AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 6, 1999
REGISTRATION NO. 333-XXXXX
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LJL BIOSYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 77-0360183
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
405 TASMAN DRIVE
SUNNYVALE, CA 94089
(408) 541-8787
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
LEV. J. LEYTES
PRESIDENT AND CHIEF EXECUTIVE OFFICER
405 TASMAN DRIVE
SUNNYVALE, CA 94089
(408) 541-8787
(Name, Address Including Zip Code, and Telephone Number Including Area Code, of
Agent for Service)
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COPIES TO:
MARK B. WEEKS
STEPHEN B. THAU
JAMES D. FAY
VENTURE LAW GROUP
A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED UNIT(1) PRICE(1) REGISTRATION FEE
Common Stock, par value $0.001........ 2,000,000 $4.50 $9,000,000 $2,502
(1) Estimated solely for the purpose of computing the amount of the registration
fee based on the average of the high and low closing price of the Common
Stock as reported on the Nasdaq National Market on June 30, 1999 pursuant to
Rule 457(c).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Subject To Completion, Dated July 6, 1999
PROSPECTUS
[LJL BIOSYSTEMS LOGO]
405 TASMAN DRIVE
SUNNYVALE, CA 94089
(408) 541-8787
2,000,000 SHARES OF COMMON STOCK
THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 3 IN
DETERMINING WHETHER TO PURCHASE OUR COMMON STOCK.
------------------------
The selling stockholders identified on page 16 of this prospectus are
offering these shares of common stock. For additional information on the methods
of sale, you should refer to the section entitled "Plan of Distribution" on page
15. We will not receive any portion of the proceeds from the sale of these
shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
LJLB.
On June 30, 1999, the last sale price of our common stock on the Nasdaq
National Market was $4.50 per share.
UNDERWRITING PROCEEDS TO
DISCOUNTS AND SELLING
PRICE TO PUBLIC COMMISSION STOCKHOLDERS
Per Share.......................................... See Text Above See Text Above See Text Above
Total..............................................
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is July , 1999
TABLE OF CONTENTS
THE COMPANY............................................................... 1
RISK FACTORS.............................................................. 3
USE OF PROCEEDS........................................................... 15
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS.......................... 15
PLAN OF DISTRIBUTION...................................................... 15
SELLING STOCKHOLDERS...................................................... 16
LEGAL MATTERS............................................................. 17
EXPERTS................................................................... 17
WHERE YOU CAN FIND MORE INFORMATION....................................... 17
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction in which it is unlawful. The information
in this prospectus is current as of the date on the cover.
THE COMPANY
We design, produce and sell products and services which accelerate and
enhance the chemical and analytical tests that pharmaceutical and biotechnology
companies perform in the process of discovering new drugs or medicines. Our
customers include pharmaceutical and biotechnology companies.
The drug discovery process involves several stages, including:
- Target identification: Target identification involves determining the
biological molecules (or targets) in the body that are associated with
diseases. Recent advancements in the science of genomics, which identifies
these biological molecules, have resulted in a substantial increase in the
number of targets associated with different diseases.
- Compound development: In the context of drug discovery research,
"compounds" are potential new drug candidates. Many new compounds today
are developed using a molecule-making technique known as combinatorial
synthesis or combinatorial chemistry, a field whose recent rapid evolution
has resulted in a substantial increase in the number of compounds
available to pharmaceutical companies and biotechnology firms.
- Assay development: In the context of drug discovery research, "assays" are
tests which involve mixing various chemicals and analyzing interactions
between targets and compounds. Our customers hope that these assays can
serve as a model for showing a compound's action in the body. Assays
involve chemicals called "reagents," a compound and a target. All three of
these components are combined in a mixture that is put in a small well on
a microplate, which is then fed through an instrument where a reading
(also called a "screening") is performed to evaluate the potential
effectiveness of the compound being evaluated.
- Screening: Screening is the process of evaluating, testing and finding
compounds that have the potential to become a drug candidate. Screening is
done by performing the assay (i.e., mixing together reagents, a compound
and a target) and evaluating the assay results by reading the assay
signal. Scientists can then evaluate these signals or outputs to determine
whether there is any indication that the compound has the potential to
become a drug candidate. The speed at which an instrument reads each assay
is important to the speed of the screening process. Currently, "high
throughput" screening generally indicates performing 20,000 - 100,000
readings per day, while "ultra high throughput" generally indicates
reading more than 100,000 data points per day.
- Lead optimization: Compounds that have been identified in the screening
process as potential drug candidates, are considered "leads" or "lead
compounds." Following the initial screening steps, leads are further
evaluated and developed in a process referred to as lead optimization.
This process may involve doing further screens using many different
variations of the lead compound and various assay methods. Once a compound
has been refined to a formulation that a scientist feels has the best
chance of becoming an effective drug, it moves further along in the drug
development process towards clinical trials.
Historically, target identification and compound development have been the
limiting steps in the drug discovery process, but recent advancements in the
sciences of genomics and combinatorial chemistry have resulted in the generation
of significant numbers of new targets and compounds. This growth in the number
of targets and compounds has now shifted the limiting steps of the drug
discovery process to assay development, screening and lead optimization.
To address these bottlenecks, we are developing an integrated family of
products that gives our customers the ability to more rapidly screen the greatly
increasing numbers of compounds and targets.
The first products in this product family have been launched to the market. Our
proprietary product line consists of instruments used for reading assays and
consumable items, such as microplates and reagents used in assays. Each of these
products can be used individually or in conjunction with other companies'
products, but we believe our products provide their best results when used as an
integrated system. Our instruments allow customers the flexibility to use four
different methods of reading assay results, which provides them with the ability
to use the same instrument to perform tests that otherwise may require several
instruments. Since our instrumentation requires smaller amounts of reagents,
compounds, and targets consumed per test, we also have developed a cost
effective screening solution. We believe that our technology platform (i.e.,
family of products) addresses the major throughput limitations associated with
our customers' current efforts to perform screens at a high rate of throughput
in a cost effective way, thereby enhancing their ability to accelerate the
identification and optimization of lead compounds for development into new
medicines.
Our first high throughput screening product, Analyst HT-TM-, first shipped
in the second quarter of 1998, is what we believe to be one of the most
sensitive assay detection instruments currently available on the market,
specifically designed for high throughput screening and it offers customers the
flexibility of reading results in four different assay detection modes. The term
"assay detection" refers to the instrument's ability to detect and analyze how
potential drug compounds perform when tested against specific biological
targets. Additionally, with a built-in capability of reading both 96-well or
384-well plates, Analyst HT permits our customers to perform up to 70,000 tests
per day.
