AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 2000
REGISTRATION NO. 333-48366
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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TRIANGLE PHARMACEUTICALS, INC.
(Exact name of Registrant as Specified in Its Charter)
DELAWARE 56-1930728
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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4 UNIVERSITY PLACE
4611 UNIVERSITY DRIVE
DURHAM, NORTH CAROLINA, 27707
(919) 493-5980
(Address, Including Zip Code, And Telephone Number, Including Area Code, Of
Registrant's Principal Executive Offices)
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DAVID W. BARRY, M.D.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
TRIANGLE PHARMACEUTICALS, INC.
4 UNIVERSITY PLACE
4611 UNIVERSITY DRIVE
DURHAM, NORTH CAROLINA 27707
(919) 493-5980
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
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COPIES TO:
Luci Staller Altman, Esq.
Ellen B. Corenswet, Esq.
BROBECK, PHLEGER & HARRISON LLP
1633 Broadway, 47th Floor
New York, NY 10019
(212) 581-1600
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If only the securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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: / /
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM AGGREGATE
TITLE OF SHARES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE(2)
-------------------------------- -------------------------- -----------------------------
Common Stock, $.001 par value................................ $24,000,000 $6,336
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(o) under the Securities Act
of 1933.
(2) $26,400 has been paid previously.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
SUBJECT TO COMPLETION, DATED NOVEMBER 17, 2000.
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 in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
TRIANGLE PHARMACEUTICALS, INC.
$24,000,000 AGGREGATE AMOUNT OF COMMON STOCK
We have engaged Ramius Securities, LLC as the Underwriter for this
offering. The Underwriter has agreed to sell, on a best efforts basis, up to
$100 million of our common stock during 15-trading day selling periods which we
select. The Underwriter may sell our common stock at market prices prevailing at
the time of sale, at prices related to prevailing market prices or at negotiated
prices, but not below a floor price set by us for each selling period. If the
Underwriter does not sell the requisite number of shares of our common stock
during a given selling period, then under the terms of the purchase agreement,
Ramius Capital Group, LLC, the Investor, is obligated to purchase from us the
remaining number of shares of our common stock so long as certain share price
and volume limitations are met. The Underwriter may also purchase from us up to
an additional 10% of the amount of common stock we request to sell during a
15-trading day selling period to cover over-allotments. See "Plan of
Distribution" commencing on page 16 for a discussion of the underwriting
agreement and purchase agreement.
Pursuant to Rule 415 of the Securities Act of 1933, as amended, we are
initially registering $24 million as an aggregate amount of our common stock for
issuance and sale pursuant to the underwriting agreement and purchase agreement.
We intend to file additional registration statements or post-effective
amendments to this registration statement, as needed, for the sale of additional
shares of common stock under the underwriting agreement and purchase agreement.
See "Plan of Distribution."
You should read this document and any prospectus supplement or
amendment carefully before you invest.
Our common stock is traded on the Nasdaq National Market under the
symbol "VIRS." On November 16, 2000, the last reported sale price for our common
stock was $6.625 per share.
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THE COMMON STOCK OFFERED INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 2 FOR A DISCUSSION OF SOME IMPORTANT RISKS YOU
SHOULD CONSIDER BEFORE BUYING ANY SHARES OF COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION, SEC, NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
Ramius Securities, LLC
The date of this prospectus is _______ , 2000
TABLE OF CONTENTS
PAGE
WHERE YOU CAN FIND MORE INFORMATION............................................1
INFORMATION INCORPORATED BY REFERENCE..........................................1
OUR BUSINESS...................................................................2
RISK FACTORS...................................................................2
FORWARD-LOOKING STATEMENTS....................................................15
USE OF PROCEEDS...............................................................15
PLAN OF DISTRIBUTION..........................................................16
LEGAL MATTERS.................................................................21
EXPERTS.......................................................................21
You should rely only on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information contained in this document may only be
accurate on the date of this document. This prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, in any state where the
offer or sale is prohibited. Neither the delivery of this prospectus, nor any
sale made under this prospectus shall, under any circumstances, imply that the
information in this prospectus is correct as of any date after the date of this
prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC.
You may read and copy any document we file at the SEC's public reference rooms
in Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public on the SEC's website at
http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings we make with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
1. Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (file no. 000-21589), including certain
information in our Definitive Proxy Statement in connection with
our 2000 Annual Meeting of Stockholders;
2. Our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2000 (file no. 000-21589);
3. Our Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2000 (file no. 000-21589);
4. Our Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2000 (file no. 000-21589);
5. Our Report on Form 8-K filed on November 3, 2000 (file no.
000-21589); and
6. The description of our common stock contained in our
Registration Statements on Form 8-A filed October 18, 1996,
February 10, 1999, and June 18, 1999 (file no. 000-21589).
The reports and other documents that we file after the date of this
prospectus will update and supersede the information in this prospectus.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
Triangle Pharmaceuticals, Inc.,
4 University Place
4611 University Drive
Durham, North Carolina, 27707
(919) 493-5980
Attn: General Counsel.
We have received U.S. trademark registrations for our corporate name
and logo, Coactinon(R) and Coviracil(R). This prospectus also includes names
and trademarks of other companies.
1
OUR BUSINESS
We develop new drug candidates primarily in the antiviral area, with a
particular focus on therapies for HIV, including AIDS, and the hepatitis B and C
viruses. We have an existing portfolio of five licensed drug candidates and
several drug candidates for which we have an option to acquire a license.
Members of our senior management, prior to joining Triangle, played instrumental
roles in developing and commercializing several leading antiviral therapies. Our
goal is to capitalize on our management team's expertise, as well as on advances
in virology and immunology, to identify, develop and commercialize new drug
candidates that can be used alone or in combination to coactively treat serious
diseases.
Triangle was incorporated in Delaware in July 1995. Our principal
executive offices are located at 4 University Place, 4611 University Drive,
Durham, North Carolina 27707, and our telephone number is (919) 493-5980.
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS AND UNCERTAINTIES BEFORE DECIDING TO
PURCHASE SHARES OF OUR COMMON STOCK. AN INVESTMENT IN OUR COMMON STOCK INVOLVES
A HIGH DEGREE OF RISK.
ALL OF OUR PRODUCT CANDIDATES ARE IN DEVELOPMENT AND MAY NEVER BE SUCCESSFULLY
COMMERCIALIZED WHICH WOULD HAVE AN ADVERSE IMPACT ON YOUR INVESTMENT AND OUR
BUSINESS.
Some of our drug candidates are at an early stage of development and
all of our drug candidates will require expensive and lengthy testing and
regulatory clearances. None of our drug candidates has been approved by
regulatory authorities. We do not expect any of our drug candidates to be
commercially available until at least the year 2002. There are many reasons that
we may fail in our efforts to develop our drug candidates, including that:
- our drug candidates will be ineffective, toxic or will not receive
regulatory clearances,
- our drug candidates will be too expensive to manufacture or market
or will not achieve broad market acceptance,
- third parties will hold proprietary rights that may preclude us
from developing or marketing our drug candidates, or
- third parties will market equivalent or superior products.
The success of our business depends upon our ability to successfully
develop and market our drug candidates.
WE HAVE INCURRED LOSSES SINCE INCEPTION AND MAY NEVER ACHIEVE PROFITABILITY.
We formed Triangle in July 1995 and we have only a limited operating
history for you to review in evaluating our business. We have incurred losses
since our inception. At September 30, 2000, our accumulated deficit was $305.6
million. Our historical costs relate primarily to the acquisition and
development of our drug candidates and selling, general and administrative
costs. We have not generated any revenue from the sale of our drug candidates to
date, and do not expect to do so until at least the year 2002. In addition, we
expect annual losses to increase over the next several years as a result of our
drug development and commercialization efforts. To become profitable, we must
successfully develop and obtain regulatory approval for our drug candidates and
effectively manufacture, market and sell any products we develop. We may never
generate significant revenue or achieve profitable operations.
2
IF WE NEED ADDITIONAL FUNDS AND ARE UNABLE TO RAISE THEM, WE WILL HAVE TO
CURTAIL OR CEASE OPERATIONS.
Our drug development programs and potential commercialization of our
drug candidates require substantial working capital, including expenses for
preclinical testing, chemical synthetic scale-up, manufacture of drug substance
for clinical trials, toxicology studies, clinical trials of drug candidates,
sales and marketing expenses, payments to our licensors and potential commercial
launch of our drug candidates. Our future working capital needs will depend on
many factors, including:
- the progress and magnitude of our drug development programs,
- the scope and results of preclinical testing and clinical trials,
- the cost, timing and outcome of regulatory reviews,
- the costs under current and future license and option agreements
for our drug candidates, including the costs of obtaining patent
protection for our drug candidates,
- the costs of acquiring any additional drug candidates,
- the rate of technological advances,
- the commercial potential of our drug candidates,
- the magnitude of our administrative and legal expenses,
- the costs of establishing sales and marketing functions, and
- the costs of establishing third party arrangements for
manufacturing.
