e424b5
The information in
this preliminary prospectus supplement is not complete and may
be changed. This preliminary prospectus supplement is not an
offer to sell nor does it seek an offer to buy these securities
in any jurisdiction where the offer or sale is not
permitted.
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Filed Pursuant to
Rule 424(b)(5)
Registration No. 333-127175
Subject to Completion. Dated
October 7, 2005.
Prospectus Supplement to Prospectus dated August 17, 2005.
5,000,000 Shares
Common Stock
GTx, Inc. is offering 5,000,000 shares to be sold in the
offering.
The common stock is quoted on the Nasdaq National Market under
the symbol GTXI. The last reported sale price of the
common stock on October 6, 2005 was $8.36 per share.
J.R. Hyde, III, our chairman and the beneficial owner of
approximately 39.8% of our common stock as of September 30,
2005, has indicated an initial interest in purchasing, directly
or through his affiliates, up to $10.0 million worth of
shares of our common stock in this offering at the initial price
to public, but has no legal obligation to do so.
See Risk Factors on page S-10 of this prospectus
supplement to read about factors you should consider before
buying shares of the common stock.
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus
supplement or the accompanying prospectus. Any representation to
the contrary is a criminal offense.
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To the extent that the underwriters sell more than 5,000,000
shares of common stock, the underwriters have the option to
purchase up to an additional 750,000 shares from GTx at the
initial price to public less the underwriting discount.
The underwriters expect to deliver the shares against payment in
New York, New York
on ,
2005.
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Lazard Capital Markets |
SG Cowen & Co. |
Prospectus Supplement
dated ,
2005.
ABOUT THIS PROSPECTUS SUPPLEMENT
You should read this prospectus supplement along with the
accompanying prospectus carefully before you invest in our
common stock. Both documents contain important information you
should consider when making your investment decision. This
prospectus supplement may add, update or change information
contained or incorporated by reference in the accompanying
prospectus. You should rely only on the information provided in
this prospectus supplement and the accompanying prospectus or
incorporated by reference in the accompanying prospectus. We
have not, and the underwriters have not, authorized anyone to
provide you with different information. We are not, and the
underwriters are not, making an offer to sell our common stock
in any jurisdiction where the offer or sale is not permitted.
To the extent there is a conflict between the information
contained in this prospectus supplement, on the one hand, and
the information contained or incorporated by reference in the
accompanying prospectus, on the other hand, the information
contained in this prospectus supplement shall control.
PROSPECTUS SUPPLEMENT SUMMARY
This is a summary of the information contained elsewhere in
this prospectus supplement and the accompanying prospectus or
incorporated by reference into the accompanying prospectus.
Investors should carefully consider the information set forth
under Risk Factors in this prospectus supplement and
in the accompanying prospectus.
GTx, Inc.
GTx is a biopharmaceutical company dedicated to the discovery,
development and commercialization of therapeutics for cancer and
serious conditions related to mens health. Our lead drug
discovery and development programs are focused on small
molecules that selectively modulate the effects of estrogens and
androgens, two essential classes of hormones. We have four
clinical programs. We are developing ACAPODENE® (toremifene
citrate), a selective estrogen receptor modulator, or SERM, in
two separate clinical programs in men: (1) a pivotal
Phase III clinical trial for the treatment of serious side
effects of androgen deprivation therapy, or ADT, for advanced
prostate cancer and (2) a pivotal Phase III clinical
trial for the prevention of prostate cancer in high risk men
with precancerous prostate lesions. In our third clinical
program, we are developing ostarine, a selective androgen
receptor modulator, or SARM, for the treatment of muscle wasting
associated with acute conditions, such as burns. We plan to
initiate a Phase II clinical trial for ostarine for this
indication in the fourth quarter of 2005. We are also evaluating
clinical development of ostarine for the treatment of chronic
conditions, such as testosterone deficiency in aging men, or
andropause. In our fourth clinical program, we and our
collaborator, Ortho Biotech Products, L.P., a subsidiary of
Johnson & Johnson, are developing andarine, another one
of our SARMs, for the treatment of weight loss from various
types of cancer, which is known as cancer cachexia. We are
working with Ortho Biotech to plan a Phase II clinical
trial of andarine.
