule of CollaGenex
Pharmaceuticals, Inc. and subsidiaries as of December 31, 1999 and 2000, and for
each of the years in the three-year period ended December 31, 2000, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG LLP covering the December 31, 2000 financial
statements contains an explanatory paragraph that states that the Company
adopted the provisions of the Securities and Exchange Commission's Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements", in
2000.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other documents with the SEC. You may
read and copy any document we file at the SEC's public reference room at
Judiciary Plaza Building, 450 Fifth Street N.W., Room 1024, Washington, D.C.
20549. You should call 1-800-SEC-0330 for more information on the public
reference room. Our SEC filings are also available to you on the SEC's Internet
site at http://www.sec.gov.
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this prospectus
regarding us and our common stock, including certain exhibits and schedules. You
can obtain a copy of the registration statement from the SEC at the address
listed above or from the SEC's Internet site.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission allows CollaGenex to "incorporate by
reference" the information CollaGenex files with the Securities and Exchange
Commission, which means that CollaGenex can disclose important information to
you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus, and information that
CollaGenex files later with the Securities and Exchange Commission will
automatically update and supersede this information. CollaGenex incorporates by
reference the documents listed below and any future filings made by CollaGenex
with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act of 1934, as amended, until the filing of a
post-effective amendment to this prospectus which indicates that all securities
registered have been sold or which deregisters all securities then remaining
unsold:
-13-
o CollaGenex's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 filed with the Securities and Exchange
Commission on March 26, 2001, as amended on Form 10-K/A filed
with Securities and Exchange Commission on January 2, 2002 to
disclose information regarding the financial position, results of
operations and cash flows of CollaGenex and its subsidiaries;
o CollaGenex's Current Report on Form 8-K filed with the Securities
and Exchange Commission on March 16, 2001;
o CollaGenex's Current Report on Form 8-K/A filed with the
Securities and Exchange Commission on April 3, 2001;
o CollaGenex's Definitive Proxy materials for the Company's 2001
Annual Meeting of Stockholders, filed with the Securities and
Exchange Commission on April 18, 2001;
o CollaGenex's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 2001 filed with the Securities and Exchange
Commission on May 15, 2001, to disclose information regarding the
financial position, results of operations and cash flows of
CollaGenex and its subsidiaries;
o CollaGenex's Current Report on Form 8-K filed with the Securities
and Exchange Commission on July 20, 2001;
o CollaGenex's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2001 filed with the Securities and Exchange
Commission on August 14, 2001, to disclose information regarding
the financial position, results of operations and cash flows of
CollaGenex and its subsidiaries;
o CollaGenex's Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 18, 2001;
o CollaGenex's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2001 filed with the Securities and Exchange
Commission on November 14, 2001, as amended on Form 10-Q/A filed
with the Securities and Exchange Commission on February 14, 2002,
to disclose information regarding the financial position, results
of operations and cash flows of CollaGenex and its subsidiaries;
o CollaGenex's Current Report on Form 8-K filed with the Securities
and Exchange Commission on December 10, 2001; and
o The description of CollaGenex's common stock, $.01 par value,
which is contained in CollaGenex's Registration Statement on Form
8-A filed pursuant to Section 12(g) of the Exchange Act of 1934,
as amended, in the form declared effective by the Securities and
Exchange Commission on June 20, 1996, including any subsequent
amendments or reports filed for the purpose of updating such
description.
-14-
CollaGenex will provide to any person, including any beneficial owner of
its securities, to whom this prospectus is delivered, a copy of any or all of
the information that has been incorporated by reference in this prospectus but
not delivered with this Prospectus. You may make such requests at no cost to you
by writing or telephoning CollaGenex at the following address or number:
CollaGenex Pharmaceuticals, Inc.
