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As filed with the Securities and Exchange Commission on May 1, 2001.
Registration No. 333-54796
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ARQULE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3221586
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
19 PRESIDENTIAL WAY
WOBURN, MASSACHUSETTS 01801
(781) 994-0300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
DR. STEPHEN A. HILL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ARQULE, INC.
19 PRESIDENTIAL WAY
WOBURN, MASSACHUSETTS 01801
(781) 994-0300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
PAUL M. KINSELLA, ESQ.
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
(617) 573-0100
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.|_|
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL 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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WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. THE SELLING
SHAREHOLDERS MAY NOT SELL THE SHARES OF OUR COMMON STOCK TO BE OFFERED WITH THIS
PROSPECTUS UNTIL THIS REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED OR LEGAL.
PROSPECTUS
ARQULE, INC.
3,103,567 SHARES
COMMON STOCK
The shareholders named on page 9 and 10 are selling up to 3,103,567 shares
of our common stock. ArQule issued the shares to the selling stockholders in
connection with our acquisition of Camitro Corporation in January 2001.
We list our common stock for trading on the Nasdaq National Market under
the symbol "ARQL". On April 18, 2001, the last reported sale price of the
common stock on the Nasdaq National Market was $13.77 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. BEFORE BUYING
ANY SHARES YOU SHOULD READ THE DISCUSSION OF MATERIAL RISKS OF INVESTING IN OUR
COMMON STOCK IN "RISK FACTORS" BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is__________, 2001
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TABLE OF CONTENTS
Page
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ArQule, Inc.............................................................1
Risk Factors............................................................2
Use of Proceeds.........................................................8
Recent Developments.....................................................8
The Acquisition.........................................................8
Selling Stockholders....................................................9
Plan of Distribution...................................................10
Legal Matters..........................................................11
Experts................................................................12
Incorporation of Certain Documents By Reference........................12
Where You Can Find More Information....................................12
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ARQULE, INC.
We are a drug discovery company. We facilitate development of new drugs by
applying our expertise in the design, production and evaluation of chemical
compounds. We offer a range of products and services tailored to our customers'
needs for drug discovery assistance, including generating potential drug
candidates, assessing the suitability of drug candidates and selecting the most
promising candidates. Our automated molecular assembly plant, for example,
rapidly produces large quantities of compounds of known chemical structure.
Other technologies are capable of screening compounds for characteristics of
potential medicines. We believe that our products and services provide our
customers with an efficient strategy for generating and selecting drug
candidates for clinical trials, which should lower both the cost and time
needed to successfully develop marketable medicines.
Advances in genomics, the study of the relationship between genes and
disease, are rapidly increasing the scientific understanding of various medical
problems. This increased understanding is dramatically expanding the number of
potential drug targets. Fulfilling the promise of genomics, however, requires
similar advances in the design, production and evaluation of chemical compounds
that interact with the newly identified drug targets. We believe that our
systematic approach to drug discovery assists our customers in addressing that
need.
We provide our products and services under collaboration agreements with a
number of pharmaceutical companies, including Pfizer, Inc, Bayer AG, American
Home Products Corporation, Solvay Pharmaceuticals B.V., Pharmacia Corp., Sankyo
Company, Ltd., Johnson & Johnson, Inc. and GlaxoSmithKline.
Our principle executive offices are located at 19 Presidential Way, Woburn,
MA 01801, where the phone number is 781-994-0300.
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RISK FACTORS
You should carefully consider the risks described below together with all
of the other information included in this prospectus before making an investment
decision. If any of the following risks actually occurs, our business, results
of operations and financial condition could suffer. In that case, the trading
price of our common stock could decline, and you could lose all or part of your
investment.
Although we were profitable in fiscal year 2000, we may not be able to sustain
profitability.
From our inception in 1993 to December 31, 2000, we have incurred
cumulative net losses of approximately $30.7 million. The costs of our research
activities and enhancements to our technology principally have resulted in these
losses. We have derived our revenue primarily from:
- license fees;
- payments for product deliveries;
- milestone payments; and
- research and development funding paid under our agreements with our
collaboration partners.
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To date, except for during 1997 and 2000, these revenues have not generated
profits, nor have we realized any revenue from royalties from the sale by any of
our collaboration partners of a commercial product developed using our
technology.
OUR STRATEGY OF USING OUR TECHNOLOGIES TO ASSIST IN THE DEVELOPMENT OF NEW DRUGS
AND OTHER PRODUCTS MAY NOT BE COMMERCIALLY SUCCESSFUL.