Our second product, Acquest-TM-, first shipped in the fourth quarter of
1998, goes beyond the capabilities of Analyst HT by offering customers the
opportunity to use state-of-the-art ultra-high throughput screening formats that
dramatically increase the number of screens that can be performed at any one
time. Also multi-mode, the Acquest is designed to accept microplates with both
384-well and 1,536-well formats. Its assay throughput is designed to reach a
level of 200,000 tests per day.
Our third product, Analyst AD-TM-, introduced in the second quarter of 1999,
offers customers a cost effective system with flexible assay development
capabilities and is fully compatible with our Analyst HT. Both Analyst AD and
Analyst HT read results in four different assay detection modes and share the
same optical reading technology we call "Smart Optics-TM-". This compatibility
allows customers to easily transfer assays, from their assay development
departments, to their high throughput screening areas.
We believe that our family of instruments, including Analyst HT, Acquest and
Analyst AD, provide several important advantages over other currently available
analyzers, including:
- increased throughput;
- minimization of time and costs associated with the transfer of assay
methods from the assay development part of the drug discovery process to
the high throughput screening part of the process;
- improved analytical performance and flexibility;
- lower reagent costs;
- the ability to be quickly integrated into existing high throughput
screening laboratories; and
- the capacity to evolve with changing high throughput screening needs.
Our principal executive offices are located at 405 Tasman Drive, Sunnyvale,
CA 94089 and our telephone number is (408) 541-8787. As used in this prospectus,
"we," "us," "our" and "LJL" refer to LJL BioSystems, Inc., a Delaware
corporation, and its wholly-owned subsidiary.
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RISK FACTORS
WE DESIRE TO TAKE ADVANTAGE OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 AND OF SECTION 21E AND RULE 3B-6 UNDER
THE SECURITIES EXCHANGE ACT OF 1934. SPECIFICALLY, WE WISH TO ALERT READERS THAT
THE FOLLOWING IMPORTANT FACTORS, AS WELL AS OTHER FACTORS INCLUDING, WITHOUT
LIMITATION, THOSE DESCRIBED ELSEWHERE IN REPORTS WE HAVE FILED WITH THE SEC AND
INCORPORATED INTO THIS PROSPECTUS BY REFERENCE, COULD IN THE FUTURE AFFECT, AND
IN THE PAST HAVE AFFECTED, OUR ACTUAL RESULTS AND COULD CAUSE OUR RESULTS FOR
FUTURE PERIODS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING
STATEMENTS MADE BY OR ON BEHALF OF US. WE ASSUME NO OBLIGATION TO UPDATE THESE
FORWARD-LOOKING STATEMENTS.
WE RECENTLY ADOPTED A NEW BUSINESS STRATEGY AND HAVE HAD OPERATING LOSSES EVER
SINCE; THE MARKET FOR OUR HIGH THROUGHPUT SCREENING PRODUCTS IS NEW AND
UNDEFINED, AND WE MAY NEVER ACHIEVE PROFITABILITY
In the second half of 1996, we implemented a new strategic business model to
develop products for the high throughput screening market. In connection with
this change in strategy, we shifted our focus from developing and manufacturing
clinical diagnostic and research products on an OEM basis to developing,
manufacturing and marketing products for the high throughput screening market.
As a result, our historical operating and financial performance is generally not
indicative of future financial and business results. We incurred operating
losses for the three months ended March 31, 1999 and the years ended December
31, 1998 and 1997 as a result of our change in business strategy and anticipate
that we may continue to incur losses for at least the next several years, due to
the substantial increases in expenditures necessary to develop and commercialize
our high throughput screening and ultra-high throughput screening products. We
began commercial shipments of our first high throughput screening instrument,
the Analyst HT, in the second quarter of 1998. Accordingly, we are subject to
the risks inherent in the operation of a new business, such as:
- the failure to develop an effective sales, marketing and distribution
channel;
- failure to achieve market acceptance and demand for our high throughput
screening and ultra-high throughput screening products;
- failure to implement commercial scale-up of developed high throughput
screening and ultra-high throughput screening products; and
- failure to attract and retain key personnel.
Furthermore, the high throughput screening market is new and undefined, and
the use of high throughput screening by pharmaceutical and biotechnology
companies is limited. Demand for our high throughput screening and ultra-high
throughput screening products will depend upon the extent to which
pharmaceutical and biotechnology companies adopt high throughput screening as a
drug discovery tool. If high throughput screening does not become a widely used
method in drug discovery, demand for our products will not develop as we
currently expect or at all. The lack of demand for our high throughput screening
and ultra-high throughput screening products would have a material adverse
effect on our business, financial condition and results of operations.
BECAUSE WE ARE IN THE EARLY STAGE OF INSTRUMENT DEVELOPMENT, OUR ABILITY TO
DEVELOP HIGH THROUGHPUT SCREENING AND ULTRA-HIGH THROUGHPUT SCREENING
INSTRUMENTS IS UNCERTAIN
Our success will depend on our ability to develop and commercialize our high
throughput screening and ultra-high throughput screening instruments. We began
commercial shipments of our first high throughput screening instrument, Analyst
HT, in the second quarter of 1998. We had not previously developed or
commercialized products for the high throughput screening market before this
time. The successful implementation and operation of our high throughput
screening and ultra-high
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throughput screening products is a complex process requiring the integration of,
among other technologies:
- advanced optics;
- electronics;
- robotics;
- microfluidics;
- fluorescence detector technologies; and
- software and information systems.
Even if Analyst HT, Analyst AD, Acquest and our other high throughput
screening and ultra-high throughput screening products appear promising at
commercial launch, they may not achieve market acceptance at a level necessary
to enable production at a reasonable cost, to support the required sales and
marketing effort, and to support continuing research and development costs. In
addition, our high throughput screening or ultra-high throughput screening
instruments may:
- be difficult or overly expensive to produce;
- fail to achieve performance levels expected by customers;
- have a price level that is unacceptable in our targeted industries; or
- be precluded from commercialization by the proprietary rights of others or
other competitive forces.
There can be no assurance that we will be able to successfully manufacture
and market the Analyst HT, Analyst AD, Acquest or any of our other products on a
timely basis, achieve anticipated performance levels or throughputs, gain
industry acceptance of our products or develop a profitable business. The
failure to achieve any of these objectives would have a material adverse effect
on our business, financial condition and results of operations.
