As filed with the Securities and Exchange Commission on May 30, 2002
Registration No. 333-86156
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO.1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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IGEN INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 94-28528543
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer
Organization Identification Number)
16020 Industrial Drive, Gaithersburg, Maryland 20877
(301) 869-9800
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Samuel J. Wohlstadter
Chairman of the Board & Chief Executive Officer
IGEN International, Inc.
16020 Industrial Drive, Gaithersburg, Maryland 20877
(301) 869-9800
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
With a copy to:
Thomas F. Cooney, III, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W., Washington, D.C. 20036
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO THE PUBLIC: At any time and from time to time after this
Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. //
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price per Aggregate Offering Registration Fee
Share (1) Price (1)
Common Stock, $ .001 par value 31,726 $36.875 $1,169,896.25 $107.63 (3)
Series A Preferred Share Purchase Rights 31,726 Not applicable (2) Not applicable (2) Not applicable (2)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933 based upon the average of
the high and low closing prices of the Registrant's Common Stock as reported on
the Nasdaq National Market on April 10, 2002.
(2) IGEN Common Stock includes associated rights (the "Rights") to purchase
shares of IGEN Series A Preferred Stock, par value $.001 per share. Until the
occurrence of certain prescribed events, none of which has occurred, the Rights
are not exercisable, are evidenced by the certificates representing IGEN Common
Stock and will be transferred along with and only with the IGEN Common Stock.
The value attributable to such Rights, if any, is reflected in the market price
of IGEN Common Stock.
(3) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
Subject to Completion, dated May 30, 2002
31,726 SHARES
IGEN INTERNATIONAL, INC.
COMMON STOCK
The 31,726 shares of Common Stock of IGEN International, Inc. ("IGEN")
offered through this prospectus will be sold by the selling stockholder listed
on page 23 of this prospectus.
The sale of shares offered through this prospectus may be effected by
the selling stockholder from time to time in transactions on the Nasdaq National
Market, in privately negotiated transactions or in a combination of such methods
of sale. The shares may be sold at fixed prices that may change, at prices
prevailing at the time of sale, at prices relating to such prevailing prices or
at negotiated prices. None of the proceeds from this offering will be received
by IGEN.
IGEN's Common Stock is currently listed on the Nasdaq National Market
under the trading symbol "IGEN." IGEN's principal executive offices are located
at 16020 Industrial Drive, Gaithersburg, Maryland 20877. IGEN's telephone number
is (301) 869-9800.
POTENTIAL INVESTORS SHOULD CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING STOCKHOLDER MAY NOT SELL ITS SHARES PURSUANT TO THE REGISTRATION
STATEMENT UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is ________, 2002
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TABLE OF CONTENTS
About IGEN.......................................................4
The Offering.....................................................5
Risk Factors.....................................................5
This Prospectus Includes Forward-Looking Information............20
Where to Find More Information..................................21
Incorporation of Documents by Reference.........................21
Selling Stockholder.............................................22
Use of Proceeds.................................................24
Plan of Distribution............................................24
Legal Matters...................................................25
Experts.........................................................25
Indemnification.................................................25
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy Common Stock in any jurisdiction where it is
unlawful. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of Common Stock. This preliminary prospectus is
subject to completion prior to this offering.
Origen, M-Series and Tricorder are trademarks owned by or licensed to
Igen International, Inc. Other trademarks and trade names appearing in this
prospectus are the property of their holders. The domain name and website
address www.igen.com, and all rights thereto, are registered in the name of and
owned by IGEN. The information on our website is not intended to be a part of
this prospectus.
ABOUT IGEN
We develop and market products that incorporate our proprietary
ORIGEN(R) technology, which permits the detection and measurement of biological
substances. We believe that ORIGEN offers significant advantages over competing
detection methods by providing a unique combination of speed, sensitivity,
flexibility and throughput in a single technology platform. ORIGEN is
incorporated into instrument systems and related consumable reagents, and we
also offer assay development and other services used to perform analytical
testing. Products based on our ORIGEN technology have been developed and sold
for the life science, clinical testing and industrial testing markets.
We and our corporate collaborators have commercialized numerous product
lines to serve these markets. These sales and placements have been made
predominantly through our license arrangement with Roche Diagnostics GmbH
("Roche"), a leading provider of clinical diagnostic products.
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We sell the M-SERIES(TM) System product line for use by pharmaceutical
and biotechnology companies in drug discovery and development. The M-SERIES
System may be used in all phases of drug discovery, including (1) validating
targets identified through genomics, (2) screening of large numbers of compounds
generated through combinatorial chemistry, (3) re-testing and optimization of
lead compounds, and (4) clinical trial testing of drug candidates. We also
provide custom assay development services. We market the M-SERIES System through
our sales, marketing and applications team dedicated to the life science market.
We have also applied our ORIGEN technology to the rapidly growing
market for testing food and water for disease causing pathogens.
Our address is 16020 Industrial Drive, Gaithersburg, Maryland 20877,
and our telephone number is (301) 869-9800.
THE OFFERING
This prospectus relates to 31,726 shares of Common Stock that may be
offered for sale by the selling stockholder. On March 26, 2002, we closed a
private placement of the Common Stock to an accredited investor. As part of the
private placement, we entered into a registration rights agreement with the
investor with respect to the purchased shares. We are registering the Common
Stock covered by this prospectus to fulfill our contractual obligations with
respect to these registration rights. Registration of the Common Stock does not
necessarily mean that all or any portion of such stock will be offered for sale
by the selling stockholder.
We have agreed to bear the expenses of the registration of the Common
Stock under Federal and state securities laws, but we will not receive any
proceeds from the sale of the Common Stock offered under this prospectus.
RISK FACTORS
INVESTING IN OUR COMMON STOCK IS VERY RISKY. YOU SHOULD BE ABLE TO BEAR
A COMPLETE LOSS OF YOUR INVESTMENT. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING
FACTORS IN ADDITION TO OTHER INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS
OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS FROM OUR OTHER SEC FILINGS.
THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE THE MATERIAL RISKS KNOWN BY IGEN
CONCERNING OUR OPERATIONS AND THE SECURITIES THAT ARE THE SUBJECT OF THIS
PROSPECTUS. IF ANY OF THESE RISKS, OR ANY OTHER MATERIAL RISKS NOT CURRENTLY
KNOWN BY US, ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION, OPERATING
RESULTS, CASH FLOWS AND THE TRADING PRICE FOR OUR STOCK COULD BE HARMED.
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IF THE COMPANIES THAT LICENSE TECHNOLOGY FROM US DO NOT EFFECTIVELY
DEVELOP AND MARKET PRODUCTS BASED ON THAT TECHNOLOGY, OUR REVENUE WOULD BE
ADVERSELY AFFECTED.
