As filed with the Securities and Exchange Commission on June 25, 1996
Registration No. 33-87138
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
ON FORM S-3
Under
the Securities Act of 1933
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PDT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 7408 HOLLISTER AVENUE 77-0222872
SANTA BARBARA, CALIFORNIA 93117 (I.R.S. Employer
(State or other (805) 685-9880 Identification No.)
jurisdiction
of incorporation
or organization)
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
GARY S. KLEDZIK, PH.D.
PDT, INC.
7408 HOLLISTER AVENUE
SANTA BARBARA, CALIFORNIA 93117
(805) 685-9880
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
-----------------
COPY TO:
THEODORE R. MALONEY, ESQ.
NIDA & MALONEY
A PROFESSIONAL CORPORATION
801 GARDEN STREET, SUITE 201
SANTA BARBARA, CALIFORNIA 93101-1580
(805) 568-1151
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE
SECURITIES TO THE PUBLIC: FROM TIME TO TIME AFTER THE
EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box./ /
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8 (a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8 (a),
may determine.
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PROSPECTUS
PDT, Inc.
Common Stock
($.01 par value)
This Prospectus relates to the offering and sale of 37,986 shares of the
Common Stock, par value $.01 per share (the "Common Stock") of PDT, Inc., a
Delaware corporation (the "Company" or "PDTI") by certain holders thereof named
herein (each a "Selling Shareholder") from time to time after the date hereof
(such shares being referred to collectively as the "Shares"). See "Shares Being
Offered" and "Selling Shareholders."
Shares of the Common Stock are traded on The Nasdaq National Market under
the symbol "PDTI." On June 24, 1996 the last sale price of the Common Stock as
reported by Nasdaq was $35.75 per share.
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING AT PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------------
Each of the shares of Common Stock offered hereby may be offered for sale
and sold by the Selling Shareholders from time to time in varying amounts,
including in block transactions, on The Nasdaq National Market at then
prevailing prices or in private transactions at prices and on terms to be
determined at the time of sale. The Shares may be sold by the Selling
Shareholders directly, through an underwritten offering, through agents
designated from time to time or to or through broker-dealers designated from
time to time. To the extent required, the number and series of Shares to be
sold, the name of the Selling Shareholders, the purchase price, the public
offering price, if applicable, the name of any such agent or broker-dealer, and
any applicable commissions, discounts or other items constituting compensation
to such underwriters, agents or broker-dealers with respect to a particular
offering will be set forth in a supplement or supplements to this Prospectus
(each, a "Prospectus Supplement"). The aggregate proceeds to the Selling
Shareholders from the sale of the Shares so offered will be the purchase price
of the Shares sold less (i) the aggregate commissions, discounts and other
compensation, if any, paid by the Selling Shareholders to underwriters, agents
or broker-dealers and (ii) certain other expenses of the offering and sale of
the Shares that will be the responsibility of the Selling Shareholders. See
"Selling Shareholders" and "Plan of Distribution." The Company will not receive
any proceeds from the sale of the Shares. The Company knows of no selling
arrangement between any underwriter, agent or broker-dealer and the Selling
Shareholders.
The Selling Shareholders and any broker-dealers or agents that participate
with the Selling Shareholders in the distribution of any of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any discount or commission 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.
The date of this Prospectus is June __, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by the Company
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W, Washington, D.C. 20549 and at
the Commission's Regional Offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Branch of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed or incorporated by
reference as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and the schedules
thereto. For further information pertaining to the Company or the Common Stock
offered hereby, reference is made to the Registration Statement and such
exhibits and schedules thereto, which may be inspected without charge at, and
copies thereof may be obtained at prescribed rates from, the Public Reference
Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith, as indicated below. The Company will
provide without charge to each person to whom a copy of this Prospectus has been
delivered, on the written or oral request of such person, a copy of any or all
of the documents referred to below which are incorporated herein by reference
(other than exhibits to such documents unless they are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to Corporate Secretary, PDT, Inc., 7408 Hollister Avenue, Santa Barbara,
California 93117; telephone number (805) 685-9880.
The following documents filed with the Commission by the Company under
File No. 0-25544 pursuant to the Exchange Act are incorporated herein by
reference: the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (as amended on Form 10-K/A-1 filed April 23, 1996 and on Form
10-K/A-2 filed April 24, 1996); the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996 and the description of the Company's Common
Stock as contained in Item 1 of the Company's Registration Statement on Form 8-A
filed February 9, 1995.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this
Prospectus and prior to the termination of the offering of the Common Stock
offered hereby shall be deemed to be incorporated by reference herein and to be
a part hereof from the date of filing of such documents. See "Available
Information." Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document incorporated or deemed to be incorporated
herein by reference, which statement is also incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY
PDT, Inc. ("PDTI" or the "Company") is engaged in the integrated
development of drug and medical device products for use in photodynamic therapy.
Photodynamic therapy is a medical procedure which uses light-activated
(photoreactive) drugs, light producing devices and light delivery devices to
achieve selective photochemical destruction of diseased cells. The Company
believes that photodynamic therapy has the potential to be a safe,
cost-effective, minimally invasive primary or adjunctive treatment for
indications in a broad number of disease areas including oncology,
ophthalmology, urology, dermatology, gynecology and cardiology. PDTI is
conducting Phase III clinical trials for two indications in the oncology area;
is preparing to initiate Phase III clinical trials for a third indication in the
oncology area; is conducting a Phase I/II clinical trial in the ophthalmology
area; is preparing to initiate three Phase I/II clinical trials in the urology,
oncology and dermatology areas; and is conducting preclinical studies in
oncology, ophthalmology, gynecology and cardiology. All of the Company's
clinical trials are testing PDTI's leading drug candidate, tin ethyl
etiopurpurin ("SnET2"). PDTI is developing products in collaboration with its
corporate partners, a subsidiary of Pharmacia & Upjohn, Inc. (together with
certain other subsidiaries, "Pharmacia & Upjohn"), Boston Scientific Corporation
("Boston Scientific"), Cordis Corporation, a Johnson & Johnson company
("Cordis") and Iridex Corporation, ("Iridex").
Photodynamic therapy typically involves the intravenous injection of a
photoreactive drug followed by the application of light of a specific wavelength
which activates the drug. When exposed to the appropriate light wavelength,
SnET2 acts as a catalyst to generate a highly reactive form of oxygen which
destroys the membranes of the cells containing the drug. Importantly, neither
SnET2 nor light alone can produce the photodynamic reaction. After
administration, SnET2 is absorbed by cells throughout the body. The drug begins
to clear from normal cells after several hours but is retained by
hyperproliferating cells for up to several days. As a result, photodynamic
therapy can be used to selectively destroy diseased or undesirable cells in two
ways: (i) drug selectivity-hyperproliferating cells such as in a cancer tumor
can be selectively destroyed by allowing the drug to clear from non-target cells
before delivering light to the general area; and (ii) light selectivity-in
conditions such as certain eye disorders, tissues can be selectively destroyed
by precisely delivering the light to discrete areas before the drug has cleared.