BECAUSE WE ARE IN THE EARLY STAGE IN DEVELOPMENT, OUR ABILITY TO DEVELOP
REAGENTS AND ASSAY KITS IS UNCERTAIN
We expect in the future that a substantial portion of our revenues may be
derived from the sale of reagents, assay kits and microplates. We have limited
experience in the development, manufacture and marketing of reagents, assay kits
and microplates, having only recently introduced our first assay kits, TKX-TM-
and TKXtra-TM- and LJL designed microplates, HE-TM- (High Efficiency). We intend
to continue to license assay technologies from third parties and to develop
reagents, assay kits and microplates internally. We may not succeed in licensing
any additional assay technologies on acceptable terms, if at all, and we may not
successfully commercialize any reagents that we license. In addition, we are
internally developing reagents, assay kits and microplates, but have limited
experience in this area. We may not successfully develop additional reagents,
assay kits or microplates internally, and any reagents, assay kits or
microplates we do develop may not achieve market acceptance. We intend to
outsource the manufacture of microplates and, as sales volumes increase, to also
outsource the manufacture of reagents and assays kits. We may not be able to
enter into agreements with third parties for the manufacture of reagents, assay
kits or microplates on terms commercially acceptable to us or at all. In
addition, we intend to sell reagents, assay kits and microplates to purchasers
of high throughput screening and ultra-high throughput screening instruments,
including the Analyst HT, Analyst AD and Acquest. Sales of the Analyst HT,
Analyst AD and Acquest may not be sufficient to support this strategy. A failure
to achieve commercial acceptance of our reagents, assay kits and microplates
would have a material adverse effect on our business, financial condition and
results of operations.
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BECAUSE WE DEPEND ON NEW PRODUCTS AND OUR MARKETS ARE SUBJECT TO RAPID
TECHNOLOGICAL CHANGE, WE MAY NOT BE ABLE TO COMMERCIALIZE PRODUCTS WE DEVELOP
The pharmaceutical and biotechnology instrumentation and reagents markets
are characterized by rapid technological change and frequent new product
introductions. Our future success will depend on our ability to enhance our
current and planned high throughput screening and ultra-high throughput
screening products and to develop and introduce, on a timely basis, new products
that address the evolving needs of our customers, including fluorescence-based
reagents and assay kits, as well as products based on our FLARe-TM- and
SmartOptics-TM- technologies. We anticipate that production units for these new
products may not be available for several months or years, if at all. The
production of new high throughput screening and ultra-high throughput screening
products, microplates, fluorescence-based reagents and assay kits may present
development and manufacturing challenges. We may experience difficulties that
could delay or prevent the successful development, introduction and marketing of
our new products or our product enhancements. Any failure to develop and
introduce products in a timely manner in response to changing market demands or
customer requirements could have a material adverse effect on our business,
financial condition and results of operations.
WE HAVE LIMITED SALES AND MARKETING EXPERIENCE AND MAY NOT BE ABLE TO DEVELOP A
DIRECT SALES FORCE OR DISTRIBUTION CHANNELS THAT CAN MEET OUR CUSTOMERS NEEDS,
AND OUR FAILURE TO DO SO WILL HURT OUR FINANCIAL RESULTS
We have limited experience in direct marketing, sales and distribution. Our
future profitability will depend on our ability to further develop a direct
sales force to sell our high throughput screening and ultra-high throughput
screening products to pharmaceutical and biotechnology companies. Our products
are technical in nature and we therefore believe it is necessary to develop a
direct sales force consisting of people with scientific backgrounds and
expertise. Competition for such employees is intense. We may not be able to
attract and retain qualified salespeople or be able to build an efficient and
effective sales and marketing organization. Failure to attract or retain
qualified salespeople or to build such a sales and marketing organization would
have a material adverse effect on our business, financial condition and results
of operations.
We intend to market our high throughput screening and ultra-high throughput
screening products in certain international markets through distributors. Other
than Japan, we do not currently have distributors in any international markets,
and there can be no assurance that we will be able to engage qualified
distributors. Such distributors may:
- fail to satisfy financial or contractual obligations to us;
- fail to adequately market our products;
- cease operations with little or no notice to us; or
- offer, design, manufacture or promote competing product lines.
The failure to develop and maintain effective distribution channels could
have a material adverse effect on our business, financial condition and results
of operations.
WE PARTICIPATE IN A HIGHLY COMPETITIVE MARKET AND OUR PRODUCTS MAY NOT BE
ACCEPTED IN THE MARKET
The market for high throughput screening and ultra-high throughput screening
products is highly competitive. We expect that competition will increase
significantly as more biotechnology and pharmaceutical companies adopt high
throughput screening and ultra-high throughput screening instruments as a drug
discovery tool and as new companies enter the market with advanced technologies
and products. We compete in many areas, including high throughput screening and
ultra-high throughput screening products, microplates, assay development and
reagent sales. We compete
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with companies which directly market high throughput and ultra high throughput
screening products. In addition, pharmaceutical and biotechnology companies,
academic institutions, governmental agencies and other research organizations
are conducting research and developing products in various areas which compete
with our technology platform, either on their own or in collaboration with
others. Further, certain companies offer screening services on a contract or
collaborative basis, and these services could eliminate a potential customer's
need to purchase our products. Our technological approaches may be rendered
obsolete or uneconomical by advances in existing technological approaches or the
development of different approaches by one or more of our current or future
competitors. Many of our competitors have greater financial, operational and
personnel resources, and more experience in research and development, sales and
marketing and other areas than we do.
THE HIGH THROUGHPUT SCREENING AND ULTRA-HIGH THROUGHPUT SCREENING MARKET IS
CONCENTRATED, WHICH LIMITS THE NUMBER OF OUR POTENTIAL CUSTOMERS
The market for high throughput screening and ultra-high throughput screening
products is highly concentrated, with approximately 50 large pharmaceutical
companies operating a substantial portion of our targeted drug discovery
laboratories. Accordingly, we expect a relatively small number of customers will
continue to account for a substantial portion of our revenues. We face risks
associated with a highly concentrated customer base as we sell our high
throughput screening and ultra-high throughput screening products, including the
failure to establish or maintain relationships within a limited customer pool,
or substantial financial difficulties or decreased capital spending by our
customers, any of which could have a material adverse effect on our business,
financial condition and results of operations.
OUR PRODUCTS HAVE LENGTHY SALES CYCLES, WHICH COULD CAUSE OUR OPERATING RESULTS
TO FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER
The sale of high throughput screening and ultra-high throughput screening
products typically involves a significant technical evaluation and commitment of
capital by customers. Accordingly, the sales cycle associated with our products
is expected to be lengthy and subject to a number of significant risks,
including customers' budgetary constraints and internal acceptance reviews, that
are beyond our control. Due to this lengthy and unpredictable sales cycle, our
operating results could fluctuate significantly from quarter to quarter.
WE HAVE LIMITED MANUFACTURING EXPERIENCE AND MAY NOT BE ABLE TO SCALE-UP OUR
MANUFACTURING OPERATIONS TO COMMERCIAL LEVELS
We are only producing Analyst HT, Acquest, Analyst AD, reagents and assay
kits in limited quantities, and have not yet manufactured other products in
significant quantities. We may encounter difficulties in scaling up production
of our high throughput screening and ultra-high throughput screening products
due to, among other things, quality control and assurance, component supply and
availability of qualified personnel. Even if we successfully develop and
introduce our products to market, we may not be able to manufacture them in
sufficient quantities at acceptable cost while meeting quality control
standards. We intend to outsource the manufacture of microplates and, as sales
volumes increase, to outsource the manufacture of reagents and assay kits.