The success of our business depends, in large part, on how effectively
the companies to which we have licensed our technology develop and market that
technology. If these companies do not effectively develop and market products
based on this technology, our revenues would decrease.
We have licensed our technology to Organon Teknika B.V., Eisai Co.,
Ltd., and Roche Diagnostics GmbH for selected markets and uses. Our license
agreements with each of these companies allow each company to develop products
using our technology and to manufacture and sell those products in selected
markets. In return for the right to use our technology, each of these companies
must pay royalties to us based on revenues they receive from sales of products
based on our technology. These royalties are a significant part of our overall
revenue. For example, they accounted for 52% of our revenue in fiscal year 2001.
We have brought a lawsuit against Roche, one of our licensees, in part
because we believe Roche has not properly calculated and paid royalties to us
and because we believe Roche has not commercialized our technology as diligently
as our license agreement with Roche requires. See the risk factor immediately
below for a more detailed description of this litigation and the risks it poses
to us. Similar or other problems may arise with other companies to whom we
license our technology.
WE ARE SUING THE LARGEST LICENSEE OF OUR TECHNOLOGY, AND THE OUTCOME OF
THAT LITIGATION COULD MATERIALLY ADVERSELY AFFECT OUR REVENUES AND FINANCIAL
CONDITION.
We have an ongoing lawsuit against Roche, which is the largest licensee
of our technology in terms of royalty income accounting for over 90% of our
royalty income in fiscal 2001. The lawsuit centers on a number of claims we
assert against Roche in which we allege that they failed to comply with the
terms of our license agreement with them. Roche has filed a counterclaim against
us in the lawsuit, alleging, among other things, that we breached the Roche
license agreement by permitting Eisai Co., Ltd., another of our licensees, to
market some ORIGEN-based products in Japan.
The United States District Court issued a final order of judgment in
our case against Roche that awarded us $105 million in compensatory damages and
$400 million in punitive damages, confirmed our right to terminate the Roche
license agreement, directed and commanded Roche to grant to us for use in our
retained fields a license to all improvements developed by Roche under the
agreement, including Roche's Elecsys(R) diagnostics product line, and barred
Roche from marketing, selling, placing or distributing outside of its licensed
field any products, including its Elecsys diagnostics product line, that are
based on our ORIGEN(R) technology. We have voluntarily agreed not to terminate
the license agreement until an appellate court determines that we are entitled
to do so; however, we have already notified Roche that the license agreement
will terminate automatically once the judgment is affirmed by the Court of
Appeals.
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The final judgment issued in this case also found in our favor and
against Roche on all of Roche's counterclaims, except for one in which we were
ordered to pay $500,000.
Roche has filed a notice of appeal. During the appeal process, Roche is
obligated to continue to comply with the terms of the license agreement.
The risks involved in the litigation include:
- The appellate court may modify or overturn some or all of the
judgment favorable to us including the finding that Roche
materially breached the license agreement, the scope and
extent of the improvements awarded to us, the amount of
compensatory and punitive damages, or the favorable findings
relating to Roche's counterclaims against us;
- The appellate court could overturn some or all of the judgment
and order a new trial on those issues. For example, if the
court orders a new trial on whether or not Roche miscalculated
and underpaid royalties, breached its duty of good faith and
fair dealing, or engaged in unfair competition against us, the
amount of damages awarded in a new trial could be lower than
the amount already awarded to us;
- If the court orders a new trial on any of the issues, we might
need to continue expending significant amounts of money and
management time in pursuing our claims against Roche. This
time and money will then be unavailable for use in the
development of our business;
- If the appellate court upheld the judgment that Roche
materially breached the license agreement, and the license
agreement were terminated, our royalty revenues would suffer
unless and until we were able to introduce new products and
generate revenues on our own or find one or more comparable
replacements for Roche;
- We may not be able to find a suitable replacement for Roche or
successfully introduce new products on our own following
termination of the license. Our ability to successfully
commercialize new products, including products based on the
improvements awarded to us in this litigation, is subject to
numerous risks and uncertainties including risks relating to:
- the need for governmental approvals ;
- our ability to compete effectively;
- our ability to effectively manufacture and
market new products;
- our ability to attract and retain employees;
- our need for additional financing;
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- our dependence on suppliers; and
- the other risks applicable to our business as
more completely described in this prospectus
and in our filings with the SEC;
- While an appeal is pending, Roche may divert its attention
from selling the licensed products that generate royalties to
us and focus its energies instead to find alternative products
to develop and market; and
- While an appeal is pending, Roche may continue to market and
sell other Roche products that compete with its ORIGEN-based
products, thereby lowering the royalty revenues that we would
have otherwise received if Roche had sold more ORIGEN-based
products instead of its other competing products.
OUR ROYALTY INCOME COULD SUFFER AS A RESULT OF OUR LITIGATION AGAINST
HITACHI.
We are suing Hitachi Ltd. in Japan. Hitachi develops and manufactures
diagnostic equipment based on ORIGEN technology for Roche, to whom we license
our technology. We believe that Hitachi's actions in Japan violate rights that
we originally granted to Eisai Co., Ltd. to develop, manufacture and sell
products using ORIGEN technology to the Japanese clinical diagnostic market. We
have asked the Japanese court to prohibit Hitachi from manufacturing, using or
selling in Japan the Elecsys 2010 Instrument, which Hitachi developed for Roche
based on our technology.
If we lose our lawsuit against Hitachi and Hitachi continues Japanese
manufacturing of products covered by our license with Eisai, Eisai's ability to
sell products based on our technology in Japan could suffer, and the royalty
income we receive from Eisai could decrease as a result. If, on the other hand,
we win the lawsuit against Hitachi, Roche will either have to find a new
manufacturer to make equipment based on ORIGEN technology or make arrangements
for Hitachi to manufacture the equipment outside of Japan. Our royalty income
could suffer if Roche cannot effectively make alternate arrangements.
In connection with our ongoing litigation against Roche, Roche has
attempted to sue us for interfering with its contract with Hitachi because we
filed this lawsuit. That claim was dismissed by the district court. If we lose
our lawsuit against Hitachi, Roche may try to bring this claim against us again.
FAILURE TO MEET OUR DEBT OBLIGATIONS COULD ADVERSELY AFFECT OUR RESULTS
OF OPERATIONS AND FINANCIAL CONDITION; IN ADDITION, OUR DEBT SERVICE OBLIGATIONS
COULD IMPAIR OUR OPERATING FLEXIBILITY.