We have incurred negative cash flow from operations since we
incorporated Triangle and do not expect to generate positive cash flow from our
operations for at least the next several years. Although the strategic alliance
with Abbott Laboratories, the Abbott Alliance, provided us with significant
additional funding, we cannot assure you that such funding, combined with other
available sources of funds, will be sufficient to meet our future needs. In
addition, we cannot assure you that we will receive the contingent future
research funding payments under the Abbott Alliance. Therefore, we may need
additional future financings to fund our operations. We may not be able to
obtain adequate financing to fund our operations, and any additional financing
we obtain may be on terms that are not favorable to us. In addition, any future
financings could substantially dilute our stockholders. If adequate funds are
not available, we will be required to delay, reduce or eliminate one or more of
our drug development programs, to enter into new collaborative arrangements or
to modify the Abbott Alliance on terms that are not favorable to us. These
collaborative arrangements or modifications could result in the transfer to
third parties of rights that we consider valuable. In addition, we often
consider the acquisition of technologies and drug candidates that would increase
our working capital requirements.
To facilitate our ability to raise additional equity capital, on
November 1, 2000, we entered into the Facility, described below under "Plan of
Distribution," pursuant to which we may be able to issue and sell up to $100
million of our common stock over the next three years. There are conditions and
limitations on the obligations of Ramius Securities, LLC, the Underwriter, and
Ramius Capital Group, LLC, the Investor, with respect to the issuance and sale
of our common stock. In particular, the Underwriter's and Investor's obligations
are subject to certain share price and trading volume limitations which could
curtail the number of shares of common stock they are obligated to sell or
purchase, as the case may be, regardless of the number of shares of common stock
we request to be sold. In some circumstances, such as an average trading price
of less than $4.00 per share, they will have no obligation to sell or purchase
our common stock, even if we request them to do so. In addition, we may elect
not to sell shares of common stock if we believe that market conditions are
unfavorable.
3
BECAUSE OUR PRODUCT CANDIDATES MAY NOT SUCCESSFULLY COMPLETE CLINICAL TRIALS
REQUIRED FOR COMMERCIALIZATION, OUR BUSINESS MAY NEVER ACHIEVE PROFITABILITY.
To obtain regulatory approvals needed for the sale of our drug
candidates, we must demonstrate through preclinical testing and clinical trials
that each drug candidate is safe and effective. The clinical trial process is
complex and uncertain and the regulatory environment varies widely from country
to country. Positive results from preclinical testing and early clinical trials
do not ensure positive results in pivotal clinical trials. Many companies in our
industry have suffered significant setbacks in pivotal clinical trials, even
after promising results in earlier trials. Any of our drug candidates may
produce undesirable side effects in humans. These side effects could cause us or
regulatory authorities to interrupt, delay or halt clinical trials of a drug
candidate, as occurred with mozenavir dimesylate, or could result in regulatory
authorities refusing to approve the drug candidate for any and all targeted
indications. In April 2000, the Food and Drug Administration, FDA, issued a
clinical hold on, and the South African Medicines Control Council, MCC,
terminated, clinical study FTC-302 for our drug candidate Coviracil, formerly
known as FTC. Study FTC-302 was being conducted under a U.S. Investigational New
Drug Application, IND, at sites in South Africa. The FDA indicated that study
FTC-302 may not be adequate to provide pivotal data in support of a New Drug
Application, NDA. Discussions with the FDA and MCC on this issue are continuing.
Due to these circumstances, the planned submission of a U.S. NDA for Coviracil
may be significantly delayed. We, the FDA, or foreign regulatory authorities may
suspend or terminate clinical trials at any time if we or they believe the trial
participants face unacceptable health risks. Clinical trials may not demonstrate
that our drug candidates are safe or effective.
Clinical trials are lengthy and expensive. They require adequate
supplies of drug substance and sufficient patient enrollment. Patient enrollment
is a function of many factors, including:
- the size of the patient population,
- the nature of the protocol,
- the proximity of patients to clinical sites, and
- the eligibility criteria for the clinical trial.
Delays in patient enrollment can result in increased costs and longer
development times. Even if we successfully complete clinical trials, we may not
be able to file any required regulatory submissions in a timely manner and we
may not receive regulatory approval for the drug candidate.
In addition, if the FDA or foreign regulatory authorities require
additional clinical trials, we could face increased costs and significant
development delays, as occurred with Coactinon and which may occur with
Coviracil. In December 1999, we were advised by the FDA that additional Phase
III studies would be required to support an NDA submission for Coactinon. In
August 2000, we announced our decision to continue the development of Coactinon.
Based upon discussions with the FDA and an analysis of clinical data from two
clinical studies, we began enrolling an additional 280 patients in an ongoing
Phase III clinical study in an effort to generate clinical results that would
help support an NDA submission for Coactinon. Changes in regulatory policy or
additional regulations adopted during product development and regulatory review
of information we submit could also result in delays or rejections. The FDA has
notified us that two of our drug candidates, Coviracil and DAPD for the
treatment of HIV, qualify for designation as "fast track" products under
provisions of the Food and Drug Administration Modernization Act of 1997. The
fast track provisions are designed to expedite the review of new drugs intended
to treat serious or life-threatening conditions and essentially codified the
criteria previously established by the FDA for accelerated approval. These drug
candidates may not, however, continue to qualify for expedited review and our
other drug candidates may fail to qualify for fast track development or
expedited review. Even though some of our drug candidates have qualified for
expedited review, the FDA may not approve them at all or any sooner than other
drug candidates that do not qualify for expedited review.
4
IF WE OR OUR LICENSORS ARE NOT ABLE TO OBTAIN AND MAINTAIN ADEQUATE PATENT
PROTECTION FOR OUR PRODUCT CANDIDATES, WE MAY BE UNABLE TO COMMERCIALIZE OUR
PRODUCT CANDIDATES OR TO PREVENT OTHER COMPANIES FROM USING OUR TECHNOLOGY IN
COMPETITIVE PRODUCTS.
Our success will depend on our ability and the ability of our licensors
to obtain and maintain patents and proprietary rights for our drug candidates
and to avoid infringing the proprietary rights of others, both in the United
States and in foreign countries. We have no patents in our own name and we have
a small number of patent applications of our own pending. One of our patent
applications is a joint application with co-inventors from another institution.
We have, however, licensed or we have an option to license patents, patent
applications and other proprietary rights from third parties for each of our
drug candidates. If we breach our licenses, we may lose rights to important
technology and drug candidates.
Our patent position, like that of many pharmaceutical companies, is
uncertain and involves complex legal and factual questions for which important
legal principles are unresolved. We may not develop or obtain rights to products
or processes that are patentable. Even if we do obtain patents, they may not
adequately protect the technology we own or have in-licensed. In addition,
others may challenge, seek to invalidate, infringe or circumvent any patents we
own or in-license, and rights we receive under those patents may not provide
competitive advantages to us. Further, the manufacture, use or sale of our
products or processes may infringe the patent rights of others.
Several pharmaceutical and biotechnology companies, universities and
research institutions have filed patent applications or received patents that
cover our technologies or technologies similar to ours. Others have filed patent
applications and received patents that conflict with patents or patent
applications we own or have in-licensed, either by claiming the same methods or
compounds or by claiming methods or compounds that could dominate those owned by
or licensed to us. In addition, we may not be aware of all patents or patent
applications that may impact our ability to make, use or sell any of our drug
candidates. For example, United States patent applications are confidential
while pending in the Patent and Trademark Office, PTO, and patent applications
filed in foreign countries are often first published six months or more after
filing. Any conflicts resulting from third party patent applications and patents
could significantly reduce the coverage of our patents and limit our ability to
obtain meaningful patent protection. If other companies obtain patents with
conflicting claims, we may be required to obtain licenses to these patents or to
develop or obtain alternative technology. We may not be able to obtain any such
license on acceptable terms or at all. Any failure to obtain such licenses could
delay or prevent us from pursuing the development or commercialization of our
drug candidates, which would adversely affect our business.
There are significant risks regarding the patent rights of two of our
in-licensed drug candidates. We may not be able to commercialize Coviracil or
DAPD due to patent rights held by third parties other than our licensors. Third
parties have filed numerous patent applications and have received numerous
issued patents in the United States and many foreign countries that relate to
these drug candidates and their use alone or coactively to treat HIV and
hepatitis B. As a result, our patent position regarding the use of Coviracil and
DAPD to treat HIV and/or hepatitis B is highly uncertain and involves numerous
complex legal and factual questions that are unknown or unresolved. If any of
these questions is resolved in a manner that is not favorable to us, we would
not have the right to commercialize Coviracil and/or DAPD in the absence of a
license from one or more third parties, which may not be available on acceptable
terms or at all. In addition, even if any of these questions is favorably
resolved, we may still attempt to obtain licenses from one or more third parties
to reduce or eliminate the risks relating to some or all of these matters. Such
licenses may not be available on acceptable terms or at all. Our inability to
commercialize either of these drug candidates could adversely affect our
business.
COVIRACIL (EMTRICITABINE)
Coviracil, a purified form of FTC, belongs to the same general class of
nucleosides as lamivudine, also known as 3TC. In the United States, the FDA has
approved 3TC for the treatment of hepatitis B and for use in combination with
zidovudine, also known as AZT, for the treatment of HIV. Regulatory authorities
have approved 3TC for the treatment of hepatitis B and for use in combination
with other nucleoside analogues for the treatment of HIV in a number of other
countries. Glaxo Wellcome plc, Glaxo, currently sells 3TC for the treatment of
HIV and hepatitis B under a license agreement with BioChem Pharma Inc., BioChem
Pharma. We obtained rights to Coviracil under a license from Emory University,
Emory. In 1990 and 1991, Emory filed in the United States and thereafter in
numerous foreign countries patent applications with claims to compositions of
matter and methods to
5
treat HIV and hepatitis B with Coviracil. In 1991, Yale University, Yale,
filed in the United States patent applications on FTC, including Coviracil
and its use to treat hepatitis B, and subsequently licensed its rights under
those patent applications to Emory. Our license arrangement with Emory
includes all rights to Coviracil and its uses claimed in the Yale patent
applications.
