As filed with the Securities and Exchange Commission on December 20, 2002
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BioMarin Pharmaceutical Inc.
(Exact name of registrant as specified in its charter)
Delaware 68-0397820
(State or other jurisdiction of (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)
Louis Drapeau
Chief Financial Officer
BioMarin Pharmaceutical Inc.
371 Bel Marin Keys Boulevard, Suite 210
Novato, California 94949
(415) 884-6700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Siobhan McBreen Burke
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street, 25th 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. |_|
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Proposed Maximum Aggregate Amount of
Securities to be Registered Offering Price (1) (2) Registration Fee
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Common Stock, par value $0.001 $150,000,000 $13,800
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(1) An indeterminate number of shares of common stock is being
registered as may at various times be issued at indeterminate prices, with an
aggregate public offering price not to exceed $150,000,000.
(2) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457(o) under the Securities Act of 1933.
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
================================================================================
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION DATED DECEMBER 20, 2002
BIOMARIN
PHARMACEUTICAL INC.
$150,000,000
Common Stock, par value $0.001
We may offer from time to time the shares of our common stock described in this
prospectus in amounts, at prices, and on terms to be determined at the time of
the offering. This prospectus describes the general manner in which our common
stock may be offered using this prospectus. We will provide the specific terms
of the offering in supplements to this prospectus. This prospectus may not be
used to offer and sell our common stock unless accompanied by a prospectus
supplement.
Our common stock currently trades on the Nasdaq National Market and the Swiss
SWX New Market under the symbol "BMRN." The last reported sale price for our
common stock on the Nasdaq National Market on December 19, 2002, was $7.21 per
share.
We will provide the specific terms of the offering in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest. See "Risk Factors" beginning on page 3 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 _________, 200_
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and is not soliciting an offer to buy these
securities, in any state where the offer or sale is not permitted.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS..........................................................1
SUMMARY ...................................................................... 1
RISK FACTORS...................................................................3
FORWARD LOOKING STATEMENTS....................................................15
USE OF PROCEEDS...............................................................16
PLAN OF DISTRIBUTION..........................................................17
LEGAL MATTERS.................................................................20
EXPERTS ..................................................................... 20
WHERE YOU CAN FIND MORE INFORMATION...........................................20
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with the
Securities and Exchange Commission under a "shelf" registration process. Under
this shelf process, we may sell the shares of our common stock described in this
prospectus in one or more offerings, up to a total dollar amount of
$150,000,000. Each time we offer common stock, we will provide a prospectus
supplement that will describe the specific terms of the offering. The prospectus
supplement and any pricing supplement may also add to, update or change the
information contained in this prospectus. Please carefully read this prospectus,
the prospectus supplement and any pricing supplement, in addition to the
information contained in the documents we refer to under the heading "Where You
Can Find More Information."
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 develop enzyme therapies to treat serious, life-threatening diseases and
conditions. We leverage our expertise in enzyme biology to develop product
candidates for the treatment of genetic diseases, including
Mucopolysaccharidosis I (MPS I), Mucopolysaccharidosis VI (MPS VI) and
Phenylketonuria (PKU), as well as other critical care situations such as
cardiovascular surgery and serious burns. Our product candidates address markets
for which no products are currently available or where current products have
been associated with major deficiencies.
Our lead product candidate, Aldurazyme(TM) is being developed with our joint
venture partner, Genzyme Corporation (Genzyme), for the treatment of MPS I, a
life threatening genetic disease for which no specific drug treatments currently
exist. On July 31, 2002, we announced that the U.S. Patent and Trademark Office
had issued U.S. Patent No. 6,426,208 covering Aldurazyme for the treatment of
MPS I. The patent claims unique characteristics of the pharmaceutical
composition of Aldurazyme, including, but not limited to, the purity of
(alpha)-L-iduronidase in the final formulation. This patent, which protects a
highly purified form of (alpha)-L-iduronidase, supports the intellectual
property position for using Aldurazyme to treat MPS I.
In July 2002, we announced that together with Genzyme, we submitted the final
portion of our "rolling" Biologics License Application (BLA) to the U.S. Food
and Drug Administration (FDA). The BLA is the application to market Aldurazyme
in the U.S. The BLA was formally accepted and granted priority review status in
September 2002. On October 28, 2002, Genzyme and we announced that the FDA
informed us that the Aldurazyme BLA had been scheduled for review by the
Endocrinologic and Metabolic Drugs Advisory Committee on January 15, 2003.
Genzyme and we expect a response from the FDA regarding the BLA by the end of
January 2003. A Marketing Authorization Application or MAA, was submitted to the
European Agency for the Evaluation of Medicinal Products (EMEA) in the first
quarter of 2002. The MAA is the application to market Aldurazyme in the European
Community. We expect a response on the MAA in the first half of 2003.
On November 24, 2002, Genzyme and we released 36-week data from the ongoing open
label Phase-3 extension study of Aldurazyme. This data was submitted to the FDA
for review as part of the BLA and was also submitted to the EMEA for review as
part of the MAA.
We are developing another product candidate, Neutralase(TM), for reversal of
anticoagulation by heparin in patients undergoing Coronary Artery Bypass Graft,
or CABG, surgery. Heparin is a carbohydrate drug commonly used to prevent
coagulation, or blood clotting, during certain types of major surgery.
