As filed with the Securities and Exchange Commission on January 29, 2002
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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 the effective date of this Registration Statement as
determined by market conditions.
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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 of 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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CALCULATION OF REGISTRATION FEE
========================================================================================================
Proposed maximum
Amount to be aggregate offering Amount of
Title of securities to be registered (1) registered (2) price (2) registration fee
--------------------------------------------------------------------------------------------------------
Debt Securities (3).............................
Common Stock, $.001 par value per share (4).....
Preferred Stock, $.001 par value per share (5)..
Preferred Stock Purchase Rights(6)..............
Warrants (7)....................................
Total........................................... $150,000,000 $150,000,000 $13,800 (8)
========================================================================================================
(Footnotes on following page)
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
(Footnotes from previous page)
(1) This Registration Statement also covers contracts which may be issued by
the Registrant under which the counterparty may be required to purchase
Debt Securities, Common Stock, Preferred Stock, or warrants.
(2) In no event will the aggregate maximum offering price of all securities
registered under this Registration Statement exceed $150,000,000. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(3) Subject to footnote (2), there are being registered hereunder an
indeterminate number of Debt Securities as may be sold from time to time
by Geron Corporation.
(4) Subject to footnote (2), there are being registered hereunder shares of
Common Stock as may be sold, from time to time, by Geron Corporation.
There is also being registered hereunder an indeterminate number of shares
of Common Stock that may be issued upon conversion, as applicable, of
Preferred Stock or Debt Securities registered hereunder or upon exercise
of Warrants registered hereunder, as the case may be.
(5) Subject to footnote (2), there are being registered hereunder shares of
Preferred Stock, as may be sold, from time to time, by Geron Corporation
or as may be issued upon conversion of Debt Securities registered
hereunder or upon the exercise of Warrants registered hereunder, as the
case may be.
(6) Rights to acquire shares of the Registrant's Series A Junior Participating
Preferred Stock are attached to and trade with the Common Stock of the
Registrant. Value attributable to such rights, if any, is reflected in the
market price of the Common Stock.
(7) Subject to footnote (2), there are being registered hereunder Warrants
representing rights to purchase Debt Securities, Preferred Stock or Common
Stock (as shall be designated by the Company at the time of any such
offering) registered hereunder.
(8) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
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 JANUARY 29, 2002
PROSPECTUS
$150,000,000
GERON CORPORATION
Debt Securities, Common Stock, Preferred Stock
and Warrants
We may from time to time offer in one or more series or classes:
o debt securities,
o shares of our common stock,
o shares of our preferred stock, and
o warrants to purchase debt securities, common stock or preferred stock.
The securities will have a maximum aggregate public offering price of
$150,000,000 (or its equivalent in another currency based on the exchange rate
at the time of sale). The securities may be offered, separately or together, in
separate series, in amounts, at prices and on terms to be set forth in one or
more supplements to this prospectus.
The securities may be offered directly, through agents or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth in
the accompanying prospectus supplement. No securities may be sold under this
prospectus without delivery of the applicable prospectus supplement.
Our common stock is traded on the Nasdaq National Market under the symbol
"GERN." On January 28, 2002, the closing price of our common stock was $9.33.
----------------------
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 2 for a discussion of material risks that you should
consider before you invest in our securities being sold with this prospectus.
----------------------
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.
----------------------
THE DATE OF THIS PROSPECTUS IS JANUARY ___, 2002.
TABLE OF CONTENTS
Page
----
ABOUT THIS PROSPECTUS..........................................................1
ABOUT GERON....................................................................2
RISK FACTORS...................................................................2
FORWARD-LOOKING STATEMENTS.....................................................2
RATIO OF EARNINGS TO FIXED CHARGES............................................14
USE OF PROCEEDS...............................................................14
PLAN OF DISTRIBUTION..........................................................15
DESCRIPTION OF DEBT SECURITIES................................................16
DESCRIPTION OF COMMON STOCK...................................................25
DESCRIPTION OF PREFERRED STOCK................................................26
DESCRIPTION OF WARRANTS.......................................................28
CERTAIN PROVISIONS OF DELAWARE LAW AND OF THE COMPANY'S CHARTER AND BYLAWS....29
VALIDITY OF SECURITIES........................................................30
EXPERTS ................................................ .....................30
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..........................30
WHERE YOU CAN FIND MORE INFORMATION...........................................31
ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement that we filed with
the Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $150,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities as
described in this prospectus, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described under the next heading "Where You
Can Find More Information."
1
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. Please see the
applicable prospectus supplement and our recent public filings for recent
developments.
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."
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:
o continue to have success with our research and development efforts;
o select therapeutic compounds for development;
o obtain the required regulatory approvals; and
o 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 right 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
2
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.
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 at least 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:
o the accuracy of the assumptions underlying our estimates for our
capital needs in 2002 and beyond;
o continued scientific progress in our research and development
programs;
o the magnitude and scope of our research and development programs;
o our ability to maintain and establish strategic arrangements for
research, development, clinical testing, manufacturing and
marketing;
o our progress with preclinical and clinical trials;
o the time and costs involved in obtaining regulatory approvals;
o the costs involved in preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims; and
o 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, GRN 163,
as a lead compound for preclinical development as a telomerase inhibitor for
cancer. Further research is required to determine if this compound can be fully
developed as an efficacious, safe and commercially viable treatment for cancer.
3
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:
o research and development;
o manufacturing;
o preclinical and clinical testing;
o obtaining regulatory approvals; and
o 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:
o product efficacy and safety;
4
o the timing and scope of regulatory consents;
o availability of resources;
o reimbursement coverage;
o price; and
o 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 we do. 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 social and political arenas. We use human
embryonic stem cells derived through a process that uses either donated embryos
that are no longer necessary 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:
o harm our ability to establish critical partnerships and
collaborations;
o prompt government regulation of our technologies;
o cause delays in our research and development; and
o 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.
5
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.