We plan to build a specialized sales and marketing capability to
market our product candidates directly to the relatively small
and concentrated community of urologists and medical oncologists
in the United States and to seek collaborators to commercialize
our product candidates outside the United States and to broader
target physician markets. We currently market FARESTON®
(toremifene citrate 60 mg) tablets, which have been
approved by the U.S. Food and Drug Administration, or FDA,
for the treatment of metastatic breast cancer in post-menopausal
women in the United States. The active pharmaceutical ingredient
in Fareston is the same as in Acapodene, but at a different dose.
The following table summarizes key information about our product
candidates:
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Program |
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Product Candidate/Indication |
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Development Phase |
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Status |
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SERM
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Acapodene |
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Side effects of androgen
deprivation therapy
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Pivotal Phase III clinical
trial
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Phase III clinical trial
ongoing under an SPA; enrollment goal reached; interim results
expected in the fourth quarter of 2005
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Prevention of prostate cancer in
high risk men with precancerous prostate lesions
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Pivotal Phase III clinical
trial
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Phase III clinical trial
ongoing under a proposed SPA; completion of patient enrollment
anticipated in the first quarter of 2006
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S-1
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Program |
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Product Candidate/Indication |
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Development Phase |
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Status |
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SARM
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Ostarine |
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Muscle wasting associated with
burns and andropause
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Planning Phase II clinical
trial
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Phase I clinical trials
completed; initial Phase II proof of concept clinical trial
planned for the fourth quarter of 2005
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Andarine |
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Cancer cachexia
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Planning Phase II clinical
trial
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Phase I clinical trials
completed
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Prostarine |
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Benign prostatic hyperplasia
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Preclinical
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Preclinical studies ongoing
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Anticancer
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Andromustine |
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Prostate cancer that is not
responsive to androgen deprivation therapy
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Preclinical
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Preclinical studies ongoing
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Acapodene for the Treatment of Serious Side Effects of
Androgen Deprivation Therapy
The standard medical treatment for men who have advanced,
recurrent or metastatic prostate cancer is androgen deprivation
therapy, which reduces blood levels of testosterone, a primary
growth factor for prostate cancer. In the United States, we
believe approximately 600,000 men are currently being treated by
this therapy, with approximately 100,000 new patients started on
this therapy each year. Androgen deprivation therapy has serious
side effects, including: severe bone loss, or osteoporosis,
leading to skeletal fractures; hot flashes; and breast pain and
enlargement, or gynecomastia. We are developing Acapodene as a
treatment for these side effects. Because there are no drugs
approved by the FDA for the treatment of these multiple side
effects, we believe that there could be a substantial market for
Acapodene for this indication.
In November 2003, we initiated a randomized, double-blind,
placebo-controlled pivotal Phase III clinical trial of
orally-administered Acapodene in patients undergoing androgen
deprivation therapy for advanced, recurrent or metastatic
prostate cancer under a Special Protocol Assessment, or SPA,
with the FDA that provides that this clinical trial should serve
as an adequate basis for the submission of the effectiveness
portion of a New Drug Application, or NDA. An SPA is designed to
facilitate the FDAs review and approval of drug products
by allowing the agency to evaluate the proposed design and size
of clinical trials that are intended to form the primary basis
for determining a drug products efficacy. If agreement is
reached with the FDA, an SPA documents the terms and conditions
under which the design of the subject trial will be adequate for
submission of the effectiveness portion of an NDA. In this
clinical trial, approximately 1,200 patients with advanced,
recurrent or metastatic prostate cancer who have been receiving
androgen deprivation therapy for at least six months and who
either have significant existing bone loss or are greater than
70 years of age are being randomized to receive either a
placebo or a daily dose of 80 mg of Acapodene for
24 months. The primary endpoint is the incidence of
vertebral skeletal fractures measured by x-ray. The secondary
endpoints include bone mineral density, hot flashes,
gynecomastia and lipid changes. Over 100 clinical sites across
the United States and Mexico are participating in this clinical
trial. We reached our enrollment goal, and in the fourth quarter
of 2005, we plan to conduct an interim analysis of the
measurement of bone mineral density, a secondary endpoint, in
approximately the
S-2
first 200 patients to complete one year of this clinical
trial. We expect that the last patient will complete this
clinical trial in the second half of 2007. Following completion
of the trial, we plan to conduct a three-year extension trial to
gather additional fracture and survival data.