Neutralase is a carbohydrate-modifying enzyme that cleaves heparin, allowing
coagulation of blood following CABG surgery. We completed critical steps to
begin patient enrollment for our Phase 3 trial of Neutralase for reversal of
heparin in CABG surgery. Neutralase may also be useful as a heparin reversal
agent in coronary angioplasty. Preclinical experiments indicate that Neutralase
may also reverse the newer classes of anticoagulants, such as the low molecular
weight heparins and the pentasaccharide, fondiparinux.
1
In 2001, we announced the results of a Phase 1 trial of Aryplase(TM) for the
treatment of MPS VI, another seriously debilitating genetic disease. Based on
data from the Phase 1 trial we initiated a Phase 2 trial of Aryplase in the
first quarter of 2002 and expect results in the first half of 2003. We are also
developing Vibrilase(TM), a topical enzyme product for use in removing burned
skin tissue in the treatment of serious burns. We initiated a Phase 1 clinical
trial of Vibrilase in the United Kingdom in the fourth quarter of 2001, and
expect to analyze the results from this trial in the first half of 2003.
In addition, we are in preclinical development with several other enzyme product
candidates for genetic and other diseases and conditions, as well as with
NeuroTrans(TM), our technology that is being investigated as a method for
delivering enzymes and other drug candidates to the brain through traditional
intravenous delivery. Additionally, we are actively seeking partners for
licensing the NeuroTrans technology for use with non-enzyme based treatments,
including for the treatment of brain cancers.
.........
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.
"BioMarin," "Aryplase," "Neutralase" and "Vibrilase" are our trademarks.
"Aldurazyme" is a trademark of BioMarin/Genzyme LLC. All other trademarks or
trade names referred to in this prospectus are the property of their respective
owners. Information contained in our website, www.biomarinpharm.com, is not part
of this prospectus.
2
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, to evaluate 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
product candidates. As of September 30, 2002, we had an accumulated deficit of
approximately $ 206.3 million. We expect to continue to operate at a net loss
for at least the next few years. Our future profitability depends on our
receiving regulatory approval of our product 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.
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 may be unable to raise additional financing when needed due to a
variety of factors, including our financial condition, the status of our product
programs, and the general condition of the financial markets. If we fail to
raise additional financing as we need such funds, 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. The amount of capital we will need depends on many
factors, including:
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 manufacturing
processes, including quality systems and to build or acquire
manufacturing capabilities;
o the time and cost necessary to respond to technological and market
developments; and
o any changes made or new developments in our existing collaborative,
licensing and other commercial relationships or 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; and
o additional contracts for product manufacturing.
3
We believe that our cash, cash equivalents and short term investment securities
balances at September 30, 2002 will be sufficient to meet our operating and
capital requirements through 2003. These estimates are 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, our potential for generating
positive cash flow will be diminished and the capital necessary to fund our
operations will be increased.
We must obtain regulatory approval before marketing or selling our drug products
in the U.S. and in foreign jurisdictions. In the U.S., 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 products 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, and
the value of our company and our operating results will be adversely affected.
Additionally, we will be unable to generate revenue from the sale of our
products, our potential for generating positive cash flow will be diminished and
the capital necessary to fund our operations will be increased.
To obtain regulatory approval to market our products, preclinical studies and
costly and lengthy clinical trials will 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 product. 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 drug products. Additional factors that can cause delay or termination of
our clinical trials include:
o slow or insufficient patient enrollment;
o slow recruitment of, and completion of necessary institutional
approvals at clinical sites;
o longer treatment time required to demonstrate efficacy;
o lack of sufficient supplies of the product candidate;
o adverse medical events or side effects in treated patients;
o lack of effectiveness of the product candidate being tested; and
o regulatory requests for additional clinical trials.
Typically, if a drug product is intended to treat a chronic disease, as is the
case with some of the product candidates we are developing, safety and efficacy
data must be gathered over an extended period of time, which can range from six
months to three years or more.
4
We completed a 36-month patient evaluation for the initial clinical trial of our
lead drug product, Aldurazyme, for the treatment of MPS I. Two of the original
ten patients enrolled in this trial died in 2000. One of these patients received
103 weeks of Aldurazyme treatment and the other received 137 weeks of treatment.
One of the original forty-five patients who completed the Phase 3 clinical trial
died after 16 weeks of the Phase 3 extension study. One patient treated under a
single-patient use protocol died after 131 weeks of Aldurazyme treatment. Based
on medical data collected from clinical investigative sites, none of these cases
directly implicated treatment with Aldurazyme as the cause of death. If cases of
patient complications or death are ultimately attributed to Aldurazyme, our
chances of commercializing this drug would be seriously compromised.
The fast track designation for our product candidates may not actually lead to a
faster review process and a delay in the review process or approval of our
products will delay revenue from the sale of the products and will increase the
capital necessary to fund these programs.
Aldurazyme and Aryplase have obtained fast track designations, which provides
certain advantageous procedures and guidelines with respect to the review by the
FDA of the BLA for these products and which may result in our receipt of an
initial response from the FDA earlier than would be received if these products
had not received a fast track designation. However, these procedures and
guidelines do not guarantee that the total review process will be faster or that
approval will be obtained, if at all, earlier than would be the case if the
products had not received fast track designation. If the review process or
approval for either product is delayed, realizing revenue from the sale of the
products will be delayed and the capital necessary to fund these programs will
be increased.