Negative public reaction to gene therapy in the development of certain of
our therapies could result in greater government regulation, stricter clinical
trial oversight, 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:
o clinical trials may not demonstrate the safety and efficacy of our
products;
o completion of clinical trials may be delayed, or costs of clinical
trials may exceed anticipated amounts;
o we may not be able to obtain regulatory approval of our products, or
may experience delays in obtaining such approvals;
o we may not be able to manufacture our drugs economically on a
commercial scale;
o we and our licensees may not be able to successfully market our
products;
o physicians may not prescribe our products, or patients may not
accept such products;
o others may have proprietary rights which prevent us from marketing
our products; and
o 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 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.
6
Patent applications in the United States 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 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 extremely significant to our future success.
Patent prosecution 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 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,
litigation or any other proceeding in a court or patent office could 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.
We 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.
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 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,
7
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.
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:
o design and conduct advanced clinical trials in the event that we
reach clinical trials;
o fund research and development activities with us;
o pay us fees upon the achievement of milestones; and
o 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.
8
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 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 will 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 collaborators
of any commercially viable product will be subject to government regulation from
several standpoints, including the processes of:
o manufacturing;
o advertising and promoting;
9
o selling and marketing;
o labeling; and
o 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:
o significantly harm the marketing of any products that we or our
collaborators develop;
o impose costly procedures upon our activities or the activities of
our collaborators;
o diminish any competitive advantages that we or our collaborative
partners may attain; or
o 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:
o recall or seizure of products;
o injunction against manufacture, distribution, sales and marketing;
and
o criminal prosecution.
The imposition of any of these penalties could significantly impair our
business, financial condition and results of operations.
10
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 to not 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:
o our establishment and demonstration to the medical community of the
clinical efficacy and safety of our product candidates;
o our ability to create products that are superior to alternatives
currently on the market;
o our ability to establish in the medical community the potential
advantage of our treatments over alternative treatment methods; and
o reimbursement policies of government and third-party payors.
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:
o government health administration authorities;
o private health insurers;
o health maintenance organizations; and
o 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
11
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 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 December 31, 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:
o depth of the market for the common stock;
o the experimental nature of our prospective products;
o fluctuations in our operating results;
o market conditions relating to the biopharmaceutical and
pharmaceutical industries;
o any announcements of technological innovations, new commercial
products or clinical progress or lack thereof by us, our
collaborative partners or our competitors; or
o 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, which then 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.
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 December 31, 2001, we had approximately 24,481,774 shares of common
stock outstanding. Of these shares, approximately 10,534,534 shares were issued
(including shares issuable upon conversion or exercise of convertible notes or
warrants) since December 1998
12
pursuant to private placements. Of these shares, approximately 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
approximately 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 for 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 our share purchase rights plan, 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 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:
o prevent stockholders from taking actions by written consent;
o 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
o 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.
13
RATIO OF EARNINGS TO FIXED CHARGES (1)
The following table sets forth ratios of earnings to fixed charges for the
periods shown.
Nine Months
Ended September 30,
2001 Year Ended December 31,
------------------- ------------------------------------------------------------
2000 1999 1998 1997 1996
--------- ---------- ---------- ---------- ---------
N/A (2) N/A (2) N/A (2) N/A (2) N/A (2) N/A (2)
The following table sets forth ratios of earnings to fixed charges and
preferred dividend for the periods shown.
Nine Months
Ended September 30,
2001 Year Ended December 31,
------------------- ------------------------------------------------------------
2000 1999 1998 1997 1996
--------- ---------- ---------- ---------- ---------
N/A (3) N/A (3) N/A (3) N/A (3) N/A (3) N/A (3)
----------
(1) The ratio of earnings to fixed charges was computed by dividing earnings
by fixed charges. For this purpose, earnings consist of net loss before
fixed charges. Fixed charges consist of interest expense on outstanding
lease liabilities, interest accrual for outstanding convertible
debentures, the amortization of issuance costs on convertible debentures,
and the interest expense related to the value of warrants issued with
convertible debentures.
The ratio of earnings to fixed charges and preferred dividends was
calculated in a similar manner to the ratio of earnings to fixed charges,
except that the accretion of premium on outstanding redeemable preferred
stock is included in the fixed charges for the years ended December 31,
1998 and 1997. No preferred stock dividends were paid in the other
periods.
(2) Earnings have been inadequate to cover fixed charges. The dollar amount of
the coverage deficiency was approximately $22.6 million for the nine
months ended September 30, 2001 and $45.8 million, $46.4 million, $10.8
million, $9.6 million and $10.7 million for the years ended December 31,
2000, 1999, 1998, 1997 and 1996.
(3) Earnings have been inadequate to cover fixed charges and preferred
dividends. The dollar amount of the coverage deficiency was approximately
$22.6 million for the nine months ended September 30, 2001 and $45.8
million, $46.5 million, $11.4 million, $9.6 million and $10.7 million for
the years ended December 31, 2000, 1999, 1998, 1997 and 1996.
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.
14
PLAN OF DISTRIBUTION
We may sell the securities being offered by this prospectus directly to
our stockholders, directly to one or more purchasers, through agents, to or
through one or more dealers, to or through underwriters or through a combination
of any of these methods of sale.
We may distribute the securities from time to time in one or more
transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at 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 any agent, who may be deemed to be
our "underwriter" as that term is defined in the Securities Act, involved in the
offer or sale of our securities in a prospectus supplement. We will also
describe any commissions payable by us to any agent in the applicable prospectus
supplement.
If we use a dealer in the sale of the securities, we will sell the
securities to the dealer as principal. The dealer, who may be deemed to be an
"underwriter" as that term is defined in the Securities Act, may then resell the
securities to the public at varying prices to be determined by the dealer at the
time of resale.
If we use an underwriter or underwriters in the sale of the securities
being offered by this prospectus, we will execute an underwriting agreement with
the underwriters at the time of sale to them and we will provide the names of
the underwriters in the prospectus supplement which the underwriters 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 underwriters may
act as agents; may compensate the underwriters in the form of underwriting
discounts or commissions. Underwriters may also sell the securities to or
through dealers, and the underwriters may compensate those dealers in the form
of discounts, concessions or commissions. We will describe in the applicable
prospectus supplement any underwriting compensation we pay to underwriters in
connection with the offering of securities by this prospectus, and any
discounts, concessions or commission allowed by underwriters to participating
dealers.