Our approach to compound discovery has not yet yielded a commercially successful
drug.
Our strategy is to use our technologies to rapidly identify, optimize and
obtain financial interest in as many compounds with commercial potential as
possible. This approach has not yet yielded any commercially successful drug. In
addition, we have recently reoriented our business and technology strategies to
offer comprehensive compound discovery, in addition to chemical compound
products and services. Our potential customers may not accept our new strategy.
In particular, we have not proven that we can use our products successfully to
assist our customers to conduct lead optimization. Our ability to succeed
depends on our potential customers accepting our approach to crafting viable
chemical compounds, known as combinatorial chemistry, and comprehensive compound
discovery as effective tools in the discovery and development of compounds with
commercial potential. If we cannot demonstrate that our approach can result in
successful products, we may not be able to attract additional customers or to
retain our existing customers. Furthermore, our wholly-owned subsidiary, Camitro
Corporation has not launched any of its products and, therefore, the market may
not accept any of its products. If the market does not accept these products, or
does so at a lower than expected rate, we may not be able to attract new
customers to support such products.
The specialized nature and high price of our services limit our potential
customer base. These potential customers may decide to try to use our approach
themselves without our assistance, or they may try other methods.
Because we offer specialized assistance in the development of drugs, our
potential customer base consists of a limited number of pharmaceutical and
biotechnology companies and research institutions. These companies have
historically identified lead compounds and capitalized upon the most promising
leads within their own research departments. Because of the high cost of our
products and programs, they may decide to conduct these activities without our
assistance.
WE DEPEND ON COLLABORATION ARRANGEMENTS WITH THIRD PARTIES FOR OUR REVENUE AND
OUR COLLABORATIONS MAY NOT BE SUCCESSFUL OR WE MAY NOT REALIZE MUCH OF THE
POTENTIAL REVENUE FROM OUR COLLABORATIONS.
We will only realize much of the potential revenue under these collaborations if
we meet compound delivery goals, satisfy milestones and earn royalties.
Our revenue stream and our business strategy depend largely on the
formation of collaborative arrangements with third parties, initially
pharmaceutical and biotechnology companies and research institutions. To date,
we have entered into many of these arrangements. Much of the potential revenue
from our collaborations consists of contingent payments, such as payments for
achieving development milestones and royalties payable on sales of drugs
developed using our products. We may not achieve these milestones and our
partners may not develop commercial drugs or other products on which we will
receive royalties.
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Our ability to realize potential revenue from milestones and royalties from our
collaborations depends, in large part, on the efforts of our partners, over
which we have little control.
Much of the revenue from milestones and royalties that we may receive under
these collaborations will depend upon our partners' ability to successfully
develop, introduce, market and sell new drugs they develop using our products.
Our products will result in commercialized drugs generating milestone payments
and royalties only after, among other things:
- significant preclinical and clinical development efforts or the
completion of preliminary field trials;
- the receipt of the required regulatory approvals;
- developing manufacturing capabilities; and
- successful marketing efforts.
With the exception of certain aspects of preclinical drug development, we
do not currently intend to perform any of these activities. Accordingly, we will
depend on our partners having the necessary expertise and dedicating sufficient
resources to develop and commercialize products. Our collaboration partners may
fail to develop or commercialize a compound or product to which they have
obtained rights from us, because, among other reasons:
- they decide not to devote the necessary resources because of internal
constraints or other development priorities;
- they decide to pursue a competitive potential drug or compound
developed outside of the collaboration; or
- they cannot obtain the necessary regulatory approvals.
For our strategy to be successful, we must maintain existing collaborations and
enter into new ones, either of which may not be possible to do.
To be successful, we must expand the number of our collaborations both by
maintaining existing collaborations, as well as continuing to enter into
agreements with new partners to use our technology to develop potential drugs.
We may not be able to maintain our existing collaborations or establish new
collaborations with commercially acceptable terms.
WE MAY NOT SUCCESSFULLY INTEGRATE CERTAIN ASPECTS OF CAMITRO OPERATIONS, THE
INTEGRATION OF THE BUSINESSES MAY BE COSTLY, AND WE MAY ULTIMATELY NOT
CAPITALIZE ON CAMITRO'S TECHNOLOGY AND KNOW-HOW.
