SUBJECT TO COMPLETION, DATED FEBRUARY 16, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LJL BIOSYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 77-0360183
(State or Other Jurisdiction (I.R.S. Employer
of Identification Number)
Incorporation or Organization)
404 TASMAN DRIVE
SUNNYVALE, CA 94089
(408) 541-8787
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
LEV J. LEYTES
CHIEF EXECUTIVE OFFICER AND CHAIRMAN
LJL BIOSYSTEMS, INC.
404 TASMAN DRIVE
SUNNYVALE, CA 94089
(408) 541-8787
(Name, Address Including Zip Code, and Telephone Number Including Area Code, of
Agent for Service)
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COPIES TO:
MARK B. WEEKS
STEPHEN B. THAU
KATHRYN M. FULTON
VENTURE LAW GROUP
A PROFESSIONAL CORPORATION
2800 SAND HILL ROAD
MENLO PARK, CA 94025
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
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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, 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. / /
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
Common Stock, par value
$0.001........................ 1,757,545 $15.31 $26,908,014 $7,104
(1) Estimated solely for the purpose of computing the amount of the registration
fee based on the average of the high and low closing price of the Common
Stock as reported on The Nasdaq National Market on February 11, 2000
pursuant to Rule 457(c).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. 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 WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 16, 2000
PROSPECTUS
[LOGO]
404 TASMAN DRIVE
SUNNYVALE, CA 94089
(408) 541-8787
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1,757,545 SHARES OF COMMON STOCK
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THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 9 IN
DETERMINING WHETHER TO PURCHASE OUR COMMON STOCK.
The selling stockholders identified on page 22 of this prospectus are
offering these shares of common stock. For additional information on the methods
of sale, you should refer to the section entitled "Plan of Distribution" on
page 20. We will not receive any portion of the proceeds from the sale of these
shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
LJLB.
On February 14, 2000, the last sale price of our common stock on the Nasdaq
National Market was $16.00 per share.
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSION STOCKHOLDERS
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Per Share................................... See Text Above See Text Above See Text Above
Total.......................................
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
THE DATE OF THIS PROSPECTUS IS FEBRUARY , 2000
TABLE OF CONTENTS
PAGE
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THE COMPANY................................................. 1
RISK FACTORS................................................ 9
USE OF PROCEEDS............................................. 20
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS............ 20
PLAN OF DISTRIBUTION........................................ 20
SELLING STOCKHOLDERS........................................ 22
LEGAL MATTERS............................................... 23
EXPERTS..................................................... 23
WHERE YOU CAN FIND MORE INFORMATION......................... 23
INFORMATION NOT REQUIRED IN PROSPECTUS...................... 24
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU SHOULD
NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL
OR BUY ANY SHARES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL. THE INFORMATION
IN THIS PROSPECTUS IS CURRENT AS OF THE DATE ON THE COVER.
THE COMPANY
We design, produce and sell primarily to pharmaceutical and biotechnology
firms, infrastructure products and, to a lesser extent, services that accelerate
and enhance the process of discovering new drugs. Our proprietary integrated
technology platform is comprised of instrumentation and consumables (microplates
and fluorescence-based assay technologies) designed to provide flexible
solutions to the current and evolving high throughput requirements of drug
discovery laboratories. We intend to establish our products, marketed as
CRITERION-TM-, as the "gold standard" for addressing many of the key bottlenecks
in drug discovery. Further, we believe that, in the future, as more details of
the human genome become available, pharmaceutical and biotechnology firms will
begin utilizing high throughput screening in genomics during their search for
new drugs. In this regard, recently, we have demonstrated that certain products
from our CRITERION product line can be used to genotype or characterize single
nucleotide polymorphisms, or SNPs, and we have begun to commercialize these
products for genotyping applications.
DRUG DISCOVERY
The drug discovery process involves the synthesis and testing, or screening,
of compounds against a target. A compound is a molecule that might influence a
disease by its effect on a target. Targets are biological molecules, such as
enzymes, receptors, other proteins and nucleic acids that are believed to play a
role in the onset or progression of a disease. The stages of the drug discovery
process include:
- target identification,
- target validation (including genotyping of SNPs),
- assay development,
- primary screening,
- secondary and tertiary screening,
- lead compound optimization and
- clinical candidate selection.
DRUG DISCOVERY--SCREENING
Targets are identified based on their potential role in altering the
progression or prevention of a disease. Until recently, scientists using
conventional methods had identified only a few hundred targets, many of which
had not been comprehensively screened. Recent developments in molecular biology
and genomics have led to a dramatic increase in the number of targets available
for drug discovery.
After a target is validated, the researcher selects a library of compounds
to screen against this target. Compounds have historically been obtained from
natural sources or synthesized one at a time. Traditionally, pharmaceutical
companies, using conventional synthesis techniques, have compiled their compound
libraries over decades. However, recent technology advancements in parallel
synthesis combinatorial chemistry and other chemical synthesis techniques, as
well as licensing arrangements, have enabled industrial and academic groups to
greatly increase the supply and diversity of compounds available for screening
against targets. As a result, many researchers now have access to libraries of
hundreds of thousands of compounds.
Prior to high throughput screening of compounds against a target, a
biological test or assay must be developed. An assay is a combination of
reagents, which measures the effect of a compound on the activity of a target.
Assay development involves screening the assays to optimize performance against
the selected target and are broadly classified as either biochemical or
cellular. Following target and compound library
1
selection and synthesis and assay development, the compounds must be screened to
determine their effect on the target, if any. In the primary screening campaign,
a compound that has an effect on the target is defined as a hit. A greater
number of compounds screened against a given target result in a higher
statistical probability that a hit will be identified, assuming that the library
is sufficiently diverse. Scientists use both cellular and biochemical assays in
their drug discovery efforts. Both types of assays use a variety of detection
methods, including:
- absorbence,
- radioisotopic,
- luminescence and
- a variety of fluorometric technologies, such as fluorescence intensity,
fluorescence polarization and time-resolved fluorescence.
Biochemical assays are usually performed with purified molecular targets and
generally have certain advantages, such as speed, convenience, simplicity and
specificity. Cellular assays are performed with living cells, which may
sacrifice speed and simplicity, but may deliver more biologically relevant
information. Once a compound is identified as a hit, and the data is validated
in a follow up screen, several secondary and tertiary screens are performed to
evaluate its potency and specificity for the intended target. This cycle of
repeated screening continues until a small number of lead compounds is selected.
Further screening, notably against pharmacokinetic and toxicological parameters,
optimizes these lead compounds. Optimized lead compounds with the greatest
therapeutic potential and window of selectivity may be selected as candidates
for clinical evaluation.
Due to the recent dramatic increase in the number of available compounds and
targets, a bottleneck has developed at the screening stage of the drug discovery
process. Historically, screening has been a manual, time-consuming process.
Screening significantly larger numbers of compounds against an increasing number
of targets requires a system that can operate with a high degree of automation
and analytical flexibility.
To address these bottlenecks, we have developed instrumentation and assays
to provide integrated high throughput solutions. We believe that our technology
platform addresses the major throughput limitations associated with current high
throughput systems and will allow our customers to accelerate the identification
and optimization of lead compounds for development into new medicines.
DRUG DISCOVERY--GENOTYPING
THE GENOMICS SCIENCES MARKET
We are participating in the new field of high throughput genomics. By using
the knowledge of DNA (deoxyribonucleic acid) variations, genomics provides the
potential of discovering better, safer and more efficacious drugs. These
variations in DNA are believed to be the origin of many differences between
individuals, including disease predispositions and dissimilarity in drug
responses. A category of common variations in DNA are known as single nucleotide
polymorphisms, or SNPs. SNPs represent the smallest possible genetic change, and
occur where the DNA molecules of different individuals vary at a single
location. In the future, we believe that SNP analysis may play an essential role
in the development of drugs, diagnostics and other life science applications.
The process of determining the SNPs present in an individual is one method
of genotyping. It is generally estimated that there are millions of SNPs
inherited from each parent. Some SNPs may be genetic markers of inherited
diseases or responsible for individual differences in drug responsiveness.
Determining which patients have such markers is called patient stratification.
While most SNPs are believed to be of no medical consequence, thousands of SNPs
are expected to be medically relevant and correlate to disease susceptibility or
responsiveness to therapy. Establishing such a correlation is called an
association study. To capture this information, up to tens of thousands of SNPs
may have to be measured in each individual.
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After a SNP is discovered, its potential relevance for human health must be
validated by determining how common the variation is in different segments of
the population. To identify the small subset of SNPs that occur with the
greatest frequency in human disease or are responsible for variations in drug
responsiveness, hundreds of millions of SNP measurements must be made and
correlated with health and other physical and mental features of interest. SNPs
with a validated medical relevance may be useful in drug development and human
medical diagnostics. Identification of these SNPs will require a highly
accurate, cost-efficient, high throughput DNA analysis technology.