Difficulties encountered in the manufacturing scale-up of Analyst HT, Analyst
AD, Acquest and other high throughput screening and ultra-high throughput
screening products could have a material adverse effect on our business,
financial condition and results of operations.
WE MAY NOT SUCCESSFULLY MANAGE OUR GROWTH
Our success will depend on the expansion of our operations and the effective
management of growth, which will place a significant strain on our management,
operational and financial resources. To manage such growth, we must expand our
facilities, augment our operational, financial and
6
management systems and hire and train additional qualified personnel. Our
failure to manage growth effectively would have a material adverse effect on our
business, financial condition and results of operations.
WE DEPEND UPON KEY PERSONNEL WHO MAY TERMINATE THEIR EMPLOYMENT WITH US AT ANY
TIME; WE NEED TO HIRE ADDITIONAL QUALIFIED PERSONNEL
Our success will depend to a significant degree upon the continued services
of key management, technical, and scientific personnel, including Lev J. Leytes,
the Chairman of our Board of Directors, President and Chief Executive Officer.
In addition, our success will depend on our ability to attract and retain other
highly skilled personnel. Competition for qualified personnel is intense, and
the process of hiring such qualified personnel is often lengthy. There can be no
assurance that we can recruit such personnel on a timely basis, if at all. Our
management and other employees may voluntarily terminate their employment with
us at any time. The loss of the services of key personnel, or the inability to
attract and retain additional qualified personnel, could have a material adverse
effect on our business, financial condition and results of operations.
BECAUSE WE DEPEND ON SUPPLIERS AND CONTRACT MANUFACTURERS, WE ARE SUBJECT TO
RISKS BEYOND OUR CONTROL
Certain components used in our high throughput screening and ultra-high
throughput screening products are currently purchased from a single or a limited
number of outside sources. The reliance on a sole or limited number of suppliers
could result in:
- delays associated with redesigning a product due to a failure to obtain a
single source component;
- an inability to obtain an adequate supply of required components; and
- reduced control over pricing, quality and timely delivery.
We do not maintain long-term agreements with any of our suppliers, and
therefore the supply of a particular component could be terminated at any time
without penalty to the supplier. Any interruption in the supply of single source
components could have a material adverse effect on our business, financial
condition and results of operations. We intend to rely on contract
manufacturers, some of which may be single source vendors, for the development,
manufacture and supply of certain of our reagents, assay kits and microplates.
There can be no assurance that we will be able to enter into such manufacturing
contracts on commercially reasonable terms, if at all, or that our current or
future contract manufacturers will meet our requirements for quality, quantity
or timeliness. If the supply of any components, reagents, assay kits or
microplates is interrupted, components, reagents, assay kits and microplates
from alternative suppliers and contract manufacturers may not be available in
sufficient volumes within required timeframes, if at all, to meet our production
needs.
WE HAVE AN ACCUMULATED DEFICIT AND OUR FUTURE PROFITABILITY IS UNCERTAIN
As of March 31, 1999, we had an accumulated deficit of approximately $14.6
million. The expansion of our operations and continued development of our high
throughput screening and ultra-high throughput screening products will require a
substantial increase in sales, marketing and research and development
expenditures for at least the next several years. As a result, we expect to
incur operating losses for the next several years. Our profitability will depend
on our ability to successfully develop and commercialize our high throughput
screening and ultra-high throughput screening products. Accordingly, the extent
of future losses and the time required to achieve profitability, if achieved at
all, is highly uncertain. Moreover, if profitability is achieved, the level of
such profitability cannot be predicted and may vary significantly from quarter
to quarter.
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WE MAY NEED TO RAISE CAPITAL IN THE FUTURE AND ADDITIONAL FUNDING IS UNCERTAIN
We may be required to raise substantial additional capital over a period of
several years in order to develop and commercialize our products. Our future
capital requirements will depend on numerous factors, including the costs
associated with:
- developing and commercializing our products;
- developing a direct marketing and sales force;
- maintaining existing, or entering into future, licensing and distribution
agreements;
- protecting intellectual property rights;
- entering the reagents and assay kits business;
- expanding facilities; and
- consummating possible future acquisitions of technologies, products or
businesses.
We may consume available resources more rapidly than currently anticipated,
resulting in the need for additional funding. Accordingly, we may be required to
raise additional capital through a variety of sources, including the public
equity market, private equity financing, collaborative arrangements, and public
or private debt. Additional capital may not be available on acceptable terms, if
at all. If adequate funds are not available, we may be required to significantly
reduce or refocus our operations or to obtain funds through arrangements that
may require us to relinquish rights to certain of our products, technologies or
potential markets, which would have a material adverse effect on our business,
financial condition and results of operations. To the extent that additional
capital is raised through the sale of equity or convertible securities, the
issuance of such securities would result in ownership dilution to our existing
stockholders.
WE HAVE INTERNATIONAL SALES AND OPERATIONS, WHICH SUBJECT US TO RISKS RELATED TO
FOREIGN CURRENCY EXCHANGE RATES, TARIFFS, FOREIGN REGULATIONS, IMPORT AND EXPORT
RESTRICTIONS AND DIFFICULTIES MANAGING AND STAFFING INTERNATIONAL OPERATIONS.
We sell products in foreign countries in local currencies, which exposes us
to foreign currency exchange risk. In order to reduce the risk from fluctuation
in foreign currency exchange rates, our UK subsidiary uses the U.S. dollar as
its functional currency; however, our UK subsidiary bills its customers in the
customer's local currency. Foreign currency assets and liabilities are
translated into U.S. dollars at end-of-period exchange rates, except for
property and equipment, which is translated at historical exchange rates.
Revenue and expenses are translated at average exchange rates in effect during
each period. Gains or losses from foreign currency transactions are included in
net income (loss) and to date have not been material. We have not entered into
any currency hedging activities.
We expect that international sales will account for a significant portion of
our total revenues in the future. International sales and operations are subject
to a number of risks, including:
- the imposition of government controls;
- export license requirements;
- restrictions on the export of critical technology;
- political and economic instability or conflicts;
- trade restrictions;
- changes in tariffs and taxes;
- difficulties in staffing and managing international operations;
8
- problems in establishing or managing distributor relationships; and
- general economic conditions.
In addition, as we expand our international operations and the amount of
revenue invoiced in local currencies becomes a larger portion of our business,
fluctuations in the value of foreign currencies relative to the U.S. dollar may
adversely affect our business, financial condition and results of operations.