As of March 31, 2001, our debt balance is $56.0 million. There is a
possibility that we may be unable to generate cash or arrange financing
sufficient to pay the principal of, interest on and other amounts due in respect
of our indebtedness when due, or in the event any of our indebtedness
8
is accelerated. Termination of the license agreement with Roche would cause
approximately $28.0 million, as of March 31, 2001, of our debt payment
obligations under our 8.5% senior secured notes to accelerate. The note purchase
agreement for the 8.5% senior secured notes also contains covenants that limit
our ability to take specified actions, including incurring additional secured
debt and amending our license agreement with Roche, which could affect our
ability to resolve issues that are being litigated through an amendment to the
existing license agreement with Roche. These restrictions may limit our
operating flexibility, as well as our ability to raise additional capital. In
addition, our debt obligations may require that we dedicate a substantial
portion of our expected cash flow to service our indebtedness, which would
reduce the amount of our expected cash flow available for other purposes,
including working capital and capital expenditures.
WE HAVE A HISTORY OF OPERATING LOSSES, EXPECT TO INCUR FUTURE LOSSES
AND CANNOT BE CERTAIN THAT WE WILL BECOME A PROFITABLE COMPANY.
We have experienced significant operating losses in most years since
our inception, and we expect those losses to continue. We also have an
accumulated deficit and negative net worth. Our losses have resulted principally
from costs incurred in research and development and from litigation costs,
selling costs and other general and administrative costs. We expect to incur
additional operating losses as a result of increases in expenses for
manufacturing, marketing and sales capabilities, litigation costs and expenses,
research and product development, the transfer and commercialization of
improvements from Roche, general and administrative costs and our share of
losses in the Meso Scale Diagnostics, LLC joint venture ("MSD").
We may not achieve profitability in the future. Our ability to become
profitable in the future will depend on, among other things, our ability to:
- expand the commercialization of our existing products;
- upgrade and enhance the M-SERIES product capabilities;
- introduce new products into the market, including products
for the markets currently served by Roche following
termination of Roche's license with us;
- develop our marketing capabilities cost-effectively;
- develop sales and distribution capabilities cost-effectively;
and
- establish successful collaborations with corporate partners to
develop and commercialize products that incorporate our
technologies.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, AND THESE
FLUCTUATIONS MAY CAUSE OUR STOCK PRICE TO FALL.
Our quarterly operating results depend upon:
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- the volume and timing of orders for M-SERIES or other
products;
- the timing of instrument deliveries and installations;
- the success of M-SERIES upgrades and enhancements;
- variations in revenue recognized from royalties and other
contract revenues;
- our mix of products sold;
- whether our instruments are sold to or placed with customers;
- the timing of our introduction of new products;
- our competitors' introduction of new products;
- variations in expenses we incur in connection with the
operation of our business, including costs associated with the
transfer of improvements from Roche to us, research and
development costs including costs associated with developing
and commercializing new products for the markets currently
served by Roche, and sales and marketing costs, including
costs for upgrading the M-SERIES products;
- our share of losses in MSD;
- our manufacturing capabilities; and
- the volume and timing of product returns and warranty claims.
These factors may cause our quarterly operating results to fluctuate
significantly, which in turn, may cause our stock price to fall. In addition,
because our revenues and operating results are volatile and difficult to
predict, we believe that period-to-period comparisons of our results of
operations are not a good indication of our future performance.
WE MAY NOT BE ABLE TO RAISE SUFFICIENT ADDITIONAL CAPITAL TO
SUCCESSFULLY DEVELOP OUR BUSINESS.
We need substantial amounts of money to fund our operations. Our access
to funds could be negatively impacted by many factors, including the results of
pending litigation, the volatility of the price of Common Stock, continued
losses from operations, acceleration of debt payment obligations resulting from
termination of the license agreement with Roche and other factors.
We may need to raise substantial amounts of money to fund a variety of
future activities integral to the development of our business, including the
following:
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- for research and development in order to successfully develop
our technologies, including to develop new products for the
clinical diagnostic markets that are currently being served by
Roche;
- to obtain regulatory approval for some of our products;
- to file and prosecute patent applications in order to protect
our technologies;
- to respond to innovations that our competitors develop;
- to continue to aggressively pursue our ongoing litigations
against Roche and Hitachi;
- to retain qualified employees, particularly in light of
intense competition for qualified scientists and engineers;
- to make new arrangements to market our technology, including
for the markets currently being served by Roche following the
termination of our license agreement with Roche;
- to continue to fund investments in MSD;
- to manufacture products ourselves or through a third party;
and
- to market different products to different markets, either
through building our own sales and distribution capabilities
or relying on a third party.
We may not have access to enough funds to successfully develop our
business. We may try to raise necessary additional capital by issuing additional
debt or equity securities. Holders of debt securities would have priority over
our equity holders with respect to the proceeds from the sale of our assets in
the event of liquidation of our business, and any debt financings we obtain may
contain restrictive terms that limit our operating flexibility. If, on the other
hand, we raise additional capital by selling more common or preferred stock, the
holdings of existing stockholders would be diluted.
If we are unable to raise additional capital, we may have to scale
back, or even eliminate, some programs. Alternatively, we may have to consider
pursuing arrangements with other companies which may not be on terms favorable
to the Company.
WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST MORE ESTABLISHED
COMPANIES AND INSTITUTIONS, WHICH COULD ADVERSELY AFFECT OUR BUSINESS.
We are a relatively young company in a highly competitive industry. We
compete against established companies and research and academic institutions,
and we expect this competition to
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intensify. Many of these companies and institutions have one or more competitive
advantages over us, including:
- more money to invest;
- greater expertise and resources in developing, manufacturing,
marketing and selling products;
- a larger, more experienced workforce; and
- more experience in obtaining regulatory approval for clinical
diagnostic products.
As a result, we may not be able to compete successfully against our
current or future competitors. This could have a material adverse effect on our
business, financial condition and revenue.
OUR PRODUCTS MAY BECOME OBSOLETE IF WE EXPERIENCE DIFFICULTIES OR
DELAYS IN PRODUCT DEVELOPMENT.
The market for our products is characterized by rapidly changing
technology, evolving industry standards, the need for updated and effective
technology and new product introduction. Our future success will depend in part
upon our ability to enhance existing products and to develop and introduce new
or enhanced products. We may not be able to avoid the obsolescence of our
products due to rapid technological change and evolving industry standards. The
development of new or enhanced products is a complex and uncertain process
requiring the accurate anticipation of technological and market trends as well
as precise technological execution. We have and may continue to experience
design, development, implementation and other difficulties that could delay or
prevent our introduction of new or enhanced products or affect the performance
of existing products. These difficulties and delays have caused, and may
continue to cause, our expenses to increase and our product sales to fluctuate.
WE DEPEND ON HIGHLY TRAINED AND SKILLED EMPLOYEES AND MANAGEMENT, AND
WE MAY NOT BE ABLE TO ATTRACT AND RETAIN SUFFICIENT PERSONNEL.