CURRENT SCREENING SYSTEMS
Many screening systems operate with varying degrees of automation. Full
automation--from sample dispensing to data collection--enables round-the-clock
operation, thereby increasing the screening rate. Fully automated high
throughput systems consist of assay analyzers, liquid handling systems,
robotics, a computerized system for data management, reagents and assay kits and
microplates. A microplate is a plastic plate that generally contains 96 wells,
384 wells or 1,536 wells, each well holding a mixture of a target, a compound
and reagents. In the automated high throughput process, a robot moves a
microplate among preparatory stations and then delivers the microplate to the
analyzer. In the case of fluorescence-based assays, after the microplate is
placed into the analyzer, the instrument directs a light source onto a well. The
intensity of the light emitted from the well in response to this light source is
then measured by the analyzer, showing the degree of the effect, if any, of the
compound on the target. In this manner, the analyzer detects and measures
possible bioactivity of a compound against a target.
Most screening systems utilize general-purpose assay analyzers, which were
not originally designed for high throughput use. We believe that most screening
systems in use today have the following limitations:
LACK OF ANALYTICAL FLEXIBILITY. Many general-purpose analyzers do not
provide sufficient analytical flexibility because they operate in only one
or a few types of assay detection modes. In order to perform assays using
different detection modes, researchers generally must physically move such
analyzers and reconfigure the high throughput line. Alternatively,
researchers may set up the high throughput line with multiple
general-purpose analyzers, which often results in critical space
constraints.
INADEQUATE SENSITIVITY. As researchers continue to use smaller assay
volumes to reduce reagents costs and increase throughput, many
general-purpose analyzers are inadequate because they are not sensitive
enough to read results based on these smaller volumes. Inadequate
sensitivity may result in:
- missed hits,
- limited research capabilities,
- increased costs of compounds, assays and reagents and
- lower throughput.
POOR HIGH THROUGHPUT SYSTEM INTEGRATION. Most analyzers have not been
designed specifically for a high throughput environment. They are difficult
and expensive to integrate into a high throughput automated line. Even after
the analyzer is integrated into the high throughput line, there are often
many problems, including:
- increased probability of system failures,
- loss of data,
- time delays and
- loss of costly compounds and reagents.
INABILITY TO REACH HIGH PERFORMANCE IN DENSER FORMATS. Many analyzers can
achieve high performance in the standard 96-well microplate format. However,
drug discovery companies are moving to the
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denser 384-well and 1,536-well formats to reduce costs of reagents, assays
and compounds, while increasing throughput. Most existing analyzers cannot
achieve high performance in this denser format.
LIMITATIONS OF CURRENT ASSAYS. Many assays in use today are performed in a
complex, multi-step process and are expensive, time-consuming and difficult
to implement in a high throughput setting. In addition, certain assays use
radioactive isotopes, which are hazardous and result in expensive waste-
disposal. Fluorescence-based assays are becoming more accepted in high
throughput settings due to the relative lack of waste-disposal problems, as
well as their sensitivity, versatility and adaptability to high throughput.
However, historically the use of many of the fluorescence-based assays in
high throughput was limited by the relative insensitivity of available
analyzers. Certain assays are also unsuitable for high throughput because of
the low sensitivity of both the assay and general-purpose analyzer.
The high throughput laboratory today must balance the needs for performance,
such as dynamic range, sensitivity and analytical flexibility. The increasing
use of high throughput and the need for higher throughput further exposes the
limitations of current screening systems. These limitations result in higher
costs, lower throughput and lower productivity.
OUR SOLUTION
We design, produce and sell products under the CRITERION-TM- name
specifically targeted for both the current and evolving high throughput markets.
To develop these products, we have assembled an integrated team of scientists
and engineers with expertise in fluorescence chemistry, biophysics,
biochemistry, chemical and mechanical engineering, electronics and software.
Since our inception in 1988, we have designed, developed and manufactured high
performance clinical diagnostics analyzers and other automated instruments.
Starting in the second half of 1996, we began focusing on the high
throughput market. Since then our efforts have resulted in the achievement of
several key milestones.
- In May 1998, we began shipping Analyst-TM- HT, our first-generation
detection system for the high throughput market. This system was designed
specifically for the high throughput market and offers multi-mode
capability, flexibility and performs up to 70,000 screens per day.
- Later in 1998, we shipped our first ultra-high throughput system,
Acquest-TM-. Also multi-modal, the Acquest was designed to accept
microplates with both 384-well and 1,536-well formats. Assay throughput is
estimated at up to 200,000 tests per day.
- In June 1999, we began shipping Analyst AD, which was designed
specifically for assay development and is fully compatible with Analyst
HT.
We believe that the Analyst and Acquest product lines provide several
important customer benefits, including:
- increased throughput,
- improved analytical performance and flexibility, especially in higher
density formats,
- lower reagents costs and
- the ability to be quickly integrated into existing high throughput
laboratories and to evolve with changing high throughput needs.
We have developed and are developing value-added, application-specific
reagents, assay kits and microplates, which are being optimized for use in high
throughput systems and specifically for use with our Analyst and Acquest product
lines.
- In 1998, we introduced and shipped our first value-added consumable
product, the TKX-TM-, or Tyrosine Kinase Fluorescence Polarization assay
kit.
- In September 1998, we started marketing our High Efficiency (HE) line of
microplates.
4
- In September 1999, we started marketing four additional assay and reagent
products including:
- DPX-TM- for dopamine receptor screening,
- cyclic AMP (cAMP) for a general cell signaling molecule,
- ProteasePX-TM- for protease inhibitor screens and
- a new proprietary fluorescent reagent, Sunnyvale Red-TM-.
In addition, we are currently developing several other consumable products,
including additional assays, which will be optimized to perform with our
instruments. We believe that customers will prefer to purchase consumables and
instruments from a single source for convenience, ongoing support and
accountability.
OUR DRUG SCREENING STRATEGY
Our successful market introductions in 1998 of two instruments and our TKX
assay kit, followed by our introduction of one additional instrument and four
additional assays in 1999, helped to establish our brand and set the stage for
other new products. Our proprietary technologies are already increasing the
efficiencies and reducing the cost of identifying drugs that show potential as
new medicines. In addition, we have a pipeline of instruments and consumables
that we are developing in concert with our customers, such as SmithKline Beecham
in the case of our FLARe-TM- fluorescence technology.
Building upon this background, our objective is to become a leader in the
development and commercialization of advanced technologies and products that
accelerate the pace and improve the productivity of the drug discovery process.
To implement this strategy, we intend to:
PROVIDE HIGH THROUGHPUT SOLUTIONS. Our technology platform is comprised of
two principal proprietary components: instrumentation and assay
technologies. We intend to leverage this technology platform and our proven
expertise in rapid product development and manufacturing of automated
instrumentation systems to be the first to market with effective high
throughput solutions.
PURSUE AN EVOLUTIONARY APPROACH TO PRODUCT DEVELOPMENT. We anticipate that
the high throughput needs of the pharmaceutical industry will continue to
change rapidly over the coming years and are difficult to predict at this
time. We intend to offer products with features and capabilities that
provide solutions to the current and evolving high throughput needs of drug
discovery laboratories. For example, our Analyst product line can perform
seven major types of optically detected assays (and can perform multi-mode
protocols) in both the industry standard 96-well and 384-well microplate
formats. Additionally, our ultra-high throughput instrument, Acquest, is
designed to read the higher-density 1,536-well microplates at a rate of up
to 200,000 wells per day.
EXTEND INSTRUMENTATION AND ASSAY PRODUCTS INTO OTHER STAGES OF THE DRUG
DISCOVERY PROCESS. We believe that our screening products are well suited
for primary and secondary screening and other closely related stages of the
drug discovery process such as assay development, genotyping of SNPs,
toxicology and lead optimization, which require repetitive screening. We
believe that users will benefit from using integrated high performance
screening products.
GENERATE RECURRING REVENUE THROUGH THE SALE OF REAGENTS, ASSAY KITS AND
CONSUMABLES. We believe that establishing an installed base of high
throughput instruments will enable us to generate recurring revenue from the
sale of reagents, assay kits and consumables. These products are envisioned
as high value-added, application-specific tools that are optimized for use
in high throughput systems and specifically with our high throughput
instruments. We believe that customers will prefer to purchase reagents and
instruments from one source for convenience, ongoing support and
accountability.
DEVELOP AND ACQUIRE NOVEL SCREENING TECHNOLOGIES. We believe our FLARe
technology, a platform of patented bioassay technologies, will address a
number of the current limitations associated with
5
fluorescence-based high throughput assays. We are also developing internally
certain reagent technologies and have licensed and intend to license or
acquire additional screening technologies in order to establish and maintain
a market advantage for our products.
PROVIDE EARLY ACCESS TO STRATEGIC CUSTOMERS. In September 1998, SmithKline
Beecham signed a collaborative agreement with us, which gives them early
access to our FLARe technology. In October 1999, AstraZeneca signed a Master
Technology Partnership Agreement (MTPA) with us, which gives them early
access to emerging technologies such as FLARe and our assay development
services. In addition to these agreements, we intend to provide strategic
customers early access to certain of our technologies, which will provide
insight into next generation product requirements and technology needs. We
believe this insight will allow us to provide products that more closely
meet the needs of our customers.
