Filed Pursuant to Rule 424(b)(3)
Registration No. 333-119376
PROSPECTUS
5,000,000 SHARES
KERYX BIOPHARMACEUTICALS, INC.
COMMON STOCK
We may offer and sell, from time to time, up to 5,000,000 shares of our
common stock. Specific terms of these offerings will be provided in supplements
to this prospectus. You should read this prospectus and any supplement carefully
before you invest.
We may offer our common stock in one or more offerings in amounts, at
prices, and on terms determined at the time of the offering. We may sell our
common stock through agents we select or through underwriters and dealers we
select. If we use agents, underwriters or dealers, we will name them and
describe their compensation in a prospectus supplement.
Our common stock is traded on the Nasdaq Stock Market under the symbol
"KERX." On October 12, 2004, the per share closing price of our common stock
as reported on the Nasdaq Stock Market was $10.33 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS, IN ANY DOCUMENT INCORPORATED
BY REFERENCE, AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. YOU SHOULD
CAREFULLY CONSIDER THIS INFORMATION BEFORE BUYING OUR COMMON STOCK.
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 date of this prospectus is October 13, 2004
TABLE OF CONTENTS
Page
Keryx Biopharmaceuticals, Inc................................................... 1
The Offering.................................................................... 2
Where You Can Find More Information............................................. 2
Risk Factors.................................................................... 3
Important Information About This Prospectus..................................... 10
Incorporation of Certain Information by Reference............................... 10
Forward Looking Statements ..................................................... 11
Use of Proceeds................................................................. 12
Description of Common Stock..................................................... 13
Plan of Distribution............................................................ 14
Legal Matters................................................................... 15
Experts......................................................................... 15
i
SUMMARY
KERYX BIOPHARMACEUTICALS, INC.
We are a biopharmaceutical company focused on the acquisition, development
and commercialization of novel pharmaceutical products for the treatment of
life-threatening diseases, including diabetes and cancer. We have two product
candidates in the later stages of clinical development: Sulodexide, or KRX-101,
for the treatment of diabetic nephropathy, a life-threatening kidney disease
caused by diabetes, and Perifosine, or KRX-0401, for the treatment of multiple
forms of cancer.
Our lead compound under development is KRX-101, to which we have an
exclusive license in North America, Japan and certain other markets. A
randomized, double-blind, placebo-controlled, Phase II study of the use of
Sulodexide for treatment of diabetic nephropathy was conducted in 223 patients
in Europe, and the results of this study were published in the June 2002 issue
of the Journal of the American Society of Nephrology. The results of this Phase
II study showed a dose-dependent reduction in proteinuria or pathological
urinary albumin excretion rates. In 2001, the Food and Drug Administration, or
FDA, granted KRX-101 "Fast-Track" designation for the treatment of diabetic
nephropathy and, in 2002, we announced that the FDA had agreed, in principle, to
permit us to avail ourselves of the accelerated approval process under subpart H
of the FDA's regulations governing applications for the approval to market a new
drug.
In the third quarter of 2003, we announced that the Collaborative Study
Group, or CSG, the largest standing renal clinical trial group in the United
States comprised of academic and tertiary nephrology care centers, will conduct
the U.S.-based Phase II/III clinical program for KRX-101 for the treatment of
diabetic nephropathy. The CSG has conducted multiple large-scale clinical trials
resulting in over 40 publications in peer-reviewed journals. The CSG conducted
the pivotal studies for two of the three drugs that are currently approved for
treatment of diabetic nephropathy. In the fourth quarter of 2003, we initiated
the Phase II portion of our Phase II/III clinical program for our diabetic
nephropathy drug candidate, KRX-101.
In the first quarter of 2004, we completed the acquisition of ACCESS
Oncology, a privately-held, cancer-focused biotechnology company. The acquired
drug portfolio includes three clinical stage compounds, designated as KRX-0401,
KRX-0402 and KRX-0403.
KRX-0401 is a novel, first-in-class, oral Akt-inhibitor that has
demonstrated preliminary single agent anti-tumor activity in Phase I studies and
is currently in a Phase II clinical program evaluating KRX-0401 as a single
agent in the treatment of multiple forms of cancer. The National Cancer
Institute, or NCI, a department of the National Institutes of Health, or NIH, is
completing several Phase II clinical trials, conducted and funded by the NCI
under a Cooperative Research and Development Agreement, or CRADA, arrangement
with us. During the second quarter of 2004, we announced the initiation of the
Keryx-sponsored Phase II program for KRX-0401. In connection with this clinical
program, we intend to initiate several single-agent and combination studies
testing KRX-0401 as a treatment for various forms of cancer. To date, we have
initiated two trials under this program. The first trial is a multi-center study
that will evaluate the safety and efficacy of KRX-0401 as a single agent in the
treatment of patients with non-small cell lung cancer (NSCLC) who have
progressed despite standard therapy. The second trial is a multi-center study
that will evaluate KRX-0401 in combination with Gemcitabine (Gemzar(R)), a form
of chemotherapy, in the treatment of several tumor types for which Gemcitabine
is currently indicated, including non-small-cell lung cancer, breast cancer and
pancreatic cancer.
The acquired cancer portfolio also includes KRX-0402, an inhibitor of DNA
repair, which is also being studied by the NCI under a CRADA arrangement in
multiple clinical trials. In addition, the portfolio includes KRX-0403, which is
a novel spindle poison in the same general class as Navelbine(R), Taxol(R) and
Taxotere(R). KRX-0403 has completed a Phase I study. As a part of the
acquisition of ACCESS Oncology, we acquired the Online Collaborative Oncology
Group, Inc., or OCOG, a subsidiary of ACCESS Oncology which provides clinical
trial management and site recruitment services to biotechnology and
pharmaceutical companies.