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 facilities and processes. 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. Due to the complexity of the processes used
to manufacture our products, we may be unable to pass federal or international
regulatory inspections in a cost effective manner. For the same reason, any
potential third party manufacturer of our drug products may be unable to comply
with cGMP regulations in a cost effective manner.
We must pass federal, state and European regulatory inspections, and we must
manufacture process qualification batches 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 some of our products, our
competitors may sell products to treat the same conditions and our revenues will
be reduced.
As part of our business strategy, we intend to develop some 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 first
obtains FDA approval for a designated orphan drug for a given rare disease
receives marketing exclusivity for use of that drug for the stated condition for
a period of seven years. However, different drugs can be approved for the same
condition. Similar regulations are available in the European Community with a
ten-year period of market exclusivity.
Because the extent and scope of patent protection for some of our drug products
is particularly limited, orphan drug designation is particularly important for
our products that are eligible for orphan drug designation. For eligible drugs,
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 that do not have patent protection, our competitors may then
sell the same drug to treat the same condition.
5
Even though we have obtained orphan drug designation for certain of our product
candidates and even if we obtain orphan drug designation for other products we
develop, due to the uncertainties associated with developing pharmaceutical
products, we may not be the first to obtain marketing approval for any orphan
indication or, if we are the first, that exclusivity would effectively protect
the product from competition. Orphan drug designation neither shortens the
development time or regulatory review time of a drug, nor gives the drug any
advantage in the regulatory review or approval process.
Because the target patient populations for some of our products are small, we
must achieve significant market share and obtain high per-patient prices for our
products to achieve profitability.
Two of our lead drug candidates, Aldurazyme and Aryplase, target diseases with
small patient populations. As a result, our per-patient prices must be
relatively high in order to recover our development costs and achieve
profitability. Aldurazyme targets patients with MPS I and Aryplase targets
patients with MPS VI. 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.
Due to the expected costs of treatment for Aldurazyme and Aryplase, we may be
unable 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, the sales of our drugs would be adversely affected or there
may 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 Aryplase 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
Aryplase without reimbursement from third-party payers. Additionally, even if
there is a commercially viable market, if the level of reimbursement is below
our expectations, our revenue and gross margins will be adversely affected.
Third-party payers, such as government or private health care insurers,
carefully review and increasingly challenge the prices 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 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. 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 will not know what the
reimbursement rates will be until we are ready to market the product and we
actually negotiate the rates. If we are unable to obtain sufficiently high
reimbursement rates, our products may not be commercially viable or our future
revenues and gross margins may be adversely affected.
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 reimbursement
for medical treatment by third-party payers, which may render our products not
commercially viable or may adversely affect our future revenues and gross
margins.
If we are unable to protect our proprietary technology, we may not be able to
compete as effectively.
6
Where appropriate, we seek patent protection for certain aspects of our
technology. Patent protection may not be available for some of the enzymes we
are developing. If we must spend significant time and money protecting our
patents, designing around patents held by others or licensing, for large fees,
patents or other proprietary rights held by others, our business and financial
prospects may be harmed.
The patent positions of biotechnology products are complex and uncertain. The
scope and extent of patent protection for some of our products are particularly
uncertain because key information on some of the enzymes we are developing has
existed in the public domain for many years. Other parties have published the
structure of the enzymes, the methods for purifying or producing the enzymes or
the methods of treatment. The composition and genetic sequences of animal and/or
human versions of many of our enzymes have been published and are believed to be
in the public domain. The composition and genetic sequences of other MPS enzymes
that 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 broad composition-of-matter patents, other forms of
patent protection or orphan drug status may provide us with a competitive
advantage. As a result of these uncertainties, investors should not rely on
patents as a means of protecting our product candidates, including Aldurazyme.
We own or license patents and patent applications to certain of our product
candidates. However, these patents and patent applications do not ensure the
protection of our intellectual property for a number of other reasons, including
the following:
o We do not know whether our patent applications will result in issued
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. In litigation, a competitor could claim that our issued
patents are not valid for a number of reasons. If a court agrees, we
would lose that patent. 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. Management would spend less time and resources on
developing products, which could increase our research and development
expenses and delay product programs.
o Receipt of a patent 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. Due
to the number of patents in our field of technology, we cannot be certain 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 the following:
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.
7
It is also unclear whether our trade secrets are adequately protected. 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. These government organizations and
universities may be unwilling to grant us any exclusive rights to technology or
products derived from these collaborations prior to entering into the
relationship. 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 has issued two patents to a third
party that relate to (alpha)-L-iduronidase. If we are not able to successfully
challenge these patents, we may be prevented from producing Aldurazyme unless
and until we obtain a license.
The United States Patent and Trademark Office has issued two patents to a third
party that include composition-of-matter and method of use claims for
recombinant (alpha)-L-iduronidase. Our lead drug product, Aldurazyme, is based
on recombinant (alpha)-L-iduronidase. We believe that these patents are invalid
on a number of grounds. A corresponding patent application was filed in the
European Patent Office claiming composition-of-matter for recombinant
(alpha)-L-iduronidase, and it was rejected over prior art and withdrawn and
cannot be re-filed. Nonetheless, under U.S. law, issued patents are entitled to
a presumption of validity, and our challenges to the U.S. patents may be
unsuccessful. Even if we are successful, challenging the U.S. patents may be
expensive, require our management to devote significant time to this effort and
may delay commercialization of Aldurazyme in the United States.
