As filed with the Securities and Exchange Commission on May 21, 2001
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BioMarin Pharmaceutical Inc.
(Exact name of registrant as specified in its charter)
Delaware
68-0397820
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
371 Bel Marin Keys Boulevard, Suite 210
Novato, California 94949
(415) 884-6700
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
-------------------------------------------------
Raymond W. Anderson
Chief Financial Officer
BioMarin Pharmaceutical Inc.
371 Bel Marin Keys Boulevard, Suite 210
Novato, California 94949
(415) 884-6700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------------------------------
Copy to:
Siobhan McBreen Burke, Esq.
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street, 23rd Floor
Los Angeles, California 90071-2371
(213) 683-6000
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
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
under the Securities Act, please check the following box.|_|
===================================================================================================================================
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered (1) Offering Price Per Aggregate Registration Fee
Share (2) Offering Price (2)
- ---------------------------------- --------------- --------------------- ------------------------- --------------------------------
- ---------------------------------- --------------- --------------------- ------------------------- --------------------------------
Common Stock 5,621,960 $10.545 $59,283,568.00 $14,821.00
- ---------------------------------- --------------- --------------------- ------------------------- --------------------------------
<FN>
(1) Includes 752,427 shares of common stock to be issued upon the exercise of
certain outstanding common stock warrants
(2) Estimated solely for the purpose of computing the registration fee required
to Section 6(b) of the Securities Act and computed pursuant to Rule 457(c) of
the Securities Act, based on the average of the high and low prices of the
Common Stock on May 14, 2001 as reported on the NASDAQ National Market.
</FN>
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
SUBJECT TO COMPLETION DATED MAY 21, 2001
PRELIMINARY PROSPECTUS
5,621,960 Shares of Common Stock
par value $.001
BioMarin Pharmaceutical Inc.
---------------------
This prospectus relates to an aggregate 5,621,960 shares of common stock of
BioMarin Pharmaceutical Inc. that may be offered for sale by persons who have
acquired such shares in a private transaction. Included in the aggregate number
of shares are 752,427 shares of common stock which may be offered for sale by
selling stockholders who may acquire them if they exercise outstanding common
stock warrants we issued to them. We have registered the aggregate number of
shares under the Securities Act of 1933 on behalf of these stockholders so that
they can sell them in a public offering or other distribution. We will not
receive any of the proceeds from the offer and sale of the shares. If the
warrants related to the shares of common stock offered for sale pursuant to this
prospectus are exercised in full, we will receive proceeds from such exercises
of $9,776,494.
Our common stock currently trades on the NASDAQ National Market and the
Swiss SWX New Market under the symbol "BMRN."
See "Risk Factors" beginning on page 2 to read about risks that you should
consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is ________ __, 2001
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and is not soliciting an
offer to buy these securities, in any state where the offer or sale is not
permitted.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION.........................................1
SUMMARY ................................................................... 2
FORWARD LOOKING STATEMENTS..................................................3
RISK FACTORS................................................................3
USE OF PROCEEDS............................................................16
SELLING STOCKHOLDERS.......................................................16
PLAN OF DISTRIBUTION.......................................................18
LEGAL MATTERS..............................................................20
EXPERTS .................................................................. 20
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, D.C., New York, NY and Chicago, IL. You can request copies
of these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the public reference rooms. Our SEC filings are also available at the SEC's
Web site at "http://www.sec.gov." In addition, you can read and copy our SEC
filings at the office of the National Association of Securities Dealers, Inc. at
1735 K Street, Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. Further, all
filings we make under the Securities Exchange Act of 1934 after the date of the
initial registration statement and prior to effectiveness of the registration
statement shall be deemed to be incorporated by reference into this prospectus.
We incorporate by reference the documents listed below and any future filings we
will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934:
1. Our Annual Report on Form 10-K for the year ended December 31, 2000;
2. Our Definitive Proxy Statement dated April 3, 2000 filed in connection
with our 2001 Annual Meeting of Stockholders;
3. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
4. Our Current Report on Form 8-K, as filed on May 18, 2001; and
5. The description of our common stock set forth in our Amendment No. 4 to
our Registration Statement on Form S-1, filed with the SEC on
July 22, 1999.
We will provide to you at no cost a copy of any and all of the information
incorporated by reference into the registration statement of which this
prospectus is a part. You may make a request for copies of this information in
writing or by telephone. Requests should be directed to:
BioMarin Pharmaceutical Inc.
Attention: Investor Relations
371 Bel Marin Keys Boulevard, Suite 210
Novato, CA 94949
(415) 884-6700
1
SUMMARY
This prospectus contains forward looking statements which involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward looking statements as a result of certain factors appearing
under "Risk Factors" and elsewhere in this prospectus.
The following summary does not contain all the information that may be
important to you. You should read the entire prospectus, including the financial
statements and other information incorporated by reference in this prospectus,
before making an investment decision.
We are a developer of carbohydrate enzyme therapies for debilitating,
life-threatening, chronic genetic diseases and other diseases and conditions. In
September 1998, we established a joint venture with Genzyme for the worldwide
development and commercialization of our lead drug product, Aldurazyme(TM), for
the treatment of mucopolysaccharidosis-I or MPS-I, a serious genetic disease.
Aldurazyme has received fast track designation for the treatment of the more
severe forms of MPS-I. The U.S. Food and Drug Administration (FDA) has granted
Aldurazyme for the treatment of MPS-I an orphan drug designation giving us
exclusive rights to market Aldurazyme to treat MPS-I for seven years from the
date of FDA approval if Aldurazyme is the first product to be approved by the
FDA for the treatment of MPS-I. In addition, the European Commission has
designated Aldurazyme for the treatment of MPS-I as an orphan medical product in
the European Community, giving us similar market exclusivity in Europe for 10
years.
MPS-I is a life-threatening genetic disease caused by the lack of a
sufficient quantity of the enzyme (alpha)-L-iduronidase, which affects about
3,400 patients in developed countries, including approximately 1,000 in the
United States and Canada. Patients with MPS-I have multiple debilitating
symptoms resulting from the buildup of carbohydrate residues in all tissues in
the body. These symptoms include delayed physical and mental growth, enlarged
livers and spleens, skeletal and joint deformities, airway obstruction, heart
disease, reduced endurance and pulmonary function, and impaired hearing and
vision. Most children with MPS-I will die from complications associated with the
disease before adulthood.
Aldurazyme is a specific form of recombinant human (alpha)-L-iduronidase
that replaces a genetic deficiency of (alpha)-L-iduronidase in MPS-I patients.
In April 1999, we completed the initial clinical trial of Aldurazyme. This trial
was a twelve-month treatment and evaluation of ten patients with MPS-I at six
medical centers in the United States. The results of the trial were presented at
the American Society for Human Genetics in October 1999. Based on data collected
during the initial twelve-month evaluation period, Aldurazyme met the primary
endpoints set forth in the investigational new drug application. In addition,
Aldurazyme demonstrated efficacy according to various secondary endpoints in
each of the patients. We continue to collect data from the ongoing treatment of
these original patients. We recently released the data from the two-year
follow-up evaluation, which continued to suggest the efficacy of Aldurazyme. In
collaboration with Genzyme, we initiated a six-month Phase III clinical trial of
Aldurazyme in December 2000 with the intention to file a Biologics License
Application (BLA) with the FDA late in 2001, pending the successful outcome of
the Phase III trial. By the end of February 2001, the trial was fully enrolled
and all 45 MPS-I patients had received their initial weekly infusion.
In August 2000, our Galli Drive manufacturing facility and a smaller
clinical manufacturing laboratory in our Bel Marin Keys Boulevard facility were
both subjected to an extensive inspection by the State of California Food and
Drug Branch and were granted licenses to produce clinical product.
We submitted an Investigational New Drug Application for recombinant human
N-acetylgalactosamine-4-sulfatase also known as arylsulfatase B or rhASB and
received FDA acceptance to begin a Phase I/II clinical trial in enzyme
replacement therapy for MPS-VI, which was initiated on October 11, 2000. By the
end of February 2001, all six patients in this trial had received at least six
2
of their twenty-four weekly infusions. MPS-VI, also known as Maroteaux-Lamy
syndrome, is similar in its clinical symptoms to MPS-I. However, MPS-VI does not
appear to have the central nervous system involvement and mental retardation
characteristics of the most severe form of MPS-I. We are manufacturing clinical
bulk rhASB in our Bel Marin Keys Boulevard facility. RhASB has received fast
track designation and has received orphan drug designation for the treatment of
MPS-VI by the FDA. In addition, the European Commission has designated rhASB for
the treatment of MPS-VI as an orphan medical product in the European Community.