We may authorize underwriters, dealers or other persons to solicit offers
by institutions to purchase the securities offered by this prospectus pursuant
to contracts providing for payment and delivery on a future date or dates. If we
do so, we will provide the details of the arrangements in a prospectus
supplement. We may make these contracts with commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others. The obligations of any purchasers under
these contracts will not be subject to any conditions except that (a) the
purchase of the securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which the purchaser is subject and (b) if the
securities are also being sold to underwriters, we shall have sold to the
underwriters the securities offered by this prospectus which are not sold for
delayed delivery. The underwriters, dealers and other persons will not have any
responsibility in respect of the validity or performance of the contracts. We
will describe in the prospectus supplement the price to be paid for securities
under the contracts, the commission payable for solicitation of contracts and
the date or dates in the future for delivery of the securities pursuant to the
contracts.
We may enter into agreements to indemnify underwriters, dealers and agents
who participate in the distribution of securities against certain liabilities,
including liabilities under the Securities Act.
We may also offer securities to third parties which provide us with
services or other appropriate consideration such as licenses of technology. If
we do so, we will provide the details of the arrangement with such third parties
in a prospectus supplement.
Each series of securities will be a new issue and other than the Common
Stock, which is quoted on the Nasdaq National Market, will have no established
trading market. Unless otherwise specified in a related prospectus supplement,
we will not have any obligation to list any series of securities on an exchange
or otherwise. We cannot assure you that there will be any liquidity in the
trading market for any of the securities.
15
DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms and provisions of our debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms of the series in a supplement to this
prospectus. We will also indicate in the supplement whether the general terms
and provisions described in this prospectus apply to a particular series of debt
securities.
The debt securities offered by this prospectus will be issued under an
indenture between us and the trustee named in the indenture. The indenture is
subject to, and governed by, the Trust Indenture Act of 1939, as amended (the
"TIA"). We have filed a copy of the form of indenture as an exhibit to the
registration statement and you should read the indenture for provisions that may
be important to you. We have summarized select portions of the indenture below.
The summary is not complete. Capitalized terms used in the summary below have
the meanings specified in the indenture.
General
The terms of each series of debt securities will be established by or
pursuant to a resolution of our board of directors and detailed or determined in
the manner provided in an officers' certificate or by a supplemental indenture.
The particular terms of each series of debt securities will be described in a
prospectus supplement relating to the series, including any pricing supplement.
We can issue an unlimited amount of debt securities under the indenture
that may be in one or more series with the same or various maturities, at par,
at a premium, or at a discount. We will set forth in a prospectus supplement,
including any pricing supplement, relating to any series of debt securities
being offered, the initial offering price, the aggregate principal amount and
the following terms of the debt securities:
o the title of the debt securities;
o the price or prices (expressed as a percentage of the aggregate
principal amount) at which we will sell the debt securities;
o any limit on the aggregate principal amount of the debt securities;
o the date or dates on which we will pay the principal on the debt
securities;
o the rate or rates (which may be fixed or variable) per annum or the
method used to determine the rate or rates (including any commodity,
commodity index, stock exchange index or financial index) at which
the debt securities will bear interest, the date or dates from which
interest will accrue, the date or dates on which interest will
commence and be payable and any regular record date for the interest
payable on any interest payment date;
o the place or places where principal of, premium, and interest on the
debt securities will be payable;
o the terms and conditions upon which we may redeem the debt
securities;
o the terms and conditions, if any, upon which the debt securities are
convertible into common stock or preferred stock;
o any obligation we have to redeem or purchase the debt securities
pursuant to an sinking fund or analogous provisions or at the option
of a holder of debt securities;
o the dates on which and the price or prices at which we will
repurchase the debt securities at the option of the holders of debt
securities and other detailed terms and provisions of these
repurchase obligations;
o the denominations in which the debt securities will be issued, if
other than denominations of $1,000 and any integral multiple
thereof;
16
o whether the debt securities will be issued in the form of
certificated debt securities or global debt securities;
o the portion of principal amount of the debt securities payable upon
declaration of acceleration of the maturity date, if other than the
principal amount;
o the currency of denomination of the debt securities;
o the designation of the currency, currencies or currency unit in
which payment of principal of, and premium and interest on the debt
securities will be made;
o if payments of principal of, or premium or interest on the debt
securities will be made in one or more currencies or currency units
other than that or those in which the debt securities are
denominated, the manner in which the exchange rate with respect to
these payments will be determined;
o the manner in which the amounts of payment of principal of, and
premium or interest on the debt securities will be determined, if
these amounts may be determined by reference to an index based on a
currency or currencies other than that in which the debt securities
are denominated or designated to be payable or by reference to a
commodity, commodity index, stock exchange index or financial index;
o any provisions relating to any security provided for the debt
securities;
o any addition to or change in the Events of Default described in this
prospectus or in the indenture with respect to the debt securities
and any change in the acceleration provisions described in this
prospectus or in the indenture with respect to the debt securities;
o any addition to or change in the covenants described in this
prospectus or in the indenture with respect to the debt securities;
o any other terms of the debt securities, which may modify or delete
any provision of the indenture as it applies to that series; and
o any depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents with respect to the debt
securities.
We may issue debt securities that provide for an amount less than their
stated principal amount to be due and payable upon declaration of acceleration
of their maturity pursuant to the terms of the indenture. We will provide you
with information on the federal income tax considerations and other special
considerations applicable to any of these debt securities in the applicable
prospectus supplement.
If we denominate the purchase price of any of the debt securities in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest on any series of debt securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
we will provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of debt securities and such foreign currency or currencies or foreign currency
unit or units in the applicable prospectus supplement.
Payment of Interest and Exchange
Each debt security will be represented by either one or more global
securities registered in the name of a clearing agency registered under the
Securities Exchange Act of 1934, as amended, as Depositary, or a nominee of the
Depositary (we will refer to any debt security represented by a global debt
security as a "book-entry debt security"), or a certificate issued in definitive
registered form (we will refer to any debt security represented by a
certificated security as a "certificated debt security"), as described in the
applicable prospectus supplement. Except
17
as described under "Global Debt Securities and Book-Entry System" below,
book-entry debt securities will not be issuable in certificated form.
