AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 2, 2001
REGISTRATION NO. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
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.)
----------
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)
----------
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)
----------
COPIES TO:
Luci Staller Altman, Esq. James R. Tanenbaum, Esq.
Martine Apollon Wicks, Esq. Anna T. Pinedo, Esq.
BROBECK, PHLEGER & HARRISON LLP STROOCK & STROOCK & LAVAN LLP
1633 Broadway, 47th Floor 180 Maiden Lane
New York, NY 10019 New York, NY 10038
(212) 581-1600 (212) 806-5400
----------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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
- ---------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE REGISTRATION FEE
=========================================================================================================
Common Stock, $0.001 par
value per share 7,700,000 $7.59 $58,443,000 $14,620
- ---------------------------------------------------------------------------------------------------------
(1) The price of $7.59, the average of the high and low prices of Triangle's
common stock on the Nasdaq Stock Market's National Market on February 1,
2001, is set forth solely for the purpose of computing the registration
fee in accordance with Rule 457(c) under the Securities Act of 1933, as
amended.
(2) This Registration Statement shall also cover any additional shares of
common stock which become issuable in connection with the shares of common
stock which become issuable in connection with the shares registered for
sale hereby as a result of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of the
Registrant's outstanding shares of common stock.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
SUBJECT TO COMPLETION, DATED FEBRUARY 2, 2001
The information in this prospectus is not complete and may be
changed. The selling stockholders may not sell the common stock covered by this
prospectus until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell the
common stock and it is not soliciting an offer to buy the common stock in any
state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
7,700,000 SHARES
TRIANGLE PHARMACEUTICALS, INC.
COMMON STOCK
---------------
This prospectus relates to the resales of common stock we issued and
sold to the selling stockholders identified in this prospectus. We will not
receive any of the proceeds from the sale of the shares by the selling
stockholders. All of the shares were acquired by the selling stockholders from
us in a private placement we completed on ________, 2001. We have agreed to
pay certain expenses in connection with the registration of the shares and to
indemnify the selling stockholders against certain liabilities. The selling
stockholders will pay all underwriting discounts and selling commissions, if
any, in connection with the sale of the shares.
Our common stock is traded on the Nasdaq National Market under the
symbol "VIRS." On February 1, 2001, the average of the high and low prices for
the common stock was $7.59 per share.
THE COMMON STOCK OFFERED INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 3 FOR A DISCUSSION OF SOME IMPORTANT RISKS YOU
SHOULD CONSIDER BEFORE BUYING ANY SHARES OF COMMON STOCK.
---------------
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.
---------------
The date of this prospectus is February 2, 2001
TABLE OF CONTENTS
-----------------
PAGE
I. WHERE YOU CAN FIND MORE INFORMATION....................................3
II. INFORMATION INCORPORATED BY REFERENCE..................................3
III. OUR BUSINESS...........................................................4
IV. RISK FACTORS...........................................................4
V. FORWARD-LOOKING STATEMENTS............................................23
VI. USE OF PROCEEDS.......................................................23
VII. SELLING STOCKHOLDERS..................................................24
VIII. PLAN OF DISTRIBUTION..................................................25
IX. LEGAL MATTERS.........................................................27
X. EXPERTS...............................................................27
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.
I. 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.
II. 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
3
(919) 493-5980
Attn: General Counsel.
We have received U.S. trademark registrations for our corporate
name and logo, Coactinon-Registered Trademark- and Coviracil-Registered
Trademark-. This prospectus also includes names and trademarks of other
companies.
III. 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.
IV. RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISKS AND UNCERTAINTIES BEFORE MAKING AN INVESTMENT
DECISION. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY RISKS WE FACE. ADDITIONAL
RISKS THAT WE DO NOT YET KNOW OF OR THAT WE CURRENTLY THINK ARE IMMATERIAL MAY
ALSO IMPAIR OUR BUSINESS OPERATIONS. IF ANY OF THE EVENTS OR CIRCUMSTANCES
DESCRIBED IN THE FOLLOWING RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL
CONDITION, OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED. IN
SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE
ALL OR PART OF YOUR INVESTMENT.
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,
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- 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.
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,
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- 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 a firm underwritten equity facility or the Facility
with Ramius Securities, LLC, the Underwriter, and Ramius Capital Group, LLC, the
Investor, 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 the Underwriter, and 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.
For a period of 90 days from the effective date of this Registration
Statement, we will not, without the prior written consent of Banc of America
Securities LLC be allowed to sell, contract to sell or otherwise dispose of or
issue any of our securities, except pursuant to previously issued options, any
agreements providing for anti-dilution or other share issuance rights, existing
contractual obligations, any employee benefits or similar plans, any issuances
to license holders, or any strategic alliances or joint ventures we may enter
into. In addition, we will cause each of our officers and directors not to
dispose of any of their equity securities of Triangle Pharmaceuticals, Inc.
