AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 8, 2001
REGISTRATION NO. 333-32256
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GERON CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 75-2287752
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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230 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 473-7700
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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THOMAS B. OKARMA
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GERON CORPORATION
230 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 473-7700
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
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Copies to:
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Alan C. Mendelson, Esq.
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
(650) 328-4600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective, as determined
by the Registrant.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
THE INFORMATION CONTAINED 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 IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 8, 2001
PROSPECTUS
5,000,000 SHARES
GERON CORPORATION
COMMON STOCK
This prospectus will allow us to issue, from time to time in one or more
offerings, up to 5,000,000 shares of our common stock. This means:
- we will provide a prospectus supplement each time we issue common
stock;
- the prospectus supplement will inform you about the specific
terms of that offering and may also add, update or change
information contained in this document; and
- you should read this prospectus and any prospectus supplement
carefully before you invest.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 FOR A DISCUSSION OF MATERIAL
RISKS THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN OUR SECURITIES BEING SOLD
WITH THIS PROSPECTUS.
Our common stock is traded on the Nasdaq National Market under the
symbol "GERN." On November 5, 2001, the closing price of our common stock was
$11.60.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of the prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is ___________, 2001.
TABLE OF CONTENTS
PAGE
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ABOUT GERON..................................................................................1
RISK FACTORS.................................................................................1
FORWARD-LOOKING STATEMENTS..................................................................17
USE OF PROCEEDS.............................................................................18
PLAN OF DISTRIBUTION........................................................................19
LEGAL MATTERS...............................................................................23
EXPERTS.....................................................................................23
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES............................................23
WHERE YOU CAN FIND MORE INFORMATION.........................................................24
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ABOUT GERON
We are a biopharmaceutical company focused on developing and
commercializing therapeutic and diagnostic products for applications in oncology
and regenerative medicine, and research tools for drug discovery. Our product
development programs are based upon three patented core technologies:
telomerase, human embryonic stem cells and nuclear transfer.
We were incorporated in 1990 under the laws of Delaware. Our principal
executive offices are located at 230 Constitution Drive, Menlo Park, California
94025 and our telephone number is (650) 473-7700. References in this prospectus
to "we," "us," "our," and "Geron" refer to Geron Corporation and its
subsidiaries.
RISK FACTORS
Before you decide whether to purchase any of our securities, in addition
to the other information in this prospectus, you should carefully consider the
following risk factors as well as the risk factors set forth under the heading
"Risk Factors" in the section entitled "Item 1--Business" in our most recent
Annual Report on Form 10-K, which is incorporated by reference into this
prospectus, as the same may be updated from time to time by our future filings
under the Securities Exchange Act. For more information, see the section
entitled "Where You Can Find More Information."
IF SHARES OF COMMON STOCK ARE PURCHASED IN AN EQUITY LINE OF CREDIT TRANSACTION,
EXISTING COMMON STOCKHOLDERS WILL EXPERIENCE IMMEDIATE DILUTION AND, AS A
RESULT, OUR STOCK PRICE MAY GO DOWN.
We have entered into a common stock purchase agreement with Acqua
Wellington North American Equities Fund, Ltd. pursuant to which Acqua Wellington
may purchase shares of our common stock at a discount of 5%. As a result, our
existing common stockholders will experience immediate dilution upon the
purchase of any shares of our common stock by Acqua Wellington. The purchase
agreement with Acqua Wellington provides that, at our request, Acqua Wellington
will purchase a certain dollar amount of shares, with the exact number of shares
to be determined based on the per share market price of our common stock over
the draw-down period for such purchase, less a discount of 5%. As a result, if
the per share market price of our common stock declines over the draw-down
period, Acqua Wellington will receive a greater number of shares for its
purchase price, thereby resulting in further dilution to our stockholders and
potential downward pressure on the price of our stock.
OUR BUSINESS IS AT AN EARLY STAGE OF DEVELOPMENT.
The study of the mechanisms of cellular aging and cellular immortality,
including telomere biology and telomerase, the study of human embryonic stem
cells, and the process of nuclear transfer are relatively new areas of research.
Our business is at an early stage of development. Our ability to produce
products that progress to and through clinical trials is subject to our ability
to, among other things:
- continue to have success with our research and development efforts;
- select therapeutic compounds for development;
- obtain the required regulatory approvals; and
- manufacture and market resulting products.
When potential lead drug compounds or product candidates are identified
through our research programs, they will require significant preclinical and
clinical testing prior to regulatory approval in the United States and
elsewhere. In addition, we will also need to determine whether any of these
potential products can be manufactured in commercial quantities at an acceptable
cost. Our efforts may not result in a product that can be marketed. Because of
the significant scientific, regulatory and commercial milestones that must be
reached for any of our research programs to be successful, any program may be
abandoned, even after significant resources have been expended.
WE HAVE A HISTORY OF OPERATING LOSSES AND ANTICIPATE FUTURE LOSSES, CONTINUED
LOSSES COULD IMPAIR OUR ABILITY TO SUSTAIN OPERATIONS.
We have incurred net operating losses every year since our operations
began in 1990. As of September 30, 2001, our accumulated deficit was
approximately $172.4 million. Losses have resulted principally from costs
incurred in connection with our research and development activities and from
general and administrative costs associated with our operations. We expect to
incur additional operating losses over the next several years as our research
and development efforts and preclinical testing activities are expanded.
Substantially all of our revenues to date have been research support payments
under the collaboration agreements with Kyowa Hakko and Pharmacia. In 2001, we
regained our rights to telomerase inhibitors from Pharmacia and we will not
receive future payments from Pharmacia. Kyowa Hakko provided additional research
funding in 2001. We may be unsuccessful in entering into any new corporate
collaboration that results in revenues. Even if we are able to obtain new
collaboration arrangements with third parties, the revenues generated from these
arrangements will be insufficient to continue or expand our research activities
and otherwise sustain our operations.
We are unable to estimate at this time the level of revenue to be
received from the sale of diagnostic products and telomerase-immortalized cell
lines, and do not currently expect to receive significant revenues from the sale
of these products. Our ability to continue or expand our research activities and
otherwise sustain our operations is dependent on our ability, alone or with
others to, among other things, manufacture and market therapeutic products.
We may never receive material revenues from product sales or if we do
receive revenues, such revenues may not be sufficient to continue or expand our
research activities and otherwise sustain our operations.
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WE WILL NEED ADDITIONAL CAPITAL TO CONDUCT OUR OPERATIONS AND DEVELOP OUR
PRODUCTS, AND OUR ABILITY TO OBTAIN THE NECESSARY FUNDING IS UNCERTAIN.
We will require substantial capital resources in order to conduct our
operations and develop our products. While we estimate that our existing capital
resources, interest income and equipment financing arrangements will be
sufficient to fund our current level of operations through December 31, 2002, we
cannot guarantee that this will be the case. The timing and degree of any future
capital requirements will depend on many factors, including:
- the accuracy of the assumptions underlying our estimates for our capital
needs in 2001 and beyond;
- continued scientific progress in our research and development programs;
- the magnitude and scope of our research and development programs;
- our ability to maintain and establish strategic arrangements for
research, development, clinical testing, manufacturing and marketing;
- our progress with preclinical and clinical trials;
- the time and costs involved in obtaining regulatory approvals;
- the costs involved in preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims; and
- the potential for new technologies and products.