On January 29, 2001, we acquired Camitro Corporation, a California
corporation, through a wholly owned subsidiary of ours. We have to integrate
certain aspects of Camitro's operations into our pre-existing operations. The
integration will require significant efforts from each company, including
coordinating research and development efforts. Camitro personnel may leave
because of the merger. Camitro collaborators, customers, distributors, or
suppliers may terminate their arrangements with Camitro or demand new
arrangements. Integrating our operations may distract management's attention
from the day-to-day business of the combined company. If ArQule is unable to
successfully integrate certain aspects of the operations of the two companies or
if this integration process costs more than expected, ArQule's future results
will be negatively impacted.
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OUR COMPETITORS MAY HAVE GREATER RESOURCES OR RESEARCH AND DEVELOPMENT
CAPABILITIES THAN WE HAVE AND WE MAY NOT HAVE THE RESOURCES REQUIRED TO
SUCCESSFULLY COMPETE WITH THEM.
The drug development business is highly competitive. We compete with many
organizations that are engaged in attempting to identify and utilize compounds
as potential drugs. Many of these competitors have greater financial and human
resources and more experience in research and development than we have. They
include:
- biotechnology, pharmaceutical, combinatorial chemistry and other
companies;
- academic and scientific institutions;
- governmental agencies; and
- public and private research organizations.
Historically, pharmaceutical companies have maintained close control over
their research activities, including the synthesis, screening and optimization
of potential drugs. Many of these companies, which represent a significant
potential market for our products and services, have developed or are developing
internal compound discovery processes and other capabilities to improve
productivity. We anticipate that we will face increased competition in the
future as new companies enter the market and alternative technologies become
available.
WE DEPEND ON OUR KEY PERSONNEL, THE LOSS OF WHOM WOULD HURT OUR ABILITY TO
COMPETE.
We are highly dependent on the principal members of our scientific and
management staff which includes Stephen A. Hill, David C. Hastings, Phillipe Bey
and Harold E. Selick. The loss of one or more of these members of our staff
could have a material adverse effect on our business. We have employment
agreements with Stephen Hill, Phillipe Bey and Harold E. Selick. We do not
maintain keyperson life insurance coverage on the life of any employee. Our
success will depend in part on our ability to identify, attract and retain
qualified managerial and scientific personnel. We face intense competition for
qualified personnel in our industry. We may not be able to continue to attract
and retain personnel with the advanced technical qualifications or managerial
expertise necessary for the development of our business.
WE FACE UNCERTAINTY IN RAISING ADDITIONAL FUNDS THAT MAY BE NECESSARY TO FUND
OUR OPERATIONS.
Our capital requirements depend on many factors. If our operations do not
become profitable on a sustainable basis before we exhaust existing resources,
we will need to obtain additional financing, either through public or private
financings, including debt or equity financings, or through collaborations or
other arrangements with corporate partners. We may not be able to obtain
adequate funds for our operations from these sources when needed or on
acceptable terms. If we raise additional capital through the sale of equity, or
securities convertible into equity, it may dilute your proportionate ownership
in ArQule. If we cannot obtain additional financing, we could be forced to delay
or scale back our research and development programs. If adequate funds are not
available, we may be required to curtail operations significantly or to obtain
funds by entering into arrangements with collaboration partners or others that
may require that we relinquish rights to certain technologies, product
candidates, products or potential markets.
WE WILL NOT BE ABLE TO SUCCESSFULLY GROW OUR BUSINESS IF WE ARE UNABLE TO EXPAND
AND INTEGRATE OUR TECHNOLOGIES.
Our success depends on the integration and expansion of various chemistry-
based drug discovery technologies. In order for us to achieve our goal of
reducing the current industry average for identifying investigational new drug
candidates, or IND candidates, by half, we will have to integrate and acquire
complimentary technologies. We also must successfully structure and manage
multiple collaborative relationships. If we do not, we could lose significant
amounts of revenues. Further, we may not succeed in managing and meeting the
staffing requirements of additional collaborative relationships.
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OUR PATENTS AND OTHER PROPRIETARY RIGHTS MAY FAIL TO PROTECT OUR TECHNOLOGIES
AND THIS FAILURE COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.