We need to hire additional staff and to retain existing staff, both of
which are difficult in today's competitive marketplace. Because we are a
technology company, we depend heavily on scientists and engineers to develop
products and to build a successful business. Research and development efforts
could suffer if we are not able to hire and retain enough qualified scientists
and engineers. We compete with other technology companies and research and
academic institutions for experienced scientists. Many of these companies and
institutions have greater resources than we do and thus may be in a better
position to attract desirable candidates.
In addition to scientists, we will also need to hire managers as the
business grows. We will need managers who are able to address the need for
regulatory, manufacturing and marketing
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capabilities. If we are not able to hire managers with these skills, or develop
expertise in these areas, our business prospects could suffer.
WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR MATERIALS USED IN
MANUFACTURING OUR PRODUCTS, AND ANY INTERRUPTION IN THE SUPPLY OF THOSE
MATERIALS COULD HAMPER OUR ABILITY TO MANUFACTURE PRODUCTS AND MEET CUSTOMER
ORDERS.
We depend on vendors to supply key materials that we use in our
products. Some of these materials are available only from limited sources. In
the event of a reduction in, interruption of, or degradation in the quality of
the supply of any of our required materials, or an increase in the cost of
obtaining those materials, we would be forced to locate an alternative source of
supply. If no alternative source were available or if an alternative source were
not available on a timely basis or at a reasonable cost or otherwise on
acceptable terms, our ability to manufacture one or more of our products would
be delayed or halted. Any changes in sources of supply may require additional
engineering or technical development in order to ensure consistent and
acceptable performance of the products. If any of these events occur, product
costs may increase, we might be unable to deliver products timely, we could lose
sales as well as customers, and our business would be significantly harmed as a
result.
WE MUST OBTAIN FDA APPROVAL TO MARKET OUR CLINICAL DIAGNOSTIC PRODUCTS,
WHICH IS OFTEN COSTLY AND TIME CONSUMING, AND IF WE DO NOT OBTAIN THE NECESSARY
APPROVAL OUR BUSINESS PROSPECTS WOULD SUFFER.
The U.S. Food and Drug Administration ("FDA") regulates many areas in
which we conduct research and in which we develop, produce and market products.
In particular, we must obtain FDA approval before we can market clinical
diagnostic products such as those we are currently developing for the patient
care market. The approval process is often costly and time consuming. We may not
be successful in obtaining FDA approval for any of our clinical diagnostic
products, which would materially adversely affect our future prospects.
In order to obtain FDA approval in the United States, we, or the
companies with whom we work, will need to either obtain pre-market application
approval or pre-market notification clearance from the FDA. In order to obtain
pre-market notification clearance, we must submit data from clinical trials
demonstrating that new clinical diagnostic systems are substantially equivalent
to diagnostic systems that the FDA has already approved. If a product is subject
to the substantial equivalence requirement, neither we, nor any of our licensees
can sell that system for clinical use in the United States until the FDA
determines that a new ORIGEN-based system is substantially equivalent to a
previously approved system. Typically, the FDA review process takes 90 days, but
the FDA's review could take longer. In addition, we may not be able to
demonstrate substantial equivalence for future diagnostic systems.
If we do not successfully demonstrate substantial equivalence, or if we
are required to obtain pre-market application approval as an initial matter, we
will have to conduct extensive clinical testing of these products, which could
take years to complete. Extensive testing could involve substantial additional
costs and might delay bringing clinical diagnostic products to market,
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weakening our competitive position. If we fail to obtain FDA approval for new
products altogether, we will be unable to market our ORIGEN-based systems at all
for clinical use in the United States.
WE ARE SUBJECT TO EXTENSIVE, ONGOING GOVERNMENT REGULATION, WHICH MAY
INVOLVE SIGNIFICANT COSTS AND MAY RESTRICT OUR ABILITY TO CONDUCT BUSINESS.
We expect that we may need to spend a substantial amount of money to
comply on an ongoing basis with the regulations of the FDA and other government
agencies. Government agencies, such as the FDA and the Environmental Protection
Agency, regulate manufacturers of diagnostic products and the manufacturing
process itself. The costs of complying with governmental regulations and any
restrictions that government agencies might impose could have a significant
impact on our business. As we increase our manufacturing, these costs will
increase.
Whether we manufacture products ourselves or contract with another
company to manufacture products based on our technology, the FDA will
continually review and periodically inspect the manufacturing process. If the
FDA were to discover a problem with our products, the manufacturing process or
the manufacturing facility, the FDA could place restrictions on these products
and on the manufacturer. For example, the FDA could require us to recall, or
even totally withdraw, a product from the market or close a manufacturing
facility. In addition to FDA regulations, the process of manufacturing products
is subject to a variety of environmental and safety laws and regulations,
including laws and regulations governing the use and disposal of hazardous
materials. If we fail to comply with these laws or regulations, our business and
financial condition could be materially adversely affected.
WE HAVE LIMITED MANUFACTURING AND MARKETING EXPERIENCE, WHICH PUTS US
AT A COMPETITIVE DISADVANTAGE.
We lack experience in large-scale manufacturing, which could hamper our
ability to manufacture existing products or new products that we develop. We
have two options to address this issue. First, we could expand our internal
ability to manufacture products. Second, we could contract with a third party to
manufacture for us products based on our technology. If, however, we are unable
to expand our own manufacturing capability or find a suitable manufacturer on
acceptable terms we may be unable to meet demand for existing products and could
be delayed in introducing new products to the market. Failure to meet demand for
existing products or delays in introducing new products could put us at a
competitive disadvantage and could harm our financial condition or our business
prospects.
We will also need to develop greater selling, marketing and
distribution capabilities. To market clinical diagnostic products directly to
customers, and not through a licensee, we need to develop a substantial sales
force with technical expertise. We also need to establish a distribution system
to support the sales force. Alternatively, we could license or contract with
another company to provide sales and distribution services for products, in much
the same way as we have done with Roche, Eisai and Organon Teknika. We may not
be able to develop a sufficient sales and distribution force or find a suitable
company to fill that role for us.
14
THE SUCCESS OF OUR BUSINESS DEPENDS ON PATENTS THAT WILL EXPIRE AND
THAT MUST BE ACTIVELY PURSUED AND PROTECTED.
Our business depends heavily on patents that will expire over time and
may be challenged or circumvented by competitors. Patents allow us to prevent
others, for a time, from using our inventions to compete against us. Our
business success or failure will depend, in part, on our ability to obtain and
maintain adequate patent protection for the ORIGEN technology. Our current
patents or future patents may not adequately protect our technology from being
used by our competitors.
Because there is no consistent policy governing the scope of claims in
medical patents, patent protection is uncertain. Companies may, for example,
challenge and invalidate patents or circumvent valid claims in patents, all of
which could make it necessary for us to defend our patents in litigation.