We designed our pivotal Phase III clinical trial
principally based on the results of the Phase II clinical
trial that we conducted to evaluate Acapodene in patients who
had been receiving androgen deprivation therapy by treatment
with luteinizing hormone releasing hormone agonists, known as
LHRH agonists, for more than 12 months. In this trial,
patients who received Acapodene at the highest tested dose
experienced a 3.5% average increase in lumbar vertebral spine
bone mineral density, an indicator of bone strength, while
patients who received the placebo experienced a 0.24% average
increase in lumbar vertebral spine bone mineral density. The
difference in these measurements had a p-value of less than
0.05. A p-value of 0.05 or less generally represents a
statistically significant difference in treatments. The results
of our pivotal Phase III clinical trial of Acapodene for
this indication may not be the same as the results of this
Phase II clinical trial.
Acapodene for the Prevention of Prostate Cancer in High
Risk Men with Precancerous Prostate Lesions
In the United States, prostate cancer is one of the most
commonly diagnosed cancers and the second leading cause of
cancer-related deaths in men. We believe that treating the
precancerous lesions of prostate cancer known as high grade
prostatic intraepithelial neoplasia, or high grade PIN, may be
an effective approach to preventing prostate cancer. In the
United States, there are over 115,000 new cases of high grade
PIN diagnosed each year, and an estimated 15.0 million men
under the age of 80 harbor this condition. As there is currently
no therapy for the treatment of this condition, we believe this
represents a significant unmet medical need.
In January 2005, we initiated a randomized, double-blind,
placebo-controlled pivotal Phase III clinical trial of
orally-administered Acapodene for the prevention of prostate
cancer in men with high grade PIN. Approximately 100 clinical
sites across the United States and Canada are participating in
this clinical trial. Approximately 1,260 patients with high
grade PIN are being randomized to receive either a daily dose of
20 mg of Acapodene or placebo. Only patients who have
confirmed high grade PIN and a prostate biopsy that excludes
cancer in the past six months are eligible to participate. The
primary endpoint is the incidence of prostate cancer. We expect
to complete patient enrollment in the first quarter of 2006. We
submitted our plan for this pivotal Phase III clinical
trial to the FDA in October 2004 under a proposed SPA. We filed
a revised SPA in response to comments from the FDA on our
initial filing, and in September 2005 we received a response
letter from the FDA related to the revised SPA. We agree with
and intend to implement the FDAs recommendations under the
SPA. We believe that upon submission of an amendment to the SPA
file to implement the FDAs recommendations, the SPA will
be complete and the trial would then be conducted under an
agreed SPA. We will evaluate efficacy endpoints for this trial
at 36 months, with an interim analysis at 24 months.
If a sufficient reduction in prostate cancer at 24 months
is achieved, we could potentially file an NDA, provided that we
are also able to submit as part of the filing safety data for
36 months for a majority of patients in the trial and other
safety data, as requested by the FDA. However, the results of
the interim analysis may not be sufficiently favorable to
support an application for regulatory approval. If the results
of the interim analysis are not sufficiently favorable to
support an application, we expect that the trial will continue
for 36 months.
In 2004, we completed a randomized, double-blind,
placebo-controlled, dose-finding Phase IIb clinical trial
of Acapodene in men with recently diagnosed high grade PIN to
determine the efficacy and safety of a daily dose of Acapodene
for 12 months. The trial enrolled 514 men and was conducted
at 64 clinical sites across the United States. The primary
efficacy endpoint of this trial was incidence of prostate cancer
at 12 months. Participants were randomized to receive a
20 mg, 40 mg or 60 mg dose of Acapodene or
placebo. A screening biopsy was performed on each trial
participant at the time of enrollment, and eligibility was
limited to participants who did not show evidence of prostate
cancer. A second biopsy was performed six months after
enrollment in an effort
S-3
to identify trial participants who had prostate cancer that was
not detected by the initial biopsy. The intent-to-treat
population consisted of all patients initially enrolled in the
trial who returned for their six-month biopsy. We also analyzed
trial results in a predefined subgroup of patients that excluded
patients showing biopsy evidence of prostate cancer at six
months and that also excluded patients who did not complete the
full course of therapy in the trial.
