Halozyme Therapeutics, Inc.
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-125731
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 17, 2005)
9,171,429 Shares
HALOZYME THERAPEUTICS, INC.
Common Stock
We are offering up to 9,171,429 shares of our common stock.
In connection with this offering, we will pay fees to SG Cowen
& Co., LLC, Rodman & Renshaw, LLC and Roth Capital
Partners, LLC, as the placement agents. See Plan of
Distribution beginning on page S-16 of this prospectus
supplement for more information regarding this arrangement.
Our common stock is quoted and traded on The American Stock
Exchange under the symbol HTI. On December 12,
2005, the last reported sale price for our common stock was
$2.18 per share.
Investing in our common stock involves a high degree of risk.
See the section entitled Risk Factors beginning on
page S-4 of this prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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Maximum | |
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Per Share | |
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Offering | |
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Public offering price
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$ |
1.75 |
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$ |
16,050,000 |
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Placement agents fee
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$ |
0.1225 |
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1,123,500 |
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Proceeds, before expenses, to us
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$ |
1.6275 |
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$ |
14,926,500 |
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We estimate the total expenses of this offering, excluding the
placement agents fee, will be approximately $150,000. The
placement agents are not required to sell any specific number or
dollar amount of the shares of common stock offered by this
offering, but will use their commercially reasonable efforts to
sell the shares of common stock offered. The offering will end
on or prior to December 16, 2005. Pursuant to an escrow
agreement among us, the placement agents and an escrow agent, a
portion of the funds received in payment for the shares sold in
this offering will be deposited into an interest-bearing escrow
account and held until we and the placement agents notify the
escrow agent that the offering has closed, indicating the date
on which the shares are to be delivered to the purchasers and
the proceeds are to be delivered to us. Because there is no
minimum offering amount required as a condition to closing in
this offering, the actual public offering amount, placement
agents fee and net proceeds to us, if any, in this
offering are not presently determinable and may be substantially
less than the maximum offering amounts set forth above.
SG Cowen & Co.
December 12, 2005
TABLE OF CONTENTS
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Prospectus Supplement |
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S-2 |
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S-3 |
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S-4 |
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S-16 |
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S-17 |
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S-18 |
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S-19 |
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S-19 |
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You should rely only on the information contained in this
prospectus supplement, the accompanying base prospectus and the
documents incorporated by reference herein or therein. We have
not authorized any other person to provide you with different
information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not
making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that
the information contained in this prospectus supplement and the
accompanying base prospectus is accurate only as of their
respective dates, regardless of the time of delivery of this
prospectus supplement and accompanying base prospectus or of any
sale of common stock. Our business, financial condition, results
of operations and prospects may have subsequently changed.
Unless the context requires otherwise, in this prospectus
supplement and the accompanying base prospectus the terms
Halozyme, we, us and
our refer to Halozyme Therapeutics, Inc., and its
subsidiary.
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ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying base prospectus
are part of a registration statement on Form S-3 that we
filed on June 10, 2005 with the Securities and Exchange
Commission, or SEC, using a shelf registration
process. Under this shelf registration process, we may offer and
sell any combination of securities described in the accompanying
base prospectus in one or more offerings. The accompanying base
prospectus provides you with a general description of the
securities we may offer. Each time we use the accompanying base
prospectus to offer securities, 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 the base prospectus.
The shelf registration statement was declared effective by the
SEC on June 17, 2005. This prospectus supplement describes
the specific details regarding this offering, including the
price, the amount of common stock being offered, the risks of
investing in our common stock and the placement arrangements.
The accompanying base prospectus provides general information
about us, some of which may not apply to this offering.
To the extent that any statement that we make in this
prospectus supplement is inconsistent with statements made in
the accompanying base prospectus, the statements made in this
prospectus supplement will be deemed to modify or supersede
those made in the accompanying base prospectus. You should read
both this prospectus supplement and the accompanying base
prospectus together with additional information described under
the heading, Where You Can Find More Information.
S-1
HALOZYME THERAPEUTICS, INC.
We are a biopharmaceutical company dedicated to the development
and planned commercialization of recombinant human enzymes for
the infertility, ophthalmology, drug delivery and oncology
communities. Our existing products and our products under
development are based on intellectual property covering the
family of human enzymes known as hyaluronidases. Hyaluronidases
are enzymes (proteins) that break down hyaluronic acid, a
space-filling, gel-like substance that is a major
component of tissues throughout the body. Our technology is
based on recombinant human PH20 (rHuPH20), a human synthetic
version of hyaluronidase that degrades hyaluronic acid. The PH20
enzyme is a naturally occurring enzyme that digests hyaluronic
acid to temporarily break down the gel, thereby facilitating the
penetration and dispersion of other drugs that are injected in
the skin or in the muscle.
We launched our first product,
Cumulasetm,
in the European Union, or EU, and in the United States in June
of 2005. In December 2005, we received approval from the U.S.
Food and Drug Administration for our second product,
Hylenextm.
We also commenced initial clinical testing of our product
candidate
Chemophasetm
in October 2005. All of our other product candidates are either
in the discovery stage or pre-clinical stage.
We have applied for trademark registration for various names and
logos, including
Cumulasetm,
Chemophasetm
and
Enhanzetm
Technology, and we have the right to use the product name
Hylenextm
by virtue of an agreement with Baxter Healthcare Corporation.
All trademarks, service marks or trade names appearing in this
prospectus supplement are the property of their respective
owners. Use or display by us of other parties trademarks,
trade dress or products is not intended to and does not imply a
relationship with, or endorsements or sponsorship of, us by the
trademark or trade dress owners.
Our principal executive offices are located at 11588 Sorrento
Valley Road, Suite 17, San Diego, California 92121.
Our telephone number is (858) 794-8889. Our web site
address is www.halozyme.com. Information contained
on our web site is not incorporated into, and does not
constitute any part of, this prospectus.
S-2
THE OFFERING
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Common stock offered |
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9,171,429 shares |
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Common stock to be outstanding after this offering |
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59,218,468 shares |
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Use of proceeds |
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Proceeds from the offering will be used to fund:
(i) research and development activities; (ii) clinical
trials; and (iii) other working capital and general
corporate purposes. See Use of Proceeds. |
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The American Stock Exchange Symbol |
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HTI |
The number of shares of common stock to be outstanding after
this offering is based on 50,047,039 shares outstanding as of
December 1, 2005. This number excludes:
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10,000 shares of our common stock subject to outstanding options
under our 2005 Outside Directors Stock Plan as of
December 1, 2005, having a weighted average exercise price
of $1.75 per share; |
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2,640,500 shares of our common stock subject to outstanding
options under our 2004 Stock Plan (including 125,000 shares of
common stock subject to a nonstatutory option issued outside of
the 2004 Stock Plan to a non-executive employee) as of
December 1, 2005, having a weighted average exercise price
of $2.34 per share; |
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6,024,739 shares of our common stock subject to outstanding
options under our Amended and Restated 2001 Stock Plan as of
December 1, 2005, having a weighted average exercise price
of $0.41 per share; and |
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11,622,048 shares of our common stock issuable upon exercise of
outstanding warrants as of December 1, 2005, having a
weighted average exercise price of $1.59 per share. |
S-3
RISK FACTORS
You should carefully consider the following risk factors
before purchasing any of our securities. The risks and
uncertainties described below are not the only ones we face.
There may be additional risks and uncertainties that are not
known to us or that we do not consider to be material at this
time. If the events described in these risks occur, our
business, financial condition and results of operations would
likely suffer. This prospectus supplement contains
forward-looking statements that involve risks and uncertainties.
Our actual results may differ significantly from the results
discussed in the forward-looking statements. This section
discusses the risk factors that might cause those differences.
You should also consider the additional information set forth in
our SEC reports on Forms 10-KSB, 10-QSB and 8-K and in the
other documents considered a part of this prospectus supplement.
See Where You Can Find More Information.
Risks Related To Our Business
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We have generated only minimal revenue from product sales
to date; we have a history of net losses and negative cash flow,
and we may never achieve or maintain profitability. |
We have generated only minimal revenue from product sales to
date and may never generate significant revenues from future
product sales. Even if we do achieve significant revenues from
product sales, we expect to incur significant operating losses
over the next several years. We have never been profitable, and
we may never become profitable. Through September 30, 2005,
we have incurred aggregate net losses of $22,834,000.
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We will need to raise funds in the next twelve months, and
there can be no assurance that such funds will be
available. |
During the next twelve months we will need to raise additional
capital to complete the steps required to obtain FDA or other
regulatory approval for certain products and to fund general
operations. If we engage in acquisitions of companies, products,
or technology in order to execute our business strategy, we may
need to raise additional capital. We may be required to raise
additional capital in the future through the public offering of
securities, collaborative agreements, private financings and
various other equity or debt financings, including calling
outstanding warrants to purchase our common stock.
Currently, warrants to purchase approximately 11.6 million
shares of our common stock are outstanding and this amount of
outstanding warrants may make us a less desirable candidate for
investment for some potential investors. Approximately
5.9 million of our outstanding warrants contain a call
feature that, potentially, may allow us to raise funds from the
holders of these warrants. If our common stock closes at a price
equal to or greater than $2.00 per share for twenty consecutive
trading days, we have the ability, at our sole discretion, to
call warrants exercisable for up to approximately
1,971,000 shares of common stock, provided that we have not
exercised a call right in the preceding three months. Upon such
a call, the holders of these warrants have thirty days to decide
whether to either exercise their warrants at a price of $1.75
per share or receive $0.01 from us for each share of common
stock that is not exercised. If we need to raise funds in the
future and we wish to utilize this call right, we will not be
able to exercise the call right if we do not meet the minimum
closing price condition and, even if we meet this condition, we
cannot be sure of the amounts that will be raised by such a call
because some or all warrant holders may decide not to exercise
their warrants.
Considering our stage of development and the nature of our
capital structure, when we are required to raise additional
capital in the future, the additional financing may not be
available on favorable terms, or at all. If we are successful in
raising additional capital, a substantial number of additional
shares will be outstanding and would dilute the ownership
interest of our investors.
S-4
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If we do not receive and maintain regulatory approvals for
our product candidates, we will not be able to commercialize our
products, which would substantially impair our ability to
generate revenues. |
With the exception of the December 2004 receipt of a CE
(European Conformity) Mark and April 2005 FDA clearance for
Cumulase, and the December 2005 FDA approval for Hylenex, none
of our product candidates have received regulatory approval from
the FDA or from any similar national regulatory agency or
authority in any other country in which we intend to do
business. Approval from the FDA is necessary to manufacture and
market pharmaceutical products in the United States. Most other
countries in which we may do business have similar requirements.
In December 2005 we received FDA approval for the spreading
agent Hylenex (formerly referred to as Enhanze SC), the first
product in our
Enhanzetm
Technology platform. Other manufacturers have FDA approved
products for use as spreading agents, including ISTA
Pharmaceuticals, Inc. (ISTA), with an ovine (ram)
derived hyaluronidase (Vitrase®) and Amphastar
Pharmaceuticals, Inc. (Amphastar), with a bovine
(bull) derived hyaluronidase,
Amphadasetm.
The FDA determined that the ISTA and Amphastar products were new
chemical entities and hence afforded market exclusivity,
precluding identical products from being marketed for a period
of five years. Hylenex was also designated as a new chemical
entity and, therefore, the FDA determined that the Vitrase or
Amphadase marketing exclusivities did not apply to Hylenex. If,
however, it is later determined that either or both of these
marketing exclusivities are applicable to Hylenex, or any of our
other products or product candidates, then such a decision could
have a material adverse impact on our operations.
During June 2005, we submitted an investigational new drug
application (IND) in order to begin clinical testing
of our Chemophase product candidate. We received authorization
to initiate clinical testing of Chemophase in August 2005, and
we commenced our initial clinical protocol under this IND in
October 2005.
The processes for obtaining FDA approval are extensive,
time-consuming and costly, and there is no guarantee that the
FDA will approve any NDAs that we intend to file with respect to
any of our product candidates, or that the timing of any such
approval will be appropriate for our product launch schedule and
other business priorities, which are subject to change. We have
not currently begun the NDA approval process for any of our
other potential products, and we may not be successful in
obtaining such approvals for any of our potential products.
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We may not receive regulatory approvals for our product
candidates for a variety of reasons, including unsuccessful
clinical trials. |
Clinical testing of pharmaceutical products is also a long,
expensive and uncertain process. Even if initial results of
pre-clinical studies or clinical trial results are promising, we
may obtain different results that fail to show the desired
levels of safety and efficacy, or we may not obtain FDA approval
for a variety of other reasons. The clinical trials of any of
our product candidates could be unsuccessful, which would
prevent us from obtaining regulatory approval and
commercializing the product. FDA approval can be delayed,
limited or not granted for many reasons, including, among others:
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FDA officials may not find a product candidate safe or effective
to merit an approval; |
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FDA officials may not find that the data from pre-clinical
testing and clinical trials justify approval, or they may
require additional studies that would make it commercially
unattractive to continue pursuit of approval; |
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the FDA may not approve our manufacturing processes or
facilities, or the processes or facilities of our contract
manufacturers or raw material suppliers; |
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the FDA may change its formal or informal approval policies, act
contrary to previous guidance, or adopt new regulations; |
S-5
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the exclusive rights granted to previously approved
hyaluronidase products may be determined to apply to our
products, including Hylenex, thus significantly delaying the
approval or commercialization, as applicable, of these products;
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the FDA may approve a product candidate for indications that are
narrow or under conditions that place the product at a
competitive disadvantage, which may limit our sales and
marketing activities or otherwise adversely impact the
commercial potential of a product. |
If the FDA does not approve our product candidates in a timely
fashion on commercially viable terms or we terminate development
of any of our product candidates due to difficulties or delays
encountered in the regulatory approval process, it will have a
material adverse impact on our business and we will be dependent
on the development of our other product candidates and/or our
ability to successfully acquire other products and technologies.
We may not receive regulatory approval of Chemophase, or any
other product candidates, in a timely manner, or at all.
In addition, we intend to market certain of our products, and
perhaps have certain of our products manufactured, in foreign
countries. The process of obtaining regulatory approvals in
foreign countries is subject to delay and failure for many of
the same reasons set forth above as well as for reasons that
vary from jurisdiction to jurisdiction.
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If our product candidates are approved by the FDA but do
not gain market acceptance, our business will suffer because we
may not be able to fund future operations. |
Assuming that we obtain the necessary regulatory approvals, a
number of factors may affect the market acceptance of any of our
existing product candidates or any other products we develop or
acquire in the future, including, among others:
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the price of our products relative to other therapies for the
same or similar treatments; |
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the perception by patients, physicians and other members of the
health care community of the effectiveness and safety of our
products for their prescribed treatments; |
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our ability to fund our sales and marketing efforts; |
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the degree to which the use of our products is restricted by the
product label approved by the FDA; |
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the effectiveness of our sales and marketing efforts; and |
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the introduction of generic competitors. |
If our products do not gain market acceptance, we may not be
able to fund future operations, including the development or
acquisition of new product candidates and/or our sales and
marketing efforts for our approved products, which would cause
our business to suffer.
In addition, our ability to market and promote our product
candidates will be restricted to the labels approved by the FDA.
If the approved labels are restrictive, our sales and marketing
efforts may be negatively affected.