WE MAY ACQUIRE TECHNOLOGIES AND BUSINESSES, WHICH COULD EXPOSE US TO ADDITIONAL
RISKS AND BE DILUTIVE TO EXISTING STOCKHOLDERS
We may acquire certain technologies, products or businesses to broaden the
scope of our existing and planned product lines and technologies. Such
acquisitions would expose us to:
- the risks associated with the assimilation of new technologies,
operations, sites and personnel;
- the diversion of resources from our existing business and technologies;
- the inability to generate revenues to offset associated acquisition costs;
- the requirement to maintain uniform standards, controls, and procedures;
and
- the impairment of relationships with employees and customers as a result
of any integration of new management personnel.
Acquisitions may also result in the issuance of dilutive equity securities,
the incurrence or assumption of debt or additional expenses associated with the
amortization of acquired intangible assets or potential businesses. Our failure
to successfully address such risks could have a material adverse effect on our
business, financial condition and results of operations.
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS MAY LIMIT OUR ABILITY TO DEVELOP AND
SELL OUR PRODUCTS; WE HAVE LICENSED TECHNOLOGY THAT WE USE IN OUR PRODUCTS, BUT
WE COULD LOSE RIGHTS TO THIS TECHNOLOGY AND THE ABILITY TO SELL OUR PRODUCTS IF
WE MATERIALLY BREACH THIS LICENSE
Our success will depend in part on our ability to obtain patents, maintain
trade secret protection and operate without infringing the proprietary rights of
others. We hold four U.S. patents. We have 11 pending U.S. patent applications,
six international patent applications and 26 provisional U.S. patent
applications. To supplement our proprietary technology, we have licensed ten
patents and one patent application from FluorRx pursuant to a June 1997
agreement, as amended. In October 1998, we exercised our option under this
agreement to license three more patent applications. Under this license, we
obtained certain worldwide rights relating to FluorRx's FLARe technology.
Certain of these rights have been licensed on an exclusive basis. Certain other
rights have been licensed on a non-exclusive basis, and therefore could be or
are licensed to third parties. In accordance with this agreement, we paid
one-time fees as well as agreed to pay royalties based on sales of our products
that incorporate this technology. The license may be terminated in the event of
a material breach by us. Furthermore, FluorRx may elect to convert the exclusive
rights into non-exclusive rights in the event that we fail to make certain
minimum royalty payments. If FluorRx were to terminate the license due to a
material breach of the license by us, we would lose the right to incorporate
FLARe technology into our high throughput screening and ultra-high throughput
screening products, which would require us to exclude FLARe technology from our
existing and future products and either license or internally develop
alternative technologies. There can be no assurance that we would be able to
license alternative technologies on commercially acceptable terms, or at all, or
that we would be capable of internally developing such technologies.
Furthermore, other companies may independently develop technology with
functionality similar or superior to the FLARe technology that does not or is
claimed not to infringe the FLARe patents or that otherwise circumvents the
technology we have licensed.
9
We are aware of third party patents that contain issued claims that may
cover certain aspects of our reagent technologies. In the future we may be
required to license third-party patents to produce certain reagents, assay kits
and related products. Licenses for such patents may not be available on
commercially acceptable terms, if at all. Any action against us claiming damages
and seeking to enjoin commercial activities relating to the affected
technologies could subject us to potential liability for damages. We could incur
substantial costs in defending patent infringement claims, obtaining patent
licenses, engaging in interference and opposition proceedings or other
challenges to our patent rights or intellectual property rights made by third
parties, or in bringing such proceedings or enforcing any patent rights against
third parties. Our inability to obtain necessary licenses or our involvement in
proceedings concerning patent rights could have a material adverse effect on our
business, financial condition and results of operations.
The patent positions of bioanalytical product companies, including ours, are
uncertain and involve complex legal and factual questions. In addition, the
coverage claimed in a patent application can be significantly reduced before the
patent is issued. Consequently, there can be no assurance that our patent
applications or those of our licensor will result in patents being issued or
that any issued patents will provide protection against competitive technologies
or will be held valid if challenged or circumvented. Others may independently
develop products similar to ours or design around or otherwise circumvent
patents issued to us. In the event that any relevant claims of third-party
patents are upheld as valid and enforceable, we could be prevented from
practicing the subject matter claimed in such patents, or would be required to
obtain licenses from the patent owners of each of such patents or to redesign
our products or processes to avoid infringement. There can be no assurance that
such licenses would be available or, if available, would be on terms acceptable
to us or that we would be successful in any attempt to redesign our products or
processes to avoid infringement. If we do not obtain the necessary licenses, we
could be subject to litigation and encounter delays in product introductions
while we attempt to design around such patents. Alternatively, the development,
manufacture or sale of such products could be prevented. Litigation would result
in significant costs to us as well as diversion of management time. Adverse
determinations in any such proceedings could have a material adverse effect on
our business, financial condition and results of operations.
We also rely on trade secret and copyright law, as well as employee and
third-party nondisclosure agreements to protect our intellectual property rights
in our products and technology. There can be no assurance that these agreements
and measures will provide meaningful protection of our trade secrets,
copyrights, know-how, or other proprietary information in the event of any
unauthorized use, misappropriation or disclosure. In addition, others may
independently develop substantially equivalent proprietary technologies.
Litigation to protect our trade secrets or copyrights would result in
significant costs to us as well as diversion of management time. Adverse
determinations in any such proceedings or unauthorized disclosure of our trade
secrets could have a material adverse effect on our business, financial
condition and results of operations. In addition, the laws of certain foreign
countries do not protect our intellectual property rights to the same extent as
U.S. laws. There can be no assurance that we will be able to protect our
intellectual property in these markets.
SOME OF OUR PRODUCTS ARE SUBJECT TO GOVERNMENT REGULATION, AND THE FAILURE BY US
OR OUR OEM CUSTOMERS TO COMPLY WITH GOVERNMENT REGULATIONS COULD LIMIT OUR SALES
OF THESE PRODUCTS
While we believe that none of our high throughput screening and ultra-high
throughput screening products will be regulated as medical devices or otherwise
subject to FDA regulation, our clinical diagnostics products, including the
Luminometer, Q2000, Horizon and a microplate heater, are subject to FDA
regulation as medical devices, as well as similar foreign regulation. The
process of obtaining and maintaining required regulatory clearances and
approvals and otherwise remaining in regulatory compliance in the U.S. and
certain other countries is lengthy, expensive and uncertain. Although we have
phased out production of the Luminometer, Q2000 and the microplate heater, we
will continue to
10
manufacture the Horizon on an OEM basis during 1999 but do not expect to
manufacture the Horizon after 1999. The Horizon is used in research and clinical
laboratories to perform in vitro diagnostic tests, which are exempt from
investigational device exemption requirements, including the need to obtain the
FDA's prior approval, provided that, among other things:
- the testing is noninvasive;
- the product is not used as a diagnostic procedure without confirmation by
another medically established test or procedure; and
- distribution controls are established to assure that in vitro diagnostic
products distributed for research are used only for those purposes.