We have successfully conducted preclinical studies of our burn enzyme,
Vibriolysin, for use in burn debridement and grafting in pigs and mice. We
expect to submit an application to the FDA or a foreign equivalent to begin a
clinical trial for Vibriolysin by mid-year 2001.
Our principal executive offices are located at 371 Bel Marin Keys
Boulevard, Suite 210, Novato, CA 94949 and our telephone number is (415)
884-6700.
FORWARD LOOKING STATEMENTS
This prospectus contains forward looking statements. These statements
relate to future events or our future financial performance. We have identified
forward looking statements in this prospectus using words such as "anticipates",
"believes," "could," "estimates," "expects," "intends," "may," "plans,"
"potential," "predicts," "should," or "will" or the negative of such terms or
other comparable terminology. These statements are based on our beliefs as well
as assumptions we made using information currently available to us. Because
these statements reflect our current views concerning future events, these
statements involve risks, uncertainties, and assumptions. These risks,
uncertainties, assumptions and other factors, including the risks outlined under
"Risk Factors," that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from future
results, levels of actual activity, performance or achievements expressed or
implied by such forward looking statements.
Although we believe that the expectations reflected in the forward looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward looking statements after the date
of this prospectus to conform such statements to actual results, unless required
by law.
RISK FACTORS
An investment in our common stock involves a high degree of risk. We
operate in a dynamic and rapidly changing industry that involves numerous risks
and uncertainties. Before purchasing these securities, you should carefully
consider the following risk factors, as well as other information contained in
this prospectus or incorporated by reference into this prospectus, in evaluating
an investment in the securities offered by this prospectus. The risks and
uncertainties described below are not the only ones we face. Other risks and
uncertainties, including those that we do not currently consider material, may
impair our business. If any of the risks discussed below actually occur, our
business, financial condition, operating results or cash flows could be
materially adversely affected. This could cause the trading price of our common
stock to decline, and you may lose all or part of your investment.
If we continue to incur operating losses for a period longer than anticipated,
we may be unable to continue our operations at planned levels and be forced to
reduce or discontinue operations.
We are in an early stage of development and have operated at a net loss
since we were formed. Since we began operations in March 1997, we have been
3
engaged primarily in research and development. We have no sales revenues from
any of our drug products. As of March 31, 2001, we had an accumulated deficit of
approximately $90.2 million. We expect to continue to operate at a net loss at
least through 2002. Our future profitability depends on our receiving regulatory
approval of our drug candidates and our ability to successfully manufacture and
market any approved drugs, either by ourselves or jointly with others. The
extent of our future losses and the timing of profitability are highly
uncertain. If we fail to become profitable or are unable to sustain
profitability on a continuing basis, then we may be unable to continue our
operations.
Because of the relative small size and scale of our wholly-owned
subsidiary, Glyko, Inc., profits from its products and services will be
insufficient to offset the expenses associated with our pharmaceutical business.
As a result, we expect that operating losses will continue and increase for the
foreseeable future.
If we fail to obtain the capital necessary to fund our operations, we will be
unable to complete our product development programs.
In the future, we may need to raise substantial additional capital to fund
operations. We cannot be certain that any financing will be available when
needed. If we fail to raise additional financing as we need it, we will have to
delay or terminate some or all of our product development programs.
We expect to continue to spend substantial amounts of capital for our
operations for the foreseeable future. Activities which will require additional
expenditures include:
o Research and development programs
o Preclinical studies and clinical trials
o Process development, including quality systems for product manufacture
o Regulatory processes in the United States and international jurisdictions
o Commercial scale manufacturing capabilities
o Expansion of sales and marketing activities
The amount of capital we will need depends on many factors, including:
o The progress, timing and scope of our research and development programs
o The progress, timing and scope of our preclinical studies and clinical trials
o The time and cost necessary to obtain regulatory approvals
o The time and cost necessary to develop commercial processes, including
quality systems
o The time and cost necessary to build our manufacturing facilities and obtain
the necessary regulatory approvals for those facilities
o The time and cost necessary to respond to technological and market
developments
o Any changes made or new developments in our existing collaborative, licensing
and other commercial relationships
o Any new collaborative, licensing and other commercial relationships that we
may establish
4
Moreover, our fixed expenses such as rent, license payments and other
contractual commitments are substantial and will increase in the future. These
fixed expenses will increase because we may enter into:
o Additional leases for new facilities and capital equipment
o Additional licenses and collaborative agreements
o Additional contracts for consulting, maintenance and administrative services
o Additional contracts for product manufacturing
We believe that the cash, cash equivalents and short-term investment
securities balances at March 31, 2001, together with the proceeds from our
recent private placement of our common stock, will be sufficient to meet our
operating and capital requirements at least through mid 2002. This estimate is
based on assumptions and estimates, which may prove to be wrong. As a result, we
may need or choose to obtain additional financing during that time.
If we fail to obtain regulatory approval to commercially manufacture or sell any
of our future drug products, or if approval is delayed, we will be unable to
generate revenue from the sale of our products.
We must obtain regulatory approval before marketing or selling our drug
products in the U.S. and in foreign jurisdictions. In the United States, we must
obtain FDA approval for each drug that we intend to commercialize. The FDA
approval process is typically lengthy and expensive, and approval is never
certain. Products distributed abroad are also subject to foreign government
regulation. None of our drug products has received regulatory approval to be
commercially marketed and sold. If we fail to obtain regulatory approval, we
will be unable to market and sell our drug products. Because of the risks and
uncertainties in biopharmaceutical development, our drug candidates could take a
significantly longer time to gain regulatory approval than we expect or may
never gain approval. If regulatory approval is delayed, our management's
credibility, the value of our Company and our operating results will be
adversely affected.
To obtain regulatory approval to market our products, preclinical studies
and costly and lengthy clinical trials may be required and the results of the
studies and trials are highly uncertain.
As part of the regulatory approval process, we must conduct, at our own
expense, preclinical studies in the laboratory on animals, and clinical trials
on humans for each drug candidate. We expect the number of preclinical studies
and clinical trials that the regulatory authorities will require will vary
depending on the drug product, the disease or condition the drug is being
developed to address and regulations applicable to the particular drug. We may
need to perform multiple preclinical studies using various doses and
formulations before we can begin clinical trials, which could result in delays
in our ability to market any of our drug products. Furthermore, even if we
obtain favorable results in preclinical studies on animals, the results in
humans may be significantly different.
After we have conducted preclinical studies in animals, we must demonstrate
that our drug products are safe and efficacious for use on the target human
patients in order to receive regulatory approval for commercial sale. Adverse or
inconclusive clinical results would stop us from filing for regulatory approval
of our products. Additional factors that can cause delay or termination of our
clinical trials include:
o Slow patient enrollment
o Longer treatment time required to demonstrate efficacy
o Lack of sufficient supplies of the drug candidate
5
o Adverse medical events or side effects in treated patients
o Lack of effectiveness of the drug candidate being tested
o Regulatory requests for additional clinical trials
Typically, if a drug product is intended to treat a chronic disease, safety
and efficacy data must be gathered over an extended period of time, which can
range from six months to three years or more. In addition, clinical trials on
humans are typically conducted in three phases. The FDA generally requires two
pivotal clinical trials that demonstrate substantial evidence of safety and
efficacy and appropriate dosing in a broad patient population at multiple sites
to support an application for regulatory approval. If a drug is intended for the
treatment of a serious or life-threatening condition and the drug demonstrates
the potential to address unmet medical needs for this condition, fewer clinical
trials may be sufficient to prove safety and efficacy under the FDA's
Modernization Act of 1997.
In May 1999, we completed a twelve-month patient evaluation for the initial
clinical trial of our lead drug product, Aldurazyme, for the treatment of MPS-I.