To date, we have not received approval for the sale of any of our drug
candidates in any market.
We were incorporated in Delaware in October 1998. We commenced operations
in November 1999, following our acquisition of substantially all of the assets
and certain of the liabilities of Partec Ltd., our predecessor company that
began its operations in January 1997. Since commencing operations, our
activities have been primarily devoted to developing our technologies and drug
candidates, acquiring clinical-stage compounds, raising capital, purchasing
assets for our facilities and recruiting personnel. We are a development stage
company and have no product sales to date. Our major sources of working capital
have been proceeds from various private placements of equity securities, option
and warrant exercises and from our initial public offering.
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Our principal executive offices are located at 750 Lexington Avenue, New
York, New York 10022, and our telephone number is (212) 531-5965. We maintain a
website on the Internet at www.keryx.com and our e-mail address is
info@keryx.com. Our Internet website, and the information contained on it, are
not to be considered part of this prospectus.
THE OFFERING
Common Stock offered hereby.................. 5,000,000 shares
Use of Proceeds.............................. We intend to use the net proceeds
of any offering to advance our
pharmaceutical products and to
in-license, acquire and develop
novel drug candidates.
Nasdaq Symbol................................ KERX
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission, or SEC. You may read
and copy, at prescribed rates, any documents we have filed with the SEC at its
Public Reference Room located at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. We also file these documents with the SEC
electronically. You can access the electronic versions of these filings on the
SEC's Internet website found at http://www.sec.gov. You can also obtain copies
of materials we file with the SEC from our Internet website found at
www.keryx.com. Our stock is quoted on The Nasdaq Stock Market under the symbol
"KERX."
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RISK FACTORS
You should carefully consider the following risks and uncertainties. If
any of the following occurs, our business, financial condition or operating
results could be materially harmed. These factors could cause the trading price
of our common stock to decline, and you could lose all or part of your
investment.
RISKS RELATED TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY AND HAVE INCURRED SUBSTANTIAL OPERATING
LOSSES SINCE OUR INCEPTION. WE EXPECT TO CONTINUE TO INCUR LOSSES IN THE FUTURE
AND MAY NEVER BECOME PROFITABLE.
We have a limited operating history. You should consider our prospects in
light of the risks and difficulties frequently encountered by early stage
companies. In addition, we have incurred operating losses since our inception,
and expect to continue to incur operating losses for the foreseeable future and
may never become profitable. As of June 30, 2004, we had an accumulated deficit
of approximately $79.7 million. As we expand our research and development
efforts, we will incur increasing losses. We may continue to incur substantial
operating losses even if we begin to generate revenues from our drug candidates
or technologies.
We have not yet commercialized any products or technologies and cannot be
sure we will ever be able to do so. Even if we commercialize one or more of our
drug candidates or technologies, we may not become profitable. Our ability to
achieve profitability depends on a number of factors, including our ability to
complete our development efforts, obtain regulatory approval for our drug
candidates and successfully commercialize our drug candidates and technologies.
IF WE ARE UNABLE TO SUCCESSFULLY COMPLETE OUR CLINICAL TRIAL PROGRAMS FOR
KRX-101 OR OUR RECENTLY ACQUIRED CANCER COMPOUNDS, OR IF SUCH CLINICAL TRIALS
TAKE LONGER TO COMPLETE THAN WE PROJECT, OUR ABILITY TO EXECUTE OUR CURRENT
BUSINESS STRATEGY WILL BE ADVERSELY AFFECTED.
Whether or not and how quickly we complete clinical trials is dependent in
part upon the rate at which we are able to engage clinical trial sites and,
thereafter, the rate of enrollment of patients. Patient enrollment is a function
of many factors, including the size of the patient population, the proximity of
patients to clinical sites, the eligibility criteria for the study and the
existence of competitive clinical trials. If we experience delays in identifying
and contracting with sites and/or in patient enrollment in our clinical trial
programs, we may incur additional costs and delays in our development programs,
and may not be able to complete our clinical trials on a cost-effective basis.
Additionally, we have submitted a subpart H clinical development plan to
the FDA for the clinical development of KRX-101 for diabetic nephropathy. A
final agreement on the specifics of our clinical program for that development
plan has not been agreed to with the FDA, and we cannot give any assurance that
an acceptable final agreement on the specifics of such clinical program will
ever be reached with the FDA. In fact, based on the FDA's comments to our last
submission, we believe that additional discussions with the FDA will be required
prior to final agreement on the specifics of our subpart H accelerated approval
clinical program. We cannot assure you as to when those discussions will take
place or that the results of such discussions will be satisfactory to us.
Additionally, the FDA has stated that, based on the novelty of the approach that
we have discussed with them, they may want to refer our proposed approach to the
Cardio-Renal Advisory Committee.
Moreover, even if we are able to reach final agreement with the FDA
regarding the specifics of an accelerated approval approach, no assurance can be
given that we will be able to meet the requirements set forth in such agreement.
The subpart H process is complex and requires flawless execution. Many companies
who have been granted the right to utilize an accelerated approval approach have
failed to obtain approval. The clinical timeline, scope and consequent cost for
the development of KRX-101 will depend, in part, on the final outcome of our
discussions with the FDA. Moreover, negative or inconclusive results from the
clinical trials we hope to conduct or adverse medical events could cause us to
have to repeat or terminate the clinical trials. Accordingly, we may not be able
to complete the clinical trials within an acceptable time frame, if at all.