OUR SNP GENOTYPING PLATFORM AND BUSINESS STRATEGY
SNP genotyping generally involves a multi-step chemical reaction, the
results of which are detected using a specialized hardware platform. We have
developed a proprietary implementation of polarization technology that enables
sensitive and robust detection, called High-Efficiency Fluorescence Polarization
(HEFP-TM-). During the second half of 1999, our customers and our staff have
demonstrated that this HEFP platform has the ability to perform highly accurate,
cost effective, high throughput SNP genotyping, using off-the-shelf consumables.
We believe that our HEFP genotyping platform has significant advantages because
it requires only a simple "mix and measure" chemical reaction, without the need
to attach any molecules to a solid surface and the attendant washing and
separation steps. In addition, our approach to genotyping does not require
labeled primers, thus further reducing costs and complexity. Similar to our high
throughput technologies used in drug discovery, we intend to expand our genomics
product portfolio and augment this HEFP hardware platform with proprietary
software solutions and LJL consumables. In addition to HEFP, we are developing
other high throughput technologies.
Our goal is to become the leader in the commercialization of high throughput
SNP analysis technology, capitalizing on what we believe is the quickly emerging
demand for SNP genotyping. Our strategy is to initially focus on the drug
discovery and development markets, where we already have a customer base. We
intend to expand our penetration within our customer base into related areas
such as clinical and pre-clinical trials to perform patient stratification by
genetic traits. We believe that there are other significant potential
applications areas for our HEFP platform in SNP genotyping, including human DNA
diagnostics and other life science areas. To implement this strategy, we created
the Genomics Sciences Group at LJL in August 1999. We have started selling and
shipping our HEFP platform for high throughput SNP genotyping. Customers at
several leading genomics organizations are already successfully utilizing our
high throughout HEFP-SNP platform. We intend to grow the genomics business in a
manner similar to the way we are growing our business in high throughput drug
discovery.
CRITERION PRODUCT LINE
ANALYST PRODUCT LINE
Starting in May 1998, we began commercial shipments of Analyst HT, the first
assay detection instrument system in our Analyst product line. Analyst HT is a
multi-mode analyzer designed specifically for use in high throughput settings.
The term "assay detection" refers to the instrument's ability to read and
analyze how potential drug compounds perform when tested against specific
biological targets. Analyst HT can read several major types of fluorescence and
other assays, including HEFP. We believe that our SmartOptics-TM- proprietary
technology enables Analyst HT to detect assay results with improved sensitivity
in smaller volumes, thus saving costs. With a built-in capability of reading
both 96-well and 384-well plates, our customers are currently using our Analyst
HT to perform up to 70,000 tests per day.
6
Starting in June 1999, we began commercial shipments of Analyst AD, which is
designed specifically to allow for an efficient transfer of assays from assay
development to the screening and lead optimization part of the drug discovery
process. Analyst AD is a cost-effective system with flexible assay development
capabilities and is fully compatible with our other products. Having this
compatibility eliminates the need to modify or re-validate assays upon their
transfer from assay development into screening and lead optimization.
ACQUEST PRODUCT LINE
Starting in September 1998, we began commercial shipments of Acquest, our
first ultra-high throughput system. This high-density analyzer is an evolution
of the Analyst technology platform, which dramatically increases the number of
screens that can be performed at any one time. Current assay throughput is
estimated at up to 200,000 tests per day. The Acquest is also multi-modal and
accepts microplates with both 384-well and 1,536-well formats. In addition,
Acquest performs screens using significantly reduced assay volumes, thus
reducing the costs of reagents, assays and compounds. We are developing
1,536-well microplates to operate with Acquest. We believe that high throughput
system performance will be optimized with the use of these proprietary plates in
conjunction with Acquest due to the lower error tolerance between system
components in this miniaturized format. In addition, Acquest operates with third
party 1,536-well microplates, reagents and liquid handling systems. We also plan
to bring to market additional reagents and assay kits and intend to miniaturize
certain of our first generation reagents and assays for use in the high-density
format.
REAGENTS, ASSAYS AND PLATES
In 1998, we began offering high value-added, application-specific reagents
and assay kits that are optimized for use in high throughput and specifically
for use with our CRITERION product line instruments. We intend to develop
additional reagents and assay kits in a single-step format. We believe that a
single-step assay format is better suited to the high throughput environment
because it is faster, less expensive and easier to automate than multi-step
assays. We also believe that our reagents and assay kits will provide two major
benefits to our customers. First, overall assay performance is expected to
improve as these consumables are being optimized for use with our Analyst and
Acquest product lines. Second, we believe that customers will prefer to purchase
reagents and instruments from a single source for convenience, integrated
support and accountability.
The use of fluorescence-based assays in high throughput is increasing due to
their sensitivity, versatility, adaptability, safety and lack of waste-disposal
problems associated with radioactive isotopic assays. Among fluorescence-based
assays, fluorescence polarization assays are especially well suited for high
throughput because they can be used in a single-step format and are relatively
insensitive to volume variations.
We believe the increased sensitivity and precision of our Analyst and
Acquest product lines in the HEFP format will improve the performance of
fluorescence polarization assays. We are currently developing a new,
long-lifetime fluorescence polarization reagent based on our proprietary FLARe
assay technology. Currently available fluorescence polarization reagents have
short lifetimes and cannot be used in screening certain targets. We believe that
our long- lifetime fluorescence polarization reagent has the potential to expand
the class of available targets for certain major diseases, including
cardiovascular and immunodeficiency diseases, that can be screened in a
single-step, fluorescence polarization format.
We also introduced High Efficiency (HE-TM-) microplates in 1998 to provide a
"tuned" solution that optimizes assay performance in the Analyst system. These
microplates allow users to reduce assay volume and as a result, dramatically
reduce the costs without loss of performance.
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NEW CRITERION TECHNOLOGIES BEING DEVELOPED
SCREENSTATION-TM-. In September 1999, we demonstrated a prototype and announced
the introduction of our next generation instrument platform, the ScreenStation.
ScreenStation is being developed to permit unattended operations, non-contact
micro-volume dispensing, and multiple detection modes. We believe ScreenStation
technology represents a significant advance in high throughput screening as it
enables pharmaceutical companies to easily implement homogeneous assays that are
fast, miniaturized, and non-radioactive. We plan to start shipments in 2000.
FLARE TECHNOLOGY AND SMITHKLINE BEECHAM COLLABORATION. FLARe (Fluorescence
Lifetime Assay Repertoire) is our patented and patent pending instrumentation
and reagent platform for addressing next generation solutions for critical drug
discovery challenges. Many targets, compounds and microplates have transient
fluorescent properties that obscure the assay specific signal by transient
background signal, or noise. Through a combination of advanced biophysics and
electronics, FLARe reduces the effect of background noise by 98% in certain
fluorescence-based assays.
Fluorescence-based assay technologies are well suited to high throughput
because they are:
- sensitive,
- versatile,
- easy to automate and
- safer than radioisotopic assays.
However, use of fluorescence-based high throughput assays has been limited due
to the high level of background noise in the fluorescence signal within the
assay, which obscures the assay-specific signal and results in loss of
sensitivity and reduced accuracy. We believe our FLARe technology may
significantly reduce false readings when running these assays.
In September 1998, we entered into a collaboration agreement with SmithKline
Beecham which provides them early access to our FLARe technology. In May 1999,
we announced the successful completion of the first milestone in our
collaboration with SmithKline Beecham, which demonstrated the unique enabling
performance of FLARe. In September 1999, we demonstrated a prototype of our
proprietary platform for drug discovery assays based on the measurement of
fluorescence lifetime using our FLARe technology.
Our principal executive offices are located at 404 Tasman Drive, Sunnyvale,
CA 94089 and our telephone number is (408) 541-8787. As used in this prospectus,
"we," "us," "our" and "LJL" refer to LJL BioSystems, Inc., a Delaware
corporation, and its wholly-owned subsidiary.
8
RISK FACTORS
WE DESIRE TO TAKE ADVANTAGE OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 AND OF SECTION 21E AND RULE 3B-6 UNDER
THE SECURITIES EXCHANGE ACT OF 1934. SPECIFICALLY, WE WISH TO ALERT READERS THAT
THE FOLLOWING IMPORTANT FACTORS, AS WELL AS OTHER FACTORS INCLUDING, WITHOUT
LIMITATION, THOSE DESCRIBED ELSEWHERE IN REPORTS WE HAVE FILED WITH THE SEC AND
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE, COULD IN THE FUTURE AFFECT, AND
IN THE PAST HAVE AFFECTED, OUR ACTUAL RESULTS AND COULD CAUSE OUR RESULTS FOR
FUTURE PERIODS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING
STATEMENTS MADE BY OR ON BEHALF OF US. WE ASSUME NO OBLIGATION TO UPDATE THESE
FORWARD-LOOKING STATEMENTS.
