As filed with the Securities and Exchange Commission on June 19, 2001
Registration No. 333-61322
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BioMarin Pharmaceutical Inc.
(Exact name of registrant as specified in its charter)
Delaware 68-0397820
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
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)
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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.|_|
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.
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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 4 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 June 19, 2001
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION............................................1
SUMMARY........................................................................2
FORWARD LOOKING STATEMENTS.....................................................3
RISK FACTORS...................................................................3
USE OF PROCEEDS...............................................................13
SELLING STOCKHOLDERS..........................................................13
Plan of Distribution..........................................................16
LEGAL MATTERS.................................................................17
EXPERTS.......................................................................17
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
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.
2
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 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
3
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
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:
4
o Slow patient enrollment
o Longer treatment time required to demonstrate efficacy
o Lack of sufficient supplies of the drug candidate
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.
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.
5
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
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.
6
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.
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.
7
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
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.
8
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 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 achieve 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.
9
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
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.
10
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.
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
11
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
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.
12
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, 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.
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 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.
13
Number of Shares Number
Beneficially of Shares
Owned Prior to Offered
Name Offering Hereby
----------------------------------------------- -------------- ---------
BayStar Capital LP (1)......................... 162,258 162,258
BayStar International Ltd.(2).................. 81,129 81,129
equityfourlife (Bahamas) Ltd. (3).............. 872,159 730,159
Perceptive Life Sciences Master Fund LP (4).... 121,694 121,694
MPM BioEquities Master Fund LP (5)............. 486,773 486,773
Pequot Scout Fund L.P. (6)..................... 158,202 158,202
Pequot Navigator Offshore Fund, Inc.(7)........ 85,186 85,186
Caduceus Capital Trust (8)..................... 419,750 419,750
Caduceus Capital II, LP (8).................... 235,750 235,750
PW Eucalyptus Fund, L.L.C.(8).................. 511,750 511,750
PW Eucalyptus Fund, Ltd(8)..................... 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 (9)........ 316,402 316,402
Orbitex Life Science & Biotechnology Fund (10). 64,609 36,509
Monument Medical Science Fund (11)............. 133,863 133,863
Ursus Capital L.P. (12)........................ 145,351 95,651
Ursus Offshore Ltd.(13)........................ 40,443 26,043
Biotech Value Plus Ltd......................... 121,694 121,694
SCO Securities LLC (14)........................ 22,000 22,000
(1) BayStar Capital, Management, as general partner of BayStar Capital LP, has
sole voting and investment control over these securities.
(2) BayStar International, Management, as general partner of BayStar
International Ltd., has sole voting and investment control over these
securities
(3) 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. After
completion of this offering equity for life (Bahamas) Ltd. will continue to
beneficially own 142,000 shares of our common stock.
(4) Joseph Edelman, as director of Perceptive Life Sciences Master Fund LP, has
sole voting and investment control over these securities. After completion
of this offering Perceptive Life Sciences Master Fund LP will continue to
beneficially own 21,500 shares of our common stock.
(5) MPM BioEquities GP LP, the general partner of MPM BioEquities Master Fund
LP, has assigned sole voting and investment control over these securities
to MPM BioEquities Advisers LLC. 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.
(6) Pequot Capital Management Inc., as general partner of Pequot Scout Fund
L.P., has sole voting and investment control over these securities.
(7) Pequot Capital Management Inc., as investment manager of Pequot Navigator
Offshore Fund, Inc., has sole voting and investment control over these
securities.
(8) Samuel D. Isaly, Sven Borho, Carl Gordon and Michael Sheffery, as managers
of Orbimed Advisors LLC, the investment advisor and/or general partner of
these entities, each have shared voting and investment control of these
securities.
(9) Orbitex Management, Inc., as investment manager of Orbitex Health &
Biotechnology Fund, has sole voting and investment control over these
securities.
(10) Orbitex Management, Inc., as investment manager of Orbitex Life Science &
Biotechnology Fund, has sole voting and investment control over these
securities. After completion of this offering Orbitex Management Inc. will
continue to beneficially own 28,100 shares of our common stock.
(11) Orbitex Management, Inc., as investment manager of Monument Medical Science
Fund, has sole voting and investment control over these securities.
(12) Evan Sturza, as sole member of Ursus Capital Management Corp., the general
partner of Ursus Capital L.P., has sole voting and investment control over
these securities. After completion of this offering Ursus Capital L.P. will
continue to beneficially own 49,700 shares of our common stock.
14
(13) Evan Sturza, as sole member of Ursus Capital Management Corp., the
investment manager of Ursus Offshore Ltd., has sole voting and investment
control over these securities. After completion of this offering Ursus
Offshore Ltd. will continue to beneficially own 14,400 shares of our common
stock.
(14) 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.
15
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
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.
16
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.
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.
17
II-1
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
--------------------------------------------------------------------------------
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.
10.6*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.
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).
------------------
* Previously filed.
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:
(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.
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 Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Novato, State of California, this 15th day of
June, 2001.
BIOMARIN PHARMACEUTICAL INC.
By: /s/ Fredric D. Price
--------------------------------------
Fredric D. Price
Chairman, Chief Executive Officer and
Director (Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1
to 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 June 15, 2001
----------------------- and Director
Fredric D. Price (Principal Executive Officer)
/s/ Raymond W. Anderson Chief Financial Officer, Chief June 15, 2001
----------------------- Operating Officer, Secretary,
Raymond W. Anderson and Vice President Finance and
Administration (Principal Financial
and Accounting Officer)
/s/ * Director June 15, 2001
-----------------------
Grant W. Denison, Jr.
/s/ * Director June 15, 2001
------------------------
Ansbert S. Gadicke, M.D.
/s/ * Director June 15, 2001
------------------------
Erich Sager
/s/ * Director June 15, 2001
------------------------
Gwynn R. Williams
* By: /s/ Raymond W. Anderson
-----------------------
Raymond W. Anderson
as Attorney-In-Fact
Exhibit Index
Exhibit
Number Description of Document
--------------------------------------------------------------------------------
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.
10.6*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.
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).
------------------
* Previously filed.