HIV. Emory received a United States patent in 1993 covering a method to
treat HIV with Coviracil. Emory has also received United States and European
patents containing composition of matter claims that cover Coviracil. BioChem
Pharma filed a patent application in the United States in 1989 and received a
patent in 1991 covering a group of nucleosides in the same general class as
Coviracil, but which did not include Coviracil. BioChem Pharma filed foreign
patent applications in 1990, which expanded upon its 1989 United States patent
application to include FTC among a large class of nucleosides. The foreign
patent applications are pending in many countries and have issued in a number of
countries with claims directed to FTC that may cover Coviracil and its use to
treat HIV. In addition, BioChem Pharma filed a United States patent application
in 1991 specifically directed to Coviracil. BioChem Pharma has received two
patents in the United States based on this patent application, one directed to
Coviracil and the other directed to a method for treating viral diseases with
Coviracil. The PTO has determined that there are conflicts between both BioChem
Pharma patents and patent applications filed by Emory because they have
overlapping claims to the same technology. The PTO is conducting two adversarial
proceedings, interferences, to determine whether BioChem Pharma or Emory is
entitled to the patent claims in dispute regarding BioChem Pharma's two issued
patents. Emory may not prevail in the adversarial proceedings, and the
proceedings may also delay the decision of the PTO regarding Emory's patent
application. BioChem Pharma also filed patent applications in many foreign
countries based upon its 1991 United States patent application and has received
patents in certain countries. BioChem Pharma may have additional patent
applications pending in the United States.
In the United States, the first to invent a technology is entitled to
patent protection on that technology. For patent applications filed prior to
January 1, 1996, United States patent law provides that a party who invented a
technology outside the United States is deemed to have invented the technology
on the earlier of the date it introduced the invention in the United States or
the date it filed its patent application. In a filing with the SEC, BioChem
Pharma stated that prior to January 1, 1996, it conducted substantially all of
its research activities outside the United States. BioChem Pharma also stated
that it considered this to be a disadvantage in obtaining United States patents
based on patent applications filed before January 1, 1996 as compared to
companies that mainly conducted research in the United States. We do not know
whether Emory or BioChem Pharma was the first to invent the technology claimed
in their respective United States patent applications or patents. We also do not
know whether BioChem Pharma invented the technology disclosed in its patent
applications in the United States or introduced that technology in the United
States before the date of its patent applications.
In foreign countries, the first party to file a patent application on a
technology, not the first to invent the technology, is entitled to patent
protection on that technology. We believe that Emory filed patent applications
disclosing Coviracil as a useful anti-HIV agent in many foreign countries before
BioChem Pharma filed its foreign patent applications on that technology.
However, BioChem Pharma has received patents in several foreign countries. In
addition, BioChem Pharma has filed patent applications on Coviracil and its uses
in certain countries in which Emory did not file patent applications. Emory has
opposed or otherwise challenged patent claims on Coviracil granted to BioChem
Pharma in Australia and Europe. Emory may not initiate patent opposition
proceedings in any other countries or be successful in any foreign proceeding
attempting to prevent the issuance of, revoke or limit the scope of patents
issued to BioChem Pharma. BioChem Pharma has opposed patent claims on Coviracil
granted to Emory in Europe, Japan, Australia and South Korea. BioChem Pharma may
make additional challenges to Emory patents or patent applications, which Emory
may not succeed in defending. Our sales, if any, of Coviracil for the treatment
of HIV may be held to infringe United States and foreign patent rights of
BioChem Pharma. Under the patent laws of most countries, a product can be found
to infringe a third party patent either if the third party patent expressly
covers the product or method of treatment using the product, or if the third
party patent covers subject matter that is substantially equivalent in nature to
the product or method, even if the patent does not expressly cover the product
or method. If it is determined that the sale of Coviracil for the treatment of
HIV infringes a BioChem Pharma patent, we would not have the right to make, use
or sell Coviracil for the treatment of HIV in one or more countries in the
absence of a license from BioChem Pharma. We may be unable to obtain such a
license from BioChem Pharma on acceptable terms or at all.
6
HEPATITIS B. Burroughs Wellcome Co, Burroughs Wellcome, filed patent
applications in March 1991 and May 1991 in Great Britain on a method to treat
hepatitis B with FTC and purified forms of FTC, that include Coviracil.
Burroughs Wellcome filed similar patent applications in other countries,
including the United States. Glaxo subsequently acquired Burroughs Wellcome's
rights under those patent applications. Those patent applications were filed in
foreign countries prior to the date Emory filed its patent application on the
use of Coviracil to treat hepatitis B. Burroughs Wellcome's foreign patent
applications, therefore, have priority over those filed by Emory. In July 1996,
Emory instituted litigation against Glaxo in the United States District Court to
obtain ownership of the patent applications filed by Burroughs Wellcome,
alleging that Burroughs Wellcome converted and misappropriated Emory's invention
and property and that an Emory employee is the inventor or a co-inventor of the
subject matter covered by the Burroughs Wellcome patent applications. In May
1999, Emory and Glaxo settled the litigation, and we became the exclusive
licensee of the United States and all foreign patent applications and patents
filed by Burroughs Wellcome on the use of Coviracil to treat hepatitis B. Under
the license and settlement agreements, Emory and we were also given access to
development and clinical data and drug substance held by Glaxo relating to
Coviracil.
BioChem Pharma filed a patent application in May 1991 in Great Britain
also directed to a method to treat hepatitis B with FTC. BioChem Pharma filed
similar patent applications in other countries. In January 1996, BioChem Pharma
received a patent in the United States, which included a claim to treat
hepatitis B with Coviracil. The PTO has determined that there is a conflict
between the BioChem Pharma patent and patent applications filed by Yale and
Emory. The PTO is conducting an adversarial proceeding, an interference, to
determine which party is entitled to the patent claims in dispute. Yale licensed
all of its rights relating to FTC, including Coviracil, and its uses claimed in
this patent application to Emory, which subsequently licensed these rights to
us. Neither Emory nor Yale may prevail in the adversarial proceeding, and the
proceeding may delay the decision of the PTO regarding Yale's and Emory's patent
applications. In addition, the PTO has recently added the U.S. patent
application filed by Burroughs Wellcome to this interference. Emory may not
pursue or succeed in any such proceedings. We will not be able to sell Coviracil
for the treatment of hepatitis B in the United States unless a United States
court or administrative body determines that the BioChem Pharma patent is
invalid or unless we obtain a license from BioChem Pharma. We may be unable to
obtain such a license on acceptable terms or at all. In July 1991, BioChem
Pharma received a United States patent on the use of 3TC to treat hepatitis B
and has corresponding patent applications pending or issued in foreign
countries. If it is determined that the use of Coviracil to treat hepatitis B is
not substantially different from the use of 3TC to treat hepatitis B, a court
could hold that the use of Coviracil to treat hepatitis B infringes these
BioChem Pharma 3TC patents.
In addition, BioChem Pharma has filed in the United States and foreign
countries several patent applications on manufacturing methods relating to a
class of nucleosides that includes Coviracil, from which BioChem Pharma has
received several patents in the United States and many foreign countries. If we
use a manufacturing method that is covered by patents issued on any of these
applications, we will not be able to manufacture Coviracil without a license
from BioChem Pharma. We may not be able to obtain such a license on acceptable
terms or at all.
DAPD
We obtained our rights to DAPD under a license from Emory and the
University of Georgia Research Foundation, Inc., University of Georgia. Our
rights to DAPD include a number of issued United States patents that cover
composition of matter, a method for the synthesis of DAPD, methods for the use
of DAPD alone or in combination with certain other agents for the treatment of
hepatitis B, and a method to treat HIV with DAPD. We also have rights to several
foreign patents and patent applications that cover methods for the use of DAPD
alone or in combination with certain other anti-hepatitis B agents for the
treatment of hepatitis B. Additional foreign patent applications are pending
which contain claims for the use of DAPD to treat HIV. Emory and the University
of Georgia filed patent applications claiming these inventions in the United
States in 1990 and 1992. BioChem Pharma filed a patent application in the United
States in 1988 on a group of nucleosides in the same general class as DAPD and
their use to treat HIV, and has filed corresponding patent applications in
foreign countries. The PTO issued a patent to BioChem Pharma in 1993 covering a
class of nucleosides that includes DAPD and its use to treat HIV. Corresponding
patents have been issued to BioChem Pharma in many foreign countries. Emory has
filed an opposition to patent claims granted to BioChem Pharma by the European
Patent Office based, in part, upon Emory's assertion that BioChem Pharma's
patent does not disclose how to make DAPD. In a patent opposition hearing held
7
at the European Patent Office on March 4, 1999, the Opposition Division ruled
that the BioChem Pharma European patent covering DAPD is valid. Emory has
appealed this decision to the European Patent Office Technical Board of Appeal.
If the Technical Board of Appeal affirms the decision of the Opposition
Division, or if Emory or Triangle does not pursue the appeal, we would not be
able to sell DAPD in Europe without a license from BioChem Pharma, which may not
be available on acceptable terms or at all. Patent claims granted to Emory on
both DAPD (the administered drug) and DXG (the parent drug into which DAPD is
converted in the body) have also been opposed by BioChem Pharma in the
Australian Patent Office.