We intend to acquire additional funding through strategic
collaborations, public or private equity financings, capital lease transactions
or other financing sources that may be available. Additional financing may not
be available on acceptable terms, or at all. Additional equity financings could
result in significant dilution to stockholders. Further, in the event that
additional funds are obtained through arrangements with collaborative partners,
these arrangements may require us to relinquish rights to some of our
technologies, product candidates or products that we would otherwise seek to
develop and commercialize ourselves. If sufficient capital is not available, we
may be required to delay, reduce the scope of or eliminate one or more of our
research or development programs, each of which could have a material adverse
effect on our business.
WE MAY BE UNABLE TO IDENTIFY A SAFE AND EFFECTIVE INHIBITOR OF TELOMERASE WHICH
MAY PREVENT US FROM DEVELOPING A VIABLE CANCER TREATMENT PRODUCT, WHICH WOULD
ADVERSELY IMPACT OUR FUTURE BUSINESS PROSPECTS.
As a result of our drug discovery efforts to date, we have identified
compounds in laboratory studies that demonstrate potential for inhibiting
telomerase in humans. Kyowa Hakko has selected one of these compounds, GRN163,
as a lead compound for preclinical development
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as a telomerase inhibitor for cancer. Further research is required to determine
if this compound can be fully developed as a efficacious, safe and commercially
viable treatment for cancer.
This compound, and other compounds we have identified, may prove to have
undesirable and unintended side effects or other characteristics adversely
affecting its safety or efficacy that would likely prevent or limit its
commercial use. Accordingly, it may not be appropriate for us to proceed with
clinical development, to obtain regulatory approval or to market a telomerase
inhibitor for the treatment of cancer. If we abandon our research for cancer
treatment for any of these reasons or for other reasons, our business prospects
would be materially and adversely affected.
IF OUR ACCESS TO NECESSARY TISSUE SAMPLES, INFORMATION OR LICENSED TECHNOLOGIES
IS RESTRICTED, WE WILL NOT BE ABLE TO DEVELOP OUR BUSINESS.
To continue the research and development of our therapeutic and
diagnostic products, we need access to normal and diseased human and other
tissue samples, other biological materials and related clinical and other
information. We compete with many other companies for these materials and
information. We may not be able to obtain or maintain access to these materials
and information on acceptable terms, if at all. In addition, government
regulation in the United States and foreign countries could result in restricted
access to, or prohibiting the use of, human and other tissue samples. If we lose
access to sufficient numbers or sources of tissue samples, or if tighter
restrictions are imposed on our use of the information generated from tissue
samples, our business will be materially harmed.
SOME OF OUR COMPETITORS MAY DEVELOP TECHNOLOGIES THAT ARE SUPERIOR TO OR MORE
COST-EFFECTIVE THAN OURS, WHICH MAY IMPACT THE COMMERCIAL VIABILITY OF OUR
TECHNOLOGIES AND WHICH MAY SIGNIFICANTLY DAMAGE OUR ABILITY TO SUSTAIN
OPERATIONS.
The pharmaceutical and biotechnology industries are intensely
competitive. We believe that other pharmaceutical and biotechnology companies
and research organizations currently engage in or have in the past engaged in
efforts related to the biological mechanisms of cell aging and cell immortality,
including the study of telomeres, telomerase, human embryonic stem cells and
nuclear transfer. In addition, other products and therapies that could compete
directly with the products that we are seeking to develop and market currently
exist or are being developed by pharmaceutical and biopharmaceutical companies
and by academic and other research organizations.
Many companies are also developing alternative therapies to treat cancer
and, in this regard, are competitors of ours. Many of the pharmaceutical
companies developing and marketing these competing products have significantly
greater financial resources and expertise than we do in:
- research and development;
- manufacturing;
- preclinical and clinical testing;
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- obtaining regulatory approvals; and
- marketing.
Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large and established
companies. Academic institutions, government agencies and other public and
private research organizations may also conduct research, seek patent protection
and establish collaborative arrangements for research, clinical development and
marketing of products similar to ours. These companies and institutions compete
with us in recruiting and retaining qualified scientific and management
personnel as well as in acquiring technologies complementary to our programs.
There is also competition for access to libraries of compounds to use for
screening. Should we fail to secure and maintain access to sufficiently broad
libraries of compounds for screening potential targets, our business would be
materially harmed.
In addition to the above factors, we expect to face competition in the
following areas:
- product efficacy and safety;
- the timing and scope of regulatory consents;
- availability of resources;
- reimbursement coverage;
- price; and
- patent position, including potentially dominant patent positions of
others.
As a result of the foregoing, our competitors may develop more effective
or more affordable products, or achieve earlier patent protection or product
commercialization than us. Most significantly, competitive products may render
the products that we develop obsolete.
THE ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF OUR RESEARCH USING EMBRYONIC STEM
CELLS AND NUCLEAR TRANSFER COULD PREVENT US FROM DEVELOPING OR GAINING
ACCEPTANCE FOR COMMERCIALLY VIABLE PRODUCTS IN THIS AREA.
Our programs in regenerative medicine may involve the use of human
embryonic stem cells that would be derived from human embryonic or fetal tissue.
The use of human embryonic stem cells gives rise to ethical, legal and social
issues regarding the appropriate use of these cells. In the event that our
research related to human embryonic stem cells becomes the subject of adverse
commentary or publicity, the market price for our common stock could be
significantly harmed.
Some groups have voiced opposition to our technology and practices. The
concepts of cell regeneration, cell immortality, and genetic cloning have
stimulated significant debate in
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social and political arenas. We use human embryonic stem cells derived through a
process that uses either donated embryos that are no longer needed following a
successful in vitro fertilization procedure or donated fetal material as the
starting material. Further, many research institutions, including some of our
scientific collaborators, have adopted policies regarding the ethical use of
human embryonic and fetal tissue. These policies may have the effect of limiting
the scope of research conducted using human embryonic stem cells, resulting in
reduced scientific progress. In addition, the United States government and its
agencies have in recent years refused to fund research which involves the use of
human embryonic tissue. President Bush, however, announced on August 9, 2001
that he would permit federal funding of research on human embryonic stem cells
using the limited number of embryonic stem cell lines that had already been
created. A newly created president's council will monitor stem cell research,
and the guidelines and regulations it recommends may include restrictions on the
scope of research using human embryonic or fetal tissue. Our inability to
conduct research using human embryonic stem cells due to such factors as
government regulation or otherwise could have a material adverse effect on us.
Finally, we acquired Roslin Bio-Med to gain the rights to nuclear transfer
technology. The Roslin Institute produced Dolly the sheep in 1997 -- the first
mammal cloned from an adult cell. Geron acquired exclusive rights to this
technology for all areas except human reproductive cloning and certain other
limited applications. Although we will not be pursuing human reproductive
cloning, we continue to develop techniques for use in agricultural cloning and
for possible application in human regenerative medicine. Government imposed
restrictions with respect to any or all of these practices could:
- harm our ability to establish critical partnerships and collaborations;
- prompt government regulation of our technologies;
- cause delays in our research and development; and
- cause a decrease in the price of our stock.
If human therapeutic cloning is restricted or banned (as it would be
under bill H.R. 2505 recently passed by the U.S. House of Representatives), our
ability to commercialize those applications could be significantly harmed. Also,
if regulatory bodies were to ban nuclear transfer processes, our research using
nuclear transfer technology could be cancelled and our business could be
significantly harmed.
PUBLIC ATTITUDES TOWARDS GENE THERAPY MAY NEGATIVELY AFFECT REGULATORY APPROVAL
OR PUBLIC PERCEPTION OF OUR PRODUCTS.