Litigation over patents poses the following risks to our business:
- Litigation costs can be extremely high, which could drain our
financial resources.
- Litigation over our patents could discourage other companies
from working with us to develop and market new products based
on technology covered by these disputed patents.
- If we lose some patent protection as a result of litigation,
our competitive advantage could be eroded.
OUR BUSINESS WOULD BE HARMED IF WE VIOLATE THE PATENT RIGHTS OF OTHERS.
Our business success or failure will also depend, in part, on the
patent rights of others. We license technology from other companies and academic
institutions. Because access to this technology is necessary to our business, we
must be certain that we comply with these license agreements. Our business could
be harmed if we breached any of these license agreements and lost the rights to
use this patented technology or if we were unable to renew existing licenses on
acceptable terms or get additional licenses that we may need on acceptable
terms.
We must also make sure that we do not infringe the patent rights of
others. If we were to infringe others' patent rights we could be exposed to the
following risks:
- We could be required to alter, or abandon, our products or
processes.
- We could be required to obtain a license from the patent
holder.
- We could lose customers that are reluctant to continue using
our products or doing business with us.
15
- We could be forced to abandon development work that we had
begun with respect to these products.
- We could be required to pay damages that could be substantial.
If we infringe others' patent rights, our business could be damaged if
we were unable to make necessary alterations or obtain a necessary license on
acceptable terms.
In addition, we may need to litigate the scope and validity of patents
held by others and such litigation could be a substantial cost for us.
WE RELY ON TRADE SECRETS AND OTHER INFORMATION THAT CANNOT BE PROTECTED
BY PATENTS, AND WE FACE RISKS THAT THIS INFORMATION WILL BE DISCLOSED TO OTHERS.
In addition to patents, we also rely in our business on trade secrets,
know-how and other proprietary information. If this information were disclosed
to competitors, our business would suffer. We seek to protect this information,
in part, by entering into confidentiality agreements with licensees, employees
and consultants, which prohibit these parties from disclosing our confidential
information. These agreements may not provide adequate protection for our trade
secrets, know-how and other proprietary information or ensure that the
information we share with others during the course of our business will remain
confidential. We may not have sufficient legal remedies under these agreements
or otherwise to correct or compensate for unauthorized disclosures or sufficient
resources to seek redress.
RESTRICTIONS ON HEALTH CARE COSTS AND HEALTH CARE AND INSURANCE
FINANCING PRACTICES COULD LIMIT DEMAND FOR OUR PRODUCTS.
In the United States and elsewhere, demand for clinical diagnostic
testing is dependent, in part, on consumers' ability to be reimbursed for the
cost of the tests by third-party payors, such as government agencies, health
maintenance organizations and private insurers. Medicaid and other third-party
payors are increasingly challenging the prices charged for medical services,
including clinical diagnostic tests. They are also attempting to contain costs
by limiting their coverage of, and the amount they will reimburse for, clinical
diagnostic tests and other health care products . Without adequate coverage and
reimbursement, consumer demand for clinical diagnostic tests may decrease.
Decreased demand would likely cause sales of our clinical diagnostic products,
and sales by our licensees, to fall since fewer tests would be performed or
prices would be lowered, or both. Reduced sales or royalty income would hurt our
business and our business prospects.
In many foreign markets, governments directly set the prices that
clinical diagnostic companies may charge for their products and services. In the
United States, a number of legislative and regulatory proposals aimed at
changing the health care system have been proposed in recent years. Foreign and
domestic legislative and regulatory initiatives that limit health care coverage
may have a materially adverse effect on our business and our business prospects.
16
WE ARE EXPOSED TO PRODUCT LIABILITY RISKS WHICH, IF NOT ADEQUATELY
COVERED BY INSURANCE, MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL
CONDITION.
We may not be able to adequately insure against risk of product
liability. As we begin marketing products, we may face product liability for
claims and lawsuits brought by customers. Damages awarded in product liability
cases can be very large. While we have product liability insurance, this
coverage is limited. We may not have adequate product liability insurance to
cover us against our potential liabilities or be able to maintain current levels
of product liability insurance on acceptable terms, if at all. Claims or losses
in excess of our current or future product liability insurance coverage could
have a material adverse effect on our financial condition.
MEMBERS OF OUR MANAGEMENT TEAM EXERCISE SIGNIFICANT CONTROL OVER IGEN
AND MAY BE ABLE TO CONTROL THE OUTCOME OF PROPOSED CORPORATE ACTIONS SUPPORTED
OR OPPOSED BY OTHER IGEN STOCKHOLDERS.
Our officers and directors, in the aggregate, own or have the right to
purchase about 28% of Common Stock and our Chief Executive Officer owns
approximately 21% of the Common Stock at March 11, 2002. As a result, certain of
our officers and directors have significant influence over the election of
directors and may be able to control the outcome of proposed corporate actions
supported or opposed by other IGEN stockholders.
FAILURE TO MANAGE OUR GROWTH COULD ADVERSELY AFFECT OUR BUSINESS.
We have grown rapidly and expect to continue to grow by hiring new
employees in all areas of our operations, increasing our presence in existing
markets and introducing new products we develop into new potential high-growth
markets. Our growth has placed, and continues to place, a strain on our
management and our operating and financial systems.
As we grow, our personnel, systems, manufacturing capabilities and
resources, procedures and controls may be inadequate to support future
operations. In order to accommodate the increased operations for sales and
marketing, research and development, facilities and administration, we will need
to hire, train and retain the appropriate personnel. We may also need to improve
our financial and management controls, reporting systems and operating systems.
We may encounter difficulties in developing and implementing other new systems.
In response to our growth, we have recently implemented a new
enterprise resource planning system in order to automate all of our accounting,
manufacturing, sales and purchasing. If the enterprise resource planning system
fails to operate as we expect or experiences delays or interruptions, our
operations, as well as our ability to manage our increased growth, could be
materially adversely affected.
17
PROVISIONS OF OUR GOVERNING DOCUMENTS MAY DETER OTHERS FROM ATTEMPTING
TO ACQUIRE US.
Our governing documents contain provisions designed to prevent hostile
takeovers, which may limit the ability of stockholders to sell their stock at a
premium in a takeover. According to our governing documents, stockholders can
only act at annual meetings or at special meetings of stockholders. Stockholders
are not allowed to act by written consent. In addition, stockholders are not
allowed to call for a special meeting. Only our board of directors, the chairman
of the board or the president may call a special meeting. These provisions may
make it difficult for stockholders to force us to hold special meetings. These
provisions may also limit the ability of stockholders to consider transactions
that they may want to approve, such as a hostile takeover of us.