We analyzed the results of this Phase IIb clinical trial on a
stratified basis, in which we assessed the effect of individual
clinical sites on the overall statistical analysis of the trial
results, and on an unstratified basis, in which we did not
assess such effect. In the stratified analysis of the per
protocol population, which is the intent-to-treat population
less two patients in the group that received 20 mg of Acapodene
who were deemed to be not compliant with the protocol, the
cumulative, or overall, risk of prostate cancer was 24.4% in the
group that received 20 mg of Acapodene compared with 31.2% in
the group that received placebo. The p-value for this result was
less than 0.05. Thus, the cumulative risk of prostate cancer
based on a stratified analysis of the per protocol population
was 22.0% lower in the 20 mg treatment group, which would imply
an annualized rate of prevention of cancers of 6.8 per 100 men
treated. The p-value in the unstratified analysis of the per
protocol population for the comparison between the group that
received 20 mg of Acapodene and the group that received placebo
was 0.132. In the stratified analysis of the intent-to-treat
population, the cumulative risk of prostate cancer was 24.9% in
the group that received 20 mg of Acapodene compared with 31.2%
in the group that received placebo. The p-value for this result
was 0.081, which was statistically significant under the
protocol for this trial. Statistical significance under the
protocol was defined as a p-value of 0.10 or less. The p-value
in the unstratified analysis of the intent-to-treat population
for the comparison between the group that received 20 mg of
Acapodene and the group that received placebo was 0.148.
In a stratified analysis of the subgroup of patients who had no
biopsy evidence of prostate cancer at their initial screening
biopsy or their six-month biopsy and completed the full course
of therapy in the trial, the cumulative risk of prostate cancer
was 9.1% in the group that received 20 mg of Acapodene compared
with 17.4% in the group that received placebo, a 48.2%
reduction. The p-value for this result was less than 0.05. For
the 40 mg and 60 mg treatment arms, in the intent-to-treat
population, the per protocol population and the predefined
patient subgroup, the cumulative risk of cancer was lower than
the placebo group, although these results were not statistically
significant.
The overall rates of drug-related adverse events and serious
adverse events did not differ to a significant degree between
any of the Acapodene dose groups and placebo. The results of our
pivotal Phase III clinical trial of Acapodene for this
indication may not be the same as the results of this Phase IIb
clinical trial.
Ostarine for the Treatment of Muscle Wasting Associated
with Burns and Andropause
Ostarine, a SARM, is a nonsteroidal, orally-available small
molecule that binds to and modulates the same receptor as
testosterone. Testosterone and other tissue building, or
anabolic, agents have been proven to beneficially reverse
involuntary weight loss in patients who have muscle wasting
caused by burns and trauma, end-stage renal disease, chronic
obstructive pulmonary disease and HIV. However, testosterone and
anabolic steroids have major limitations, including unwanted
side effects on the prostate in elderly men and masculinization
in women, and testosterone is inconvenient to administer to
patients. Ostarine is designed to have anabolic activity like
testosterone, but in an orally-available formulation and without
the unwanted side effects of testosterone and anabolic steroids
on the prostate and skin sebaceous glands. We believe that
ostarine has the potential to treat muscle wasting associated
with chronic conditions, such as andropause, frailty and
end-stage renal disease, as well as muscle wasting associated
with acute conditions, such as burns.
We plan to initiate Phase II clinical trials of ostarine
first for muscle wasting associated with burns because we
believe that acute indications have a relatively expeditious and
defined clinical
S-4
development and regulatory pathway. Many burn patients are
hypermetabolic and lose significant lean body weight, which
adversely affects their healing and recovery. As a result, we
believe that clinical results demonstrating that ostarine is
effective in treating muscle wasting in burn patients could
establish proof of concept of the potential efficacy of ostarine
as a treatment for patients with other muscle wasting
conditions. Anabolic steroidal agents are frequently used for
the treatment of muscle wasting associated with burns. We expect
to initiate Phase II clinical testing of ostarine for the
treatment of muscle wasting associated with burns in the fourth
quarter of 2005.
We are also evaluating clinical development of ostarine for the
treatment of muscle wasting associated with andropause.
Andropause is a condition associated with aging men caused by
declining testosterone levels and is characterized by the loss
of muscle mass, osteoporosis, high cholesterol, hypogonadism and
obesity. Men on average gain a pound of fat and lose one-half
pound of muscle each year between the ages of 30 and 60, and
muscle loss accelerates after age 60, with the average man
losing 35% of his muscle between the ages of 20 and 80. This
characteristic loss of muscle mass and bone in men with
andropause is also known as frailty. Frailty is a condition that
adversely effects the health of both men and women. A 2001 study
of more than 5,000 elderly adults found that morbidity rates
among the frail elderly population were significantly higher
than among the non-frail elderly. The study found that over a
three-year period, the rate of death among the frail elderly was
18%, versus a 3% rate among the non-frail elderly. The frail
were also far more likely to experience falls, hospitalizations
and loss of independence. In this study funded by the National
Institutes of Health, which was designed to be representative of
the elderly U.S. population, 7% of the patient population was
found to be frail.