The commercial success of our product candidates will depend in part on
public acceptance of the use of gene therapies for the prevention or treatment
of human diseases. Public attitudes may be influenced by claims that gene
therapy is unsafe, and gene therapy may not gain the acceptance of the public or
the medical community. Adverse events in the field of gene therapy that have
occurred or may occur in the future also may result in greater governmental
regulation of our product candidates and potential regulatory delays relating to
the testing or approval of our product candidates.
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Negative public reaction to gene therapy in the development of certain
of our therapies could result in greater government regulation, stricter
clinical trial oversight, restrictive commercial product labeling requirements
of gene therapies, and could cause a decrease in the demand for any products
that we may develop. The subject of genetically modified organisms has received
negative publicity in Europe, which has aroused public debate. The adverse
publicity in Europe could lead to greater regulation and trade restrictions on
imports of genetically altered products. If similar adverse public reaction
occurs in the United States, genetic research and resultant products could be
subject to greater domestic regulation and could cause a decrease in the demand
for our potential products.
ENTRY INTO CLINICAL TRIALS WITH ONE OR MORE PRODUCTS MAY NOT RESULT IN ANY
COMMERCIALLY VIABLE PRODUCTS.
We do not expect to generate any significant revenues from product sales
for a period of several years. We may never generate revenues from product sales
or become profitable because of a variety of risks inherent in our business,
including risks that:
- clinical trials may not demonstrate the safety and efficacy of our
products;
- completion of clinical trials may be delayed, or costs of clinical
trials may exceed anticipated amounts;
- we may not be able to obtain regulatory approval of our products, or may
experience delays in obtaining such approvals;
- we may not be able to manufacture our drugs economically on a commercial
scale;
- we and our licensees may not be able to successfully market our
products;
- physicians may not prescribe our products, or patients may not accept
such products;
- others may have proprietary rights which prevent us from marketing our
products; and
- competitors may sell similar, superior or lower-cost products.
IMPAIRMENT OF OUR INTELLECTUAL PROPERTY RIGHTS MAY LIMIT OUR ABILITY TO PURSUE
THE DEVELOPMENT OF OUR INTENDED TECHNOLOGIES AND PRODUCTS.
Our success will depend on our ability to obtain and enforce patents for
our discoveries; however, legal principles for biotechnology patents in the
United States and in other countries are not firmly established and the extent
to which we will be able to obtain patent coverage is uncertain.
Protection of our proprietary compounds and technology is critically
important to our business. Our success will depend in part on our ability to
obtain and enforce our patents and maintain trade secrets, both in the United
States and in other countries. The patent positions of pharmaceutical and
biopharmaceutical companies, including ours, are highly uncertain and
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involve complex legal and technical questions. We may not continue to develop
products or processes that are patentable, and it is possible that patents will
not issue from any of our pending applications, including allowed patent
applications. Further, our current patents, or patents that issue on pending
applications, may be challenged, invalidated or circumvented, and our current or
future patent rights may not provide proprietary protection or competitive
advantages to us. In the event that we are unsuccessful in obtaining and
enforcing patents, our business would be negatively impacted.
Patent applications filed in the United States prior to November 29,
2000, are maintained in secrecy until patents issue. Publication of discoveries
in the scientific or patent literature tends to lag behind actual discoveries by
at least several months and sometimes several years. Therefore, the publications
may reveal in the future that the persons or entities that we or our licensors
name as inventors in our patents and patent applications may not have been the
first to invent the inventions disclosed in the patent applications or patents,
or file patent applications for these inventions. As a result, we may not be
able to obtain patents from discoveries that we otherwise would consider
patentable and that we consider to be significant to our future success.
Patent prosecution, interference, opposition proceeding or litigation
may also be necessary to obtain patents, enforce any patents issued or licensed
to us or to determine the scope and validity of our proprietary rights or the
proprietary rights of another. We may not be successful in any patent
prosecution, interference, opposition proceeding or litigation. Patent
prosecution and litigation in general can be extremely expensive and time
consuming, even if the outcome is favorable to us. An adverse outcome in a
patent prosecution or litigation or any other proceeding in a court or patent
office could weaken our proprietary position, subject our business to
significant liabilities to other parties, require disputed rights to be licensed
from other parties or require us to cease using the disputed technology.
IF WE FAIL TO MEET OUR OBLIGATIONS UNDER LICENSE AGREEMENTS, WE MAY FACE LOSS OF
OUR RIGHTS TO KEY TECHNOLOGIES ON WHICH OUR BUSINESS DEPENDS.
Our business depends on our three core technologies, each of which is
based in part on patents licensed from third parties. Those third-party license
agreements impose obligations on us, such as payment obligations and obligations
to diligently pursue development of commercial products under the licensed
patents. If a licensor believes that we have failed to meet our obligations
under a license agreement, the licensor could seek to limit or terminate our
license rights, which would most likely lead to costly and time-consuming
litigation. During the period of any such litigation our ability to carry out
the development and commercialization of potential products could be
significantly and negatively affected. If our license rights were ultimately
lost, our ability to carry on our business based on the affected technology
platform would be severely affected.
For example, as we stated in our Form 8-K filed on November 5, 2001, and
our Form 10-Q for the fiscal quarter ended September 30, 2001, the Wisconsin
Alumni Research Foundation, or WARF, has expressed dissatisfaction with the
development plans we submitted to WARF under our 1999 license agreement and
about our progress in commercializing therapeutic products based on the WARF
patents on human embryonic stem cells. We believe that our development of the
technology has been diligent and that our development plans are both reasonable
and consistent with our obligations under the license agreement. We are
committed to resolving our differences with WARF amicably, but we may be unable
to do so. If we do not reach a settlement and WARF seeks to reduce or terminate
our rights, our ability to carry out the development and commercialization of
products based on human embryonic stem cells would be severely affected until
and unless the resulting litigation is concluded successfully.
WE ARE AND IN THE FUTURE MAY BE SUBJECT TO LITIGATION THAT WILL BE COSTLY TO
DEFEND OR PURSUE AND UNCERTAIN IN ITS OUTCOME.
Our business may bring us into conflict with our licensees, licensors,
or others with whom we have contractual or other business relationships, or with
our competitors or others whose interests differ from ours. If we are unable to
resolve those conflicts on terms that are satisfactory to all parties, we may
become involved in litigation brought by or against us. That litigation is
likely to be expensive and may require a significant amount of management's time
and attention, at the expense of other aspects of our business. The outcome of
litigation is always uncertain, and in some cases could include judgments
against us that require us to pay damages, enjoin us from certain activities, or
otherwise affect our legal or contractual rights, which could have a significant
effect on our business.
For example, the Wisconsin Alumni Research Foundation, or WARF, has
brought a lawsuit against our company seeking a declaratory judgment concerning
our rights and WARF's obligations under a 1999 license agreement between us and
WARF. The license agreement covers the commercialization of six cell types made
from human embryonic stem cells. This lawsuit addresses our option to obtain an
exclusive license to cell types in addition to the six cell types already
licensed to us and the scope of our exclusive license to commercialize research
products based on those six cell types. We have had and expect to continue to
have discussions with WARF about settling the lawsuit. If we do not reach a
settlement, however, and our defense of the case is unsuccessful, our ability to
commercialize research products could be significantly affected.