SINCE WE ADOPTED OUR CURRENT BUSINESS STRATEGY IN 1996, WE HAVE CONSISTENTLY HAD
OPERATING LOSSES; THE MARKET FOR OUR CRITERION PRODUCTS IS RELATIVELY NEW AND
UNDEFINED, AND WE MAY NEVER ACHIEVE PROFITABILITY
We began implementing our current strategic business model to develop
products for the high throughput market in 1996 and we began targeting the SNP
genotyping market in 1999. In connection with this change in strategy, we
shifted our focus from developing and manufacturing clinical diagnostic and
research products on an original equipment manufacturing basis to developing,
manufacturing and marketing products for the high throughput market. As a
result, our historical operating and financial performance is generally not
indicative of future financial and business results. We incurred operating
losses for the years ended December 31, 1999, 1998 and 1997 as a result of our
change in business strategy and anticipate that we may continue to incur losses
for at least the next several years, due to the substantial increases in
expenditures necessary to continue to develop and commercialize our CRITERION
product line. We began commercial shipments of our first high throughput
instrument, the Analyst HT, in the second quarter of 1998, we began commercial
shipments of our ultra-high throughput product, Acquest, in the fourth quarter
of 1998 and began commercial shipments of our Analyst AD instrument in
June 1999. Accordingly, we are subject to the risks inherent in the operation of
a new business, such as:
- the failure to develop effective sales, marketing and distribution
channels;
- failure to achieve market acceptance and demand for our CRITERION product
line;
- failure to effectively service and maintain the CRITERION product line;
- failure to implement commercial scale-up of developed CRITERION product
line products; and
- failure to attract and retain key personnel.
Furthermore, the high throughput market is new and undefined, and the use of
high throughput products by pharmaceutical and biotechnology companies is
limited. Demand for our CRITERION product line instruments will depend upon the
extent to which pharmaceutical and biotechnology companies adopt high throughput
analysis as a drug discovery tool. If high throughput analysis does not become
widely used, demand for our products will not develop as we currently expect or
at all. The lack of demand for our CRITERION product line products would have a
material adverse effect on our business, financial condition and results of
operations.
BECAUSE WE ARE IN THE EARLY STAGE OF INSTRUMENT DEVELOPMENT OF CERTAIN OF OUR
CRITERION PRODUCT LINE, OUR ABILITY TO DEVELOP AND COMMERCIALIZE THESE PRODUCTS
IS UNCERTAIN
Our success will depend on our ability to develop and commercialize our
CRITERION product line instruments. We began commercial shipments of our first
high throughput instrument, the Analyst HT, in the second quarter of 1998, we
began commercial shipments of our ultra-high throughput product, Acquest, in the
fourth quarter of 1998 and began commercial shipments of our Analyst AD
instrument in June 1999. We had not previously developed or commercialized
products for the high throughput market before this time. We are also developing
new technologies and products for our CRITERION product line, such as the FLARe
and ScreenStation instruments. The successful implementation and operation of
our
9
CRITERION product line, including the new technologies and products currently
being developed, is a complex process requiring the integration and maintenance
of, among other technologies:
- advanced optics;
- electronics;
- robotics;
- microfluidics;
- fluorescence detector technologies; and
- software and information systems.
Even if our current and future CRITERION products appear promising at
commercial launch, they may not achieve market acceptance at a level necessary
to enable production at a reasonable cost, to support the required sales and
marketing effort, to cost effectively service and maintain, and to support
continuing research and development costs. In addition, our CRITERION product
line instruments may:
- be difficult or overly expensive to produce;
- fail to achieve performance levels expected by customers;
- have a price level that is unacceptable in our targeted industries; or
- be precluded from commercialization by the proprietary rights of others or
other competitive forces.
There can be no assurance that we will be able to successfully manufacture
and market our CRITERION products on a timely basis, achieve anticipated
performance levels or throughputs, gain and maintain industry acceptance of our
CRITERION products or develop a profitable business. The failure to achieve any
of these objectives would have a material adverse effect on our business,
financial condition and results of operations.
BECAUSE WE ARE IN THE EARLY STAGE IN DEVELOPMENT, OUR ABILITY TO DEVELOP
REAGENTS AND ASSAY KITS IS UNCERTAIN
We expect in the future that a substantial portion of our revenues may be
derived from the sale of reagents, assay kits and microplates. We have limited
experience in the development, manufacture and marketing of reagents, assay kits
and microplates, having only recently introduced our first assay kits and
microplates, HE-TM- (High Efficiency). We intend to continue to license assay
technologies from third parties and to develop reagents, assay kits and
microplates internally. We may not succeed in licensing any additional assay
technologies on acceptable terms, if at all, and we may not successfully
commercialize any reagents that we license. In addition, we are internally
developing reagents, assay kits and microplates, but have limited experience in
this area. We may not successfully develop additional reagents, assay kits or
microplates internally, and any reagents, assay kits or microplates we do
develop may not achieve market acceptance. We intend to outsource the
manufacture of microplates and, as sales volumes increase, to also outsource the
manufacture of reagents and assay kits. We may not be able to enter into
agreements with third parties for the manufacture of reagents, assay kits or
microplates on terms commercially acceptable to us or at all. In addition, we
intend to sell reagents, assay kits and microplates to purchasers of our
CRITERION product line instruments, including the Analyst HT, Analyst AD and
Acquest. Sales of the Analyst HT, Analyst AD and Acquest may not be sufficient
to support this strategy. A failure to achieve commercial acceptance of our
reagents, assay kits and microplates would have a material adverse effect on our
business, financial condition and results of operations.
BECAUSE WE DEPEND ON DEVELOPING TECHNOLOGIES AND OUR MARKETS ARE SUBJECT TO
RAPID TECHNOLOGICAL CHANGE, WE MAY NOT BE ABLE TO COMMERCIALIZE OUR PRODUCTS
The pharmaceutical, biotechnology and genomics instrumentation and reagents
markets are characterized by rapid technological change and frequent new product
introductions by many competitors. Our future success will depend on our ability
to enhance and maintain our current and planned CRITERION product line products
and to develop and introduce, on a timely basis, new technologies and products
that
10
address the evolving needs of our customers. These new technologies and products
include but are not limited to fluorescence-based reagents and assay kits,
products based on our ScreenStation-TM-, FLARe-TM- and SmartOptics-TM-
technologies, as well as future additions to our SNP genotyping platform.
Development of these new technologies subjects us to significant risks and
uncertainties, as we may encounter unantipated technical issues that may cause
development delays. These technical issues may require us to cancel such
development programs altogether, if we are unable to find solutions to these
issues. Even if development is successful, we anticipate that production units
for these new products may not be available for several months or years, if at
all. The production of CRITERION product line instruments, microplates,
fluorescence-based reagents and assay kits may present manufacturing challenges.
We may experience difficulties that could delay or prevent the successful
manufacturing, introduction and marketing of our new products or our product
enhancements. Any failure to manufacture and introduce products in a timely
manner in response to changing market demands or customer requirements could
have a material adverse effect on our business, financial condition and results
of operations.
WE HAVE LIMITED SALES, MARKETING AND SERVICE EXPERIENCE AND MAY NOT BE ABLE TO
DEVELOP A DIRECT SALES AND SERVICE FORCE OR DISTRIBUTION CHANNELS THAT CAN MEET
OUR CUSTOMERS NEEDS, AND OUR FAILURE TO DO SO WILL HURT OUR FINANCIAL RESULTS
We have limited experience in direct marketing, sales, service and
distribution. Our future profitability will depend on our ability to further
develop a direct sales and service force to sell and maintain our CRITERION
product line. Our products are technical in nature and we therefore believe it
is necessary to develop a direct sales and service force consisting of people
with scientific backgrounds and expertise. Competition for such employees is
intense. We may not be able to attract and retain qualified sales and service
personnel or be able to build an efficient and effective sales, support and
marketing organization. Failure to attract or retain qualified sales and service
personnel or to build such a sales, support and marketing organization would
have a material adverse effect on our business, financial condition and results
of operations.
We are marketing our CRITERION product line in certain international markets
through distributors. While we currently have two distributors in international
markets, one in Japan and another with the territory of Belgium, Netherlands and
Luxembourg, there can be no assurance that we will be able to engage additional
qualified distributors. Such distributors may:
- fail to satisfy financial or contractual obligations to us;
- fail to adequately market our products;
- cease operations with little or no notice to us; or
- offer, design, manufacture or promote competing product lines.
The failure to develop and maintain effective distribution channels could
have a material adverse effect on our business, financial condition and results
of operations.
WE PARTICIPATE IN A HIGHLY COMPETITIVE MARKET AND OUR PRODUCTS MAY NOT BE
ACCEPTED IN THE MARKET
The market for high throughput instrumentation, assays for drug discovery
and SNP genotyping is highly competitive. We anticipate that competition will
increase significantly as more customers adopt high throughput tools for drug
discovery and SNP genotyping, and as competitors enter the market with new
advanced technologies and products. We are competing in many areas, including
high throughput instruments, assay development, consumables and reagent sales.
We compete with companies that directly market high throughput products. In
addition, pharmaceutical and biotechnology companies, academic institutions,
governmental agencies and other research organizations are conducting research
and developing products in various areas which compete with our technology
platform, either on their own or in collaboration with others. As a result, our
potential customers may choose not to purchase our products. Our potential
customers may assemble and run high throughput systems by purchasing products
from competitors or making their own. Further, certain companies offer screening
and genotyping services on a
11
contract or collaborative basis, and these services could eliminate the need for
a potential customer to purchase our products. Our technological approaches may
be rendered obsolete or uneconomical by advances in existing technological
approaches or the development of different approaches by one or more of our
current or future competitors. Many of these competitors have greater financial
and personnel resources, and more experience in research and development, sales
and marketing and other areas than us.