Debt Securities. You may transfer or exchange certificated debt securities
at the trustee's office or paying agencies in accordance with the terms of the
indenture. No service charge will be made for any transfer or exchange of
certificated debt securities, but we may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection with a transfer
or exchange.
You may transfer certificated debt securities and the right to receive the
principal of, and premium and interest on certificated debt securities only by
surrendering the old certificate representing those certificated debt securities
and either we or the trustee will reissue the old certificate to the new holder
or we or the trustee will issue a new certificate to the new holder.
Global Debt Securities and Book-Entry System. Each global debt security
representing book-entry debt securities will be deposited with, or on behalf of,
the Depositary, and registered in the name of the Depositary or a nominee of the
Depositary.
We expect that the Depositary will follow substantially the following
procedures with respect to book-entry debt securities.
Ownership of beneficial interests in book-entry debt securities will be
limited to persons that have accounts with the Depositary for the related global
debt security, otherwise referred to as participants, or persons that may hold
interests through participants. Upon the issuance of a global debt security, the
Depositary will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective principal amounts of the book-entry
debt securities represented by the global debt security beneficially owned by
such participants. The accounts to be credited will be designated by any
dealers, underwriters or agents participating in the distribution of the
book-entry debt securities. Ownership of book-entry debt securities will be
shown on, and the transfer of the ownership interests will be effected only
through, records maintained by the Depositary for the related global debt
security (with respect to interests of participants) and on the records of
participants (with respect to interests of persons holding through
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. These
laws may impair the ability to own, transfer or pledge beneficial interests in
book-entry debt securities.
So long as the Depositary for a global debt security, or its nominee, is
the registered owner of that global debt security, the Depositary or its
nominee, as the case may be, will be considered the sole owner or holder of the
book-entry debt securities represented by such global debt security for all
purposes under the indenture. Except as described herein, beneficial owners of
book-entry debt securities will not be entitled to have securities registered in
their names, will not receive or be entitled to receive physical delivery of a
certificate in definitive form representing securities and will not be
considered the owners or holders of those securities under the indenture.
Accordingly, to exercise any rights of a holder under the indenture, each person
beneficially owning book-entry debt securities must rely on the procedures of
the Depositary for the related global debt security and, if that person is not a
participant, on the procedures of the participant through which that person owns
its interest.
We understand, however, that under existing industry practice, the
Depositary will authorize the persons on whose behalf it holds a global debt
security to exercise certain rights of holders of debt securities, and the
indenture provides that we, the trustee and our respective agents will treat as
the holder of a debt security the persons specified in a written statement of
the Depositary with respect to that global debt security for purposes of
obtaining any consents or directions required to be given by holders of the debt
securities pursuant to the indenture.
We will make payments of principal of, and premium and interest on
book-entry debt securities to the Depositary or its nominee, as the case may be,
as the registered holder of the related global debt security. Geron, the trustee
and any other agent of ours or agent of the trustee will not have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global debt
security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
We expect that the Depositary, upon receipt of any payment of principal
of, or premium or interest on a global debt security, will immediately credit
participants' accounts with payments in amounts proportionate to the
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respective amounts of book-entry debt securities held by each participant as
shown on the records of the Depositary. We also expect that payments by
participants to owners of beneficial interests in book-entry debt securities
held through those participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of those participants.
We will issue certificated debt securities in exchange for each global
debt security if the Depositary is at any time unwilling or unable to continue
as Depositary or ceases to be a clearing agency registered under the Exchange
Act, and a successor Depositary registered as a clearing agency under the
Exchange Act is not appointed by us within 90 days. In addition, we may at any
time and in our sole discretion determine not to have any of the book-entry debt
securities of any series represented by one or more global debt securities and,
in that event, we will issue certificated debt securities in exchange for the
global debt securities of that series. Global debt securities will also be
exchangeable by the holders for certificated debt securities if an Event of
Default with respect to the book-entry debt securities represented by those
global debt securities has occurred and is continuing. Any certificated debt
securities issued in exchange for a global debt security will be registered in
such name or names as the Depositary shall instruct the trustee. We expect that
such instructions will be based upon directions received by the Depositary from
participants with respect to ownership of book-entry debt securities relating to
such global debt security.
We have obtained the foregoing information in this section concerning the
Depositary and the Depositary's book-entry system from sources we believe to be
reliable, but we take no responsibility for the accuracy of this information.
Redemption
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which the debt securities are redeemable. These terms
will include:
o provisions regarding whether redemption will be at our option or the
option of the holders;
o the time for delivery and required content of a notice of redemption
to the trustee and the holders;
o the manner of selection of debt securities to be redeemed; and
o provisions regarding the payment of the redemption price.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge into, or convey, transfer or lease
all or substantially all of our properties and assets to, any person (a
"successor person"), and we may not permit any person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to us,
unless:
o the successor person is a corporation, partnership, trust or other
entity organized and validly existing under the laws of any U.S.
domestic jurisdiction and expressly assumes our obligations on the
debt securities and under the indenture;
o immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have occurred and be
continuing under the indenture; and
o we deliver to the trustee an officer's certificate and legal opinion
covering compliance with the conditions listed above.
Covenants
In addition to our obligation to make payments of principal and interest
on the debt securities in accordance with their terms, the indenture contains
covenants requiring us to:
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o deliver to the trustee, within 15 days of filing, copies of all
filings made by us with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act;
o deliver to the trustee, within 90 days after the end of each of our
fiscal years, an officer's certificate stating that we have
fulfilled our obligations under the indenture during the preceding
fiscal year;
o to the extent we may lawfully do so, refrain from claiming or taking
advantage of any stay, extension or usury law which may affect our
obligations under the indenture or the debt securities;
o preserve our corporate existence, except as permitted under
"--Consolidation, Merger and Sale of Assets," and preserve our
rights, licenses and franchises, and the existence of our
significant subsidiaries, unless our board of directors determines
that it is no longer desirable in the conduct of our business to
preserve those rights, license or franchises, or to preserve the
existence of any significant subsidiary; and
o pay when due all taxes, assessments and governmental levies, except
those that we contest in good faith.