The Company believes that this selectivity may offer advantages over existing
chemotherapy, radiation therapy and surgery treatments, which can damage both
normal and abnormal tissues.
PDTI is developing all three components of photodynamic therapy:
photoreactive drugs, light producing devices and light delivery devices. The
Company believes that by integrating the development of drugs and devices, it
can produce easy-to-use photodynamic therapy systems which offer the potential
for predictable and consistent results. SnET2 is synthetic, clears from the body
in days and is activated by a wavelength of light that can be produced using
semiconductor diode technology. In contrast to PDTI's synthetic drugs, certain
competing compounds used in photodynamic therapy have one or more of the
following drawbacks: they may be complex mixtures derived from blood or plant
sources and may yield inconsistent results; they may produce a relatively severe
sensitivity to light for up to several weeks; or they may react only to light
wavelengths which require the use of large, expensive and difficult-to-maintain
laser systems. PDTI is collaborating with its partner Pharmacia & Upjohn in the
worldwide development and commercialization of SnET2. In conjunction with its
partners Boston Scientific and Cordis, PDTI is developing and testing medical
catheters which incorporate specialized light diffusers and measurement devices.
PDTI is collaborating with Iridex in the development of light-producing devices
for photodynamic therapy in the field of ophthalmology.
In late 1995, PDTI completed two Phase I/II clinical trials. One trial
involved 46 patients with a total of 418 tumors and tested SnET2 for the local
treatment of nonmelanoma skin cancers including basal cell carcinoma, basal cell
nevus syndrome and metastatic breast cancer involving the skin. The other trial
involved 45 patients with a total of 404 tumors and tested SnET2 for the local
treatment of AIDS-related Kaposi's Sarcoma ("KS"). These studies assessed the
safety of the drug and evaluated responses to various drug and light doses. In
each of these trials, treatment was found to be well tolerated, with minimal
side effects. In the Phase II portion of these trials, evaluable tumor responses
were as follows: 100% of the basal cell carcinomas had complete responses; 95%
of the basal cell nevus tumors responded, 86% of which were complete responses;
100% of the metastatic breast tumors involving the skin responded, 96% of which
were complete responses; and 62% of the KS tumors which were given the higher of
two light doses responded, 64% of which were complete responses. A complete
response was defined as no visible or palpable evidence of tumor remaining for
at least four weeks. The foregoing data are subject to change as a result of the
continuing evaluation of patient data and are not definitive inasmuch as Phase
III clinical trials are required to determine the safety and efficacy of the
Company's products. The Company commenced Phase III clinical trials in March
1996 for the local treatment of KS and metastatic breast cancer involving the
skin and, based on clinical results and after review with the FDA, the Company
plans to begin enrolling patients in Phase III clinical trials for basal cell
carcinoma in 1996.
PDTI's objective is to develop and commercialize its photodynamic therapy
systems for use as adjunct or primary treatments. The key elements of the
Company's strategy include: (i) integrating photoreactive drugs, light producing
devices and light delivery devices into easy-to-use, cost-effective clinical
treatment systems; (ii) initially targeting high-incidence or serious diseases
for which there is no satisfactory alternative treatment or which may offer
accelerated regulatory processes; and (iii) collaborating with industry-leading
corporate partners which can assist the Company in expanding the number of
target applications and expediting the development and marketing of its
products.
On April 30, 1996, the Company closed its offering of 1,500,000 shares of
Common Stock. The underwriters for such offering elected not to exercise an
option to purchase an additional 225,000 shares of Common Stock granted by the
Company in connection therewith.
PDTI was incorporated in Delaware in 1989. The Company's executive offices
and the offices of its three subsidiaries, PDT Pharmaceuticals, Inc., PDT
Systems, Inc. and PDT Cardiovascular, Inc., are located at 7408 Hollister
Avenue, Santa Barbara, California 93117. The Company's telephone number is (805)
685-9880. Unless otherwise indicated, all references to the Company and PDTI
include PDTI and its subsidiaries.
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, together with the other information contained in this Prospectus, in
evaluating the Company and its business before purchasing the shares offered
hereby. In particular, prospective investors should note that this Prospectus
contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, which involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to differ materially from
any future results, performance or achievements expressed or implied by such
forward-looking statements. The factors listed below represent certain important
factors the Company believes could cause such results to differ. These factors
are not intended to represent a complete list of the general or specific risks
that may affect the Company. It should be recognized that other risks may be
significant, presently or in the future, and the risks set forth below may
affect the Company to a greater extent than indicated.
EARLY STAGE OF THE COMPANY AND ITS PRODUCTS
The Company and its products are in an early stage of development. No
revenues have been generated from sales of the Company's drugs and only limited
revenues have been generated from sales of the Company's devices. The Company
does not expect to achieve significant levels of revenues for at least several
years. The Company's revenues to date have consisted, and for the foreseeable
future are expected to consist, principally of grants awarded and payments for
its devices which are purchased by others engaged in preclinical and clinical
testing and research of photodynamic therapy drugs or by companies that
distribute the devices and payments under research and development agreements,
license fees, royalties and interest income. To achieve profitable operations on
a continuing basis, the Company, alone or with collaborative partners, must
successfully research, develop, test, obtain regulatory approval for,
manufacture, introduce, market and distribute its products. The time frame
necessary to achieve these goals for any individual product is long and
uncertain. Most of the products currently under development by the Company will
require significant additional research and development, preclinical and
clinical testing and regulatory approval prior to commercialization. There can
be no assurance that the Company's research or product development efforts or
those of its collaborative partners will be successfully completed, that the
drugs or devices currently under development will be successfully transformed
into marketable products, that required regulatory approvals can be obtained,
that products can be manufactured at an acceptable cost and with appropriate
quality, that any approved products can be successfully marketed, or that any
products that may be marketed will be favorably accepted. The likelihood of the
Company's success must be considered in light of these and other problems,
expenses, difficulties, complications and delays frequently encountered in
connection with the formation of a new business and the development and
commercialization of new products, particularly pharmaceutical and medical
device products.