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If we are unable to sufficiently develop our sales,
marketing and distribution capabilities or enter into agreements
with third parties to perform these functions, we will not be
able to commercialize products. |
We may not be successful in marketing and promoting our existing
product candidates or any other products we develop or acquire
in the future. We are currently in the process of developing our
sales, marketing and distribution capabilities. However, our
current capabilities in these areas are very limited. In order
to commercialize any products successfully, we must internally
develop substantial sales, marketing and distribution
capabilities, or establish collaborations or other arrangements
with third parties to perform these services. We do not have
extensive experience in these areas, and we may not be able to
establish adequate in-house sales, marketing and distribution
capabilities or engage and effectively manage relationships with
third parties to perform any or all of such services. To the
extent that we enter into co-
S-6
promotion or other licensing arrangements, our product revenues
are likely to be lower than if we directly marketed and sold our
products, and any revenues we receive will depend upon the
efforts of third parties, whose efforts may not be successful.
We have entered into non-exclusive distribution agreements with
MediCult AS, a Denmark-based distributor, MidAtlantic
Diagnostics, Inc., a New Jersey-based distributor, and Cook Ob/
Gyn Incorporated, an Indiana-based distributor, to market and
sell our Cumulase product. We have entered into an exclusive
sales and marketing agreement with Baxter Healthcare Corporation
(Baxter) to market and sell our Hylenex product
candidate in the United States and Puerto Rico. Baxter will also
market and sell Hylenex on an exclusive basis in the European
Union, pending applicable regulatory approvals.
We depend upon the efforts of these third parties to promote and
sell our current products, but there can be no assurance that
the efforts of these third parties will result in significant
product sales.
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If our sole contract manufacturer is unable to manufacture
our products, our product development and commercialization
efforts could be delayed or stopped. |
We have signed a commercial supply agreement with Avid
Bioservices, Inc. (Avid), a contract manufacturing
organization, to produce bulk recombinant human hyaluronidase
for clinical trials and commercial use. Avid will produce the
active pharmaceutical ingredient used in each of Cumulase,
Hylenex and Chemophase under current Good Manufacturing
Practices for commercial scale production and will provide
support for the chemistry, manufacturing and controls sections
for FDA regulatory filings. If Avid does not maintain its status
as an FDA-approved manufacturing facility, or is unable to
manufacture the active pharmaceutical ingredient used in our
products and product candidates for any other reason, the
commercialization of our products and the development of our
product candidates will be delayed and our business will be
adversely affected. We have not established and may not be able
to establish arrangements with additional manufacturers for
these ingredients or products should the existing supplies
become unavailable or in the event that our sole contract
manufacturer is unable to adequately perform its
responsibilities. Any delays or interruptions in the supply of
materials by Avid could cause the delay of clinical trials and
could delay or prevent the commercialization of product
candidates that may receive regulatory approval. Such delays or
interruptions would have a material adverse effect on our
business and financial condition.
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If we have problems with the third parties that prepare,
package and fill and finish our product candidates for
distribution, our product development and commercialization
efforts for these candidates could be delayed or stopped. |
In the event that any of our product candidates are used in
clinical trials or receive the necessary regulatory approval for
commercialization, we rely on third parties to prepare, package
and fill and finish the products prior to their distribution. If
we are unable to locate third parties to perform these functions
on terms that are economically acceptable to us, the progress of
clinical trials could be delayed or even suspended and the
commercialization of approved product candidates could be
delayed or prevented. We currently utilize a third-party to fill
and finish Cumulase. In addition, we currently utilize Baxter
Healthcare Corporation (Baxter) to fill and finish
Hylenex under a development and supply agreement.
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We may be unable to execute our strategic plan, which
could have a material adverse impact on our business and
financial condition. |
Our ability to execute our strategic plan is dependent upon our
ability to gain additional regulatory approvals for our current
product candidates in a timely manner, achieve market acceptance
for our approved products and develop additional product
candidates. If we are unable to execute our strategic plan on a
timely basis for any reason, our ability to generate revenues
would be substantially impaired, which would materially harm our
business and financial condition.
S-7
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Our inability to attract, hire and retain key management
and scientific personnel, and to recruit qualified independent
directors, could negatively affect our business. |
Our success depends on the performance of key management and
scientific employees with biotechnology experience. Given our
small staff size and programs currently under development, we
depend substantially on our ability to hire, train, retain and
motivate high quality personnel, especially our scientists and
management team in this field. In addition, we also rely on the
expertise and guidance of independent directors to develop
business strategies and to guide our execution of these
strategies. Due to changes in the regulatory environment for
public companies over the past few years, the demand for
independent directors has increased and it may be difficult for
us, due to competition from both like-sized and larger
companies, to recruit qualified independent directors.
Furthermore, if we were to lose key management personnel,
particularly Jonathan Lim, M.D., our chief executive
officer, or Gregory Frost, Ph.D, our chief scientific officer,
then we would likely lose some portion of our institutional
knowledge and technical know-how, potentially causing a
substantial delay in one or more of our development programs
until adequate replacement personnel could be hired and trained.
For example, Dr. Frost has been with us from soon after our
inception, and he possesses a substantial amount of knowledge
about our development efforts. If we were to lose his services,
we would experience delays in meeting our product development
schedules. We have not entered into any retention or other
agreements specifically designed to motivate officers or other
employees to remain with Halozyme other than standard agreements
relating to the vesting of stock options that every optionee of
Halozyme must enter into as a condition of receiving an option
grant.
We do not have key man life insurance policies on the lives of
any of our employees, including Dr. Lim and Dr. Frost.
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If actual future payments for allowances, discounts,
returns and rebates exceed the estimates we made at the time of
the sale of our products, our financial position, results of
operations and cash flows may be negatively impacted. |
We recognize product revenue net of estimated allowances for
discounts, returns and rebates. Such estimates are inherently
difficult because we have limited experience selling our
products and any judgments that we make relating to discounts,
returns and rebates are subjective. We will accept the return of
our product that is damaged in accordance with our return goods
policy and procedures. We may also give credits for expired
product. Actual results may differ significantly from our
estimated allowances for discounts, returns and rebates. Any
changes in estimates and assumptions based upon actual results
may have an impact on our results of operations and/or financial
condition. In addition, our financial position, results of
operations and cash flows may be negatively impacted if actual
future payments for discounts, returns and rebates exceed the
estimates we made at the time of the sale of our products.
Risks Related To Our Stock
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Future sales of shares of our common stock, including
sales of shares issued in recent financings, may negatively
affect our stock price. |
As a result of our January 2004 private financing transaction,
we issued warrants to private investors for the purchase of
10,461,943 shares of common stock at purchase prices ranging
from $0.77 to $1.75 per share. Currently, approximately
8.2 million shares of common stock remain issuable upon
exercise of these warrants. The exercise of these warrants could
result in significant dilution to shareholders at the time of
exercise. We have registered the sale by the holders of
23,902,482 of the shares issued in the January 2004 private
financing transaction and issuable upon exercise of the warrants
issued in that transaction.
As a result of our October 2004 financing transaction, we issued
7,925,715 shares of common stock to certain institutional and
accredited investors for $13.9 million in gross proceeds.
In connection with this transaction, we also issued warrants for
the purchase of 2,609,542 shares of common stock. We have
S-8
registered the sale by the holders of 10,535,257 shares issued
to the private investors and issuable upon exercise of the
warrants.
We currently have an effective shelf registration statement
which will permit us, from time to time, to offer and sell up to
$50 million of equity or debt securities. Sales of
substantial amounts of shares of our common stock, or even the
potential for such sales through the exercise of warrants, could
lower the market price of our common stock and impair the
Companys ability to raise capital through the sale of
equity securities. In the future, we may issue additional
options, warrants or other derivative securities convertible
into Halozyme common stock.
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Our stock price is subject to significant
volatility. |
We participate in a highly dynamic industry, which often results
in significant volatility in the market price of common stock
irrespective of company performance. As a result, our closing
high and low stock prices during the twelve months ended
October 31, 2005 were $3.10 and $1.50, respectively. We
expect our stock price to continue to be subject to significant
volatility and, in addition to the other risks and uncertainties
described elsewhere in this report, any of the following factors
may lead to a significant drop in our stock price:
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general negative conditions in the healthcare industry; |
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general negative conditions in the financial markets; |
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the failure, for any reason, to obtain FDA approval for any of
our products; |
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for those products that are approved by the FDA, the failure of
the FDA to approve such products in a timely manner consistent
with the FDAs historical approval process; |
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the exclusive rights granted to previously approved
hyaluronidase products may be determined to apply to our
products, including Hylenex, thus significantly delaying the
approval or commercialization, as applicable, of these products; |
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our failure, or the failure of our third-party partners, to
successfully commercialize products approved by the FDA; |
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our failure, or the failure of our third-party partners, to
generate product revenues anticipated by investors; |
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problems with our sole contract manufacturer; |
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the exercise of our right to redeem certain outstanding warrants
to purchase our common stock; and |
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the sale of additional debt and/or equity securities by us. |
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Trading in our stock has been limited, so investors may
not be able to sell as much stock as they want to at prevailing
market prices. |
During the ninety day period ending October 31, 2005, our
average daily trading volume was approximately 55,000 shares. If
limited trading in our stock continues, it may be difficult for
shareholders to sell their shares in the public market at any
given time at prevailing prices.
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Our decision to redeem outstanding warrants may drive down
the market price of our stock. |
We may have the ability to redeem certain outstanding warrants,
under certain conditions, that may be exercised for
approximately 5.9 million shares of common stock. The
redemption price for these warrants is $0.01 per share, but the
warrant holders have the opportunity to exercise their warrants
prior to redemption at the price of $1.75 per share. If we
decide to redeem any portion of our outstanding warrants in the
future, some selling security holders may choose to sell
outstanding shares of common stock in order to finance the
exercise of the warrants prior to their redemption. This pattern
of selling may result in a reduction of our common stocks
market price.
S-9
Risks Related To Our Industry
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Compliance with the extensive government regulations to
which we are subject is expensive and time consuming, and may
result in the delay or cancellation of product sales,
introductions or modifications. |
Extensive industry regulation has had, and will continue to
have, a significant impact on our business. All pharmaceutical
companies, including Halozyme, are subject to extensive,
complex, costly and evolving regulation by the federal
government, principally the FDA and to a lesser extent by the
U.S. Drug Enforcement Administration (DEA), and
foreign and state government agencies. The Federal Food, Drug
and Cosmetic Act, the Controlled Substances Act and other
domestic and foreign statutes and regulations govern or
influence the testing, manufacturing, packaging, labeling,
storing, record keeping, safety, approval, advertising,
promotion, sale and distribution of our products. Under certain
of these regulations, Halozyme and its contract suppliers and
manufacturers are subject to periodic inspection of its or their
respective facilities, procedures and operations and/or the
testing of products by the FDA, the DEA and other authorities,
which conduct periodic inspections to confirm that Halozyme and
its contract suppliers and manufacturers are in compliance with
all applicable regulations. The FDA also conducts pre-approval
and post-approval reviews and plant inspections to determine
whether our systems, or our contract suppliers and
manufacturers processes, are in compliance with current
good manufacturing practices and other FDA regulations. If we,
or our contract supplier, fail these inspections, we may not be
able to commercialize our product in a timely manner without
incurring significant additional costs, or at all.
In addition, the FDA imposes a number of complex regulatory
requirements on entities that advertise and promote
pharmaceuticals, including, but not limited to, standards and
regulations for direct-to-consumer advertising, off-label
promotion, industry-sponsored scientific and educational
activities, and promotional activities involving the Internet.
We are dependent on receiving FDA and other governmental
approvals prior to manufacturing, marketing and shipping our
products. Consequently, there is always a risk that the FDA or
other applicable governmental authorities will not approve our
products, or will take post-approval action limiting or revoking
our ability to sell our products, or that the rate, timing and
cost of such approvals will adversely affect our product
introduction plans or results of operations.
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Our suppliers and sole manufacturer are subject to
regulation by the FDA and other agencies, and if they do not
meet their commitments, we would have to find substitute
suppliers or manufacturers, which could delay the supply of our
products to market. |
Regulatory requirements applicable to pharmaceutical products
make the substitution of suppliers and manufacturers costly and
time consuming. We have no internal manufacturing capabilities
and are, and expect to be in the future, entirely dependent on
contract manufacturers and suppliers for the manufacture of our
products and for their active and other ingredients. The
disqualification of these manufacturers and suppliers through
their failure to comply with regulatory requirements could
negatively impact our business because the delays and costs in
obtaining and qualifying alternate suppliers (if such
alternative suppliers are available, which we cannot assure)
could delay clinical trials or otherwise inhibit our ability to
bring approved products to market, which would have a material
adverse affect on our business and financial condition.
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We may be required to initiate or defend against legal
proceedings related to intellectual property rights, which may
result in substantial expense, delay and/or cessation of the
development and commercialization of our products. |
We rely on patents to protect our intellectual property rights.
The strength of this protection, however, is uncertain. For
example, it is not certain that:
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our patents and pending patent applications cover products
and/or technology that we invented first; |
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we were the first to file patent applications for these
inventions; |
S-10
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others will not independently develop similar or alternative
technologies or duplicate our technologies; |
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any of our pending patent applications will result in issued
patents; and |
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any of our issued patents, or patent pending applications that
result in issued patents, will be held valid and infringed in
the event the patents are asserted against others. |
We currently own or license several U.S. patents and also
have pending patent applications. There can be no assurance that
our existing patents, or any patents issued to us as a result of
such applications, will provide a basis for commercially viable
products, will provide us with any competitive advantages, or
will not face third-party challenges or be the subject of
further proceedings limiting their scope or enforceability.
We may become involved in interference proceedings in the
U.S. Patent and Trademark Office to determine the priority
of our inventions. In addition, costly litigation could be
necessary to protect our patent position. We also rely on
trademarks to protect the names of our products. These
trademarks may be challenged by others. If we enforce our
trademarks against third parties, such enforcement proceedings
may be expensive. We also rely on trade secrets, unpatented
proprietary know-how and continuing technological innovation
that we seek to protect with confidentiality agreements with
employees, consultants and others with whom we discuss our
business. Disputes may arise concerning the ownership of
intellectual property or the applicability or enforceability of
these agreements, and we might not be able to resolve these
disputes in our favor.
In addition to protecting our own intellectual property rights,
third parties may assert patent, trademark or copyright
infringement or other intellectual property claims against us
based on what they believe are their own intellectual property
rights. If we become involved in any intellectual property
litigation, we may be required to pay substantial damages,
including but not limited to treble damages, for past
infringement if it is ultimately determined that our products
infringe a third-partys intellectual property rights. Even
if infringement claims against us are without merit, defending a
lawsuit takes significant time, may be expensive and may divert
managements attention from other business concerns.
Further, we may be stopped from developing, manufacturing or
selling our products until we obtain a license from the owner of
the relevant technology or other intellectual property rights.
If such a license is available at all, it may require us to pay
substantial royalties or other fees.
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Future acquisitions could disrupt our business and harm
our financial condition. |
In order to remain competitive, we may decide to acquire
additional businesses, products and technologies. As we have
limited experience in evaluating and completing acquisitions,
our ability as an organization to make such acquisitions is
unproven. Acquisitions could require significant capital
infusions and could involve many risks, including, but not
limited to, the following:
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we may have to issue convertible debt or equity securities to
complete an acquisition, which would dilute our shareholders and
could adversely affect the market price of our common stock; |
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an acquisition may negatively impact our results of operations
because it may require us to incur large one-time charges to
earnings, amortize or write down amounts related to goodwill and
other intangible assets, or incur or assume substantial debt or
liabilities, or it may cause adverse tax consequences,
substantial depreciation or deferred compensation charges; |
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we may encounter difficulties in assimilating and integrating
the business, technologies, products, personnel or operations of
companies that we acquire; |
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certain acquisitions may disrupt our relationship with existing
customers who are competitive with the acquired business; |
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acquisitions may require significant capital infusions and the
acquired businesses, products or technologies may not generate
sufficient revenue to offset acquisition costs; |
S-11
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an acquisition may disrupt our ongoing business, divert
resources, increase our expenses and distract our management; |
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acquisitions may involve the entry into a geographic or business
market in which we have little or no prior experience; and |
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key personnel of an acquired company may decide not to work for
us. |
If any of these risks occurred, it could adversely affect our
business, financial condition and operating results. We cannot
assure you that we will be able to identify or consummate any
future acquisitions on acceptable terms, or at all. If we do
pursue any acquisitions, it is possible that we may not realize
the anticipated benefits from such acquisitions or that the
market will not view such acquisitions positively.