Unless we state otherwise in (a) the applicable prospectus supplement and
in a supplement to the indenture, (b) a board resolution, or (c) an officers'
certificate delivered pursuant to the indenture, the debt securities will not
contain any other restrictive covenants, including covenants restricting us or
any of our subsidiaries from incurring, issuing, assuming or guarantying any
indebtedness secured by a lien on any of our or our subsidiaries' property or
capital stock, or restricting us or any of our subsidiaries from entering into
any sale and leaseback transactions.
Events of Default
"Event of Default" means with respect to any series of debt securities,
any of the following:
o default in the payment of any interest upon any debt security of
that series when it becomes due and payable, and continuance of that
default for a period of 30 days (unless the entire amount of such
payment is deposited by us with the trustee or with a paying agent
prior to the expiration of the 30-day period);
o default in the payment of principal of or premium on any debt
security of that series when due and payable;
o default in the deposit of any sinking fund payment, when and as due
in respect of any debt security of that series;
o default in the performance or breach of any other covenant or
warranty by us in the indenture (other than a covenant or warranty
that has been included in the indenture solely for the benefit of a
series of debt securities other than that series), which default
continues uncured for a period of 60 days after we receive written
notice from the trustee or we and the trustee receive written notice
from the holders of at least 25% in principal amount of the
outstanding debt securities of that series as provided in the
indenture;
o an event of default under any of our debt (including a default with
respect to debt securities of any series other than that series) or
any subsidiary, whether that debt exists today or is created at a
later date, if
o the default results from our failure to pay the debt when it
becomes due;
o the principal amount of the debt, together with the principal
amount of any other debt in default for failure to pay
principal at stated final maturity or the maturity of which
has been accelerated, at any time exceeds a specified amount;
and
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o the debt is not discharged or the acceleration is not
rescinded or annulled within 10 days after we receive written
notice as provided in the indenture;
o events of bankruptcy, insolvency or reorganization as provided in
the indenture; and
o any other Event of Default provided with respect to debt securities
of that series that is described in the applicable prospectus
supplement accompanying this prospectus.
No Event of Default with respect to a particular series of debt securities
(except as to events of bankruptcy, insolvency or reorganization described in
the indenture) necessarily constitutes an Event of Default with respect to any
other series of debt securities. An Event of Default may also be an event of
default under our bank credit agreements in existence from time to time and
under certain guaranties by us of any subsidiary indebtedness. In addition,
certain Events of Default or an acceleration under the indenture may also be an
event of default under some of our other indebtedness outstanding from time to
time.
If an Event of Default with respect to debt securities of any series at
the time outstanding occurs and is continuing, then the trustee or the holders
of not less than 25% in principal amount of the outstanding debt securities of
that series may, by written notice to us (and to the trustee if given by the
holders), declare to be due and payable immediately the principal (or, if the
debt securities of that series are discount securities, that portion of the
principal amount as may be specified in the terms of that series) and premium of
all debt securities of that series. In the case of an Event of Default resulting
from events of bankruptcy, insolvency or reorganization, the principal (or the
specified amount) and premium of all outstanding debt securities will become and
be immediately due and payable without any declaration or other act by the
trustee or any holder of outstanding debt securities. At any time after a
declaration of acceleration with respect to debt securities of any series has
been made, but before the trustee has obtained a judgment or decree for payment
of the money due, the holders of a majority in principal amount of the
outstanding debt securities of that series may, subject to our having paid or
deposited with the trustee a sum sufficient to pay overdue interest and
principal which has become due other than by acceleration and certain other
conditions, rescind and annul the acceleration if all Events of Default, other
than the non-payment of accelerated principal and premium with respect to debt
securities of that series, have been cured or waived as provided in the
indenture. For information as to waiver of defaults see the discussion under
"--Modification and Waiver" below. We refer you to the prospectus supplement
relating to any series of debt securities that are discount securities for the
particular provisions relating to acceleration of a portion of the principal
amount of the discount securities upon the occurrence of an Event of Default and
the continuation of an Event of Default.
The indenture provides that the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of outstanding debt securities, unless the trustee receives indemnity
satisfactory to it against any loss, liability or expense. Subject to the rights
of the trustee, the holders of a majority in principal amount of the outstanding
debt securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee with respect to the
debt securities of that series.
No holder of any debt security of any series will have any right to
institute any proceeding judicial or otherwise, with respect to the indenture or
for the appointment of a receiver or trustee, or for any remedy under the
indenture, unless:
o that holder has previously given to the trustee written notice of a
continuing Event of Default with respect to debt securities of that
series; and
o the holders of at least 25% in principal amount of the outstanding
debt securities of that series have made written request, and
offered reasonable indemnity, to the trustee to institute such
proceeding as trustee, and the trustee shall not have received from
the holders of a majority in principal amount of the outstanding
debt securities of that series a direction inconsistent with that
request and has failed to institute the proceeding within 60 days.
Notwithstanding the foregoing, the holder of any debt security will have
an absolute and unconditional right to receive payment of the principal of, and
premium and any interest on, that debt security on or after the due dates
expressed in that debt security and to institute suit for the enforcement of
payment.
21
The indenture provides that the trustee may withhold notice to the holders
of debt securities of any series of any Default or Event of Default (except in
payment on any debt securities of that series) with respect to debt securities
of that series if it in good faith determines that withholding notice is in the
interest of the holders of those debt securities.
Conversion Rights
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which the debt securities are convertible into common
stock or preferred stock. Those terms will include:
o whether the debt securities are convertible into common stock or
preferred stock;
o the conversion price, or manner of calculation;
o the conversion period;
o provisions regarding whether conversion will be at our option or the
option of the holders;
o the events requiring an adjustment of the conversion price; and
o provisions affecting conversion in the event of the redemption of
the debt securities.