IF OUR DRUG CANDIDATES DO NOT RECEIVE THE NECESSARY REGULATORY APPROVALS, WE
WILL BE UNABLE TO COMMERCIALIZE OUR DRUG CANDIDATES.
We have not received, and may never receive, regulatory approval for
commercial sale for any of our drug candidates. We will need to conduct
significant additional research and human testing before we can apply for
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product approval with the FDA or with regulatory authorities of other countries.
Pre-clinical testing and clinical development are long, expensive and uncertain
processes. Satisfaction of regulatory requirements typically depends on the
nature, complexity and novelty of the product and requires the expenditure of
substantial resources. Data obtained from pre-clinical and clinical tests can be
interpreted in different ways, which could delay, limit or prevent regulatory
approval. It may take us many years to complete the testing of our drug
candidates and failure can occur at any stage of this process. Negative or
inconclusive results or medical events during a clinical trial could cause us to
delay or terminate our development efforts.
Clinical trials also have a high risk of failure. A number of companies in
the pharmaceutical industry, including biotechnology companies, have suffered
significant setbacks in advanced clinical trials, even after achieving promising
results in earlier trials. If we experience delays in the testing or approval
process or if we need to perform more or larger clinical trials than originally
planned, our financial results and the commercial prospects for our drug
candidates may be materially impaired. In addition, we have limited experience
in conducting and managing the clinical trials necessary to obtain regulatory
approval in the United States and abroad and, accordingly, may encounter
unforeseen problems and delays in the approval process.
BECAUSE WE LICENSE OUR PROPRIETARY TECHNOLOGIES, TERMINATION OF THESE AGREEMENTS
WOULD PREVENT US FROM DEVELOPING OUR DRUG CANDIDATES.
We do not own any of our drug candidates. We have licensed the patent
rights to these drugs candidates from others. These license agreements require
us to meet development or financing milestones and impose development and
commercialization due diligence requirements on us. In addition, under these
agreements, we must pay royalties on sales of products resulting from licensed
technologies and pay the patent filing, prosecution and maintenance costs
related to the licenses. If we do not meet our obligations in a timely manner or
if we otherwise breach the terms of our agreements, our licensors could
terminate the agreements, and we would lose the rights to our drug candidates.
BECAUSE OUR BUSINESS MODEL IS BASED, IN PART, ON THE ACQUISITION OR IN-LICENSING
OF ADDITIONAL CLINICAL PRODUCT CANDIDATES, IF WE FAIL TO ACQUIRE OR IN-LICENSE
SUCH CLINICAL PRODUCT CANDIDATES, OUR FUTURE GROWTH PROSPECTS MAY BE
SUBSTANTIALLY IMPAIRED.
As a major part of our business strategy, we plan to continue to acquire or
in-license additional clinical stage product candidates. If we fail to acquire
or in-license such product candidates, we may not achieve expectations of our
future performance. Because we do not intend to engage in significant discovery
research, we must rely on third parties to sell or license new product
opportunities to us. Other companies, including some with substantially greater
financial, development, marketing and sales resources, are competing with us to
acquire or in-license such products or product candidates. We may not be able to
acquire or in-license rights to additional products or product candidates on
acceptable terms, if at all.
IF WE DO NOT ESTABLISH OR MAINTAIN DRUG DEVELOPMENT AND MARKETING ARRANGEMENTS
WITH THIRD PARTIES, WE MAY BE UNABLE TO COMMERCIALIZE OUR TECHNOLOGIES INTO
PRODUCTS.
We are an emerging company and do not possess all of the capabilities to
fully commercialize our product candidates on our own. From time to time, we may
need to contract with third parties to:
- assist us in developing, testing and obtaining regulatory
approval for and commercializing some of our compounds and
technologies; and
- market and distribute our drug candidates.
We can provide no assurance that we will be able to successfully enter into
agreements with such partners on terms that are acceptable to us. If we are
unable to successfully contract with third parties for these services when
needed, or if existing arrangements for these services are terminated, whether
or not through our actions, or if such third parties do not fully perform under
these arrangements, we may have to delay, scale back or end one or more of our
drug development programs or seek to develop or commercialize our technologies
independently, which could result in delays. Further, such failure could result
in the termination of license rights to one or more of our technologies.
Moreover, if these development or marketing agreements take the form of a
partnership or strategic alliance, such arrangements may provide our
collaborators with significant discretion in determining the efforts and
resources that they will apply to the development and commercialization of
products based on our technologies.
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Accordingly, to the extent that we rely on third parties to research, develop or
commercialize products based on our technologies, we are unable to control
whether such products will be scientifically or commercially successful.
EVEN IF WE OBTAIN FDA APPROVAL TO MARKET OUR PRODUCT CANDIDATES, IF OUR PRODUCTS
FAIL TO ACHIEVE MARKET ACCEPTANCE, WE WILL NEVER RECORD MEANINGFUL REVENUES.
Even if our products are approved for sale, they may not be commercially
successful in the marketplace. Market acceptance of our product candidates will
depend on a number of factors, including:
- perceptions by members of the health care community, including
physicians, of the safety and efficacy of our product
candidates;
- the rates of adoption of our products by medical practitioners
and the target populations for our products;
- the potential advantages that our product candidates offer
over existing treatment methods;
- the cost-effectiveness of our product candidates relative to
competing products;
- the availability of government or third-party payor
reimbursement for our product candidates;
- the side effects or unfavorable publicity concerning our
products or similar products; and
- the effectiveness of our sales, marketing and distribution
efforts.