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If third-party reimbursement is not available, our
products may not be accepted in the market. |
Our ability to earn sufficient returns on our products will
depend in part on the extent to which reimbursement for our
products and related treatments will be available from
government health administration authorities, private health
insurers, managed care organizations and other healthcare
providers.
Third-party payers are increasingly attempting to limit both the
coverage and the level of reimbursement of new drug products to
contain costs. Consequently, significant uncertainty exists as
to the reimbursement status of newly approved healthcare
products. Third-party payers may not establish adequate levels
of reimbursement for the products that we commercialize, which
could limit their market acceptance and result in a material
adverse effect on our financial condition.
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The rising cost of healthcare and related pharmaceutical
product pricing has led to cost-containment pressures that could
cause us to sell our products at lower prices, resulting in less
revenue to us. |
Any of our products that have been or in the future are approved
by the FDA may be purchased or reimbursed by state and federal
government authorities, private health insurers and other
organizations, such as health maintenance organizations and
managed care organizations. Such third-party payors increasingly
challenge pharmaceutical product pricing. The trend toward
managed healthcare in the United States, the growth of such
organizations, and various legislative proposals and enactments
to reform healthcare and government insurance programs,
including the Medicare Prescription Drug Modernization Act of
2003, could significantly influence the manner in which
pharmaceutical products are prescribed and purchased, resulting
in lower prices and/or a reduction in demand. Such cost
containment measures and healthcare reforms could adversely
affect our ability to sell our products. Furthermore, individual
states have become increasingly aggressive in passing
legislation and implementing regulations designed to control
pharmaceutical product pricing, including price or patient
reimbursement constraints, discounts, restrictions on certain
product access, importation from other countries and bulk
purchasing. Legally mandated price controls on payment amounts
by third-party payors or other restrictions could negatively and
materially impact our revenues and financial condition. We
anticipate that we will encounter similar regulatory and
legislative issues in most other countries outside the United
States.
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We face intense competition and rapid technological change
that could result in the development of products by others that
are superior to the products we are developing. |
We have numerous competitors in the United States and abroad,
including, among others, major pharmaceutical and specialized
biotechnology firms, universities and other research
institutions that may be developing competing products. Such
competitors include, but are not limited to, Sigma-Aldrich
Corporation, ISTA Pharmaceuticals, Inc. (ISTA), and Amphastar
Pharmaceuticals, Inc., among others. These competitors may
develop technologies and products that are more effective or
less costly than our current or future product candidates or
that could render our technologies and product candidates
obsolete or noncompetitive. Many of these competitors have
substantially more resources and product development,
manufacturing and marketing experience and capabilities than we
do. In addition, many of our competitors
S-12
have significantly greater experience than we do in undertaking
pre-clinical testing and clinical trials of pharmaceutical
product candidates and obtaining FDA and other regulatory
approvals of products and therapies for use in healthcare. Other
manufacturers have FDA approved products for use as spreading
agents, including ISTA Pharmaceuticals, Inc. (ISTA),
with an ovine-derived hyaluronidase (Vitrase®) and
Amphastar Pharmaceuticals, Inc., with a bovine
(bull) hyaluronidase,
Amphadasetm.
The FDA determined that each of these products were new chemical
entities and hence afforded market exclusivity, precluding
identical products from being marketed for a period of five
years. On March 3, 2005, the FDA confirmed to us that
Hylenex would be designated a new chemical entity and, based on
this confirmation, we believe that it is unlikely that the
Vitrase or Amphadase marketing exclusivity will apply to
Hylenex. If, however, it is determined in the future that either
or both market exclusivities apply to Hylenex, then such a
decision would have a material adverse impact on our operations.
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We are exposed to product liability claims, and insurance
against these claims may not be available to us on reasonable
terms or at all. |
We might incur substantial liability in connection with clinical
trials or the sale of our products. Product liability insurance
is expensive and in the future may not be available on
commercially acceptable terms, or at all. We currently carry a
limited amount of product liability insurance. A successful
claim or claims brought against us in excess of our insurance
coverage could materially harm our business and financial
condition.
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We may have difficulty implementing in a timely manner the
internal controls over financial reporting necessary to allow
our management to report on the effectiveness of our internal
controls over financial reporting, and we may incur substantial
costs in order to comply with the requirements of the
Sarbanes-Oxley Act of 2002. |
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
we will be required to furnish a report of managements
assessment of the effectiveness of our internal controls over
financial reporting as part of our Annual Report for the fiscal
year ending December 31, 2006. Our registered public
accountant will then be required to attest to, and report on,
our assessment. In order to issue our report, our management
must document both the design for our internal controls over
financial reporting and the testing processes that support
managements evaluation and conclusion. There can be no
assurance that we will be able to complete the work necessary
for our management to issue its management report in a timely
manner, or that management will be able to report that our
internal controls over financial reporting are effective.
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Provisions in our charter documents and Nevada law may
inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our common stock, and
could entrench management. |
Our charter and bylaws contain provisions that may discourage
unsolicited takeover proposals that shareholders may consider to
be in their best interests. These provisions include:
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a classified board of directors; |
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advance notice requirements for nominations for election to the
board of directors; and |
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special voting requirements for the amendment of our charter and
bylaws. |
We are also subject to anti-takeover provisions under Nevada
law, each of which could delay or prevent a change of control.
Together, these provisions may make more difficult the removal
of management and may discourage transactions that otherwise
could involve payment of a premium over prevailing market prices
for our common stock.
S-13
Risks Related To This Offering
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Our use of the offering proceeds may not yield a favorable
return on your investment. |
We currently anticipate using the net proceeds from this
offering to fund: (i) research and development activities;
(ii) clinical trials; (iii) other working capital and
general corporate purposes. In addition, we may use a portion of
the net proceeds to acquire businesses, products or technologies
that are complementary to our current or future business and
product lines. Our management has broad discretion over how
these proceeds are used and could spend the proceeds in ways
with which you may not agree. Pending the use of the proceeds in
this offering, we will invest them. However, the proceeds may
not be invested in a manner that yields a favorable or any
return.
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As a new investor, you will incur substantial dilution as
a result of this offering and future equity issuances, and as a
result, our stock price could decline. |
The offering price will be substantially higher than the net
tangible book value per share of our outstanding common stock.
As a result, based on our capitalization as of
September 30, 2005, investors purchasing common stock in
this offering will incur immediate dilution of $1.41 per
share, based on the offering price of $1.75 per share. We
believe that following this offering, our current cash, cash
equivalents and short-term investments, together with the
anticipated proceeds from this offering, will be sufficient to
fund our operations for at least the next 12 months;
however, our projected revenue may decrease or our expenses may
increase and that would lead to our cash resources being
consumed before that time. In addition to this offering, subject
to market conditions and other factors, we likely will pursue
raising additional funds in the future, as we continue to build
our business. In future years, we will likely need to raise
significant additional funding to finance our operations and to
fund clinical trials, regulatory submissions and the
development, manufacture and marketing of other products under
development and new product opportunities. Accordingly, we may
conduct substantial future offerings of equity or debt
securities. The exercise of outstanding options and warrants and
future equity issuances, including future public offerings or
future private placements of equity securities and any
additional shares issued in connection with acquisitions, will
also result in dilution to investors. In addition, the market
price of our common stock could fall as a result of resales of
any of these shares of common stock due to an increased number
of shares available for sale in the market.
S-14
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying base prospectus,
including the documents that we incorporate by reference,
contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act. Any statements about our
expectations, beliefs, plans, objectives, assumptions or future
events or performance are not historical facts and may be
forward-looking. These statements are often, but are not always,
made through the use of words or phrases such as
anticipates, estimates,
plans, projects, continuing,
ongoing, expects, management
believes, we believe, we intend
and similar words or phrases. Accordingly, these statements
involve estimates, assumptions and uncertainties which could
cause actual results to differ materially from those expressed
in them. Any forward-looking statements are qualified in their
entirety by reference to the factors discussed throughout this
prospectus, and in particular those factors listed under the
section entitled Risk Factors.
Because the factors referred to in the preceding paragraph could
cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements we make, you should
not place undue reliance on any such forward-looking statements.
Further, any forward-looking statement speaks only as of the
date on which it is made, and we undertake no obligation to
update any forward-looking statement or statements to reflect
events or circumstances after the date on which such statement
is made or to reflect the occurrence of unanticipated events.
New factors emerge from time to time, and it is not possible for
us to predict which factors will arise. In addition, we cannot
assess the impact of each factor on our business or the extent
to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any
forward-looking statements.
S-15
USE OF PROCEEDS
We estimate that the net proceeds we will receive from this
offering will be approximately $14.8 million after
deducting the placement agents fee and estimated offering
expenses and assuming that we sell the maximum number of shares
offered hereby.
We currently anticipate using the net proceeds from this
offering to fund: (i) research and development activities;
(ii) clinical trials; and (iii) other working capital
and general corporate purposes.
The amounts and timing of the expenditures may vary
significantly, depending on numerous factors, including the
success of our commercialization activities and the progress of
our clinical trials and other development efforts as well as the
amount of cash used in our operations. Accordingly, our
management will have broad discretion in the application of the
net proceeds and investors will be relying on the judgment of
our management regarding the application of the proceeds of this
offering. We reserve the right to change the use of these
proceeds as a result of certain contingencies such as the
results of our commercialization activities, competitive
developments, opportunities to acquire products, technologies or
businesses and other factors.
Pending the uses described above, we plan to invest the net
proceeds of this offering in short- and medium-term,
interest-bearing obligations, investment-grade instruments,
certificates of deposit or direct or guaranteed obligations of
the U.S. government.
S-16
DILUTION
If you invest in our common stock, your interest will be diluted
to the extent of the difference between the public offering
price per share of our common stock and the net tangible book
value per share of our common stock after this offering. As of
September 30, 2005, we had a net tangible book value of
$5.6 million, or $0.11 per share of common stock. Net
tangible book value per share is equal to our total tangible
assets (total assets less intangible assets) less total
liabilities, divided by the number of shares of our outstanding
common stock.
Dilution in net tangible book value per share represents the
difference between the amount per share paid by purchasers of
shares of common stock in this offering and the net tangible
book value per share of common stock immediately after the
completion of this offering. After giving effect to our sale of
9,171,429 shares of common stock in this offering at the
public offering price of $1.75 per share and after
deducting placement agents fee and estimated offering
expenses payable by us, our pro forma net tangible book value as
of September 30, 2005 would have been $20.3 million,
or $0.34 per share. This amount represents an immediate
increase in net tangible book value of $0.23 per share to
our existing shareholders and an immediate dilution in net
tangible book value of $1.41 per share to new investors.
The following table illustrates this per share dilution:
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Public offering price per share
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1.75 |
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Net tangible book value per share as of September 30, 2005
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0.11 |
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Increase in net tangible book value per share attributable to
new investors
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0.23 |
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Pro forma net tangible book value per share after this offering
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0.34 |
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Dilution per share to new investors
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$ |
1.41 |
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These calculations exclude:
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10,000 shares of our common stock subject to outstanding options
under our 2005 Outside Directors Stock Plan as of
December 1, 2005, having a weighted average exercise price
of $1.75 per share; |
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2,640,500 shares of our common stock subject to outstanding
options under our 2004 Stock Plan (including 125,000 shares of
common stock subject to a nonstatutory option issued outside of
the 2004 Stock Plan to a non-executive employee) as of
December 1, 2005, having a weighted average exercise price
of $2.34 per share; |
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6,024,739 shares of our common stock subject to outstanding
options under our Amended and Restated 2001 Stock Plan as of
December 1, 2005, having a weighted average exercise price
of $0.41 per share; and |
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11,622,048 shares of our common stock issuable upon exercise of
outstanding warrants as of December 1, 2005, having a
weighted average exercise price of $1.59 per share. |
To the extent that any of these options or warrants are
exercised, there will be further dilution to new investors.
To the extent that additional capital is raised through the sale
of equity or convertible debt securities, the issuance of these
securities could result in further dilution to our shareholders.
S-17
PLAN OF DISTRIBUTION
We are offering the shares of our common stock through placement
agents. Subject to the terms and conditions contained in the
placement agent agreement dated December 12, 2005, SG
Cowen & Co., LLC, Rodman & Renshaw, LLC and
Roth Capital Partners, LLC have agreed to act as the placement
agents for the sale of up to 9,171,429 shares of our common
stock. The placement agents are not purchasing or selling any
shares by this prospectus supplement or accompanying prospectus,
nor are they required to arrange the purchase or sale of any
specific number or dollar amount of shares, but have agreed to
use commercially reasonable efforts to arrange for the sale of
all 9,171,429 shares.
The placement agent agreement provides that the obligations of
the placement agents and the investors are subject to certain
conditions precedent, including the absence of any material
adverse change in our business and the receipt of certain
opinions, letters and certificates from our counsel, our
independent auditors and us.
Confirmations and definitive prospectuses will be delivered, or
otherwise made available, to all investors who agree to purchase
shares of the common stock, informing investors of the closing
date as to such shares. We currently anticipate that closing of
the sale of 9,171,429 shares of common stock will take
place on or about December 16, 2005. Investors will also be
informed of the date and manner in which they must transmit the
purchase price for their shares.
On the scheduled closing date, the following will occur:
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we will receive funds in the amount of the aggregate purchase
price; and |
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SG Cowen & Co., LLC will receive the placement
agents fee on behalf of all placement agents in accordance
with the terms of the placement agent agreement. |
We will pay the placement agents an aggregate commission equal
to 7% of the gross proceeds of the sale of shares of common
stock in the offering. In no event will the total amount of
compensation paid to the placement agents and other securities
brokers and dealers upon completion of this offering exceed 8%
of the maximum gross proceeds of the offering. The estimated
offering expenses payable by us, in addition to the placement
agents fee, are approximately $150,000, which includes
legal, accounting and printing costs and various other fees
associated with registering and listing the shares of common
stock. After deducting certain fees due to the placement agents
and our estimated offering expenses, we expect the net proceeds
from this offering to be up to approximately $14.8 million.
We have agreed to indemnify the placement agents against certain
liabilities, including liabilities under the Securities Act of
1933, as amended, and liabilities arising from breaches of
representations and warranties contained in the placement agent
agreement. We have also agreed to contribute to payments the
placement agents may be required to make in respect of such
liabilities.
We, along with our executive officers and directors, have agreed
to certain lock-up provisions with regard to future sales of our
common stock for a period of 90 days after the offering as
set forth in the placement agent agreement.
The placement agent agreement with SG Cowen & Co.,
LLC, Rodman & Renshaw, LLC and Roth Capital Partners,
LLC is included as an exhibit to our Current Report on
Form 8-K that will be filed with the Securities and
Exchange Commission in connection with the consummation of this
offering.
The transfer agent for our common stock is Corporate Stock
Transfer Company.
Our common stock is traded on The American Stock Exchange under
the symbol HTI.
S-18
LEGAL MATTERS
The validity of the securities offered hereby and certain other
legal matters relating to the offering will be passed upon for
us by Hale Lane Peek Dennison and Howard, Reno, Nevada. Brown
Raysman Millstein Felder & Steiner LLP in New York, New York
is acting as counsel to the placement agents in connection with
various legal matters relating to the shares of common stock
offered hereby.