Our governing documents also contain other provisions that could make
it more difficult for a change in control to be effected. Our board of directors
can issue preferred stock and can determine the rights of those preferred
stockholders without the approval of holders of Common Stock. For example, our
board of directors could give preferred stockholders one or more votes on issues
on which holders of Common Stock vote. This could have the effect of diluting
the voting rights of holders of Common Stock, which might further discourage
other companies from trying to acquire us.
In addition, our certificate of incorporation contains provisions
dividing our board of directors into three classes. Each class serves until the
third succeeding annual meeting, and one class is elected at each annual meeting
of stockholders. As a result, even if our stockholders might prefer to effect a
change sooner, it could take at least two annual meetings of stockholders to
change a majority of the members of the board of directors.
Furthermore, our certificate of incorporation authorizes, and we have
adopted, a preferred share purchase rights plan, commonly referred to as a
"poison pill." Under the rights plan, we made a dividend distribution to the
stockholders of record on November 6, 1996 of one right to purchase from us one
one-hundredth of a share of our preferred stock for each outstanding share of
Common Stock. The terms of the rights and the circumstances under which they may
be exercised are contained in a rights agreement, which has been filed with the
SEC.
These terms have been designed to deter hostile takeovers of us, even
though our stockholders might favor a takeover, especially if it were to afford
them an opportunity to sell their stock at a price above the prevailing market
rate.
OUR STOCK PRICE IS VOLATILE AND COULD DROP PRECIPITOUSLY AND
UNEXPECTEDLY.
Our Common Stock currently trades on The Nasdaq National Market. The
prices of publicly traded stock often fluctuate. The price of our stock may rise
or fall dramatically, even though our business performance has not changed. In
the past, the stock price of technology companies has been especially volatile.
We expect that this will continue to be the case.
18
In addition to these fluctuations, an investment in our stock could be
affected by a wide variety of factors that relate to our business and industry,
many of which are outside of our control. For example, the value of Common Stock
could be affected by:
- new product introductions;
- innovations by competitors;
- our competitors' announcements of their financial results;
- the failure of our operating results to meet or exceed the
expectations of investors and analysts;
- changes in financial estimates and recommendations by security
analysts;
- general economic conditions;
- disputes over patents or other proprietary rights;
- new or existing litigation, including our litigation with
Roche;
- publicity;
- regulations;
- market conditions; and
- fluctuations in our performance and the performances of our
licensees.
WE DO NOT PLAN TO PAY ANY CASH DIVIDENDS ON OUR COMMON STOCK.
Although there are no prohibitions or restrictions imposed by our
outstanding debt facilities with respect to the Company's ability to pay
dividends, we have never paid cash dividends on Common Stock and we have no
plans to pay cash dividends in the foreseeable future.
THE VALUE OF THE COMMON STOCK MAY BE DILUTED IN THE FUTURE.
Our officers, directors, employees and consultants have options to
purchase a significant aggregate amount of Common Stock. If they exercise their
options and purchase Common Stock, Common Stock will be diluted. In addition, we
currently have preferred stockholders and convertible debenture holders who have
the right to convert their preferred shares and debentures, as the case may be,
to Common Stock. Common Stock would be diluted if these preferred stockholders
or convertible debenture holders decide to convert their securities in the
future. Moreover, Common Stock could be further diluted if we issue additional
Common Stock or securities convertible into Common Stock in the future, which we
may need to do to raise funds for
19
our business. Sales of additional shares of Common Stock or the conversion of
securities into Common Stock could cause the market price of Common Stock to
decrease.
THIS PROSPECTUS INCLUDES FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated in this prospectus by
reference include forward-looking statements under the Securities Act. In
addition from time to time, we or our representatives have made or may make
forward-looking statements orally or in writing. The words "may," "will,"
"expect," "anticipate," "believe," "estimate," "plan," "intend" and similar
expressions have been used in this prospectus and the documents incorporated in
this prospectus by reference to identify forward-looking statements. We have
based these forward-looking statements on our current views with respect to
future events and financial performance. Actual results could differ materially
from those projected in the forward-looking statements. These forward-looking
statements are subject to risks, uncertainties and assumptions, including, among
other things:
- adverse results in our litigation with Roche;
- risks associated with managing and maintaining internal
growth;
- competition, including market competition, competition in the
patent process and our ability to consummate contract
negotiations with prospective licensees;
- the possible termination of contracts with key licensees;
- changes in coverages or reimbursement practices of health
maintenance organizations and private insurers;
- adverse results in other litigation and in regulatory matters,
the adoption of adverse legislation or regulations, more
aggressive enforcement of existing legislation or regulations
or a change in the interpretation of existing legislation or
regulations;
- dependence on key members of management;
- other risks described in this "Risk Factors" section; and
- other risks described from time to time in our filings with
the SEC.
We are not obligated to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
All subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained throughout this prospectus and the documents
incorporated in this prospectus by reference. Because of these risks,
uncertainties and assumptions, you should not place undue reliance on these
forward-looking statements.
20
WHERE TO FIND MORE INFORMATION
We are subject to the reporting requirements of the Securities Exchange
Act of 1934 and file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy these reports, proxy
statements and other information at the SEC's public reference facilities at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You can request
copies of these documents by writing to the SEC and paying a fee for the copying
cost. Please call the SEC at 1-800-SEC-0330 for more information about the
operation of the public reference facilities. SEC filings are also available at
the SEC's Web site at http://www.sec.gov. Our Common Stock is listed on the
Nasdaq National Market, and you can read and inspect our filings at the offices
of the National Association of Securities Dealers, Inc. at 1735 K Street,
Washington, D.C. 20006.