The results were presented at the American Society for Human Genetics in October
1999. We continue to collect data from the ongoing treatment of these original
patients. The initial clinical trial treated ten patients with MPS-I at six
medical centers in the United States. Two of the original ten patients enrolled
in the first clinical trial of Aldurazyme died in 2000. Based on medical data
collected from clinical investigative sites, neither case directly implicated
treatment with Aldurazyme as the cause of death. The data suggest that one
patient died due to a combination of systemic viral illness, residual MPS-I
coronary disease, and external factors. This patient had received 103 weeks of
Aldurazyme administration. For the other patient, the data suggest that the
patient died due to complications following posterior spinal fusion for
scoliosis. This patient had received 127 weeks of Aldurazyme administration.
The fast track designation for our product candidates may not actually lead to a
faster review process.
Although Aldurazyme and rhASB have obtained fast track designations, we
cannot guarantee a faster review process or faster approval compared to the
normal FDA procedures.
We will not be able to sell our products if we fail to comply with manufacturing
regulations.
Before we can begin commercial manufacture of our products, we must obtain
regulatory approval of our manufacturing facility and process. In addition,
manufacture of our drug products must comply with the FDA's current Good
Manufacturing Practices regulations, commonly known as cGMP. The cGMP
regulations govern quality control and documentation policies and procedures.
Our manufacturing facilities are continuously subject to inspection by the FDA,
the State of California and foreign regulatory authorities, before and after
product approval. Our Galli Drive and our Bel Marin Keys Boulevard manufacturing
facilities have been inspected and licensed by the State of California for
clinical pharmaceutical manufacture. We cannot guarantee that these facilities
will pass federal or international regulatory inspection. We cannot guarantee
that we, or any potential third-party manufacturer of our drug products, will be
able to comply with cGMP regulations.
We must pass Federal, state and European regulatory inspections, and we
must manufacture three process qualification batches (five process qualification
batches for Europe) to final specifications under cGMP controls for each of our
drug products before the marketing applications can be approved. Although we
have completed process qualification batches for Aldurazyme, these batches may
be rejected by the regulatory authorities and we may be unable to manufacture
the process qualification batches for our other products or pass the inspections
in a timely manner, if at all.
6
If we fail to obtain orphan drug exclusivity for our products, our competitors
may sell products to treat the same conditions and our revenues may be reduced.
As part of our business strategy, we intend to develop drugs that may be
eligible for FDA and European Community orphan drug designation. Under the
Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a
drug intended to treat a rare disease or condition, defined as a patient
population of less than 200,000 in the United States. The company that obtains
the first FDA approval for a designated orphan drug for a given rare disease
receives marketing exclusivity for use of that drug for the stated condition for
a period of seven years. However, different drugs can be approved for the same
condition. Similar regulations are available in the European Community with a
ten-year period of market exclusivity.
Because the extent and scope of patent protection for our drug products is
limited, orphan drug designation is particularly important for our products that
are eligible for orphan drug designation. We plan to rely on the exclusivity
period under the orphan drug designation to maintain a competitive position. If
we do not obtain orphan drug exclusivity for our drug products, which do not
have patent protection, our competitors may then sell the same drug to treat the
same condition.
We received orphan drug designation from the FDA for Aldurazyme for the
treatment of MPS-I in September 1997. In February 1999, we received orphan drug
designation from the FDA for rhASB for the treatment of MPS-VI. In February 2001
we received orphan drug designation from the European Community for both
products. Even though we have obtained orphan drug designation for these drugs
and even if we obtain orphan drug designation for other products we develop, we
cannot guarantee that we will be the first to obtain marketing approval for any
orphan indication or that exclusivity would effectively protect the product from
competition. Orphan drug designation neither shortens the development time or
regulatory review time of a drug so designated nor gives the drug any advantage
in the regulatory review or approval process.
Because the target patient populations for our products are small we must
achieve significant market share and obtain high per patient prices for our
products to achieve profitability.
Our initial drug candidates target diseases with small patient populations.
As a result, our per patient prices must be high enough to recover our
development costs and achieve profitability. For example, two of our initial
drug products in genetic diseases, Aldurazyme and rhASB, target patients with
MPS-I and MPS-VI, respectively. We estimate that there are approximately 3,400
patients with MPS-I and 1,100 patients with MPS-VI in the developed world. We
believe that we will need to market worldwide to achieve significant market
share. In addition, we are developing other drug candidates to treat conditions,
such as other genetic diseases and serious burn wounds, with small patient
populations. We cannot be certain that we will be able to obtain sufficient
market share for our drug products at a price high enough to justify our product
development efforts.
If we fail to obtain an adequate level of reimbursement for our drug products by
third-party payers, there would be no commercially viable markets for our
products.
The course of treatment for patients with MPS-I using Aldurazyme and for
patients with MPS-VI using rhASB is expected to be expensive. We expect patients
to need treatment throughout their lifetimes. We expect that most families of
patients will not be capable of paying for this treatment themselves. There will
be no commercially viable market for Aldurazyme or rhASB without reimbursement
from third-party payers.
Third-party payers, such as government or private health care insurers,
carefully review and increasingly challenge the price charged for drugs.
Reimbursement rates from private companies vary depending on the third-party
payer, the insurance plan and other factors. Reimbursement systems in
international markets vary significantly by country and by region, and
reimbursement approvals must be obtained on a country-by-country basis. We
7
cannot be certain that third-party payers will pay for the costs of our drugs
and the courses of treatment. Even if we are able to obtain reimbursement from
third-party payers, we cannot be certain that reimbursement rates will be enough
to allow us to profit from sales of our drugs or to justify our product
development expenses.
We currently have no expertise obtaining reimbursement. We expect to rely
on the expertise of our joint venture partner Genzyme to obtain reimbursement
for the costs of Aldurazyme. We cannot predict what the reimbursement rates will
be. In addition, we will need to develop our own reimbursement expertise for
future drug candidates unless we enter into collaborations with other companies
with the necessary expertise.
We expect that in the future, reimbursement will be increasingly restricted
both in the United States and internationally. The escalating cost of health
care has led to increased pressure on the health care industry to reduce costs.
Governmental and private third-party payers have proposed health care reforms
and cost reductions. A number of federal and state proposals to control the cost
of health care, including the cost of drug treatments have been made in the
United States. In some foreign markets, the government controls the pricing
which would affect the profitability of drugs. Current government regulations
and possible future legislation regarding health care may affect our future
revenues from sales of our drugs and may adversely affect our business and
prospects.
If we are unable to protect our proprietary technology, we may not be able to
compete as effectively.
Where appropriate, we seek patent protection for certain aspects of our
technology. Meaningful patent protection may not be available for some of the
enzymes we are developing, including Aldurazyme and rhASB. If we must spend
significant time and money protecting our patents, designing around patents held
by others or licensing, for large fees, patents or other proprietary rights held
by others, our business and financial prospects may be harmed.
The patent positions of biotechnology products are complex and uncertain.
The scope and extent of patent protection for some of our products are
particularly uncertain because key information on some of the enzymes we are
developing has existed in the public domain for many years. Other parties have
published the structure of the enzymes, the methods for purifying or producing
the enzymes or the methods of treatment. The composition and genetic sequences
of animal and/or human versions of many of our enzymes, including those for
Aldurazyme and rhASB, have been published and are believed to be in the public
domain. The composition and genetic sequences of other MPS enzymes which we
intend to develop as products have also been published. Publication of this
information may prevent us from obtaining composition-of-matter patents, which
are generally believed to offer the strongest patent protection. For enzymes
with no prospect of composition-of-matter patents, we will depend on orphan drug
status to provide us a competitive advantage.
In addition, our owned and licensed patents and patent applications do not
ensure the protection of our intellectual property for a number of other
reasons:
o We do not know whether our patent applications will
result in actual patents. For example, we may not have
developed a method for treating a disease before others
developed similar methods.
o Competitors may interfere with our patent process in
a variety of ways. Competitors may claim that they invented
the claimed invention prior to us. Competitors may also claim
that we are infringing on their patents and therefore cannot
practice our technology as claimed under our patent.
Competitors may also contest our patents by showing the patent
examiner that the invention was not original, was not novel or
was obvious. As a company, we have no meaningful experience
with competitors interfering with our patents or patent
applications.
8
o Enforcing patents is expensive and may absorb
significant time of our management. In litigation, a
competitor could claim that our issued patents are not valid
for a number of reasons. If the court agrees, we would lose
that patent.
o Even if we receive a patent, it may not provide much
practical protection. If we receive a patent with a narrow
scope, then it will be easier for competitors to design
products that do not infringe on our patent.