EXPERTS
The financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-KSB for the year
ended December 31, 2004, have been so incorporated in
reliance on the report of Cacciamatta Accountancy Corporation,
an independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
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 SECs public reference rooms
located at Room 1024, 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 rooms. We are
also required to file electronic versions of these documents
with the SEC, which may be accessed from the SECs Internet
site at http://www.sec.gov or at our website
http://www.halozyme.com.
The SEC allows us to incorporate by reference the
information we file with it, which means that we can disclose
important information to you by referring you to those
documents. The information incorporated by reference is
considered to be part of this prospectus supplement, and
information that we file with the SEC later will automatically
update and supersede the information in this prospectus
supplement or incorporated by reference. The following documents
filed by us and any future filings made by us with the SEC under
Sections 13(a), 13(c) 14 or 15(d) of the Securities
Exchange Act of 1934, until we sell all of the securities
offered hereby, are incorporated by reference in this prospectus:
1. Our Annual Report on Form 10-KSB for the year ended
December 31, 2004, as amended on the Form 10-KSB/ A
filed on March 29, 2005;
2. Our Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 2005;
3. Our Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 2005;
4. Our Quarterly Report on Form 10-QSB for the fiscal
quarter ended September 30, 2005;
5. Our proxy statement for our annual shareholders
meeting on April 21, 2005;
6. Our Current Reports on Form 8-K filed with SEC on
February 22, 2005; March 28, 2005; March 30,
2005; April 19, 2005; May 26, 2005; July 1, 2005;
July 6, 2005; August 12, 2005; December 5, 2005;
and December 9, 2005;
7. The description of our common stock set forth in our
registration statement on Form SB-2/ A, file
No. 333-114776, filed with the SEC on July 23, 2004;
and
8. All of the filings pursuant to the Securities Exchange
Act that we may make after the date of this prospectus
supplement and prior to the termination of this offering.
We will furnish without charge to you, on written or oral
request, a copy of any or all of the documents incorporated by
reference. You should direct any requests for documents to David
Ramsay, Chief Financial Officer, 11588 Sorrento Valley
Road, Suite 17, San Diego, California 92121, telephone:
(858) 794-8889.
S-19
PROSPECTUS
$50,000,000
HALOZYME THERAPEUTICS, INC.
Common Stock
Preferred Stock
Debt Securities
Warrants
We may from time to time issue, in one or more series or
classes, up to $50,000,000 in aggregate principal amount of our
common stock, preferred stock, debt securities and/or warrants.
We may offer these securities separately or together. We will
specify in the accompanying prospectus supplement the terms of
the securities being offered. We may not sell any securities
under this prospectus without delivery of the applicable
prospectus supplement.
We will provide the specific terms of these securities in
supplements to this prospectus. Any prospectus supplement may
also add, update or change information contained in this
prospectus. You should read this prospectus and any accompanying
prospectus supplement carefully before you invest. THIS
PROSPECTUS MAY NOT BE USED TO OFFER OR SELL ANY SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
Our common stock is listed on The American Stock Exchange under
the symbol HTI. On June 8, 2005, the last
reported sale price for our common stock was $2.00 per share.
The securities offered by this prospectus or any prospectus
supplement may be offered directly to investors or to or through
underwriters, dealers or other agents. If any underwriters or
dealers are involved in the sale of any securities offered by
this prospectus and any prospectus supplement, their names, and
any applicable purchase price, fee, commission or discount
arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable
prospectus supplement.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SEE RISK FACTORS BEGINNING ON PAGE 3 FOR A
DISCUSSION OF MATERIAL RISKS YOU SHOULD CONSIDER BEFORE YOU
INVEST IN OUR SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is June 17, 2005.
You should rely only on the information provided or incorporated
by reference in this prospectus. We have not authorized anyone
to provide you with additional or different information. This
document may only be used where it is legal to sell these
securities. You should not assume that any information in this
prospectus is accurate as of any date other than the date of
this prospectus. Information incorporated by reference in this
prospectus is accurate only as of the date of the document
incorporated by reference. In this prospectus, unless otherwise
indicated, the words Halozyme, we,
us, and our refer to Halozyme
Therapeutics, Inc. and its subsidiaries.
TABLE OF CONTENTS
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FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by
reference, contains forward-looking statements within the
meaning of Section 27A of the Securities Act and
Section 21E of the Securities Exchange Act. Any statements
about our expectations, beliefs, plans, objectives, assumptions
or future events or performance are not historical facts and may
be forward-looking. These statements are often, but are not
always, made through the use of words or phrases such as
anticipates, estimates,
plans, projects, continuing,
ongoing, expects, management
believes, we believe, we intend
and similar words or phrases. Accordingly, these statements
involve estimates, assumptions and uncertainties which could
cause actual results to differ materially from those expressed
in them. Any forward-looking statements are qualified in their
entirety by reference to the factors discussed throughout this
prospectus, and in particular those factors listed under the
section entitled Risk Factors.
Because the factors referred to in the preceding paragraph could
cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements we make, you should
not place undue reliance on any such forward-looking statements.
Further, any forward-looking statement speaks only as of the
date on which it is made, and we undertake no obligation to
update any forward-looking statement or statements to reflect
events or circumstances after the date on which such statement
is made or to reflect the occurrence of unanticipated events.
New factors emerge from time to time, and it is not possible for
us to predict which factors will arise. In addition, we cannot
assess the impact of each factor on our business or the extent
to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any
forward-looking statements.
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PROSPECTUS SUMMARY
The following summary highlights selected
information from this prospectus and in information incorporated
by reference. Because this is a summary, it does not contain all
the information about us that may be important to you. You
should read this entire prospectus and the other documents and
the financial statements and related notes which are
incorporated by reference in this prospectus.
Our Business
Halozyme is a development stage
biopharmaceutical company dedicated to the development and
commercialization of recombinant human enzymes for the
infertility, ophthalmology, and oncology markets.
Our products under development are based
on intellectual property covering the family of human enzymes
known as hyaluronidases. Hyaluronidases are enzymes
(proteins) that break down hyaluronic acid, which is a
naturally occurring substance in the human body. Currently, we
have no product revenue and all of our potential products, with
the exception of
Cumulasetm,
are either in the discovery, pre-clinical, or pre-NDA approval
stage. It may be years, if ever, before we are able to obtain
the necessary regulatory approvals necessary to generate
meaningful revenue from the sale of these potential products. In
addition, we have never generated any revenue from our
biopharmaceutical operations and we have had operating and net
losses each year since inception. We have accumulated a deficit
of $16,264,958 from inception through March 31, 2005.
Our technology is based on recombinant
human PH20 (rHuPH20), a human synthetic version of hyaluronidase
that degrades hyaluronic acid, a space-filling,
gel-like substance that is a major component of
tissues throughout the body, such as the skin and eyes. The PH20
enzyme is a naturally occurring enzyme that digests hyaluronic
acid to temporarily break down the gel, thereby facilitating the
penetration and dispersion of other drugs that are injected in
the skin or in the muscle.
Bovine and ovine derived hyaluronidases
have been used in multiple therapeutic areas, including in vitro
fertilization and ophthalmology, where a FDA-approved bovine
version was used as a drug delivery agent to enhance dispersion
of local anesthesia for cataract surgery for over 50 years.
Despite the multiple potential therapeutic applications for
hyaluronidase, there are problems with existing and potential
animal derived product offerings, including:
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Impurity: Most such commercial enzyme
preparations are crude extracts from cattle testes and are
typically less than 1-5% pure.
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Prion disease: Cattle testes are an organ
with the highest concentration of hyaluronidase, but also with
the highest levels of a protein implicated in the development of
neurodegenerative disorders associated with prion disease, such
as Mad Cow Disease.
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Immunogenicity: Hyaluronidases can also be
found in bacteria, leeches, certain venoms, and marine
organisms. Very few companies are pursuing clinical development
of any of these enzymes. Regardless, all such preparations are
non-human, and are therefore likely to elicit potent immune
reactions, possess endotoxin, or have some of the same defects
as slaughterhouse derivations.
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There have been successes in replacing
animal-derived drugs with human recombinant biologics, as in the
case of insulin, Pulmozyme® and human growth hormone. Our
objective is to execute this recombinant human enzyme
replacement strategy by applying our products under development
to key markets in multiple therapeutic areas, beginning with in
vitro fertilization and ophthalmology.
As an alternative to the existing
animal-derived drugs, our proprietary technology, as evidenced
by our exclusive license with the University of Connecticut of
the patent covering the DNA sequence which encodes human
hyaluronidase, may be utilized to expand existing markets and
create new markets. Gaps in existing hyaluronidase offerings may
create demand for our solution.
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Deliatroph Pharmaceuticals, Inc., our
predecessor company, was founded on February 26, 1998. Our
operations to date have been limited to organizing and staffing,
acquiring, developing and securing technology and undertaking
product development for a limited number of product candidates.
As we have not begun principal operations of commercializing a
product candidate, our financial statements have historically
been presented as a development stage company.
Our principal executive offices are
located at 11588 Sorrento Valley Road, Suite 17, San Diego,
California 92121. Our telephone number is (858) 794-8889.
This Prospectus
This prospectus is part of a registration
statement that we filed with the SEC utilizing a
shelf registration process. Under this shelf
process, we may sell the securities described in this prospectus
in one or more offerings up to a total dollar amount of
$50 million. We have provided in this prospectus a general
description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering.
We may also add, update or change in the prospectus supplement
any of the information contained in this prospectus. This
prospectus, together with applicable prospectus supplements,
includes all material information relating to this offering. You
should read both this prospectus and any prospectus supplement
together with the additional information described under the
heading Where You Can Find More Information.
Risk Factors
You should consider carefully all of the
information contained in and incorporated by reference in this
prospectus, including the information set forth under the
caption Risk Factors, before making an investment in
the securities offered.
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RISK FACTORS
You should carefully consider the
following risk factors before purchasing any of our securities.
The risks and uncertainties described below are not the only
ones we face. There may be additional risks and uncertainties
that are not known to us or that we do not consider to be
material at this time. If the events described in these risks
occur, our business, financial condition and results of
operations would likely suffer. This prospectus contains
forward-looking statements that involve risks and uncertainties.
Our actual results may differ significantly from the results
discussed in the forward-looking statements. This section
discusses the risk factors that might cause those differences.
You should also consider the additional information set forth in
our SEC reports on Forms 10-KSB, 10-QSB and 8-K and in the
other documents considered a part of this prospectus. See
Where You Can Find More Information.
Risks Related To Our Business
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We have not generated any revenue
from product sales to date; we have a history of net losses and
negative cash flow, and may never achieve or maintain
profitability. |
We have not generated any revenue from
product sales to date and may never generate significant
revenues from future product sales. Even if we do achieve
significant revenues from product sales, we expect to incur
significant operating losses over the next several years. We
have never been profitable, and may never become profitable.
Through March 31, 2005, we have incurred aggregate net
losses of $16,264,958.
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We may need to raise funds in the
next twelve months, and there can be no assurance that such
funds will be available. |
During the next twelve months we may need
to raise additional capital to complete the steps required to
obtain FDA or other regulatory approval for any of our products.
If we engage in acquisitions of companies, products, or
technology in order to execute our business strategy, we may
need to raise additional capital. We may be required to raise
additional capital in the future through the public offering of
securities, collaborative agreements, private financings and
various other equity or debt financings, including calling
outstanding warrants to purchase our common stock.
Currently, warrants to purchase
approximately 11.7 million shares of our common stock are
outstanding and this amount of outstanding warrants may make us
a less desirable candidate for investment for some potential
investors. Approximately 5.9 million of our outstanding
warrants contain a call feature that, potentially, will allow us
to raise funds from the holders of these warrants. If our common
stock closes at a price equal to or greater than $2.00 per share
for twenty consecutive trading days, we have the ability, at our
sole discretion, to call warrants exercisable for up to
approximately 1,971,000 shares of common stock, provided
that we have not exercised a call right in the preceding three
months. Upon such a call, the holders of these warrants have
thirty days to decide whether to either exercise their warrants
at a price of $1.75 per share or receive $0.01 from us for each
share of common stock that is not exercised. If we need to raise
funds in the future and we wish to utilize this call right, we
will not be able to exercise the call right if we do not meet
the minimum closing price condition and, even if we meet this
condition, we cannot be sure of the amounts that will be raised
by such a call because some or all warrant holders may decide
not to exercise their warrants.
Considering our stage of development and
the nature of our capital structure, if we are required to raise
additional capital in the future, the additional financing may
not be available on favorable terms, or at all. If we are
successful in raising additional capital, a substantial number
of additional shares will be outstanding and would dilute the
ownership interest of our investors.
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If we do not receive and maintain
regulatory approvals for our product candidates, we will not be
able to commercialize our products, which would substantially
impair our ability to generate revenues. |
With the exception of the December 2004
receipt of a CE (European Conformity) Mark and April 2005 FDA
clearance for Cumulase, none of our product candidates have
received regulatory approval from the FDA or from any similar
national regulatory agency or authority in any other country in
which we intend to do business. Approval from the FDA is
necessary to manufacture and market pharmaceutical products in
the United States. Many other countries including major European
countries and Japan have similar requirements.
During March 2005, we filed a new drug
application (NDA) for the spreading agent
Hylenextm,
the first product in our
Enhanzetm
Technology platform. Other manufacturers have FDA approved
products for use as spreading agents, including ISTA
Pharmaceuticals, Inc. (ISTA), with an ovine-derived
hyaluronidase (Vitrase®) and Amphastar Pharmaceuticals,
Inc., with a bovine (bull) hyaluronidase,
Amphadasetm.
The FDA determined that each of these products were new chemical
entities and hence afforded market exclusivity, precluding
identical products from being marketed for a period of five
years. On March 3, 2005, the FDA confirmed to us that
Hylenex would be designated a new chemical entity. Therefore, we
believe that it is unlikely that the Vitrase or Amphadase
marketing exclusivity will apply to Hylenex; but if the FDA
later changes its determination and decides that either or both
apply to Hylenex, then such a decision could have a material
adverse impact on our operations.
The processes for obtaining FDA approval
are extensive, time-consuming and costly, and there is no
guarantee that the FDA will approve our recently filed NDA
application for Hylenex or any NDAs that we intend to file with
respect to any of our product candidates, or that the timing of
any such approval will be appropriate for our product launch
schedule and other business priorities, which are subject to
change. We have not currently begun the NDA approval process for
any of our other potential products, and we may not be
successful in obtaining such approvals for any of our potential
products.
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If we are unsuccessful in our
clinical trials, we will not receive regulatory approvals for
our product candidates. |
Clinical testing of pharmaceutical
products is also a long, expensive and uncertain process. Even
if initial results of pre-clinical studies or clinical trial
results are positive, we may obtain different results in later
stages of drug development, including failure to show desired
safety and efficacy.
The clinical trials of any of our product
candidates could be unsuccessful, which would prevent us from
obtaining regulatory approval and commercializing the product.
FDA approval can be delayed, limited or not granted for many
reasons, including, among others:
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FDA officials may not find a product
candidate safe or effective to merit an approval;
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FDA officials may not find that the data
from pre-clinical testing and clinical trials justify approval,
or they may require additional studies that would make it
commercially unattractive to continue pursuit of approval;
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the FDA may not approve our manufacturing
processes or facilities, or the processes or facilities of our
contract manufacturers or raw material suppliers;
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the FDA may change its approval policies
or adopt new regulations; and
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the FDA may approve a product candidate
for indications that are narrow or under conditions that place
the product at a competitive disadvantage, which may limit our
sales and marketing activities or otherwise adversely impact the
commercial potential of a product.