Our success will depend on our ability to obtain and protect patents on our
technology and to protect our trade secrets. We may not receive any additional
patents, and the claims of our patents may not offer significant protection of
our technology. Third parties may challenge, narrow, invalidate or circumvent
our patents. In order to protect or enforce our patent rights, we may initiate
patent litigation against third parties, such as infringement suits or
interference proceedings. These lawsuits could be expensive, take significant
time and divert management's attention from other business concerns. We may also
provoke these third parties to assert claims against us. The patent position of
biotechnology firms is generally highly uncertain, involves complex legal and
factual questions, and has recently been the subject of much litigation. Neither
the U.S. Patent and Trademark Office, nor the courts have set forth a consistent
policy regarding the breadth of claims allowed or the degree of protection
afforded under many biotechnology patents. In addition, there is a substantial
backlog of biotechnology patent applications at the U.S. Patent and Trademark
Office, and the approval or rejection of patent applications may take several
years.
In an effort to protect our trade secrets, we require our employees,
consultants and advisors to execute confidentiality agreements. These
agreements, however, may not provide us with adequate protection against
improper use or disclosure of confidential information. In addition, in some
situations, these agreements may conflict with, or be subject to, the rights of
third parties with whom our employees, consultants or advisors have previous
employment or consulting relationships. Also, others may independently develop
substantially equivalent proprietary information and techniques, or otherwise
gain access to our trade secrets.
OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING ON
OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS.
Others may sue us for infringing on their patent rights. Intellectual
property litigation is costly to defend, and, even if we prevail, the cost of
such litigation could adversely affect our business, financial condition and
results of operations. In addition, litigation is time consuming and could
divert management's attention and resources away from our business. If we do not
prevail in litigation, in addition to any damages we might have to pay, we could
be required to stop the infringing activity or obtain a license. Any required
license may not be available to us on acceptable terms, or at all. In addition,
some licenses may be non-exclusive and, accordingly, our competitors may have
access to the same technology licensed to us. If we fail to obtain a required
license or are unable to design around a patent, we may be unable to sell some
of our products. Any of these occurrences will result in lost revenues and
profits for us.
OUR COMMON STOCK MAY HAVE A VOLATILE PUBLIC TRADING PRICE AND LOW TRADING
VOLUME.
The market price of our common stock has been highly volatile and the
market for our common stock has experienced significant price and volume
fluctuations, some of which are unrelated to our operating performance. For
example, from January 2, 2001 to March 12, 2001, the per share price of our
common stock has fluctuated from $31.25 to $14.00 per share with an average
daily trading volume over such period of approximately 338,400 shares. Many
factors can have a significant adverse effect on our common stock's market
price, including:
- announcements by us or our competitors of technological innovations or
new commercial products;
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- developments concerning our proprietary rights, including patent and
litigation matters;
- publicity regarding actual or potential results relating to our or our
collaborators' products or compounds under development;
- an unexpected termination of one of our collaborations;
- announcements of business acquisitions and other business ventures;
- regulatory developments in the United States and other countries;
- general market conditions; and
- quarterly fluctuations in our revenues and other financial results.
FORWARD-LOOKING STATEMENTS
It is especially important to keep these risk factors in mind when you read
forward-looking statements. These are statements that relate to future periods
and include statements about our:
- implementation of corporate strategy;
- financial performance;
- ability to deliver products to our corporate collaborators and to
satisfy milestones so that we can earn future payments under our
collaboration agreements;
- collaborators' ability to develop and commercialize products using our
technology and pay us royalties on the sales of those products;
- ability to enter into future collaborations with pharmaceutical and
biotechnology companies and academic institutions;
- product research and development activities and projected
expenditures;
- cash needs;
- plans for sales and marketing; and
- results of scientific research.
Generally, the words "anticipates," "believes," "expects," "intends," and
similar expressions identify such forward-looking statements. Forward-looking
statements involve risks and uncertainties, and our actual results could differ
materially from the results discussed in the forward-looking statements because
of these and other factors.
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders.
RECENT DEVELOPMENTS
ACADIA PHARMACEUTICALS
On December 18, 2000, ArQule and ACADIA Pharmaceuticals entered into a
five-year drug discovery collaboration. Under the agreement ACADIA will combine
its functional genomics platform with ArQule's Parallel Track(TM) Drug Discovery
program to discover novel small molecule drug candidates directed at individual
G-protein coupled receptor targets related to the human therapeutics and animal
health fields. The companies will share intellectual property resulting from the
collaboration, and equally contribute to at least one joint drug discovery
program. The companies will share equally any revenues resulting from the
commercialization of joint drug discovery programs. In addition to these joint
drug discovery programs, each of us will receive the exclusive, worldwide right
and license to develop independently certain compounds that we initially
considered developing, but decided not to develop in a joint drug discovery
program, subject to a royalty payment to the other party. Each of us will also
receive the exclusive worldwide right and license to develop independently
certain compounds that did not receive serious consideration for joint
development, without payment of any royalties to the other party. On April 7,
1998, we entered into a material transfer and screening agreement with ACADIA.