We have data from two Phase I clinical trials of ostarine:
a double-blind, placebo-controlled, single-ascending dose
clinical trial and a double-blind, placebo-controlled,
multiple-ascending dose clinical trial. The single-ascending
dose clinical trial included 96 healthy male volunteers.
Ostarine was well tolerated by the participants in this clinical
trial, and there were no drug-related serious adverse events.
This clinical trial demonstrated that the average half life of
ostarine was approximately 24 hours, which supports a daily
dosing regimen.
The second Phase I clinical trial evaluated the safety,
tolerability and specific pharmacodynamic characteristics of
ostarine using multiple-ascending doses in 48 healthy male
volunteers between the ages of 18 and 45 and 12 elderly males
with truncal obesity who had an average age of 68 years.
Data from an additional group of 11 elderly males with truncal
obesity are being collected for the purpose of evaluating safety
but not tolerability. Safety and pharmacodynamic measurements
were taken at the beginning of the study and after 14 days
of daily oral dosing. These measurements included routine blood
chemistry and hematology, sex hormones and gonadotropins, serum
prostate specific antigen, metabolic markers of bone and muscle,
cutaneous sebum analysis and DEXA scanning for body composition.
Overall, clinical laboratory values and hormonal effects for the
60 volunteers were consistent with anabolic activity.
Comparisons of DEXA assessments from the beginning of the study
to DEXA assessments after 14 days for the 60 volunteers
showed positive changes in body composition, with lean body mass
and fat mass moving in a direction consistent with anabolic
activity. Ostarine did not appear to have unwanted side effects
on the prostate or the skin for the 60 volunteers. We believe
that these observations support the potential ability of
ostarine to selectively modulate androgen receptors in a
tissue-specific manner. Ostarine has been well tolerated by the
participants in this Phase I clinical trial, and there have
been no drug-related serious adverse events to date. However,
Phase I clinical trials are not designed to show efficacy,
and the results of future clinical trials may not be the same as
these early observations.
Andarine for the Treatment of Cancer Weight Loss
We are developing another one of our SARMs, andarine, under a
collaboration agreement with Ortho Biotech. Together with Ortho
Biotech, our strategy is to develop andarine for the treatment
of cancer cachexia. We selected this indication because it
represents a potentially large market and we believe it has a
relatively well-defined clinical and regulatory process. There
are approximately
S-5
1.3 million patients diagnosed with cancer each year in the
United States. Wasting weight loss afflicts approximately
one-third of newly-diagnosed cancer patients. The weight loss
attributable to cancer cachexia results from both the loss of
lean body, or muscle, weight and the loss of fat. There are no
drugs that have been approved by the FDA for the treatment of
weight loss from cancer.
We are working with Ortho Biotech to initiate a Phase II
clinical trial of andarine in 2006. We have completed four
Phase I clinical trials of andarine in which andarine was
well tolerated by all participants with no serious adverse
events. We observed early indications in the multiple-dose
Phase I clinical trial that andarine promoted growth
activity, as measured by levels of IGF-1, a marker for muscle
growth, without affecting the sebaceous glands. We believe that
these observations support the potential ability of andarine to
selectively modulate androgen receptors in a tissue-specific
manner. However, Phase I clinical trials are not designed
to show efficacy, and the results of future clinical trials may
not be the same as these early observations.