THE MARKET FOR OUR CRITERION PRODUCT LINE IS CONCENTRATED, WHICH LIMITS THE
NUMBER OF OUR POTENTIAL CUSTOMERS
We currently market our CRITERION product line to pharmaceutical,
biotechnology and genomics companies, as well as academic institutions; however,
our primary marketing efforts and the majority of our sales are to
pharmaceutical companies. Our market for high throughput and ultra-high
throughput products is highly concentrated, with approximately 50 large
pharmaceutical companies operating a substantial portion of our targeted drug
discovery laboratories. In 1999, sales to a single customer accounted for 15% of
our revenues. We expect a relatively small number of customers will continue to
account for a substantial portion of our revenues. We face risks associated with
a highly concentrated customer base to which we sell our CRITERION product line
products, including the failure to establish or maintain relationships within a
limited customer pool, or substantial financial difficulties or decreased
capital spending by our customers, any of which could have a material adverse
effect on our business, financial condition and results of operations.
OUR PRODUCTS HAVE LENGTHY SALES CYCLES, WHICH COULD CAUSE OUR OPERATING RESULTS
TO FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER
The sale of our CRITERION product line products typically involves a
significant technical evaluation and commitment of capital by customers.
Accordingly, the sales cycle associated with our products is expected to be
lengthy and subject to a number of significant risks, including customers'
budgetary constraints and internal acceptance reviews, that are beyond our
control. Due to this lengthy and unpredictable sales cycle, our operating
results could fluctuate significantly from quarter to quarter.
WE HAVE LIMITED MANUFACTURING EXPERIENCE AND MAY NOT BE ABLE TO SCALE-UP OUR
MANUFACTURING OPERATIONS TO COMMERCIAL LEVELS
We are producing certain of our CRITERION products in limited quantities,
and have not yet manufactured other CRITERION products and reagents and assay
kits in significant quantities. We may encounter difficulties in scaling up
production of our CRITERION product line due to, among other things, quality
control and assurance, component supply and availability of qualified personnel.
Even if we successfully develop and introduce our CRITERION products to market,
we may not be able to manufacture or support them in sufficient quantities at
acceptable cost while meeting quality control standards. We intend to outsource
the manufacture of microplates and, as sales volumes increase, to evaluate
outsourcing the manufacture of reagents and assay kits. Difficulties encountered
in the manufacturing scale-up of other products in our CRITERION product line
could have a material adverse effect on our business, financial condition and
results of operations.
WE MAY NOT SUCCESSFULLY MANAGE OUR GROWTH
Our success will depend on the expansion of our operations and the effective
management of growth, which will place a significant strain on our management,
operational and financial resources. To manage such growth, we must expand our
facilities, augment our operational, financial and management systems and hire
and train additional qualified personnel. Our failure to manage growth
effectively would have a material adverse effect on our business, financial
condition and results of operations.
WE DEPEND UPON KEY PERSONNEL WHO MAY TERMINATE THEIR EMPLOYMENT WITH US AT ANY
TIME; WE NEED TO HIRE ADDITIONAL QUALIFIED PERSONNEL
12
Our success will depend to a significant degree upon the continued services
of key management, technical, and scientific personnel, including Lev J. Leytes,
the Chairman of our Board of Directors, President and Chief Executive Officer.
In addition, our success will depend on our ability to attract and retain other
highly skilled personnel. Competition for qualified personnel is intense, and
the process of hiring such qualified personnel is often lengthy. There can be no
assurance that we can recruit such personnel on a timely basis, if at all. Our
management and other employees may voluntarily terminate their employment with
us at any time. The loss of the services of key personnel, or the inability to
attract and retain additional qualified personnel, could have a material adverse
effect on our business, financial condition and results of operations.
BECAUSE WE DEPEND ON SUPPLIERS AND CONTRACT MANUFACTURERS, WE ARE SUBJECT TO
RISKS BEYOND OUR CONTROL
Certain components used in our CRITERION product line are currently
purchased from a single or a limited number of outside sources. The reliance on
a sole or limited number of suppliers could result in:
- delays associated with redesigning a product due to a failure to obtain a
single source component;
- an inability to obtain an adequate supply of required components; and
- reduced control over pricing, quality and timely delivery.
We do not maintain long-term agreements with any of our suppliers, and
therefore the supply of a particular component could be terminated at any time
without penalty to the supplier. Any interruption in the supply of single source
components could have a material adverse effect on our business, financial
condition and results of operations. We intend to rely on contract
manufacturers, some of which may be single source vendors, for the development,
manufacture and supply of certain of our reagents, assay kits and microplates.
There can be no assurance that we will be able to enter into such manufacturing
contracts on commercially reasonable terms, if at all, or that our current or
future contract manufacturers will meet our requirements for quality, quantity
or timeliness. If the supply of any components, reagents, assay kits or
microplates is interrupted, components, reagents, assay kits and microplates
from alternative suppliers and contract manufacturers may not be available in
sufficient volumes within required timeframes, if at all, to meet our production
needs.
WE HAVE AN ACCUMULATED DEFICIT AND OUR FUTURE PROFITABILITY IS UNCERTAIN
As of December 31, 1999, we had an accumulated deficit of approximately
$20.4 million. The expansion of our operations and continued development of our
CRITERION product line will require a substantial increase in sales, marketing
and research and development expenditures for at least the next several years.
As a result, we expect to incur operating losses for the next several years. Our
profitability will depend on our ability to successfully develop, support and
commercialize our CRITERION product line. Accordingly, the extent of future
losses and the time required to achieve profitability, if achieved at all, is
highly uncertain. Moreover, if profitability is achieved, the level of such
profitability cannot be predicted and may vary significantly from quarter to
quarter.
WE MAY NEED TO RAISE CAPITAL IN THE FUTURE AND ADDITIONAL FUNDING IS UNCERTAIN
We may be required to raise substantial additional capital over a period of
several years in order to develop and commercialize our products. Our future
capital requirements will depend on numerous factors, including the costs
associated with:
- developing and commercializing our products;
- developing a direct marketing, service and sales force;
- maintaining existing, or entering into future, licensing and distribution
agreements;
- protecting intellectual property rights;
- expanding our reagents and assay kits business;
- broadening our product lines to include genotyping of SNPs;
13
- expanding facilities; and
- consummating possible future acquisitions of technologies, products or
businesses.
We may consume available resources more rapidly than currently anticipated,
resulting in the need for additional funding. Accordingly, we may be required to
raise additional capital through a variety of sources, including the public
equity market, private equity financing, collaborative arrangements, and public
or private debt. Additional capital may not be available on acceptable terms, if
at all. If adequate funds are not available, we may be required to significantly
reduce or refocus our operations or to obtain funds through arrangements that
may require us to relinquish rights to certain of our products, technologies or
potential markets, which would have a material adverse effect on our business,
financial condition and results of operations. To the extent that additional
capital is raised through the sale of equity or convertible securities, the
issuance of such securities would result in ownership dilution to our existing
stockholders.
WE HAVE INTERNATIONAL SALES AND OPERATIONS, WHICH SUBJECT US TO RISKS RELATED TO
FOREIGN CURRENCY EXCHANGE RATES, TARIFFS, FOREIGN REGULATIONS, IMPORT AND EXPORT
RESTRICTIONS AND DIFFICULTIES MANAGING AND STAFFING INTERNATIONAL OPERATIONS.
We sell products in foreign countries in local currencies, which exposes us
to foreign currency exchange risk. In order to reduce the risk from fluctuation
in foreign currency exchange rates, the U.S. dollar is the functional currency
for our UK subsidiary, however, our UK subsidiary often bills its customers in
the customers' local currencies. Foreign currency assets and liabilities are
translated into U.S. dollars at end-of-period exchange rates, except for
property and equipment, which is translated at historical exchange rates. Sales
and expenses are translated at average exchange rates in effect during each
period, except for those expenses related to balance sheet amounts, which are
translated at historical exchange rates. Gains or losses from foreign currency
transactions are included in net income (loss) and to date have not been
material. We have not entered into any currency hedging activities but may
choose to do so in the future.
We expect that international sales could account for a significant portion
of our total sales in the future. International sales and operations are subject
to a number of risks, including:
- the imposition of government controls;
- export license requirements;
- restrictions on the export of critical technology;
- political and economic instability or conflicts;
- trade restrictions;
- changes in tariffs and taxes;
- difficulties in staffing and managing international operations;
- problems in establishing or managing distributor relationships; and
- general economic conditions.
In addition, as we expand our international operations and the amount of
sales invoiced in local currencies becomes a larger portion of our business,
fluctuations in the value of foreign currencies relative to the U.S. dollar may
adversely affect our business, financial condition and results of operations.
WE MAY ACQUIRE TECHNOLOGIES AND BUSINESSES, WHICH COULD EXPOSE US TO ADDITIONAL
RISKS AND BE DILUTIVE TO EXISTING STOCKHOLDERS
We may acquire certain technologies, products or businesses to broaden the
scope of our existing and planned product lines and technologies. Such
acquisitions would expose us to:
- the risks associated with the assimilation of new technologies,
operations, sites and personnel;
- the diversion of resources from our existing business and technologies;
14
- the inability to generate revenues to offset associated acquisition costs;
- the requirement to maintain uniform standards, controls, and procedures;
and
- the impairment of relationships with employees and customers as a result
of any integration of new management personnel.