To our knowledge, our OEM customers have met these conditions. However, the
FDA may not agree that our OEM customers' distribution of our clinical
diagnostic products meet and have met the requirements for investigational
device exemption. Failure by us, our OEM customers or the recipients of our
clinical diagnostic products to comply with the investigational device exemption
requirements could result in enforcement action by the FDA, which could
adversely affect us or our OEM customers' ability to gain marketing clearance or
approval of these products or could result in the recall of previously
distributed products.
Applicable law requires that we comply with the FDA's regulations for the
manufacture of the Horizon. The FDA monitors compliance with its regulations by
subjecting medical product manufacturers to periodic FDA inspections of their
manufacturing facilities. The FDA has recently revised its regulations, and the
new regulations impose design controls and make other significant changes in the
requirements applicable to manufacturers. We are also subject to other
regulatory requirements, and may need to submit reports to the FDA, including
adverse event reporting. Failure to comply with current FDA regulations or other
applicable legal requirements can lead to, among other things:
- warning letters;
- seizure of violative products;
- suspension of manufacturing, government injunctions; and
- potential civil or criminal liability on our part and the part of the
responsible officers and employees.
In addition, the government may halt or restrict continued sale of such
instruments. Any such actions could have a material, adverse effect on our
business, financial condition and results of operations.
In conjunction with the export of our clinical diagnostics instruments, we
maintain International Organization for Standardization ("ISO") 9001
certification and apply the CE mark to certain products that are exported, which
subjects our operations to periodic surveillance audits. While we believe we are
currently in compliance with all applicable regulations and standards, there can
be no assurance that our operations will be found to comply with these
regulations or standards or other applicable legal requirements in the future or
that we will not be required to incur substantial costs to maintain our
compliance with existing or future manufacturing regulations, standards or other
requirements. Any such noncompliance or increased cost of compliance could have
a material adverse effect on our business, results of operations and financial
condition.
We are also subject to numerous federal, state and local laws relating to
safe working conditions, manufacturing practices, environmental protection,
storage, use and disposal of hazardous or potentially hazardous substances. Any
material failure to comply with such laws could require us to incur significant
costs and would have a material, adverse effect upon our ability to do business.
Changes in
11
existing requirements or adoption of new requirements or policies relating to
government regulations could materially and adversely affect our ability to
comply with such requirements.
WE USE HAZARDOUS MATERIALS AND IMPROPER HANDLING OF THESE MATERIALS BY OUR
EMPLOYEES OR AGENTS COULD EXPOSE US TO SIGNIFICANT FINANCIAL PENALTIES
Our research and development and manufacturing operations involve the use of
hazardous materials, biological samples and chemicals. In the future, we plan to
manufacture certain reagents, some of which likely will contain hazardous
materials, including carcinogens. We are subject to federal, state and local
laws and regulations governing the storage, use, and disposal of such materials
and certain waste products. The risk of accidental contamination or injury from
the use of these materials cannot be completely eliminated. In the event of an
accident, we could be held liable for damages that result and any such liability
could exceed our resources, which would have a material adverse effect on us. We
may incur substantial costs to comply with environmental and safety regulations
if we develop our own commercial reagents manufacturing facility.
YEAR 2000 PROBLEMS COULD ADVERSELY IMPACT OUR BUSINESS
We have established a Year 2000 Program to address certain Year 2000 issues.
This program focuses on four key areas of readiness:
- Internal Infrastructure Readiness, addressing internal hardware and
software, including both information and non-information technology
systems;
- Supplier Readiness, addressing the preparedness of suppliers providing
material incorporated into our products;
- Product Readiness, addressing product functionality; and
- Customer Readiness, addressing customer support and transactional
activity.
For each readiness area, we are in the process of performing risk
assessment, conducting testing, repairing Year 2000 issues, developing
contingency plans to mitigate unknown risks, and communicating Year 2000
information to employees, suppliers, customers and other third parties.
INTERNAL INFRASTRUCTURE READINESS. We have completed an assessment of our
internal software applications and information technology hardware and have
commenced work on testing and repairs. Readiness activities are intended to
encompass all major categories of software applications we use, including:
- those used for manufacturing, engineering, sales, finance, and human
resources;
- hardware, including hubs, routers, telecommunication equipment,
workstations and other items; and
- non-information technology systems, including embedded systems, facilities
and other operations, such as financial, banking, security and utility
systems.
At March 31, 1999, approximately 80 percent of our mission critical internal
infrastructure has either been tested and determined to be Year 2000 ready or is
undergoing testing but is believed to be Year 2000 ready based on
representations by the supplier. Testing and repair activity is scheduled for
completion by July 31, 1999. Although we have not yet found any significant
mission critical software applications which require repair, any repairs that
may yet be found to be required are expected to be completed by July 31, 1999.
12
SUPPLIER READINESS. This area focuses on minimizing two components of risk
associated with suppliers:
- a supplier's product integrity; and
- a supplier's business capability to continue providing products and
services.
We have identified and contacted key suppliers regarding their relative
risks in these two components. To date, we have received responses from
approximately 75 percent of our key suppliers, who indicate that the products
provided to us are Year 2000 compliant. In addition, the key suppliers have
indicated they are in the process of developing or executing repair plans, if
needed, to address Year 2000 issues which may affect their ability to continue
providing products and services to us. Our assessment of our key suppliers' Year
2000 readiness, and testing and repair of any Year 2000 compliance issues, are
scheduled to be completed by July 31, 1999.
PRODUCT READINESS. This area focuses on identifying and resolving Year 2000
issues existing in our products. This area encompasses a number of activities,
including testing, evaluation, engineering and manufacturing implementation. We
have completed a Year 2000 readiness assessment for our current generation of
released high throughput screening products based upon a series of
industry-recognized testing parameters and have determined that these products
are Year 2000 ready.
CUSTOMER READINESS. This area focuses on customer readiness as it relates
to our responsibility to provide customer support, including retrofitting
products as well as providing other services to our customers. Primarily due to
our product readiness efforts regarding our current generation of released
products, we have completed our assessment of Year 2000 risk in this area and
have determined there are no issues to address.
SUMMARY. If required, we will formulate contingency plans by September 30,
1999, for those software applications, hardware and non-information technology
systems found to not be Year 2000 ready. We do not anticipate that we will need
contingency plans for our mission critical software applications, hardware and
non-information technology systems, nor do we expect to need contingency plans
for our current generation of released products. We do not know at this point if
we will need contingency plans for key suppliers.
We believe the overall cost to address Year 2000 issues will not be
material; however, we are continually testing and making necessary repairs and
we may need to reassess this estimate over time.