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
The Company has generated little revenue to date, has experienced operating
losses since its inception in 1989 and has not yet achieved profitability. As of
December 31, 1995, the Company had an accumulated deficit of approximately $34.5
million. These losses have resulted primarily from the Company's research and
development programs, the funding of preclinical and clinical testing and
regulatory activities and the general and administrative expenses associated
with these activities. The Company anticipates incurring substantial and
increasing losses over at least the next several years. The extent of losses and
the time required to reach profitability are highly uncertain. To achieve
sustained profitable operations, the Company, alone or with collaborative
partners, must successfully research, develop, test, obtain regulatory approval,
manufacture, introduce, market and distribute its products. There can be no
assurance that the Company will be able to achieve profitability or that
profitability, if achieved, can be sustained on an ongoing basis. Moreover, if
profitability is achieved, the level of that profitability cannot be accurately
predicted.
UNPROVEN SAFETY AND EFFICACY; CLINICAL TRIALS
All drug and device products currently under development by the Company
will require extensive preclinical and clinical testing prior to regulatory
approval for commercial use. None of the Company's products have completed
testing for efficacy or safety in humans. There can be no assurance that such
testing will demonstrate that SnET2 or any other of the Company's products is
safe or efficacious or that testing for any of the Company's compounds currently
under development will be completed successfully within any specified time
period, if at all. Further, there can be no assurance that clinical data
reported by the Company will not change as a result of the continuing evaluation
of patients. Data obtained from preclinical and clinical trials are subject to
varying interpretations which can delay, limit or prevent approval by the U.S.
Food and Drug Administration (the "FDA") or other regulatory authorities. There
can be no assurance that the Company will not encounter Problems in research and
development, preclinical testing or clinical trials that will cause the Company
to delay, suspend or cancel clinical trials. Many potential pharmaceutical and
medical device products that achieve promising results in preclinical tests and
clinical trials fail to demonstrate sufficient safety or efficacy to warrant
approval by the FDA or other regulatory authorities, and there can be no
assurance that any of the Company's potential products will obtain the required
approvals or, if approved, will obtain sufficient market acceptance to become
commercially successful.
To date, the Company has very limited experience in conducting clinical
trials. The Company will either need to rely on third parties, including its
collaborative partners, to design and conduct any required clinical trials or
expend resources to hire additional personnel to administer such clinical
trials. There can he no assurance that the Company will be able to find
appropriate third parties to design and conduct clinical trials or that it will
have the resources to hire personnel to administer clinical trials in-house.
RELIANCE ON COLLABORATIVE PARTNERS
The Company has entered into collaborative relationships with certain
corporations and academic institutions in connection with the research and
development, preclinical and clinical testing, licensing, manufacturing and
distribution of its products. In July 1995, the Company entered into a
collaborative agreement with Pharmacia & Upjohn pursuant to which the Company
granted to Pharmacia & Upjohn an exclusive worldwide license to use, distribute
and sell SnET2 for therapeutic or diagnostic applications in the area of
photodynamic therapy. SnET2 is the only drug being developed by the Company that
currently is in clinical trials. Pursuant to this agreement, Pharmacia & Upjohn
is responsible for conducting certain aspects of clinical trials involving SnET2
and is obligated to reimburse the Company for certain expenses incurred by the
Company for clinical trials conducted by the Company involving SnET2. Under the
agreement, the Company is entitled to royalties on the sale of SnET2 as well as
payments upon the achievement of certain milestones. The amount of royalty
revenues and other payments, if any, ultimately received by the Company with
respect to sales of SnET2 is dependent, in part, on the amount and timing of
resources Pharmacia & Upjohn commits to research and development, clinical
testing and regulatory and marketing activities, which are entirely within the
control of Pharmacia & Upjohn. The resources committed by Pharmacia & Upjohn in
these areas will depend on Pharmacia & Upjohn's own competitive, marketing and
strategic considerations, including the relative advantages of alternative
products or therapies developed and marketed by Pharmacia & Upjohn or
competitors. There can be no assurance that Pharmacia & Upjohn will pursue the
development and commercialization of SnET2 or that Pharmacia & Upjohn will
perform its obligations as expected. In addition, the Company is collaborating
with Boston Scientific and Cordis with respect to the development of medical
catheters for use in photodynamic therapy. The Company has not entered into any
definitive agreement with either of these companies and there can be no
assurance that any definitive agreement will be executed. In addition, the
Company has entered into a collaborative agreement with Iridex for the
co-development and distribution of light devices for use in photodynamic therapy
in the field of ophthalmology. There can be no assurance that any of the
Company's collaborations will culminate in marketable products or will otherwise
be successful.
In addition, the Company is currently at various stages of discussions with
other companies regarding the establishment of various collaborations. The
Company's current and future collaborations are important to the Company because
they allow the Company greater access to funds, to research, development or
testing resources and to manufacturing, sales or distribution resources than
would otherwise have, and the Company intends to continue to rely on such
collaborative arrangements. However, there can be no assurance that the Company
will be able to negotiate acceptable collaborative arrangements in the future or
that such future or existing collaborative arrangements will be successful. In
addition, there can be no assurance that such collaborative relationships will
not limit or restrict the Company in any way. Further, there can be no assurance
that the Company's collaborative partners will not develop or pursue alternative
technologies either on their own or in collaboration with others, including the
Company's competitors, as a means of developing or marketing products for the
diseases targeted by the collaborative programs and the Company's products.
ADDITIONAL FINANCING REQUIREMENTS AND UNCERTAINTY OF CAPITAL FUNDING
The Company has incurred negative cash flows from operations since its
inception and has expended substantial funds in connection with its research and
development programs and preclinical and clinical testing. The Company will
require substantial funding to continue or undertake its research and
development activities, preclinical and clinical testing and manufacturing,
marketing, sales, distribution and administrative activities. There can be no
assurance that the Company's existing capital resources, together with the
proceeds from this offering and future cash flows, will be sufficient to fund
the Company's future operations. The Company's capital requirements will depend
on numerous factors, including the progress and magnitude of the Company's
research and development programs and preclinical and clinical testing, the time
involved in obtaining regulatory approvals, the cost involved in filing and
maintaining patent claims, technological advances, competitive and market
conditions, the ability of the Company to establish and maintain collaborative
arrangements, the cost of manufacturing scale-up and the cost and effectiveness
of commercialization activities and arrangements. Other than a $1.0 million bank
credit line, the Company does not currently have any committed sources of
financing. The Company has raised funds in the past through the public and
private sale of securities, including its April 1996 offering, and contemplates
raising funds in the future through public or private financings, collaborative
arrangements or from other sources. The success of such efforts will depend in
large part upon continuing developments in the Company's preclinical and
clinical testing. The Company continues to explore and, as appropriate, enters
into discussions with other companies regarding the potential for equity
investment, collaborative arrangements, license agreements or development or
other funding programs with the Company in exchange for manufacturing,
marketing, distribution or other rights to products developed by the Company.
