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As filed with the Securities and Exchange Commission on April 23, 2001
REGISTRATION NO. 333-56558
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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INTERLEUKIN GENETICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3123681
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
135 BEAVER STREET, 2ND FLOOR
WALTHAM, MASSACHUSETTS 02452
(781) 398-0700
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
--------------------
FENEL M. ELOI
CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER
INTERLEUKIN GENETICS, INC.
135 BEAVER STREET, 2ND FLOOR
WALTHAM, MASSACHUSETTS 02452
(781) 398-0700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------
Copies of all communications, including all communications sent to
the agent for service, should be sent to:
DARYL L. LANSDALE, JR., ESQ.
FULBRIGHT & JAWORSKI L.L.P.
300 CONVENT STREET, SUITE 2200
SAN ANTONIO, TEXAS 78205
(210) 270-9367
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, 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: / /
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 Section 8(a), may
determine.
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P R O S P E C T U S
2,186,441 SHARES
INTERLEUKIN GENETICS, INC.
COMMON STOCK
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The selling shareholders named on page 12 are offering up to 2,186,441
shares of our common stock. These shares include 728,814 shares issuable upon
the exercise of warrants to purchase common stock. We may receive up to
$2,202,544 upon the exercise of the warrants. The prices at which the selling
shareholders may sell these shares will be determined by the prevailing market
price for the shares or in negotiated transactions.
Our common stock is traded on The NASDAQ SmallCap Market and The Boston
Stock Exchange under the symbol "ILGN." On April 18, 2001, the last reported
sale price for our common stock on the Nasdaq SmallCap Market was $1.40 per
share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD READ THE
"RISK FACTORS" BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is April 19, 2001.
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THE COMPANY
We develop and commercialize genetic risk assessment tests and medical
research tools. Our efforts are focused on genetic factors that regulate control
points in the inflammatory process of various diseases. Our first genetic test,
PST(R), a test predictive of risk for periodontal disease, is currently marketed
in the United States and Europe. Products under development include tests
predictive of risk for osteoporosis, coronary artery disease, diabetic
retinopathy, asthma, pulmonary fibrosis, and meningitis/sepsis.
We believe by combining genetic risk assessment with specific
therapeutic strategies, improved clinical outcomes and more cost-effective
management of these common diseases are achieved. We also develop and license
our medical research tools, including BioFusion(R), to pharmaceutical and
biotech companies. BioFusion, a proprietary enabling system for diagnostic and
drug discovery and development, is a computer modeling system that integrates
genetic and other sub-cellular behavior, system functions, and clinical symptoms
to simulate complex diseases. This system allows useful information to be
derived from rapidly increasing databases of gene expression being generated in
companies and academic centers worldwide.
We have followed a strategy of working with strategic partners at the
fundamental discovery stage. This strategy has given us access to early-stage
research while reducing up-front research expenses. Since 1994, we have had a
strategic alliance with the Department of Molecular and Genetic Medicine at
Sheffield University in the United Kingdom. Under this alliance, Sheffield has
provided us with the fundamental discovery and genetic analysis from Sheffield's
research laboratories, and we have focused on product development, including
clinical trials, and the commercialization of these discoveries.
In August 2000, we granted Kenna Technologies a perpetual,
non-exclusive license to certain disease information system technology and to
certain biological modeling technology in exchange for an initial licensing fee
of $80,000 and royalties for periods ranging from five to ten years. We are
recognizing the initial licensing fee of $80,000 ratably over the term of the
agreement.
In June 2000, we terminated our arrangement with Dumex under which
Dumex had agreed to market and sell PST in nine European countries. In December
2000, we entered into a license agreement with Hain Diagnostika/ADA GmbH, or
Hain, for the marketing, distribution and processing of the PST test in all
countries outside of North America and Japan. Hain has extensive experience in
commercializing genetic tests on its DNA- STRIP Technology Platform in several
fields as well as a specific commitment to marketing products directly to
dentists.
In March 1999, we entered into an agreement with the Straumann Company,
a leading supplier of dental implants, to market and sell PST in the United
States and Puerto Rico. In September 2000, we entered into an agreement with
Kimball Genetics, experts in the processing and analysis of genetic tests and
their results, to co- market PST with Straumann. In addition, Kimball will
process and analyze all PST tests in the United States and Puerto Rico.
In December 1998, we signed an agreement with Washington Dental
Service, a member of the Delta Dental Plans Association, for the purchase of
1,200 PST tests. The tests are being used in a study, sponsored by Washington
Dental Service in collaboration with the University of Washington School of
Dentistry and Interleukin Genetics. This study is expected to provide scientific
and financial data regarding the use of PST as a treatment- planning tool to
assess risk before actual damage occurs. The data from the study may be
available for analysis in early 2001.
In December 1997, we entered into an agreement with Medicadent, a
French corporation, to market and sell PST in France. In August 1998, we entered
into an agreement with H.A. Systems, Ltd. to market and sell PST in Israel.
Medicadent began offering PST in France in June 1998, and H.A. Systems began
offering PST in Israel in April 1999. To date, sales of PST have generated
minimal revenues, and we are uncertain if or when PST will achieve commercial
acceptance.
Our executive offices are located at 135 Beaver Street, Waltham,
Massachusetts 02452, and its telephone number is 781/398-0700. We were
incorporated in Texas in 1986 and re-incorporated in Delaware in March 2000. We
maintain a website at www.ilgenetics.com. The contents of our website are not
part of this prospectus.
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RISK FACTORS
You should carefully examine this entire prospectus and should give
particular attention to the risk factors set forth below in conjunction with the
other information contained or incorporated by reference in this prospectus in
evaluating an investment in our common stock.
WE HAVE A HISTORY OF OPERATING LOSSES, ACCUMULATED DEFICIT AND WE ARE UNCERTAIN
OF FUTURE PROFITABILITY
We incurred net operating losses of $0.8 million in fiscal year 1996,
$4.5 million in 1997, $9.8 million in 1998, $6.2 million in 1999 and $5.2
million in 2000. As of December 31, 2000, our accumulated deficit was $31.0
million. Our losses have resulted principally from expenses incurred for
research and development and selling, general and administrative activities. We
have yet to generate any significant revenues from the sale of our genetic
susceptibility testing services and we may never generate significant revenues.