This prospectus is only part of a Registration Statement on Form S-3
that we have filed with the SEC under the Securities Act of 1933 and therefore
omits certain information contained in the Registration Statement. We have also
filed exhibits and schedules with the Registration Statement that are excluded
from this prospectus, and you should refer to the applicable exhibit or schedule
for a complete description of any statement referring to any contract or other
document. You may inspect a copy of the Registration Statement, including the
exhibits and schedules, without charge, at the public reference room or obtain a
copy from the SEC upon payment of the fees prescribed by the SEC.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information that we
file with them. Incorporation by reference allows us to disclose important
information to you by referring you to those other documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We filed a Registration Statement on Form S-3 under
the Securities Act of 1933 with the SEC with respect to the Common Stock being
offered pursuant to this prospectus. This prospectus omits certain information
contained in the Registration Statement, as permitted by the SEC. You should
refer to the Registration Statement, including the exhibits, for further
information about us and the Common Stock being offered pursuant to this
prospectus. Statements in this prospectus regarding the provisions of certain
documents filed with, or incorporated by reference in, the Registration
Statement are believed by us to be accurate summaries of the material provisions
of these documents, but are not necessarily complete and each statement is
qualified by that reference. Copies of all or any part of the Registration
Statement, including the documents incorporated by reference or the exhibits,
may be obtained upon payment of the prescribed rates at the offices of the SEC
listed above. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until we sell all of our shares of Common Stock
covered by the registration statement. The documents we are incorporating by
reference are:
- Annual Report on Form 10-K for the year ended March 31, 2001,
Commission File No. 000-23252;
21
- Quarterly Reports on Form 10-Q for the quarters ended June 30,
September 30 and December 31, 2001;
- Proxy Statement filed July 30, 2001;
- Supplement filed September 5, 2001 to the Proxy Statement
filed July 30, 2001;
- Current Report on Form 8-K, dated August 15, 2001;
- Amendment No. 1 to the Current Report on Form 8-K, dated
August 15, 2001;
- Current Report on Form 8-K, dated December 7, 2001;
- Current Report on Form 8-K, dated January 10, 2002;
- Current Report on Form 8-K, dated February 15, 2002;
- Current Report on Form 8-K, dated March 8, 2002;
- Current Report on Form 8-K, dated April 15, 2002;
- Current Report on Form 8-K, dated May 15, 2002; and
- The description of Common Stock contained in our Registration
Statement No. 33-84042 on Form 8-A filed with the SEC on
December 10, 1996 including any amendments or reports filed
for the purpose of updating such description.
Upon request, we will provide without charge to each person to whom a
copy of this prospectus has been delivered a copy of any information that was
incorporated by reference in the prospectus (other than exhibits to documents,
unless the exhibits are specifically incorporated by reference into the
prospectus). We will also provide upon request, without charge to each person to
whom a copy of this prospectus has been delivered, a copy of all documents filed
by us from time to time with the SEC pursuant to the Securities Exchange Act of
1934. Requests for copies should be directed to:
IGEN International, Inc.
16020 Industrial Drive
Gaithersburg, MD 20877
Attention: George Migausky, Chief Financial Officer
Telephone: (301) 869-9800
SELLING STOCKHOLDER
As part of the private placement that we closed on March 26, 2002, we
entered into a registration rights agreement with the investor with respect to
the purchased shares. We are
22
registering the Common Stock covered by this prospectus to fulfill our
contractual obligations with respect to these registration rights.
The following table sets forth the name of the stockholder selling
shares of Common Stock in this offering, the number of shares of Common Stock
owned by such selling stockholder as of April 3, 2002 and the number of shares
of Common Stock that may be offered for sale pursuant to this prospectus by such
selling stockholder. In some instances, the shares offered pursuant to this
prospectus may be sold by the pledgees, donees or transferees of or other
successors in interest to the selling stockholder. The selling stockholder has
not held any position, office or other material relationship with IGEN or any of
its affiliates within the past three years other than as a result of the
transactions that resulted in its ownership of shares of Common Stock.
The shares may be offered from time to time by the selling stockholder
named below. However, the selling stockholder is under no obligation to sell all
or any portion of such shares, nor is the selling stockholder obligated to sell
any such shares immediately pursuant to the Registration Statement. Because the
selling stockholder may sell all or part of its shares, no estimate can be given
as to the number of shares of Common Stock that will be held by the selling
stockholder after termination of any offering made by this prospectus.
COMMON STOCK BENEFICIALLY OWNED AFTER
OFFERING IF ALL OFFERED SHARES ARE SOLD
SHARES OF COMMON STOCK COMMON STOCK NUMBER PERCENT OF
BENEFICIALLY OWNED OFFERED OF SHARES OWNED OUTSTANDING
NAME OF SELLING PRIOR TO OFFERING HEREBY AFTER OFFERING SHARES OWNED AFTER
STOCKHOLDER OFFERING
-------------------------------------- ------------------------- -------------- ----------------- --------------------
Citadel Equity Fund Ltd.(1) 851,716(2) 31,726 819,990(2) 3.4%(3)
(1) Citadel Limited Partnership ("Citadel LP") is the trading manager
of Citadel Equity Fund Ltd. and consequently has voting control
and investment discretion over securities held by Citadel Equity
Fund Ltd. Citadel LP disclaims beneficial ownership of the shares
beneficially owner by Citadel Equity Fund Ltd.. Kenneth C.
Griffin indirectly controls Citadel LP. Mr. Griffin disclaims
beneficial ownership of the shares beneficially owner by Citadel
LP and Citadel Equity Fund Ltd.. Citadel Equity Fund is not a
registered broker-dealer. Citadel Equity Fund, however, is under
common control with, and therefore an affiliate of, a registered
broker-dealer.
(2) Includes as of April 3, 2002, shares of Common Stock issuable
upon conversion of $25,000,000 aggregate principal amount of our
5% subordinated convertible debentures due 2005 and shares of
Common Stock which are not being offered pursuant to this
prospectus.
(3) Based on 23,062,192 shares issued and outstanding as of April 3,
2002 and determined in accordance with Section 13(d) of the
Securities and Exchange Act of 1934, as amended.
From time to time the selling stockholder may transfer or donate its
shares to others and upon acquiring the shares, such persons will be deemed to
be selling stockholders for purposes of this prospectus. The number of shares
owned by the selling stockholder in the event of such
23
transfer or donation of shares will decrease as and when it takes such actions.
The plan of distribution for shares sold hereunder will otherwise remain
unchanged, except that the transferees, donees or other successors will be
selling stockholders hereunder. If IGEN is notified by a selling stockholder
that a transferee or a donee intends to sell more than 500 shares, a supplement
to this prospectus will be filed.
USE OF PROCEEDS
There will be no proceeds to IGEN from the sale of the shares by the
selling stockholder. Any proceeds from the sale of Common Stock received by the
selling stockholder will be retained by the selling stockholder.
IGEN will pay substantially all of the expenses incident to the
registration, offering and sale of the shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents and the
expenses of counsel to the selling stockholder. Such expenses are estimated to
be approximately $14,000. IGEN has also agreed to indemnify the selling
stockholder against certain liabilities, including liabilities under the
Securities Act of 1933.
PLAN OF DISTRIBUTION
We are registering the shares of Common Stock on behalf of the selling
stockholder, and IGEN will not receive any proceeds from this offering. The
shares of Common Stock 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:
o transactions on the Nasdaq National Market or on any national
securities exchange or U.S. inter-dealer system of a registered
national securities association on which the Common Stock may be
listed or quoted at the time of sale;
o in the over-the-counter market;
o in private transactions and transactions otherwise than on these
exchanges or systems or in the over-the-counter market;
o in connection with short sales of the shares (sales of shares not
owned by the selling stockholder at the time of sale);
o by pledge to secure debt and other obligations;
o through the writing of options, whether the options are listed on
an options exchange or otherwise;
24
o 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; or
o through a combination of any of the above transactions, or by any
other legally available means.