Acquisitions may also result in the issuance of dilutive equity securities,
the incurrence or assumption of debt or additional expenses associated with the
amortization of acquired intangible assets or potential businesses. Our failure
to successfully address such risks could have a material adverse effect on our
business, financial condition and results of operations.
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS MAY LIMIT OUR ABILITY TO DEVELOP,
SUPPORT AND SELL OUR PRODUCTS; WE HAVE LICENSED TECHNOLOGY THAT WE USE IN OUR
PRODUCTS, BUT WE COULD LOSE RIGHTS TO THIS TECHNOLOGY AND THE ABILITY TO SELL
AND SUPPORT OUR PRODUCTS IF WE MATERIALLY BREACH THIS LICENSE
Our success will depend in part on our ability to obtain patents, maintain
trade secret protection and operate without infringing the proprietary rights of
others. As of January 31, 2000, LJL held five U.S. patents and had fourteen
pending U.S. patent applications, one pending European patent application, one
pending Israeli patent application, one pending Japanese patent application,
eleven pending international patent applications, and twenty-three pending U.S.
provisional patent applications. To supplement our proprietary technology, we
have licensed, and expect to continue to license from time to time, certain
patent rights from third parties. In the event of a material breach by us, these
licenses may be terminated. Furthermore, under some of these agreements, the
licensors may elect to convert the exclusive rights into non-exclusive rights in
the event that we fail to make certain minimum royalty payments. If the
licensors were to terminate certain of these licenses due to a material breach
of the license by us, then we would lose the right to incorporate the licensed
technology into our products, which would require us to exclude this certain
technology from our existing and future products and either license or
internally develop alternative technologies. There can be no assurance that we
would be able to license alternative technologies on commercially acceptable
terms, or at all, or that we would be capable of internally developing such
technologies. Furthermore, other companies may independently develop technology
with functionality similar or superior to the licensed technology that does not
or is claimed not to infringe the licensed patents or that otherwise circumvents
the technology we have licensed.
We are aware of third party patents that contain issued claims that may
cover certain aspects of our reagent technologies. In the future we may be
required to license third-party patents to produce certain reagents, assay kits
and related products. Licenses for such patents may not be available on
commercially acceptable terms, if at all. Any action against us claiming damages
and seeking to enjoin commercial activities relating to the affected
technologies could subject us to potential liability for damages. We could incur
substantial costs in defending patent infringement claims, obtaining patent
licenses, engaging in interference and opposition proceedings or other
challenges to our patent rights or intellectual property rights made by third
parties, or in bringing such proceedings or enforcing any patent rights against
third parties. Our inability to obtain necessary licenses or our involvement in
proceedings concerning patent rights could have a material adverse effect on our
business, financial condition and results of operations.
The patent positions of life science product companies, including ours, are
uncertain and involve complex legal and factual questions. In addition, the
coverage claimed in a patent application can be significantly reduced before the
patent is issued. Consequently, there can be no assurance that our patent
applications or those of our licensors will result in patents being issued or
that any issued patents will provide protection against competitive technologies
or will be held valid if challenged or circumvented. Others may independently
develop products similar to our products, or design around or otherwise
circumvent patents issued to us. In the event that any relevant claims of
third-party patents are upheld as valid and enforceable, we could be prevented
from practicing the subject matter claimed in such patents, or would be required
to obtain licenses from the patent owners of each of such patents or to redesign
our products or processes to avoid infringement. There can be no assurance that
such licenses would be
15
available or, if available, would be on terms acceptable to us or that we would
be successful in any attempt to redesign our products or processes to avoid
infringement. If we do not obtain the necessary licenses, we could be subject to
litigation and encounter delays in product introductions while we attempt to
design around such patents. Alternatively, the development, manufacture or sale
of such products could be prevented. Litigation would result in significant
costs to us as well as diversion of management time. Adverse determinations in
any such proceedings could have a material adverse effect on our business,
financial condition and results of operations.
We also rely on trade secret and copyright law, as well as employee and
third-party nondisclosure agreements to protect our intellectual property rights
in our products and technology. There can be no assurance that these agreements
and measures will provide meaningful protection of our trade secrets,
copyrights, know-how, or other proprietary information in the event of any
unauthorized use, misappropriation or disclosure. In addition, others may
independently develop substantially equivalent proprietary technologies.
Litigation to protect our trade secrets or copyrights would result in
significant costs to us as well as diversion of management time. Adverse
determinations in any such proceedings or unauthorized disclosure of our trade
secrets could have a material adverse effect on our business, financial
condition and results of operations. In addition, the laws of certain foreign
countries do not protect our intellectual property rights to the same extent as
U.S. laws. There can be no assurance that we will be able to protect our
intellectual property in these markets.
SOME OF OUR PRODUCTS ARE SUBJECT TO GOVERNMENT REGULATION, AND THE FAILURE BY US
OR OUR ORIGINAL EQUIPMENT MANUFACTURING CUSTOMERS TO COMPLY WITH GOVERNMENT
REGULATIONS COULD LIMIT OUR SALES OF THESE PRODUCTS
While we believe that none of our CRITERION product line will be regulated
as medical devices or otherwise subject to FDA regulation, our clinical
diagnostics products, including the Luminometer, Q2000, Horizon and a microplate
heater, are subject to FDA regulation as medical devices, as well as similar
foreign regulation. The process of obtaining and maintaining required regulatory
clearances and approvals and otherwise remaining in regulatory compliance in the
U.S. and certain other countries is lengthy, expensive and uncertain. Although
we have phased out production of the Luminometer, Q2000 and the microplate
heater, we will continue to manufacture the Horizon on an original equipment
manufacturing basis during 2000 but do not expect to manufacture the Horizon
after 2000. The Horizon is used in research and clinical laboratories to perform
in vitro diagnostic tests, which are exempt from investigational device
exemption requirements, including the need to obtain the FDA's prior approval,
provided that, among other things:
- the testing is noninvasive;
- the product is not used as a diagnostic procedure without confirmation by
another medically established test or procedure; and
- distribution controls are established to assure that in vitro diagnostic
products distributed for research are used only for those purposes.
To our knowledge, our original equipment manufacturing customers have met
these conditions. However, the FDA may not agree that our original equipment
manufacturing customers' distribution of our clinical diagnostic products meets
and have met the requirements for investigational device exemption. Failure by
us, our original equipment manufacturing customers or the recipients of our
clinical diagnostic products to comply with the investigational device exemption
requirements could result in enforcement action by the FDA, which could
adversely affect us or our original equipment manufacturing customers' ability
to gain marketing clearance or approval of these products or could result in the
recall of previously distributed products.
Applicable law requires that we comply with the FDA's regulations for the
manufacture of the Horizon. The FDA monitors compliance with its regulations by
subjecting medical product manufacturers to periodic FDA inspections of their
manufacturing facilities. The FDA has recently revised its regulations, and the
new regulations impose design controls and make other significant changes in the
requirements
16
applicable to manufacturers. We are also subject to other regulatory
requirements, and may need to submit reports to the FDA, including adverse event
reporting. Failure to comply with current FDA regulations or other applicable
legal requirements can lead to, among other things:
- warning letters;
- seizure of violative products;
- suspension of manufacturing, government injunctions; and
- potential civil or criminal liability on our part and the part of the
responsible officers and employees.
In addition, the government may halt or restrict continued sale of such
instruments. In conjunction with the export of our clinical diagnostics
instruments, we maintain International Organization for Standardization ("ISO")
9001 certification and apply the CE mark to certain products that are exported,
which subjects our operations to periodic surveillance audits. While we believe
we are currently in compliance with all applicable regulations and standards,
there can be no assurance that our operations will be found to comply with these
regulations or standards or other applicable legal requirements in the future or
that we will not be required to incur substantial costs to maintain our
compliance with existing or future manufacturing regulations, standards or other
requirements. Any such noncompliance or increased cost of compliance could have
a material adverse effect on our business, results of operations and financial
condition.
We are also subject to numerous federal, state and local laws relating to
safe working conditions, manufacturing practices, environmental protection,
storage, use and disposal of hazardous or potentially hazardous substances. Any
material failure to comply with such laws could require us to incur significant
costs and would have a material, adverse effect upon our ability to do business.
Changes in existing requirements or adoption of new requirements or policies
relating to government regulations could materially and adversely affect our
ability to comply with such requirements.
WE USE HAZARDOUS MATERIALS AND IMPROPER HANDLING OF THESE MATERIALS BY OUR
EMPLOYEES OR AGENTS COULD EXPOSE US TO SIGNIFICANT FINANCIAL PENALTIES
Our research and development and manufacturing operations involve the use of
hazardous materials, biological samples and chemicals. In the future, we plan to
manufacture certain reagents, some of which likely will contain hazardous
materials, including carcinogens. We are subject to federal, state and local
laws and regulations governing the storage, use and disposal of such materials
and certain waste products. The risk of accidental contamination or injury from
the use of these materials cannot be completely eliminated. In the event of an
accident, we could be held liable for damages that result and any such liability
could exceed our resources, which would have a material adverse effect on us. We
may incur substantial costs to comply with environmental and safety regulations
if we develop our own commercial reagents manufacturing facility.