In March 2004, we entered into a joint collaboration and license
agreement with Ortho Biotech for andarine for indications
related to mens health and other licensed SARM compounds
meeting specified criteria which Ortho Biotech may ultimately
choose to develop instead of, or in addition to, andarine. We
retain the right to independently develop specific SARM
compounds which are excluded from the collaboration, including
ostarine. Under the terms of the agreement, we received an
up-front licensing fee and reimbursement of certain andarine
development expenses totaling approximately $6.7 million,
which is being amortized into revenue over five years. We are
entitled to receive additional licensing fees and milestone
payments prior to product launch of (1) up to an aggregate
of $76 million for licensed products containing andarine or
any replacement compound, and (2) up to $45 million
for each licensed product containing any other compound
developed under the agreement, upon achievement of specific
clinical development milestones or receipt of regulatory
approvals. Johnson & Johnson Pharmaceutical
Research & Development, an affiliate of Ortho Biotech,
is responsible for further clinical development and related
expenses for andarine and other licensed SARM compounds. If a
licensed product containing andarine or any other SARM compound
is approved for commercial sale, Ortho Biotech will have full
and exclusive decision-making authority for marketing such
product in the United States and in markets outside the United
States. Under the agreement, we have the option, subject to
meeting specified conditions, to co-promote andarine and other
licensed products to urologists in the United States for
indications specifically related to mens health. Ortho
Biotech is obligated to pay us up to double digit royalties on
worldwide net sales of andarine and other licensed products, and
an additional royalty in excess of 20% on all co-promoted net
sales to urologists in the United States. Ortho Biotech may
terminate the development or commercialization of andarine or
any other licensed SARM compound under the agreement upon
90 days notice, or 30 days notice if there
are safety issues, or may terminate the agreement for our
uncured material breach.
Fareston
In January 2005, we acquired from Orion Corporation the right to
market Fareston (toremifene citrate 60 mg) tablets in the
United States for the prevention and treatment of breast cancer.
Fareston had been marketed in the United States by third parties
since 1998. We also acquired a license to toremifene, the active
pharmaceutical ingredient in Fareston and Acapodene, for all
indications worldwide, except breast cancer outside of the
United States. We do not have the right to manufacture
toremifene, although we have specified rights to assume
manufacture of toremifene under specified circumstances, and we
rely on Orion for our clinical and commercial supply. We pay
Orion a royalty on Fareston sales. For the six months ended
June 30, 2005, we recognized approximately
$1.8 million in net revenues from the sale of Fareston.
S-6
Orion Agreement
In March 2000, we entered into a license and supply agreement
with Orion to develop and commercialize products containing
toremifene, the active pharmaceutical ingredient in Fareston and
Acapodene. Our rights under the original license agreement were
limited to specific disease fields pertaining to prostate
cancer. In December 2004, we entered into an agreement with
Orion to purchase specified Fareston-related assets which Orion
had re-acquired from another licensee. We also entered into an
amended and restated license and supply agreement with Orion
which replaces the original license agreement. We paid Orion
approximately $5.2 million under the 2004 agreements for
the assets and related license rights.
Under the amended and restated license agreement, we obtained an
exclusive license from Orion to develop and commercialize
toremifene-based products, including Fareston and Acapodene, for
all human indications worldwide, except breast cancer outside of
the United States. We are required to pay Orion a royalty on
sales by us and our affiliates of Fareston for breast cancer in
the United States. We are also required to pay Orion a royalty
on sales by us, our affiliates and third-party sublicensees of
other toremifene-based products, including Acapodene if approved
for commercial sale. We are obligated to purchase all of our
clinical and commercial requirements for toremifene from Orion
at transfer prices specified in the amended and restated
agreement. Orion may terminate its supply obligations under
specified circumstances. However, we have specified rights to
assume manufacture of toremifene if Orion terminates its supply
of toremifene because it has ceased to manufacture toremifene,
although we would have to engage another supplier to do so. The
term of the amended and restated agreement lasts, on a
country-by-country basis, until the later of expiration of our
own patents claiming the method of use or manufacture of
toremifene for prostate cancer or the end of all marketing or
regulatory exclusivity which we may obtain for toremifene-based
products. Orion may terminate the agreement as a result of our
uncured material breach or bankruptcy.
Pipeline
We have an extensive preclinical pipeline generated from our own
discovery program, which includes the specific product candidate
prostarine, a SARM for benign prostatic hyperplasia, and
andromustine, an anticancer drug candidate, for
hormone-refractory prostate cancer.
We believe that our drug discovery capabilities position us well
to design and develop non-steroidal small molecule drugs that
modulate the effects of hormones.
GTx, Inc., the GTx logo and all other GTx product and service
names are trademarks of GTx, Inc. All other brand names or
trademarks appearing in this prospectus supplement and the
accompanying prospectus are the property of their respective
holders.