In addition, competitors also seek patent protection for their technology.
There are many patents in our field of technology, and we cannot guarantee that
we do not infringe on those patents or that we will not infringe on patents
granted in the future. If a patent holder believes our product infringes on
their patent, the patent holder may sue us even if we have received patent
protection for our technology. If someone else claims we infringe on their
technology, we would face a number of issues, including:
o Defending a lawsuit takes significant time and can be very expensive.
o If the court decides that our product infringes on
the competitor's patent, we may have to pay substantial
damages for past infringement.
o The court may prohibit us from selling or licensing
the product unless the patent holder licenses the patent to
us. The patent holder is not required to grant us a license.
If a license is available, we may have to pay substantial
royalties or grant cross-licenses to our patents.
o Redesigning our product so it does not infringe may
not be possible or could require substantial funds and time.
It is also unclear whether our trade secrets will provide useful
protection. While we use reasonable efforts to protect our trade secrets, our
employees or consultants may unintentionally or willfully disclose our
information to competitors. Enforcing a claim that someone else illegally
obtained and is using our trade secrets, like patent litigation, is expensive
and time consuming, and the outcome is unpredictable. In addition, courts
outside the United States are sometimes less willing to protect trade secrets.
Our competitors may independently develop equivalent knowledge, methods and
know-how.
We may also support and collaborate in research conducted by government
organizations or by universities. We cannot guarantee that we will be able to
acquire any exclusive rights to technology or products derived from these
collaborations. If we do not obtain required licenses or rights, we could
encounter delays in product development while we attempt to design around other
patents or even be prohibited from developing, manufacturing or selling products
requiring these licenses. There is also a risk that disputes may arise as to the
rights to technology or products developed in collaboration with other parties.
The United States Patent and Trademark Office recently issued a patent that
related to (alpha)-L-iduronidase. If Aldurazyme infringes on this patent and we
are not able to successfully challenge it, we may be prevented from producing
Aldurazyme unless and until we obtain a license.
The United States Patent and Trademark Office recently issued a patent that
includes claims related to (alpha)-L-iduronidase. Our lead drug product,
Aldurazyme, may infringe on this patent. We believe that this patent is invalid
on a number of grounds. A patent making the same claims was filed in Europe and
has been rejected and cannot be refiled. Our challenges to the U.S. patent may
be unsuccessful, but the rejection of the European application supports our
strategy to challenge the validity of the U.S. patent. Even if we are
successful, challenging the patent may be expensive, require our management to
devote significant time to this effort and may delay commercialization of our
product in the United States.
The patent holder has granted an exclusive license for products relating to
this patent to one of our competitors. If we are unable to successfully
challenge the patent, we may be unable to produce Aldurazyme in the United
States unless we can obtain a sub-license from the current licensee. The current
licensee is not required to grant us a license and even if a license is
available, we may have to pay substantial license fees, which could adversely
affect our business and operating results.
If our joint venture with Genzyme were terminated, we could be barred from
commercializing Aldurazyme or our ability to commercialize Aldurazyme would be
delayed or diminished.
We are relying on Genzyme to apply the expertise it has developed through
the launch and sale of Ceredase(R) and Cerezyme(R) enzymes for Gaucher disease,
a rare genetic disease, to the marketing of our initial drug product,
Aldurazyme. Because it is our initial product, our operations are substantially
dependent upon the development of Aldurazyme. We have no experience selling,
marketing or obtaining reimbursement for pharmaceutical products. In addition,
without Genzyme we would be required to pursue foreign regulatory approvals. We
have no experience in seeking foreign regulatory approvals.
We cannot guarantee that Genzyme will devote the resources necessary to
successfully market Aldurazyme. In addition, either party may terminate the
joint venture for specified reasons, including if the other party is in material
breach of the agreement or has experienced a change of control or has declared
bankruptcy and also is in breach of the agreement. Either party may also
terminate the agreement upon one-year prior written notice for any reason.
Furthermore, we may terminate the joint venture if Genzyme fails to fulfill its
contractual obligation to pay us $12.1 million in cash upon the approval of the
BLA for Aldurazyme.
Upon termination of the joint venture one party must buy out the other
party's interest in the joint venture. The party who buys out the other will
then also obtain, exclusively, all rights to Aldurazyme and any related
intellectual property and regulatory approvals.
If the joint venture is terminated by Genzyme for a breach on our part,
Genzyme would be granted, exclusively, all of the rights to Aldurazyme and any
related intellectual property and regulatory approvals and would be obligated to
buy out our interest in the joint venture. We would then effectively be unable
to develop and commercialize Aldurazyme. If we terminated the joint venture for
a breach by Genzyme, we would be obligated to buy out Genzyme's interest in the
joint venture and, we would then be granted all of these rights to Aldurazyme
exclusively. While we could then continue to develop Aldurazyme, that
development would be slowed because we would have to divert substantial capital
to buy out Genzyme's interest in the joint venture. We would then either have to
search for a new partner to commercialize the product and to obtain foreign
regulatory approvals or have to develop these capabilities ourselves.
If the joint venture is terminated by us without cause, Genzyme would have
the option, exercisable for one year, to immediately buy out our interest in the
joint venture and obtain all rights to Aldurazyme exclusively. If the agreement
is terminated by Genzyme without cause, we would have the option, exercisable
for one year, to immediately buy out Genzyme's interest in the joint venture and
obtain these exclusive rights. In event of termination of the buy out option
without exercise by the non-terminating party as described above, all right and
title to Aldurazyme is to be sold to the highest bidder, with the proceeds to be
split equally between Genzyme and us.
If the joint venture is terminated by us because Genzyme fails to make the
$12.1 million payment to us upon FDA approval of the BLA for Aldurazyme, we
would be obligated to buy Genzyme's interest in the joint venture and would
obtain all rights to Aldurazyme exclusively. If the joint venture is terminated
by either party because the other declared bankruptcy and is also in breach of
the agreement, the terminating party would be obligated to buy out the other and
would obtain all rights to Aldurazyme exclusively. If the joint venture is
terminated by a party because the other party experienced a change of control,
the terminating party shall notify the other party, the offeree, of its intent
to buy out the offeree's interest in the joint venture for a stated amount set
by the terminating party at its discretion. The offeree must then either accept
10
this offer or agree to buy the terminating party's interest in the joint venture
on those same terms. The party who buys out the other would then have exclusive
rights to Aldurazyme.
If we were obligated, or given the option, to buy out Genzyme's interest in
the joint venture, and gain exclusive rights to Aldurazyme, we may not have
sufficient funds to do so and we may not be able to obtain the financing to do
so. If we fail to buy out Genzyme's interest we may be held in breach of the
agreement and may lose any claim to the rights to Aldurazyme and the related
intellectual property and regulatory approvals. We would then effectively be
prohibited from developing and commercializing the product.
Termination of the joint venture in which we retain the rights to
Aldurazyme could cause us significant delays in product launch in the United
States, difficulties in obtaining third-party reimbursement and delays or
failure to obtain foreign regulatory approval, any of which could hurt our
business and results of operations. Since Genzyme funds 50% of the joint
venture's operating expenses, the termination of the joint venture would double
our financial burden and reduce the funds available to us for other product
programs.
If we are unable to manufacture our drug products in sufficient quantities and
at acceptable cost, we may be unable to meet demand for our products and lose
potential revenues or have reduced margins.
With the exception of Aldurazyme, we have no experience manufacturing drug
products in volumes that will be necessary to support commercial sales. Our
manufacturing processes may not meet initial expectations as to schedule,
reproducibility, yields, purity, costs, quality, and other measurements of
performance. Improvements in manufacturing processes typically are very
difficult to achieve and are often very expensive. We cannot know with certainty
how long it might take to make improvements if it became necessary to do so. If
we contract for manufacturing services with an unproven process, our contractor
is subject to the same uncertainties, high standards and regulatory controls.
If we are unable to establish and maintain commercial scale manufacturing within
our planned time and cost parameters, sales of our products and our financial
performance will be adversely affected.