Under this agreement, we provided to ACADIA access to certain ArQule compound
arrays for screening against their target collection. The drug discovery
collaboration agreement supersedes this agreement. On May 10, 2000, we entered
into a compound license agreement with ACADIA. Under this agreement, we granted
to Acadia an exclusive license to certain of our compounds having activity
against certain of their targets, in return for payments and royalties.
GLAXOSMITHKLINE
On November 27, 2000, we entered into a five-year collaboration and
license agreement with SmithKline Beecham Corporation, now GlaxoSmithKline.
Under the terms of the agreement, GlaxoSmithKline receives access to our
Compass Array libraries and Mapping Array libraries for screening primarily in
the anti-infective and anti-fungal fields. In addition, GlaxoSmithKline has
committed to submit two drug discovery programs to us during the course of the
agreement. We have initiated the first of the two drug discovery programs based
on a lead compound discovered in a GlaxoSmithKline compound library. We will
initiate the second drug discovery program when and if GlaxoSmithKline decides
to develop a lead compound discovered in an ArQule compound library.
GlaxoSmithKline receives all rights in compounds developed in these drug
discovery programs, and must pay us royalties for a period of ten years on any
revenues for products developed from such compounds. As of December 31, 2000,
we have received no payments under this collaboration. In addition to a
committed minimum payment from GlaxoSmithKline, we will receive more than the
minimum amount if GlaxoSmithKline continues the first drug discovery program
beyond the minimum period and when and if GlaxoSmithKline begins the second
drug discovery program. Anytime at its option, GlaxoSmithKline may terminate
any of the projects under the agreement prior to their completion, and may
terminate the entire agreement before the end of the five-year term, if all
such projects have been terminated early. GlaxoSmithKline has agreed to pay us
development milestones and royalties on sales of products resulting from the
collaboration. These obligations would continue even if GlaxoSmithKline
terminated the entire agreement, or any project under the agreement, early. We
have not received any milestone or royalty payments.
SOLVAY
In November 1995, we entered into a five-year agreement with Solvay Duphar
B.V. Under this agreement, Solvay subscribed to our Mapping Array and Directed
Array programs and received a non-exclusive license to our AMAP Chemistry
Operating System. This agreement was superseded by an amended and restated
agreement with Solvay Pharmaceuticals B.V., which became effective on January 1,
2001. The amended agreement extends the collaboration through December 31, 2003.
Under the amended agreement, Solvay receives our Compass Array libraries and
continues to access our Mapping Array libraries and Directed Array programs. We
received a total of $18.1 million under the original agreement. Solvay is
committed to make additional payments totaling $2.5 million under the amended
agreement. Solvay has also agreed to make additional payments if we achieve
certain development milestones and to pay royalties on sales of any drugs that
result from the relationship. To date, we have not received any milestone or
royalty payments. In connection with this collaboration, an affiliate of Solvay,
Physica B.V., made a $7 million equity investment in ArQule in 1995, acquiring
1,815,468 shares of our Series B preferred stock which converted into 907,734
shares of our common stock upon our initial public offering.
THE ACQUISITION
On January 29, 2001, we acquired Camitro Corporation pursuant to the terms
of an Agreement and Plan of Merger dated as of January 16, 2001 among us, a
wholly owned subsidiary of ours, Camitro, and certain stockholders of Camitro.
In connection with this acquisition, we issued a total of 3,092,037 shares of
our common stock and $1,733,055 in cash in consideration for all the Camitro
stock. We also reserved 306,762 shares of our common stock for options and
warrants of Camitro which we assumed. Camitro now operates as our wholly owned
subsidiary.
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SELLING STOCKHOLDERS
The selling stockholders were the former stockholders and a warrant holder
of Camitro Corporation. We issued the shares covered by this prospectus to them
in connection with the acquisition of Camitro. Pursuant to the merger agreement,
we agreed to register for resale the shares issued to the selling stockholders.