WE MAY BE SUBJECT TO INFRINGEMENT CLAIMS THAT ARE COSTLY TO DEFEND, AND WHICH
MAY LIMIT OUR ABILITY TO USE DISPUTED TECHNOLOGIES AND PREVENT US FROM PURSUING
RESEARCH AND DEVELOPMENT OR COMMERCIALIZATION OF POTENTIAL PRODUCTS.
Our commercial success depends significantly on our ability to operate
without infringing patents and proprietary
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rights of others. Our technologies may infringe the patents or proprietary
rights of others. In addition, we may become aware of discoveries and technology
controlled by third parties that are advantageous to our research programs. In
the event our technologies do infringe on the rights of others or we require the
use of discoveries and technology controlled by third parties, we may be
prevented from pursuing research, development or commercialization of potential
products or may be required to obtain licenses to these patents or other
proprietary rights or develop or obtain alternative technologies. We may not be
able to obtain alternative technologies or any required license on commercially
favorable terms, if at all. If we do not obtain the necessary licenses or
alternative technologies, we may be delayed or prevented from pursuing the
development of some potential products. Our failure to obtain alternative
technologies or a license to any technology that we may require to develop or
commercialize our products will significantly and negatively affect our
business.
Patent law relating to the scope and enforceability of claims in the
technology fields in which we operate is still evolving, and the degree of
future protection for any of our proprietary rights is highly uncertain. In this
regard, patents may not issue from any of our patent applications or our
existing patents may be found to be invalid by a court. In addition, our success
may become dependent on our ability to obtain licenses for using the patented
discoveries of others. We are aware of patent applications and patents that have
been filed by others with respect to our technologies and we may have to obtain
licenses to use these technologies. Moreover, other patent applications may be
granted priority over patent applications that we or any of our licensors have
filed. Furthermore, others may independently develop similar or alternative
technologies, duplicate our technologies or design around the patented
technologies we have developed. In the event that we are unable to acquire
licenses to critical technologies that we cannot patent ourselves, we may be
required to expend significant time and resources to develop alternative
technology, and we may not be successful in this regard. If we cannot acquire or
develop the necessary technology, we may be prevented from pursuing some of our
business objectives. Moreover, one or more of our competitors could acquire or
license the necessary technology. Any of these events could materially harm our
business.
MUCH OF THE INFORMATION AND KNOW-HOW THAT IS CRITICAL TO OUR BUSINESS IS NOT
PATENTABLE AND WE MAY NOT BE ABLE TO PREVENT OTHERS FROM OBTAINING THIS
INFORMATION AND ESTABLISHING COMPETITIVE ENTERPRISES.
We sometimes rely on trade secrets to protect our proprietary
technology, especially in circumstances in which patent protection is not
believed to be appropriate or obtainable. We attempt to protect our proprietary
technology in part by confidentiality agreements with our employees,
consultants, collaborators and contractors. We cannot assure you that these
agreements will not be breached, that we would have adequate remedies for any
breach, or that our trade secrets will not otherwise become known or be
independently discovered by competitors, any of which would harm our business
significantly.
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WE DEPEND ON OUR COLLABORATORS TO HELP US COMPLETE THE PROCESS OF DEVELOPING AND
TESTING OUR PRODUCTS AND OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS MAY
BE IMPAIRED OR DELAYED IF OUR COLLABORATIVE PARTNERSHIPS ARE UNSUCCESSFUL.
Our strategy for the development, clinical testing and commercialization
of our products requires entering into collaborations with corporate partners,
licensors, licensees and others. We are dependent upon the subsequent success of
these other parties in performing their respective responsibilities and the
continued cooperation of our partners. Our collaborators may not cooperate with
us or perform their obligations under our agreements with them. We cannot
control the amount and timing of our collaborators' resources that will be
devoted to our research activities related to our collaborative agreements with
them. Our collaborators may choose to pursue existing or alternative
technologies in preference to those being developed in collaboration with us.
Our ability to successfully develop and commercialize a telomerase
inhibitor in Asia depends on our corporate alliance with Kyowa Hakko. Our
ability to successfully develop and commercialize telomerase diagnostic products
depends on our corporate alliance with Roche Diagnostics. Under our
collaborative agreements with these collaborators, we rely significantly on
them, among other activities, to:
- design and conduct advanced clinical trials in the event that we reach
clinical trials;
- fund research and development activities with us;
- pay us fees upon the achievement of milestones; and
- market with us any commercial products that result from our
collaborations.
The development and commercialization of products from these
collaborations will be delayed if Kyowa Hakko or Roche Diagnostics fail to
conduct these collaborative activities in a timely manner or at all. In
addition, Kyowa Hakko or Roche Diagnostics could terminate their agreements with
us and we may not receive any development or milestone payments. If we do not
achieve milestones set forth in the agreements, or if Kyowa Hakko or Roche
Diagnostics or any of our future collaborators breach or terminate collaborative
agreements with us, our business may be materially harmed.
OUR RELIANCE ON THE RESEARCH ACTIVITIES OF OUR NON-EMPLOYEE SCIENTIFIC ADVISORS
AND OTHER RESEARCH INSTITUTIONS, WHOSE ACTIVITIES ARE NOT WHOLLY WITHIN OUR
CONTROL, MAY LEAD TO DELAYS IN TECHNOLOGICAL DEVELOPMENTS.
We rely extensively and have relationships with scientific advisors at
academic and other institutions, some of whom conduct research at our request.
These scientific advisors are not our employees and may have commitments to, or
consulting or advisory contracts with, other entities that may limit their
availability to us. We have limited control over the activities of these
advisors and, except as otherwise required by our collaboration and consulting
agreements, can expect only limited amounts of their time to be dedicated to our
activities. If our scientific
10
advisors are unable or refuse to contribute to the development of any of our
potential discoveries, our ability to generate significant advances in our
technologies may be significantly harmed.
In addition, we have formed research collaborations with many academic
and other research institutions throughout the world, including the Roslin
Institute. These research facilities may have commitments to other commercial
and non-commercial entities. We have limited control over the operations of
these laboratories and can expect only limited amounts of time to be dedicated
to our research goals.
THE LOSS OF KEY PERSONNEL COULD SLOW OUR ABILITY TO CONDUCT RESEARCH AND DEVELOP
PRODUCTS.
Our future success depends to a significant extent on the skills,
experience and efforts of our executive officers and key members of our
scientific staff. Competition for personnel is intense and we may be unable to
retain our current personnel or attract or assimilate other highly qualified
management and scientific personnel in the future. The loss of any or all of
these individuals could harm our business and might significantly delay or
prevent the achievement of research, development or business objectives.
We also rely on consultants and advisors, including the members of our
Scientific Advisory Board, who assist us in formulating our research and
development strategy. We face intense competition for qualified individuals from
numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well
as academic and other research institutions. We may not be able to attract and
retain these individuals on acceptable terms. Failure to do so would materially
harm our business.
WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN SUFFICIENT INSURANCE ON COMMERCIALLY
REASONABLE TERMS OR WITH ADEQUATE COVERAGE AGAINST POTENTIAL LIABILITIES IN
ORDER TO PROTECT OURSELVES AGAINST PRODUCT LIABILITY CLAIMS.
Our business exposes us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of human therapeutic and
diagnostic products. We may become subject to product liability claims if the
use of our products is alleged to have injured subjects or patients. This risk
exists for products tested in human clinical trials as well as products that are
sold commercially. We currently have no clinical trial liability insurance and
we may not be able to obtain and maintain this type of insurance for any of our
clinical trials. In addition, product liability insurance is becoming
increasingly expensive. As a result, we may not be able to obtain or maintain
product liability insurance in the future on acceptable terms or with adequate
coverage against potential liabilities which could have a material adverse
effect on us.