Although we have successfully manufactured Aldurazyme at commercial scale
within our cost parameters, we cannot guarantee that we will be able to
manufacture rhASB, Vibriolysin or any future product candidates successfully in
a scale large enough to support their respective commercial markets.
We may encounter problems with any of the following if we attempt to
increase the scale or size of manufacturing:
o Design, construction and qualification of manufacturing facilities that
meet regulatory requirements
o Production yields
o Purity
o Quality control and assurance systems
o Shortages of qualified personnel
o Compliance with regulatory requirements
We have constructed and built-out a total of 41,200 square feet at our
Novato facilities for manufacturing capability for Aldurazyme and rhASB. We
expect to expand the Galli Drive facility in stages over time, which creates
11
additional operational complexity and challenges. We expect that the
manufacturing process of all of our new products, including rhASB, will require
lengthy significant time and resources before we can begin to manufacture them
(or have them manufactured by third parties) in commercial quantity. Even if we
can establish the necessary capacity, we cannot be certain that manufacturing
costs will be commercially reasonable, especially if third-party reimbursement
is substantially lower than expected.
In order to a chieve our product cost targets we must develop efficient
manufacturing processes either by:
o Improving the product yield from our current cell
lines, colonies of cells which have a common genetic make-up,
o Improving the processes licensed from others, or
o Developing more efficient, lower cost recombinant cell lines and
production processes.
A recombinant cell line is a cell line with foreign DNA inserted which is
used to produce a protein that it would not have otherwise produced. The
development of a stable, high production cell line for any given enzyme is
risky, expensive and unpredictable and may not result in adequate yields. In
addition, the development of protein purification processes is difficult and may
not produce the high purity required with acceptable yield and costs or may not
result in adequate shelf-lives of the final products. If we are not able to
develop efficient manufacturing processes, the investment in manufacturing
capacity sufficient to satisfy market demand will be much greater and will place
heavy financial demands upon us. If we do not achieve our manufacturing cost
targets, we will have lower margins and reduced profitability in commercial
production and larger losses in manufacturing start-up phases.
If we are unable to increase our marketing and distribution capabilities or to
enter into agreements with third parties to do so, our ability to generate
revenues will be diminished.
If we cannot increase our marketing capabilities either by developing our
sales and marketing organization or by entering into agreements with others, we
may be unable to successfully sell our products. If we are unable to effectively
sell our drug products, our ability to generate revenues will be diminished.
To increase our distribution and marketing for both our drug candidates and
our Glyko, Inc. products, we will have to increase our current sales force
and/or enter into third-party marketing and distribution agreements. We cannot
guarantee that we will be able to hire in a timely manner, the qualified sales
and marketing personnel we need, if at all. Nor can we guarantee that we will be
able to enter into any marketing or distribution agreements on acceptable terms,
if at all. If we cannot increase our marketing capabilities as we intend, either
by increasing our sales force or entering into agreements with third parties,
sales of our products may be adversely affected.
Under our joint venture with Genzyme, Genzyme is responsible for marketing
and distributing Aldurazyme. We cannot guarantee that we will be able to
establish sales and distribution capabilities or that the joint venture, any
future collaborators or we will successfully sell any of our drug candidates.
If we fail to compete successfully, our revenues and operating results will be
adversely affected.
Our competitors may develop, manufacture and market products that are more
effective or less expensive than ours. They may also obtain regulatory approvals
for their products faster than we can obtain them, including those products with
orphan drug designation, or commercialize their products before we do. If our
competitors successfully commercialize a product, which treats a given rare
genetic disease before we do, we will effectively be precluded from developing a
product to treat that disease because the patient populations of the rare
genetic diseases are so small. If our competitor gets orphan drug exclusivity,
we could be precluded from marketing our version for seven years. However,
different drugs can be approved for the same condition. These companies also
compete with us to attract qualified personnel and organizations for
12
acquisitions, joint ventures or other collaborations. They also compete with us
to attract academic research institutions as partners and to license these
institutions' proprietary technology. If our competitors successfully enter into
partnering arrangements or license agreements with academic research
institutions, we will then be precluded from pursuing those specific
opportunities. Since each of these opportunities is unique, we may not be able
to find a substitute. Several pharmaceutical and biotechnology companies have
already established themselves in the field of enzyme therapeutics, including
Genzyme, our joint venture partner. These companies have already begun many drug
development programs, some of which may target diseases that we are also
targeting, and have already entered into partnering and licensing arrangements
with academic research institutions, reducing the pool of available
opportunities.
Universities and public and private research institutions are also
competitors. While these organizations primarily have educational or basic
research objectives, they may develop proprietary technology and acquire patents
that we may need for the development of our drug products. We will attempt to
license this proprietary technology, if available. These licenses may not be
available to us on acceptable terms, if at all. We also directly compete with a
number of these organizations to recruit personnel, especially scientists and
technicians.
We believe that established technologies provided by other companies, such
as laboratory and testing services firms, compete with Glyko, Inc.'s products
and services. For example, Glyko's FACE(R) Imaging System competes with
alternative carbohydrate analytical technologies, including capillary
electrophoresis, high-pressure liquid chromatography, mass spectrometry and
nuclear magnetic resonance spectrometry. These competitive technologies have
established customer bases and are more widely used and accepted by scientific
and technical personnel because they can be used for non-carbohydrate
applications. Companies competing with Glyko may have greater financial,
manufacturing and marketing resources and experience.
If we fail to manage our growth or fail to recruit and retain personnel, our
product development programs may be delayed.
Our rapid growth has strained our managerial, operational, financial and
other resources. We expect this growth to continue. We have entered into a joint
venture with Genzyme. If we receive FDA approval to market Aldurazyme, the joint
venture will be required to devote additional resources to support the
commercialization of Aldurazyme.
To manage expansion effectively, we need to continue to develop and improve
our research and development capabilities, manufacturing and quality capacities,
sales and marketing capabilities and financial and administrative systems. We
cannot guarantee that our staff, financial resources, systems, procedures or
controls will be adequate to support our operations or that our management will
be able to manage successfully future market opportunities or our relationships
with customers and other third parties.
Our future growth and success depend on our ability to recruit, retain,
manage and motivate our employees. The loss of key scientific, technical and
managerial personnel may delay or otherwise harm our product development
programs. Any harm to our research and development programs would harm our
business and prospects.
Because of the specialized scientific and managerial nature of our
business, we rely heavily on our ability to attract and retain qualified
scientific, technical and managerial personnel. In particular, the loss of
Fredric D. Price, our Chairman and Chief Executive Officer, or Christopher M.
Starr, Ph.D., our Vice President for Research and Development, could be
detrimental to us if we cannot recruit suitable replacements in a timely manner.
While Mr. Price and Dr. Starr are parties to employment agreements with us, we
cannot guarantee that they will remain employed with us in the future. In
addition, these agreements do not restrict their ability to compete with us
after their employment is terminated. The competition for qualified personnel in
the biopharmaceutical field is intense. We cannot be certain that we will
continue to attract and retain qualified personnel necessary for the development
of our business.
13
If product liability lawsuits are successfully brought against us, we may incur
substantial liabilities.
We are exposed to the potential product liability risks inherent in the
testing, manufacturing and marketing of human pharmaceuticals. The
BioMarin/Genzyme LLC maintains product liability insurance for our clinical
trials of Aldurazyme. We have obtained insurance against product liability
lawsuits for the clinical trials for rhASB. We may be subject to claims in
connection with our current clinical trials for Aldurazyme and rhASB for which
the joint venture's or our insurance coverages are not adequate. We cannot be
certain that if Aldurazyme receives FDA approval, the product liability
insurance the joint venture will need to obtain in connection with the
commercial sales of Aldurazyme will be available in meaningful amounts or at a
reasonable cost. In addition, we cannot be certain that we can successfully
defend any product liability lawsuit brought against us. If we are the subject
of a successful product liability claim which exceeds the limits of any
insurance coverage we may obtain, we may incur substantial liabilities which
would adversely affect our earnings and financial condition.
Our stock price may be volatile and an investment in our stock could suffer a
decline in value.