We expect our operating losses to continue for the near future as our research
and development programs and our commercialization activities continue. We will
need to generate significant revenues to continue our research and development
programs and achieve profitability. We cannot be certain whether or when we will
become profitable because of the significant uncertainties with respect to our
ability to generate revenues from the sale of products and services and from
existing and potential future strategic alliances.
WE WILL NEED TO RAISE ADDITIONAL CAPITAL, WHICH MAY BE DIFFICULT TO OBTAIN. OUR
FAILURE TO OBTAIN NECESSARY FINANCING OR DOING SO ON UNATTRACTIVE TERMS COULD
ADVERSELY AFFECT OUR RESEARCH AND DEVELOPMENT PROGRAMS AND OTHER OPERATIONS
We anticipate that our current financial resources will be adequate to
maintain our current and planned operations through July 2002. If we cannot
raise additional capital prior to July 2002, we will suffer material adverse
consequences to our business and financial condition and will likely be required
to seek protection under the United States Bankruptcy laws.
Our future capital requirements will depend on many factors. We will
need capital for the commercial launch of additional genetic tests, continued
marketing and sales efforts, continued research and development efforts, the
protection of the our intellectual property rights (including preparing and
filing of patent applications), as well as operational, administrative, legal
and accounting expenses. Our research and development activities will require
substantial additional funds. Additional financing may not be available when we
need it or may not be available on terms that are favorable to us. If we are
unable to obtain adequate funding on a timely basis, we may be required to
significantly curtail one or more of our research and development programs or
commercialization activities. We could be required to seek funds through
arrangements with collaborators or others that may require us to relinquish
rights to some of our technologies, product candidates or products which we
would otherwise pursue on our own. We are unable to predict the likelihood of
completing any such arrangements. We may not be able to obtain additional
capital in amounts sufficient to continue to fund our operations and product
development.
THE MARKET FOR GENETIC RISK ASSESSMENT TESTS IS AT AN EARLY STAGE OF DEVELOPMENT
AND DEMAND FOR OUR PRODUCTS IS UNCERTAIN; WE MAY NOT BE ABLE TO DEVELOP
COMMERCIALLY ACCEPTABLE GENETIC RISK ASSESSMENT TESTS
The market for genetic risk assessment tests is at an early stage of
development and may not continue to grow. The process of discovering a genetic
marker (i.e., a genetic variation or polymorphism associated with increased
disease incidence or severity) is new and evolving rapidly. Both we and the
general scientific community have only a limited understanding of the role of
genes and genetic markers in predicting disease. Even when we discover a genetic
marker, we will need to conduct additional clinical trials to confirm the
initial scientific discovery and to support the scientific discovery's clinical
utility in the marketplace. The results of a clinical trial could delay, reduce
the test's acceptance or cause our company to cancel a program. Such delays,
reduced acceptance or cancellations would limit or delay revenues and may result
in additional losses. With the exception of PST(R), our periodontal
susceptibility test, we are still developing, designing and testing our genetic
risk assessment tests. We have had only minimal revenues related to the sale of
PST. We may not be able to complete development of these genetic risk assessment
tests, they may not be accepted in the marketplace, and they may not be sold at
a profit. We
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are not certain whether we will be successful in developing and bringing to
market our current portfolio of future tests based on the genetic discoveries
made by us and our collaborators.
BECAUSE WE HAVE LIMITED SALES, MARKETING OR DISTRIBUTION EXPERIENCE AND
CAPABILITIES, WE WILL DEPEND ON THIRD PARTIES TO SUCCESSFULLY PERFORM THESE
FUNCTIONS ON OUR BEHALF OR WILL BE REQUIRED TO INCUR SIGNIFICANT COSTS AND
DEVOTE SIGNIFICANT EFFORTS TO DEVELOP THESE CAPABILITIES
Although we have operated as a contract research firm since 1986, we
have limited experience and a short history of operations with respect to
marketing and selling genetic risk assessment tests or therapeutics. We have
limited sales, marketing or distribution experience and capabilities. We rely
and plan to continue to rely significantly on sales, marketing and distribution
arrangements with our collaborators and other party parties for the products and
services that we are developing. Our success is dependent to a great extent on
the marketing efforts of our distribution and marketing partners, over which we
have limited ability to influence. The failure of these companies to
aggressively or successfully market our products could have a material adverse
effect on our revenues. We plan to enter into collaborative selling arrangements
with one or more other parties. It is uncertain whether we will be able to
negotiate acceptable collaborative arrangements or whether these collaborative
arrangements will be successful. If any collaborative selling arrangement fails
it could result in limited or delayed revenues and additional losses. If in the
future we elect to perform sales marketing and distribution functions ourselves,
we would face a number of additional risks, including the need to recruit
experienced marketing and sales personnel.
BECAUSE WE HAVE LIMITED RESEARCH AND DEVELOPMENT CAPABILITIES, WE DEPEND ON
THIRD PARTIES TO SUCCESSFULLY PERFORM THIS FUNCTION ON OUR BEHALF
We have limited research and development capabilities. In July 1999, we
entered into a new contractual arrangement with the University of Sheffield
replacing the research and development agreement that had been in place since
1996. Under this new arrangement, we will undertake the development and
commercialization of discoveries resulting from Sheffield's research. The
agreement is non-cancellable for those discoveries on which we and Sheffield
have reached a specific development agreement, but may otherwise be terminated
by either party upon six-months notice, including those discoveries upon which
the parties have not reached a specific development agreement. If Sheffield
terminates our agreement, it would have a significant adverse effect on our
ability to develop new products and on our business. This agreement with
Sheffield has a five-year term with an automatic yearly renewal. As part of this
arrangement, we issued an aggregate of 475,000 shares of our common stock to
Sheffield and its investigators in exchange for the transfer of patent rights
and the relinquishment of proceeds interests held by Sheffield and its
investigators under our previous project agreements. We also entered into a
research and development services agreement with Sheffield which automatically
renews in one-year increments and entered into a five-year consulting agreement
with Sheffield's key collaborator, Dr. Gordon Duff.