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If the FDA does not approve our product
candidates in a timely fashion on commercially viable terms or
we terminate development of any of our product candidates due to
difficulties or delays encountered in the regulatory approval
process, it will have a material adverse impact on our business
and we will be
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dependent on the development of our other
product candidates and/or our ability to successfully acquire
other products and technologies.
In order to begin clinical testing of our
Chemophase product candidate, we need to file an investigational
new drug application (IND), which the FDA needs to
determine is satisfactory to allow the initiation of clinical
trials. If the FDA determines that our IND is deficient, we may
be required to perform substantial additional work. This could
require significant additional expense and delay any initiation
of our clinical trials.
In addition, we intend to market certain
of our products, and perhaps have certain of our products
manufactured, in foreign countries. The process of obtaining
regulatory approvals in foreign countries is subject to delay
and failure for many of the same reasons set forth above as well
as for reasons that vary from jurisdiction to jurisdiction.
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If our product candidates are
approved by the FDA but do not gain market acceptance, our
business will suffer because we may not be able to fund future
operations. |
Assuming that we obtain the necessary
regulatory approvals, a number of factors may affect the market
acceptance of any of our existing product candidates or any
other products we develop or acquire in the future, including,
among others:
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the price of our products relative to
other therapies for the same or similar treatments;
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the perception by patients, physicians and
other members of the health care community of the effectiveness
and safety of our products for their prescribed treatments;
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our ability to fund our sales and
marketing efforts;
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the degree to which the use of our
products is restricted by the product label approved by the FDA;
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the effectiveness of our sales and
marketing efforts; and
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the introduction of generic competitors.
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If our products do not gain market
acceptance, we may not be able to fund future operations,
including the development or acquisition of new product
candidates and/or our sales and marketing efforts for our
approved products, which would cause our business to suffer.
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If we are unable to sufficiently
develop our sales, marketing and distribution capabilities or
enter into agreements with third parties to perform these
functions, we will not be able to commercialize
products. |
We have never successfully marketed any
products, and we may not be successful in marketing and
promoting our existing product candidates or any other products
we develop or acquire in the future. We are currently in the
process of developing our sales, marketing and distribution
capabilities. However, our current capabilities in these areas
are very limited. In order to commercialize any products
successfully, we must internally develop substantial sales,
marketing and distribution capabilities, or establish
collaborations or other arrangements with third parties to
perform these services. We do not have extensive experience in
these areas, and we may not be able to establish adequate
in-house sales, marketing and distribution capabilities or
engage and effectively manage relationships with third parties
to perform any or all of such services. To the extent that we
enter into co-promotion or other licensing arrangements, our
product revenues are likely to be lower than if we directly
marketed and sold our products, and any revenues we receive will
depend upon the efforts of third parties, whose efforts may not
be successful.
In addition, our ability to market and
promote our product candidates will be restricted to the labels
approved by the FDA. If the approved labels are restrictive, our
sales and marketing efforts may be negatively affected.
We have entered into non-exclusive
distribution agreements with MediCult AS, a Denmark-based
distributor, MidAtlantic Diagnostics, Inc., a New Jersey-based
distributor, and Cook Ob/ Gyn Incorpo-
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rated, an Indiana-based distributor, to
market and sell our Cumulase product. We have entered into an
exclusive sales and marketing agreement with Baxter Healthcare
Corporation to market and sell our Hylenex product candidate,
pending FDA approval. We depend upon the efforts of these third
parties to promote and sell our Cumulase product and our Hylenex
product candidate, pending FDA approval, but there can be no
assurance that the efforts of these third parties will result in
product sales.
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If we have problems with our sole
contract manufacturer, our product development and
commercialization efforts for our product candidates could be
delayed or stopped. |
We have signed a commercial supply
agreement with Avid Bioservices Incorporated (Avid),
a contract manufacturing organization, to produce bulk
recombinant human hyaluronidase for clinical use. Avid will
produce the active pharmaceutical ingredient under current good
manufacturing practices for commercial scale production and will
provide support for chemistry, manufacturing and controls
sections for FDA regulatory filings. The active pharmaceutical
ingredient is used in Hylenex, which will require a pre-approval
inspection. If Avid fails this pre-approval inspection, it will
likely delay the potential approval of our Hylenex NDA and have
a material adverse effect on our business. We have not
established and may not be able to establish arrangements with
additional manufacturers for these ingredients or products
should the existing supplies become unavailable or in the event
that our sole contract manufacturer is unable to adequately
perform its responsibilities. Difficulties in our relationship
with Avid or delays or interruptions in Avids supply of
its requirements could limit or stop our ability to provide
sufficient quantities of our products, on a timely basis, for
clinical trials and, if our products are approved, could limit
or stop commercial sales, which would have a material adverse
effect on our business and financial condition.
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If we have problems with the third
parties that prepare, package and fill and finish our product
candidates for distribution, our product development and
commercialization efforts for these candidates could be delayed
or stopped. |
In the event that any of our product
candidates are used in clinical trials or receive the necessary
regulatory approval for commercialization, we rely on third
parties to prepare, package and fill and finish the products
prior to their distribution. If we are unable to locate third
parties to perform these functions on terms that are
economically acceptable to us, the progress of clinical trials
could be delayed or even suspended and the commercialization of
approved product candidates could be delayed or prevented. We
currently utilize a third party to fill and finish Cumulase. In
addition, we currently utilize Baxter Healthcare Corporation
(Baxter) to fill and finish Hylenex under a
development and supply agreement. Baxter may receive a
pre-approval inspection by the FDA. If Baxter fails this
pre-approval inspection, the potential approval of our Hylenex
NDA, will likely be delayed. This could have a material adverse
effect on our business.
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Our inability to attract, hire and
retain key management and scientific personnel, and to recruit
qualified independent directors, could negatively affect our
business. |
Our success depends on the performance of
key management and scientific employees with biotechnology
experience. Given our small staff size and programs currently
under development, we depend substantially on our ability to
hire, train, retain and motivate high quality personnel,
especially our scientists and management team in this field. In
addition, we also rely on the expertise and guidance of
independent directors to develop business strategies and to
guide our execution of these strategies. Due to changes in the
regulatory environment for public companies over the past few
years, the demand for independent directors has increased and it
may be difficult for us, due to competition from both like-sized
and larger companies, to recruit qualified independent directors.
Furthermore, if we were to lose key
management personnel, particularly Jonathan E. Lim, MD, our
chief executive officer, or Gregory I. Frost, PhD, our chief
scientific officer, then we would likely lose some portion of
our institutional knowledge and technical know-how, potentially
causing a substantial delay in one or more of our development
programs until adequate replacement personnel could be hired and
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trained. For example, Dr. Frost has
been with us from soon after our inception, and he possesses a
substantial amount of knowledge about our development efforts.
If we were to lose his services, we would experience delays in
meeting our product development schedules. We have not entered
into employment agreements with any of our employees or
officers, including Dr. Lim and Dr. Frost. We do not
have key man life insurance policies on the lives of any of our
employees, including Dr. Lim and Dr. Frost.
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Future sales of shares of our common
stock, including sales of shares issued in our most recent
financings, may negatively affect our stock price. |
As a result of our January 2004 private
financing transaction, we issued 19,046,721 shares of common
stock to certain private investors. In connection with this
transaction we also issued warrants to the private investors for
the purchase of 10,461,943 shares of common stock at
purchase prices ranging from $0.77 to $1.75 per share.
Currently, 8.3 million shares of common stock remain
issuable upon exercise of these warrants. The exercise of these
warrants could result in significant dilution to stockholders at
the time of exercise. We filed a registration statement on
Form S-3 (Registration No. 333-114776), which was
declared effective on April 1, 2005, covering 23,902,482 of
the shares issued in the January 2004 private financing
transaction and issuable upon exercise of the warrants issued in
that transaction.
As a result of our October 2004 financing
transaction, we issued 7,925,715 shares of common stock to
certain institutional and accredited investors for
$13.9 million in gross proceeds. In connection with this
transaction, we also issued warrants for the purchase of
2,609,542 shares of common stock. We filed a registration
statement on Form S-3 (Registration No. 333-120448),
which was declared effective on November 26, 2004, covering
the 10,535,257 shares issued to the private investors and
issuable upon exercise of the warrants. In the future, we may
issue additional options, warrants or other derivative
securities convertible into Halozyme common stock.
Sales of substantial amounts of shares of
our common stock, or even the potential for such sales through
the exercise of warrants, could lower the market price of our
common stock and impair the Companys ability to raise
capital through the sale of equity securities.
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Our stock price is subject to
significant volatility. |
Our stock price is subject to significant
volatility. Overall market conditions, in addition to other
risks and uncertainties described in this section and elsewhere
in this report, may cause the market price of our common stock
to fall. We participate in a highly dynamic industry, which
often results in significant volatility in the market price of
common stock irrespective of company performance. As a result,
our high and low stock prices during the last twelve months were
$4.40 and $1.41, respectively. Fluctuations in the price of our
common stock may be exacerbated by conditions in the healthcare
and technology industry segments or conditions in the financial
markets generally.
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Recent trading in our stock has been
limited, so investors may not be able to sell as much stock as
they want to at prevailing market prices. |
During the last ninety days, our average
daily trading volume was approximately 60,000 shares. If
limited trading in our stock continues, it may be difficult for
stockholders to sell their shares in the public market at any
given time at prevailing prices.
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Our decision to redeem outstanding
warrants may drive down the market price of our
stock. |
As discussed above in the Risk Factor
titled We may need to raise funds in the next twelve
months, and there can be no assurance that such funds will be
available we may have the ability to redeem certain
outstanding warrants, under certain conditions, that may be
exercised for approximately 5.9 million shares of common
stock. The redemption price for these warrants is $0.01 per
share, but the warrant holders have the opportunity to exercise
their warrants prior to redemption at the price of $1.75 per
share. If we decide to redeem any portion of our outstanding
warrants in the future, some selling security holders may choose
to sell outstanding shares of common stock in order to finance
the exercise of the warrants
7
prior to their redemption. This pattern of selling may result in
a reduction of our common stocks market price.
Risks Related To Our Industry
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Compliance with the extensive government regulations to
which we are subject is expensive and time consuming, and may
result in the delay or cancellation of product sales,
introductions or modifications. |
Extensive industry regulation has had, and will continue to
have, a significant impact on our business. All pharmaceutical
companies, including Halozyme, are subject to extensive,
complex, costly and evolving regulation by the federal
government, principally the FDA and to a lesser extent by the
U.S. Drug Enforcement Administration (DEA), and
foreign and state government agencies. The Federal Food, Drug
and Cosmetic Act, the Controlled Substances Act and other
domestic and foreign statutes and regulations govern or
influence the testing, manufacturing, packaging, labeling,
storing, record keeping, safety, approval, advertising,
promotion, sale and distribution of our products. Under certain
of these regulations, Halozyme and its contract suppliers and
manufacturers are subject to periodic inspection of its or their
respective facilities, procedures and operations and/or the
testing of products by the FDA, the DEA and other authorities,
which conduct periodic inspections to confirm that Halozyme and
its contract suppliers and manufacturers are in compliance with
all applicable regulations. The FDA also conducts pre-approval
and post-approval reviews and plant inspections to determine
whether our systems, or our contract suppliers and
manufacturers processes, are in compliance with current
good manufacturing practices and other FDA regulations. If we,
or our contract supplier, fail these inspections, we may not be
able to commercialize our product in a timely manner without
incurring significant additional costs, or at all.
In addition, the FDA imposes a number of complex regulatory
requirements on entities that advertise and promote
pharmaceuticals, including, but not limited to, standards and
regulations for direct-to-consumer advertising, off-label
promotion, industry-sponsored scientific and educational
activities, and promotional activities involving the Internet.
We are dependent on receiving FDA and other governmental
approvals prior to manufacturing, marketing and shipping our
products. Consequently, there is always a risk that the FDA or
other applicable governmental authorities will not approve our
products, or will take post-approval action limiting or revoking
our ability to sell our products, or that the rate, timing and
cost of such approvals will adversely affect our product
introduction plans or results of operations.
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Our suppliers and sole manufacturer are subject to
regulation by the FDA and other agencies, and if they do not
meet their commitments, we would have to find substitute
suppliers or manufacturers, which could delay the supply of our
products to market. |
Regulatory requirements applicable to pharmaceutical products
make the substitution of suppliers and manufacturers costly and
time consuming. We have no internal manufacturing capabilities
and are, and expect to be in the future, entirely dependent on
contract manufacturers and suppliers for the manufacture of our
products and for their active and other ingredients. The
disqualification of these manufacturers and suppliers through
their failure to comply with regulatory requirements could
negatively impact our business because the delays and costs in
obtaining and qualifying alternate suppliers (if such
alternative suppliers are available, which we cannot assure)
could delay clinical trials or otherwise inhibit our ability to
bring approved products to market, which would have a material
adverse affect on our business and financial condition.
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We may be required to initiate or defend against legal
proceedings related to intellectual property rights, which may
result in substantial expense, delay and/or cessation of the
development and commercialization of our products. |
We rely on patents to protect our intellectual property rights.
The strength of this protection, however, is uncertain. For
example, it is not certain that:
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our patents and pending patent applications cover products
and/or technology that we invented first; |
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we were the first to file patent applications for these
inventions; |
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others will not independently develop similar or alternative
technologies or duplicate our technologies; |
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any of our pending patent applications will result in issued
patents; and |
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any of our issued patents, or patent pending applications that
result in issued patents, will be held valid and infringed in
the event the patents are asserted against others. |
We currently own or license several U.S. patents and also
have pending patent applications. There can be no assurance that
our existing patents, or any patents issued to us as a result of
such applications, will provide a basis for commercially viable
products, will provide us with any competitive advantages, or
will not face third-party challenges or be the subject of
further proceedings limiting their scope or enforceability.
We may become involved in interference proceedings in the
U.S. Patent and Trademark Office to determine the priority
of our inventions. In addition, costly litigation could be
necessary to protect our patent position. We also rely on
trademarks to protect the names of our products. These
trademarks may be challenged by others. If we enforce our
trademarks against third parties, such enforcement proceedings
may be expensive. We also rely on trade secrets, unpatented
proprietary know-how and continuing technological innovation
that we seek to protect with confidentiality agreements with
employees, consultants and others with whom we discuss our
business. Disputes may arise concerning the ownership of
intellectual property or the applicability or enforceability of
these agreements, and we might not be able to resolve these
disputes in our favor.
In addition to protecting our own intellectual property rights,
third parties may assert patent, trademark or copyright
infringement or other intellectual property claims against us
based on what they believe are their own intellectual property
rights. While we have not ever been and are currently not
involved in any litigation, in the event we become involved, we
may be required to pay substantial damages, including but not
limited to treble damages, for past infringement if it is
ultimately determined that our products infringe a third
partys intellectual property rights. Even if infringement
claims against us are without merit, defending a lawsuit takes
significant time, may be expensive and may divert
managements attention from other business concerns.
Further, we may be stopped from developing, manufacturing or
selling our products until we obtain a license from the owner of
the relevant technology or other intellectual property rights.
If such a license is available at all, it may require us to pay
substantial royalties or other fees.