Our valuation and stock price since the beginning of trading after our
initial public offering have had no meaningful relationship to current or
historical earnings, asset values, book value or many other criteria based on
conventional measures of stock value. The market price of our common stock will
fluctuate due to factors including:
o Progress of Aldurazyme and our other lead drug
products through the regulatory process, especially Aldurazyme
regulatory actions in the United States
o Results of clinical trials, announcements of technological innovations
or new products by us or our
competitors
o Government regulatory action affecting our drug
candidates or our competitors' drug candidates in both the
United States and foreign countries
o Developments or disputes concerning patent or proprietary rights
o General market conditions for emerging growth and biopharmaceutical
companies
o Economic conditions in the United States or abroad
o Actual or anticipated fluctuations in our operating results
o Broad market fluctuations in the United States or in Europe may cause the
market price of our common stock to fluctuate
o Changes in company assessments or financial estimates by securities analysts
In addition, the value of our common stock may fluctuate because it is
listed on both the NASDAQ National Market and the Swiss Exchange's SWX New
Market. Listing on both exchanges may increase stock price volatility due to:
o Trading in different time zones
o Different ability to buy or sell our stock
o Different market conditions in different capital markets
o Different trading volume
14
In the past, following periods of large price declines in the public market
price of a company's securities, securities class action litigation has often
been initiated against that company. Litigation of this type could result in
substantial costs and diversion of management's attention and resources, which
would hurt our business. Any adverse determination in litigation could also
subject us to significant liabilities.
If all or a substantial portion of the shares of our common stock offered
for sale by this prospectus are sold in a short period of time, our stock price
may be adversely affected. Our stock price may also be adversely affected by the
perception that such sales could occur.
The shares of common stock offered for sale by this prospectus represents a
significant portion of our outstanding common stock. We cannot control when the
selling stockholders will sell their shares. If all or a substantial portion of
the shares of common stock offered for sale by this prospectus are sold in a
short period of time, the common stock available for sale may exceed the demand
and the stock price may be adversely affected. In addition, the mere perception
that such sales could occur may depress the price of our common stock.
If our officers, directors and largest stockholder elect to act together, they
may be able to control our management and operations, acting in their best
interests and not necessarily those of other stockholders.
Our directors and officers control approximately 41.3% of the outstanding
shares of our common stock. Glyko Biomedical Ltd. owns 27.0% of the outstanding
shares of our capital stock. The president and chief executive officer of Glyko
Biomedical and a significant shareholder of Glyko Biomedical serve as two of our
directors. As a result, due to their concentration of stock ownership, directors
and officers, if they act together, may be able to control our management and
operations, and may be able to prevail on all matters requiring a stockholder
vote including:
o The election of all directors;
o The amendment of charter documents or the approval of a merger, sale of
assets or other major corporate transactions; and
o The defeat of any non-negotiated takeover attempt that might
otherwise benefit the public stockholders.
Anti-takeover provisions in our charter documents and under Delaware law may
make an acquisition of us, which may be beneficial to our stockholders, more
difficult.
We are incorporated in Delaware. Certain anti-takeover provisions of
Delaware law and our charter documents as currently in effect may make a change
in control of our company more difficult, even if a change in control would be
beneficial to the stockholders. Our anti-takeover provisions include provisions
in the certificate of incorporation providing that stockholders' meetings may
only be called by the board of directors and a provision in the bylaws providing
that the stockholders may not take action by written consent. Additionally, our
board of directors has the authority to issue 1,000,000 shares of preferred
stock and to determine the terms of those shares of stock without any further
action by the stockholders. The rights of holders of our common stock are
subject to the rights of the holders of any preferred stock that may be issued.
The issuance of preferred stock could make it more difficult for a third party
to acquire a majority of our outstanding voting stock. Delaware law also
prohibits corporations from engaging in a business combination with any holders
of 15% or more of their capital stock until the holder has held the stock for
three years unless, among other possibilities, the board of directors approves
the transaction. Our board of directors may use these provisions to prevent
changes in the management and control of our company. Also, under applicable
Delaware law, our board of directors may adopt additional anti-takeover measures
in the future.
15
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares offered
and sold for the accounts of the selling stockholders. In order for the selling
stockholders to sell 752,427 shares of common stock offered for sale pursuant to
this prospectus, they must exercise outstanding warrants for the purchase of
common stock. If all of those warrants are exercised, we will receive proceeds
of $9,776,494. Since we do not have any control over when or to what extent the
warrants will be exercised, management intends to use any proceeds received upon
exercise for working capital and general corporate purposes. Since we have not
made any specific allocation for any proceeds, our management will have
significant flexibility in applying such proceeds.
The selling stockholders will not pay any of the expenses that are incurred
in connection with the registration of the shares, but they will pay all
commissions, discounts and any other compensation to any securities broker
dealers through whom they sell any of the shares.
SELLING STOCKHOLDERS
The following table sets forth the names of each selling stockholder, the
aggregate number of shares of common stock beneficially owned by each selling
stockholder as of May 18, 2001, and the aggregate number of shares of common
stock that each selling stockholder may offer and sell pursuant to this
prospectus. Because each selling stockholder may offer all or a portion of the
shares of common stock offered by this prospectus at any time and from time to
time after the date hereof, no estimate can be made of the number of shares that
each selling stockholder may retain upon completion of this offering. However,
assuming all of the shares offered by this prospectus are sold by the selling
stockholders then, unless otherwise noted, after completion of this offering,
none of the selling stockholders will own more than one percent of the shares of
common stock outstanding.
Of the 5,621,960 shares of common stock offered by this prospectus,
4,869,533 shares are issued and outstanding as of May 17, 2001 and 752,427
shares have been reserved for issuance by us to the selling stockholders upon
the exercise of outstanding common stock warrants. We are registering all of the
shares of common stock offered for sale pursuant to this prospectus as required
by certain registration rights obligations.
In the following table, we have calculated shares of common stock
beneficially owned based upon 42,026,259 shares of common stock outstanding
on May 17, 2001, together with options, warrants or other convertible securities
that are exercisable within 60 days of May 17, 2001 for each selling
stockholder. Under the rules of the Securities and Exchange Commission,
beneficial ownership includes shares over which the named stockholder exercises
voting and/or investment power. Unless otherwise indicated in the footnotes
below, we believe that the persons and entities named in the table have sole
voting and investment power with respect to all shares beneficially owned,
subject to applicable community property laws. The information with respect to
beneficial ownership of common stock held by each person is based upon record
ownership data provided by our transfer agent, information as supplied or
confirmed by selling stockholders, based upon statements filed with the
Securities and Exchange Commission or based upon our actual knowledge. None of
the selling stockholders will own one percent or more of the our common stock
after completion of this offering.
Except as noted in the footnotes to the table below, within the past three
years, none of the selling stockholders have held any position or office with us
or entered into a material relationship with us.
Except as noted in the footnotes to the table below, none of the selling
stockholders will own 1% or more of our common stock after completion of this
offering.
16
Number of Shares
Beneficially Number of Shares
Owned Prior to Offered
Name Offering Hereby
---- ---------------- ------
BayStar Capital LP 162,258 162,258
BayStar International Ltd. 81,129 81,129
equityfourlife (Bahamas) Ltd. (1) 730,159 730,159
Perceptive Life Sciences Fund LP 121,694 121,694
MPM BioEquities Master Fund LP (2) 486,773 486,773
Pequot Scout Fund L.P. 158,202 158,202
Pequot Navigator Offshore Fund, Inc. 85,186 85,186
Caduceus Capital Trust 419,750 419,750
Caduceus Capital II, LP 235,750 235,750
PW Eucalyptus Fund, L.L.C. 511,750 511,750
PW Eucalyptus Fund, Ltd 51,750 51,750
Franklin California Growth Fund-Class A 1,095,238 1,095,238
Franklin Biotechnology Discovery Fund 730,159 730,159
Orbitex Health & Biotechnology Fund 316,402 316,402
Orbitex Life Science & Biotechnology Fund 36,509 36,509
Monument Medical Science Fund 133,863 133,863
Ursus Capital L.P. 95,651 95,651
Ursus Offshore Ltd. 26,043 26,043
Biotech Value Plus Ltd. 121,694 121,694
SCO Securities LLC (3) 32,000 22,000
(1) Eric Sager, one of our directors, serves on the board of advisors of
equity4life. Through his interest in the fund manager of equity4life, Mr.
Sager is indirectly entitled to 3% of the profits of equity4life.