The patent holder has granted an exclusive license for products relating to
these patents to one of our competitors. If we are unable to successfully
challenge the patents, we may be unable to produce Aldurazyme in the United
States unless we can obtain a sublicense 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 other enzyme-based products to the marketing of our initial
drug product, 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.
Either Genzyme or we 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. Although we are not currently in breach of the joint venture
agreement and we believe that Genzyme is not currently in breach of the joint
venture agreement, there is a risk that either party could breach the agreement
in the future. 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.
If the joint venture is terminated for breach, the non-breaching party 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
the breaching party's interest in the joint venture. If we are the breaching
party, we would lose our rights to Aldurazyme and the related intellectual
property and regulatory approvals. If the joint venture is terminated without
cause, the non-terminating party would have the option, exercisable for one
year, to buy out the terminating party's interest in the joint venture and
obtain all rights to Aldurazyme exclusively. In the 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.
8
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.
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.
Although we have successfully manufactured Aldurazyme at commercial scale and
within our cost parameters, due to the complexity of manufacturing our products
we may not be able to manufacture any other drug product successfully with a
commercially viable process or at a scale large enough to support their
respective commercial markets or at acceptable margins.
Our manufacturing processes may not meet initial expectations and we may
encounter problems with any of the following if we attempt to increase the scale
or size or improve the commercial viability of our manufacturing processes:
o design, construction and qualification of manufacturing facilities that
meet regulatory requirements;
o schedule;
o reproducibility;
o production yields;
o purity;
o costs;
o quality control and assurance systems;
o shortages of qualified personnel; and
o compliance with regulatory requirements.
Improvements in manufacturing processes typically are very difficult to achieve
and are often very expensive and may require extended periods of time to
develop. If we contract for manufacturing services with an unproven process, our
contractor is subject to the same uncertainties, high standards and regulatory
controls.
The availability of suitable contract manufacturing at scheduled or optimum
times is not certain. The cost of contract manufacturing is greater than
internal manufacturing and therefore our manufacturing processes must be of
higher productivity to yield equivalent margins.
9
The manufacture of Neutralase involves the fermentation of a bacterial species.
We have never used a bacterial production process for the production of any
commercial product. IBEX Technologies Inc., from which we acquired Neutralase,
had contracted with a third party for the manufacture of the Neutralase used in
prior clinical trials. We have also contracted with a third party for the
manufacture of additional quantities of Neutralase.
We have built-out approximately 51,800 square feet at our Novato facilities for
manufacturing capability for Aldurazyme and Aryplase including related quality
control laboratories, materials capabilities, and support areas. We expect to
add additional capabilities in stages over time, which could create additional
operational complexity and challenges. We expect that the manufacturing process
of all of our new drug products, including Aryplase and Neutralase, will require
significant time and resources before we can begin to manufacture them (or have
them manufactured by third parties) in commercial quantity at acceptable cost.
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, which are
colonies of cells that have a common genetic makeup;
o improving the manufacturing processes licensed from others; or
o developing more efficient, lower cost recombinant cell lines and
production processes.
A recombinant cell line is a cell line with foreign DNA inserted that is used to
produce an enzyme or other protein that it would not have otherwise produced.
The development of a stable, high production cell line for any given enzyme is
difficult, 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 create 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 expand capabilities either by developing our own sales and
marketing organization or by entering into agreements with others, we may be
unable to successfully sell our products. We believe that developing an internal
sales and distribution capability will be expensive and time consuming.
Alternatively, we may enter into agreements with third parties to market our
products. For example, under our joint venture with Genzyme, Genzyme is
responsible for marketing and distributing Aldurazyme. However, these third
parties may not be capable of successfully selling any of our drug products.
With our acquisition of Neutralase we have an enzyme product that has a
significantly larger potential patient population than Aldurazyme and Aryplase
and will be marketed and sold to different target audiences with different
therapeutic and financial requirements and needs. As a result, we will be
competing with other pharmaceutical companies with experienced and well-funded
sales and marketing operations targeting these specific physician and
institutional audiences. We may not be able to develop our own sales and
marketing force at all, or of a size that would allow us to compete with these
other companies. If we elect to enter into third-party marketing and
distribution agreements in order to sell into these markets, we may not be able
to enter into these agreements on acceptable terms, if at all. If we cannot
compete effectively in these specific physician and institutional markets, it
would adversely affect sales of Neutralase.
10
If we fail to compete successfully with respect to product sales, we may be
unable to generate sufficient sales to recover our expenses related to the
development of a product program or to justify continued marketing of a product.
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. With
respect to Aldurazyme and Aryplase, if our competitors successfully
commercialize a product that treats MPS I or MPS VI, respectively, before we do,
we may effectively be precluded from developing a product to treat that disease
because the patient populations of the diseases are so small. If one of our
competitors gets orphan drug exclusivity, we could be precluded from marketing
our version for seven years in the U.S. and ten years in the European Union.