Because we expect sales of our product candidates, if approved, to generate
substantially all of our revenues in the long-term, the failure of our drugs to
find market acceptance would harm our business and could require us to seek
additional financing or other sources of revenue.
WE RELY ON THIRD PARTIES TO MANUFACTURE OUR PRODUCTS. IF THESE THIRD PARTIES DO
NOT SUCCESSFULLY MANUFACTURE OUR PRODUCTS, OUR BUSINESS WILL BE HARMED.
We have no experience in manufacturing products for clinical or commercial
purposes and do not have any manufacturing facilities. We intend to continue to
use third parties to manufacture our products for use in clinical trials and for
future sales. We may not be able to enter into future third-party contract
manufacturing agreements on acceptable terms, if at all.
Contract manufacturers often encounter difficulties in scaling up
production, including problems involving production yields, quality control and
assurance, shortage of qualified personnel, compliance with FDA and foreign
regulations, production costs and development of advanced manufacturing
techniques and process controls. Our third-party manufacturers may not perform
as agreed or may not remain in the contract manufacturing business for the time
required by us to successfully produce and market our drug candidates. In
addition, our contract manufacturers will be subject to ongoing periodic,
unannounced inspections by the FDA and corresponding foreign governmental
agencies to ensure strict compliance with, among other things, current good
manufacturing practices, in addition to other governmental regulations and
corresponding foreign standards. We will not have control over, other than by
contract, third-party manufacturers' compliance with these regulations and
standards. Switching or engaging multiple manufacturers may be difficult because
the number of potential manufacturers is limited and, particularly in the case
of KRX-101, the process by which multiple manufacturers make the drug substance
must be identical at each manufacturing facility. It may be difficult for us to
find and engage replacement or multiple manufacturers quickly and on terms
acceptable to us, if at all. Moreover, if we need to change manufacturers, the
FDA and corresponding foreign regulatory agencies must approve these
manufacturers in advance, which will involve testing and additional inspections
to ensure compliance with FDA and foreign regulations and standards.
If third-party manufacturers fail to deliver the required quantities of our
drug candidates on a timely basis and at commercially reasonable prices, and if
we fail to find replacement or multiple manufacturers on acceptable terms, our
ability to develop and deliver products on a timely and competitive basis may be
adversely impacted and our business, financial condition or results of
operations will be materially harmed.
In the event that we are unable to obtain or retain third-party
manufacturers, we will not be able to commercialize our products as planned. The
manufacture of our products for clinical trials and commercial purposes is
subject to FDA and foreign regulations. No assurance can be given that our
third-party manufacturers will comply with these regulations or other regulatory
requirements now or in the future.
We have entered into a contract manufacturing relationship with a
U.S.-based contract manufacturer for KRX-101 which we believe will be adequate
to satisfy our current clinical and commercial supply needs; however,
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as we seek to transition the manufacturing of KRX-101 to our U.S.-based
contract manufacturer, we will need to create a reproducible manufacturing
process that will ensure consistent manufacture of KRX-101 across multiple
batches and sources. As with all heparin-like compounds, the end product is
highly sensitive to the manufacturing process utilized. Accordingly, the
creation of a reproducible process will be required for the successful
commercialization of KRX-101. There can be no assurance that we will be
successful in this endeavor.
IF WE ARE NOT ABLE TO OBTAIN THE RAW MATERIALS REQUIRED FOR THE MANUFACTURE OF
OUR LEAD PRODUCT CANDIDATE, KRX-101, OUR ABILITY TO DEVELOP AND MARKET THIS
PRODUCT CANDIDATE WILL BE SUBSTANTIALLY HARMED.
Source materials for KRX-101, our lead product candidate, are derived from
porcine intestines. Long-term supplies for KRX-101 could be affected by
limitations in the supply of porcine intestines and the demand for other heparin
products, over which we will have no control. Additionally, diseases affecting
the world supply of pigs could have an actual or perceived negative impact on
our ability, or the ability of our contract manufacturers, to source, make
and/or sell KRX-101. Such negative impact could materially affect the commercial
success of KRX-101.
IF OUR COMPETITORS DEVELOP AND MARKET PRODUCTS THAT ARE LESS EXPENSIVE, MORE
EFFECTIVE OR SAFER THAN OUR PRODUCT CANDIDATES, OUR COMMERCIAL OPPORTUNITY MAY
BE REDUCED OR ELIMINATED.
The pharmaceutical industry is highly competitive. Our commercial
opportunity may be reduced or eliminated if our competitors develop and market
products that are less expensive, more effective or safer than our drug
candidates. Other companies have products or drug candidates in various stages
of pre-clinical or clinical development to treat diseases for which we are also
seeking to discover and develop drug candidates. Some of these potential
competing drugs are further advanced in development than our drug candidates and
may be commercialized earlier. Even if we are successful in developing effective
drugs, our products may not compete successfully with products produced by our
competitors.
Our competitors include pharmaceutical companies and biotechnology
companies, as well as universities and public and private research institutions.
In addition, companies that are active in different but related fields represent
substantial competition for us. Many of our competitors have significantly
greater capital resources, larger research and development staffs and facilities
and greater experience in drug development, regulation, manufacturing and
marketing than we do. These organizations also compete with us to recruit
qualified personnel, attract partners for joint ventures or other
collaborations, and license technologies that are competitive with ours. As a
result, our competitors may be able to more easily develop technologies and
products that could render our technologies or our drug candidates obsolete or
noncompetitive.
IF WE LOSE OUR KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL, OUR OPERATIONS COULD BE DISRUPTED AND OUR BUSINESS COULD BE HARMED.