Modification and Waiver
We and the trustee may modify and amend the indenture with the consent of
the holders of at least a majority in principal amount of the outstanding debt
securities of each series affected by the modifications or amendments. We and
the trustee may not make any modification or amendment without the consent of
the holder of each affected debt security then outstanding if that amendment
will:
o change the amount of debt securities whose holders must consent to
an amendment or waiver;
o reduce the rate of or extend the time for payment of interest
(including default interest) on any debt security;
o reduce the principal of or premium on or change the fixed maturity
of any debt security or reduce the amount of, or postpone the date
fixed for, the payment of any sinking fund or analogous obligation
with respect to any series of debt securities;
o reduce the principal amount of discount securities payable upon
acceleration of maturity;
o waive a default in the payment of the principal of, or premium or
interest on any debt security (except a rescission of acceleration
of the debt securities of any series by the holders of at least a
majority in aggregate principal amount of the then outstanding debt
securities of that series and a waiver of the payment default that
resulted from that acceleration);
o make the principal of, or premium or interest on any debt security
payable in currency other than that stated in the debt security;
o make any change to provisions of the indenture relating to, among
other things, the right of holders of debt securities to receive
payment of the principal of, and premium and interest on those debt
securities and to institute suit for the enforcement of any payment
and to waivers or amendments; or
o waive a redemption payment with respect to any debt security or
change any of the provisions with respect to the redemption of any
debt securities.
22
Except for waivers having the effects listed immediately above, the
holders of at least a majority in principal amount of the outstanding debt
securities of any series may on behalf of the holders of all debt securities of
that series waive our compliance with provisions of the indenture. The holders
of a majority in principal amount of the outstanding debt securities of any
series may on behalf of the holders of all the debt securities of that series
waive any past default under the indenture with respect to that series and its
consequences, except a default in the payment of the principal of, or premium or
any interest on any debt security of that series; provided, however, that the
holders of a majority in principal amount of the outstanding debt securities of
any series may rescind an acceleration and its consequences, including any
related payment default that resulted from the acceleration.
Defeasance of Debt Securities and Certain Covenants in Certain Circumstances
Legal Defeasance. The indenture provides that, unless otherwise provided
by the terms of the applicable series of debt securities, we may be discharged
from any and all obligations in respect of the debt securities of any series
(except for obligations to register the transfer or exchange of debt securities
of the series, to replace stolen, lost or mutilated debt securities of the
series, and to maintain paying agencies and provisions relating to the treatment
of funds held by paying agents). We will be so discharged upon the deposit with
the trustee, in trust, of money and/or U.S. government obligations or, in the
case of debt securities denominated in a single currency other than U.S.
dollars, foreign government obligations, that, through the payment of interest
and principal in accordance with their terms, will provide money in an amount
sufficient in the opinion of a nationally recognized firm of independent public
accountants to pay and discharge each installment of principal, premium and
interest on and any mandatory sinking fund payments in respect of the debt
securities of that series on the stated maturity of such payments in accordance
with the terms of the indenture and those debt securities.
This discharge may occur only if, among other things, we have delivered to
the trustee an officers' certificate and an opinion of counsel stating that we
have received from, or there has been published by, the United States Internal
Revenue Service a ruling or, since the date of execution of the indenture, there
has been a change in the applicable United States federal income tax law, in
either case to the effect that holders of the debt securities of such series
will not recognize income, gain or loss for United States federal income tax
purposes as a result of the deposit, defeasance and discharge and will be
subject to United States federal income tax on the same amount and in the same
manner and at the same times as would have been the case if the deposit,
defeasance and discharge had not occurred.
Defeasance of Certain Covenants. The indenture provides that, unless
otherwise provided by the terms of the applicable series of debt securities,
upon compliance with conditions specified in the indenture:
o we may omit to comply with the restrictive covenants contained in
Sections 4.2 through 4.6 and Section 5.1 of the indenture, as well
as any additional covenants contained in a supplement to the
indenture, a board resolution or an officers' certificate delivered
pursuant to the indenture; and
o Events of Default under Section 6.1(e) of the indenture will not
constitute a Default or an Event of Default with respect to the debt
securities of that series.
The conditions include:
o depositing with the trustee money and/or U.S. government obligations
or, in the case of debt securities denominated in a single currency
other than U.S. dollars, foreign government obligations, that,
through the payment of interest and principal in accordance with
their terms, will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent public
accountants to pay principal, premium and interest on and any
mandatory sinking fund payments in respect of the debt securities of
that series on the stated maturity of those payments in accordance
with the terms of the indenture and those debt securities; and
o delivering to the trustee an opinion of counsel to the effect that
the holders of the debt securities of that series will not recognize
income, gain or loss for United States federal income tax purposes
as a result of the deposit and related covenant defeasance and will
be subject to united states federal income tax in the same amount
and in the same manner and at the same times as would have been the
case if the deposit and related covenant defeasance had not
occurred.
23
Covenant Defeasance and Events of Default. In the event we exercise our
option not to comply with certain covenants of the indenture with respect to any
series of debt securities and the debt securities of that series are declared
due and payable because of the occurrence of any Event of Default, the amount of
money and/or U.S. government obligations or foreign government obligations on
deposit with the trustee will be sufficient to pay amounts due on the debt
securities of that series at the time of their stated maturity but may not be
sufficient to pay amounts due on the debt securities of that series at the time
of the acceleration resulting from the Event of Default. However, we will remain
liable for those payments.
"Foreign government obligations" means, with respect to debt securities of
any series that are denominated in a currency other than U.S. Dollars:
o direct obligations of the government that issued or caused to be
issued such currency for the payment of which obligations its full
faith and credit is pledged, which are not callable or redeemable at
the option of the issuer thereof; or
o obligations of a person controlled or supervised by or acting as an
agency or instrumentality of that government the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation by that government, which are not callable or redeemable
at the option of the issuer thereof.
Governing Law
The indenture and the debt securities will be governed by, and construed
in accordance with, the internal laws of the State of New York.
24
DESCRIPTION OF COMMON STOCK
The following summary of the terms of our common stock does not purport to
be complete and is subject to and qualified in its entirety by reference to our
Charter and Bylaws, copies of which are on file with the Commission as exhibits
to registration statements previously filed by us. See "Where You Can Find More
Information."
We have authority to issue 50,000,000 shares of common stock, $.001 par
value per share. As of December 31, 2001, we had 24,481,774 shares of common
stock outstanding.
The holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding shares of our preferred stock, the holders of
common stock are entitled to receive ratably such dividends, if any, as may be
declared from time to time by our Board of Directors out of funds legally
available for that purpose. In the event of a liquidation, dissolution or
winding up of the Company, the holders of our common stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to
preferences applicable to shares of our preferred stock, if any, then
outstanding. The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
available to the common stock. All outstanding shares of our common stock are,
and the shares of common stock offered by this prospectus will be, fully paid
and nonassessable.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is U.S. Stock
Transfer Corporation.