We anticipate entering into additional collaborative arrangements with
Sheffield and other parties in the future. We face significant competition in
seeking appropriate collaborators. Moreover, these alliance arrangements are
complex to negotiate and time-consuming to document. We may not be successful in
our efforts to establish additional strategic alliances or other alternative
arrangements. The terms of any additional strategic alliances or other
arrangements that we establish may not be favorable to us. Moreover, such
strategic alliances or other arrangements may not be successful.
Reliance on third party research and development entails risks to which
we would not be subject if we performed this function ourselves, including
reliance on the third party for regulatory compliance and quality assurance, the
possibility of breach of the agreement by the third party because of factors
beyond our control and the possibility of termination or nonrenewals of the
agreement by the third party, based on its own business priorities, at a time
that is costly or inconvenient for us. We may in the future elect to perform our
own research and development. We will require substantial additional funds and
need to recruit qualified personnel in order to develop this function.
IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR FUTURE PRODUCTS
OR SERVICES BY THIRD PARTY PAYORS, THERE MAY BE NO COMMERCIALLY VIABLE MARKETS
FOR OUR PRODUCTS OR SERVICES
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The availability and levels of reimbursement by governmental and other
third party payors affect the market for any healthcare service. These third
party payors continually attempt to contain or reduce the costs of healthcare by
challenging the prices charged for medical products and services. Our ability to
successfully commercialize our existing genetic risk assessment tests and others
that we may develop depends on obtaining adequate reimbursement from these
third-party payors. Physicians' and dentists' decisions to recommend genetic
risk assessment tests, as well as patients' elections to pursue testing, are
likely to be heavily influenced by the scope and extent of reimbursement for
such tests by third-party payors. We may not be able to sell our products and
services profitably if reimbursement is unavailable or limited in scope or
amount. In particular, services which are determined to be investigational in
nature or which are not considered "reasonable and necessary" for diagnosis or
treatment may be denied reimbursement coverage. To date, few insurers or
third-party payors have agreed to reimburse patients for genetic risk assessment
tests, and we are uncertain third-party payors will elect to provide full
reimbursement coverage for our genetic susceptibility tests in the future. If
third party payors do not provide adequate reimbursement coverage, we do not
know if individuals will elect to directly pay for the test. If both third-party
payors and individuals are unwilling to pay for the tests, then the number of
tests we perform will be significantly decreased. This scenario would result in
reduced revenues and additional losses.
WE DEPEND ON OUR PROPRIETARY TECHNOLOGY. IF WE FAIL TO OBTAIN PATENT PROTECTION
FOR OUR PRODUCTS, PRESERVE OUR TRADE SECRETS AND OPERATE WITHOUT INFRINGING UPON
THE PROPRIETARY RIGHTS OF OTHERS, WE MAY NOT GENERATE PROFITS.
Our success will partly depend on our ability to obtain patent
protection, both in the United States and in other countries, for our products
and services. In addition, our success will also depend upon our ability to
preserve our trade secrets and to operate without infringing the proprietary
rights of third parties.
We have twenty-two (22) U.S. patent applications pending and a number
of foreign counterparts to these applications, including applications covering
certain of our anticipated genetic risk assessment tests. Our patent positions,
and those of other pharmaceutical and biotechnology companies are generally
uncertain and involve complex legal, scientific and factual questions. Our
ability to develop and commercialize products and services depends in
significant part on our ability to:
- Obtain patents
- Obtain licenses to the proprietary rights of others
- Prevent others from infringing on our proprietary rights; and
- Protect trade secrets.
Our patent applications may fail to issue patents or any issued patents
may never afford meaningful protection for our technology or products. Further,
others may develop competing products which test for genetic susceptibility
related to some diseases yet avoid infringing upon, or conflicting with, our
anticipated patents. In addition, any patents issued to us may be challenged,
and subsequently narrowed, invalidated or circumvented.
We also rely on trade secrets and proprietary know-how that we seek to
protect, in part, by confidentiality agreements with our employees, suppliers
and consultants. These agreements could be breached, and we might not have
adequate remedies for any breach. Additionally, our trade secrets could
otherwise become known or be independently developed by our competitors.
THIRD PARTIES MAY OWN OR CONTROL PATENTS OR PATENT APPLICATIONS AND REQUIRE US
TO SEEK LICENSES, WHICH COULD INCREASE OUR DEVELOPMENT AND COMMERCIALIZATION
COSTS, OR PREVENT US FROM DEVELOPING OR MARKETING OUR PRODUCTS OR SERVICES
We may not have rights under some patents or patent applications
related to our proposed products, processes or services. Third parties may own
or control these patents and patent applications in the United States and
abroad. Therefore, in some cases, to develop or sell any proposed products or
services, whose rights are controlled by third parties, we or our collaborators
may choose to seek, or be required to seek, licenses under third party patents
issued in the United Stated and abroad or those that might issue from United
States and foreign patent applications. If this occurs, we would be required to
pay license fees or royalties or both to the licensor. If licenses
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are not available to use on acceptable terms, we or our collaborators may not be
able to develop or sell these products or services.
Third parties could bring legal proceedings against us seeking damages
or seeking to enjoin us from testing, manufacturing or marketing our products.
Any litigation could result in substantial expenses to us and significant
diversion of effort by our technical and management personnel, and even if we
prevail, the cost and diversion of resources of patent litigation would likely
have an adverse effect on us. If the other parties in any such actions are
successful, in addition to any liability for damages, we could be required to
cease the infringing activity or obtain a license.
TECHNOLOGICAL CHANGES MAY CAUSE OUR PRODUCTS AND SERVICES TO BE OBSOLETE
Market acceptance and sales of our genetic risk assessment tests can be
adversely affected by technological change. Our competitors may succeed in
developing genetic risk assessment tests that circumvent or are more effective
than our technologies or services or could make our or our collaborators'
technology or services less competitive or obsolete. Future innovations in the
treatment of periodontal disease, osteoporosis, coronary artery disease,
pulmonary fibrosis, asthma, diabetic retinopathy or other disease areas in which
we have products as product candidates could make our products obsolete. These
innovations could have a significant negative impact on our ability to market
our services effectively.