However, different drugs can be approved for the same condition. If we do not
compete successfully, we may be unable to generate sufficient sales to recover
our expenses related to the development of a product program or to justify
continued marketing of a product.
If we fail to compete successfully with respect to acquisitions, joint venture
and other collaboration opportunities, we may be limited in our ability to
develop new products and to continue to expand our product pipeline.
Our competitors compete with us to attract organizations for acquisitions, joint
ventures, licensing arrangements or other collaborations. To date, several of
our product programs have been acquired through acquisitions, such as Neutralase
and NeuroTrans, and several of our product programs have been developed through
licensing or collaborative arrangements, such as Aldurazyme and Vibrilase. These
collaborations include licensing proprietary technology from, and other
relationships with academic research institutions. 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
with us. 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. If we are unable to compete successfully
with respect to acquisitions, joint venture and other collaboration
opportunities, we may be limited in our ability to develop new products and to
continue to expand our product pipeline.
If we do not achieve our projected development goals in the time frames we
announce and expect, the commercialization of our products may be delayed and
the credibility of our management may be adversely affected and, as a result,
our stock price may decline.
For planning purposes, we estimate the timing of the accomplishment of various
scientific, clinical, regulatory and other product development goals, which we
sometimes refer to as milestones. These milestones may include the commencement
or completion of scientific studies and clinical trials and the submission of
regulatory filings. From time to time, we publicly announce the expected timing
of some of these milestones. All of these milestones are based on a variety of
assumptions. The actual timing of these milestones can vary dramatically
compared to our estimates, in many cases for reasons beyond our control. If we
do not meet these milestones as publicly announced, the commercialization of our
products may be delayed and the credibility of our management may be adversely
affected and, as a result, our stock price may decline.
If we fail to manage our growth or fail to recruit and retain personnel, our
product development programs may be delayed.
11
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 and/or foreign government 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. Our
staff, financial resources, systems, procedures or controls may be inadequate to
support our operations and our management may be unable 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 Emil D. Kakkis, M.D., Ph.D., our
Senior Vice President of Business Operations or Christopher M. Starr, Ph.D., our
Senior Vice President of Scientific Operations, could be detrimental to us if we
cannot recruit suitable replacements in a timely manner. While Mr. Price, Dr.
Kakkis and Dr. Starr are parties to employment agreements with us, these
agreements do not 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. Due to this intense
competition, we may be unable to continue to attract and retain qualified
personnel necessary for the development of our business.
Changes in methods of treatment of disease could reduce demand for our products.
Even if our drug products are approved, doctors must use treatments that require
using those products. If doctors elect a different course of treatment from that
which includes our drug products, this decision would reduce demand for our drug
products.
Examples include the potential use in the future of effective gene therapy for
the treatment of genetic diseases. The use of gene therapy could theoretically
reduce or eliminate the use of enzyme replacement therapy in MPS diseases.
Sometimes, this change in treatment method can be caused by the introduction of
other companies' products or the development of new technologies or surgical
procedures which may not directly compete with ours, but which have the effect
of changing how doctors decide to treat a disease. For example, Neutralase is
being developed for heparin reversal in coronary artery bypass graft (CABG)
surgery. It is possible that alternative non-surgical methods of treating heart
disease could be developed. If so, then the demand for Neutralase would likely
decrease.
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 with
aggregate loss limits of $5.0 million. We have obtained insurance against
product liability lawsuits for the clinical trials for Aryplase, Vibrilase and
Neutralase with aggregate loss limits of $8.0 million. Pharmaceutical companies
must balance the cost of insurance with the level of coverage based on estimates
of potential liability. Historically, the potential liability associated with
product liability lawsuits for pharmaceutical products has been unpredictable.
Although we believe that our current insurance is a reasonable estimate of our
potential liability and represents a commercially reasonable balancing of the
level of coverage as compared to the cost of the insurance, we may be subject to
claims in connection with our current clinical trials for Aldurazyme, Aryplase,
Vibrilase and Neutralase for which our insurance coverage is not adequate.
12
If Aldurazyme, Aryplase, Vibrilase or Neutralase receives FDA or foreign
regulatory approval, the product liability insurance we will need to obtain in
connection with the commercial sales of Aldurazyme, Aryplase, Vibrilase or
Neutralase may be unavailable in meaningful amounts or at a reasonable cost. In
addition, while we take, and continue to take, what we believe are appropriate
precautions, we may be unable to avoid significant liability if any product
liability lawsuit is brought against us. If we are the subject of a successful
product liability claim that exceeds the limits of any insurance coverage we
obtain, we may incur substantial liabilities that would adversely affect our
earnings and require the commitment of capital resources that might otherwise be
available for the development and commercialization of our product programs.
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, Neutralase, Aryplase and our other lead drug
products through the regulatory process, especially regulatory actions
in the United States related to Aldurazyme;
o results of clinical trials, announcements of technological innovations
or new products by us or our competitors;
o government regulatory action affecting our drug products or our
competitors' drug products in both the United States and foreign
countries;
o developments or disputes concerning patent or proprietary rights;
o general market conditions and fluctuations for the emerging growth and
biopharmaceutical market sectors; 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, which may
cause the market price of our common stock to fluctuate; and
o changes in company assessments or financial estimates by securities
analysts.