However, there can be no assurance that discussions with other companies will
result in any investments, collaborative arrangements, agreements or funding or
that the necessary additional financing through debt or equity financing will be
available to the Company on acceptable terms, if at all. Further, there can be
no assurance that any arrangements resulting from these discussions will
successfully reduce the Company's funding requirements. In addition, the terms
and price of any such financings may be significantly more favorable to
investors than those in this offering, which could have the effect of diluting
or otherwise materially adversely affecting the holdings or the rights of
existing shareholders of the Company, including purchasers acquiring Common
Stock in this offering. If additional funding is not available to the Company
when needed, the Company will be required to scale back its research and
development programs, preclinical and clinical testing and administrative
activities, and the Company's business and financial condition would be
materially adversely affected.
COMPETITION AND TECHNOLOGICAL UNCERTAINTY
The pharmaceutical and medical device industries are characterized by
extensive world-wide research and development efforts and rapid technological
change. Competition from other domestic and foreign pharmaceutical or medical
device companies and research and academic institutions in the areas of product
development, product and technology acquisition, manufacturing and marketing is
intense and is expected to increase. These competitors may succeed in obtaining
approval from the FDA or other regulatory agencies for their products more
rapidly than the Company. Competitors have also developed or are in the process
of developing technologies that are, or in the future may be, the basis for
competitive products. The Company is aware of five competitors involved in the
development of photodynamic therapy drugs: QLT PhotoTherapeutics ("QLT")
(Canada), Nippon Petrochemicals ("Nippon") (Japan), Scotia Pharmaceuticals
("Scotia") (United Kingdom), DUSA Pharmaceuticals ("DUSA") (Canada and USA) and
Pharmacyclics, Inc. ("Pharmacyclics") (USA). The Company understands that QLT's
drug Photofrin(R) has received marketing approval in the United States, Canada,
the Netherlands and Japan for various specific disease indications. Further, the
Company understands that QLT, Nippon, Scotia, DUSA and Pharmacyclics are
conducting preclinical and/or clinical testing in various countries and for a
variety of disease indications. In addition, the Company is aware of two
competitors active in the commercialization of photodynamic therapy devices
(Coherent Inc. and Laserscope). Both Coherent Inc. and Laserscope entered into
collaborative agreements with QLT in 1994 to develop photodynamic devices for
use with QLT's drugs. These and other companies may also be involved in
competitive activities of which the Company is unaware. The Company's
competitive position may be materially adversely affected by product
developments or approvals in photodynamic therapy or other technologies which
have already been achieved, or which may be achieved in the future, by these or
other companies. Further, the prior development and commercialization of a
pharmaceutical or medical device product has often resulted in a competitive
advantage in that area. The Company's competitors may have substantially greater
financial, technical and human resources than the Company and substantially
greater experience in developing products, conducting preclinical or clinical
testing, obtaining regulatory approvals and manufacturing and marketing.
Further, the Company's competitive position could be materially adversely
affected by the establishment of patent protection by its competitors. There can
be no assurance that the Company's competitors will not succeed in developing
technologies and products that are more effective or affordable than those being
developed by the Company or that would render the Company's technology and
products less competitive or obsolete.
The Company's products are subject to the risks of failure inherent in the
development and testing of products based on innovative technologies. These
risks include the possibilities that this technology or any or all of the
Company's products may be found to be ineffective or to have unanticipated
limitations or otherwise fail.
GOVERNMENT REGULATION
The production and marketing of the Company's products and its ongoing
research and development, preclinical testing and clinical trial activities are
subject to extensive regulation and review by numerous governmental authorities
in the United States, including the FDA, and in other countries. All drugs and
most medical devices developed by the Company must undergo rigorous preclinical
and clinical testing and an extensive regulatory approval process administered
by the FDA under the Food, Drug, and Cosmetic Act, as amended (the "FDC Act"),
and comparable foreign authorities before they can be marketed. These processes
involve substantial cost and can take many years. The Company has limited
experience in, and limited resources available to commit to, regulatory
activities. Failure to comply with the applicable regulatory requirements can,
among other things, result in non-approval, suspensions of regulatory approvals,
fines, product seizures and recalls, operating restrictions, injunctions and
criminal prosecution.
The time required for completing such testing and obtaining such approvals
is uncertain and approval itself may not be obtained. In addition, delays or
rejections may be encountered due to, among other reasons, regulatory review of
each submitted new drug, device or combination drug/device application or
product license application, as well as changes in regulatory policy during the
period of product development. Similar delays may also be encountered in foreign
countries. To date, no pharmaceutical product candidate being developed by the
Company has been submitted for approval or has been approved by the FDA or any
other regulatory authority for marketing, and there can be no assurance that,
even after investing substantial time and expense, regulatory approval will be
obtained for any products developed by the Company. Moreover, if regulatory
approval of a product is granted, such approval may entail limitations on the
indicated uses for which the product may be marketed. Further, even if such
regulatory approval is obtained, a marketed product, its manufacturer and the
facilities in which the product is manufactured are subject to continual review
and periodic inspections. Later discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions on such product or
manufacturer, including withdrawal of the product from the market and
litigation. Although to date photodynamic therapy products have been categorized
by the FDA as combination drug/device products, there can be no assurance that
PDTI's products currently under investigation or any future drug/device products
will continue to be categorized for regulatory purposes as combination products,
that they will not require separate drug and device submissions, or that they
will not require separate approval by regulatory authorities.
LIABILITY AND RECALL EXPOSURE
The use of the Company's products in clinical trials and the sale of such
products may expose the Company to liability claims. These claims could be made
directly by patients or consumers or by companies, institutions or others using
or selling such products. In addition, the Company is subject to the inherent
risk that a government authority or third party may require the recall of one or
more of the Company's products. The Company has not obtained liability insurance
that would cover a claim relating to the use or recall of its products. In the
absence of such insurance, claims made against the Company or a product recall
could have a material adverse effect on the Company. In addition, there can be
no assurance that, if the Company seeks insurance coverage in the future, such
coverage will be available at reasonable cost and in amounts sufficient to
protect the Company against claims that could have a material adverse effect on
the financial condition and prospects of the Company. Further, liability claims
relating to the use of the Company's products or a product recall could
negatively affect the Company's ability to obtain or maintain regulatory
approvals for its products. The Company has agreed to indemnify certain of its
collaborative partners against certain potential liabilities relating to the
manufacture and sale of SnET2 and photodynamic therapy light devices.