WE MAY NOT BE SUCCESSFUL IN ESTABLISHING ADDITIONAL STRATEGIC ALLIANCES, WHICH
COULD ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS AND
SERVICES.
An important element of our business strategy is entering into strategic
alliances for the development and commercialization of products and services
based on our discoveries. We face significant competition in seeking appropriate
collaborators. Moreover, these alliance arrangements are complex to negotiate
and time-consuming to document. We may not be successful in our efforts to
establish additional strategic alliances or other alternative arrangements. The
terms of any additional strategic alliances or other arrangements that we
establish may not be favorable to us. Moreover, such strategic alliances or
other arrangements may not be successful.
WE MAY FACE POSSIBLE NASDAQ DELISTING RESULTING IN A LIMITED PUBLIC MARKET FOR
OUR COMMON STOCK AND POSSIBLE VOLATILITY OF SECURITIES PRICES
Our common stock is currently listed on the NASDAQ SmallCap Market and
the Boston Stock Exchange. During 1999, we received several notices from The
Nasdaq Stock Market, Inc. or NASDAQ stating that the Company was not in
compliance with certain of the continued listing requirements of the NASDAQ
SmallCap Market. We believe that we currently comply with the continued listing
requirements of the NASDAQ SmallCap Market. However, we may not be able to
maintain the qualifications for continued listing on the NASDAQ SmallCap Market
or the Boston Stock Exchange.
If our shares are delisted on the NASDAQ SmallCap Market or the Boston
Stock Exchange trading would be conducted in the over-the-counter market in the
so-called "pink sheets" or the OTC Bulletin Board. Selling our common stock will
be more difficult because of reduced trading volume and transaction size,
transactions could be delayed, and security analysts' and news media's coverage
of ILGN will be reduced. These factors may result in lower prices and larger
spreads in the bid and ask prices for shares of common stock. The delisting of
our shares would also greatly impair our ability to raise additional necessary
capital through equity or debt financing.
Historically, our common stock has experienced low trading volumes. The
market price of our common stock also has been highly volatile and it may
continue to be highly volatile as has been the case with the securities of other
public biotechnology companies. Factors such as announcements by us or by our
competitors concerning technological innovations, new commercial products or
procedures, proposed government regulations and developments or disputes
relating to patents or proprietary rights may substantially affect the market
price of our securities. Changes in the market price of our common stock may
bear no relation to our actual operational or financial results.
WE MAY BE UNABLE TO FULLY USE NET OPERATING LOSS CARRYFORWARDS
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As a result of the losses incurred in 1998, 1999 and 2000, we have not
recorded a federal income tax provision for those years and has recorded a
valuation allowance against all future tax benefits. As of December 31, 2000, we
had net operating loss carryforwards of approximately $23.3 million for federal
income tax purposes, expiring in varying amounts through the year 2020. We also
had a research tax credit of approximately $317,000 at December 31, 2000, that
expires in varying amounts through the year 2020. Our ability to use these NOL
and credit carryforwards is subject to restrictions contained in the Internal
Revenue Code which provide for limitations on our utilization of our NOL and
credit carryforwards following a greater than 50% ownership change during the
prescribed testing period. We experienced a change in ownership interest in June
1999. As a result, approximately $15,619,000 of the Company's NOL carryforwards
are limited in utilization to approximately $825,000 annually. The annual
limitation may result in the expiration of the carryforwards prior to
utilization.
MARKET ACCEPTANCE FOR GENETIC RISK ASSESSMENT TESTS IS UNCERTAIN
The commercial success of our genetic risk assessment tests and those
that we may develop will depend upon their acceptance as medically useful and
cost-effective by patients, physicians, dentists, other members of the medical
and dental community and third-party payors. Broad market acceptance can be
achieved only with substantial education about the benefits and limitations of
such tests. Our current genetic risk assessment tests or others that we may
develop may not gain market acceptance on a timely basis, if at all. If
patients, dentists and physicians do not accept our tests, or take a longer time
to accept than we anticipate, then our revenues will be reduced and may result
in additional losses.
WE ARE SUBJECT TO COMPETITION FROM COMPANIES WITH GREATER RESOURCES THAN US
Research in the field of disease predisposing genes and genetic markers
is intense and highly competitive. Genetic research is characterized by rapid
technological change. Our competitors in the United States and abroad are
numerous and include, among others, major pharmaceutical and diagnostic
companies, specialized biotechnology firms, universities and other research
institutions (including those receiving funding from the Human Genome Project).
Many of our potential competitors have considerably greater financial resources,
research and development staffs, facilities, technical personnel, marketing
resources and other resources than us. Furthermore, many of these competitors
are more experienced than we are in discovering and commercializing products.
These greater resources may allow our competitors to discover important genes or
genetic markers before us. If we, in conjunction with the University of
Sheffield, do not discover disease predisposing genes or genetic markers
associated with increased disease severity, characterize their function, develop
susceptibility tests and related information services based on such discoveries,
obtain regulatory and other approvals, if needed, and launch such services or
products before competitors, then our revenues will be reduced or eliminated. We
expect competition to intensify in our industry as technical advances are made
and become more widely known.
WE ARE SUBJECT TO GOVERNMENT REGULATION WHICH MAY SIGNIFICANTLY INCREASE OUR
COSTS AND DELAY INTRODUCTION OF FUTURE PRODUCTS
The sampling of blood, saliva or cheek scrapings from patients and
subsequent analysis in a clinical laboratory does not, at the present time,
require FDA or regulatory authority approval inside or outside the U.S. for
either the sampling procedure or the analysis itself. The samples are taken in
the healthcare provider's office, using standard materials previously approved
as medical devices, such as sterile lancets and swabs. The testing procedure
itself is performed in one or more registered, certified clinical laboratories
under the auspices of the Clinical Laboratory Improvement Amendments of 1988, or
CLIA, administered by the Health Care Financing Administration. In general, the
federal regulations promulgated pursuant to CLIA governing the approval of
laboratory facilities and applicable state and local regulations governing the
operation of clinical laboratories apply to our service providers who operate
approved CLIA laboratories, but will apply to us if and when we operate our own
laboratory for testing procedures. Additionally, changes in existing regulations
could require advance regulatory approval of genetic risk assessment tests
resulting in a substantial curtailment or even prohibition of our activities
without regulatory approval. If our tests ever require regulatory approval, the
costs of introduction will increase and marketing and sales may be significantly
delayed.