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Future acquisitions could disrupt our business and harm
our financial condition. |
In order to remain competitive, we may decide to acquire
additional businesses, products and technologies. As we have
limited experience in evaluating and completing acquisitions,
our ability as an organization to make such acquisitions is
unproven. Acquisitions could require significant capital
infusions and could involve many risks, including, but not
limited to, the following:
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we may have to issue convertible debt or equity securities to
complete an acquisition, which would dilute our stockholders and
could adversely affect the market price of our common stock; |
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an acquisition may negatively impact our results of operations
because it may require us to incur large one-time charges to
earnings, amortize or write down amounts related to goodwill and
other |
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intangible assets, or incur or assume substantial debt or
liabilities, or it may cause adverse tax consequences,
substantial depreciation or deferred compensation charges; |
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we may encounter difficulties in assimilating and integrating
the business, technologies, products, personnel or operations of
companies that we acquire; |
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certain acquisitions may disrupt our relationship with existing
customers who are competitive with the acquired business; |
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acquisitions may require significant capital infusions and the
acquired businesses, products or technologies may not generate
sufficient revenue to offset acquisition costs; |
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an acquisition may disrupt our ongoing business, divert
resources, increase our expenses and distract our management; |
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acquisitions may involve the entry into a geographic or business
market in which we have little or no prior experience; and |
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key personnel of an acquired company may decide not to work for
us. |
If any of these risks occurred, it could adversely affect our
business, financial condition and operating results. We cannot
assure you that we will be able to identify or consummate any
future acquisitions on acceptable terms, or at all. If we do
pursue any acquisitions, it is possible that we may not realize
the anticipated benefits from such acquisitions or that the
market will not view such acquisitions positively.
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If third-party reimbursement is not available, our
products may not be accepted in the market. |
Our ability to earn sufficient returns on our products will
depend in part on the extent to which reimbursement for our
products and related treatments will be available from
government health administration authorities, private health
insurers, managed care organizations and other healthcare
providers.
Third-party payers are increasingly attempting to limit both the
coverage and the level of reimbursement of new drug products to
contain costs. Consequently, significant uncertainty exists as
to the reimbursement status of newly approved healthcare
products. If we succeed in bringing one or more of our product
candidates to market, third-party payers may not establish
adequate levels of reimbursement for our products, which could
limit their market acceptance and result in a material adverse
effect on our financial condition.
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We face intense competition and rapid technological change
that could result in the development of products by others that
are superior to the products we are developing. |
We have numerous competitors in the United States and abroad,
including, among others, major pharmaceutical and specialized
biotechnology firms, universities and other research
institutions that may be developing competing products. Such
competitors include Sigma-Aldrich Corporation, ISTA
Pharmaceuticals, Inc. (ISTA), and Allergan, Inc., among others.
These competitors may develop technologies and products that are
more effective or less costly than our current or future product
candidates or that could render our technologies and product
candidates obsolete or noncompetitive. Many of these competitors
have substantially more resources and product development,
manufacturing and marketing experience and capabilities than we
do. In addition, many of our competitors have significantly
greater experience than we do in undertaking pre-clinical
testing and clinical trials of pharmaceutical product candidates
and obtaining FDA and other regulatory approvals of products and
therapies for use in healthcare. Other manufacturers have FDA
approved products for use as spreading agents, including ISTA
Pharmaceuticals, Inc. (ISTA), with an ovine-derived
hyaluronidase (Vitrase®) and Amphastar Pharmaceuticals,
Inc., with a bovine (bull) hyaluronidase,
Amphadasetm.
The FDA determined that each of these products were new chemical
entities and hence afforded market exclusivity, precluding
identical products from being marketed for a period of five
years. On March 3, 2005, the FDA confirmed to us that
Hylenex would be designated a new chemical entity. Therefore, we
believe that it is unlikely that the
10
Vitrase or Amphadase marketing exclusivity will apply to
Hylenex; but if the FDA later changes its determination and
decides that either or both apply to Hylenex, then such a
decision could have a material adverse impact on our operations.
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We are exposed to product liability claims, and insurance
against these claims may not be available to us on reasonable
terms or at all. |
We might incur substantial liability in connection with clinical
trials or the sale of our products. Product liability insurance
is expensive and in the future may not be available on
commercially acceptable terms, or at all. We currently carry a
limited amount of product liability insurance. A successful
claim or claims brought against us in excess of our insurance
coverage could materially harm our business and financial
condition.
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We may have difficulty implementing in a timely manner the
internal controls over financial reporting necessary to allow
our management to report on the effectiveness of our internal
controls over financial reporting, and we may incur substantial
costs in order to comply with the requirements of the
Sarbanes-Oxley Act of 2002. |
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
we will be required to furnish a report of managements
assessment of the effectiveness of our internal controls over
financial reporting as part of our Annual Report on
Form 10-KSB for the fiscal year ending December 31,
2006. Our registered public accountant will then be required to
attest to, and report on, our assessment. In order to issue our
report, our management must document both the design for our
internal controls over financial reporting and the testing
processes that support managements evaluation and
conclusion. There can be no assurance that we will be able to
complete the work necessary for our management to issue its
management report in a timely manner, or that management will be
able to report that our internal controls over financial
reporting are effective.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth ratios of earnings to fixed
charges for the periods shown.
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Twelve Months Ended December 31, | |
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N/A |
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N/A |
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N/A |
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N/A |
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N/A |
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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 plus the interest factor in lease expenses. During the
fiscal years covered by this table, we did not have any material
fixed charges or preferred stock dividends. However, our total
lease expenses, which comprised most of our total commitments,
were $147,638, $123,110, $64,958, $26,292 and zero for the
twelve months ended December 31, 2004, 2003, 2002, 2001 and
2000.
Earnings have been inadequate to cover fixed charges and total
commitments. The dollar amount of the coverage deficiency was
approximately $9.1 million, $2.1 million,
$1.1 million, $0.6 million and $0.1 million for
the twelve months ended December 31, 2004, 2003, 2002, 2001
and 2000.
USE OF PROCEEDS
We cannot guarantee that we will receive any proceeds in
connection with this offering because we may choose not to issue
any securities covered by this prospectus.
Unless otherwise provided in a supplement or amendment to this
prospectus, we intend to use any net proceeds from this
offering, together with other available funds, for operating
costs, capital expenditures and working capital needs and for
other general corporate purposes.
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We have not specifically identified the precise amounts we will
spend on each of these areas or the timing of these
expenditures. The amounts actually expended for each purpose may
vary significantly depending upon numerous factors, including
the amount and timing of the proceeds from this offering,
progress with clinical product development and other research
programs. In addition, expenditures may also depend on the
establishment of new collaborative arrangements with other
companies, the availability of additional financing, and other
factors.
We anticipate that we will be required to raise substantial
additional capital to continue to fund the clinical development
of our technologies and products. We may raise additional
capital through additional public or private financing, as well
as collaborative relationships, incurring debt and other
available sources.
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 SECs public reference rooms
located at Room 1024, 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 rooms. We are
also required to file electronic versions of these documents
with the SEC, which may be accessed from the SECs Internet
site at http://www.sec.gov or at our website
http://www.halozyme.com.
The SEC allows us to incorporate by reference the
information we file with it, which means that we can disclose
important information to you by referring you to those
documents. The information incorporated by reference is
considered to be part of this prospectus, and information that
we file with the SEC later will automatically update and
supersede the information in this prospectus or incorporated by
reference. The following documents filed by us and any future
filings made by us with the SEC under Sections 13(a), 13(c)
14 or 15(d) of the Securities Exchange Act of 1934, until we
sell all of the securities offered hereby, are incorporated by
reference in this prospectus:
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1. Our Annual Report on Form 10-KSB for the year ended
December 31, 2004, as amended on the Form 10-KSB/ A
filed on March 29, 2005; |
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2. Our Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 2005; |
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3. Our Current Reports on Form 8-K filed with SEC on
February 22, 2005; March 28, 2005; March 30,
2005; and April 19, 2005; |
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4. The description of our common stock set forth in our
registration statement on Form SB-2/ A, file
No. 333-114776, filed with the SEC on July 23, 2004; and |
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5. All of the filings pursuant to the Securities Exchange
Act that we may make prior to the effectiveness of this
registration statement, and prior to the termination of the
offering contemplated by this prospectus. |
We will furnish without charge to you, on written or oral
request, a copy of any or all of the documents incorporated by
reference. You should direct any requests for documents to David
Ramsay, Chief Financial Officer, 11588 Sorrento Valley
Road, Suite 17, San Diego, California 92121, telephone:
(858) 794-8889.
THE SECURITIES WE MAY OFFER
The descriptions of the securities contained in this prospectus,
together with the applicable prospectus supplements, summarize
all the material terms and provisions of the various types of
securities that we may offer. We will describe in the applicable
prospectus supplement the particular terms of the securities
offered by that prospectus supplement. If we indicate in the
applicable prospectus supplement, the terms of the securities
may differ from the terms we have summarized below. We will also
include in the prospectus supplement information, where
applicable, about material U.S. federal income tax
considerations relating to the securities, and the securities
exchange, if any, on which the securities will be listed.
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DESCRIPTION OF COMMON STOCK
The following is only a summary of the material terms of our
common stock and, because it is only a summary, it does not
contain all the information that may be important to you.
Accordingly, you should read carefully the more detailed
provisions of our articles of incorporation and bylaws, each of
which has been filed with the SEC, as well as applicable Nevada
law.
General
We currently have authorized 100,000,000 shares of common stock,
par value $0.001, and, as of May 1, 2005, we had 49,922,468
shares of common stock outstanding. As of June 1, 2005, we
had an aggregate of 10,000,000 shares of common stock
reserved for issuance upon exercise of stock options granted, or
to be granted, under our Amended and Restated 2001 Stock Plan
and 2004 Stock Plan. As of June 1, 2005, we had warrants to
purchase an aggregate of approximately 11,675,846 shares of our
common stock outstanding.
Voting Rights
Holders of our common stock are entitled to one vote per share
on all matters to be voted upon by the stockholders. The holders
of common stock are not entitled to cumulate voting rights with
respect to the election of directors, which means that the
holders of a majority of the shares voted can elect all of the
directors then standing for election.
Dividends
Subject to limitations under Nevada law and preferences that may
apply to any outstanding shares of preferred stock, holders of
our common stock are entitled to receive ratably such dividends
or other distribution, if any, as may be declared by our board
of directors out of funds legally available therefor.
Liquidation
In the event of our liquidation, dissolution or winding up,
holders of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to the
liquidation preference of any outstanding preferred stock.
Rights and Preferences
The common stock has no preemptive, conversion or other rights
to subscribe for additional securities. There are no redemption
or sinking fund provisions applicable to our common stock. The
rights, preferences and privileges of holders of common stock
are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock that we
may designate and issue in the future.
Fully Paid and Nonassessable
All outstanding shares of our common stock are, and all shares
of common stock to be outstanding upon completion of the
offering will be, validly issued, fully paid and nonassessable.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
Corporate Stock Transfer Company.
DESCRIPTION OF PREFERRED STOCK
We currently have authorized 20,000,000 shares of preferred
stock, $0.001 par value per share. All shares of preferred
stock are undesignated. As of the date of this prospectus, we
did not have any shares of preferred stock outstanding.
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Our Board of Directors is authorized to fix and determine
designations, preferences, privileges, rights, and powers and
relative, participating, optional, or other special rights,
qualifications, limitations, or restrictions on the preferred
stock of Halozyme as provided by Nevada Revised Statutes.
The purpose of authorizing our Board of Directors to issue
preferred stock in one or more series and determine the number
of shares in the series and its rights and preferences is to
eliminate delays associated with a stockholder vote on specific
issuances. Examples of rights and preferences that the Board of
Directors may fix are: (1) dividend rights,
(2) dividend rates, (3) conversion rights,
(4) voting rights, (5) terms of redemption, and
(6) liquidation preferences. The issuance of preferred
stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could make
it more difficult for a third party to acquire, or could
discourage a third party from acquiring, a majority of our
outstanding voting stock. The rights of holders of our common
stock described above, will be subject to, and may be adversely
affected by, the rights of any preferred stock that we may
designate and issue in the future.
We will incorporate by reference as an exhibit to the
registration statement which includes this prospectus the form
of any certificate of designation which describes the terms of
the series of preferred stock we are offering. This description
and the applicable prospectus supplement will include:
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the title and stated value; |
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the number of shares authorized; |
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the liquidation preference per share; |
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the purchase price; |
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the dividend rate, period and payment date, and method of
calculation for dividends; |
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whether dividends will be cumulative or non-cumulative and, if
cumulative, the date from which dividends will accumulate; |
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the procedures for any auction and remarketing, if any; |
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the provisions for a sinking fund, if any; |
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the provisions for redemption or repurchase, if applicable, and
any restrictions on our ability to exercise those redemption and
repurchase rights; |
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any listing of the preferred stock on any securities exchange or
market; |
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whether the preferred stock will be convertible into our common
stock, and, if applicable, the conversion price, or how it will
be calculated, and the conversion period; |
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whether the preferred stock will be exchangeable into debt
securities, and, if applicable, the exchange price, or how it
will be calculated, and the exchange period; |
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voting rights, if any, of the preferred stock; |
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preemptive rights, if any; |
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restrictions on transfer, sale or other assignment, if any; |
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whether interests in the preferred stock will be represented by
depositary shares; |
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a discussion of any material U.S. federal income tax
considerations applicable to the preferred stock; |
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the relative ranking and preferences of the preferred stock as
to dividend rights and rights if we liquidate, dissolve or wind
up our affairs; |
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any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with the series of
preferred stock as to dividend rights and rights if we
liquidate, dissolve or wind up our affairs; and |
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any other specific terms, preferences, rights or limitations of,
or restrictions on, the preferred stock. |
If we issue shares of preferred stock under this prospectus, the
shares will fully be paid and nonassessable and will not have,
or be subject to, any preemptive or similar rights.
The Nevada Revised Statutes provides that the holders of
preferred stock will have the right to vote separately as a
class on any proposal involving an increase or decrease in the
authorized number of shares of that class, or changes in the
powers, preferences or special rights of holders of that
preferred stock so as to affect the class adversely. This right
is in addition to any voting rights that may be provided for in
the applicable certificate of designation.
The transfer agent and registrar for any series of preferred
stock will be set forth in the applicable prospectus supplement.
DESCRIPTION OF DEBT SECURITIES
The following description, together with the additional
information we include in any applicable prospectus supplements,
summarizes the material terms and provisions of the debt
securities that we may offer under this prospectus. While the
terms we have summarized below will apply generally to any
future debt securities we may offer, we will describe the
particular terms of any debt securities that we may offer in
more detail in the applicable prospectus supplement. If we
indicate in a prospectus supplement, the terms of any debt
securities we offer under that prospectus supplement may differ
from the terms we describe below.
We will issue any senior notes under the senior indenture which
we will enter into with a trustee to be named in the senior
indenture. We will issue any subordinated notes under the
subordinated indenture which we will enter into with a trustee
to be named in the subordinated indenture. We have filed forms
of these documents as exhibits to the registration statement
which includes this prospectus. We use the term
indentures to refer to both the senior indenture and
the subordinated indenture. The indentures will be qualified
under the Trust Indenture Act of 1939. We use the term
debenture trustee to refer to either the senior
trustee or the subordinated trustee, as applicable.
The following summaries of material provisions of the senior
notes, the subordinated notes and the indentures are subject to,
and qualified in their entirety by reference to, all the
provisions of the indenture applicable to a particular series of
debt securities. Except as we may otherwise indicate, the terms
of the senior indenture and the subordinated indenture are
identical.
We conduct some of our operations through a subsidiary formed
under the laws of California. Our rights and the rights of our
creditors, including holders of debt securities, to the assets
of any subsidiary of ours upon that subsidiarys
liquidation or reorganization or otherwise would be subject to
the prior claims of that subsidiarys creditors, except to
the extent that we may be a creditor with recognized claims
against the subsidiary. Our subsidiarys creditors would
include trade creditors, debt holders, secured creditors and
taxing authorities. Except as we may provide in a prospectus
supplement, neither the debt securities nor the indentures
restrict us or our subsidiary from incurring indebtedness.