41 University Drive
Newtown, Pennsylvania 18940
Attention: Chief Financial Officer
Telephone: (215) 579-7388
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. CollaGenex has not
authorized anyone else to provide you with different information. CollaGenex is
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsection (a) and (b) or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith; that the indemnification provided by Section 145 shall not be deemed
exclusive of any other rights to which the
-15-
indemnified party may be entitled; and that the scope of indemnification extends
to directors, officers, employees, or agents of a constituent corporation
absorbed in a consolidation or merger and persons serving in that capacity at
the request of the constituent corporation for another. Section 145 also
empowers a corporation to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him or her or incurred by him or her in any such capacity or arising out of his
or her status as such whether or not the corporation would have the power to
indemnify him or her against such liabilities under Section 145.
Article IX of CollaGenex's By-laws specifies that CollaGenex shall
indemnify its directors, officers, employees and agents because he or she was or
is a director, officer, employee or agent of the Corporation or was or is
serving at the request of the Corporation as a director, officer, employee or
agent of another entity to the full extent that such right of indemnity is
permitted by the laws of the State of Delaware. This provision of the By-laws is
deemed to be a contract between CollaGenex and each director and officer who
serves in such capacity at any time while such provision and the relevant
provisions of the Delaware General Corporation Law are in effect, and any repeal
or modification thereof shall not offset any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts. The affirmative vote of the holders of at least 80% of
the voting power of all outstanding shares of the capital stock of CollaGenex,
and, in certain circumstances, 66 2/3% of the voting power of all outstanding
shares of the Series D cumulative convertible preferred stock of CollaGenex, is
required to adopt, amend or repeal such provision of the By-laws.
CollaGenex has executed indemnification agreements with each of its
officers and directors pursuant to which CollaGenex has agreed to indemnify such
parties to the full extent permitted by law, subject to certain exceptions, if
such party becomes subject to an action because such party is a director,
officer, employee, agent or fiduciary of CollaGenex.
Section 102(b)(7) of the Delaware General Corporation Law enables a
corporation in its certificate of incorporation to limit the personal liability
of members of its board of directors for violation of a director's fiduciary
duty of care. This section does not, however, limit the liability of a director
for breaching his or her duty of loyalty, failing to act in good faith, engaging
in intentional misconduct or knowingly violating a law, or from any transaction
in which the director derived an improper personal benefit. This section also
will have no effect on claims arising under the federal securities laws.
CollaGenex's Amended and Restated Certificate of Incorporation limits the
liability of its directors as authorized by Section 102(b)(7). The affirmative
vote of the holders of at least 75% of the voting power of all outstanding
shares of the capital stock of CollaGenex, and, in certain circumstances, 66
2/3% of the voting power of all outstanding shares of the Series D cumulative
convertible preferred stock of CollaGenex, is required to amend such provisions.
CollaGenex has obtained liability insurance for the benefit of its
directors and officers which provides coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of CollaGenex (or any subsidiary thereof) due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by such directors and officers, except as prohibited by law.
-16-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses to be incurred in
connection with the sale and distribution of the securities being registered
hereby, all of which will be borne by CollaGenex Pharmaceuticals, Inc. All
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
Filing Fee - Securities and Exchange Commission...........$ 2,191
Legal fees and expenses...................................$ 15,000
Accounting fees and expenses..............................$ 5,000
------------
Total Expenses..................................$ 22,191
------------
------------
Item 15. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he or she is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsection (a) and (b) or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
II-1
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith; that the indemnification provided by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the scope of indemnification extends to directors, officers, employees,
or agents of a constituent corporation absorbed in a consolidation or merger and
persons serving in that capacity at the request of the constituent corporation
for another. Section 145 also empowers a corporation to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Article IX of CollaGenex's By-laws specifies that CollaGenex shall
indemnify its directors, officers, employees and agents because he or she was or
is a director, officer, employee or agent of CollaGenex or was or is serving at
the request of CollaGenex as a director, officer, employee or agent of another
entity to the full extent that such right of indemnity is permitted by the laws
of the State of Delaware. This provision of the By-laws is deemed to be a
contract between CollaGenex and each director and officer who serves in such
capacity at any time while such provision and the relevant provisions of the
Delaware General Corporation Law are in effect, and any repeal or modification
thereof shall not offset any action, suit or proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts. The affirmative vote of the holders of at least 80% of the voting
power of all outstanding shares of the capital stock of CollaGenex, and, in
certain circumstances, 66 2/3% of the voting power of all outstanding shares of
the Series D cumulative convertible preferred stock of CollaGenex, is required
to adopt, amend or repeal such provision of the By-laws.