POSSIBLE ADVERSE EFFECTS OF FUTURE LEGISLATION OR REGULATIONS
Heightened public awareness and concerns regarding the growth in overall
health care expenditures in the United States, combined with the continuing
efforts of governmental authorities to contain or reduce costs of health care,
may result in the enactment of national health care reform or other legislation
or regulations that impose limits on the number and type of medical procedures
which may be performed or which have the effect of restricting a physician's
ability to select specific products for use in certain procedures. Such new
legislation or regulations may materially adversely affect the demand for the
Company's products. In the United States, there have been, and the Company
expects that there will continue to be, a number of federal and state
legislative proposals and regulations to implement greater governmental control
in the health care industry. For example, the Clinton Administration and certain
members of Congress have proposed health care reform legislation that may impose
pricing or profitability limitations or other restrictions on companies in the
health care industry. The announcement of such proposals may materially
adversely affect the Company's ability to raise capital or to form
collaborations, and the enactment of any such reforms could have a material
adverse effect on the Company. In certain foreign markets, the pricing and
profitability of health care products are subject to governmental influence or
control. In addition, legislation or regulations that impose restrictions on the
price that may be charged for health care products or medical devices may
adversely affect the Company's results of operations. From time to time,
legislation or regulatory proposals are considered that could alter the review
and approval process relating to pharmaceutical or medical device products. The
Company is unable to predict the likelihood of adverse effects which might arise
from future legislative or administrative action, either in the United States or
abroad.
REIMBURSEMENT
The Company's ability to commercialize its products successfully may depend
in part on the extent to which reimbursement for such products and related
treatment will be available from government health administration authorities,
private health insurers, managed care entities and other organizations. Such
payers are increasingly challenging the price of medical products and services
and establishing protocols and formularies which effectively limit physicians'
ability to select products and procedures. Uncertainty exists as to the
reimbursement status of health care products (especially innovative
technologies), and there can be no assurance that adequate reimbursement
coverage will be available to enable the Company to achieve market acceptance of
its products or to maintain price levels sufficient for realization of an
appropriate return on its products.
LIMITED MANUFACTURING AND MARKETING CAPABILITY AND EXPERIENCE
To be successful, the Company's products must be manufactured in commercial
quantities under current Good Manufacturing Practices ("GMP") prescribed by the
FDA and at acceptable costs. Although the Company intends to manufacture drugs
and devices, the Company has not yet manufactured any products in commercial
quantities under GMP and has no experience in such commercial manufacturing. The
Company will need to expand its manufacturing capabilities and/or depend on its
collaborators, licensees or contract manufacturers for the commercial
manufacture of its products. In the event the Company determines to expand its
manufacturing capabilities, it will require the expenditure of substantial
funds, the hiring and retention of significant additional personnel and
compliance with extensive regulations applicable to such expansion.
There can be no assurance that the Company will be able to expand such
capabilities successfully or that it will be able to manufacture products in
commercial quantities for sale at competitive prices. Further, there can be no
assurance that the Company will be able to enter into manufacturing arrangements
with collaborators, licensees, or contract manufacturers on acceptable terms or
at all. If the Company is not able to expand its manufacturing capabilities or
enter into additional commercial manufacturing agreements, it could be
materially and adversely affected.
The Company has limited experience in marketing, distributing and
selling pharmaceutical products, and will need to develop a sales force or rely
on its collaborators or licensees or make arrangements with others to provide
for the marketing, distribution and sale of its products. There can be no
assurance that the Company's marketing, distribution and sales capabilities or
current or future arrangements with third parties to perform such activities
will be adequate for the successful commercialization of its products.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY TECHNOLOGY
The Company's success will depend, in part, on its and its licensors'
ability to obtain, assert and defend its patents, protect trade secrets and
operate without infringing the proprietary rights of others. The Company has
filed applications for or has been issued U.S. and foreign patents, a majority
of which relate to its light delivery and measurement devices, and the Company
has an exclusive license under patent applications or patents of others relating
to certain photoreactive compounds. Such issued U.S. patents expire from 2006
through 2014. Certain of the foregoing patents and patent applications are
subject to certain governmental rights. The exclusive license to the Company
under various drug patents, including patents relating to its leading drug
candidate SnET2, provides that the licensors may elect that the license become
non-exclusive if the Company fails to satisfy certain development and
commercialization objectives. Although the Company believes it should be able to
achieve such objectives, there can be no assurance that the Company will be
successful. The patent position of pharmaceutical and medical device firms
generally is highly uncertain and involves complex legal and factual questions.
There can be no assurance that the patent applications owned by or licensed to
the Company will result in issued patents, that any issued patents will provide
the Company with proprietary protection or competitive advantages, will not be
infringed upon or designed around by others, will not be challenged by others
and held to be invalid or unenforceable or that the patents of others will not
have a material adverse effect on the Company.
The Company is aware that its competitors and other companies, institutions
and individuals have been issued patents relating to photodynamic therapy. In
addition, the Company's competitors and other companies, institutions and
individuals may have filed patent applications or been issued patents relating
to other potentially competitive products of which the Company is not aware.
Further, the Company's competitors and other companies, institutions and
individuals may in the future file applications for, or be granted or license or
otherwise obtain proprietary rights to, patents relating to other potentially
competitive products. There can be no assurance that these existing or future
patents or patent applications will not conflict with the Company's or its
licensors' patents or patent applications. Such conflicts could result in a
rejection of the Company's or its licensors' patent applications or the
invalidation of their patents, which could have a material adverse effect on the
Company's competitive position. In the event of such conflicts, or in the event
the Company believes that such competitive products may infringe the patents
owned by or licensed to the Company, the Company may pursue patent infringement
litigation or interference proceedings against, or may be required to defend
against litigation involving, holders of such conflicting patents or competing
products. Such proceedings may materially adversely affect the Company's
competitive position, and there can be no assurance that the Company will be
successful in any such proceeding. Litigation and other proceedings relating to
patent matters, whether initiated by the Company or a third party, can be
expensive and time consuming, regardless of whether the outcome is favorable to
the Company, and can result in the diversion of substantial financial,
managerial and other resources from the Company's other activities. An adverse
outcome could subject the Company to significant liabilities to third parties or
require the Company to cease any related research and development activities or
product sales. The Company does not have contractual indemnification rights
against the licensors of the various drug patents. In addition, if patents that
contain dominating or conflicting claims have been or are subsequently issued to
others and such claims are ultimately determined to be valid, the Company may be
required to obtain licenses under patents or other proprietary rights of others.
No assurance can be given that any licenses required under any such patents or
proprietary rights would be made available on terms acceptable to the Company,
if at all. If the Company does not obtain such licenses, it could encounter
delays or could find that the development, manufacture or sale of products
requiring such licenses is foreclosed.