YEAR 2000 PROBLEMS COULD ADVERSELY IMPACT OUR BUSINESS
In fiscal 1999, we established a year 2000 Program to address certain year
2000 issues. This program focuses on four key areas of readiness:
- Internal Infrastructure Readiness, addressing internal hardware and
software, including both information and non-information technology
systems;
- Supplier Readiness, addressing the preparedness of suppliers providing
material incorporated into our products;
- Product Readiness, addressing product functionality; and
- Customer Readiness, addressing customer support and transactional
activity.
17
For each readiness area, we performed risk assessment, tested and repaired
year 2000 issues as needed, developed contingency plans as considered necessary
to mitigate unknown risks, and communicated year 2000 information to employees,
suppliers, customers and other third parties.
INTERNAL INFRASTRUCTURE READINESS. We completed an assessment of our internal
software applications and information technology hardware and completed any
necessary testing and repairs. These readiness activities were intended to
encompass all major categories of software applications we use, including:
- those used for manufacturing, engineering, sales, finance, and human
resources;
- hardware, including hubs, routers, telecommunication equipment,
workstations and other items; and
- non-information technology systems, including embedded systems, facilities
and other operations, such as financial, banking, security and utility
systems.
As of December 31, 1999, we completed the evaluation and any necessary
testing and repairs of our mission critical internal infrastructure and
determined it to be year 2000 ready.
SUPPLIER READINESS. This area focused on minimizing two components of risk
associated with suppliers:
- a supplier's product integrity; and
- a supplier's business capability to continue providing products and
services.
We identified and contacted key suppliers regarding their relative risks in
these two components. As of December 31, 1999, we had received responses from
approximately 95% of our key suppliers, who indicated that the products provided
to us were year 2000 compliant, or they were in the process of developing or
executing repair plans to address year 2000 issues which may have affected their
ability to continue providing products and services to us. Since we had no way
of testing or validating what third party suppliers represented to us and given
the fact that we had not received responses from 100% of our key suppliers, as a
contingency plan we had enough material on hand at year end to satisfy our
production needs through the first quarter of 2000.
PRODUCT READINESS. This area focuses on identifying and resolving year 2000
issues existing in our products. This area encompassed a number of activities,
including testing, evaluation, engineering and manufacturing implementation. As
of December 31, 1999, we had completed a year 2000 readiness assessment for our
current generation of released CRITERION products based upon a series of
industry-recognized testing parameters and had determined that these products
were year 2000 ready.
CUSTOMER READINESS. This area focused on customer readiness as it related to
our responsibility to provide customer support, including retrofitting products
as well as providing other services to our customers. Primarily due to our
product readiness efforts regarding our current generation of released products,
we completed our assessment of year 2000 risk in this area and determined that
there were no issues to address as of December 31, 1999.
SUMMARY. As of December 31, 1999, we completed our year 2000 readiness program
for internal infrastructure, product and customer readiness. Regarding supplier
readiness, since we had no way of testing or validating what third party
suppliers represent to us and given the fact that we had not received responses
from 100% of our key suppliers, we had enough material on hand at year end to
satisfy our production needs through the first quarter of 2000. Our overall cost
to address year 2000 issues was not material. As of January 31, 2000, we have
not had any Year 2000 readiness issues. Although we are not aware of any Year
2000 readiness issues affecting us at this time, there can be no assurance that
issues, not yet apparent to us, will not arise during the year 2000 and beyond
18
OUR FUTURE OPERATING RESULTS ARE LIKELY TO FLUCTUATE
Our future operating results are likely to fluctuate substantially from year
to year and quarter to quarter. The degree of fluctuation will depend on a
number of factors, including:
- the timing and level of sales;
- the mix of products sold through direct sales channels and third party
distributors; and
- any change in the product mix among our existing and planned product
lines.
Fluctuations of these factors could have a material adverse effect on our
business, financial condition and results of operations. Because we expect a
significant portion of our business to be derived from orders placed by a
limited number of large customers, variations in the timing of such orders could
cause significant fluctuations in our operating results. Other factors that may
result in fluctuations in operating results include:
- industry acceptance of high throughput and ultra-high throughput products
as a drug discovery tool;
- market acceptance of our products;
- the timing of new product announcements and the introduction of new
products and new technologies by us or our competitors;
- delays in research and development of new products;
- increased research and development expenses;
- increased marketing and sales expenses associated with the implementation
of our direct marketing efforts;
- increased spending to develop and market our SNP genotyping product lines;
- availability and cost of component parts from our suppliers;
- competitive pricing pressures; and
- developments with respect to regulatory matters.
In connection with future introductions of new products, we may be required
to record charges for inventory obsolescence in connection with unsold
inventory, if any, of older generations of products.
Our expenditures for research and development, selling, support and
marketing and general and administrative functions are based in part on future
revenue projections. We may be unable to adjust spending in a timely manner in
response to any unanticipated declines in revenues, which may have a material
adverse effect on our business, financial condition and results of operations.
We may be required to reduce prices in response to competitive pressures or
other factors or increase spending to pursue new market opportunities. Any
decline in the average selling price of a product which is not offset by a
reduction in product costs or by sales of other products with higher gross
margins would decrease our overall gross profit and adversely affect our
business, financial condition and results of operations. In addition, our
operating results may vary from the expectations of public market analysts and
investors, and, as a result, the price of our common stock could be materially
and adversely affected.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discussion about our market risk disclosures contains
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements. We assume no obligation to update
these forward-looking statements. We are exposed to market risk related to
changes in interest rates and foreign currency exchange rates. We do not use
derivative financial instruments for speculative or trading purposes.
INTEREST RATE RISK. Our strategy to manage interest rate risk is to invest
primarily in cash equivalents and short-term marketable securities with at least
an investment grade rating to minimize interest rate and credit risk as well as
to provide for appropriate liquidity. We diversify our cash equivalents and
marketable
19
securities portfolio by investing in multiple types of short-term investment
grade securities. Interest rates payable on our debt are generally fixed. Based
on these factors, we do not believe that near-term changes in interest rates
will have a material effect on our future results of operations.
FOREIGN CURRENCY RISK. We have a wholly owned UK subsidiary which exposes
us to foreign currency exchange rate risk. The U.S. dollar is the functional
currency for our UK subsidiary, however, we do enter into transactions in
currencies other than the U.S. dollar or pound sterling. Monetary and
non-monetary assets and liabilities of our UK subsidiary are remeasured into
U.S. dollars at period end and historical exchange rates, respectively. Sales
and expenses are remeasured at average exchange rates in effect during each
period, except for those expenses related to non-monetary assets, which are
remeasured at historical exchange rates. Gains or losses resulting from foreign
currency transactions are included in net loss and to date have not been
material. We have not entered into any currency hedging activities but may
choose to do so in the future.
USE OF PROCEEDS
The proceeds from the sale of the common stock offered by this prospectus
are solely for the account of the selling shareholders. We will not receive any
proceeds from the sale of these shares.
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On February 2, 2000, we issued 1,757,545 shares of our common stock to the
selling stockholders in a private placement transaction. This prospectus covers
the resale of the shares of common stock issued in the private placement.
PLAN OF DISTRIBUTION
Shares of common stock offered by this prospectus may be offered and sold
from time to time by the selling stockholders. As used herein, "selling
stockholders" includes donees and pledgees selling shares received from a named
selling stockholder after the date of this prospectus. The selling stockholders
will act independently of us in making decisions with respect to the timing,
manner and size of each sale. The selling stockholders may sell shares from time
to time in one or more types of transactions (which may include block
transactions) on the Nasdaq National Market, in the over-the-counter market,
through put or call options transactions relating to the shares or a combination
of methods of sale, at market prices prevailing at the time of sale, or at
negotiated prices. Such transactions may or may not involve brokers or dealers.
The selling stockholders and any underwriters, dealers or agents who participate
in the distribution of the shares may be deemed to be "underwriters" under the
Securities Act of 1933. Any discount, commission or concession received by such
persons might be deemed to be an underwriting discount or commission under the
Securities Act. We have agreed to indemnify the selling stockholders against
certain liabilities arising under the Securities Act.
Selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of such Rule.
The selling stockholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a broker-dealer might
be in excess of customary commissions).
The selling stockholders will pay selling commissions or brokerage fees, if
any, with respect to the sale of the common stock offered by this prospectus in
amounts customary for this type of transaction. Each
20
selling stockholder will also pay all applicable transfer taxes and fees for its
legal counsel incurred in connection with the sale of shares.
The anti-manipulation rules under the Securities Exchange Act of 1934 may
apply to sales of the shares offered by this prospectus in the market, and to
their own activities and those of their affiliates. The selling stockholders
have advised us that during the time they are engaged in attempting to sell the
shares offered by this prospectus, they will:
- not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of) any of the shares offered by this prospectus except in
compliance with the Securities Act of 1933, as amended, applicable state
securities laws and the respective rules and regulations promulgated
thereunder;
- provide copies of this prospectus to each transferee of such selling
stockholder's shares offered by this prospectus; and
- not use on of the shares offered by this prospectus to cover any short
position in the common stock of the Company if doing so would be in
violation of applicable securities laws.