We currently have 22 full and part-time employees. To successfully develop
our drug candidates, we must be able to attract and retain highly skilled
personnel. In addition, if we lose the services of our current personnel, in
particular, Michael S. Weiss, our Chairman and Chief Executive Officer, our
ability to continue to execute on our business plan could be materially
impaired. In addition, while we have an employment agreement with Mr. Weiss,
this agreement would not prevent him from terminating his employment with us.
ANY ACQUISITIONS WE MAKE MAY DILUTE YOUR EQUITY OR REQUIRE A SIGNIFICANT AMOUNT
OF OUR AVAILABLE CASH AND MAY NOT BE SCIENTIFICALLY OR COMMERCIALLY SUCCESSFUL.
As part of our business strategy, we may effect acquisitions to obtain
additional businesses, products, technologies, capabilities and personnel. If we
make one or more significant acquisitions in which the consideration includes
stock or other securities, your equity in us may be significantly diluted. If we
make one or more significant acquisitions in which the consideration includes
cash, we may be required to use a substantial portion of our available cash.
Acquisitions involve a number of operational risks, including:
- difficulty and expense of assimilating the operations,
technology and personnel of the acquired business;
- inability to retain the management, key personnel and other
employees of the acquired business;
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- inability to maintain the acquired company's relationship with
key third parties, such as alliance partners;
- exposure to legal claims for activities of the acquired
business prior to acquisition;
- diversion of management attention; and
- potential impairment of substantial goodwill and write-off of
in-process research and development costs, adversely affecting
our reported results of operations.
WE FACE PRODUCT LIABILITY RISKS AND MAY NOT BE ABLE TO OBTAIN ADEQUATE
INSURANCE.
The use of our drug candidates in clinical trials, and the sale of any
approved products, exposes us to liability claims. Although we are not aware of
any historical or anticipated product liability claims against us, if we cannot
successfully defend ourselves against product liability claims, we may incur
substantial liabilities or be required to cease clinical trials of our drug
candidates or limit commercialization of any approved products.
We believe that we have obtained sufficient product liability insurance
coverage for our clinical trials. We intend to expand our insurance coverage to
include the commercial sale of any approved products if marketing approval is
obtained; however, insurance coverage is becoming increasingly expensive. We may
not be able to maintain insurance coverage at a reasonable cost. We may not be
able to obtain additional insurance coverage that will be adequate to cover
product liability risks that may arise. Regardless of merit or eventual outcome,
product liability claims may result in:
- decreased demand for a product;
- injury to our reputation;
- inability to continue to develop a drug candidate;
- withdrawal of clinical trial volunteers; and
- loss of revenues.
Consequently, a product liability claim or product recall may result in
losses that could be material.
IN CONNECTION WITH PROVIDING OUR SERVICES, WE MAY BE EXPOSED TO LIABILITY THAT
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
In conducting the activities of OCOG, any failure on our part to comply
with applicable governmental regulations or contractual obligations could expose
us to liability to our clients and could have a material adverse effect on us.
We also could be held liable for errors or omissions in connection with the
services we perform. In addition, the wrongful or erroneous delivery of health
care information or services may expose us to liability. We could be materially
and adversely affected if we were required to pay damages or bear the costs of
defending any such claims.
RISKS RELATED TO OUR FINANCIAL CONDITION
IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDS ON TERMS FAVORABLE TO US, OR AT ALL,
OUR BUSINESS WOULD BE HARMED.
We expect to use, rather than generate, funds from operations for the
foreseeable future. Based on our current plans, we believe our existing cash and
cash equivalents will be sufficient to fund our operating expenses and capital
requirements for approximately the next 36 months; however, the actual amount of
funds that we will need prior to or after that date will be determined by many
factors, some of which are beyond our control. As a result, we may need funds
sooner or in different amounts than we currently anticipate. These factors
include:
- the progress of our development activities;
- the progress of our research activities;
- the number and scope of our development programs;
- our ability to establish and maintain current and new
licensing or acquisition arrangements;
- our ability to achieve our milestones under our licensing
arrangements;
- the costs involved in enforcing patent claims and other
intellectual property rights; and
- the costs and timing of regulatory approvals.
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If our capital resources are insufficient to meet future capital
requirements, we will have to raise additional funds. If we are unable to obtain
additional funds on terms favorable to us or at all, we may be required to cease
or reduce our operating activities or sell or license to third parties some or
all of our technology. If we raise additional funds by selling additional shares
of our capital stock, the ownership interests of our stockholders will be
diluted. If we raise additional funds through the sale or license of our
technology, we may be unable to do so on terms favorable to us.
OUR PRIOR RESTRUCTURINGS MAY RESULT IN ADDITIONAL ISRAELI-RELATED LIABILITIES.
In September 2001, one of our Israeli subsidiaries received the status of
an "Approved Enterprise," a status which grants certain tax benefits in Israel
in accordance with the "Law for the Encouragement of Capital Investments, 1959."
Through December 31, 2003, our Israeli subsidiary, which ceased operations in
2003, has received tax benefits in the form of exemptions of approximately
$744,000 as a result of our subsidiary's status as an "Approved Enterprise." As
part of the restructuring implemented during 2003, we closed down our Jerusalem
laboratory facility. In October 2003, the subsidiary received a letter from the
Israeli Ministry of Industry and Trade that its Approved Enterprise status was
cancelled as of July 2003 and that past benefits would not need to be repaid.