The Company also seeks to protect its proprietary technology and processes
in part by confidentiality agreements with its collaborative partners, employees
and consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
discovered by competitors. Certain of the research activities relating to the
development of certain of the patents owned by or licensed to the Company were
funded, in part, by agencies of the United States government. When the United
States government participates in research activities, it retains certain rights
that include the right to use the resulting patents for government purposes
under a royalty-free license.
DEPENDENCE UPON KEY PERSONNEL AND CONSULTANTS
The Company's ability to successfully develop its products, manage growth
and maintain a competitive position will depend in large part on its ability to
attract and retain highly qualified scientific, management and other personnel
and to develop and maintain relationships with leading research institutions and
consultants. The Company is highly dependent upon its Chairman, the principal
members of its management, key employees, scientific staff and consultants which
the Company may retain from time to time. Competition for such personnel and
relationships is intense, and there can be no assurance that the Company will be
able to continue to attract and retain such personnel. The Company's consultants
may be affiliated or employed by others, and some have consulting or other
advisory arrangements with other entities that may conflict or compete with
their obligations to the Company. Inventions or processes discovered by such
persons will not necessarily become the property of the Company and may remain
the property of such persons or others.
DEPENDENCE UPON SUPPLIERS
The Company currently depends upon outside suppliers, contracted or
otherwise, for certain raw materials and components for its products. There can
be no assurance that such raw materials or components will continue to be
available to the Company's standards or on acceptable terms, if at all, or that
alternative suppliers will be available to the Company on acceptable terms, if
at all. Further, there can be no assurance that the Company will be able to
produce needed materials or components in-house in a timely manner or in
sufficient quantities to meet the needs of the Company, if at all. Although most
of the Company's raw materials and components are available from various
sources, the Company is currently dependent on single, contracted sources for
certain key materials or services used by the Company in its drug development
and production operations. Although the Company has entered into agreements with
these suppliers, there can be no assurance that these arrangements will be
successful or that the Company will not encounter delays or other problems which
may materially adversely affect its business.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state, county and local laws and
regulations relating to the protection of the environment. In the course of its
business, the Company is involved in the handling, storage and disposal of
materials that are classified as hazardous. The Company s safety procedures for
handling, storage and disposal of such materials are designed to comply with the
standards prescribed by applicable laws and regulations. However, there can be
no assurance that the Company will not be involved in an accidental
contamination or injury from these materials. In the event of such an accident,
the Company could be held liable for any damages that result, and any such
liability could materially and adversely affect the Company. Further, there can
be no assurance that the cost of complying with these laws and regulations will
not increase materially in the future.
CONTROL BY OFFICERS AND DIRECTORS
As of May 31, 1996 the Company's officers and directors beneficially owned
approximately 38.8% of the outstanding Common Stock (approximately 40.9% if all
options granted to such officers and directors become vested and are exercised).
These shareholders will be able to elect a substantial number of the Company's
directors and will have the ability to influence significantly the Company and
the direction of its business and affairs. Such concentration of ownership may
have the effect of delaying or preventing a change in control of the Company,
which could adversely affect the market price for the Common Stock.
DILUTION; OUTSTANDING OPTIONS, WARRANTS AND CONVERTIBLE NOTES
The Company also contemplates future sales of Common Stock through public
or private offerings that may effect a dilution to purchasers in this offering.
As of May 31, 1996, there were outstanding options to purchase 2,200,168 shares
of Common Stock at a weighted average exercise price or $12.56 per share,
warrants to purchase 1,626,875 shares of Common Stock at a weighted average
exercise price of $10.14 per share and convertible notes convertible into 10,625
shares of Common Stock at a conversion price of $8.00 per share. The exercise of
these options and warrants and conversion of these convertible notes would
result in significant book value and earnings dilution to purchasers of shares
of Common Stock in this offering. Additionally, of the above-described options,
options covering 427,500 shares of Common Stock vest upon achievement of
specified milestones and consequently are treated as variable options under
applicable accounting principles. These variable options could result in
substantial compensation expense to the Company. In May 1996, the Board voted to
lock-in the vesting dates of these variable options to reduce excessive deferred
compensation expense in the future and referred the matter to the Compensation
Committee to finalize the vesting dates of these variable options.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of Common Stock in the public market could materially
adversely affect prevailing market prices and may have a material and adverse
effect on the Company's ability to raise the capital necessary to fund its
future operations. As of June 18, 1996, the Company had 12,387,957 shares of
Common Stock outstanding. Of these shares, the 1,500,000 shares sold in the
April 1996 offering, the 602,991 shares sold by the Company and selling
shareholders in the Company's initial public offering in April 1995 and the
3,740,550 shares previously sold by shareholders under the registration
statement filed in connection with the initial public offering or sold in
reliance on Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), will be or are freely tradable without restriction or further
registration under the Securities Act, unless purchased by affiliates of the
Company. The remaining 6,506,430 shares (the "Restricted Shares") of Common
Stock outstanding are "restricted securities" and may not be sold in a public
distribution except in compliance with the registration requirements of the
Securities Act or an applicable exemption under the Securities Act, such as Rule
144 or Rule 144A thereunder. Of these Restricted Shares, 3,117,023 shares are
subject to 180-day lockup agreements with the underwriters for the April 1996
offering (the "Lockup Agreements").
As of June 18, 1996, 453,775 Restricted Shares not subject to the Lockup
Agreements were eligible for sale in the public market under Rule 144 subject to
the volume, manner of sale and other restrictions set forth in Rule 144, and
543,856 Restricted Shares were eligible for sale without restrictions pursuant
to Rule 144(k). Upon expiration of the Lockup Agreements, an additional
3,117,023 Restricted Shares will be eligible for sale in the public market
subject to the volume, manner of sale and other restrictions set forth in Rule
144.
As of June 18, 1996, 3,827,043 shares were subject to outstanding options
and warrants. The Lockup Agreements also cover options and warrants covering
1,115,001 shares. Upon expiration of the Lockup Agreements on October 27, 1996,
the holders of options and warrants to purchase 918,751 shares will be vested
and could exercise their options or warrants and sell these shares in compliance
with Rule 701 or without restriction in the public market if the Company has
filed a Registration Statement on Form S-8 covering such shares.
Certain holders of shares of Common Stock are entitled to have their shares
registered for sale under the Securities Act by the Company under certain
circumstances. The exercise of these rights and the sale of such shares could
have a material adverse effect on the market price for the Common Stock.