BECAUSE WE OR OUR COLLABORATORS MUST OBTAIN REGULATORY APPROVAL TO MARKET OUR
PRODUCTS IN THE UNITED STATES AND FOREIGN JURISDICTIONS, WE CANNOT PREDICT
WHETHER OR WHEN WE WILL BE PERMITTED TO COMMERCIALIZE OUR PRODUCTS.
Federal, state and local governments in the United States and
governments in other countries have significant regulations in place that govern
many of our activities. The preclinical testing and clinical trials of the
products that we develop ourselves or that our collaborators develop are subject
to extensive government regulation and may prevent us from creating commercially
viable products from our discoveries. In addition, the sale by us or our
11
collaborators of any commercially viable product will be subject to government
regulation from several standpoints, including the processes of:
- manufacturing;
- advertising and promoting;
- selling and marketing;
- labeling; and
- distributing.
We may not obtain regulatory approval for the products we develop and
our collaborators may not obtain regulatory approval for the products they
develop. Regulatory approval may also entail limitations on the indicated uses
of a proposed product. Because certain of our product candidates involve the
application of new technologies and may be based upon a new therapeutic
approach, such products may be subject to substantial additional review by
various government regulatory authorities, and, as a result, we may obtain
regulatory approvals for such products more slowly than for products based upon
more conventional technologies. If, and to the extent that, we are unable to
comply with these regulations, our ability to earn revenues will be materially
and negatively impacted.
The regulatory process, particularly for biopharmaceutical products like
ours, is uncertain, can take many years and requires the expenditure of
substantial resources. Any product that we or our collaborative partners develop
must receive all relevant regulatory agency approvals or clearances, if any,
before it may be marketed in the United States or other countries. Generally,
biological drugs and non-biological drugs are regulated more rigorously than
medical devices. In particular, human pharmaceutical therapeutic products are
subject to rigorous preclinical and clinical testing and other requirements by
the Food and Drug Administration in the United States and similar health
authorities in foreign countries. The regulatory process, which includes
extensive preclinical testing and clinical trials of each product in order to
establish its safety and efficacy, is uncertain, can take many years and
requires the expenditure of substantial resources.
Data obtained from preclinical and clinical activities is susceptible to
varying interpretations that could delay, limit or prevent regulatory agency
approvals or clearances. In addition, delays or rejections may be encountered as
a result of changes in regulatory agency policy during the period of product
development and/or the period of review of any application for regulatory agency
approval or clearance for a product. Delays in obtaining regulatory agency
approvals or clearances could:
12
- significantly harm the marketing of any products that we or our
collaborators develop;
- impose costly procedures upon our activities or the activities of our
collaborators;
- diminish any competitive advantages that we or our collaborative
partners may attain; or
- adversely affect our ability to receive royalties and generate revenues
and profits.
Even if we commit the necessary time and resources, economic and
otherwise, the required regulatory agency approvals or clearances may not be
obtained for any products developed by or in collaboration with us. If
regulatory agency approval or clearance for a new product is obtained, this
approval or clearance may entail limitations on the indicated uses for which it
may be marketed that could limit the potential commercial use of the product.
Furthermore, approved products and their manufacturers are subject to continual
review, and discovery of previously unknown problems with a product or its
manufacturer may result in restrictions on the product or manufacturer,
including withdrawal of the product from the market. Failure to comply with
regulatory requirements can result in severe civil and criminal penalties,
including but not limited to:
- recall or seizure of products;
- injunction against manufacture, distribution, sales and marketing; and
- criminal prosecution.
The imposition of any of these penalties could significantly impair our
business, financial condition and results of operations.
TO BE SUCCESSFUL, OUR PRODUCTS MUST BE ACCEPTED BY THE HEALTH CARE COMMUNITY,
WHICH CAN BE VERY SLOW TO ADOPT OR UNRECEPTIVE TO NEW TECHNOLOGIES AND PRODUCTS.
Our products and those developed by our collaborative partners, if
approved for marketing, may not achieve market acceptance since physicians,
patients or the medical community in general may decide not to accept and
utilize these products. The products that we are attempting to develop may
represent substantial departures from established treatment methods and will
compete with a number of traditional drugs and therapies manufactured and
marketed by major pharmaceutical companies. The degree of market acceptance of
any of our developed products will depend on a number of factors, including:
- our establishment and demonstration to the medical community of the
clinical efficacy and safety of our product candidates;
- our ability to create products that are superior to alternatives
currently on the market;
- our ability to establish in the medical community the potential
advantage of our treatments over alternative treatment methods; and
- reimbursement policies of government and third-party payors.
13
If the health care community does not accept our products for any of the
foregoing reasons, or for any other reason, our business would be materially
harmed.
THE REIMBURSEMENT STATUS OF NEWLY-APPROVED HEALTH CARE PRODUCTS IS UNCERTAIN AND
FAILURE TO OBTAIN REIMBURSEMENT APPROVAL COULD SEVERELY LIMIT THE USE OF OUR
PRODUCTS.
Significant uncertainty exists as to the reimbursement status of newly
approved health care products, including pharmaceuticals. If we fail to generate
adequate third party reimbursement for the users of our potential products and
treatments, then we may be unable to maintain price levels sufficient to realize
an appropriate return on our investment in product development.
In both domestic and foreign markets, sales of our products, if any,
will depend in part on the availability of reimbursement from third-party
payors, examples of which include:
- government health administration authorities;
- private health insurers;
- health maintenance organizations; and
- pharmacy benefit management companies.
Both federal and state governments in the United States and foreign
governments continue to propose and pass legislation designed to contain or
reduce the cost of health care through various means. Legislation and
regulations affecting the pricing of pharmaceuticals and other medical products
may change or be adopted before any of our potential products are approved for
marketing. Cost control initiatives could decrease the price that we receive for
any product we may develop in the future. In addition, third-party payors are
increasingly challenging the price and cost-effectiveness of medical products
and services and any of our potential products and treatments may ultimately not
be considered cost effective by these third parties. Any of these initiatives or
developments could materially harm our business.
OUR ACTIVITIES INVOLVE HAZARDOUS MATERIALS AND IMPROPER HANDLING OF THESE
MATERIALS BY OUR EMPLOYEES OR AGENTS COULD EXPOSE US TO SIGNIFICANT LEGAL AND
FINANCIAL PENALTIES.
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. As a
consequence, we are subject to numerous environmental and safety laws and
regulations, including those governing laboratory procedures, exposure to
blood-borne pathogens and the handling of biohazardous materials. We may be
required to incur significant costs to comply with current or future
environmental laws and regulations and may be adversely affected by the cost of
compliance with these laws and regulations.
Although we believe that our safety procedures for using, handling,
storing and disposing of hazardous materials comply with the standards
prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated. In the event
of such an accident, state or federal authorities could curtail our use of these
materials and we
14
could be liable for any civil damages that result, the cost of which could be
substantial. Further, any failure by us to control the use, disposal, removal or
storage of, or to adequately restrict the discharge of, or assist in the cleanup
of, hazardous chemicals or hazardous, infectious or toxic substances could
subject us to significant liabilities, including joint and several liability
under certain statutes, and any liability could exceed our resources and could
have a material adverse effect on our business, financial condition and results
of operations. Additionally, an accident could damage our research and
manufacturing facilities and operations.