General
We will describe in each prospectus supplement the following
terms relating to a series of notes:
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the title; |
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any limit on the amount that may be issued; |
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whether or not we will issue the series of notes in global form,
the terms and who the depository will be; |
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the maturity date; |
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the annual interest rate, which may be fixed or variable, or the
method for determining the rate; |
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the date interest will begin to accrue, the dates interest will
be payable and the regular record dates for interest payment
dates or the method for determining such dates; |
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whether or not the notes will be secured or unsecured, and the
terms of any security; |
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the terms of the subordination of any series of subordinated
debt; |
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the place where payments will be payable; |
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our right, if any, to defer payment of interest and the maximum
length of any such deferral period; |
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the date, if any, after which, and the price at which, we may,
at our option, redeem the series of notes pursuant to any
optional redemption provisions; |
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the date, if any, on which, and the price at which we are
obligated, pursuant to any mandatory sinking fund provisions or
otherwise, to redeem, or at the holders option to
purchase, all or a portion of the series of notes; |
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whether the indenture will restrict our ability to pay
dividends, or will require us to maintain any asset ratios or
reserves; |
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whether we will be restricted from incurring any additional
indebtedness; |
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a discussion of any material United States federal income tax
considerations applicable to the notes; |
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the denominations in which we will issue the series of notes, if
other than denominations of $1,000 and any integral multiple
thereof; and |
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any other specific terms, preferences, rights or limitations of,
or restrictions on, the debt securities. |
Conversion or Exchange Rights
We will set forth in the prospectus supplement the terms on
which a series of notes may be convertible into or exchangeable
for common stock or other securities of ours. We will include in
that prospectus supplement provisions as to whether conversion
or exchange is mandatory, at the option of the holder or at our
option. We may include provisions pursuant to which the number
of shares of common stock or other securities of ours that the
holders of the series of notes receive would be subject to
adjustment.
Consolidation, Merger or Sale of Assets
The indentures do not contain any covenant which restricts our
ability to merge or consolidate, or sell, convey, transfer or
otherwise dispose of all or substantially all of our assets.
However, any successor to or acquirer of such assets must assume
all of our obligations under the indentures or the notes, as
appropriate.
Events of Default Under the Indenture
The following are events of default under the indentures with
respect to any series of notes that we may issue:
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if we fail to pay interest when due and our failure continues
for 60 days and the time for payment has not been extended
or deferred; |
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if we fail to pay the principal, or premium, if any, when due
and the time for payment has not been extended or delayed; |
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if we fail to observe or perform any other covenant contained in
the notes or the indentures, other than a covenant specifically
relating to another series of notes, and our failure continues
for 60 days after we receive notice from the debenture
trustee or holders of at least 50% in aggregate principal amount
of the outstanding notes of the applicable series; and |
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if specified events of bankruptcy, insolvency or reorganization
occur as to us. |
If an event of default with respect to notes of any series
occurs and is continuing, the debenture trustee or the holders
of at least 50% in aggregate principal amount of the outstanding
notes of that series, by notice to us in writing, and to the
debenture trustee if notice is given by such holders, may
declare the unpaid principal of, premium, if any, and accrued
interest, if any, due and payable immediately.
The holders of a majority in principal amount of the outstanding
notes of an affected series may waive any default or event of
default with respect to the series and its consequences, except
defaults or events of default regarding payment of principal,
premium, if any, or interest, unless we have cured the default
or event of default in accordance with the indenture. Any waiver
shall cure the default or event of default.
Subject to the terms of the indentures, if an event of default
under an indenture shall occur and be continuing, the debenture
trustee will be under no obligation to exercise any of its
rights or powers under such indenture at the request or
direction of any of the holders of the applicable series of
notes, unless such holders have offered the debenture trustee
reasonable indemnity. The holders of a majority in principal
amount of the outstanding notes of any series will have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the debenture trustee, or
exercising any trust or power conferred on the debenture
trustee, with respect to the notes of that series, provided that:
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the direction so given by the holder is not in conflict with any
law or the applicable indenture; and |
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subject to its duties under the Trust Indenture Act, the
debenture trustee need not take any action that might involve it
in personal liability or might be unduly prejudicial to the
holders not involved in the proceeding. |
A holder of the notes of any series will only have the right to
institute a proceeding under the indentures or to appoint a
receiver or trustee, or to seek other remedies if:
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the holder has given written notice to the debenture trustee of
a continuing event of default with respect to that series; |
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the holders of at least 50% in aggregate principal amount of the
outstanding notes of that series have made written request, and
such holders have offered reasonable indemnity to the debenture
trustee to institute the proceeding as trustee; and |
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the debenture trustee does not institute the proceeding, and
does not receive from the holders of a majority in aggregate
principal amount of the outstanding notes of that series other
conflicting directions within 60 days after the notice,
request and offer. |
These limitations do not apply to a suit instituted by a holder
of notes if we default in the payment of the principal, premium,
if any, or interest on, the notes.
We will periodically file statements with the debenture trustee
regarding our compliance with specified covenants in the
indentures.
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Modification of Indenture; Waiver
We and the debenture trustee may change an indenture without the
consent of any holders with respect to specific matters,
including:
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to fix any ambiguity, defect or inconsistency in the indenture;
and |
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to change anything that does not materially adversely affect the
interests of any holder of notes of any series. |
In addition, under the indentures, the rights of holders of a
series of notes may be changed by us and the debenture trustee
with the written consent of the holders of at least a majority
in aggregate principal amount of the outstanding notes of each
series that is affected. However, we and the debenture trustee
may only make the following changes with the consent of each
holder of any outstanding notes affected:
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extending the fixed maturity of the series of notes; |
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reducing the principal amount, reducing the rate of or extending
the time of payment of interest, or any premium payable upon the
redemption of any notes; or |
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reducing the percentage of notes, the holders of which are
required to consent to any amendment. |
Discharge
Each indenture provides that we can elect to be discharged from
our obligations with respect to one or more series of debt
securities, except for obligations to:
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register the transfer or exchange of debt securities of the
series; |
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replace stolen, lost or mutilated debt securities of the series; |
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maintain paying agencies; |
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hold monies for payment in trust; |
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compensate and indemnify the trustee; and |
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appoint any successor trustee. |
In order to exercise our rights to be discharged, we must
deposit with the debenture trustee money or government
obligations sufficient to pay all the principal of, any premium,
if any, and interest on, the debt securities of the series on
the dates payments are due.
Form, Exchange, and Transfer
We will issue the notes of each series only in fully registered
form without coupons and, unless we otherwise specify in the
applicable prospectus supplement, in denominations of $1,000 and
any integral multiple thereof. The indentures provide that we
may issue notes of a series in temporary or permanent global
form and as book-entry securities that will be deposited with,
or on behalf of, The Depository Trust Company or another
depository named by us and identified in a prospectus supplement
with respect to that series. See Legal Ownership of
Securities for a further description of the terms relating
to any book-entry securities.
At the option of the holder, subject to the terms of the
indentures and the limitations applicable to global securities
described in the applicable prospectus supplement, the holder of
the notes of any series can exchange the notes for other notes
of the same series, in any authorized denomination and of like
tenor and aggregate principal amount.
Subject to the terms of the indentures and the limitations
applicable to global securities set forth in the applicable
prospectus supplement, holders of the notes may present the
notes for exchange or for registration of transfer, duly
endorsed or with the form of transfer endorsed thereon duly
executed if so required by us or the security registrar, at the
office of the security registrar or at the office of any transfer
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agent designated by us for this purpose. Unless otherwise
provided in the notes that the holder presents for transfer or
exchange, we will make no service charge for any registration of
transfer or exchange, but we may require payment of any taxes or
other governmental charges.
We will name in the applicable prospectus supplement the
security registrar, and any transfer agent in addition to the
security registrar, that we initially designate for any notes.
We may at any time designate additional transfer agents or
rescind the designation of any transfer agent or approve a
change in the office through which any transfer agent acts,
except that we will be required to maintain a transfer agent in
each place of payment for the notes of each series.
If we elect to redeem the notes of any series, we will not be
required to:
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issue, register the transfer of, or exchange any notes of that
series during a period beginning at the opening of business
15 days before the day of mailing of a notice of redemption
of any notes that may be selected for redemption and ending at
the close of business on the day of the mailing; or |
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register the transfer of or exchange any notes so selected for
redemption, in whole or in part, except the unredeemed portion
of any notes we are redeeming in part. |
Information Concerning the Debenture Trustee
The debenture trustee, other than during the occurrence and
continuance of an event of default under an indenture,
undertakes to perform only those duties as are specifically set
forth in the applicable indenture. Upon an event of default
under an indenture, the debenture trustee must use the same
degree of care as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision,
the debenture trustee is under no obligation to exercise any of
the powers given it by the indentures at the request of any
holder of notes unless it is offered reasonable security and
indemnity against the costs, expenses and liabilities that it
might incur.
Payment and Paying Agents
Unless we otherwise indicate in the applicable prospectus
supplement, we will make payment of the interest on any notes on
any interest payment date to the person in whose name the notes,
or one or more predecessor securities, are registered at the
close of business on the regular record date for the interest.
We will pay principal of and any premium and interest on the
notes of a particular series at the office of the paying agents
designated by us, except that unless we otherwise indicate in
the applicable prospectus supplement, will we make interest
payments by check which we will mail to the holder. Unless we
otherwise indicate in a prospectus supplement, we will designate
the corporate trust office of the debenture trustee in the City
of New York as our sole paying agent for payments with respect
to notes of each series. We will name in the applicable
prospectus supplement any other paying agents that we initially
designate for the notes of a particular series. We will maintain
a paying agent in each place of payment for the notes of a
particular series.
All money we pay to a paying agent or the debenture trustee for
the payment of the principal of or any premium or interest on
any notes which remains unclaimed at the end of two years after
such principal, premium or interest has become due and payable
will be repaid to us, and the holder of the security thereafter
may look only to us for payment of those amounts.
Governing Law
The indentures and the notes will be governed by and construed
in accordance with the laws of the State of New York, except to
the extent that the Trust Indenture Act is applicable.
Subordination of Subordinated Notes
The subordinated notes will be unsecured and will be subordinate
and junior in priority of payment to some or all of our other
indebtedness to the extent described in a prospectus supplement.
The subordinated
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indenture does not limit the amount of subordinated notes which
we may issue. It also does not limit us from issuing any other
secured or unsecured debt.
DESCRIPTION OF WARRANTS
The following description, together with the additional
information we may include in any applicable prospectus
supplements, summarizes the material terms and provisions of the
warrants that we may offer under this prospectus and the related
warrant agreements and warrant certificates. While the terms
summarized below will apply generally to any warrants that we
may offer, we will describe the particular terms of any series
of warrants in more detail in the applicable prospectus
supplement. If we indicate in the prospectus supplement, the
terms of any warrants offered under that prospectus supplement
may differ from the terms described below. Specific warrant
agreements will contain additional important terms and
provisions and will be incorporated by reference as an exhibit
to the registration statement which includes this prospectus.
General
We may issue warrants for the purchase of common stock,
preferred stock and/or debt securities in one or more series. We
may issue warrants independently or together with common stock,
preferred stock and/or debt securities, and the warrants may be
attached to or separate from these securities.
We will evidence each series of warrants by warrant certificates
that we will issue under a separate warrant agreement. We will
enter into the warrant agreement with a warrant agent. Each
warrant agent will be a bank that we select which has its
principal office in the United States and a combined capital and
surplus of at least $50,000,000. We will indicate the name and
address of the warrant agent in the applicable prospectus
supplement relating to a particular series of warrants.
We will describe in the applicable prospectus supplement the
terms of the series of warrants, including:
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the offering price and aggregate number of warrants offered; |
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the currency for which the warrants may be purchased; |
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if applicable, the designation and terms of the securities with
which the warrants are issued and the number of warrants issued
with each such security or each principal amount of such
security; |
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if applicable, the date on and after which the warrants and the
related securities will be separately transferable; |
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in the case of warrants to purchase debt securities, the
principal amount of debt securities purchasable upon exercise of
one warrant and the price at, and currency in which, this
principal amount of debt securities may be purchased upon such
exercise; |
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in the case of warrants to purchase common stock or preferred
stock, the number of shares of common stock or preferred stock,
as the case may be, purchasable upon the exercise of one warrant
and the price at which these shares may be purchased upon such
exercise; |
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the effect of any merger, consolidation, sale or other
disposition of our business on the warrant agreement and the
warrants; |
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the terms of any rights to redeem or call the warrants; |
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any provisions for changes to or adjustments in the exercise
price or number of securities issuable upon exercise of the
warrants; |
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the dates on which the right to exercise the warrants will
commence and expire; |
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the manner in which the warrant agreement and warrants may be
modified; |
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federal income tax consequences of holding or exercising the
warrants; |
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the terms of the securities issuable upon exercise of the
warrants; and |
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any other specific terms, preferences, rights or limitations of
or restrictions on the warrants. |
Before exercising their warrants, holders of warrants will not
have any of the rights of holders of the securities purchasable
upon such exercise, including:
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in the case of warrants to purchase debt securities, the right
to receive payments of principal of, or any premium or interest
on, the debt securities purchasable upon exercise or to enforce
covenants in the applicable indenture; or |
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in the case of warrants to purchase common stock or preferred
stock, the right to receive any dividends or payments upon our
liquidation, dissolution or winding up or to exercise any voting
rights. |
Exercise of Warrants
Each warrant will entitle the holder to purchase the securities
that we specify in the applicable prospectus supplement at the
exercise price that we describe in the applicable prospectus
supplement. Unless we otherwise specify in the applicable
prospectus supplement, holders of the warrants may exercise the
warrants at any time up to 5:00 P.M. New York time on the
expiration date that we set forth in the applicable prospectus
supplement. After the close of business on the expiration date,
unexercised warrants will become void.
Holders of the warrants may exercise the warrants by delivering
the warrant certificate representing the warrants to be
exercised together with specified information, and paying the
required amount to the warrant agent in immediately available
funds, as provided in the applicable prospectus supplement. We
will set forth on the reverse side of the warrant certificate
and in the applicable prospectus supplement the information that
the holder of the warrant will be required to deliver to the
warrant agent upon exercise.
Upon receipt of the required payment and the warrant certificate
properly completed and duly executed at the corporate trust
office of the warrant agent or any other office indicated in the
applicable prospectus supplement, we will issue and deliver the
securities purchasable upon such exercise. If fewer than all of
the warrants represented by the warrant certificate are
exercised, then we will issue a new warrant certificate for the
remaining amount of warrants. If we so indicate in the
applicable prospectus supplement, holders of the warrants may
surrender securities as all or part of the exercise price for
warrants.
Enforceability of Rights By Holders of Warrants
Each warrant agent will act solely as our agent under the
applicable warrant agreement and will not assume any obligation
or relationship of agency or trust with any holder of any
warrant. A single bank or trust company may act as warrant agent
for more than one issue or series of warrants. A warrant agent
will have no duty or responsibility in case of any default by us
under the applicable warrant agreement or warrant, including any
duty or responsibility to initiate any proceedings at law or
otherwise, or to make any demand upon us. Any holder of a
warrant may, without the consent of the related warrant agent or
the holder of any other warrant, enforce by appropriate legal
action its right to exercise, and receive the securities
purchasable upon exercise of, its warrants.
LEGAL OWNERSHIP OF SECURITIES
We can issue securities in registered form or in the form of one
or more global securities. We describe global securities in
greater detail below. We refer to those persons who have
securities registered in their own names on the books that we or
any applicable trustee maintain for this purpose as the
holders of those securities. These persons are the
legal holders of the securities. We refer to those
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persons who, indirectly through others, own beneficial interests
in securities that are not registered in their own names, as
indirect holders of those securities. As we discuss
below, indirect holders are not legal holders, and investors in
securities issued in book-entry form or in street name will be
indirect holders.