(2) MPM Capital L.P. is the investment manager of BB BioVentures L.P., MPM
Asset Management 1998 Investors L.L.C.and MPM BioVentures Parallel Fund
L.P. which currently hold 2,725,787 shares (not including the shares held
by MPM BioEquities Master Fund L.P.) or 6.5% of our outstanding Common
Stock in the aggregate, and MPM BioEquities Master Fund L.P., one of the
selling stockholders. As investment manager, MPM Capital L.P. is entitled
to receive a performance fee of 20% of the profits from each fund. Mr.
Ansbert Gadicke, one of our directors, is a general partner of MPM Capital
L.P. and, as such, is indirectly entitled to a significant portion of this
performance fee.
(3) We entered into an agreement dated November 20, 2000, which was amended in
May 2001 with SmallCaps OnLine, LLC (now known as SCO Securities LLC
("SCO")) for the providing of investment advisory services, and SCO
provided such services to us in connection with the transactions in which
the shares offered for sale pursuant to this prospectus initially were
sold. Pursuant to this arrangement, we are obligated to pay SCO a
commission of 1% of the gross proceeds received by us in such transactions,
subject to certain specified exceptions including proceeds received by us
from our affiliates, SCO is to receive an additional commission of .5% on
the gross proceeds received by us from Caduceus Capital Trust, Caduceus
Capital II, L.P., PW Eucalyptus Fund, LLC and PW Eucalyptus Fund, Ltd., and
we issued warrants for 22,000 shares of our common stock to SCO. We also
entered into an agreement with SCO dated January 16, 2001, pursuant to
which SCO provides advisory services with respect to corporate finance and
investor relations matters. In connection with this arrangement, we are
obligated to pay SCO $6,000 per month (a portion of which may be credited
against the fee payable to SCO under our other agreement with SCO), and we
issued to SCO an option to purchase 10,000 shares of our common stock with
a term of five years and subject to such limitations and restrictions as
are applicable to options issued under our employee stock option plan. Both
of our agreements with SCO are terminable on 30 days notice. Under both of
these agreements, we are obligated to reimburse SCO for reasonable
out-of-pocket expenses incurred by SCO in connection with the providing of
services under these agreements and to indemnify SCO from all losses and
liabilities arising out of the transactions contemplated by these
agreements, except for losses which result primarily from SCO's bad faith
or gross negligence.
17
Plan of Distribution
We are registering the shares of common stock offered for sale by this
prospectus on behalf of the selling stockholders. As used in this section,
"selling stockholders" includes donees, pledgees, distributees, transferees or
other successors-in-interest, including, without limitation, their respective
affiliates, members and limited or general partners, all of which are referred
to as a group below as transferees, or certain counterparties to derivative
transactions with the selling stockholders or transferees. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. We will pay all costs, expenses and
fees in connection with the registration of the shares. The selling stockholders
will pay all brokerage commissions, underwriting discounts, commissions,
transfer taxes and other similar selling expenses, if any, associated with the
sale of the shares of common stock by them.
An aggregate of 4,869,533 shares of common stock was originally issued to
and purchased by certain of the selling stockholders at a price of $9.45 per
share in a private placement on May 16, 2001 and on May 17, 2001 and, in
connection therewith, warrants representing a total of up to 730,427 shares of
common stock at an exercise price of $13.10 per share were issued to these
selling stockholders. All of these shares of common stock and warrants were
issued and sold pursuant to an exemption from the registration requirements of
the Securities Act as provided by Rule 506 of Regulation D promulgated under the
Securities Act. In addition, the Company issued warrants representing 22,000
shares of common stock at an exercise price of $9.45 per share pursuant to
Section 4(2) of the Securities Act to one of the selling stockholders, SCO
Securities LLC, as compensation for services as a financial advisor to the
Company. The Company also is obligated to pay SCO Securities LLC a fee as
compensation for services as a financial advisor to the Company (see "SELLING
STOCKHOLDERS".) All warrants issued by the Company terminate on the earlier of
three years from the date of issuance or the closing of a merger or acquisition
which results in a change of control of the Company.
Shares of common stock may be sold by the selling stockholders from time to
time in one or more types of transactions (which may include block transactions)
on NASDAQ or on any other market on which our common stock may from time to time
be trading, in the over-the-counter market, in privately negotiated
transactions, through put or call options transactions relating to the shares,
through short sales of such shares, or a combination of such methods of sale, at
market prices prevailing at the time of sale, fixed prices, varying prices
determined at the time of sale or at negotiated prices. The selling stockholders
will have the sole discretion not to accept any purchase offer or make any sale
of shares if they deem the purchase price to be unsatisfactory at any particular
time. Such transactions may or may not involve brokers or dealers. To the best
of our knowledge, none of the selling stockholders have entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares of common stock offered by this prospectus; however, the selling
stockholders may enter into agreements, understandings or arrangements with an
underwriter or broker-dealer regarding the sale of their shares in the future.
The selling stockholders may effect such transactions by selling shares of
common stock directly to purchasers or to or through broker-dealers, which may
act as agents or principals, or other agents. Such broker-dealers or other
agents may receive compensation in the form of discounts, concessions, or
commissions from the selling stockholders and/or the purchasers of shares of
common stock for whom such broker-dealers or other agents may act as agents or
to whom they sell as principal, or both (which compensation as to a particular
broker-dealer or other agent might be in excess of customary commissions).
Market makers and block purchasers purchasing the shares will do so for their
own account and at their own risk. It is possible that a selling stockholder
will attempt to sell shares of common stock in block transactions to market
18
makers or other purchasers at a price per share which may be below the then
market price. There can be no assurance that all or any part of the shares
offered hereby will be sold by the selling stockholders.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions with respect to the shares. In
connection with these transactions, broker-dealers or other financial
institutions may engage in short sales of the shares in the course of hedging
the positions they assume with the selling stockholders. Subject to contractual
restrictions applicable to most, but not all selling stockholders, which
restrictions expire on June 15, 2001, the selling stockholders may also sell the
shares short and redeliver the shares to close out the short positions. The
selling stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to the
broker-dealer or other financial institutions of the shares. The selling
stockholders may also loan or pledge the shares to a financial institution or a
broker-dealer and the financial institution or the broker-dealer may sell the
shares loaned or upon a default the financial institution or the broker-dealer
may effect sales of the pledged shares.
The selling stockholders and any brokers, dealers or agents that
participate in connection with the sale of shares of common stock might be
deemed to be "underwriters" within the meaning of the Securities Act of 1933
(the "Securities Act"), and any commissions received by such brokers, dealers or
agents and any profit on the resale of the shares sold by them while acting as
principals might be deemed to be underwriting discounts or commissions under the
Securities Act. We have agreed to indemnify the selling stockholders against
certain liabilities, including liabilities arising under the Securities Act. The
selling stockholders may agree to indemnify any agent, dealer, broker-dealer or
underwriter that participates in transactions involving sales of the shares of
common stock offered pursuant to this prospectus against certain liabilities,
including liabilities arising under the Securities Act.
Because the selling stockholders may be deemed to be "underwriters" within
the meaning of the Securities Act, the selling stockholders will be subject to
the prospectus delivery requirements of the Securities Act and the rules
promulgated thereunder and they may be subject to certain statutory liabilities
under the Securities Act, including, but not limited to, Sections 11, 12 and 17
of the Securities Act and Rule 10b-5 under the Securities Exchange Act. In
addition, the selling stockholders and any other person participating in the
offering will be subject to applicable provisions of the Securities Exchange Act
and the rules and regulations thereunder, including Regulation M under the
Securities Exchange Act, which may limit the timing of purchases and sales.
These restrictions may affect the marketability of the common stock and the
ability of any person to engage in market-making activities with respect to the
common stock.
Commencing on May 16, 2002 (May 17, 2002, in the case of one selling
stockholder), some of the shares of common stock covered by this prospectus may
qualify for resale pursuant to Rule 144 under the Securities Act and such shares
may be sold under Rule 144 rather than under the terms of this prospectus. In
addition, subject to applicable state and foreign laws, the selling stockholders
may sell their common stock outside the United States pursuant to Rules 903 and
904 of Regulation S under the Securities Act.
To comply with the securities laws of certain jurisdictions, the shares of
common stock offered by this prospectus may need to be offered or sold only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions, the shares of common stock may not be offered or sold unless they
have been registered or qualified for sale or an exemption is available and
complied with.