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Although our primary business is to develop genetic susceptibility
testing services, we may also develop or assist others to develop drugs or other
treatments for the diseases related to our tests. The FDA and comparable
agencies in state and local jurisdictions and in foreign countries impose
substantial requirements upon the manufacturing and marketing of drug products.
The process of obtaining FDA and other required regulatory approvals is lengthy
and expensive. The time required for FDA approvals is uncertain and typically
takes a number of years, depending on the type, complexity and novelty of the
product. We may encounter significant delays or excessive costs in our efforts
to secure necessary approvals or licenses. FDA approvals may not be obtained in
a timely manner, if at all. Any delay in obtaining, or the failure to obtain,
FDA approvals would adversely affect our ability to generate product or product
sales. Even if FDA approvals are obtained, the marketing and manufacturing of
drug products are subject to continuing FDA and other regulatory review, and
later discovery of previously unknown problems with a product, manufacturer or
facility may result in restrictions on the product or manufacturer, including
withdrawal of the product from the market. Additional governmental regulations
may be promulgated which could delay regulatory approval of our potential
products. We cannot predict the impact of adverse governmental regulation which
might arise from future legislative or administrative action.
We intend to generate product revenues from sales outside of the United
States. Distribution of our testing services or products outside the United
States may be subject to extensive government regulation. These regulations,
including the requirements for approvals or clearance to market, the time
required for regulatory review and the sanctions imposed for violations, vary by
country. It is uncertain whether we will be required to obtain regulatory
approvals in such countries or if we will be required to incur significant costs
in obtaining or maintaining our foreign regulatory approvals. Failure to obtain
necessary regulatory approvals or any other failure to comply with regulatory
requirements will result in reduced revenues and increased losses.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS THAT ARE COSTLY TO DEFEND AND
COULD LIMIT OUR ABILITY TO USE SOME TECHNOLOGIES IN THE FUTURE.
The design, development, manufacture and use of our genetic risks
assessment tests involve an inherent risk of product liability claims and
associated adverse publicity. Producers of medical products may face substantial
liability for damages in the event of product failure or allegations that the
product caused harm. We currently maintain product liability insurance, but it
is expensive and difficult to obtain and may not be available in the future on
acceptable terms. We may become subject to product liability claims, our current
insurance may not cover any claims, and adequate insurance may not be available
on acceptable terms in the future. A liability claim, even one without merit,
could result in significant legal defense costs. We could be held liable for
damages in excess of the limits of our insurance coverage, and any claim or
product recall could create significant adverse publicity.
OUR INDUSTRY HAS ETHICAL, LEGAL AND SOCIAL IMPLICATIONS, WHICH MAY NEGATIVELY
IMPACT OUR BUSINESS
The prospect of broadly available genetic testing has raised issues
which are currently being widely discussed by the medical and scientific
communities, as well as other interested groups and organizations, regarding the
appropriate utilization and the confidentiality of information provided by such
testing. The recent movement towards discovery and commercialization of
susceptibility tests for assessing a person's likelihood of developing a chronic
disease has also focused public and legislative attention on the need to protect
the privacy of genetic assessment medical information. With the progression
towards more comprehensive record keeping by health insurers and managed care
firms, this need has led to a number of legal initiatives. The recently enacted
federal health insurance reform law (Health Insurance Portability Act of 1996)
recognizes the comparability of information obtained by genetic means to other
types of personal medical information. The law prohibits insurance companies
from refusing health insurance coverage to individuals on the basis of their
medical history, including "genetic information." This legislation also
prohibits employees from discrimination in hiring practices on the same basis.
This legislation indicates a trend to protect the privacy of patients while
allowing them to be screened for conditions which can be prevented, reduced in
severity or cured. In the most extreme scenario, governmental authorities could,
for social or other purposes, limit the use of genetic testing or prohibit
testing for genetic susceptibility to certain conditions. For these reasons, we
could experience a delay or reduction in test acceptance. Such a delay or
reduction could reduce our revenues or result in losses.
We are taking a proactive stance in the ethical arena. Dr. Philip
Reilly, our Chief Executive Officer, is both an M.D. (certified specialist in
clinical genetics) and an attorney. He will advise us in the area of genetic
testing and
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its ethical, legal and clinical utility ramifications. Additionally, we are
currently advising doctors who administer our genetic susceptibility tests to
take special efforts to maintain the confidentiality of the test results. Our
intent is to avoid information about test results being disclosed to insurers
until issues regarding insurability have been fully analyzed and acted upon by
the appropriate legislative bodies.
THE COMPETITION FOR SCIENTIFIC AND MANAGEMENT PERSONNEL IS PARTICULARLY INTENSE
IN OUR INDUSTRY AND IN BOSTON, MASSACHUSETTS; WE WILL NOT BE ABLE TO SUSTAIN OUR
OPERATIONS IF WE ARE NOT ABLE TO ATTRACT AND RETAIN KEY PERSONNEL
Our success substantially depends on the ability, experience and
performance of our senior management and other key personnel. If we lose one or
more of the members of our senior management or other key employees, our
business and operating results could be seriously harmed. In addition, our
future success will depend heavily on our ability to continue to hire, train,
retain and motivate additional skilled managerial and scientific personnel. The
pool of personnel with the skill that we require is limited. Competition to hire
from this limited pool is intense. We compete with numerous pharmaceutical and
health care companies, as well as universities and nonprofit research
organizations in the highly competitive Boston, Massachusetts business area.
Because of the specialized scientific nature of our business, we are highly
dependent upon our ability to attract and retain qualified management,
scientific and technical personnel. Competition for scientific and other
personnel is intense. Loss of the services of Dr. Reilly, our Chairman and CEO,
Dr. Kenneth Kornman, our President, or Dr. Paul Martha, our Chief Medical
Officer, could adversely affect our research and development programs and
susceptibility testing service business and could impede the achievement of our
business objectives. We have entered into employment agreements with Dr. Reilly,
Dr. Kornman and Dr. Martha, which provide for three to five year terms. Any of
these employees can terminate his employment upon 30 days notice. We do not
maintain key man life insurance on any of our personnel.