The Israeli tax authorities have yet to confirm this position; however, we
believe that, based on the letter received from the Ministry of Industry and
Trade, it is unlikely that past benefits will need to be repaid, and therefore,
we have not recorded any charge with respect to this potential liability. There
can be no assurances that the Israeli tax authorities will confirm this
position. As a result, we may be liable to repay some or all of the tax benefits
received to date, which could adversely affect our cash flow and results of
operations.
In July 2003, our Israeli subsidiaries vacated their Jerusalem facility and
relocated to smaller facilities. The landlord of the Jerusalem facility has
alleged that we were immediately liable to pay the landlord a sum in excess of
$1.1 million as a result of the alleged breach of the lease agreement for the
Jerusalem facility. The amount demanded by the landlord includes rent for the
entire remaining term of the lease (through 2005), as well as property taxes and
other costs. In August 2003, the landlord claimed a bank guarantee, in the
amount of $222,000, which was previously provided as security in connection with
the lease agreement, making the net amount potentially due to the landlord
$776,000. To date, no litigation has been initiated, and, to our knowledge, the
landlord has succeeded in leasing most, if not all, of the space to one or more
new tenants.
RISKS RELATED TO OUR INTELLECTUAL PROPERTY
IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, THIRD PARTIES
MAY BE ABLE TO USE OUR TECHNOLOGY, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO
COMPETE IN THE MARKET.
Our commercial success will depend in part on our ability and the ability
of our licensors to obtain and maintain patent protection on our drug products
and technologies and successfully defend these patents and technologies against
third-party challenges. The patent positions of pharmaceutical and biotechnology
companies can be highly uncertain and involve complex legal and factual
questions. No consistent policy regarding the breadth of claims allowed in
biotechnology patents has emerged to date. Accordingly, the patents we use may
not be sufficiently broad to prevent others from practicing our technologies or
from developing competing products. Furthermore, others may independently
develop similar or alternative technologies or design around our patented
technologies. The patents we use may be challenged or invalidated or may fail to
provide us with any competitive advantage.
Moreover, we rely on trade secrets to protect technology where we believe
patent protection is not appropriate or obtainable. However, trade secrets are
difficult to protect. While we require our employees, collaborators and
consultants to enter into confidentiality agreements, this may not be sufficient
to adequately protect our trade secrets or other proprietary information. In
addition, we share ownership and publication rights to data relating to some of
our drug candidates with our research collaborators and scientific advisors. If
we cannot maintain the confidentiality of this information, our ability to
receive patent protection or protect our proprietary information will be at
risk.
LITIGATION OR THIRD-PARTY CLAIMS OF INTELLECTUAL PROPERTY INFRINGEMENT COULD
REQUIRE US TO SPEND SUBSTANTIAL TIME AND MONEY DEFENDING SUCH CLAIMS AND
ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND COMMERCIALIZE OUR PRODUCTS.
Third parties may assert that we are using their proprietary technology
without authorization. In addition, third parties may have or obtain patents in
the future and claim that our technologies infringe their patents. If we are
required to defend against patent suits brought by third parties, or if we sue
third parties to protect our patent rights,
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we may be required to pay substantial litigation costs, and our management's
attention may be diverted from operating our business. In addition, any legal
action against our licensors or us that seeks damages or an injunction of our
commercial activities relating to the affected technologies could subject us to
monetary liability and require our licensors or us to obtain a license to
continue to use the affected technologies. We cannot predict whether our
licensors or we would prevail in any of these types of actions or that any
required license would be made available on commercially acceptable terms, if at
all.
RISKS RELATED TO OUR COMMON STOCK
CONCENTRATION OF OWNERSHIP OF OUR COMMON STOCK AMONG OUR EXISTING EXECUTIVE
OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS MAY PREVENT NEW INVESTORS FROM
INFLUENCING SIGNIFICANT CORPORATE DECISIONS.
As of June 30, 2004, our executive officers, directors and principal
stockholders (including their affiliates) beneficially owned, in the aggregate,
approximately 28.24% of our outstanding common stock, including, for this
purpose, currently exercisable options and warrants held by our executive
officers, directors and principal stockholders. As a result, these persons,
acting together, may have the ability to effectively determine the outcome of
all matters submitted to our stockholders for approval, including the election
and removal of directors and any merger, consolidation or sale of all or
substantially all of our assets. In addition, such persons, acting together, may
have the ability to effectively control our management and affairs. Accordingly,
this concentration of ownership may harm the market price of our common stock by
discouraging a potential acquirer from at tempting to acquire us.
OUR STOCK PRICE COULD BE VOLATILE WHICH INCREASES THE RISK OF LITIGATION, AND
MAY RESULT IN A SIGNIFICANT DECLINE IN THE VALUE OF YOUR INVESTMENT.
The trading price of our common stock is likely to be highly volatile and
subject to wide fluctuations in price in response to various factors, many of
which are beyond our control. These factors include:
- developments concerning our drug candidates;
- announcements of technological innovations by us or our
competitors;
- introductions or announcements of new products by us or our
competitors;
- announcements by us of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
- changes in financial estimates by securities analysts;
- actual or anticipated variations in quarterly operating
results;
- expiration or termination of licenses, research contracts or
other collaboration agreements;
- conditions or trends in the regulatory climate and the
biotechnology and pharmaceutical industries;
- changes in the market valuations of similar companies; and
- additions or departures of key personnel.