In a decision dated November 8, 2000, the Australian Patent Office held
that Emory's patent claims directed to DAPD are not patentable over an earlier
BioChem Pharma patent. If Emory, the University of Georgia or Triangle does not
appeal this decision of the Australian Patent Office, or is unsuccessful in the
appeal, then we will not be able to sell DAPD in Australia without a license
from BioChem Pharma, which may not be available on reasonable terms or at all.
BioChem Pharma's opposition to Emory's patent claims on DXG in Australia is
ongoing. If Emory, the University of Georgia and we do not challenge, or are not
successful in any challenge to, BioChem Pharma's issued patents, pending patent
applications, or patents that may issue from such applications, we will not be
able to manufacture, use or sell DAPD in the United States and any foreign
countries in which BioChem Pharma receives a patent without a license from
BioChem Pharma. We may not be able to obtain such a license from BioChem Pharma
on acceptable terms or at all.
IMMUNOSTIMULATORY SEQUENCE PRODUCT CANDIDATES
In March 2000, we entered into a licensing and collaborative agreement
with Dynavax Technologies Corporation, Dynavax, to develop immunostimulatory
polynucleotide sequence product candidates for the prevention and/or treatment
of serious viral diseases, which became effective in April 2000.
Immunostimulatory sequences are polynucleotides which stimulate the immune
system, and could potentially be used in combination with our small molecule
product candidates to increase the body's ability to defend against viral
infection. Immunostimulatory sequences can be stabilized for use through
internal linkages that do not occur in nature, including phosphorothioate
linkages.
There are a number of companies which have patent applications and
issued patents, both in the United States and in other countries, that cover
immunostimulatory sequences and their uses. Coley Pharmaceuticals, Inc. has
filed several patent applications in this area and has in addition exclusively
licensed a number of patent applications on this subject from the University of
Iowa and Isis Pharmaceuticals, Inc. A number of these patent applications have
been issued. A number of companies have also filed patent applications and have
or are expected to receive patents on certain polynucleotides and methods for
their use and manufacture. We could be prevented from making, using or selling
any immunostimulatory sequence that is covered by a patent issued to a third
party company, unless we obtain a license from that company, which may not be
available on reasonable terms or at all.
With respect to any of our drug candidates, litigation, patent
opposition and adversarial proceedings, including the currently pending
proceedings, could result in substantial costs to us. We expect the costs of the
currently pending proceedings to increase significantly during the next several
years. We anticipate that additional litigation and/or proceedings will be
necessary or may be initiated to enforce any patents we own or in-license, or to
determine the scope, validity and enforceability of other parties' proprietary
rights and the priority of an invention. Any of these activities could result in
substantial costs and/or delays to us. The outcome of any of these proceedings
may significantly affect our drug candidates and technology. United States
patents carry a presumption of validity and generally can be invalidated only
through clear and convincing evidence. As indicated above, the PTO is conducting
three adversarial proceedings in connection with the emtricitabine technology.
We cannot assure you that a court or administrative body would hold our
in-licensed patents valid or would find an alleged infringer to be infringing.
Further, the license and option agreements with Emory, the University of
Georgia, The Regents of the University of California, The DuPont Pharmaceuticals
Company, Mitsubishi Chemical Corporation, and Dynavax provide that each of these
licensors is primarily responsible for any patent prosecution activities, such
as litigation, patent conflict proceeding, patent opposition or other actions,
for the technology licensed to us. These agreements also provide that in general
we are required to reimburse these licensors for the costs they incur in
performing these activities. Similarly, Yale and the University of Georgia, the
licensors of clevudine, formerly L-FMAU, to Bukwang Pharm. Ind. Co., Ltd., are
primarily responsible for patent prosecution activities with respect to
clevudine at our expense. As a result, we generally do not have the ability to
institute or determine the conduct of any such
8
patent proceedings unless our licensors elect not to institute or to abandon
such proceedings. If our licensors elect to institute and prosecute patent
proceedings, our rights will depend in part upon the manner in which these
licensors conduct the proceedings. In any proceedings they elect to initiate
and maintain, these licensors may not vigorously pursue or defend or may
decide to settle such proceedings on terms that are unfavorable to us. An
adverse outcome of these proceedings could subject us to significant
liabilities to third parties, require disputed rights to be licensed from
third parties or require us to cease using such technology, any of which
could adversely affect our business. Moreover, the mere uncertainty resulting
from the initiation and continuation of any technology related litigation or
adversarial proceeding could adversely affect our business pending resolution
of the disputed matters.
We also rely on unpatented trade secrets and know-how to maintain
our competitive position, which we seek to protect, in part, by
confidentiality agreements with employees, consultants and others. These
parties may breach or terminate these agreements, and we may not have
adequate remedies for any breach. Our trade secrets may also be independently
discovered by competitors. We rely on certain technologies to which we do not
have exclusive rights or which may not be patentable or proprietary and thus
may be available to competitors. We have filed applications for, but have not
obtained, trademark registrations for various marks in the United States and
other jurisdictions. We have received U.S. trademark registrations for our
corporate name and logo, Coactinon(R) and Coviracil(R). We have also received
registrations in the European Union for the mark Coactinon(R) and our
corporate logo. Our pending application in the European Union for the mark
CoviracilTM has been opposed by Orsem, based upon registrations for the mark
Coversyl in various countries, and Les Laboratories Serveir, based on a
French registration for the mark Coversyl. We do not believe that the marks
Coviracil and Coversyl are confusingly similar, but, in the event they are
found to be confusingly similar, we may need to adopt a different product
name for emtricitabine in the applicable jurisdictions. Several other
companies use trade names that are similar to our name for their businesses.
If we are unable to obtain any licenses that may be necessary for the use of
our corporate name, we may be required to change our name. Our management
personnel were previously employed by other pharmaceutical companies. The
prior employers of these individuals may allege violations of trade secrets
and other similar claims relating to their drug development activities for us.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION AND MAY FAIL TO RECEIVE
REGULATORY APPROVAL WHICH COULD PREVENT OR DELAY THE COMMERCIALIZATION OF OUR
PRODUCTS.
In addition to preclinical testing, clinical trials and other approval
procedures for human pharmaceutical products, we are subject to numerous other
regulations covering the development of pharmaceutical products. These
regulations include, for example, domestic and international regulations
relating to the manufacturing, safety, labeling, storage, record keeping,
reporting, marketing and promotion of pharmaceutical products. We are also
regulated with respect to non-clinical and clinical laboratory practices, safe
working conditions, and the use and disposal of hazardous substances, including
radioactive compounds and infectious disease agents used in connection with our
development work. The requirements vary widely from country to country and some
requirements may vary from state to state in the United States. We expect the
process of obtaining these approvals and complying with appropriate government
regulations to be time consuming and expensive. Even if our drug candidates
receive regulatory approval, we may still face difficulties in marketing and
manufacturing those drug candidates. Further, any approval may be contingent on
postmarketing studies or other conditions. The approval of any of our drug
candidates may limit the indicated uses of the drug candidate. A marketed
product, its manufacturer and the manufacturer's facilities are subject to
continual review and periodic inspections. The discovery of previously unknown
problems with a product, manufacturer or facility may result in restrictions on
the product or manufacturer, including withdrawal of the product from the
market. The failure to comply with applicable regulatory requirements can, among
other things, result in:
- fines,
- suspended regulatory approvals,
- refusal to approve pending applications,
- refusal to permit exports from the United States,
9
- product recalls,
- seizure of products,
- injunctions,
- operating restrictions, and
- criminal prosecutions.
In addition, adverse clinical results by others could negatively impact
the development and approval of our drug candidates. Some of our drug candidates
are intended for use as coactive therapy with one or more other drugs, and
adverse safety, effectiveness or regulatory developments in connection with such
other drugs will also have an adverse effect on our business.
INTENSE COMPETITION MAY RENDER OUR DRUG CANDIDATES NONCOMPETITIVE OR OBSOLETE.
We are engaged in segments of the drug industry that are highly
competitive and rapidly changing. Any of our current drug candidates that we
successfully develop will compete with numerous existing therapies. In addition,
many companies are pursuing novel drugs that target the same diseases we are
targeting. We believe that a significant number of drugs are currently under
development and will become available in the future for the treatment of HIV and
hepatitis B. We anticipate that we will face intense and increasing competition
as new products enter the market and advanced technologies become available. Our
competitors' products may be more effective, or more effectively marketed and
sold, than any of our products. Competitive products may render our products
obsolete or noncompetitive before we can recover the expenses of developing and
commercializing our drug candidates. Furthermore, the development of a cure or
new treatment methods for the diseases we are targeting could render our drug
candidates noncompetitive, obsolete or uneconomical. Many of our competitors:
- have significantly greater financial, technical and human
resources than we have and may be better equipped to develop,
manufacture and market products,
- have extensive experience in preclinical testing and clinical
trials, obtaining regulatory approvals and manufacturing and
marketing pharmaceutical products, and
- have products that have been approved or are in late stage
development and operate large, well-funded research and
development programs.
Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large pharmaceutical and
biotechnology companies. Academic institutions, governmental agencies and other
public and private research organizations are also becoming increasingly aware
of the commercial value of their inventions and are more actively seeking to
commercialize the technology they have developed.
If we successfully develop and obtain approval for our drug candidates,
we will face competition based on the safety and effectiveness of our products,
the timing and scope of regulatory approvals, the availability of supply,
marketing and sales capability, reimbursement coverage, price, patent position
and other factors. Our competitors may develop or commercialize more effective
or more affordable products, or obtain more effective patent protection, than we
do. Accordingly, our competitors may commercialize products more rapidly or
effectively than we do, which could hurt our competitive position.