Due to the inherent uncertainty surrounding the Year 2000 issue, we cannot
anticipate all of the possible problems that may occur. Adverse consequences
from Year 2000 issues may materially affect our warranty liability, the value of
capitalized software applications, hardware and non-information technology
systems, the carrying value of our inventory, as well as our financial
condition, results of operation and cash flows. Year 2000 readiness problems
could also subject us to litigation which may include consequential damages.
EURO CONVERSION
On January 1, 1999, 11 of the 15 member countries of the European Union
established fixed conversion rates between each of their existing sovereign
currencies and the Single European Currency ("Euro"). The participating
countries adopted the Euro as their common legal currency on that date, with a
transition period through January 1, 2002 regarding certain elements of the Euro
change. We do not expect the transition to, or use of, the Euro to materially or
adversely affect our business, financial condition or results of operation.
13
OUR FUTURE OPERATING RESULTS ARE LIKELY TO FLUCTUATE
Our future operating results are likely to fluctuate substantially from year
to year and quarter to quarter. The degree of fluctuation will depend on a
number of factors, including:
- the timing and level of sales;
- the mix of products sold through direct sales channels and third party
distributors; and
- any change in the product mix among our existing and planned product
lines.
Fluctuations of these factors could have a material adverse effect on our
business, financial condition and results of operations. Because a significant
portion of our business is expected to be derived from orders placed by a
limited number of large customers, variations in the timing of such orders could
cause significant fluctuations in our operating results. Other factors that may
result in fluctuations in operating results include:
- industry acceptance of high throughput screening and ultra-high throughput
screening as a drug discovery tool;
- market acceptance of our products;
- the timing of new product announcements and the introduction of new
products and new technologies by us or our competitors;
- delays in research and development of new products;
- increased research and development expenses;
- increased marketing and sales expenses associated with the implementation
of our direct marketing efforts;
- availability and cost of component parts from our suppliers;
- competitive pricing pressures; and
- developments with respect to regulatory matters.
In connection with future introductions of new products, we may be required
to record charges for inventory obsolescence in connection with unsold
inventory, if any, of older generations of products.
Our expenditures for research and development, selling and marketing and
general and administrative functions are based in part on future revenue
projections. We may be unable to adjust spending in a timely manner in response
to any unanticipated declines in revenues, which may have a material adverse
effect on our business, financial condition and results of operations. We may be
required to reduce prices in response to competitive pressures or other factors
or increase spending to pursue new market opportunities. Any decline in the
average selling price of a product which is not offset by a reduction in product
costs or by sales of other products with higher gross margins would decrease our
overall gross profit and adversely affect our business, financial condition and
results of operations. In addition, our operating results may vary from the
expectations of public market analysts and investors, and, as a result, the
price of our common stock could be materially and adversely affected.
14
USE OF PROCEEDS
The proceeds from the sale of the common stock offered by this prospectus
are solely for the account of the selling shareholders. We will not receive any
proceeds from the sale of these shares.
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On January 27, 1999, we issued 2,000,000 shares of our common stock to the
selling stockholders in a private placement transaction. This prospectus covers
the resale of the shares of common stock issued in the private placement.
PLAN OF DISTRIBUTION
Shares of common stock offered by this prospectus may be offered and sold
from time to time by the selling stockholders. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders may sell shares on the Nasdaq
National Market, or in private sales at negotiated prices directly or through a
broker. The selling stockholders and any underwriters, dealers or agents who
participate in the distribution of the shares may be deemed to be "underwriters"
under the Securities Act of 1933. Any discount, commission or concession
received by such persons might be deemed to be an underwriting discount or
commission under the Securities Act. We have agreed to indemnify the selling
stockholders against certain liabilities arising under the Securities Act.
The selling stockholders will pay selling commissions or brokerage fees, if
any, with respect to the sale of the common stock offered by this prospectus in
amounts customary for this type of transaction. Each selling stockholder will
also pay all applicable transfer taxes and fees for its legal counsel incurred
in connection with the sale of shares.
The anti-manipulation rules under the Securities Exchange Act of 1934 may
apply to sales of the shares offered by this prospectus in the market, and to
their own activities and those of their affiliates. The selling stockholders
have advised us that during the time they are engaged in attempting to sell the
shares offered by this prospectus, they will:
- not engage in any stabilization activity in connection with any of our
securities;
- provide copies of this prospectus to each person to whom shares may be
offered, and to each broker-dealer, if any, through whom shares are
offered; and
- not bid for or purchase any of our securities or any rights to acquire our
securities, or attempt to induce any person to purchase any of our
securities or rights to acquire our securities other than as permitted
under the Exchange Act.
We have agreed to maintain the effectiveness of this registration statement
until the earlier of the sale of all the shares offered by this prospectus or
the date that each holder of shares can sell all of the shares it holds in any
three-month period in compliance with Rule 144 promulgated under the Securities
Act, but in no event after three years from the date on which the SEC declared
the registration statement containing this prospectus effective. No sales may be
made pursuant to this prospectus after the expiration date unless we amend or
supplement this prospectus to indicate that we have agreed to extend the period
of effectiveness. The selling stockholders may sell all, some or none of the
shares offered by this prospectus.
15
SELLING STOCKHOLDERS
The following table sets forth certain information as of March 1, 1999 with
respect to the selling stockholders. The following table assumes that the
selling stockholders sell all of the shares offered by this prospectus. We are
unable to determine the exact number of shares that actually will be sold.
The number and percentage of shares beneficially owned is based on
12,590,420 shares outstanding at March 1, 1999 determined in accordance with
Rule 13d-3 of the Exchange Act. The information is not necessarily indicative of
beneficial ownership for any other purpose. Under Rule 13d-3, beneficial
ownership includes any shares as to which an individual has sole or shared
voting power or investment power, and also includes shares which an individual
has the right to acquire within 60 days of March 1, 1999 through the exercise of
any stock option or other right. Unless otherwise indicated in the footnotes,
each person has sole voting and investment power (or shares such powers with his
or her spouse) with respect to the shares shown as beneficially owned.
Except as described in footnotes (1) and (2), no selling stockholder has had
any material relationship with us or any of our predecessors or affiliates
within the last three years.
SHARES BENEFICIALLY OWNED
SHARES BENEFICIALLY
OWNED PRIOR TO THE
OFFERING(1) SHARES OFFERED AFTER THE OFFERING
---------------------- BY THIS --------------------------
SELLING STOCKHOLDER NUMBER PERCENT PROSPECTUS NUMBER PERCENT
- ------------------------------------------------------- --------- ----------- ---------------- ------------- -----------
The Bay City Capital Fund I, L.P. (1).................. 857,143 6.8% 857,143 0 0%
The Kaufmann Fund, Inc................................. 857,143 6.8% 857,143 0 0%
Skyline Venture Partners, L.P. (2)..................... 285,714 2.3% 285,714 0 0%
- ------------------------
(1) This information is based on a Schedule 13D filed on February 3, 1999. The
Bay City Capital Fund I, L.P. refers to the following persons: The Bay City
Capital Fund I, L.P., a Delaware limited partnership, Bay City Capital
Management LLC, a Delaware limited liability company and Bay City Capital
LLC, a Delaware limited liability company, all of which share voting and
dispositive power over all shares held by The Bay City Capital Fund I, L.P.