The following table sets forth the name and number of shares of common
stock beneficially owned by the selling stockholders. In the last three years,
none of the selling stockholders has held any position or office with, been
employed by, or otherwise had a material relationship with, us or any of our
predecessors or affiliates other than as stockholders, except as noted below. We
are registering the shares to permit public secondary trading of the shares, and
the selling stockholders may offer the shares for resale from time to time. See
"Plan of Distribution."
Shares Beneficially Owned
Shares Beneficially Owned Shares Offered Pursuant or Issuable After the
Name of Selling Stockholder(1) Before Offering(2) to This Prospectus(3) Offering(4)
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Number Percent Number Percent*
------- ------- ------ --------
Gary L. Neil 5,425 * 5,425 0 *
Kenneth Korzekwa 61,036 * 61,036 0 *
Jeffrey P. Jones 5,425 * 5,425 0 *
Harold E. Selick 189,890 * 189,890 0 *
Bob Powell 5,425 * 5,425 0 *
David Fram 10,850 * 10,850 0 *
The University of Pittsburgh 22,379 * 22,379 0 *
Janet Swearson 33,909 * 33,909 0 *
Malcolm Rowland 8,477 * 8,477 0 *
John Manchester(5) 6,742(6) * 5,510 1,232(6) *
Robert Wells 61,036 * 61,036 0 *
Kranz & Associates, LLC 346 * 346 0 *
Lisa Peterson 61,036 * 61,036 0 *
Jie Q. Wu 3,490 * 3,390 100 *
Camilla Marie Olson, as Custodian for
Catherine Olson under the Uniform Gift
To Minors Act (California) 1,898 * 1,898 0 *
Camilla Marie Olson, as Custodian for
Mark Olson under the Uniform Gift To
Minors Act (California) 1,898 * 1,898 0 *
Camilla Marie Olson, as Trustee of
the Olson Living Trust dated 10/20/93 80,974 * 80,974 0 *
Camilla Marie Olson 50,863 * 50,863 0 *
Koenrad Wiedhaup 10,850 * 10,850 0 *
Lyn Chambers 1,356 * 1,356 0 *
JPMorgan H&Q (Chase) 21,701 * 21,701 0 *
Asset Management Assoc. 1996, L.P. 301,413 1.5% 301,413 0 *
Pidwell Family Trust 12,056 * 12,056 0 *
AMA98 Partners, L.P. 43,950 * 43,950 0 *
AMA98 Ventures, L.P. 726,210 3.6% 726,210 0 *
AMA98 Corporate, L.P. 87,144 * 87,144 0 *
AMA98 Investors, L.P. 109,036 * 109,036 0 *
CHL Medical Partners L.P. 417,342 2.0% 417,342 0 *
Forward Ventures III L.P. 43,591 * 43,591 0 *
Forward Ventures Inst. Partners, L.P. 165,079 * 165,079 0 *
GIMV NV 417,342 2.0% 417,342 0 *
BayStar Capital L.P. 52,167 * 52,167 0 *
BayStar International Ltd. 52,167 * 52,167 0 *
Pidwell Investments LLC 10,433 * 10,433 0 *
GC&H Investments 10,433 * 10,433 0 *
Silicon Valley Bank(7) 11,530(8) * 11,530(8) 0 *
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+ Indicates shares that are subject to contractual restrictions with us.
* Indicates ownership of less than 1%.
(1) This registration statement shall also cover any additional shares of
common stock which we issue in connection with the shares registered
for sale hereby as a result of any stock dividend, stock split,
recapitalization, or other similar transaction effected without receipt of
consideration which results in an increase in the number of outstanding
shares of common stock.
(2) These share numbers are based on information provided to us by the selling
stockholders.
(3) Of these shares, 345,280 are subject, on a pro-rata basis among the selling
stockholders, to an Escrow Agreement dated January 29, 2001 among ArQule,
the shareholder representative, and the escrow agent, which will expire on
March 31, 2002.
(4) The numbers in this column assume that the selling stockholders will sell
all of the common stock offered for sale under this prospectus. There can
be no assurance that the selling stockholders will sell all or any part of
the shares offered under this prospectus.
(5) Mr. Manchester has been an employee of ArQule since October 1999.
(6) Includes 750 shares of common stock issuable to Mr. Manchester upon
exercise of outstanding options exercisable within the 60 day period
following January 16, 2001.
(7) In connection with the acquisition of Camitro Corporation, ArQule
has guaranteed a $1.5 million equipment lease line of credit with Silicon
Valley Bank, of which approximately $1,336,000 is presently outstanding.