In addition, the value of our common stock may fluctuate because it is listed on
both the Nasdaq National Market and the Swiss Exchange's SWX New Market. Listing
on both exchanges may increase stock price volatility due to:
o trading in different time zones;
o different ability to buy or sell our stock;
o different market conditions in different capital markets; and
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 you purchase our common stock pursuant to this prospectus, depending on the
terms of the offering, you will incur immediate dilution in the book value of
your shares.
Based on our most recent balance sheet and the recent trading price of our
common stock, you will incur an immediate dilution in the net tangible book
value per share of our common stock purchased pursuant to this prospectus. The
magnitude of this dilution will depend on the offering price per share, the
total net proceeds received by us in the offering and the net tangible book
value of our common stock immediately before the offering.
13
Anti-takeover provisions in our charter documents, our stockholders' rights plan
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 an additional 249,886 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.
On September 11, 2002, our board of directors authorized a stockholders' rights
plan and related dividend of one preferred share purchase right for each share
of our common stock outstanding at the close of business on September 23, 2002.
As long as these rights are attached to our common stock, we will issue one
right with each new share of common stock so that all shares of our common stock
will have attached rights. When exercisable, each right will entitle the
registered holder to purchase from us one one-hundredth of a share of our Series
B Junior Participating Preferred Stock at a price of $35.00 per one-hundredth of
a Preferred Share, subject to adjustment.
The rights are designed to assure that all of our stockholders receive fair and
equal treatment in the event of any proposed takeover of us and to guard against
partial tender offers, open market accumulations and other abusive tactics to
gain control of us without paying all stockholders a control premium. The rights
will cause substantial dilution to a person or group that acquires 15% or more
of our stock on terms not approved by our board of directors. However, the
rights may have the effect of making an acquisition of us, which may be
beneficial to our stockholders, more difficult, and the existence of such rights
may prevent or reduce the likelihood of a third party making an offer for an
acquisition of us.
The ability of our stockholders to recover against Arthur Andersen LLP may be
limited because we have not been able to obtain, after reasonable efforts, the
reissued reports of Arthur Andersen with respect to the financial statements
included in this prospectus.
Our audited consolidated financial statements, the audited financial statements
of IBEX Technologies Inc./Technologies IBEX Inc.-- Therapeutic Enzymes Division
and Glyko Biomedical Ltd. incorporated by reference into this prospectus have
been audited by Arthur Andersen LLP. We have not been able to obtain, after
reasonable efforts, the reissued reports of Arthur Andersen with respect to the
financial statements included in this registration statement of which this
prospectus is a part. Therefore, in reliance on Rule 437a promulgated under the
Securities Act, we have dispensed with the requirement to file with this
registration statement the reissued report and consent of Arthur Andersen with
respect to these financial statements. As a result, our stockholders will not be
able to recover against Arthur Andersen under Section 11 of the Securities Act
for any untrue statement of a material fact contained in these financial
statements or any omissions to state a material fact required to be stated
therein. In addition, the ability of Arthur Andersen to satisfy any claims
properly brought against it may be limited as a practical matter due to recent
developments involving Arthur Andersen.
14
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.
15
USE OF PROCEEDS
We cannot guarantee that we will receive any proceeds in connection with this
offering. Unless we inform you otherwise in a prospectus supplement or any
pricing supplement, we expect to use the net proceeds from any and all offerings
of the common stock registered hereunder for general corporate purposes and
working capital, which may include some or all of the following purposes:
o to fund our share of costs associated with our joint venture with
Genzyme for the development and commercialization of Aldurazyme;
o to fund research and development including clinical trials, regulatory
processes, process development and scale-up and start-up of
manufacturing activities for our other pharmaceutical product programs,
including Neutralase, Aryplase and Vibrilase, and other products in
earlier stages of development; and
o to fund research, development, clinical and commercial manufacturing
facilities, including related equipment.
A portion of the proceeds may also be used to acquire or invest in businesses or
products or to obtain rights to use other technologies. There are currently no
commitments or agreements with respect to any such acquisitions.
We have not identified precisely the amounts we plan to spend on each of these
areas or the timing of such expenditures. Accordingly, our management will have
significant flexibility in applying such proceeds. The amounts actually expended
for each purpose may vary significantly depending upon numerous factors,
including the amount and timing of the proceeds from this offering, progress
with the regulatory approval, manufacturing and commercialization of Aldurazyme,
Neutralase, Aryplase and Vibrilase and progress with our other development
programs. In addition, expenditures will also depend upon the establishment of
additional collaborative arrangements with other companies, the availability of
other financing and other factors. Pending use for these or other purposes, we
intend to invest the net proceeds of this offering in short-term,
investment-grade, interest-bearing securities.
16
PLAN OF DISTRIBUTION
We may offer the common stock covered by this prospectus by one or more of, or a
combination of, the following methods:
o through agents to the public;
o to underwriters for resale to the public;
o directly to institutional investors;
o in payment of all or a portion of the purchase price from one or more
acquisitions of companies, businesses or assets; or
o as consideration for rights for us to use third party technologies
pursuant to one or more license, development or other similar
agreements.