If a selling stockholder notifies us that any material arrangement has been
entered into with a broker-dealer for the sale of shares of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker, dealer or underwriter, we will file a supplement to
this prospectus, if required, pursuant to Rule 424(b) under the Securities Act.
In addition, to the extent required, we will amend or supplement this prospectus
to disclose other material arrangements regarding the plan of distribution.
19
LEGAL MATTERS
For the purpose of this offering, Paul, Hastings, Janofsky & Walker LLP,
Los Angeles, California is giving an opinion of the validity of the issuance of
the securities offered in this prospectus.
EXPERTS
The financial statements included in our Annual Report on Form 10-K for the
year ended December 31, 2000, incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report(s) with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said reports.
20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses to be paid by the
registrant in connection with the sale of the common stock being registered:
Securities and Exchange Commission registration fee...........$14,821.00
Legal fees and expenses.......................................$40,000.00
Accountants' fees and expenses................................$ 6,000.00
Miscellaneous.................................................$10,000.00
----------
Total.........................................................$70,821.00
==========
The foregoing items, except for the Securities and Exchange Commission
registration fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to the Amended and Restated Certificate of Incorporation
with the Registrant; the Bylaws of the Registrant; Section 145 of the Delaware
General Corporation Law; which, among other things, and subject to certain
conditions, authorize the Registrant to indemnify, or indemnify by their terms,
as the case may be, the directors and officers of the Registrant against certain
liabilities and expenses incurred by such persons in connection with claims made
by reason of their being such a director or officer. Pursuant to this authority,
the Registrant has entered into an indemnification agreement with each director
and executive officer, whereby the Registrant has agreed to cover the
indemnification obligations.
The Registrant maintains directors' and officers' insurance providing
indemnification against certain liabilities for certain of the Registrant's
directors, officers, affiliates, partners or employees.
The indemnification provisions in the Registrant's Bylaws, and the
indemnification agreements entered into between the Registrant and its directors
and executive officers, may be sufficiently broad to permit indemnification of
the Registrant's officers and directors for liabilities arising under the Act.
Reference is made to the following documents incorporated by reference into
this Registration Statement regarding relevant indemnification provisions
described above and elsewhere herein: (1) the Amended and Restated Certificate
of Incorporation, filed as Exhibit 3.1B to Registrant's Amendment No. 2 to
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on July 6, 1999; (2) the Registrant's Bylaws filed as Exhibit 3.1 to
Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001,
and (3) the form of Indemnification Agreement entered into by the Registrant
with each of its directors and executive officers filed as Exhibit 10.1 to
Registrant's Registration Statement on Form S-1 filed with the Securities and
Exchange Commission on May 4, 1999, each incorporated by reference into this
Registration Statement.
ITEM 16. EXHIBITS
Exhibit
Number Description of Document
- -------- -----------------------------------------------------------------------
4* Form of Warrant, with attached schedule of warrant holders, each
dated as of May 16, 2001 except for the warrant issued to Biotech
Value Plus Ltd., which is dated May 17, 2001, each warrant with an
exercise price of $13.10 per share except for the warrant issued to
SCO Securities LLC with an exercise price of $9.45 per share.
5.1* Opinion of Paul, Hastings, Janofsky & Walker LLP.
10.1 Common Stock Purchase Agreement between BioMarin Pharmaceutical
Inc. and Acqua Wellington North American Equities Fund Ltd., dated
January 26, 2001, previously filed as Exhibit 10.2 to the Company's
Registration Statement on Form S-3, Registration No. 333-48800, which
is incorporated herein by reference.
10.2 Securities Purchase Agreement between BioMarin Pharmaceutical
Inc. and the investors named therein, dated May 16, 2001, previously
filed as Exhibit 10.1 to the Company's Current Report on Form 8-K as
filed May 18, 2001, which is incorporated herein by reference.
10.3 Securities Purchase Agreement between BioMarin Pharmaceutical
Inc. and the investor named therein, dated May 17, 2001, previously
filed as Exhibit 10.2 to the Company's Current Report on Form 8-K as
filed May 18, 2001, which is incorporated herein by reference.
10.4* Letter Agreement between BioMarin Pharmaceutical Inc. and
SmallCaps Online Group LLC (now SCO Securities LLC) dated November 20,
2000, as amended, regarding financial advisory services.
10.5* Letter Agreement between BioMarin Pharmaceutical Inc. and
SmallCaps Online Group LLC (now SCO Securities LLC) dated January 16,
2001, regarding investor relations services.
23.1* Consent of Paul, Hastings, Janofsky & Walker LLP (Included with
5.1).
23.2* Consent of Arthur Andersen LLP.
24.1* Power of Attorney (Included with signature page).
- ------------------
*........Filed herewith
ITEM 17. UNDERTAKINGS
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 in Item 15 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
Act, 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 Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
2
(1) To file, during any period in which offers or sales are being made
pursuant 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. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; (iii) to include any material information with
respect to the 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; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act 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.
The undersigned Registrant undertakes that: (1) for purpose of determining
any liability under the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of the registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of the registration statement as of the time it was declared effective;
and (2) for the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus 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
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 Novato, State of California, this 18th day of May,
2001.
BIOMARIN PHARMACEUTICAL INC.
By: /s/ Fredric D. Price
----------------------------------------
Fredric D. Price
Chairman, Chief Executive Officer and
Director (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Fredric D. Price and Raymond W. Anderson
as such persons' true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission and any other regulatory
authority, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as such
person might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or such persons' substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
/s/ Fredric D. Price Chairman, Chief Executive Officer and Director May 18, 2001
- ------------------------- (Principal Executive Officer)
Fredric D. Price
/s/ Raymond W. Anderson Chief Financial Officer, Chief Operating Officer, May 18, 2001
- -------------------------- Secretary, and Vice President Finance and
Raymond W. Anderson Administration (Principal Financial and
Accounting Officer)
/s/ Grant W. Denison, Jr. Director May 18, 2001
- ---------------------------
Grant W. Denison, Jr.
/s/ Ansbert S. Gadicke, M.D. Director May 18, 2001
- ----------------------------
Ansbert S. Gadicke, M.D.
/s/ Erich Sager Director May 18, 2001
- ----------------------------
Erich Sager
/s/ Gwynn R. Williams Director May 18, 2001
- ----------------------------
Gwynn R. Williams
4
Exhibit Index
Exhibit
Number Description of Document
- -------- -----------------------------------------------------------------------
4* Form of Warrant, with attached schedule of warrant holders, each
dated as of May 16, 2001 except for the warrant issued to Biotech
Value Plus Ltd., which is dated May 17, 2001, each warrant with an
exercise price of $13.10 per share except for the warrant issued to
SCO Securities LLC with an exercise price of $9.45 per share.
5.1* Opinion of Paul, Hastings, Janofsky & Walker LLP.
10.1 Common Stock Purchase Agreement between BioMarin Pharmaceutical
Inc. and Acqua Wellington North American Equities Fund Ltd., dated
January 26, 2001, previously filed as Exhibit 10.2 to the Company's
Registration Statement on Form S-3, Registration No. 333-48800, which
is incorporated herein by reference.
10.2 Securities Purchase Agreement between BioMarin Pharmaceutical
Inc. and the investors named therein, dated May 16, 2001, previously
filed as Exhibit 10.1 to the Company's Current Report on Form 8-K as
filed May 18, 2001, which is incorporated herein by reference.
10.3 Securities Purchase Agreement between BioMarin Pharmaceutical
Inc. and the investor named therein, dated May 17, 2001, previously
filed as Exhibit 10.2 to the Company's Current Report on Form 8-K as
filed May 18, 2001, which is incorporated herein by reference.
10.4* Letter Agreement between BioMarin Pharmaceutical Inc. and
SmallCaps Online Group LLC (now SCO Securities LLC) dated November 20,
2000, as amended, regarding financial advisory services.
10.5* Letter Agreement between BioMarin Pharmaceutical Inc. and
SmallCaps Online Group LLC (now SCO Securities LLC) dated January 16,
2001, regarding investor relations services.
23.1* Consent of Paul, Hastings, Janofsky & Walker LLP (Included with
5.1).
23.2* Consent of Arthur Andersen LLP.
24.1* Power of Attorney (Included with signature page).
- ------------------
*........Filed herewith
5