Additional federal, state and local laws and regulations affecting us
may be adopted in the future. We may incur substantial costs to comply with and
substantial fines or penalties if we violate any of these laws or regulations.
OUR STOCK PRICE HAS HISTORICALLY BEEN VERY VOLATILE.
Stock prices and trading volumes for many biopharmaceutical companies
fluctuate widely for a number of reasons, including some reasons which may be
unrelated to their businesses or results of operations such as media coverage,
legislation and regulatory measures and the activities of various interest
groups or organizations. This market volatility, as well as general domestic or
international economic, market and political conditions, could materially and
adversely affect the market price of our common stock and the return on your
investment.
Historically, our stock price has been extremely volatile. Between
January 1998 and September 30, 2001, our stock has traded as high as $75.88 per
share and as low as $3.50 per share. The significant market price fluctuations
of our common stock are due to a variety of factors, including:
- depth of the market for the common stock;
- the experimental nature of our prospective products;
- fluctuations in our operating results;
- market conditions relating to the biopharmaceutical and pharmaceutical
industries;
- any announcements of technological innovations, new commercial products
or clinical progress or lack thereof by us, our collaborative partners
or our competitors; and
- announcements concerning regulatory developments, developments with
respect to proprietary rights and our collaborations.
In addition, the stock market is subject to other factors outside our
control that can cause extreme price and volume fluctuations. Securities class
action litigation has often been brought against companies, including many
biotechnology companies, when they experience volatility in the market price of
their securities. Litigation brought against us could result in substantial
costs and a diversion of management's attention and resources, which could
adversely affect our business.
15
THE SALE OF A SUBSTANTIAL NUMBER OF SHARES, INCLUDING SHARES THAT WILL BECOME
ELIGIBLE FOR SALE IN THE NEAR FUTURE, MAY ADVERSELY AFFECT THE MARKET PRICE FOR
OUR COMMON STOCK.
Sales of substantial number of shares of our common stock in the public
market could significantly and negatively affect the market price for our common
stock. As of September 30, 2001, we had 22,024,257 shares of common stock
outstanding. Of these shares, 10,529,534 shares were issued (including shares
issuable upon conversion or exercise of convertible notes or warrants) since
December 1998 pursuant to private placements. Of these shares, 9,623,463 shares
have been registered pursuant to shelf registration statements and therefore may
be resold (if not sold prior to the date hereof) in the public market and
906,071 of the remaining shares may be resold pursuant to Rule 144 into the
public markets as early as March 9, 2002, upon the expiration of a lockup
agreement with us.
OUR UNDESIGNATED PREFERRED STOCK MAY INHIBIT POTENTIAL ACQUISITION BIDS; THIS
MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK AND THE VOTING RIGHTS
OF THE HOLDERS OF COMMON STOCK.
Our certificate of incorporation provides our Board of Directors with
the authority to issue up to 3,000,000 shares of undesignated preferred stock
and to determine the rights, preferences, privileges and restrictions of these
shares without further vote or action by the stockholders. As of the date of
this Form S-3, the Board of Directors still has authority to designate and
issue up to 2,950,000 shares of preferred stock. The rights of the holders of
common stock will be subject to, and may be adversely affected by, the rights of
the holders of any preferred stock that may be issued in the future. The
issuance of shares of preferred stock may delay or prevent a change in control
transaction without further action by our stockholders. As a result, the market
price of our common stock may be adversely affected. The issuance of preferred
stock may also result in the loss of voting control by others.
PROVISIONS IN SHARE PURCHASE RIGHTS PLAN, OUR CHARTER AND BYLAWS, AND PROVISIONS
OF DELAWARE LAW, MAY INHIBIT POTENTIAL ACQUISITION BIDS FOR US, WHICH MAY
PREVENT HOLDERS OF OUR COMMON STOCK FROM BENEFITING FROM WHAT THEY MAY BELIEVE
MAY BE THE POSITIVE ASPECTS OF ACQUISITIONS AND TAKEOVERS.
Our Board of Directors has adopted a share purchase rights plan,
commonly referred to as a "poison pill". This plan entitles existing
stockholders to rights, including the right to purchase shares of common stock,
in the event of an acquisition of 15% or more of our outstanding common stock.
Our share purchase rights plan could prevent stockholders from profiting from an
increase in the market value of their shares as a result of a change of control
of Geron by delaying or preventing a change of control. In addition, our Board
of Directors has the authority, without further action by our stockholders, to
issue additional shares of common stock, to fix the rights and preferences of,
and to issue authorized but undesignated shares of preferred stock.
In addition to our share purchase rights plan and the undesignated
preferred stock, provisions of our charter documents and bylaws may make it
substantially more difficult for a third party to acquire control of us and may
prevent changes in our management, including provisions that:
16
- prevent stockholders from taking actions by written consent;
- divide the Board of Directors into separate classes with terms of office
that are structured to prevent all of the directors from being elected
in any one year; and
- set forth procedures for nominating directors and submitting proposals
for consideration at stockholders' meetings.
Provisions of Delaware law may also inhibit potential acquisition bids
for us or prevent us from engaging in business combinations. Either collectively
or individually, these provisions may prevent holders of our common stock from
benefiting from what they may believe are the positive aspects of acquisitions
and takeovers, including the potential realization of a higher rate of return on
their investment from these types of transactions.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that are based on current
expectations, estimates and projections about our industry, management's
beliefs, and assumptions made by management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict; therefore, actual results may differ materially from
those expressed or forecasted in any forward-looking statements. The risks and
uncertainties include those noted in "Risk Factors" above and in the documents
incorporated by reference. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
17
USE OF PROCEEDS
Except as otherwise provided in the applicable prospectus supplement, we
will use the net proceeds from the sale of the securities for general corporate
purposes, which may include funding research and development, increasing our
working capital, reducing indebtedness, acquisitions or investments in
businesses, products or technologies that are complementary to our own, and
capital expenditures. Pending the application of the net proceeds, we expect to
invest the proceeds in investment-grade, interest-bearing securities.
18
PLAN OF DISTRIBUTION
GENERAL
We may sell the securities from time to time pursuant to underwritten
public offerings, negotiated transactions, block trades or a combination of
these methods. The securities also may be sold pursuant to what is known as an
equity line of credit, as described below under the heading "Equity Line of
Credit." We may sell the securities (1) through underwriters or dealers, (2)
through agents, and/or (3) directly to one or more purchasers. We may distribute
the securities from time to time in one or more transactions at:
- a fixed price or prices, which may be changed;
- market prices prevailing at the time of sale;
- prices related to the prevailing market prices; or
- negotiated prices.
We may solicit directly offers to purchase the securities being offered
by this prospectus. We may also designate agents to solicit offers to purchase
the securities from time to time. We will name in a prospectus supplement any
agent involved in the offer or sale of our securities.
If we utilize a dealer in the sale of the securities being offered by
this prospectus, we will sell the securities to the dealer, as principal. The
dealer may then resell the securities to the public at varying prices to be
determined by the dealer at the time of resale.
If we utilize an underwriter in the sale of the securities being offered
by this prospectus, we will execute an underwriting agreement with the
underwriter at the time of sale and we will provide the name of any underwriter
in the prospectus supplement which the underwriter will use to make resales of
the securities to the public. In connection with the sale of the securities, we,
or the purchasers of securities for whom the underwriter may act as agent, may
compensate the underwriter in the form of underwriting discounts or commissions.
The underwriter may sell the securities to or through dealers, and the
underwriter may compensate those dealers in the form of discounts, concessions
or commissions.