(other than securities acquired in the private placement we completed on ______,
2001) for a period of 90 days from the effective date of this
6
Registration Statement without the prior written consent of Banc of America
Securities LLC. We will not be issuing any securities pursuant to our Facility
for a period of 90 days from the effective date of this Registration Statement.
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, an 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.
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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.
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
8
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. GlaxoSmithKline 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 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.
9
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
10
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.
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
11
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
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
12
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
13
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 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-Registered Trademark- and
Coviracil-Registered Trademark-. We have also received registrations in the
European Union for the mark Coactinon-Registered Trademark- 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.
14
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,
- 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
15
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.
16
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 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
17
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 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.
18
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.
19
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 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. Abbott elected to exercise
this right in connection with the private placement of common stock we completed
on ______, 2001 by purchasing 1,300,000 shares of our common stock. 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,
20
- 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. 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 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.
21
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 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.
In connection with the private placement we completed on ______, 2001,
for a period of 90 days from the effective date of this Registration Statement,
we will not, without the prior written consent of Banc of America Securities
LLC, sell, contract to sell or otherwise dispose of or issue any of our
securities, except pursuant to previously issued options, any agreements
providing for anti-dilution or other share issuance rights, existing contractual
obligations (other than under the Facility), any employee benefit or similar
plan of Triangle Pharmaceuticals, Inc., any issuances to license holders, or any
strategic alliance or joint venture we may enter into. In addition, we will
cause each of our officers and directors not to dispose of any equity securities
of Triangle Pharmaceuticals, Inc. (other than securities acquired in the private
placement we completed on ______, 2001) for a period of 90 days from the
effective date of this Registration Statement without the prior written consent
of Banc of America Securities LLC. We will not be issuing any securities
pursuant to our Facility for a period of 90 days from the effective date of this
Registration Statement.
Subject to receipt of necessary regulatory approvals, if required, we
intend to offer to certain QIBs and a limited number of large institutional
accredited investors in a private placement up to 230,000 shares of convertible
preferred stock. The shares of preferred stock will be convertible into our
common stock at a fixed conversion ratio of ten to one.
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
22
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.
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.
V. 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.
VI. USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares
by the selling stockholders.
23
VII. SELLING STOCKHOLDERS
We are registering all 7,700,000 shares of common stock covered by
this prospectus on behalf of the selling stockholders named in the table below.
We issued all of the shares to the selling stockholders pursuant to a private
placement we completed on ______, 2001. We have registered the shares of
common stock to permit the selling stockholders and their pledgees, donees,
transferees or other successors-in-interest that receive their shares from a
selling stockholder as a gift, partnership distribution or other non-sale
related transfer after the date of this prospectus to resell the shares when
they deem appropriate.
We have agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep this Registration
Statement effective until the earlier of the date upon which all of the shares
are sold or two years from the effective date of the Registration Statement.
The following table sets forth the name of each of the selling
stockholders, the number of shares owned by each of the selling stockholders as
of ___________, 2001, the number of shares that may be offered under this
prospectus, and the number of shares of our common stock owned by each of the
selling stockholders after this offering is completed. Except as set forth in
the table below, none of the selling stockholders has had a material
relationship with us within the past three years other than as a result of the
ownership of the shares or other securities of Triangle. The number of shares in
the column "Number of Shares Being Offered" represent all of the shares that
each selling stockholder may offer under this prospectus. We do not know how
long the selling stockholders will hold the shares before selling them or if
they will sell them and we currently have no agreements, arrangements or
understandings with any of the selling stockholders regarding the sale of any of
the shares. The shares offered by this prospectus may be offered from time to
time by the selling stockholders named below.
Unless otherwise indicated, each person has sole investment and
voting power with respect to the shares listed in the table, subject to
community property laws, where applicable. For purposes of this table, a person
or group of persons is deemed to have "beneficial ownership" of any shares which
such person has the right to acquire within 60 days. Percentage ownership is
based on 46,339,938 shares of common stock of Triangle outstanding on _________,
2001. For purposes of computing the percentage of outstanding shares held by
each person or group of persons named below, any security which such person or
group of persons has the right to acquire within 60 days is deemed to be
outstanding for the purpose of computing the percentage ownership for such
person or persons, but is not deemed to be outstanding for the purpose of
computing the percentage ownership for other persons. This registration
statement shall also cover any additional shares of common stock which become
issuable in connection with the shares registered for sale hereby as a result of
any stock dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an increase in
the number of Triangle's outstanding shares of common stock.