BECAUSE OUR PRINCIPAL SHAREHOLDERS, OFFICERS AND DIRECTORS CONTROL A LARGE
PERCENTAGE OF OUR VOTING POWER, OTHER STOCKHOLDERS' VOTING POWER MAY BE LIMITED
As of February 1, 2001, our directors, executive officers and certain
of their affiliates beneficially owned approximately 20% of our outstanding
common stock. Accordingly, these shareholders, individually and as a group, may
be able to influence the outcome of shareholder votes, including votes
concerning the election of directors, the adoption or amendment of provisions in
our Certificate of Incorporation or By-Laws and the approval of certain mergers
and other significant corporate transactions, including a sale of substantially
all of our assets. These shareholders may make decisions that are adverse to
your interests. This ownership concentration may also adversely affect the
market price of our common stock.
WE DO NOT INTEND TO PAY DIVIDENDS AND YOU SHOULD NOT EXPECT TO RECEIVE ANY FUNDS
WITHOUT SELLING YOUR SHARES, WHICH YOU MAY ONLY BE ABLE TO DO AT A LOSS
We have never declared or paid any cash dividends on our capital stock.
We currently intend to retain any earnings for use in the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Therefore, you should not expect to receive any funds
without selling your shares, which you may only be able to do at a loss.
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AVAILABLE INFORMATION
We have filed with the SEC a Registration Statement on Form S-3 under
the Securities Act of 1933, as amended, related to the shares offered hereby.
This prospectus is part of that Registration Statement and does not contain all
of the information set forth in the Registration Statement and its exhibits. You
may obtain further information with respect to ILGN and the shares offered
hereby by reviewing the Registration Statement and the attached exhibits, which
you may read and copy at the following locations of the Commission:
Public Reference Room New York Regional Office Chicago Regional Office
Judiciary Plaza Seven World Trade Center Citicorp Center
450 Fifth Street, N.W., Rm. 1024 13th Floor 500 West Madison Street, Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
We are subject to the informational requirements of the Securities
Exchange Act and file reports, proxy statements and other information with the
SEC. Such reports, proxy statements and other information can be inspected and
copied at the locations described above. Copies of such materials can be
obtained from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. You may obtain information on the
Public Reference Room of the SEC by calling the SEC at 1-800-SEC-0330. The SEC
maintains a web site that contains the Registration Statement, reports, proxy
statements and other information regarding the Company at http://www.sec.gov.
We furnish our shareholders with annual reports containing audited
financial statements which contain a report by our independent public
accountants.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" certain information
into this prospectus. This means that we can disclose important information to
you by referring you to another document we have filed separately with the SEC.
The information incorporated by reference is considered to be a part of this
prospectus, except for any information that is superseded by other information
that is set forth directly in this document.
The following documents that we have previously filed with the SEC are
incorporated by reference into this prospectus:
(1) Our Annual Report on Form 10-K for the fiscal year ended December
31, 2000;
(2) Our Current Report on Form 8-K filed March 7, 2001; and
(3) The description of our common stock contained in Item 1 of our
Registration Statement on Form 8-A dated December 15, 1997.
We also incorporate by reference additional documents that may be filed
with the SEC between the date of this prospectus and the date of completion of
the offering of the shares of common stock by the selling shareholders. These
documents 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.
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Documents incorporated by reference are available from us without
charge, excluding all exhibits, except that if we have specifically incorporated
by reference an exhibit in this prospectus, the exhibit also will be available
without charge. Shareholders may obtain documents incorporated by reference in
this prospectus by requesting them in writing or by telephone from us at the
following address:
Interleukin Genetics, Inc.
135 Beaver Street
Waltham, Massachusetts 02452
Attention: Investor Relations
Telephone: 781/398-0700
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. This
prospectus is dated April 19, 2001. You should not assume that the information
contained in this prospectus is accurate as of any date other than that date. In
this prospectus,"Interleukin Genetics," "ILGN," "we", "our" and "us" refer to
Interleukin Genetics, Inc.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
certain forward-looking statements including, without limitation, statements
concerning our expectations of future sales, gross profits, research and
development expenses, selling, general and administrative expenses, product
introductions and cash requirements. Forward-looking statements often, although
not always, include words or phrases such as "will likely result," "expect,"
"will continue," "anticipate," "estimate," "intend," "plan," "project,"
"outlook" or similar expressions. Actual results may vary materially from those
expressed in such forward-looking statements. Factors that could cause actual
results to differ from expectations include those set forth under "Risk
Factors." We cannot be certain that our results of operations will not be
adversely affected by one or more of these factors.
USE OF PROCEEDS
The shares to be sold pursuant to the prospectus are owned by our
shareholders or may be issued upon the exercise of warrants held by our
shareholders. We may receive up to $2,202,544 upon exercise of the warrants. For
further information see the sections entitled "Selling Shareholders" on page 12
of this prospectus and "Plan of Distribution" on page 13 of this prospectus.
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SELLING SHAREHOLDERS
The table below presents the following information about the number of
shares of our common stock which are beneficially owned by the selling
shareholders: (i) the number of shares each selling shareholder beneficially
owns as of February 1, 2001, (ii) the percentage of our outstanding shares of
common stock that each selling shareholder beneficially owns prior to this
offering, (iii) the number of shares that each selling shareholder is offering
under this prospectus, (iv) the number of shares that each selling shareholder
will beneficially own after the completion of this offering and (v) the
percentage of our outstanding shares of common stock that each selling
shareholder will beneficially own after the completion of the offering.