In the event we enter into an agreement regarding an equity line of
credit, other than as described below, which contemplates an at the market
equity offering, we will file a post-effective amendment to this registration
statement that identifies the underwriter(s) in that at the market equity
offering.
With respect to underwritten public offerings, negotiated transactions
and block trades, we will provide in the applicable prospectus supplement any
compensation we pay to underwriters, dealers or agents in connection with the
offering of the securities, and any discounts, concessions or commissions
allowed by underwriters to participating dealers. Underwriters, dealers and
agents participating in the distribution of the securities may be deemed to be
underwriters within the meaning of the Securities Act of 1933, as amended, and
any discounts and commissions received by them and any profit realized by them
on resale of the securities may be deemed to be underwriting discounts and
commissions. We may enter into
19
agreements to indemnify underwriters, dealers and agents against civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments they may be required to make in respect thereof.
Shares of common stock sold pursuant to the registration statement of
which this prospectus is a part will be authorized for quotation and trading on
the Nasdaq National Market. Other securities may or may not be listed on the
Nasdaq National Market or a national securities exchange. To facilitate the
offering of securities, other than securities offered through an equity line of
credit, certain persons participating in the offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the securities. This
may include over-allotments or short sales of the securities, which involve the
sale by persons participating in the offering of more securities than we sold to
them. In these circumstances, these persons would cover such over-allotments or
short positions by making purchases in the open market or by exercising their
over-allotment option. In addition, these persons may stabilize or maintain the
price of the securities by bidding for or purchasing securities in the open
market or by imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if securities sold by
them are repurchased in connection with stabilization transactions. The effect
of these transactions may be to stabilize or maintain the market price of the
securities at a level above that which might otherwise prevail in the open
market. These transactions may be discontinued at any time.
The underwriters, dealers and agents may engage in other transactions
with us, or perform other services for us, in the ordinary course of their
business.
EQUITY LINE OF CREDIT
On September 6, 2000 we entered into what is sometimes termed an equity
line of credit arrangement with Acqua Wellington North American Equities Fund,
Ltd. Specifically, we entered into a common stock purchase agreement with Acqua
Wellington, which provides that Acqua Wellington is committed to purchase up to
$50,000,000 of our common stock over the 24-month term of the purchase
agreement. The purchase agreement has been incorporated by reference into this
registration statement. The total amount of securities available under the
purchase agreement, as amended and restated, does not exceed 10% of the
aggregate market value of our outstanding common stock that was held by
non-affiliates within sixty days prior to September 6, 2000. From time to time
beginning in September 2000 and ending in September 2002 and at our sole
discretion, we may present Acqua Wellington with draw down notices constituting
offers to purchase our common stock over two periods of ten consecutive trading
days or such other number of trading days as agreed upon by us and Acqua
Wellington. Under the purchase agreement, we are able to present Acqua
Wellington with up to 12 draw down notices during the term of the agreement,
with a minimum of five trading days required between each draw down period.
Once presented with a draw down notice, Acqua Wellington is required to
purchase a pro rata portion of the shares on each trading day during the trading
period on which the daily volume weighted average price for our common stock
exceeds a threshold price for such draw down determined by us and set forth in
the draw down notice. The per share purchase price for these shares equals the
daily volume weighted average price of our common stock on each date during the
draw down period on which shares are purchased, less a discount of 5%. If the
daily
20
volume weighted average price of our common stock falls below the threshold
price on any trading day during a draw down period, the purchase agreement
provides that Acqua Wellington will not be required to purchase the pro-rata
portion of shares of common stock allocated to that day. However, at its
election, Acqua Wellington could buy the pro-rata portion of shares allocated to
that day at the threshold price less the discount described above.
As an example of how the draw down mechanism works, assume that we had
sent Acqua Wellington a draw down notice choosing a threshold price of $20.00
and a draw amount of $5,000,000. On each of the twenty trading days in the two
periods of ten consecutive trading days which comprise the trading period, Acqua
Wellington would be obligated to purchase approximately $250,000 worth of our
stock at that day's volume weighted average price less a 5% discount. On a day
when the volume weighted average price was $21.00, Acqua Wellington would be
obligated to buy approximately 12,531 shares at a price of $19.95 per share. If
the volume weighted average price remained at $21.00 during each trading day,
Acqua Wellington would be obligated to purchase a total of approximately 250,620
shares for $5,000,000. The number of shares purchased will increase or decrease
inversely to increases or decreases in the volume weighted average price.
The purchase agreement also provides that from time to time and at our
sole discretion we may grant Acqua Wellington the right to exercise one or more
call options to purchase additional shares of our common stock during each draw
down pricing period for the amount that we specify; provided, however, that the
aggregate of all such amounts that we specify during a draw down pricing period
may not exceed $50,000,000 minus the sum of all other sales of our common stock
to Acqua Wellington pursuant to the purchase agreement. Upon Acqua Wellington's
exercise of the call option, we will issue and sell the shares of our common
stock subject to the call option at a price equal to the greater of the daily
volume weighted average price of our common stock on the day Acqua Wellington
notifies us of its election to exercise its call option or the threshold price
for the call option determined by us and set forth in the draw down notice, less
a discount of 5%.
In addition to our issuance of shares of common stock to Acqua
Wellington pursuant to the purchase agreement, this prospectus also covers the
sale of those shares from time to time by Acqua Wellington to the public. Acqua
Wellington is an "underwriter" within the meaning of Section 2(a)(11) of the
Securities Act.
Acqua Wellington has informed us that it intends to use Carlin Equities
Corp. as the broker-dealer to sell shares of our common stock on the Nasdaq
National Market. Such sales will be made on the Nasdaq National Market at prices
and at terms then prevailing or at prices related to the then current market
price. Carlin Equities Corp. is the same broker-dealer that Acqua Wellington
used to sell shares of common stock it purchased from us in October 2000
pursuant to a draw down notice we delivered in the draw down pricing period
following our delivery of such draw down notice. Carlin Equities Corp. is an
underwriter within the meaning of Section 2(a)(11) of the Securities Act. We
filed a prospectus supplement to our registration statement no. 333-32256 on
October 10, 2000 and according to a telephone interpretation issued by the SEC
Staff, we should have filed a post-effective amendment to that registration
statement naming Acqua Wellington and Carlin Equities Corp. as underwriters.
Acqua Wellington has informed us that Carlin Equities Corp., which is not an
affiliate of Acqua Wellington, will receive commissions from Acqua Wellington
which will not exceed customary brokerage commissions.
21
Acqua Wellington also will pay other expenses associated with the sale of the
common stock it acquires pursuant to the purchase agreement.
The shares of common stock may be sold in one or more of the following
manners:
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers; or
- a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell
a portion of the block as principal to facilitate the
transaction.
Acqua Wellington has agreed that prior to, during the term of and for a
period of three months after the termination of the purchase agreement, neither
Acqua Wellington nor any of its affiliates will, directly or indirectly, sell
any of our securities except the shares that it owns or has the right to
purchase pursuant to the provisions of a draw down notice. Acqua Wellington has
agreed that it will not enter into a short position with respect to shares of
our common stock except that Acqua Wellington may sell shares that it has not
yet taken delivery of pursuant to the provisions of a draw down notice so long
as Acqua Wellington covers any such sales with the shares purchased pursuant to
such draw down notice. Acqua Wellington has further agreed that it will not
grant any option to purchase or acquire any right to dispose or otherwise
dispose for value of any shares of our common stock or any securities
convertible into, or exchangeable for, or warrants to purchase, any shares of
our common stock, or enter into any swap, hedge or other agreement that
transfers, in whole or in part, the economic risk of ownership of our common
stock, except for the sales permitted by the purchase agreement. Acqua
Wellington also has agreed that its sales of our common stock on any trading day
will not represent more than 30% of the total trading volume of our common stock
for that trading day.