(8) This number represents shares underlying warrants that were assumed by
ArQule in connection with the acquisition of Camitro. Silicon Valley
Bank net exercised these warrants on February 13, 2001 and ArQule issued
the shares on February 21, 2001.
PLAN OF DISTRIBUTION
The selling stockholders include their respective pledgees, donees,
transferees or other successors-in-interest selling shares received from a
selling stockholder as a gift, partnership distribution or other non-sale
related transfer after the date of this prospectus. A supplement to this
prospectus may be filed naming that successor-in-interest prior to consummating
a sale hereunder.
The selling stockholders may offer the shares of common stock covered by
this prospectus from time to time in transactions in the over-the-counter
market, on any exchange where the common stock is then listed, with broker-
dealers or third-parties other than in the over-the-counter market or on an
exchange (including in block sales), in connection with short sales, in
privately negotiated transactions, in connection with writing call options or in
other hedging arrangements, or in transactions involving a combination of such
methods.
The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices, at fixed prices, or a combination of these prices. The
selling stockholders shall have the sole and absolute discretion not to accept
any
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purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
The selling stockholders may sell the shares directly to market makers
acting as principals and/or broker-dealers as agents for themselves or their
customers. If this happens, these broker-dealers may receive compensation in the
form of discounts or commissions from the selling stockholders and/or the
purchasers of shares for whom these broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation to a particular broker might
be in excess of customary compensation).
We cannot assure that all or any of the shares offered hereby will be
issued to, or sold by, the selling stockholders. The selling stockholders and
any broker, dealers or agents that participate with the selling stockholder in
the distribution of the shares may be deemed to be "underwriters" as such term
is defined in the Securities Act of 1933. The provisions of the Securities Act
of 1933 may deem as underwriting commissions or discounts any commissions paid
or any discounts or concessions allowed to any such persons, and any profits
received on the resale of such shares of common stock offered by this
prospectus.
To the extent required, we will amend or supplement this prospectus to
disclose material arrangements regarding the plan of distribution.
To comply with the securities laws of certain jurisdictions, registered or
licensed brokers or dealers may need to offer or sell the shares offered by this
prospectus.
The applicable rules and regulations under the Securities Exchange Act of
1934, may limit any person engaged in a distribution of the shares of common
stock covered by this prospectus in its ability to engage in market activities
with respect to such shares. A selling stockholder, for example, will be subject
to applicable provisions of the Securities Exchange Act of 1934 and the rules
and regulations under it, which provisions may limit the timing of purchases and
sales of any shares of common stock by that selling stockholder. The foregoing
may affect the marketability of the shares offered by this prospectus.
We have agreed to pay certain expenses of the offering and issuance of the
shares covered by this prospectus, including the printing, legal and accounting
expenses we incur and the registration and filing fees imposed by the SEC or the
Nasdaq National Market. We will not pay brokerage commissions or taxes
associated with sales by the selling stockholders or any legal, accounting and
other expenses of the selling stockholders.
We have agreed with the selling stockholders, subject to certain
conditions, to keep the registration statement of which this prospectus
constitutes a part effective until two years from the effective date or, if
earlier, such time as all of the shares have been disposed of pursuant to and in
accordance with the registration statement.
We have agreed to indemnify the selling stockholders, or their transferees
or assignees, against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Our counsel, Palmer & Dodge LLP, Boston, Massachusetts, will pass on the
validity of the shares of common stock offered by this prospectus. Paul M.
Kensella, a partner of Palmer & Dodge LLP, is our Secretary.
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EXPERTS
"The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of Arqule, Inc. for the year ended December 31, 2000
and the audited historical financial statements of Camitro Corporation for the
year ended December 31, 2000 included under section 99.1 of Arqule, Inc.'s Form
8-K/A dated January 29, 2001 have been so incorporated in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the sale of all the shares covered
by this prospectus:
- Annual Report on Form 10-K for the fiscal year ended December 31,
2000, filed with the SEC on March 22, 2001, and as amended on May 1,
2001.
- Current Report on Form 8-K, as amended filed with the SEC on February
1, 2001 and March 22, 2001.
- Current Report on Form 8-K, filed with the SEC on March 15, 2001.
- The description of our common stock contained in our Registration
Statement on Form 8-A, filed on September 25, 1996 including any
amendment or reports filed for the purpose of updating such
description.