POTENTIAL VOLATILITY OF STOCK PRICE; NO DIVIDENDS
The market prices for securities of emerging pharmaceutical and medical
device companies have historically been highly volatile. Future announcements
concerning the Company or its collaborators, competitors or industry, including
but not limited to the results of testing, technological innovations or new
commercial products, the achievement of or failure to achieve certain
milestones, governmental regulations, rules and orders, developments concerning
patents or other proprietary rights, litigation or public concern about the
safety of the Company's products, may have a material adverse effect on the
market price of the Common Stock. In addition, the stock market has experienced
extreme price and volume fluctuations. This volatility has significantly
affected the market prices of securities of many emerging pharmaceutical and
medical device companies for reasons frequently unrelated or disproportionate to
the performance of the specific companies. These broad market fluctuations may
materially adversely affect the market price of the Common Stock. The Company
has never paid dividends, cash or otherwise, on its capital stock and does not
anticipate paying any such dividends in the foreseeable future. The Company's
bank credit line prohibits the payment of dividends on its Common Stock.
SHARES BEING OFFERED
On February 14, 1995, the Commission declared effective the Registration
Statement of the Company relating to its initial public offering of 350,000
(525,000 as adjusted for the stock split) shares of Common Stock, the concurrent
offering by shareholders of 51,994 (77,991 as adjusted for the stock split)
shares of Common Stock and the registration for resale of 1,649,503 (2,474,254
as adjusted for the stock split) shares of Common Stock held by stockholders of
the Company. The Company closed its initial public offering April 10, 1995. Of
the additional 1,649,503 (2,474,254 as adjusted for the stock split) shares that
were registered and that are not eligible for resale under Rule 144 promulgated
under the Securities Act, 37,986 shares have not been sold. These shares
constitute the Shares being offered for sale pursuant to this Prospectus. The
names of the persons who currently hold the Shares and the number of Shares held
by them are set forth under "Selling Shareholders" below.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Selling Shareholders of the Company's Common Stock as of May
31, 1996 and as adjusted to reflect the sale of the Common Stock offered by the
Selling Shareholders hereby.
Shares Owned
Prior Shares Shares to be Owned
Name of Beneficial Owner(1) to Offering Offered After Offering
- --------------------------- ----------- ------- --------------
Number %
------ -
Lee and Annette Aerenson 2,501 2,501 0 *
Richard N. Angus(2) 3,126 3,126 0 *
The Borggreve Family Limited Partnership(2) 4,168 4,168 0 *
L. Edwards, Ph.D. and J. Macklin(3) 1,500 1,500 0 *
Donald Jurow 5,100 5,100 0 *
Harlan P. Kleiman(2) 3,150 3,150 0 *
Ronald L. and Marion J. Maddox(2) 6,252 6,252 0 *
Russell Meisinger(2) 7,500 7,500 0 *
Victor F. and Joan B. Meyer(2) 1,563 1,563 0 *
Jack Wilson DDS, IRA(2) 3,126 3,126 0 *
- ---------------------
* Less than 1%.
(1) Each person has sole voting and investment power over the Common Stock
shown as beneficially owned, subject to community property laws where
applicable and the information contained in the footnotes below.
(2) Excludes shares of Common Stock issuable upon exercise of options or
warrants exercisable within 60 days of the date hereof as follows:
Richard N. Angus--1,563 shares; The Borggreve Family Limited
Partnership--3,126 shares; Harlan P. Kleiman--1,575 shares; Ronald L.
and Marion J. Maddox--3,126 shares; Russell Meisinger--3,750 shares;
Victor F. and Joan B. Meyer--782 shares; and Jack Wilson DDS,
IRA--1,564 shares.
(3) Dr. Edwards is a scientist for PDT Pharmaceuticals, Inc.
PLAN OF DISTRIBUTION
The Shares offered hereby are being offered by the Selling Shareholders.
The Company will receive no proceeds from the sale of any of the Shares by the
Selling Shareholders. The sale of the Shares may be effected by the Selling
Shareholders from time to time in transactions on The Nasdaq National Market, in
secondary or other distributions in accordance with the rules of The Nasdaq
Stock Market, Inc. in negotiated transactions, or a combination of such methods
of sale, at fixed prices which may be changed, at market prices prevailing at
the time of sale, at prices related to prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principals, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). To the extent required, the number of Shares to be sold,
the purchase price, the public offering price, if applicable, the name of any
underwriter, agent or broker-dealer, and any applicable commissions, discounts
or other items constituting compensation to such underwriters, agents or
broker-dealers with respect to a particular offering will be set forth in an
accompanying prospectus supplement. The aggregate proceeds to the Selling
Shareholders from the sale of the Shares sold by the Selling Shareholders hereby
will be the purchase price of such Shares less a broker's commission.
There is no assurance that the Selling Shareholders will sell any or all of
the Shares offered hereby.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
If any Shares are sold in an underwritten offering, such Shares may be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise indicated in the applicable prospectus supplement, the
obligations of any underwriters to purchase Shares will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all of
the Shares specified in such prospectus supplement if any are purchased.
Shares may be sold through a broker-dealer acting as agent or broker for
the Selling Shareholders, or to a broker-dealer acting as principal. In the
latter case, the broker-dealer may then resell such Shares to the public at
varying prices to be determined by such broker-dealer at the time of resale.
The Company has been advised by the Selling Shareholders that they have
not, as of the date of this Prospectus, entered into any arrangement with an
underwriter, agent or broker-dealer for the sale of the Shares.
EXPERTS
The consolidated financial statements of PDT, Inc. and subsidiaries at
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995 incorporated by reference in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing. The validity of the issuance of the Shares of Common
Stock offered here by has been passed upon for the Company by Nida & Maloney, a
professional corporation, Santa Barbara, California. Joseph E. Nida, a partner
in Nida & Maloney, a professional corporation, owns 7,500 shares of Common
Stock.
ADDITIONAL INFORMATION
The Prospectus does not contain all the information set forth in the
Registration Statement, or amendments thereto, certain portions of which have
been omitted pursuant to the Commission's rules and regulations. The information
so omitted may be obtained from the Commission's principal office in Washington,
D.C., upon payment of the fees prescribed by the Commission.
The Delaware General Corporation Law and the Bylaws of the Company provide
for indemnification of the Company's officers and directors. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act, and is therefore unenforceable.
- ------------------------- -------------------------
No person has been authorized to
give any information or to make any
representation other than those
contained in this Prospectus or any
prospectus supplement in connection with
the offering described herein and, if
given or made, such information or
representation must not be relied upon
as having been authorized by the
Company. Neither the delivery of this
Prospectus or any prospectus supplement
nor any sale made hereunder shall, under
any circumstances, create an implication PDT, INC.
that the information contained or Common Stock
incorporated by reference herein is
correct as of any time subsequent to its
date or that there has been no change in
the affairs of the Company since such
date. This Prospectus and any prospectus
supplement do not constitute an offer to
sell or a solicitation of an offer to
buy any securities other than those
specifically offered hereby or of any
securities offered hereby in any
jurisdiction in which such offer or
solicitation is not authorized, or in
which the person making such offer or
solicitation is not qualified to do so,
or to anyone to whom it is unlawful to
make such offer or solicitation.