BECAUSE WE FACE RISKS RELATED TO OUR LICENSE AND OPTION AGREEMENTS, WE COULD
LOSE OUR RIGHTS TO OUR DRUG CANDIDATES.
We have in-licensed or obtained an option to in-license our drug
candidates under agreements with our licensors. These agreements permit our
licensors to terminate the agreements under certain circumstances, such as our
failure to achieve certain development milestones or the occurrence of an
uncured material breach by us. The
10
termination of any of these agreements could result in the loss of our rights
to a drug candidate. Upon termination of most of our license agreements, we
are required to return the licensed technology to our licensors. In addition,
most of these agreements provide that our licensors are primarily responsible
for any patent prosecution activities, such as litigation, patent conflict,
patent opposition or other actions, for the technology licensed to us. These
agreements also provide that in general we are required to reimburse our
licensors for the costs they incur in performing these activities. We believe
that these costs as well as other costs under our license and option
agreements will be substantial and may increase significantly during the next
several years. Our inability or failure to pay any of these costs with
respect to any drug candidate could result in the termination of the license
or option agreement for the drug candidate.
BECAUSE WE MAY BE UNABLE TO SUCCESSFULLY MANUFACTURE OUR DRUG CANDIDATES, OUR
BUSINESS MAY NEVER ACHIEVE PROFITABILITY.
We do not have any internal manufacturing capacity and we rely on third
party manufacturers for the manufacture of all of our clinical trial material.
We plan to expand our existing relationships or to establish relationships with
additional third party manufacturers for products that we successfully develop.
The terms of the Abbott Alliance provide that Abbott Laboratories, Abbott, will
manufacture all or a portion of our product requirements for those products that
are or become covered by the Abbott Alliance. We may be unable to maintain our
relationship with Abbott or to establish or maintain relationships with other
third party manufacturers on acceptable terms, and third party manufacturers may
be unable to manufacture products in commercial quantities on a cost effective
basis. Our dependence upon third parties for the manufacture of our products may
adversely affect our profit margins and our ability to develop and commercialize
products on a timely and competitive basis. Further, third party manufacturers
may encounter manufacturing or quality control problems in connection with the
manufacture of our products and may be unable to maintain the necessary
governmental licenses and approvals to continue manufacturing our products.
WE MAY BE UNABLE TO SUCCESSFULLY MARKET, SELL OR DISTRIBUTE OUR DRUG CANDIDATES.
In the United States, we currently intend to market the drug candidates
covered by the Abbott Alliance in collaboration with Abbott and to market other
drug candidates that we successfully develop, that do not become part of the
Abbott Alliance, through a direct sales force. Outside of the United States, we
expect Abbott to market drug candidates covered by the Abbott Alliance and, for
any other drug candidates that we successfully develop that do not become part
of the Abbott Alliance, we intend to market and sell through arrangements or
collaborations with third parties. In addition, we expect Abbott to handle the
distribution and sale of drug candidates covered by the Abbott Alliance both
inside and outside the United States. With respect to the United States, our
ability to market the drug candidates that we successfully develop will be
contingent upon recruitment, training and deployment of a sales and marketing
force as well as the performance of Abbott under the Abbott Alliance. We may be
unable to establish marketing or sales capabilities or to maintain arrangements
or enter into new arrangements with third parties to perform those activities on
favorable terms. In addition, any such third parties may have significant
control or influence over important aspects of the commercialization of our drug
candidates, including market identification, marketing methods, pricing,
composition of sales force and promotional activities. We also may have limited
control over the amount and timing of resources that a third party may devote to
our drug candidates. Our business may never achieve profitability if we fail to
establish or maintain a sales force and marketing, sales and distribution
capabilities.
BECAUSE WE DEPEND ON THIRD PARTIES FOR THE DEVELOPMENT AND ACQUISITION OF DRUG
CANDIDATES, WE MAY NOT BE ABLE TO SUCCESSFULLY ACQUIRE ADDITIONAL DRUG
CANDIDATES OR COMMERCIALIZE OR DEVELOP OUR CURRENT DRUG CANDIDATES.
We have engaged and intend to continue to engage third party contract
research organizations and other third parties to help us develop our drug
candidates. Although we have designed the clinical trials for our drug
candidates, the contract research organizations have conducted many of the
clinical trials. As a result, many important aspects of our drug development
programs have been and will continue to be outside of our direct control. In
addition, the contract research organizations may not perform all of their
obligations under arrangements with us. If the contract research organizations
do not perform clinical trials in a satisfactory manner or breach their
obligations to us, the development and commercialization of any drug candidate
may be delayed or precluded. We do not currently intend to engage in drug
discovery. Our strategy for obtaining additional drug candidates is to
11
utilize the relationships of our management team and scientific consultants
to identify drug candidates for in-licensing from companies, universities,
research institutions and other organizations. We may not succeed in
acquiring additional drug candidates on acceptable terms or at all.
BECAUSE WE MAY NOT BE ABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND ADVISORS, WE
MAY NOT SUCCESSFULLY DEVELOP OUR PRODUCTS OR ACHIEVE OUR OTHER BUSINESS
OBJECTIVES.
We are highly dependent on our senior management and scientific staff,
including Dr. David Barry, our Chairman and Chief Executive Officer. We have
entered into employment agreements with each officer of Triangle. Dr. Barry's
employment agreement contains certain non-competition provisions. In addition,
the employment agreements for each officer provide for certain severance
payments which are contingent upon each officer's refraining from competition
with Triangle. The loss of the services of any member of our senior management
or scientific staff may significantly delay or prevent the achievement of
product development and other business objectives. Our ability to attract and
retain qualified personnel, consultants and advisors is critical to our success.
In order to pursue our drug development programs and marketing plans, we will
need to hire additional qualified scientific and management personnel.
Competition for qualified individuals is intense and we face competition from
numerous pharmaceutical and biotechnology companies, universities and other
research institutions. We may be unable to attract and retain these individuals,
and our failure to do so would have an adverse effect on our business.
HEALTH CARE REFORM MEASURES AND THIRD PARTY REIMBURSEMENT PRACTICES ARE
UNCERTAIN AND MAY ADVERSELY IMPACT THE COMMERCIALIZATION OF OUR PRODUCTS.
The efforts of governments and third party payors to contain or reduce
the cost of health care will continue to affect the business and financial
condition of drug companies. A number of legislative and regulatory proposals to
change the health care system have been proposed in recent years. In addition,
an increasing emphasis on managed care in the United States has and will
continue to increase pressure on drug pricing. While we cannot predict whether
legislative or regulatory proposals will be adopted or what effect those
proposals or managed care efforts may have on our business, the announcement
and/or adoption of such proposals or efforts could have an adverse effect on our
profit margins and financial condition. Sales of prescription drugs depend
significantly on the availability of reimbursement to the consumer from third
party payors, such as government and private insurance plans. These third party
payors frequently require that drug companies give them predetermined discounts
from list prices, and they are increasingly challenging the prices charged for
medical products and services. Present coactive treatment regimens for the
treatment of HIV are expensive; published reports indicate the cost per patient
per year can exceed $13,000, and may increase as new combinations are developed.
These costs have resulted in limitations in the reimbursement available from
third party payors for the treatment of HIV infection, and we expect that
reimbursement pressures will continue in the future. If we succeed in bringing
one or more products to the market, these products may not be considered cost
effective and reimbursement to the consumer may not be available or sufficient
to allow us to sell our products on a competitive basis.
IF OUR DRUG CANDIDATES DO NOT ACHIEVE MARKET ACCEPTANCE, OUR BUSINESS MAY NEVER
ACHIEVE PROFITABILITY.
Our success will depend on the market acceptance of any products we
develop. The degree of market acceptance will depend upon a number of factors,
including the receipt and scope of regulatory approvals, the establishment and
demonstration in the medical community of the safety and effectiveness of our
products and their potential advantages over existing treatment methods, and
reimbursement policies of government and third party payors. Physicians,
patients, payors or the medical community in general may not accept or utilize
any product that we may develop.
WE MAY NOT HAVE ADEQUATE INSURANCE PROTECTION AGAINST PRODUCT LIABILITY.
Our business exposes us to potential product liability risks that are
inherent in the testing of drug candidates and the manufacturing and marketing
of drug products and we may face product liability claims in the future. We
currently have only limited product liability insurance. We may be unable to
maintain our existing insurance and/or obtain additional insurance in the future
at a reasonable cost or in sufficient amounts to protect against potential
12
losses. A successful product liability claim or series of claims brought against
us could require us to pay substantial amounts that would decrease our
profitability, if any.
WE MAY INCUR SUBSTANTIAL COSTS RELATED TO OUR USE OF HAZARDOUS MATERIALS.
We use hazardous materials, chemicals, viruses and various radioactive
compounds in our drug development programs. Although we believe that our
handling and disposing of these materials comply with state and federal
regulations, the risk of accidental contamination or injury still exists. In the
event of such an accident, we could be held liable for any damages or fines that
result and any such liability could exceed our resources.
OUR CONTROLLING STOCKHOLDERS MAY MAKE DECISIONS WHICH YOU DO NOT CONSIDER TO BE
IN YOUR BEST INTEREST.