25
DESCRIPTION OF PREFERRED STOCK
We have authority to issue 3,000,000 shares of preferred stock, $.001 par
value per share. As of December 31, 2001, we had no shares of preferred stock
outstanding.
General
Under our Certificate of Incorporation, our board of directors is
authorized generally without stockholder approval to issue shares of preferred
stock from time to time, in one or more classes or series. Prior to the issuance
of shares of each series, the board of directors is required by the Delaware
General Corporation Law and our Certificate of Incorporation to adopt
resolutions and file a certificate of designation with the Secretary of State of
the State of Delaware. The certificate of designation fixes for each class or
series the designations, powers, preferences, rights, qualifications,
limitations and restrictions, including, but not limited to, the following:
o the number of shares constituting each class or series;
o voting rights;
o rights and terms of redemption (including sinking fund provisions);
o dividend rights and rates;
o dissolution;
o terms concerning the distribution of assets;
o conversion or exchange terms;
o redemption prices; and
o liquidation preferences.
All shares of preferred stock offered hereby will, when issued, be fully
paid and nonassessable and will not have any preemptive or similar rights. Our
board of directors could authorize the issuance of shares of preferred stock
with terms and conditions which could have the effect of discouraging a takeover
or other transaction that might involve a premium price for holders of the
shares or which holders might believe to be in their best interests.
We will set forth in a prospectus supplement relating to the class or
series of preferred stock being offered the following terms:
o the title and stated value of the preferred stock;
o the number of shares of the preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock;
o the dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation applicable to the preferred stock;
o whether dividends are cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock
will accumulate;
o the procedures for any auction and remarketing, if any, for the
preferred stock;
o the provisions for a sinking fund, if any, for the preferred stock;
o the provision for redemption, if applicable, of the preferred stock;
26
o any listing of the preferred stock on any securities exchange;
o the terms and conditions, if applicable, upon which the preferred
stock will be convertible into common stock, including the
conversion price (or manner of calculation) and conversion period;
o voting rights, if any, of the preferred stock;
o whether interests in the preferred stock will be represented by
depositary shares;
o a discussion of any material and/or special United States Federal
income tax considerations applicable to the preferred stock;
o the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon the liquidation, dissolution or
winding up of our affairs;
o any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with the class or series of
preferred stock as to dividend rights and rights upon liquidation,
dissolution or winding up of our affairs; and
o any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
Rank
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will rank, with respect to dividends and upon our liquidation,
dissolution or winding up:
o senior to all classes or series of our common stock and to all of
our equity securities ranking junior to the preferred stock;
o on a parity with all of our equity securities the terms of which
specifically provide that the equity securities rank on a parity
with the preferred stock; and
o junior to all of our equity securities the terms of which
specifically provide that the equity securities rank senior to the
preferred stock.
The term "equity securities" does not include convertible debt securities.
Transfer Agent and Registrar
The transfer agent and registrar for any series or class of preferred
stock will be set forth in the applicable prospectus supplement.
27
DESCRIPTION OF WARRANTS
As of December 31, 2001, we had warrants to purchase 1,381,511 shares of
our common stock outstanding (other than options issued under our stock option
plans and non-qualified options issued to our employees and consultants outside
of our stock option plans). We may issue warrants for the purchase of debt
securities, common stock or preferred stock. We may issue warrants independently
or together with any other offered securities offered by any prospectus
supplement and may be attached to or separate from the other offered securities.
Each series of warrants will be issued under a separate warrant agreement to be
entered into by us with a warrant agent specified in the applicable prospectus
supplement. The warrant agent will act solely as our agent in connection with
the series of warrants and will not assume any obligation or relationship of
agency or trust for or with any provisions of the warrants. Further terms of the
warrants and the applicable warrant agreements will be set forth in the
applicable prospectus supplement.
The applicable prospectus supplement will describe the terms of the
warrants in respect of which this prospectus is being delivered, including,
where applicable, the following:
o the title of the warrants;
o the aggregate number of the warrants;
o the price or prices at which the warrants will be issued;
o the designation, terms and number of shares of debt securities,
preferred stock or common stock purchasable upon exercise of the
warrants;
o the designation and terms of the offered securities, if any, with
which the warrants are issued and the number of the warrants issued
with each the offered security;
o the date, if any, on and after which the warrants and the related
debt securities, preferred stock or common stock will be separately
transferable;
o the price at which each share of debt securities, preferred stock or
common stock purchasable upon exercise of the warrants may be
purchased;
o the date on which the right to exercise the warrants shall commence
and expires;
o the minimum or maximum amount of the warrants which may be exercised
at any one time;
o information with respect to book-entry procedures, if any;
o a discussion of certain federal income tax considerations;
o any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
28
CERTAIN PROVISIONS OF DELAWARE LAW AND OF
THE COMPANY'S CHARTER AND BYLAWS
The following paragraphs summarize certain provisions of the Delaware
General Corporation Law and the Company's Charter and Bylaws. The summary does
not purport to be complete and is subject to and qualified in its entirety by
reference to the DGCL and to the Company's Charter and Bylaws, copies of which
are on file with the commission as exhibits to registration statements
previously filed by the Company. See "Where You Can Find More Information."
Our Certificate of Incorporation and Bylaws contain provisions that,
together with the ownership position of the officers, directors and their
affiliates, could discourage potential takeover attempts and make it more
difficult for stockholders to change management, which could adversely affect
the market place of our common stock.
Our Certificate of Incorporation limits the personal liability of our
directors to Geron and our stockholders to the fullest extent permitted by the
Delaware General Corporation Law, or DGCL. The inclusion of this provision in
our Certificate of Incorporation may reduce the likelihood of derivative
litigation against directors and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty of
care.
Our Bylaws provide that special meetings of stockholders can be called
only by the Board of Directors, the Chairman of the Board of Directors or the
Chief Executive Officer. Stockholders are not permitted to call a special
meeting and cannot require the Board of Directors to call a special meeting. Any
vacancy on the Board of Directors resulting from death, resignation, removal or
otherwise or newly created directorships may be filled only by vote of the
majority of directors then in office, or by a sole remaining director. Our
Bylaws also provide for a classified board. See "Description of Common Stock."