John D. Diekman, Ph.D., a director of the Company, is a managing partner of
the general partner of The Bay City Capital Fund I, L.P., does not share
voting and dispositive power with respect to the shares held by such entity,
and disclaims beneficial ownership of such shares in which he has no
pecuniary interest.
(2) John G. Freund, M.D., a director of the Company, is the Managing Director of
Skyline Venture Management LLC, the general partner of Skyline Venture
Partners, L.P. Dr. Freund disclaims beneficial ownership of shares held by
Skyline, except to the extent of any indirect pecuniary interest in his
distributive shares therein.
16
LEGAL MATTERS
The validity of the issuance of the common stock offered by this prospectus
will be passed upon by Venture Law Group, A Professional Corporation, Menlo
Park, California, counsel to LJL BioSystems, Inc.
EXPERTS
The consolidated financial statements of LJL BioSystems, Inc. as of December
31, 1998 and December 31, 1997 and for each of the three years in the period
ended December 31, 1998 have been incorporated by reference in this prospectus
in reliance upon the report of PricewaterhouseCoopers LLP, independent
accountants, and upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission. Certain information in the
registration statement has been omitted from this prospectus in accordance with
the rules of the SEC. We file proxy statements and annual, quarterly and special
reports and other information with the SEC. You can inspect and copy the
registration statement as well as the reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New
York, New York 10048. You can call the SEC at 1-800-732-0330 for further
information about the public reference rooms. We are also required to file
electronic versions of these documents with the SEC, which may be accessed from
the SEC's World Wide Web site at http://www.sec/gov. Reports, proxy and
information statements and other information concerning LJL BioSystems, Inc.,
may be inspected at The Nasdaq Stock Market at 1735 K Street, N.W., Washington,
D.C. 20006.
The SEC allows us to "incorporate by reference" certain of our
publicly-filed documents into this prospectus, which means that information
included in those documents is considered part of this prospectus. Information
that we file with the SEC after the effective date of this prospectus will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, until the selling
stockholders have sold all the shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998
(File No. 000-23647).
2. Our definitive Proxy Statement dated April 16, 1999, filed in connection
with our June 1, 1999, Annual Meeting of Stockholders.
3. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, September 30, 1998, June 30, 1998 and March 31, 1998 (File No. 000-23647).
4. Our Current Report on Form 8-K, filed with the SEC on February 11, 1999
(File No. 000-23647).
5. The description of our common stock in our Registration Statement on
Form 8-A filed with the SEC on January 22, 1998 (File No. 000-23647).
We will furnish without charge to you, on written or oral request, a copy of
any or all of the documents incorporated by reference, other than exhibits to
those documents. You should direct any requests for documents to Robert T.
Beggs, 405 Tasman Drive, Sunnyvale, CA 94089, telephone: (408) 541-8787.
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale and distribution of the Common Stock
being registered. Selling commissions and brokerage fees and any applicable
transfer taxes and fees and disbursements of counsel for the selling
stockholders are payable individually by the selling stockholders. All amounts
shown are estimates except the SEC registration fee and the Nasdaq listing fee.
AMOUNT
TO BE PAID
----------------
SEC registration fee........................................................ $ 2,502.00
Legal fees and expenses..................................................... 10,000.00
Accounting fees and expenses................................................ 2,500.00
Nasdaq listing fees......................................................... 17,500.00
Miscellaneous expenses...................................................... 5,000.00
----------------
Total................................................................... $ 37,502.00
----------------
----------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Articles XIII and XIV of the
Registrant's Fourth Amended and Restated Certificate of Incorporation and
Article VI of the Registrant's Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by law. In addition, the Registrant has entered into Indemnification Agreements
with its officers and directors and maintains director and officer liability
insurance.
In connection with this offering, the selling stockholders have agreed to
indemnify the Registrant, its directors and officers and each such person who
controls the Registrant, against any and all liability arising from inaccurate
information provided to the Registrant by the selling stockholders and contained
herein up to a maximum (except in the case of willful fraud by the selling
stockholder) of the net proceeds received by the selling stockholders from the
sale of their shares hereunder.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ --------------------------------------------------------------------------
4.1(1) Registration Rights Agreement, dated January 27, 1999
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
- ------------------------
(1) Incorporated by reference to Exhibit 4.5 filed with our current report on
Form 8-K, as filed February 11, 1999.
II-1
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 above or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such director, officer
or controlling person in connection with the securities being registered
hereunder, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on the 6th day of
July, 1999.
LJL BIOSYSTEMS, INC.
By: /s/ LEV J. LEYTES
-----------------------------------
Lev J. Leytes
President, Chief Executive Officer
and
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints, Lev J. Leytes and Robert T. Beggs, and
each of them, as his attorney-in-fact, each with full power of substitution, for
him or her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and any and all
Registration Statements filed pursuant to Rule 462 under the Securities Act of
1933, as amended, in connection with or related to the Offering contemplated by
this Registration Statement and its amendments, if any, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney to any and all amendments
to said Registration Statement.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------------------------- ---------------
/s/ LEV J. LEYTES President, Chief Executive Officer and Chairman
------------------------------------ of the Board July 6, 1999
(Lev J. Leytes)
/s/ GALINA LEYTES
------------------------------------ Executive Vice President and Director July 6, 1999
(Galina Leytes)
/s/ GEORGE W. DUNBAR
------------------------------------ Director July 6, 1999
(George W. Dunbar, Jr.)
/s/ DANIEL S. JANNEY
------------------------------------ Director July 6, 1999
(Daniel S. Janney)
/s/ MICHAEL F. BIGHAM
------------------------------------ Director July 6, 1999
(Michael F. Bigham)
/s/ JOHN G. FREUND
------------------------------------ Director July 6, 1999
(John G. Freund, M.D.)
/s/ JOHN D. DIEKMAN
------------------------------------ Director July 6, 1999
(John D. Diekman, Ph.D.)
II-3
LJL BIOSYSTEMS, INC.
INDEX TO EXHIBITS
EXHIBIT
NUMBER
- -----------
4.1(1) Registration Rights Agreement, dated January 27, 1999
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
- ------------------------
(1) Incorporated by reference to Exhibit 4.5 filed with our current report on
Form 8-K, as filed February 11, 1999.