As of September 30, 2000, our directors, executive officers and their
affiliates, excluding Abbott, owned approximately 12.4% of our outstanding
common stock and Abbott owned approximately 17.3% of our outstanding common
stock. Pursuant to the terms of the Abbott Alliance, Abbott has the right to
purchase additional amounts of our common stock up to a maximum aggregate
percentage of 21% of our outstanding common stock and has certain rights to
purchase shares directly from us in order to maintain its existing level of
ownership, also known as antidilution protection. One Abbott designee serves as
a member of our Board of Directors. As a result, our controlling stockholders
are able to significantly influence all matters requiring stockholder approval,
including the election of directors and the approval of significant corporate
transactions. This concentration of ownership could also delay or prevent a
change in control of Triangle that may be favored by other stockholders.
THE MARKET PRICE OF OUR STOCK MAY BE ADVERSELY AFFECTED BY MARKET VOLATILITY.
The market price of our common stock is likely to be volatile and could
fluctuate widely in response to many factors, including:
- announcements of the results of clinical trials by us or our
competitors,
- developments with respect to patents or proprietary rights,
- announcements of technological innovations by us or our
competitors,
- announcements of new products or new contracts by us or our
competitors,
- actual or anticipated variations in our operating results due to
the level of development expenses and other factors,
- changes in financial estimates by securities analysts and whether
our earnings meet or exceed such estimates,
- conditions and trends in the pharmaceutical and other industries,
- new accounting standards,
- general economic, political and market conditions and other
factors, and
- the occurrence of any of the risks described in these
"Risk Factors."
In the past, following periods of volatility in the market price of the
securities of companies in our industry, securities class action litigation has
often been instituted against those companies. If we face such litigation in the
future, it would result in substantial costs and a diversion of management
attention and resources, which would negatively impact our business.
13
In addition, if our stockholders sell a substantial number of
shares of our common stock in the public market, the market price of our
common stock could be reduced. As of September 30, 2000, there were
38,313,803 shares of common stock outstanding, of which approximately
24,600,000 were immediately eligible for resale in the public market without
restriction. Holders of approximately 7,150,000 shares have rights to cause
us to register them for sale to the public. We have filed registration
statements to register the sale of approximately 3,900,000 of these shares.
In addition, Abbott will have the right on or after June 30, 2002 to cause us
to register for resale in the public market the 6,571,428 shares of common
stock purchased at the closing of the Abbott Alliance. Any such sales may
make it more difficult for us to raise needed working capital through an
offering of our equity or convertible debt securities and may reduce the
market price of our common stock.
Declines in our stock price might harm our ability to issue equity
under various financing arrangements including our Facility or other
transactions. The price at which we issue shares in such transactions is
generally based on the market price of our common stock and a decline in our
stock price would result in our needing to issue a greater number of shares
to raise a given amount of funds or acquire a given amount of goods or
services. For this reason, a decline in our stock price might also result in
increased ownership dilution to our stockholders. A low stock price might
impair our ability to raise capital under the Facility described below under
"Plan of Distribution" because the Underwriter and the Investor are not
obligated to sell or purchase shares of our common stock under the Facility
on a given day if our average stock price during such day is less than $4.00
per share or less than any higher floor price specified by us.
OUR STOCK PRICE COULD DECLINE AND OUR STOCKHOLDERS COULD EXPERIENCE
SIGNIFICANT OWNERSHIP DILUTION DUE TO OUR ABILITY TO ISSUE SHARES UNDER THE
FACILITY.
Pursuant to the Facility described under "Plan of Distribution," we
may sell, subject to various restrictions, up to $100 million of common stock
over a three-year period. The aggregate number of shares that may be issued
under the Facility depends on a number of factors, including the market price
and trading volume of our common stock during each 15-trading day selling
period. Because the price of any shares we choose to sell under the Facility
is based on the market price of the common stock on the date of sale, both
the number of shares we would have to sell in order to raise any given amount
of funding and the associated ownership dilution experienced by our
stockholders will be greater if the price of our common stock declines. The
lowest price at which common stock may be sold under the Facility is $4.00
per share. The perceived risk associated with the possible sale of a large
number of shares under the Facility could cause some of our stockholders to
sell their stock, thus causing the price of our stock to decline. In
addition, actual or anticipated downward pressure on our stock price due to
actual or anticipated sales of our common stock under the Facility could
cause some institutions or individuals to engage in short sales of our common
stock, which may itself cause the price of our stock to decline.
ANTITAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD DELAY,
DEFER OR PREVENT A TENDER OFFER OR TAKEOVER ATTEMPT THAT YOU CONSIDER TO BE IN
YOUR BEST INTEREST.
We have adopted a number of provisions that could have antitakeover
effects. On January 29, 1999, our Board of Directors, the Board, adopted a
preferred stock purchase rights plan, commonly referred to as a "poison pill."
The rights plan is intended to deter an attempt to acquire Triangle in a manner
or on terms not approved by the Board. Thus, the rights plan will not prevent an
acquisition of Triangle which is approved by the Board. Our charter authorizes
the Board to issue shares of undesignated preferred stock without stockholder
approval on terms as the Board may determine. Moreover, the issuance of
preferred stock may make it more difficult for a third party to acquire, or may
discourage a third party from acquiring, voting control of Triangle. Our bylaws
divide the Board into three classes of directors with each class serving a three
year term. These and other provisions of our charter and our bylaws, as well as
certain provisions of Delaware law, could delay or impede the removal of
incumbent directors and could make more difficult a merger, tender offer or
proxy contest involving Triangle, even if the events could be beneficial to our
stockholders. These provisions could also limit the price that investors might
be willing to pay for our common stock.
14
WE HAVE NOT DECLARED OR PAID ANY DIVIDENDS ON OUR COMMON STOCK.
We have never declared or paid any cash dividends on our common stock,
and we currently do not intend to pay any cash dividends on our common stock in
the foreseeable future. We intend to retain our earnings, if any, for the
operation of our business.
FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended. All
statements, other than statements of historical facts, included in, or
incorporated by reference into this prospectus, are forward-looking statements.
In addition, when used in this document, the words "anticipate", "estimate",
"project", and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are subject to various risks or
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. Although we believe that the expectations reflected in these
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. These statements are only
predictions and involve known and unknown risks, uncertainties and other
factors, including the risks outlined under "Risk Factors," that may cause our
or our industry's actual results, levels of activity, performance or
achievements to be materially different from future results, levels of activity,
performance or achievements expressed or implied by these forward-looking
statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Moreover, neither we nor any
other person assumes responsibility for the accuracy and completeness of these
statements. We are under no duty to update any of the forward-looking statements
after the date of this prospectus or to conform these statements to actual
results unless required by law.
USE OF PROCEEDS
We cannot guarantee that we will receive any proceeds in connection
with this offering because we may choose not to issue any shares of common
stock.
Unless otherwise provided in a supplement or amendment to this
prospectus, we intend to use any net proceeds from this offering, together with
other available funds, for operating costs, capital expenditures and working
capital needs, which may include costs of further preclinical development and
clinical testing of drug candidates in our pipeline, development of the
infrastructure necessary to support those activities, marketing expenses,
expenses incurred in the protection of intellectual property, payment of license
fees, and amounts paid to licensors, and for other general corporate purposes.
We have not specifically identified the precise amounts we will spend
on each of these areas or the timing of these expenditures. The proceeds of this
offering may also be used to acquire companies or intellectual property that
complement our business, although we cannot at this time predict whether any of
these types of acquisitions will occur in the near future. The amounts actually
expended for each purpose may vary significantly depending upon numerous
factors, including the amount and timing of the proceeds from this offering,
progress with clinical drug development and other drug development programs. In
addition, expenditures may also depend on the establishment of new collaborative
arrangements with other companies, the availability of other financing, and
other factors.
We anticipate that we will be required to raise substantial additional
capital to continue to fund the clinical development of our drug candidates.
Additional capital may be raised through additional public or private financing,
as well as collaborative relationships, incurring debt and other available
sources.
15
PLAN OF DISTRIBUTION
FIRM UNDERWRITTEN EQUITY FACILITY
On November 1, 2000, we entered into a common stock underwriting
agreement with Ramius Securities, LLC, the Underwriter, a limited liability
company organized and existing under the laws of the State of Delaware and a
stand-by purchase agreement with Ramius Capital Group, LLC, the Investor, a
limited liability company organized and existing under the laws of the State of
Delaware. Pursuant to the underwriting agreement, the Underwriter agrees to
sell, on a best efforts basis, up to $100 million of our common stock during
15-trading day selling periods which we select over the next three years. The
Underwriter may sell our common stock at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at negotiated prices but
not below a floor price set by us for each selling period. We are not obligated
to sell any shares of our stock and a selling period will not begin except upon
our instruction. If the Underwriter does not sell the requisite number of shares
of our common stock during a selling period, then under the terms of the
purchase agreement, the Investor is obligated to purchase from us the remaining
number of shares of our common stock so long as certain share price and volume
limitations are met. The underwriting agreement and the purchase agreement are
referred to as the firm underwritten equity facility or the Facility. We will
pay the offering expenses related to the Facility, estimated to be $400,000.
Pursuant to the underwriting agreement, we may elect (but are under no
obligation) to initiate a selling period by delivering a capital demand notice
to the Underwriter, at any time during the three year term of the underwriting
agreement, to sell an amount not less than $1 million and not more than $30
million in market value of our common stock. Upon receipt of each capital demand
notice, the Underwriter agrees to sell on a best efforts basis, on our behalf,
over a 15-trading day selling period, the number of shares of our common stock
equal to the amount requested in the capital demand notice. The Underwriter may
sell an additional 10% of the amount of common stock we requested to be sold
during a selling period to cover over-allotments. Ramius Securities, LLC is an
"underwriter" within the meaning of the Securities Act in connection with its
sale of the shares pursuant to the underwriter agreement.