TABLE OF CONTENTS
Page
-------
The Company........................ 3
Risk Factors....................... 4
Shares Being Offered............... 12
Selling Shareholders............... 13
Plan of Distribution............... 14
Experts............................ 14
Additional Information............. 14
PROSPECTUS
June __, 1996
- ------------------------- -------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All of the expenses in connection with the distribution of the Shares
are set forth below and will be borne by the Registrant.
Registration Fee...................................................... $ 12,757
NASD Filing Fee........................................................ 4,200
Nasdaq Listing Fee..................................................... 10,000
Printing and Engraving Expenses........................................ 12,000
Blue Sky Fees and Expenses............................................. 5,000
Registrar and Transfer Agent Fees...................................... 1,000
Legal Fees and Expenses................................................ 100,000
Accounting Fees and Expenses........................................... 105,000
Miscellaneous......................................................... 5,000
*Total $254,957
========
--------------------
* Fees and expenses include all initial public offering
fees and expenses in connection with the initial
registration on Form S-1 and the subsequent amendment
on Form S-3.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the Delaware General Corporation Law (the "Delaware
Law") permits a corporation to provide in its certificate of incorporation that
a directors of the corporation shall not be personally liable to the corporation
or its shareholders 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 the corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for payments of unlawful dividends or unlawful stock repurchases or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. The Company's Certificate of Incorporate contains
such a provision.
Section 145 of the Delaware Law provides that a corporation may
indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation- a "derivative action"), if they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except that
indemnification only extends to expenses ( including attorneys' fees) incurred
in connection with defense or settlement of such action, and the statute
requires court approval before there can be any indemnification where the person
seeking indemnification has been found liable to the corporation. Under Section
145, a corporation shall indemnify an agent of the corporation for expenses
actually and reasonably incurred if and to the extent such person was successful
on the merits in a proceeding or in defense of any claim, issue or matter
therein.
The Registrant is presently subject to Section 2115 of the California
Corporations Code (the "California Code"), according to which Section 317 of the
California Code applies to the indemnification of officers and directors of the
Registrant. Under Section 317 of the California Code, permissible
indemnification by a corporation of its officers and directors is substantially
the same as permissible indemnification under Section 145 of the Delaware Law,
except that (i) permissible indemnification does not cover actions the person
reasonably believed were not opposed to the best interests of the corporation,
as opposed to those the person believed were in fact in the best interests of
the corporation, (ii) the Delaware Law permits advancement of expenses to agents
other than officers and directors only upon approval of the board of directors,
(iii) in a case of stockholder approval of indemnification, the California Code
requires certain minimum votes in favor of such indemnification and excludes the
vote of the potentially indemnified person, and (iv) the California Code only
permits independent counsel to approve indemnification if an independent quorum
of directors is not obtainable, while the Delaware Law permits the directors in
any circumstance to appoint counsel to undertake such determination.
The Registrant in its Bylaws has provided for indemnification of its
officers, directors, employees and other agents substantially identical to that
permitted under the California Code. Section 145 of the Delaware Law and Section
317 of the California Code provide that they are not exclusive of other
indemnification that may be granted by a corporation's charter, bylaws,
disinterested director vote, shareholder vote, agreement or otherwise. The
limitation of liability contained in the Registrant's certificate of
incorporation and the indemnification provision included in the Registrant's
Bylaws are consistent with Delaware Law Sections 102(b)(7) and 145. The
Registrant has also entered into separate indemnification agreements with its
directors and officers that could require the Registrant, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors and officers and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, including liabilities that may arise under the Securities Act. In
addition, the Company has purchased directors and officers insurance.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to such provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
The form of Selling Agreement filed as Exhibit 1.1 to this Registration
Statement provides for the mutual indemnification of the Company and the selling
agent, their respective controlling persons, director and certain of their
officers, against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
ITEM 16. EXHIBITS
See Exhibit Index at Page II-5.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to 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 this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Barbara, State of California, on June 25, 1996.
PDT, INC.
By: _______________________________
Name: John M. Philpott
Title: Chief Financial Officer and Controller
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons (which
persons constitute a majority of the Board of Directors) in the capacities and
on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Gary S. Kledzik, Ph.D. Chairman of the Board and Chief June 25, 1996
- --------------------------- Executive Officer
Gary S. Kledzik, Ph.D (principal executive officer)
/s/ Daniel R. Doiron, Ph.D. Director and Vice President of June 25, 1996
- ---------------------------
Daniel R. Doiron, Ph.D. Technology
/s/ Michael D. Farney Director June 25, 1996
- ---------------------------
Michael D. Farney
/s/ Donald K. McGhan Director June 25, 1996
- ---------------------------
Donald K. McGhan
/s/ Raul E. Perez Director June 25, 1996
- ---------------------------
Raul E. Perez
/s. John M. Philpott Chief Financial Officer and June 25, 1996
- --------------------------- Controller (principal financial
John M. Philpott officer and principal accounting
officer)
EXHIBIT INDEX
Exhibit Description Filed (F)
- ------- ----------- ---------
1.1 Form of Selling Agreement *
1.2 Form of Escrow Agreement *
1.3 Form of Selling Shareholder Power of Attorney, Questionnaire and Selling Agreement *
3.1 Restated Certificate of Incorporation filed with the Delaware Secretary of State on
December 14, 1994 *
3.2 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of July 24, 1995 **
3.3 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of March 17, 1994 *
3.4 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of October 7, 1992 *
3.5 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of November 21, 1991 *
3.6 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of September 27, 1991 *
3.7 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of December 20, 1989 *
3.8 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of August 11, 1989 *
3.9 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of July 13, 1989 *
3.10 Certificate of Amendment of the Certificate of Incorporation filed with the Delaware
Secretary of State of June 16, 1989 *
3.11 Bylaws *
4.1 Specimen Certificate of Common Stock *
4.3 Form of Convertible Promissory Note *
4.4 Form of Indenture *
4.5 Special Registration Rights Undertaking *
4.6 Undertaking Agreement dated August 31, 1994 *
4.7 Letter Agreement dated March 10, 1994 *
4.8 Form of $10,000,000 Common Stock and Warrants Offering Investment Agreement *
5.1 Opinion of Nida & Maloney *
21.1 Subsidiaries of the Registrant *
23.1 Consent of Ernst & Young LLP F
23.2 Consent of Nida & Maloney (included in Exhibit 5.1) *
- --------------
* Previously filed with this Registration Statement.
** Incorporated by reference from the Registrant's Registration Statement
on Form S-3, Commission File No. 333-1786.