We have agreed to maintain the effectiveness of this registration statement
until, with respect to each selling stockholder, the earlier of (i) the second
anniversary of February 2, 2000, (ii) the date on which the selling stockholder
may sell all of the shares offered by this prospectus without restriction by the
volume limitations of Rule 144(e) of the Securities Act, or (iii) such time as
all shares offered by this prospectus by such selling stockholder have been sold
pursuant to a registration statement. No sales may be made pursuant to this
prospectus after the expiration date unless we amend or supplement this
prospectus to indicate that we have agreed to extend the period of
effectiveness. The selling stockholders may sell all, some or none of the shares
offered by this prospectus.
21
SELLING STOCKHOLDERS
The following table sets forth certain information as of February 2, 2000,
with respect to the selling stockholders. The following table assumes that the
selling stockholders sell all of the shares offered by this prospectus. We are
unable to determine the exact number of shares that actually will be sold.
The number and percentage of shares beneficially owned is based on
12,804,855 shares outstanding at January 31, 2000 determined in accordance with
Rule 13d-3 of the Exchange Act. The information is not necessarily indicative of
beneficial ownership for any other purpose. Under Rule 13d-3, beneficial
ownership includes any shares as to which an individual has sole or shared
voting power or investment power, and also includes shares which an individual
has the right to acquire within 60 days of January 31, 2000 through the exercise
of any stock option or other right. Unless otherwise indicated in the footnotes,
each person has sole voting and investment power (or shares such powers with his
or her spouse) with respect to the shares shown as beneficially owned.
No selling stockholder has had any material relationship with us or any of
our predecessors or affiliates within the last three years.
SHARES BENEFICIALLY
OWNED PRIOR TO SHARES
THE OFFERING OFFERED AFTER THE OFFERING
------------------- BY THIS -------------------
SELLING STOCKHOLDER NUMBER PERCENT PROSPECTUS NUMBER PERCENT
- ------------------- -------- -------- ---------- -------- --------
Activest American Performance Fund................ 40,000 * 40,000 0 *
Activest Management SA............................ 96,000 * 96,000 0 *
Aries Domestic Fund, L.P.......................... 27,434 * 27,434 0 *
Aries Domestic Fund II, L.P....................... 4,625 * 4,625 0 *
The Aries Master Fund............................. 57,941 * 57,941 0 *
Caduceus Capital II, LP........................... 58,000 * 58,000 0 *
Eaton Vance Worldwide Health Sciences Fund........ 150,000 1.17% 150,000 0 *
Green Line Mutual Funds--Green Line Health
Sciences Fund................................... 171,000 * 171,000 0 *
The Kaufmann Fund................................. 272,500 2.13% 272,500 0 *
Merlin Biomed International Ltd................... 60,000 * 60,000 0 *
Merlin Biomed, L.P................................ 40,000 * 40,000 0 *
Noranda Finance, Inc. Common Trust................ 89,300 * 72,890 16,410 *
Palm Trust........................................ 10,910 * 8,930 1,980 *
Parker Foundation................................. 19,020 * 15,520 3,500 *
PW Eucalyptus Fund, LLC........................... 155,000 1.21% 155,000 0 *
PW Eucalyptus Fund, Ltd........................... 9,500 * 9,500 0 *
T. Rowe Price Health Sciences Fund, Inc........... 283,545 2.21% 283,545 0 *
Westfield Capital Growth Fund L.P................. 92,000 * 92,000 0 *
Westfield Capital Growth Fund II L.P.............. 8,000 * 8,000 0 *
Westcliff Long/Short, L.P......................... 6,530 * 5,330 1,200 *
Westcliff Master Fund, L.P........................ 26,560 * 21,700 4,860 *
Westcliff Partners, L.P........................... 25,580 * 17,320 8,260 *
Westcliff Partners SA, L.P........................ 6,270 * 4,230 2,040 *
Westcliff Small Cap Fund, L.P..................... 4,930 * 4,080 850 *
Winchester Global Trust Company Limited as Trustee
for Caduceus Capital Trust...................... 82,000 * 82,000 0 *
- ------------------------
* less than 1%
22
LEGAL MATTERS
The validity of the issuance of the common stock offered by this prospectus
will be passed upon by Venture Law Group, A Professional Corporation, Menlo
Park, California, counsel to LJL BioSystems, Inc.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission. Certain information in the
registration statement has been omitted from this prospectus in accordance with
the rules of the SEC. We file proxy statements and annual, quarterly and special
reports and other information with the SEC. You can inspect and copy the
registration statement as well as the reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New
York, New York 10048. You can call the SEC at 1-800-732-0330 for further
information about the public reference rooms. We are also required to file
electronic versions of these documents with the SEC, which may be accessed from
the SEC's World Wide Web site at http://www.sec/gov. Reports, proxy and
information statements and other information concerning LJL BioSystems, Inc.,
may be inspected at The Nasdaq Stock Market at 1735 K Street, N.W., Washington,
D.C. 20006.
The SEC allows us to "incorporate by reference" certain of our
publicly-filed documents into this prospectus, which means that information
included in those documents is considered part of this prospectus. Information
that we file with the SEC after the effective date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, until the selling
stockholders have sold all the shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 1999
filed with the SEC on February 16, 2000.
2. Our Current Reports on Form 8-K, filed with the SEC on January 13,
January 26, February 3 and February 9, 2000, and on Form 8-K/A on February 10,
2000.
3. The description of our common stock in our Registration Statement on
Form 8-A filed with the SEC on January 22, 1998 (File No. 000-23647).
We will furnish without charge to you, on written or oral request, a copy of
any or all of the documents incorporated by reference, other than exhibits to
those documents. You should direct any requests for documents to Robert T.
Beggs, 404 Tasman Drive, Sunnyvale, CA 94089, telephone: (408) 541-8787.
23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale and distribution of the Common Stock
being registered. Selling commissions and brokerage fees and any applicable
transfer taxes and fees and disbursements of counsel for the selling
stockholders are payable individually by the selling stockholders. All amounts
shown are estimates except the SEC registration fee and the Nasdaq listing fee.
AMOUNT
TO BE PAID
----------
SEC registration fee........................................ $ 7,104
Legal fees and expenses..................................... 100,000
Accounting fees and expenses................................ 10,000
Nasdaq listing fees......................................... 17,500
Miscellaneous expenses...................................... 15,000
--------
Total..................................................... $149,604
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers 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. Articles XIII and XIV of the
Registrant's Fourth Amended and Restated Certificate of Incorporation and
Article VI of the Registrant's Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by law. In addition, the Registrant has entered into Indemnification Agreements
with its officers and directors and maintains director and officer liability
insurance.
In connection with this offering, the selling stockholders have agreed to
indemnify the Registrant, its directors and officers and each such person who
controls the Registrant, against any and all liability arising from inaccurate
information provided to the Registrant by the selling stockholders and contained
herein up to a maximum (except in the case of willful fraud by the selling
stockholder) of the net proceeds received by the selling stockholders from the
sale of their shares hereunder.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------
4.7(1) Form of Stock Purchase Agreement dated as of February 2,
2000
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Independent Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
- ------------------------
(1) Incorporated by reference to Exhibit 4.6 filed with our current report on
Form 8-K, as filed February 3, 2000.
24
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 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.
(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.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 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 the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 above 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 of 1933 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 against the Registrant by such director, officer
or controlling person in connection with the securities being registered
hereunder, 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 of 1933 and will be governed by the
final adjudication of such issue.
25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on February 16, 2000.
LJL BIOSYSTEMS, INC.
By: /s/ LEV LEYTES
-----------------------------------------
Lev J. Leytes
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD OF DIRECTORS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints, Lev J. Leytes and Robert T. Beggs, and
each of them, as his attorney-in-fact, each with full power of substitution, for
him or her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and any and all
Registration Statements filed pursuant to Rule 462 under the Securities Act of
1933, as amended, in connection with or related to the Offering contemplated by
this Registration Statement and its amendments, if any, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney to any and all amendments
to said Registration Statement.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ LEV LEYTES President, Chief Executive
-------------------------------------- Officer and Chairman of the February 16, 2000
(Lev J. Leytes) Board
/s/ GALINA LEYTES
-------------------------------------- Executive Vice President and February 16, 2000
(Galina Leytes) Director
/s/ GEORGE W. DUNBAR
-------------------------------------- Director February 16, 2000
(George W. Dunbar, Jr.)
/s/ DANIEL S. JANNEY
-------------------------------------- Director February 16, 2000
(Daniel S. Janney)
/s/ MICHAEL F. BIGHAM
-------------------------------------- Director February 16, 2000
(Michael F. Bigham)
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN G. FREUND
-------------------------------------- Director February 16, 2000
(John G. Freund, M.D.)
/s/ JOHN D. DIEKMAN
-------------------------------------- Director February 16, 2000
(John D. Diekman, Ph.D.)
LJL BIOSYSTEMS, INC.
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ------------------------------------------------------------
4.7(1) Form of Stock Purchase Agreement dated as of February 2,
2000
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Independent Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
- ------------------------
(1) Incorporated by reference to Exhibit 4.6 filed with our current report on
Form 8-K, as filed February 3, 2000.