Rule 415 under the Securities Act imposes limits on the dollar amount
of securities that may be registered pursuant to a single registration statement
(or amendments thereto) relating to an "at-the-market" offering. The registered
amount may not exceed 10% of the aggregate market value of our outstanding
common stock held by non-affiliates. For this reason, we are currently
registering $24 million in aggregate amount of shares of our common stock for
issuance and sale under the Facility and we intend to file additional amendments
or registration statements, as needed, for the sale of additional shares under
the Facility.
CAPITAL DEMAND NOTICE PROCEDURE
We may commence a 15-trading day selling period by delivering a capital
demand notice to the Underwriter stating: the dollar amount of common stock that
the Underwriter is obligated to sell during the selling period (subject to
certain limitations set forth in the underwriting agreement) and the minimum
floor price below which we are not willing to sell any shares. The minimum floor
price may vary in each capital demand notice, however, it may never be less than
$4.00 per share. The Underwriter is permitted to sell, during each selling
period, up to 110% of the minimum dollar amount described in the capital demand
notice.
At the end of each trading day of a selling period, the Underwriter
will notify both us and our transfer agent of the number of shares of common
stock that the Underwriter has sold on that day. We must deliver the number of
shares of common stock set forth in the sales notice to the Underwriter by the
third trading day following receipt of the sales notice, the settlement date. We
have agreed to pay to the Underwriter at the end of each trading day an
underwriting commission equal to (1) the daily gross proceeds from the sales of
common stock less (2) the
16
aggregate number of shares sold multiplied by a number equal to 95.75% of
the daily volume weighted average price per share of the common stock on the
Nasdaq National Market.
The Underwriter must notify us in writing if it has not received the
shares of common stock by the settlement date. After receipt of this notice, we
must deliver the shares within five (5) business days of the settlement date, or
we must reimburse the Underwriter for any damages incurred by the Underwriter
from this failure and the Underwriter may terminate the underwriting agreement.
TERMINATION, SUSPENSION AND MODIFICATION OF THE UNDERWRITER'S OBLIGATION TO
SELL SHARES OF COMMON STOCK
The Underwriter is not obligated to sell any shares of common stock for
us pursuant to a capital demand notice, nor may we deliver a capital demand
notice to the Underwriter, under the following circumstances:
- the registration statement has been withdrawn or the effectiveness
of the registration statement has been suspended;
- the common stock to be purchased is not validly listed on the
Nasdaq National Market (or another principal market);
- we have failed to fulfill all of the conditions precedent
described below;
- we have failed to provide the Underwriter with the due diligence
materials requested;
- the daily volume weighted average price per share of our common
stock falls below the floor price set forth in the capital demand
notice for five consecutive trading days during a selling period;
- we have failed to comply with the covenants described below; or
- we have merged or consolidated the Company with or into another
entity or have transferred all or substantially all of our assets
to another entity.
We must notify the Underwriter in writing immediately upon the
occurrence of one of the blocking events described above. If one or more of the
blocking events described above occurs during a selling period, at the
Underwriter's election:
- the selling period and the Underwriter's obligation to sell shares
will be extended by the number of trading days the blocking event
existed preventing the sale of shares of common stock;
- the Underwriter may waive in writing the blocking event and
continue to sell shares of common stock during the selling period;
or
- the obligation of the Underwriter to sell shares of common stock
during the selling period will be canceled for the selling period,
the Underwriter will be entitled to rescind any sales made during
the selling period, and we will be liable for all actual damages
incurred by the Underwriter as a result of a blocking event.
If a blocking event occurs during a selling period, we have agreed to use our
reasonable best efforts to cure the blocking event, if curable, within 24 hours.
17
THE INVESTOR'S OBLIGATION TO PURCHASE SHARES OF COMMON STOCK
If the Underwriter fails to fulfill its obligation to sell the
requisite number of shares of our common stock during a selling period, then
under the terms of the purchase agreement, the Investor is obligated to purchase
from us the remaining minimum number of shares of our common stock specified in
the capital demand notice for that selling period. The purchase price of the
shares of common stock will be 95.75% of the daily volume weighted average price
per share of the common stock on the Nasdaq National Market (or other principal
market) for the first trading day following the expiration of the selling
period, provided however, that if that price is below the minimum floor price
established by us in the capital demand notice, then the purchase price will be
the minimum floor price. The closing date for the purchase of the common stock
will be the first trading day following the expiration of the selling period.
The settlement date for the purchase will be the third trading day following the
closing date. We must deliver the shares of common stock to the Investor on the
settlement date, and upon delivery, the Investor will deliver to us the purchase
price.
The Investor must notify us in writing if it has not received the
shares of common stock by the settlement date. After receipt of this notice, we
must deliver the shares within five (5) business days of the settlement date, or
we must reimburse the Investor for any damages incurred by the Investor due to
this failure and the Investor may terminate the purchase agreement.
If the Investor becomes obligated to purchase shares of our common
stock pursuant to the purchase agreement, Ramius Capital Group, LLC will be an
"underwriter" within the meaning of the Securities Act in connection with its
sale of the shares acquired under the purchase agreement with us.
TERMINATION, SUSPENSION AND MODIFICATION OF THE INVESTOR'S OBLIGATION TO
PURCHASE SHARES OF COMMON STOCK
The Investor is not obligated to purchase shares of our common stock
under the following circumstances:
- the aggregate dollar amount of the common stock that the
Underwriter failed to sell during the selling period is less than
$50,000;
- the registration statement has been withdrawn or the effectiveness
of the registration statement has been suspended;
- the common stock to be purchased is not validly listed on the
Nasdaq National Market (or another principal market);
- we have failed to fulfill all of the conditions precedent
described below;
- we have failed to provide the Investor with the due diligence
materials requested;
- the daily volume weighted average price per share of the common
stock falls below the floor price set forth in the capital demand
notice for five consecutive trading days during a selling period;
- we have failed to comply with the covenants described below; or
- we have merged or consolidated the Company with or into another
entity or have transferred all or substantially all of our assets
to another entity.
We must notify the Investor in writing immediately upon the occurrence of one of
the blocking events described above. The Investor may waive any blocking event
in writing and elect to purchase the shares.
In addition, pursuant to the terms of the purchase agreement, the
Investor is not required or allowed to purchase shares of our common stock, if,
when aggregated with all other shares of our common stock then
18
beneficially owned by the Investor, the purchase would result in the Investor
beneficially owning more than 4.9% of our issued and outstanding common stock
on such date.
CONDITIONS PRECEDENT TO THE OBLIGATION OF THE UNDERWRITER TO SELL COMMON STOCK
PURSUANT TO A CAPITAL DEMAND NOTICE OR THE INVESTOR'S OBLIGATION TO PURCHASE
SHARES OF COMMON STOCK PURSUANT TO THE PURCHASE AGREEMENT
The following conditions must be satisfied before the Underwriter is
obligated to sell common stock pursuant to a capital demand notice and before
the Investor is obligated to purchase shares of common stock pursuant to the
purchase agreement:
- a registration statement covering the shares to be sold must be
declared effective by the SEC and must remain effective and
available during the selling period and on the date of purchase by
the Investor;
- the representations and warranties to the Underwriter contained in
the underwriting agreement must be true and correct in all
material respects on each trading day of a selling period and the
representations and warranties to the Investor contained in the
purchase agreement must be true and correct in all material
respects on the first trading day following the expiration of the
selling period for which the Underwriter failed to fulfill its
obligation to sell the requested number of shares of common stock;
- we must have performed our obligations under the underwriting
agreement at or prior to each trading day of a selling period or
we must have performed our obligations under the purchase
agreement at or prior to the first trading day following the
expiration of the selling period for which the Underwriter failed
to fulfill its obligation to sell the requested number of shares
of common stock;
- no statute, rule, regulation, executive order, decree, ruling or
injunction may be in effect which prohibits or adversely affects
any of the transactions contemplated by the underwriting agreement
or the purchase agreement;
- since the date through which our most recent quarterly report on
Form 10-Q or Form 10-K has been prepared and filed with the SEC,
no event which had or is reasonably likely to have a material
adverse effect on our business has occurred;
- our common stock has been approved for quotation on the Nasdaq
National Market or another approved market and trading in our
common stock has not been suspended by the SEC, the Nasdaq
National Market (or such other approved market), or the National
Association of Securities Dealers, Inc.;
- the issuance and sale of the shares of common stock must not
violate the stockholder approval requirements of the Nasdaq
National Market;
- the Underwriter must have completed its due diligence review of us
and be reasonably satisfied with the adequacy of the disclosure
contained in the registration statement;
- we must have issued instructions to the Underwriter's clearing
broker to release the selling commission at the Underwriter's
request; and
- we must have issued instructions to the transfer agent to issue
stock certificates or to electronically issue shares to the
Underwriter or the Investor, as may be the case.
Prior to the first trading day of any selling period following the
filing of any documents with the SEC pursuant to the Securities Exchange Act of
1934 to be incorporated by reference into this registration statement and
prospectus, we must provide to the Underwriter a legal opinion and a "comfort"
letter from our accountants as to
19
certain financial information contained in the registration statement. In
addition, on the first trading day of any selling period we must provide to
the Underwriters a legal opinion regarding certain matters set forth in the
underwriting agreement. Furthermore, on the first trading day of each selling
period we must deliver a certificate executed by an executive officer stating
that all the conditions precedent described above have been satisfied.