In addition, equity markets in general, and the market for biotechnology
and life sciences companies in particular, have experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of companies traded in those markets. These broad market
and industry factors may materially affect the market price of our common stock,
regardless of our development and operating performance. In the past, following
periods of volatility in the market price of a company's securities, securities
class-action litigation has often been instituted against that company. Such
litigation, if instituted against us, could cause us to incur substantial costs
to defend such claims and divert management's attention and resources, which
could seriously harm our business.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD MAKE A
THIRD-PARTY ACQUISITION OF US DIFFICULT. THIS COULD LIMIT THE PRICE INVESTORS
MIGHT BE WILLING TO PAY IN THE FUTURE FOR OUR COMMON STOCK.
Provisions in our amended and restated certificate of incorporation and
bylaws could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, or control
us. These provisions could limit the price that certain investors might be
willing to pay in the future for shares of our common stock. Our amended and
restated certificate of incorporation allows us to issue preferred stock with
rights senior to those of the common stock and our amended and restated bylaws
eliminate the right of stockholders to call a special meeting of stockholders,
which could make it more difficult for stockholders to effect certain corporate
actions. These provisions could also have the effect of delaying or preventing a
change in control. The issuance of preferred stock could decrease the amount
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of earnings and assets available for distribution to the holders of our common
stock or could adversely affect the rights and powers, including voting rights,
of such holders. In certain circumstances, such issuance could have the effect
of decreasing the market price of our common stock.
IMPORTANT INFORMATION ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we filed
with the SEC. By using a shelf registration statement, we may sell our common
stock, as described in this prospectus, from time to time in one or more
offerings. We may use the shelf registration statement to offer and sell up to a
total of 5,000,000 shares of our common stock. Each time we sell our common
stock, we will provide a supplement to this prospectus that contains specific
information about the terms of such offering. The supplement may also add,
update or change information contained in this prospectus. Before purchasing any
of our common stock, you should carefully read both this prospectus and any
supplement, together with the additional information incorporated into this
prospectus or described under the heading "Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and the supplement. We have not authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We will
not make an offer to sell our common stock in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in
this prospectus, as well as information we previously filed with the SEC and
have incorporated by reference, is accurate as of the date on the front cover of
this prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date.
We will not use this prospectus to offer and sell our common stock unless
it is accompanied by a supplement that more fully describes the terms of the
offering.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents without restating that
information in this document. The information incorporated by reference into
this prospectus is considered to be part of this prospectus, and information we
file with the SEC after the date of this prospectus will automatically update
and supersede the information contained in this prospectus and documents listed
below. We incorporate by reference into this prospectus the documents listed
below, except to the extent information in those documents differs from
information contained in this prospectus, and any future filings made by us with
the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended, including exhibits:
(a) Our Annual Report on Form 10-K for the year ended December 31, 2003;
(b) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2004;
(c) Our Quarterly Report on Form 10-Q for the quarter ended June 30,
2004;
(d) Our Current Report on Form 8-K filed with the SEC on January 15,
2004;
(e) Our Current Report on Form 8-K filed with the SEC on February 20,
2004, and as amended on Form 8-K/A filed with the SEC on April 20,
2004;
(f) Our Current Report on Form 8-K filed with the SEC on September 23,
2004; and
(g) The description of our common stock found on page 13 of this
prospectus.
We will provide to each person, including any beneficial owner, to whom a
copy of this prospectus is delivered, a copy of any or all of the information
that we have incorporated by reference into this prospectus. We will provide
this information upon written or oral request at no cost to the requester. You
may request this information by contacting our corporate headquarters at the
following address: 750 Lexington Avenue, New York, New York 10022, Attn: Vice
President Finance and Investor Relations, or by calling (212) 531-5965.
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FORWARD LOOKING STATEMENTS
When used in this prospectus and elsewhere by management or us from time
to time, the words "anticipate," "believe," "estimate," "may," "expect" and
similar expressions are generally intended to identify forward-looking
statements. These forward-looking statements include, but are not limited to,
statements about our:
- expectations for increases or decreases in expenses;
- expectations for the development, manufacturing, and approval of
KRX-101, KRX-0401, KRX-0402, KRX-0403 or any other products we may
acquire or in-license;
- expectations for incurring additional capital expenditures to expand
our research and development capabilities;
- expectations for generating revenue or becoming profitable on a
sustained basis;
- expectations or ability to enter into marketing and other
partnership agreements;
- expectations or ability to enter into product acquisition and
in-licensing transactions;
- estimates of the sufficiency of our existing cash and cash
equivalents and investments to finance our operating and capital
requirements;
- expected losses; and
- expectations for future capital requirements.
Our actual results could differ materially from those results expressed
in, or implied by, these forward-looking statements. Potential risks and
uncertainties that could affect our actual results include those discussed in
the section titled "Risk Factors," beginning on page 3 of this prospectus, the
risk factors we may include in a supplement to this prospectus, and any risk
factors we may include in other documents incorporated by reference into this
prospectus. The list of factors that may affect future performance and the
accuracy of forward-looking statements is illustrative, but by no means
exhaustive.
All forward-looking statements should be evaluated with the understanding
of their inherent uncertainty. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, events, levels of activity, performance or achievements. We do
not assume responsibility for the accuracy and completeness of the
forward-looking statements. We do not intend to update any of the
forward-looking statements after the date of this prospectus to conform them to
actual results.
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USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, the net proceeds
from the sale of the common stock will be used to advance our pharmaceutical
products and to in-license, acquire and develop novel drug candidates. The
timing and amounts of our actual expenditures will depend on several factors,
including the progress of our clinical trials, the progress of our research and
development programs, the results of other pre-clinical and clinical studies and
the timing and costs of regulatory approvals.