We will set forth in a prospectus supplement the terms of the offering of
securities, including:
o the name or names of any agents or underwriters;
o the purchase price of the securities being offered and the proceeds we
will receive from the sale;
o any over-allotment options under which underwriters may purchase
additional securities from us;
o any agency fees or underwriting discounts and other items constituting
agents' or underwriters' compensation;
o any initial public offering price; and
o any discounts or concessions allowed or reallowed or paid to dealers.
To the extent required by law, we may also provide this information by an
amendment to the registration statement, of which this prospectus is a part.
Sale Through Agents
We may designate agents to solicit purchases for the period of the agent's
appointment or to sell the common stock on a continuing basis. Unless we inform
you otherwise in the applicable prospectus supplement, any agent will agree to
use its reasonable best efforts to solicit purchases for the period of the
agent's appointment.
Sale Through Underwriters
If we use underwriters for a sale of the common stock, the underwriters will
acquire the common stock for their own account. The underwriters may resell the
common stock in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. We may offer the common stock through an underwriting syndicate or through
a single underwriter. The obligations of the underwriters to purchase the common
stock will be subject to the conditions set forth in the applicable underwriting
agreements.
The underwriters will be obligated to purchase all the offered common stock,
subject to certain conditions contained in an underwriting agreement that we
will enter into with the underwriters at the time of sale to them. The
underwriters may from time to time change any public offering price and any
discounts or concessions allowed or reallowed or paid to dealers. We may use
underwriters with whom we have a material relationship. We will describe in the
prospectus supplement that names the underwriter the nature of any such
relationship.
17
Sale Through Dealers
If we use dealers in the sale of common stock, we will sell the common stock to
the dealers as principals. They may then resell that common stock to the public
at varying prices determined by the dealers at the time of resale or at a fixed
offering price agreed to with us at the time of sale.
Compensation Of Underwriters, Dealers And Agents
Underwriters, dealers and agents that participate in the distribution of the
common stock may be underwriters as defined in the Securities Act of 1933 and
any discounts or commissions they receive from us, as well as any profit on
their resale of the common stock, may be treated as underwriting discounts and
commissions under the Securities Act of 1933. We will identify in the applicable
prospectus supplement any underwriters, dealers or agents and will describe
their compensation. We may have agreements with the underwriters, dealers or
agents to indemnify them against specified civil liabilities, including
liabilities under the Securities Act of 1933. Underwriters, dealers and agents
may engage in transactions with or perform services for us or our subsidiaries
in the ordinary course of their businesses. This includes commercial banking and
investment banking transactions.
Direct Sales
We may sell the common stock directly. In that event, no underwriters or agents
would be involved. We may sell the common stock directly to institutional
investors or others who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any sale of that common stock.
Delayed Delivery Contracts
If we so indicate in a prospectus supplement, we may authorize underwriters,
dealers or agents to solicit offers from selected types of institutions to
purchase common stock from us at the public offering price under delayed
delivery requirements. These contracts would provide for payment and delivery on
a specified date in the future. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others. The
contracts would be subject only to those conditions described in the prospectus
supplement. The applicable prospectus supplement relating to such contracts will
set forth the price to be paid for common stock under the contracts, the
commission payable for solicitation of the contracts and the date or dates in
the future for delivery of the common stock under the contracts.
Stabilization Activities
During and after an offering through underwriters, the underwriters may purchase
and sell the common stock in the open market. These transactions may include
overallotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. The underwriters may
also impose a penalty bid, in which selling concessions allowed to syndicate
members or other broker-dealers for the offered common stock sold for their
account may be reclaimed by the syndicate if the offered common stock is
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
offered common stock, which may be higher than the price that might otherwise
prevail in the open market. If commenced, these activities may be discontinued
at any time.
Passive Market Making
Any underwriters who are qualified market makers on the Nasdaq National Market
may engage in passive market making transactions in the common stock on the
Nasdaq National Market in accordance with Rule 103 of Regulation M, during the
business day prior to the pricing of the offering, before the commencement of
offers or sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid at a price not
in excess of highest independent bid for the security; if all independent bids
are lowered below the passive market maker's bid, however, the passive market
maker's bid then must be lowered when certain purchase limits are exceeded.
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Acquisitions
We may offer the common stock in payment of all or a portion of the purchase
price from one or more acquisitions of companies, businesses or assets. We
expect that the terms of acquisitions in which the common stock would be issued
by us would be determined by negotiations between us and the owners of the
companies, businesses or assets we intend to acquire. It is anticipated that the
common stock issued in any such acquisition would be valued for purposes of the
acquisition at a price reasonably related to the market value of the common
stock either at the time of the execution of the definitive acquisition
agreement or at the time of the consummation of the acquisition.
License, Development Or Other Similar Agreements
We may offer the common stock as consideration for rights for us to use third
party technologies pursuant to one or more license, development or other similar
agreements. We expect that the terms of those agreements would be determined by
negotiations between us and the other party or parties to a particular
agreement. The common stock issued as part of any such agreement would be valued
for purposes of the agreement at a price reasonably related to the market value
of the common stock either at the time of the signing of the agreement, or such
other date as the agreement stipulates.