We also incorporate by reference additional documents that we may file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior
to the sale of all of the securities covered by this prospectus. These include
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as proxy statements.
We will provide to you, without charge, upon your written or oral request,
a copy of any or all of the documents that we incorporate by reference,
including exhibits. Please direct requests to: ArQule, Inc., 19 Presidential
Way, Woburn, MA 01801, Attn: David C. Hastings, (781) 994-0300.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and special reports and proxy statements and
other information with the SEC. You may read and copy any document that we file
at the SEC's Public Reference Room at 450 Fifth Street, Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. Our SEC filings are also available on the SEC's Web site at
http://www.sec.gov. Copies of certain information filed by us with the
Commission are also available on
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our Web site at http://www.arqule.com. Our Web site is not part of this
prospectus. Our common stock is listed on the Nasdaq National Market.
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you different information. You
should not assume that the information in this prospectus is accurate as of any
date other than the date below.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the securities being registered are as follows:
SEC registration fee................................... $17,110
Accounting fees and expenses........................... 2,500
Legal fees and expenses................................ 5,000
Printing and photocopying expenses..................... 500
Miscellaneous expenses................................. 390
-------
Total.................................................. $25,500
=======
All of the above figures, except the SEC registration fee, are estimates, and
all of the above expenses will be borne by us.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law grants the Company the power
to indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, provided, however, no
indemnification shall be made in connection with any proceeding brought by or in
the right of the Company where the person involved is adjudged to be liable to
the Company except to the extent approved by a court. Article V of our Amended
and Restated By-laws provides that the Company shall, to extent legally
permitted, indemnify each person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
by reason of the fact that he is or was, or has agreed to become, a director or
officer of the Company, or is or was serving, or has agreed to serve, at the
request of the Company, as a director, officer or trustee of, or in a similar
capacity with, another corporation, partnership, joint venture, trust or other
enterprise. The indemnification provided for in Article V is expressly not
exclusive of any other rights to which those seeking indemnification may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such persons. Article V also provides that the Company
shall have the power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Company, or is or
was serving at the request of the Company, as a director, officer or trustee of,
or in a similar capacity with, another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against and incurred
by such person in any such capacity.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Laws, Section
7 of Article FIFTH of our Restated Certificate eliminates a director's personal
liability for monetary damages to the Company and its stockholders for breaches
of fiduciary duty as a director, except in circumstances involving a
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breach of a director's duty of loyalty to the Company or its stockholders, acts
or omissions not in good faith, intentional misconduct, knowing violations of
the law, self-dealing or the unlawful payment of dividends or repurchase of
stock.
ITEM 16. EXHIBITS
See the Exhibit Index immediately following the signature page.
ITEM 17. UNDERTAKINGS
The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement 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.
(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.
(4) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this 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.
(5) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment
No. 2 to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Woburn, Commonwealth of
Massachusetts, on May 1, 2001.
ArQule, Inc.
By: /s/ STEPHEN A. HILL
-----------------------------------
Stephen A. Hill
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to registration statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ STEPHEN A. HILL President and Chief Executive Officer May 1, 2001
------------------------------ (Principal Executive Officer)
Stephen A. Hill
* Vice President, Chief Financial Officer and May 1, 2001
------------------------------ Treasurer (Principal Financial Officer and
David C. Hastings Principal Accounting Officer)
* Director May 1, 2001
------------------------------
Laura Avakian
* Director May 1, 2001
------------------------------
Werner Cautreels
* Director May 1, 2001
------------------------------
Ariel Elia
* Director May 1, 2001
------------------------------
L. Patrick Gage
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* Director May 1, 2001
------------------------------
Tuan Ha-Ngoc
* Director May 1, 2001
------------------------------
Michael Rosenblatt
*/s/ Stephen A. Hill
------------------------------
As attorney-in-fact pursuant
to power of attorney.
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Exhibit Index
NUMBER DESCRIPTION
4.1 Specimen Common Stock Certificate. Filed as Exhibit 4.1 to our
Registration Statement on Form S-1 (File No. 333-11105) and
incorporated herein by reference.
5.1 Opinion of Palmer & Dodge LLP. Previously filed.
23.1 Consent of Counsel (contained in opinion of Palmer & Dodge LLP filed
as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP. Filed herewith.
23.3 Consent of PricewaterhouseCoopers LLP. Filed herewith.
24.1 Power of Attorney. Previously filed on Signature page.
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