24
SHARES SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING (4)
------------------------- SHARES BEING ----------------------------
NAME OF SELLING STOCKHOLDER NUMBER(1) PERCENT(2) OFFERED(3) NUMBER(1) PERCENT(2)
---------- ---------- ------------ ----------- -----------
Caduceus Capital II, LP 410,000 * 410,000 0 *
Winchester Global Trust Company
Limited Trustee for Caduceus
Capital Trust 810,000 1.7 810,000 0 *
PW Eucalyptus Fund, LLC 1,000,000 2.2 1,000,000 0 *
PW Eucalyptus Management Ltd. 80,000 * 80,000 0 *
Narragansett I, LP 326,922 * 283,334 43,588 *
Narragansett Offshore Ltd. 634,612 1.4 550,000 84,612 *
Baystar Capital, LP 475,000 1.0 475,000 0 *
Baystar International, Ltd. 158,333 * 158,333 0 *
Merlin BioMed, L.P. 131,000 * 100,000 31,000 *
Merlin BioMed Int'l Ltd 222,900 * 165,000 57,900 *
Merlin BioMed II, L.P. 32,700 * 27,000 5,700 *
TAIB Funds, Ltd. 10,100 * 8,000 2,100 *
S.A.C. Capital Associates, LLC 1,140,833 2.5 833,333 307,500 *
Abbott Laboratories (5) 7,942,244 17.1 1,300,000 6,642,244 14.3
Q Finance, Inc. (6) 1,516,000 3.3 1,500,000 16,000 *
---------- --------- ---------
TOTAL 14,890,644 7,700,000 7,190,644
=========== ========= =========
- ----------------------------
* Represents beneficial ownership of less than one percent.
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares listed in the table, subject to community
property laws, where applicable. For purposes of the table, a person or
group of persons is deemed to have "beneficial ownership" of any shares
which such person has the right to acquire within 60 days.
(2) Percentage ownership is based on 46,339,938 shares of common stock of
Triangle outstanding on __________, 2001. For purposes of computing the
percentage of outstanding shares held by each person or group of persons
named above, any security which such person or group of persons has the
right to acquire within 60 days is deemed to be outstanding for the
purpose of computing the percentage ownership for such person or persons,
but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(3) This registration statement also shall cover any additional shares of
common stock which become issuable in connection with the shares
registered for sale hereby by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of our
outstanding shares of common stock.
(4) Assumes the sale of all shares offered hereby and no other purchases or
sales of the Company's common stock.
(5) The relationships between Abbott Laboratories and Triangle have been
described in Triangle's periodic reports filed with the SEC prior to
the date hereof and in the Schedule 13D, as amended, filed by Abbott
Laboratories with the SEC prior to the date hereof. Includes 4,000
shares of common stock issuable upon the exercise of options that are
exercisable within 60 days of January 29, 2001 beneficially owned by
Arthur J. Higgins. Mr. Higgins, a director of the Company, is a Senior
Vice President of Abbott Laboratories. Mr. Higgins disclaims beneficial
ownership of the shares beneficially owned by Abbott Laboratories.
(6) Includes 10,000 shares of common stock beneficially owned by Dennis B.
Gillings. Q Finance, Inc. is a wholly-owned subsidiary of Quintiles
Transanational Corp. Mr. Gillings, a director of the Company, is Chairman
and Chief Executive Officer of Quintiles Transnational Corp. Also includes
6,000 shares of common stock issuable upon the exercise of options that
are exercisable within 60 days of January 29, 2001 beneficially owned by
Mr. Gillings. Mr. Gillings disclaims beneficial ownership of the shares
beneficially owned by Q Finance, Inc.
VIII. PLAN OF DISTRIBUTION
The sale or distribution of the shares may be effected directly to
purchasers by the selling stockholders or by donees or pledgees of any such
selling stockholders as principals or through one or more underwriters, brokers,
dealers or agents from time to time in one or more transactions (which may
involve crosses or block transactions) (i) or on any exchange or in the
over-the-counter market, (ii) in transactions otherwise than in the over-the
counter market, (iii)
25
through the writing of put or call options (whether such options are listed on
an options exchange or otherwise) on, or settlement of short sale of the shares,
(iv) through the distribution of the shares by any selling stockholder to its
partners, members or shareholders or (v) through a combination of any of the
above. Any of such transactions may be effected at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, at varying
prices determined at the time of sale or at negotiated or fixed prices, in each
case as determined by the selling stockholder or by agreement between the
selling stockholder and underwriters, brokers, dealers or agents, or purchasers.
If the selling stockholders effect such transactions by selling shares to or
through underwriters, brokers, dealers or agents, such underwriters, brokers,
dealers or agents may receive compensation in the form of discounts, concessions
or commissions from the selling stockholders or commissions from purchasers of
shares for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). Brokers,
dealers or agents and any other participating brokers, dealers or the selling
stockholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because selling
stockholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the selling stockholders will be subject to the
prospectus delivery requirements of the Securities Act.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of Triangle's Common Stock in the course of hedging the positions they
assume with selling stockholders. The selling stockholders may also enter into
options or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealer or other financial
institution of Shares offered hereby, which Shares such broker-dealer or other
financial institution may resell pursuant to this Prospectus (as supplemented or
amended to reflect such transaction).