Book-Entry Holders
We may issue securities in book-entry form only, as we will
specify in the applicable prospectus supplement. This means
securities may be represented by one or more global securities
registered in the name of a financial institution that holds
them as depositary on behalf of other financial institutions
that participate in the depositarys book-entry system.
These participating institutions, which are referred to as
participants, in turn, hold beneficial interests in the
securities on behalf of themselves or their customers.
Only the person in whose name a security is registered is
recognized as the holder of that security. Securities issued in
global form will be registered in the name of the depositary or
its participants. Consequently, for securities issued in global
form, we will recognize only the depositary as the holder of the
securities, and we will make all payments on the securities to
the depositary. The depositary passes along the payments it
receives to its participants, which in turn pass the payments
along to their customers who are the beneficial owners. The
depositary and its participants do so under agreements they have
made with one another or with their customers; they are not
obligated to do so under the terms of the securities.
As a result, investors in a book-entry security will not own
securities directly. Instead, they will own beneficial interests
in a global security, through a bank, broker or other financial
institution that participates in the depositarys
book-entry system or holds an interest through a participant. As
long as the securities are issued in global form, investors will
be indirect holders, and not holders, of the securities.
Street Name Holders
We may terminate a global security or issue securities in
non-global form. In these cases, investors may choose to hold
their securities in their own names or in street
name. Securities held by an investor in street name would
be registered in the name of a bank, broker or other financial
institution that the investor chooses, and the investor would
hold only a beneficial interest in those securities through an
account he or she maintains at that institution.
For securities held in street name, we will recognize only the
banks, brokers and other financial institutions in whose names
the securities are registered as the holders of those
securities, and we will make all payments on those securities to
them. These institutions pass along the payments they receive to
their customers who are the beneficial owners, but only because
they agree to do so in their customer agreements or because they
are legally required to do so. Investors who hold securities in
street name will be indirect holders, not holders, of those
securities.
Legal Holders
Our obligations, as well as the obligations of any applicable
trustee and of any third parties employed by us or a trustee,
run only to the holders of the securities. We do not have
obligations to investors who hold beneficial interests in global
securities, in street name or by any other indirect means. This
will be the case whether an investor chooses to be an indirect
holder of a security or has no choice because we are issuing the
securities only in global form.
For example, once we make a payment or give a notice to the
holder, we have no further responsibility for the payment or
notice even if that holder is required, under agreements with
depositary participants or customers or by law, to pass the
payment or notice along to the indirect holders but does not do
so. Similarly, we may want to obtain the approval of the holders
to amend an indenture, such as to relieve us of the consequences
of a default or of our obligation to comply with a particular
provision of the indenture or for other purposes. In such an
event, we would seek approval only from the holders, and not the
indirect holders, of the securities. Whether and how the holders
contact the indirect holders is up to the holders.
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Special Considerations for Indirect Holders
If you hold securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you
should check with your own institution to find out:
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how it handles securities payments and notices; |
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whether it imposes fees or charges; |
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how it would handle a request for the holders consent, if
ever required; |
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whether and how you can instruct it to send you securities
registered in your own name so you can be a holder, if that is
permitted in the future; |
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how it would exercise rights under the securities if there were
a default or other event triggering the need for holders to act
to protect their interests; and |
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if the securities are in book-entry form, how the
depositarys rules and procedures will affect these matters. |
Global Securities
A global security is a security held by a depositary which
represents one or more individual securities. Generally, all
securities represented by the same global securities will have
the same terms.
Each security issued in book-entry form will be represented by a
global security that we deposit with and register in the name of
a financial institution or its nominee that we select. The
financial institution that we select for this purpose is called
the depositary. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust Company, New York,
New York, known as DTC, will be the depositary for all
securities issued in book-entry form.
A global security may not be transferred to or registered in the
name of anyone other than the depositary, its nominee or a
successor depositary, unless special termination situations
arise. We describe those situations below under the section
titled Special Situations When a Global Security Will Be
Terminated. As a result of these arrangements, the
depositary, or its nominee, will be the sole registered owner
and holder of all securities represented by a global security,
and investors will be permitted to own only beneficial interests
in a global security. Beneficial interests must be held by means
of an account with a broker, bank or other financial institution
that in turn has an account with the depositary or with another
institution that does. Thus, an investor whose security is
represented by a global security will not be a holder of the
security, but only an indirect holder of a beneficial interest
in the global security.
If the prospectus supplement for a particular security indicates
that the security will be issued in global form only, then the
security will be represented by a global security at all times
unless and until the global security is terminated. If
termination occurs, we may issue the securities through another
book-entry clearing system or decide that the securities may no
longer be held through any book-entry clearing system.
Special Considerations for Global Securities
As an indirect holder, an investors rights relating to a
global security will be governed by the account rules of the
investors financial institution and of the depositary, as
well as general laws relating to securities transfers. We do not
recognize an indirect holder as a holder of securities and
instead deal only with the depositary that holds the global
security.
If securities are issued only in the form of a global security,
an investor should be aware of the following:
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An investor cannot cause the securities to be registered in his
or her name, and cannot obtain non-global certificates for his
or her interest in the securities, except in the special
situations we describe below; |
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An investor will be an indirect holder and must look to his or
her own bank or broker for payments on the securities and
protection of his or her legal rights relating to the
securities, as we describe under this section; |
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An investor may not be able to sell interests in the securities
to some insurance companies and to other institutions that are
required by law to own their securities in non-book-entry form; |
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An investor may not be able to pledge his or her interest in a
global security in circumstances where certificates representing
the securities must be delivered to the lender or other
beneficiary of the pledge in order for the pledge to be
effective; |
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The depositarys policies, which may change from time to
time, will govern payments, transfers, exchanges and other
matters relating to an investors interest in a global
security. We and any applicable trustee have no responsibility
for any aspect of the depositarys actions or for its
records of ownership interests in a global security. We and the
trustee also do not supervise the depositary in any way; |
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The depositary may, and we understand that DTC will, require
that those who purchase and sell interests in a global security
within its book-entry system use immediately available funds,
and your broker or bank may require you to do so as well; and |
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Financial institutions that participate in the depositarys
book-entry system, and through which an investor holds its
interest in a global security, may also have their own policies
affecting payments, notices and other matters relating to the
securities. There may be more than one financial intermediary in
the chain of ownership for an investor. We do not monitor and
are not responsible for the actions of any of those
intermediaries. |
Special Situations When a Global Security Will Be
Terminated
In a few special situations described below, the global security
will terminate and interests in it will be exchanged for
physical certificates representing those interests. After that
exchange, the choice of whether to hold securities directly or
in street name will be up to the investor. Investors must
consult their own banks or brokers to find out how to have their
interests in securities transferred to their own name, so that
they will be direct holders. We have described the rights of
holders and street name investors above.
The global security will terminate when the following special
situations occur:
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if the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary for that global
security and we do not appoint another institution to act as
depositary within 90 days; |
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if we notify any applicable trustee that we wish to terminate
that global security; or |
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if an event of default has occurred with regard to securities
represented by that global security and has not been cured or
waived. |
The prospectus supplement may also list additional situations
for terminating a global security that would apply only to the
particular series of securities covered by the prospectus
supplement. When a global security terminates, the depositary,
and not we or any applicable trustee, is responsible for
deciding the names of the institutions that will be the initial
direct holders.
ADDITIONAL INFORMATION CONCERNING OUR CAPITAL STOCK
Nevada Law
We are subject to certain provisions of the Nevada Revised
Statutes (the Revised Statutes) which could delay or
make more difficult a merger or tender offer involving Halozyme.
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Sections 78.378 to 78.3793, inclusive, of the Revised
Statutes relate to the acquisitions of a controlling interest in
a corporation. Such provisions apply to Nevada corporations that
have at least 200 shareholders, at least 100 being Nevada
residents, and that do business directly or indirectly in
Nevada. Where applicable, Nevada law prohibits an acquiror from
voting shares of a target company after exceeding certain
threshold ownership percentages, until the acquiror provides
certain information to the company and a majority of the
disinterested shareholders vote to restore the voting rights of
the acquirors shares at a meeting called at the request
and expense of the acquiror. If the voting rights of such shares
are fully restored and the acquiring person obtained shares
representing a majority of the outstanding shares of the
corporation shareholders voting against such restoration, then
those shareholders whose shares were not voted in favor of
authorizing the voting rights of the acquiror may demand payment
for the fair value of their shares.
The Revised Statutes, 78.411 to 78.444, inclusive, also restrict
a business combination with interested
shareholders, unless certain conditions are met, with
respect to corporations that have a least 200 shareholders
of record. An interested shareholder is a person
who, together with affiliates and associates, beneficially owns
(or within the prior three years, did beneficially own) 10% or
more of the corporations voting stock. A business
combination includes:
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any merger with an interested shareholder, or any
other corporation that is or after the merger would be, an
affiliate or associate of the interested shareholder; |
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any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets to an interested shareholder
having (i) an aggregate market value equal to 5% or more of
the aggregate market value of the corporations assets;
(ii) an aggregate market value equal to 5% or more of the
aggregate market value of all outstanding shares of the
corporation; or (iii) representing 10% or more of the
earning power or net income of the corporation; |
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any issuance or transfer of shares of the corporation or its
subsidiaries to the interested shareholder having an
aggregate market value equal to 5% or more of the aggregate
market value of all outstanding shares of the corporation; |
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the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by the interested
shareholder; |
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certain transactions which would result in increasing the
proportionate percentage of shares of the corporation owned by
the interested shareholder; |
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the receipt of benefits, except proportionately as a
shareholder, of any loans, advances or other financial benefits
by an interested shareholder. |
A corporation to which this statute applies may not engage in a
combination within three years after the interested shareholder
acquired its shares, unless the combination or the interested
shareholders acquisition of shares was approved by the
board of directors before the interested shareholder acquired
the shares. If this approval was not obtained, then after the
three year period expires, the combination may be consummated if
all applicable statutory requirements are met and either:
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the board of directors of the corporation approves, prior to
such person becoming an interested shareholder, the
combination or the purchase of shares by the interested
shareholder; or |
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the combination is approved by the affirmative vote of holders
of a majority of voting power not beneficially owned by the
interested shareholder at a meeting called no
earlier than three years after the date the interested
shareholder became such; or |
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the aggregate amount of cash and the market value of
consideration other than cash to be received by holders of
common shares and holders of any other class or series of shares
meets certain minimum requirements set forth in the statutes and
prior to the consummation of the business
combination, except in limited circumstances, the
interested shareholder will not have become the
beneficial owner of additional voting shares of the corporation. |
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Charter Document Provisions
Our bylaws provide that the Board of Directors is divided into
three classes of directors, with each class serving a staggered
three-year term. The classification system of electing directors
may tend to discourage a third party from making a tender offer
or otherwise attempting to obtain control of Halozyme and may
maintain the incumbency of the Board of Directors, as it
generally makes it more difficult for stockholders to replace a
majority of the directors. Our Bylaws do not permit stockholders
to act without a meeting and do not provide for cumulative
voting in the election of directors. The amendment of any of
these provisions would require approval by holders of at least a
majority of the shares of outstanding common stock.
These and other provisions of our amended and restated articles
of incorporation, including, but not limited to the Board of
Directors ability to designate the rights and preferences
of our preferred stock, could have the effect of deterring
certain takeovers or delaying or preventing certain changes in
control or management of Halozyme, including transactions in
which stockholders might otherwise receive a premium for their
shares over then-current market prices.
PLAN OF DISTRIBUTION
The securities being offered may be sold in one or more
transactions at fixed prices, at prevailing market prices at the
time of sale, at prices related to the prevailing market prices,
at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected at various times
in one or more of the following transactions, or in other kinds
of transactions:
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through underwriters for resale to the public or investors: |
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transactions on the American Stock Exchange or on any national
securities exchange or U.S. inter-dealer system of a registered
national securities association on which our common stock may be
listed or quoted at the time of sale; |
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in the over-the-counter market; |
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in private transactions and transactions otherwise than on these
exchanges or systems or in the over-the-counter market; |
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in connection with short sales of the shares; |
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by pledge to secure debt and other obligations; |
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through the writing of options, whether the options are listed
on an options exchange or otherwise; |
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in connection with the writing of non-traded and exchange-traded
call options, in hedge transactions and in settlement of other
transactions in standardized or over-the-counter options; |
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through a combination of any of the above transactions; or |
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any other method permitted by law. |
We may sell our securities directly to one or more purchasers,
or to or through underwriters, dealers or agents or through a
combination of those methods. The related prospectus supplement
will set forth the terms of each offering, including:
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the name or names of any agents, dealers, underwriters or
investors who purchase the securities; |
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the purchase price of the securities being offered and the
proceeds we will receive from the sale; |
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the amount of any compensation, discounts commissions or fees to
be received by the underwriters, dealer or agents; |
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any over-allotment options under which underwriters may purchase
additional securities from us; |
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any discounts or concessions allowed or reallowed or paid to
dealers; |
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any securities exchanges on which such securities may be listed; |
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the terms of any indemnification provisions, including
indemnification from liabilities under the federal securities
laws; and |
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the nature of any transaction by an underwriter, dealer or agent
during the offering that is intended to stabilize or maintain
the market price of the securities. |
In addition, any securities covered by this prospectus which
qualify for sale pursuant to Regulation S of the Securities
Act of 1933, as amended (the Securities Act), may be
sold pursuant to Regulation S rather than pursuant to this
prospectus.
In connection with the sale of our common stock, underwriters
may receive compensation from us or from purchasers of our
common stock in the form of discounts, concessions or
commissions. Underwriters, dealers and agents that participate
in the distribution of our common stock may be deemed to be
underwriters. Discounts or commissions they receive and any
profit on their resale of our common stock may be considered
underwriting discounts and commissions under the Securities Act.
We may agree to indemnify underwriters, dealers and agents who
participate in the distribution of our common stock against
various liabilities, including liabilities under the Securities
Act of 1933. We may also agree to contribute to payments which
the underwriters, dealers or agents may be required to make in
respect of these liabilities. We may authorize dealers or other
persons who act as our agents to solicit offers by various
institutions to purchase our common stock from us under
contracts which provide for payment and delivery on a future
date. We may enter into these contracts with commercial and
savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others.
If we enter into these agreements concerning any series of our
common stock, we will indicate that in the prospectus supplement
or amendment.
In connection with an offering of our common stock, underwriters
may engage in transactions that stabilize, maintain or otherwise
affect the price of our common stock. Specifically, underwriters
may over-allot in connection with the offering, creating a
syndicate short position in our common stock for their own
account. In addition, underwriters may bid for, and purchase,
our common stock in the open market to cover short positions or
to stabilize the price of our common stock. Finally,
underwriters may reclaim selling concessions allowed for
distributing our common stock in the offering if the
underwriters repurchase previously distributed common stock in
transactions to cover short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize
or maintain the market price of our common stock above
independent market levels. Underwriters are not required to
engage in any of these activities and may end any of these
activities at any time. Agents and underwriters may engage in
transactions with, or perform services for, us and our
affiliates in the ordinary course of business.
LEGAL MATTERS
The validity of the securities offered hereby and other legal
matters relating to the offering will be passed upon for us by
Hale Lane Peek Dennison and Howard, Reno, Nevada.
EXPERTS
The financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-KSB for the year
ended December 31, 2004, have been so incorporated in
reliance on the report of Cacciamatta Accountancy Corporation,
an independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
27
9,171,429 Shares
HALOZYME THERAPEUTICS, INC.
Common Stock
PROSPECTUS SUPPLEMENT
SG Cowen & Co.
Rodman & Renshaw
Roth Capital Partners
December 12, 2005