In addition, Acqua Wellington and Carlin Equities Corp. will be subject
to liability under the federal securities laws and must comply with the
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended, including without limitation, Rule 415(a)(4) under the Securities Act
and Rule 10b-5 and Regulation M under the Exchange Act. These rules and
regulations may limit the timing of purchases and sales of shares of common
stock by Acqua Wellington or Carlin Equities Corp. Under these rules and
regulations, Acqua Wellington and Carlin Equities Corp.:
- may not engage in any stabilization activity in connection with
our securities;
- must furnish each broker which offers shares of our common stock
covered by this prospectus with the number of copies of this
prospectus and any prospectus supplement which are required by
each broker; and
- may not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as
permitted under the Exchange Act.
These restrictions may affect the marketability of the shares of common stock by
Acqua Wellington and Carlin Equities Corp.
22
We have agreed to indemnify and hold harmless Acqua Wellington and
Carlin Equities Corp. against certain liabilities, including liabilities under
the Securities Act, which may be based upon, among other things, any untrue
statement or alleged untrue statement of a material fact contained in or
incorporated by referenced in the registration statement of which this
prospectus is a part, or any omission or alleged omission to state in the
registration statement or any document incorporated by reference in the
registration statement, a material fact required to be stated therein or
necessary to make the statements therein not misleading, unless made or omitted
in reliance upon written information provided to us by Acqua Wellington. We have
agreed to pay thirty thousand dollars ($30,000) of Acqua Wellington's reasonable
attorneys' fees and expenses (exclusive of disbursements and out-of-pocket
expenses) incurred by Acqua Wellington in connection with the preparation,
negotiation, execution and delivery of the purchase agreement. We have also
agreed to pay all reasonable fees and expenses incurred by Acqua Wellington in
connection with any amendments, modifications or waivers of the purchase
agreement.
The purchase agreement has been incorporated by reference into this
registration statement.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
up by Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, California..
EXPERTS
The consolidated financial statements of Geron Corporation appearing in
Geron Corporation's Annual Report (Form 10-K) for the year ended December 31,
2000 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our bylaws provide for indemnification of our directors and officers to
the fullest extent permitted by law. Insofar as indemnification for liabilities
under the Securities Act may be permitted to directors, officers or controlling
persons of Geron pursuant to Geron's Certificate of Incorporation, bylaws and
the Delaware General Corporation Law, Geron has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
23
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room located at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov. You may also inspect copies of these
materials and other information about us at the offices of the Nasdaq Stock
Market, Inc., National Market System, 1735 K Street, N.W., Washington, D.C.
20006-1500.
The SEC allows us to "incorporate by reference" the information we file
with them which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
between the date of this prospectus and the termination of the offering:
- Our annual report on Form 10-K for the fiscal year ended December
31, 2000;
- Our definitive proxy statement filed pursuant to Section 14 of
the Exchange Act in connection with our 2001 Annual Meeting of
Stockholders;
- Our current reports on Form 8-K filed September 26, 2000, January
31, 2001, July 23, 2001, August 22, 2001 and November 5, 2001;
- Our Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2001, June 30, 2001 and September 30, 2001; and
- The description of our common stock set forth in our registration
statement on Form 8-A, filed with the Commission on June 13, 1996
(File No. 0-20859).
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act. This prospectus does not contain all of the information in
the registration statement. We have omitted certain parts of the registration
statement, as permitted by the rules and regulations of the SEC. You may inspect
and copy the registration statement, including exhibits, at the SEC's public
reference room or internet site. Our statements in this prospectus about the
contents of any contract or other document are not necessarily complete. You
should refer to the copy of each contract or other document we have filed as an
exhibit to the registration statement for complete information.
We will furnish without charge to you, on written or oral request, a
copy of any or all of the documents incorporated by reference, including
exhibits to these documents. You should direct any requests for documents to
David L. Greenwood, Chief Financial Officer, Geron Corporation, 230 Constitution
Drive, Menlo Park, California 94025, telephone: (650) 473-7700.
24
================================================================================
5,000,000 SHARES
GERON CORPORATION
COMMON STOCK
PROSPECTUS
_____________, 2001
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE OF THIS PROSPECTUS. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES
IN ANY STATE WHERE THE OFFER IS NOT PERMITTED.
================================================================================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following sets forth the costs and expenses, all of which shall be
borne by the Registrant, in connection with the offering of the securities
pursuant to this Registration Statement:
SEC registration fee 59,929
Printing and engraving expenses 200,000
Legal fees and expenses 425,000
Accounting fees and expenses 70,000
Blue Sky fees and expenses 2,500
Registrar and Transfer Agent 7,500
Miscellaneous expenses 35,071
Total $800,000
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify these persons for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
registrant's certificate of incorporation and bylaws provide for indemnification
of the registrant's directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. The registrant has also entered into agreements with its directors and
officers that will require the registrant, among other things, to indemnify them
against liabilities that may arise by reason of their status or service as
directors to the fullest extent not prohibited by law. In addition, the
registrant carries director and officer liability insurance.
Item 16. Exhibits.
Exhibits Description
-------- -----------
4.1 Common Stock Purchase Agreement dated as of September 6, 2000, by
and between Geron Corporation and Acqua Wellington North America
Equities Fund, Ltd. (incorporated by reference to Exhibit 10.1 of
the Registrant's Current Report on Form 8-K filed on September 26,
2000).
5.1* Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).
24.1* Power of Attorney (included on the signature page to this
Registration Statement).
----------------
* Previously filed.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(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,
II-1
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 Securities and Exchange 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 plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act and (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act)
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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus
filed as part of this 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 this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act, 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.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Menlo Park, State of California, on November 8, 2001.
GERON CORPORATION
By: /s/ THOMAS B. OKARMA
-------------------------------------
Thomas B. Okarma
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ THOMAS B. OKARMA Chief Executive Officer, President and November 8, 2001
--------------------------------- Director (principal executive officer)
Thomas B. Okarma
/s/ DAVID L. GREENWOOD Senior Vice President and Chief November 8, 2001
--------------------------------- Financial Officer (principal financial
David L. Greenwood and accounting officer)
* Director November 8, 2001
---------------------------------
Alexander E. Barkas, Ph.D.
* Director November 8, 2001
---------------------------------
Edward V. Fritzky
* Director November 8, 2001
---------------------------------
Thomas D. Kiley
* Director November 8, 2001
---------------------------------
Robert B. Stein
* Director November 8, 2001
---------------------------------
John P. Walker
Director November 8, 2001
---------------------------------
Patrick J. Zenner
* By: /s/ THOMAS B. OKARMA
----------------------------
Thomas B. Okarma
Attorney-in-fact
S-1
EXHIBIT INDEX
Exhibits Description
-------- -----------
4.1 Common Stock Purchase Agreement dated as of September 6, 2000, by
and between Geron Corporation and Acqua Wellington North America
Equities Fund, Ltd. (incorporated by reference to Exhibit 10.1 of
the Registrant's Current Report on Form 8-K filed on September 26,
2000).
5.1* Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).
24.1* Power of Attorney (included on the signature page to this
Registration Statement).
--------------------
* Previously filed.
1