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE THE OFFERING AFTER THE OFFERING(1)
------------------------- -------------------------
NUMBER PERCENTAGE SHARES BEING NUMBER PERCENTAGE
NAME OF SHARES OF CLASS(2) OFFERED OF SHARES OF CLASS
---- ------------ ---------- ------------ --------- ---------
The Tail Wind Fund Ltd. 1,064,407(3) 5.1% 386,441(4) 677,966 3.3%
Special Situations Fund III L.P. 990,000 (5) 4.7% 990,000(5) -0- 0
Special Situations Private Equity
Fund L.P 480,000(6) 2.3% 480,000(6) -0- 0
Special Situations Cayman Fund L.P. 330,000(7) 1.6% 330,000(7) -0- 0
----------------------------------------------------------------------------------------------------------------------
(1) Assumes all shares of common stock offered hereby are sold.
(2) Based on 20,242,800 shares of common stock of the Company outstanding
as of February 1, 2001.
(3) Includes 264,407 shares of common stock issuable upon exercise of a
warrant.
(4) Includes 128,814 shares of common stock issuable upon exercise of a
warrant.
(5) Includes 330,000 shares of common stock issuable upon exercise of a
warrant.
(6) Includes 160,000 shares of common stock issuable upon exercise of a
warrant.
(7) Includes 110,000 shares of common stock issuable upon exercise of a
warrant.
In January 2001 we completed a private placement in which we issued
1,200,000 shares of our common stock and warrants to purchase up to 600,000
shares of our common stock to three of the selling shareholders. In addition, as
part of the terms of a private placement we completed in December 2000,
following the completion of the January 2001 private placement we issued an
additional 257,627 shares of our common stock and a warrant to purchase up to
128,814 shares of our common stock to a selling shareholder. All of these shares
are being offered hereby.
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PLAN OF DISTRIBUTION
We completed a private placement in January 2001 pursuant to which
three of the selling shareholders acquired 1,200,000 shares of our common stock
and warrants to purchase 600,000 shares of our common stock. Under the terms of
a private placement we completed in December 2000, following the January 2001
private placement, we also issued 257,627 shares of our common stock and a
warrant to purchase 128,814 shares of our common stock to one of the selling
shareholders. All 2,186,441 shares of our common stock being registered by this
prospectus are being registered on behalf of the selling shareholders. We may
receive up to $2,202,544 upon exercise of these warrants. As used in this
prospectus, the term "selling shareholders" includes donees, pledgees,
transferees or other successors-in-interest selling shares of our common stock
being offered by this prospectus or received from a selling shareholder as a
gift, pledge, partnership distribution or other non-sale related transfer after
the date of this prospectus. In addition, upon ILGN being notified by a selling
shareholder that a donee, pledgee, transferee or other successor-in-interest
intends to sell more than 500 shares, a supplement to this prospectus will be
filed.
Each selling shareholder will act independently of us in making
decisions with respect to the timing, manner and size of each sale. Each selling
shareholder may choose to sell shares of our common stock being offered hereby
from time to time at market prices prevailing at the time of the sale, at prices
related to the then prevailing market prices or in negotiated transactions,
including pursuant to an underwritten offering or pursuant to one or more of the
following methods:
- a block trade in which the broker or dealer so engaged will
attempt to sell shares of our common stock being offered
hereby as agent but may position and resell a portion of the
block as principal in order to facilitate the transaction,
- purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this
prospectus,
- an exchange distribution in accordance with the rules of an
exchange, and
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
In connection with the sale of shares of our common stock being offered
by this prospectus, a selling shareholder may engage broker-dealers who in turn
may arrange for other broker-dealers to participate. Broker-dealers may receive
commissions or discounts from a selling shareholder in amounts to be negotiated
immediately prior to the sale. In addition, underwriters or agents may receive
compensation from a selling shareholder or from purchasers of shares of our
common stock being offered by this prospectus for whom they may act as agents,
in the form of discounts, concessions or commissions. Underwriters may sell
shares to or through dealers, and such dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they act as agents. Each selling
shareholder, underwriters, brokers, dealers and agents that participate in the
distribution of shares of our common stock being offered by this prospectus may
be deemed to be underwriters, and any discounts or commissions received by them
from a selling shareholder and any profit on the resale of shares of our common
stock being offered by this prospectus by them may be deemed to be underwriting
discounts and commissions under the Securities Act.
At the time a particular offer of shares of our common stock being
offered by this prospectus is made, to the extent required, a supplement to this
prospectus will be distributed which will identify and set forth the aggregate
amount of shares of our common stock being offered and the terms of the
offering. Such supplement will also disclose the following information:
- the name or names of any underwriters, dealers or agents,
- the purchase price paid by any underwriter for shares of our
common stock purchased from a selling shareholder,
- any discounts, commissions and other items constituting
compensation from a selling shareholder and/or ILGN, and
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- any discounts, commissions or concessions allowed or reallowed
or paid to dealers, including the proposed selling price to
the public.
We have agreed to indemnify the selling shareholders in certain
circumstances against certain liabilities, including liabilities under the
Securities Act. The selling shareholders have agreed to indemnify ILGN in
certain circumstances against certain liabilities, including liabilities under
the Securities Act.
The selling shareholders also may resell all or a portion of shares of
our common stock being offered by this prospectus in open market transactions in
reliance upon Rule 144 under the Securities Act, provided it meets the criteria
and conforms to the requirements of this Rule.
The selling shareholders and any other persons participating in the
sale or distribution of the shares of our common stock being registered by this
prospectus will be subject to the provisions of the Exchange Act and its rules
and regulations, including Regulation M, to the extent applicable. The foregoing
provisions may limit the timing of purchases and sales of any shares of our
common stock by the selling shareholders or any other such person. This may
affect the marketability of shares or our common stock. The selling shareholders
also will comply with the applicable prospectus delivery requirements under the
Securities Act in connection with the sale or distribution of the shares of our
common stock under this prospectus.
In order to comply with certain states' securities laws, if applicable,
shares of our common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, shares of our
common stock may not be sold unless these shares have been registered or
qualified for sale in such state, unless an exemption from registration or
qualification is available and is obtained.