Under the securities laws of certain states, the shares may be sold
in such states only through registered or licensed brokers or dealers. In
addition, in certain states the shares may not be sold unless the shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
Selling stockholders may also resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
rather than under this prospectus, provided they meet the criteria and conform
to the requirements of such rule.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), any person engaged in the
distribution of the shares may not simultaneously engage in market making
activities with respect to our common stock for a period of two business days
prior to the commencement of such distribution. In addition, each selling
stockholder will be subject to applicable provisions of the Exchange Act and the
associated rules and regulations under the Exchange Act, including Regulation M,
which provisions may limit the timing of purchases and sales of shares of our
common stock by the
26
selling stockholders. We will make copies of this prospectus available to the
selling stockholders and have informed them of the need to deliver copies of
this prospectus to purchasers at or prior to the time of any sale of the shares.
We will pay all of the expenses incident to the registration,
offering and sale of the shares to the public hereunder other than commissions,
fees and discounts of underwriters, brokers, dealers and agents. We have agreed
to indemnify the selling stockholders against certain liabilities, including
liabilities under the Securities Act. We will not receive any of the proceeds
from the sale of any of the shares by the selling stockholders.
We have agreed to keep the Registration Statement of which this
prospectus constitutes a part effective until the earlier of the date upon which
all of the shares are sold or two years from the effective date of the
Registration Statement.
IX. 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.
X. 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.
27
WE HAVE NOT AUTHORIZED ANY
PERSON TO MAKE A STATEMENT
THAT DIFFERS FROM WHAT IS IN
THIS PROSPECTUS. IF ANY PERSON
DOES MAKE A STATEMENT THAT
DIFFERS FROM WHAT IS IN THIS
PROSPECTUS, YOU SHOULD NOT
RELY ON IT. THIS PROSPECTUS IS
NOT AN OFFER TO SELL, NOR IS 7,700,000 Shares
IT AN OFFER TO BUY, THESE
SECURITIES IN ANY STATE IN
WHICH THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION IN
THIS PROSPECTUS IS COMPLETE
AND ACCURATE AS OF ITS DATE,
BUT THE INFORMATION MAY CHANGE
AFTER THAT DATE.
TRIANGLE
PHARMACEUTICALS, INC.
COMMON STOCK
-----------------------------
PROSPECTUS
-----------------------------
February 2, 2001
28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, 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...................... $14,620
Printing and engraving expenses....... 15,000
Legal fees and expenses............... 200,000
Accounting fees and expenses.......... 15,000
Transfer Agent and Registrar Fees..... 35,000
Miscellaneous Expenses................ 20,380
------------
TOTAL........................... $300,000
============
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
II-1
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 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
----------- -----------
+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
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. Reference is made to pages II-4
and II-5 of this Registration Statement.
+Previously filed.
ITEM 17. UNDERTAKINGS.
II-2
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 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
Purchase Agreements 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.
II-3
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 31st day of
January, 2001.
TRIANGLE PHARMACEUTICALS, INC.
By: /S/ David W. Barry
-----------------------
David W. Barry
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, David W.
Barry and Chris A. Rallis, and each of them acting individually, as his
attorney-in-fact, each with full power of substitution and resubstitution, for
him or her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith as fully to all
intents and purpose as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact, or their substitute and substitutes,
may lawfully do or cause to be done by virtue hereof.
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
/s/ David W. Barry Chairman of the Board and Chief Executive January 31, 2001
- --------------------------- Officer (Principal Executive Officer)
David W. Barry
/s/ Chris A. Rallis Director, President and Chief Operating January 31, 2001
- --------------------------- Officer
Chris A. Rallis
/s/ Robert Amundsen, Jr. Executive Vice President and Chief Financial January 31, 2001
- --------------------------- Officer (Principal Financial and Accounting
Robert Amundsen, Jr. Officer)
/s/ Anthony B. Evnin Director January 31, 2001
- ---------------------------
Anthony B. Evnin
/s/ Standish M. Fleming Director January 31, 2001
- ---------------------------
Standish M. Fleming
II-4
/s/ Dennis B. Gillings Director January 31, 2001
- ---------------------------
Dennis B. Gillings
/s/ Arthur J. Higgins Director January 31, 2001
- ---------------------------
Arthur J. Higgins
/s/ Henry G. Grabowski Director January 31, 2001
- ---------------------------
Henry G. Grabowski
/s/ George McFadden Director January 31, 2001
- ---------------------------
George McFadden
II-5
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
+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.
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. Reference is made to pages II-4 and
II-5 of this Registration Statement.
+Previously filed.
II-6