The selling stockholder and its successors, including their
transferees, pledgees or donees or their successors, may sell the Common Stock
directly to purchasers or through underwriters, broker-dealers or agents, who
may receive compensation in the form of discounts, concessions or commissions
from the selling stockholder or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus.
The selling stockholder has advised us that it received the shares in
the ordinary course of its business and at the time it received the shares of
Common Stock it was not a party to any agreement or other understanding to
distribute the shares of Common Stock, directly or indirectly.
We entered into a registration rights agreement for the benefit of the
selling stockholder to register the Common Stock under applicable Federal and
state securities laws. The registration rights agreement provides for
cross-indemnification of the selling stockholder and us and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the Common Stock, including liabilities
under the Securities Act. We will pay substantially all of the expenses incurred
by the selling stockholder incident to the offering and sale of the Common
Stock.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered in this
prospectus is being passed upon for us by Kirkpatrick & Lockhart LLP.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference from IGEN's Annual Report on Form 10-K for the year ended March 31,
2001 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated herein by reference and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
INDEMNIFICATION
The Company's Bylaws provide that the Company shall indemnify its
directors and officers to the fullest extent not prohibited by the General
Corporation Law of the State of Delaware;
25
provided, however, that the Company may modify the extent of such
indemnification by individual contracts with its directors and officers; and,
provided, further, that the Company shall not be required to indemnify any
director or officer in connection with any proceeding (or part thereof)
initiated by such person unless (i) such indemnification is expressly required
by law, (ii) the proceeding was authorized by the Board of Directors of the
Company, (iii) such indemnification is provided by the Company, in its sole
discretion, pursuant to the powers vested in the Company by the General
Corporation Law of the State of Delaware, or (iv) such indemnification is
otherwise required by law, by agreement, or by vote of the stockholders or
disinterested directors. Pursuant to these Bylaw provisions, the Company has
entered into indemnity agreements with each of its directors and executive
officers and has obtained director and officer liability insurance in the amount
of $30,000,000.
Section 145 of the General Corporation Law of the State of Delaware
permits a corporation, under specified circumstances, to indemnify its
directors, employees or agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
Article VI of the Company's Certificate of Incorporation states that
directors of the Company will not be personally liable to the Company or its
stockholders for monetary damages for any breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the state of
Delaware, which makes directors liable for unlawful dividends or unlawful stock
repurchases or redemptions or (iv) for any transaction from which the director
derived an improper personal benefit. The Company's Certificate of Incorporation
further provides that if the General Corporation Law of the State of Delaware is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of the Company's directors
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions,
26
we have been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is therefore unenforceable.
We have not authorized any dealer, salesperson or other person to give
any information or represent anything not contained in this prospectus. You must
not rely on any unauthorized information. If anyone provides you with different
or inconsistent information, you should not rely on it. This prospectus does not
offer to sell any shares in any jurisdiction where it is unlawful. The
information in this prospectus is current as of the date shown on the cover
page.
[LOGO] IGEN International, Inc.
31,726 Shares of Common Stock
-------------------------------
PROSPECTUS
-------------------------------
______________, 2002
27
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the Company's estimates (other than the
SEC and Nasdaq registration fees) of the expenses in connection with the
issuance and distribution of the shares of Common Stock being registered.
ITEM AMOUNT
SEC registration fee $ 108
-------
Nasdaq listing fee 317
-------
Legal fees and expenses 5,000
-------
Accounting fees and expenses 7,000
-------
Miscellaneous fees and expenses 1,575
-------
-------
Total $14,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
See "Indemnification" contained in Part I hereof, which is incorporated
herein by reference.
ITEM 16. EXHIBITS
Exhibit
Number Description
4.7 Form of Common Stock Certificate (Previously filed and
incorporated by reference to Registration Statement No. 33-84042
on Form 8-A of the Company filed with the Securities and Exchange
Commission on December 10, 1996).
5.1 Opinion of Kirkpatrick & Lockhart LLP regarding legality
(Previously filed and incorporated by reference to Registration
Statement No. 333-86156 on Form S-3 of the Company filed with the
Securities and Exchange Commission on April 12, 2002).
23.1 Consent of Kirkpatrick & Lockhart LLP (Previously filed and
incorporated by reference to Registration Statement No. 333-86156
on Form S-3 of the Company filed with the Securities and Exchange
Commission on April 12, 2002).
23.2 Consent of Deloitte & Touche LLP.
28
24.1 Power of Attorney (Previously filed and incorporated by reference
to Registration Statement No. 333-86156 on Form S-3 of the
Company filed with the Securities and Exchange Commission on
April 12, 2002).
-------------------------
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fees" table in the effective registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement. Provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the registration statement is on Form
S-3 or Form S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
29
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Request for Acceleration of Effective Date.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the provisions described in Item 15 or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Gaithersburg and State of Maryland on the 30th day of May, 2002.
IGEN INTERNATIONAL, INC.
By: /s/ Samuel J. Wohlstadter
-------------------------
Samuel J. Wohlstadter
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Chairman, Chief Executive Officer May 30, 2002
/s/ Samuel J. Wohlstadter (Principal Executive Officer);
-------------------------
Samuel J. Wohlstadter Director
Vice President and Chief Financial May 30, 2002
/s/ George V. Migausky Officer (Principal Financial and
------------------------
George V. Migausky Accounting Officer)
President, Chief Operating Officer; May 30, 2002
/s/ *__________________ Director
Richard J. Massey
Director May 30, 2002
/s/ *__________________
Richard W. Cass
Director May 30, 2002
/s/ *__________________
Anthony Rees
Director May 30, 2002
/s/ *__________________
Robert R. Salsmans
Director May 30, 2002
/s/ *_______________
Joop Sistermans
By: /s/ Samuel J. Wohlstadter
-------------------------
Attorney-in-Fact
31
EXHIBIT INDEX
Exhibit
Number Description
4.7 Form of Common Stock Certificate (Previously filed and
incorporated by reference to Registration Statement No. 33-84042
on Form 8-A of the Company filed with the Securities and Exchange
Commission on December 10, 1996).
5.1 Opinion of Kirkpatrick & Lockhart LLP regarding legality
(Previously filed and incorporated by reference to Registration
Statement No. 333-86156 on Form S-3 of the Company filed with the
Securities and Exchange Commission on April 12, 2002).
23.1 Consent of Kirkpatrick & Lockhart LLP (Previously filed and
incorporated by reference to Registration Statement No. 333-86156
on Form S-3 of the Company filed with the Securities and Exchange
Commission on April 12, 2002).
23.2 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney (Previously filed and incorporated by reference
to Registration Statement No. 333-86156 on Form S-3 of the
Company filed with the Securities and Exchange Commission on
April 12, 2002).
---------------------------