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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
Our audited financial statements for the year ended December 31, 2001, included
in our Annual Report on Form 10-K, the audited financial statements of IBEX
Technologies Inc./Technologies IBEX Inc.-- Therapeutic Enzymes Division included
in our Current Report on Form 8-K/A, as filed on January 14, 2002, and the
audited financial statements of Glyko Biomedical Ltd. included in our Current
Report on Form 8-K/A, as filed on October 18, 2002, which are 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 with respect thereto. After reasonable efforts, we
have not been able to obtain a current consent of Arthur Andersen LLP to the
inclusion of these financial statements, and the related report of Arthur
Andersen LLP, in this prospectus. Therefore, in reliance on Rule 437a of the
Securities Act, the consent of Arthur Andersen included herein has not been
reissued and Arthur Andersen LLP has not consented to the inclusion of its
report in this amendment to the registration statement. As a result, our
stockholders may not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act for any untrue statement of a material fact
contained in these financial statements or any omissions to state a material
fact required to be stated in these financial statements. In addition, the
ability of Arthur Andersen LLP to satisfy claims properly brought against it may
be limited as a practical matter due to recent developments involving Arthur
Andersen LLP.
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. 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 supercede 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, 2001,
as amended by Form 10-K/A, as filed on April 30, 2002;
2. Our Quarterly Report on Form 10-Q for the quarters ended March 31,
2002, June 30, 2002 and September 30, 2002;
3. Our Current Report of Form 8-K/A filed on January 14, 2002 and our
Current Reports on Form 8-K, as filed on January 7, 2002, January 15,
2002; February 7, 2002; February 26, 2002; March 21, 2002; April 16,
2002; April 24, 2002; May 7, 2002; May 16, 2002; June 12, 2002, as
amended and restated on June 18, 2002; June 24, 2002; June 25, 2002;
July 9, 2002; July 15, 2002; July 29, 2002; August 1, 2002; August
2, 2002; August 26, 2002 as amended by Form 8-K/A on October 18,
2002; September 13, 2002; September 17, 2002; September 30, 2002;
October 30, 2002; November 1, 2002; and November 26, 2002; and
20
4. The description of our common stock set forth in our Form 8A, filed
with the SEC on July 15, 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: Joshua A. Grass
371 Bel Marin Keys Boulevard, Suite 210
Novato, CA 94949
(415) 884-6777
Any statement contained in a document incorporated or deemed to be incorporated
by reference in this prospectus shall be deemed modified, superceded or replaced
for purposes of this prospectus to the extent that a statement contained in this
prospectus, or in any subsequently filed document that also is deemed to be
incorporated by reference in this prospectus, modifies, supercedes or replaces
such statement. Any statement so modified, superceded or replaced shall not be
deemed, except as so modified, superceded or replaced, to constitute part of
this prospectus.
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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....................$13,800
Legal fees and expenses................................................ 25,000
Accountants' fees and expenses......................................... 3,000
Miscellaneous.......................................................... 2,000
Total..................................................................$43,800
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 June 30, 2002,
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.
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ITEM 16. EXHIBITS
Exhibit
Number Description of Document
5.1** Opinion of Paul, Hastings, Janofsky & Walker LLP.
23.1** Consent of Paul, Hastings, Janofsky & Walker LLP (included with Exhibit 5.1).
23.2* Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included with signatures).
* Omitted pursuant to Rule 437a promulgated under the Securities Act of 1933.
** To be filed by amendment.
--------------------------------------------------------------------------------------------------
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.
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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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Novato, State of California, this 20th day of
December, 2002.
BIOMARIN PHARMACEUTICAL INC.
By: /s/ Fredric D. Price
--------------------
Fredric D. Price
Chairman, Chief Executive Officer and
Director (Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Fredric D. Price and Louis Drapeau, and
each of them severally, as such persons' true and lawful attorneys-in-fact and
agents for such person and in such person's name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and any new Registration Statement
filed under Rule 462(b) of the Securities Act of 1933 and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any other regulatory authority, granting
unto said attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated:
Signature Title Date
-------------- ------------ ----------
/s/ Fredric D. Price Chairman, Chief Executive Officer and Director December 20, 2002
------------------------------------- (Principal Executive Officer)
Fredric D. Price
/s/ Louis Drapeau Chief Financial Officer, Vice President Finance and December 20, 2002
------------------------------------- Secretary (Principal Financial and
Louis Drapeau Accounting Officer)
/s/ Franz L. Cristiani Director December 20, 2002
-------------------------------------
Franz L. Cristiani
/s/ Phyllis I. Gardner Director December 20, 2002
-------------------------------------
Phyllis I. Gardner, M.D.
/s/ Elaine Heron Director December 20, 2002
-------------------------------------
Elaine Heron, Ph.D.
/s/ Erich Sager Director December 20, 2002
-------------------------------------
Erich Sager
/s/ Vijay Samant Director December 20, 2002
-------------------------------------
Vijay Samant
/s/ Gwynn R. Williams Director December 20, 2002
-------------------------------------
Gwynn R. Williams
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Exhibit Index
Exhibit Number Description of Document
5.1** Opinion of Paul, Hastings, Janofsky & Walker LLP.
23.1** Consent of Paul, Hastings, Janofsky & Walker LLP (included with Exhibit 5.1).
23.2* Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included with signatures).
* Omitted pursuant to Rule 437a promulgated under the Securities Act of 1933.
** To be filed by amendment.
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