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DESCRIPTION OF COMMON STOCK
The following summary of the terms of our common stock may not be complete
and is subject to, and qualified in its entirety by reference to, the terms and
provisions of our certificate of incorporation and our bylaws. You should refer
to, and read this summary together with, our certificate of incorporation and
bylaws to review all of the terms of our common stock that may be important to
you.
COMMON STOCK
Under our certificate of incorporation, we are authorized to issue a total
of 60,000,000 shares of common stock, par value $0.001 per share. As of
September 28, 2004, we had issued and outstanding 30,834,180 shares of our
common stock. There are approximately 73 holders of record. All outstanding
shares of our common stock are fully paid and nonassessable. Our common stock is
listed on the Nasdaq National Market under the symbol "KERX."
DIVIDENDS
Holders of our common stock are entitled to participate equally in
dividends when our board of directors declares dividends on our common stock out
of legally available funds.
We have never declared or paid any cash dividends on our common stock and
do not anticipate paying any such cash dividends in the foreseeable future.
Future dividends, if any, will be determined by our Board of Directors and will
be based upon our earnings, capital requirements and operating and financial
condition, among other factors, at the time any such dividends are considered by
our Board of Directors.
VOTING RIGHTS
The holders of our common stock are entitled to one vote for each share of
common stock held. Generally, the vote of the majority of the shares represented
at a meeting of the stockholders and entitled to vote is sufficient for actions
that require a vote of the stockholders.
LIQUIDATION AND DISSOLUTION
In the event of our liquidation, dissolution, or winding up, voluntarily or
involuntarily, holders of our common stock will have the right to a ratable
portion of the assets remaining after satisfaction in full of the prior rights
of our creditors and of all liabilities.
OTHER
Holders of our common stock are not entitled to any preemptive or
preferential right to purchase or subscribe for shares of capital stock of any
class and have no conversion or sinking fund rights.
TRANSFER AGENT
American Stock Transfer and Trust Company serves as the transfer agent and
registrar for all of our common stock.
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PLAN OF DISTRIBUTION
We may sell the common stock in any of three ways (or in any combination):
- through underwriters or dealers;
- directly to a limited number of purchasers or to a single purchaser;
or
- through agents.
Each time that we use this prospectus to sell our common stock, we will
also provide a prospectus supplement that contains the specific terms of the
offering. The prospectus supplement will set forth the terms of the offering of
such common stock, including:
(a) the name or names of any underwriters, dealers or agents and the
amounts of common stock underwritten or purchased by each of them,
and
(b) the public offering price of the common stock and the proceeds to us
and any discounts, commissions or concessions allowed or reallowed
or paid to dealers.
Any public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale of any common stock, the common stock
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The common stock may be either offered to the public
through underwriting syndicates represented by managing underwriters, or
directly by underwriters. Generally, the underwriters' obligations to purchase
the common stock will be subject to certain conditions precedent. The
underwriters will be obligated to purchase all of the common stock if they
purchase any of the common stock.
We may sell the common stock through agents from time to time. The
prospectus supplement will name any agent involved in the offer or sale of the
common stock and any commissions we pay to them. Generally, any agent will be
acting on a best efforts basis for the period of its appointment.
We may authorize underwriters, dealers or agents to solicit offers by
certain purchasers to purchase the common stock from us at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
The contracts will be subject only to those conditions set forth in the
prospectus supplement, and the prospectus supplement will set forth any
commissions we pay for solicitation of these contracts.
Agents and underwriters may be entitled to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may be customers
of, engage in transactions with, or perform services for us in the ordinary
course of business.
We may enter into derivative transactions with third parties, or sell
common stock not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell common stock
covered by this prospectus and the applicable prospectus supplement, including
in short sale transactions. If so, the third party may use common stock pledged
by us or borrowed from us or others to settle those sales or to close out any
related open borrowings of stock, and may use common stock received from us in
settlement of those derivatives to close out any related open borrowings of
stock. The third party in such sale transactions will be an underwriter and, if
not identified in this prospectus, will be identified in the applicable
prospectus supplement (or a post-effective amendment).
The maximum compensation we will pay to underwriters in connection with
any offering of the securities will not exceed 8% of the maximum proceeds of
such offering. All post-effective amendments or prospectus supplements
disclosing the actual price and selling terms of each offering of the securities
will be submitted to the NASD Corporate Financing Department at the same time
they are filed with the SEC. The NASD Corporate Financing Department will be
advised if, subsequent to the filing of any offering of the securities, any of
our 5% or greater stockholders is or becomes an affiliate or associated person
of an NASD member participating in the distribution of such securities. All NASD
members participating in offerings of the securities understand the requirements
that have to be met in connection with SEC Rule 415 and Notice to Members
88-101.
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LEGAL MATTERS
The legality and validity of the shares of common stock offered from time
to time under this prospectus will be passed upon by Alston & Bird LLP, New
York, New York.
EXPERTS
The consolidated financial statements of Keryx Biopharmaceuticals, Inc.,
a development stage company, as of December 31, 2003 and 2002, and for each of
the years in the three-year period ended December 31, 2003, and for the period
from December 3, 1996 to December 31, 2003, have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated balance sheet of ACCESS Oncology, Inc. as of December 31,
2003, and the related consolidated statement of operations, statement of
stockholders' equity, and statement for cash flows for the year then ended
incorporated in this prospectus by reference from Amendment No. 1 on Form 8-K/A
of Keryx Biopharmaceuticals, Inc. filed with the SEC on April 20, 2004 amending
the Current Report on Form 8-K filed with the SEC on February 20, 2004, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report (which report expresses an unqualified opinion), 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.
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