We are bearing all out-of-pocket expenses incurred in connection with
the registration of the resale of the shares of our common stock, including,
without limitation, all registration and filing fees imposed by the SEC, The
Nasdaq Stock Market, Inc. and blue sky laws, printing expenses, transfer agents'
and registrars' fees, and the fees and disbursements of our outside counsel and
independent public accountants. The selling shareholders will bear all
underwriting discounts and commissions and transfer or other taxes.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law or the DGCL,
provides that a Delaware corporation may indemnify any 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 (a "proceeding") (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation 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 corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A Delaware corporation may indemnify any person under
Section 145 in connection with a proceeding by or in the right of the
corporation to procure judgment in its favor, as provided in the preceding
sentence, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action,
except that no indemnification shall be made in respect thereof unless, and then
only to the extent that, a court of competent jurisdiction shall determine upon
application that such person is fairly and reasonably entitled to indemnity for
such expenses as the court shall deem proper. A person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper. A
Delaware corporation must indemnify any person who was successful on the merits
or otherwise in defense of any action, suit or proceeding or in defense of any
claim, issue or matter in any proceeding, by reason of the fact that he is or
was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. A Delaware corporation may pay for the expenses (including attorneys'
fees) incurred by an officer or director in defending a proceeding in advance of
the final disposition upon receipt of
14
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an undertaking by or on behalf of such officer or director to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article Six of our Certificate of
Incorporation eliminates the liability of directors to the fullest extent
permitted by the DGCL. The DGCL permits the purchase of insurance on behalf of
directors and officers against any liability asserted against directors and
officers and incurred by such persons in such capacity, or arising out of their
status as such, whether or not the corporation would have the power to indemnify
directors and officers against such liability.
We also have a policy insuring its directors and officers against
certain liabilities, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors and officers and controlling persons pursuant
to the foregoing provisions, we have been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be
passed upon by Fulbright & Jaworski L.L.P., counsel to ILGN.
EXPERTS
The consolidated financial statements included in the Company's Annual
Report on Form 10-K for the years ended December 31, 1998, 1999 and 2000,
incorporated by reference in this prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included in this prospectus in reliance upon the authority of Arthur Andersen
LLP as experts in giving said reports.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
------------------------------------
TABLE OF CONTENTS
PAGE
----
The Company.............................. 2
Risk Factors............................. 3
Available Information................... 10
Incorporation of Certain Documents
by Reference.......................... 10
Special Note Regarding Forward-Looking
Statements............................ 11
Use of Proceeds........................ 11
Selling Shareholders..................... 12
Plan of Distribution.................... 13
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................... 14
Legal Matters........................... 15
Experts................................. 15
==================================================
2,186,441 SHARES
INTERLEUKIN GENETICS, INC.
COMMON STOCK
P R O S P E C T U S
APRIL 19, 2001
=========================================================
18
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with this offering are:
Commission registration fee $1,279.07
Legal fees and expenses* 5,000.00
Miscellaneous* 500.00
-----------
Total $6,779.07
=========
--------------------
* Estimated
The Company has agreed to pay all the costs and expenses of this offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides that a Delaware corporation may indemnify any 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 (a "proceeding") (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation 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 corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A Delaware corporation may indemnify any person under such
Section in connection with a proceeding by or in the right of the corporation to
procure judgment in its favor, as provided in the preceding sentence, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action, except that no
indemnification shall be made in respect thereof unless, and then only to the
extent that, a court of competent jurisdiction shall determine upon application
that such person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. A person is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper. A
Delaware corporation must indemnify any person who was successful on the merits
or otherwise in defense of any action, suit or proceeding or in defense of any
claim, issue or matter in any proceeding, by reason of the fact that he is or
was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. A Delaware corporation may pay for the expenses (including attorneys'
fees) incurred by an officer or director in defending a proceeding in advance of
the final disposition upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article Tenth of the Company's
Certificate of Incorporation, as amended, eliminates the liability of directors
to the fullest extent permitted by Section 102(b)(7) of the DGCL. The DGCL
permits the purchase of insurance on behalf of directors and officers against
any liability asserted against directors and officers and incurred by such
persons in such capacity, or arising out of their status as such, whether or not
the corporation would have the power to indemnify directors and officers against
such liability.
The Company also has a policy insuring its directors and officers
against certain liabilities, including liabilities under the Securities Act.
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Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors and officers and controlling persons pursuant
to the foregoing provisions, the Company has been advised that, in the opinion
of the Commission, such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS.
Exhibit No. Exhibit
----------- -------
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding legality (previously filed)
23.1 Consent of Fulbright & Jaworski L.L.P. (previously filed)
23.2 Consent of Arthur Andersen LLP (filed herewith)
24.1 Power of Attorney (included on signature page).
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement 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, 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; and
(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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes that, insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act 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 the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Waltham and Commonwealth of Massachusetts the
19th day of April, 2001.
INTERLEUKIN GENETICS, INC.
By: /s/ Fenel M. Eloi
----------------------------------------
Fenel M. Eloi
Chief Financial Officer, Secretary
and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Philip R. Reilly and Fenel M. Eloi, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same and all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in- fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board and April 19, 2001
------------------------------------ Chief Executive Officer
Philip R. Reilly (Principal Executive Officer)
* President, Chief April 19, 2001
------------------------------------ Scientific Officer
Kenneth S. Kornman and a Director
/s/ Fenel M. Eloi Chief Financial Officer, April 19, 2001
------------------------------------ Secretary and Treasurer
Fenel M. Eloi (Principal Financial and
Accounting Officer)
* Director April 19, 2001
------------------------------------
Thomas A. Moore
* Director April 19, 2001
------------------------------------
Edward M. Blair, Jr.
* Director April 19, 2001
------------------------------------
II-3
21
Gary L. Crocker
* Director April 19, 2001
------------------------------------
John Garofalo
* by /s/ Fenel M. Eloi
-------------------------------------
Fenel M. Eloi, as Attorney-in-Fact
EXHIBIT INDEX
-------------
EXHIBIT NO. EXHIBIT PAGE
---------- ------- ----
5.1 Opinion of Fulbright & Jaworski L.L.P. (previously filed)....................................II-1
23.1 Consent of Fulbright & Jaworski L.L.P. (previously filed)....................................II-1
23.2 Consent of Arthur Andersen LLP (filed herewith)..............................................II-6
24.1 Power of Attorney (included on signature page)...............................................II-3
II-4