We are subject to the "business combination" statute of the DGCL, an
anti-takeover law enacted in 1988. In general, Section 203 of the DGCL prohibits
a publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder," for a period of three years after the date of
the transaction in which a person became an "interested stockholder," unless:
o prior to such date the board of directors of the corporation
approved either the "business combination" or the transaction which
resulted in the stockholder becoming an "interested stockholder,"
o upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the "interested
stockholder" owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned (1) by persons who are directors and
also officers and (2) employee stock plans in which employee
participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender
or exchange offer, or
o on or subsequent to such date the "business combination" is approved
by the board of directors and authorized at an annual or special
meeting of stockholders by the affirmative vote of a least 66% of
the outstanding voting stock which is not owned by the "interested
stockholder."
A "business combination" includes mergers, stock or asset sales and other
transactions resulting in a financial benefit to the "interested stockholders."
An "interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of the
corporation's voting stock. Although Section 203 permits us to elect not to be
governed by its provisions, we have not made this election. As a result of the
application of Section 203, potential acquirers of Geron may be discouraged from
attempting to effect an acquisition transaction with us, thereby possibly
depriving holders of our securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices pursuant to such
transactions.
29
VALIDITY OF SECURITIES
Latham & Watkins, Mento Park, California, will pass on the validity of the
issuance of all securities offered by this prospectus.
If the securities are underwritten, the applicable prospectus supplement
will also set forth whether and to what extent, if any, a law firm for the
underwriters will pass upon the validity of the shares.
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 the Company pursuant to the Company's Certificate of Incorporation,
as amended, bylaws and the Delaware General Corporation Law, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
30
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:
o Our annual report on Form 10-K for the fiscal year ended December
31, 2000;
o Our definitive proxy statement filed pursuant to Section 14 of the
Exchange Act in connection with our 2001 Annual Meeting of
Stockholders;
o Our current reports on Form 8-K filed January 31, 2001, July 23,
2001, August 22, 2001, November 5, 2001, November 14, 2001, and
January 18, 2002;
o Our Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2001, June 30, 2001 and September 30, 2001; and
o 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).
This prospectus is part of a registration statement on Form S-3 we have
filed with the SEC 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.
31
================================================================================
$150,000,000
GERON CORPORATION
Debt Securities, Common Stock, Preferred Stock
and Warrants
PROSPECTUS
_____________, 2002
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:
Registration Fee $ 13,800
Accounting Fees and Expenses $ 50,000 *
Legal Fees and Expenses $ 75,000 *
Printing Expenses $ 45,000 *
Blue Sky Fees and Expenses $ 25,000 *
Registrar and Transfer Agent $ 10,000 *
Miscellaneous $ 5,000 *
Total $ 223,800 *
========
* Estimated
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
1.1(1) Form of Underwriting Agreement between the Company and the
Representatives
1.2(1) Form of Debt Underwriting Agreement
4.1 Form of Indenture
4.2(1) Form of Warrant Agreement
5.1(1) Opinion of Latham & Watkins regarding the validity of the
securities being registered
12.1 Calculation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Latham & Watkins (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page hereto)
25.1(1) Statement of Eligibility of Trustee
----------
(1) To be filed by amendment or incorporated by reference in connection
with the offering of the applicable offered securities.
Item 17. Undertakings
(a) 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 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 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.
(b) The undersigned Registrant hereby undertakes that:
(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 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 this
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 and of the estimated maximum offering price
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 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
Provided, however, that subparagraphs (i) and (ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in the periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
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 herein, 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.
(c) 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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance under 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 of 1933 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
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.
II-2
(e) If and when applicable, the undersigned Registrant, hereby further
undertakes to file an application for the purpose of determining the eligibility
of the Trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Menlo Park, State of California, on January 29, 2002.
GERON CORPORATION
By: /s/ Thomas B. Okarma
-------------------------------------
Thomas B. Okarma
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PERSONS PRESENT, that the persons whose signatures
appear below do hereby constitute and appoint Thomas B. Okarma and David L.
Greenwood, or either of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resolution, each with full power to sign for
us or any of us in our names and in any and all capacities, any and all
amendments (including post-effective amendments) to this Registration Statement,
or any related registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto and other documents required in
connection therewith with the Securities and Exchange Commission and hereby
grant unto said attorneys-in-fact and each of them, Full Power to do any and all
acts in our names and in any attorneys-in-fact and agents, or either of them,
may deem necessary or advisable to enable Geron Corporation to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with this Registration
Statement, and do ratify and confirm all that each of said attorneys-in-fact, or
either of them, or his or her substitute or substitutes, shall do or cause to be
done by virtue thereof.
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, January 29, 2002
-------------------------------- President and Director
Thomas B. Okarma (principal executive
officer)
/s/ David L. Greenwood Senior Vice President and January 29, 2002
-------------------------------- Chief Financial Officer
David L. Greenwood (principal financial and
accounting officer)
/s/ Alexander E. Barkas Director January 29, 2002
--------------------------------
Alexander E. Barkas, Ph.D.
/s/ Edward V. Fritzky Director January 29, 2002
--------------------------------
Edward V. Fritzky
/s/ Thomas D. Kiley Director January 29, 2002
--------------------------------
Thomas D. Kiley
/s/ Robert B. Stein Director January 29, 2002
--------------------------------
Robert B. Stein
/s/ John P. Walker Director January 29, 2002
--------------------------------
John P. Walker
II-4
/s/ Patrick J. Zenner Director January 29, 2002
--------------------------------
Patrick J. Zenner
II-5
EXHIBIT INDEX
1.1(1) Form of Underwriting Agreement between the Company and the
Representatives
1.2(1) Form of Debt Underwriting Agreement
4.1 Form of Indenture
4.2(1) Form of Warrant Agreement
5.1(1) Opinion of Latham & Watkins regarding the validity of the
securities being registered
12.1 Calculation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Latham & Watkins (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page hereto)
25.1(1) Statement of Eligibility of Trustee
----------
(1) To be filed by amendment or incorporated by reference in connection
with the offering of the applicable offered securities.