CollaGenex has executed indemnification agreements with each of its
officers and directors pursuant to which CollaGenex has agreed to indemnify such
parties to the full extent permitted by law, subject to certain exceptions, if
such party becomes subject to an action because such party is a director,
officer, employee, agent or fiduciary of CollaGenex.
Section 102(b)(7) of the Delaware General Corporation Law enables a
corporation in its certificate of incorporation to limit the personal liability
of members of its board of directors for violation of a director's fiduciary
duty of care. This section does not, however, limit the liability of a director
for breaching his or her duty of loyalty, failing to act in good faith, engaging
in intentional misconduct or knowingly violating a law, or from any transaction
in which the director derived an improper personal benefit. This section also
will have no effect on claims arising under the federal securities laws.
CollaGenex's Amended and Restated Certificate of Incorporation limits
the liability of its directors as authorized by Section 102(b)(7). The
affirmative vote of the holders of at least 75% of the voting power of all
outstanding shares of the capital stock of CollaGenex, and, in certain
circumstances, 66 2/3% of the voting power of all outstanding shares of the
Series D cumulative convertible preferred stock of CollaGenex, is required to
amend such provisions.
CollaGenex has obtained liability insurance for the benefit of its
directors and officers which provides coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of CollaGenex (or any subsidiary thereof) due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by such directors and officers, except as prohibited by law.
II-2
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
*5.1 Opinion of Hale and Dorr LLP.
23.1 Consent of KPMG LLP.
*23.2 Consent of Hale and Dorr LLP (included in Exhibit 5.1).
*24.1 Power of Attorney (included on signature page).
--------
* Previously filed.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this 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 this 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 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in this Registration Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each 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 the time shall be deemed to be the initial bona
fide offering thereof.
II-3
(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.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions described herein, 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newtown, State of Pennsylvania, on February 14, 2002.
COLLAGENEX PHARMACEUTICALS, INC.
By: /s/ Brian M. Gallagher, Ph.D.
--------------------------------------------------
Brian M. Gallagher, Ph.D.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- ---------------------------- ----------------------------------- -----------------
/s/ Brian M. Gallagher, Ph.D. Chairman of the Board, President, February 14, 2002
- ---------------------------- Chief Executive Officer and
Brian M. Gallagher, Ph.D. Director (Principal Executive Officer)
/s/ Nancy C. Broadbent Chief Financial Officer, Treasurer and February 14, 2002
- ---------------------------- Secretary (Principal Financial and
Nancy C. Broadbent Accounting Officer)
* Director February 14, 2002
- ----------------------------
Peter Barnett, D.M.D.
* Director February 14, 2002
- ----------------------------
Robert C. Black
* Director February 14, 2002
- ----------------------------
James E. Daverman
* Director February 14, 2002
- ----------------------------
Robert J. Easton
* Director February 14, 2002
- ----------------------------
Stephen A. Kaplan
* Director February 14, 2002
- ----------------------------
W. James O'Shea
* By the signature set forth below, the undersigned, pursuant to the duly
authorized powers of attorney filed with the Securities and Exchange
Commission has signed this Amendment to the Registration Statement on behalf
of the person indicated.
--------------------------------
/s/ Nancy C. Broadbent
Nancy C. Broadbent
(Attorney-in-Fact)
II-6
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
-------------- ---------------------------------------------------------
*5.1 Opinion of Hale and Dorr LLP.
23.1 Consent of KPMG LLP.
*23.2 Consent of Hale and Dorr LLP (included in Exhibit
5.1 filed herewith).
*24.1 Power of Attorney (included on signature page).
* Previously filed.