Prior to the first trading day following the expiration of any selling
period for which the Underwriter fails to fulfill its obligation to sell the
requested number of shares of common stock, we must deliver to the Investor the
legal opinions, comfort letter and officer's certificate described above.
ADDITIONAL COVENANTS UNDER THE UNDERWRITING AGREEMENT AND THE PURCHASE AGREEMENT
We have agreed with the Underwriter under the underwriting agreement
and the Investor under the purchase agreement that we will:
- reserve for issuance, prior to the commencement of any selling
period, the requisite number of shares of common stock;
- notify the Underwriter and the Investor each time that we file a
report or document with the SEC; and
- refrain from entering into any equity line or similar transaction
with one or more underwriters other than Ramius Securities.
The Underwriter and the Investor have agreed with us under the underwriting
agreement and the purchase agreement that they will:
- promptly notify and furnish to us information regarding the
Underwriter, the Investor or the distribution as is required to be
disclosed in the registration statement and prospectus; and
- refrain from engaging in any short selling activities with respect
to our common stock.
TERMINATION OF THE UNDERWRITING AGREEMENT AND THE PURCHASE AGREEMENT
The underwriting agreement and the purchase agreement will
automatically terminate upon the earlier of November 1, 2003, or the date that
the Underwriter has sold an aggregate of $100 million of common stock pursuant
to capital demand notices.
In addition, we may terminate the underwriting agreement and the
purchase agreement in our sole discretion at any time. Furthermore, the
Underwriter may terminate the underwriting agreement and the Investor may
terminate the purchase agreement under the following circumstances:
- if we breach any of the material representations, warranties,
covenants or other obligations and fail to cure the breach within
the 30-day cure period;
- if we effect any merger or consolidation of the Company with or
into another entity or if we sell all or substantially all of our
assets to another entity; or
- if the Underwriter or the Investor reasonably determines that the
adoption of, or change in, or any change in interpretation or
application of, any law, regulation, rule, guideline or treaty,
makes it illegal or materially impracticable to fulfill its
commitments under the underwriting agreement or the purchase
agreement.
20
PURCHASE OPTION
Under the underwriting agreement, we granted to the Underwriter the
right to purchase up to 300,000 shares of common stock at a price equal to
$13.00 per share, subject to certain adjustments as described in the
underwriting agreement. The purchase option terminates on the earlier of
November 1, 2003 or the date upon which the purchase option is exercised in full
by the Underwriter.
INDEMNIFICATION OF THE UNDERWRITER AND THE INVESTOR
We have agreed to indemnify the Underwriter and the Investor against
various civil liabilities, including liabilities under the Securities Act
(except for liabilities relating to material misstatements or omissions in
information supplied by the Underwriter or Investor to us for inclusion in the
registration statement and prospectus), or to contribute the payments that the
Underwriter or Investor may be required to make in respect of such liabilities.
LEGAL MATTERS
For purposes of this offering, Brobeck, Phleger & Harrison LLP, New
York, New York, is giving its opinion as to the validity of the shares.
EXPERTS
The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K of Triangle for the year ended December 31,
1999, have been incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
auditing and accounting.
21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Registrant
in connection with the sale of the common stock being registered. All the
amounts shown are estimates, except for the registration fee.
Registration Fee......................................... $6,336
Legal fees and expenses*................................. 100,000
Accounting fees and expenses*............................ 20,000
Printing*................................................ 12,000
Transfer Agent and Registrar Fees*....................... 1,500
Nasdaq Filing Fees*...................................... 35,000
Miscellaneous Expenses*.................................. 205,164
TOTAL........................................... $380,000
================================================================
*Estimated.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of Triangle under certain conditions
and subject to certain limitations. Section 145 of the Delaware General
Corporation Law also provides that a corporation has the power to purchase and
maintain insurance on behalf of its officers and directors against any liability
asserted against such person and incurred by him or her in such capacity, or
arising out of his or her status as such, whether or not the corporation would
have the power to indemnify him or her against such liability under the
provisions of Section 145 of the Delaware General Corporation Law.
Article VII, Section (i) of the Restated Bylaws of Triangle provides
that Triangle shall indemnify its directors and executive officers to the
fullest extent not prohibited by the Delaware General Corporation Law. The
rights to indemnity thereunder continue as to a person who has ceased to be a
director, officer, employee or agent and inure to the benefit of the heirs,
executors and administrators of the person. In addition, expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of Triangle (or was serving at Triangle's request
as a director or officer of another corporation) shall be paid by Triangle in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by Triangle as authorized by the relevant Section of the Delaware
General Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, Article 5, Section (a) of Triangle's Second Restated Certificate of
Incorporation provides that a director of Triangle shall not be personally
liable for monetary damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to Triangle
or its stockholders, (ii) for acts or omissions not in good faith or acts or
omissions that involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived any improper personal benefit.
Triangle has entered into indemnification agreements with its directors
and executive officers. Generally, the indemnification agreements attempt to
provide the maximum protection permitted by Delaware law as it may be amended
from time to time. Under such additional indemnification provisions, however, an
individual will not receive indemnification for judgments, settlements or
expenses if he or she is found liable to Triangle (except to the extent the
court determines he or she is fairly and reasonably entitled to indemnity for
expenses), for settlements not approved by Triangle or for settlements and
expenses if the settlement is not approved by the court. The indemnification
agreements provide for Triangle to advance to the individual any and all
reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding. In
II-1
order to receive an advance of expenses, the individual must submit to
Triangle copies of invoices presented to him or her for such expenses. Also,
the individual must repay such advances upon a final judicial decision that
he or she is not entitled to indemnification.
The Registrant has an insurance policy covering the directors and
officers of the Registrant with respect to certain liabilities, including
liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
1.1+ Common Stock Underwriting Agreement dated as of November 1, 2000 between the
Registrant and Ramius Securities, LLC
4.1* Instruments defining the rights of stockholders. Reference is made to the
Registration Statement on Form 8-A, filed October 18, 1996 (file no.
000-21589), and the Registration Statement on Form 8-A, filed February 10, 1999
(file no. 000-21589), as amended on June 18, 1999 (file no. 000-21589).
5.1** Opinion of Brobeck, Phleger & Harrison LLP
10.1+ Stand-by Purchase Agreement dated as of November 1, 2000 between the Registrant
and Ramius Capital Group, LLC
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2** Consent of Brobeck, Phleger & Harrison LLP. Reference is made to Exhibit 5.1.
24.1** Power of Attorney
+ Previously filed as an exhibit to our Report on Form 8-K filed on November 3, 2000.
* Previously filed.
**Previously filed with our Registration Statement on Form S-3
filed on October 20, 2000.
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, 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; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report
II-2
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.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Triangle
pursuant to the foregoing provisions, Delaware Corporation law, the Underwriting
Agreement or otherwise, the Registrant has been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefor, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of its counsel the question has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by us under the
Rule 424(b)(1), or (4) or 497(h) under the Securities Act as
part of this registration statement as of the time the SEC
declared it effective.
(2) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities
offered in the registration statement, and that offering of
the securities at that time as the bona fide offering of those
securities.
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SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Durham, State of North Carolina, on the 17th day of
November, 2000.
TRIANGLE PHARMACEUTICALS, INC.
By: /s/ CHRIS A. RALLIS
------------------------------------
Chris A. Rallis
President and Chief Operating Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in this capacities and on the
dates indicated:
Signature Title
--------- -----
* Chairman of the Board and Chief Executive Officer November 17, 2000
- --------------------------------------- (Principal Executive Officer)
David W. Barry
/s/ CHRIS A. RALLIS Director, President and Chief Operating Officer November 17, 2000
- ---------------------------------------
Chris A. Rallis
/s/ ROBERT F. AMUNDSEN JR. Executive Vice President and Chief Financial November 17, 2000
- --------------------------------------- Officer (Principal Financial and Accounting
Robert F. Amundsen, Jr. Officer)
* Director November 17, 2000
- ---------------------------------------
Anthony B. Evnin
* Director November 17, 2000
- ---------------------------------------
Standish M. Fleming
* Director November 17, 2000
- ---------------------------------------
Dennis B. Gillings
* Director November 17, 2000
- ---------------------------------------
Arthur J. Higgins
* Director November 17, 2000
- ---------------------------------------
Henry G. Grabowski
* Director November 17, 2000
- ---------------------------------------
George McFadden
*By: /s/ CHRIS A. RALLIS
- ---------------------------------------
Chris A. Rallis
Attorney-in-Fact
II-4
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1+ Common Stock Underwriting Agreement dated as of November 1, 2000 between the
Registrant and Ramius Securities, LLC
4.1* Instruments defining the rights of stockholders. Reference is made to the
Registration Statement on Form 8-A, filed October 18, 1996 (file no.
000-21589), and the Registration Statement on Form 8-A, filed February 10, 1999
(file no. 000-21589), as amended on June 18, 1999 (file no. 000-21589).
5.1** Opinion of Brobeck, Phleger & Harrison LLP.
10.1+ Stand-by Purchase Agreement dated as of November 1, 2000 between the Registrant
and Ramius Capital Group, LLC
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2** Consent of Brobeck, Phleger & Harrison LLP. Reference is made to Exhibit 5.1.
24.1** Power of Attorney.
+ Previously filed as an exhibit to our Report on Form 8-K
filed on November 3, 2000.
* Previously filed.
**Previously filed with our Registration Statement on Form S-3
filed on October 20, 2000.
II-5