S-7
The Offering
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Common stock offered by GTx |
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5,000,000 shares |
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Common stock to be outstanding after the offering |
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29,666,133 shares |
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Use of proceeds |
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To fund clinical development and other research and development
activities and for working capital and general corporate
purposes. |
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Risk factors |
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See Risk Factors beginning on page S-10 and
Cautionary Note Regarding Forward-Looking
Statements on page S-26 for a discussion of factors
you should consider before buying shares of our common stock. |
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NASDAQ National Market symbol |
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GTXI |
The number of shares of common stock to be outstanding after the
offering is based on the number of shares outstanding as of
September 30, 2005 and excludes:
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1,263,084 shares of common stock underlying options
outstanding as of September 30, 2005 at a weighted-average
exercise price of $8.26 per share; and |
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|
1,759,506 shares available for issuance or future grant
under our current stock option plans, as of September 30,
2005. |
Except as otherwise indicated, all information in this
prospectus supplement assumes no exercise of the
underwriters over-allotment option in this offering.
J.R. Hyde, III, our chairman and the beneficial owner of
approximately 39.8% of our common stock as of September 30,
2005, has indicated an initial interest in purchasing, directly
or through his affiliates, up to $10.0 million worth of
shares of our common stock in this offering at the price to
public, but has no legal obligation to do so.
S-8
Summary Financial Data
We derived the following information from our audited
financial statements for each of the three years ended
December 31, 2004, 2003 and 2002, respectively, our
unaudited balance sheet as of June 30, 2005 and our
unaudited statements of operations for the six months ended
June 30, 2005 and June 30, 2004. In the opinion of our
management, our unaudited financial statements include all
adjustments, consisting only of normal and recurring
adjustments, considered necessary for a fair presentation of the
financial information. Our historical results for any prior or
interim periods are not necessarily indicative of results to be
expected for any future period.
You should read the following information in conjunction with
our financial statements and related notes incorporated by
reference in the accompanying prospectus. For more details on
how you can obtain our SEC reports and other information, you
should read the section of the accompanying prospectus entitled
Where You Can Find More Information. The as adjusted
balance sheet data gives effect to the sale of
5,000,000 shares of our common stock in this offering, at
an assumed price to public of $8.36 per share, after
deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, | |
|
Six Months Ended June 30, | |
|
|
| |
|
| |
|
|
2002 | |
|
2003 | |
|
2004 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(in thousands, except share and per share data) | |
Statement of Operations
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales, net
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
1,845 |
|
|
Collaboration revenue
|
|
|
|
|
|
|
|
|
|
|
1,055 |
|
|
|
386 |
|
|
|
669 |
|
|
Reimbursement of development costs
|
|
|
|
|
|
|
|
|
|
|
812 |
|
|
|
760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
|
|
|
|
|
|
|
|
1,867 |
|
|
|
1,146 |
|
|
|
2,514 |
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,165 |
|
|
Research and development expenses
|
|
|
9,569 |
|
|
|
10,778 |
|
|
|
17,950 |
|
|
|
8,635 |
|
|
|
15,965 |
|
|
General and administrative expenses
|
|
|
2,453 |
|
|
|
3,559 |
|
|
|
7,211 |
|
|
|
3,213 |
|
|
|
5,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses
|
|
|
12,022 |
|
|
|
14,337 |
|
|
|
25,161 |
|
|
|
11,848 |
|
|
|
22,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(12,022 |
) |
|
|
(14,337 |
) |
|
|
(23,294 |
) |
|
|
(10,702 |
) |
|
|
(19,778 |
) |
Interest income
|
|
|
156 |
|
|
|
143 |
|
|
|
946 |
|
|
|
362 |
|
|
|
678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(11,866 |
) |
|
|
(14,194 |
) |
|
|
(22,348 |
) |
|
|
(10,340 |
) |
|
|
(19,100 |
) |
Accrued preferred stock dividends
|
|
|
(2,147 |
) |
|
|
(3,436 |
) |
|
|
(455 |
) |
|
|
(455 |
) |
|
|
|
|
Adjustments to preferred stock
redemption value
|
|
|
(7,220 |
) |
|
|
(77,844 |
) |
|
|
17,125 |
|
|
|
17,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable
to common stockholders
|
|
$ |
(21,233 |
) |
|
$ |
(95,474 |
) |
|
$ |
(5,678 |
) |
|
$ |
6,330 |
|
|
$ |
(19,100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share
attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
(2.75 |
) |
|
$ |
(12.34 |
) |
|
$ |
(0.25 |
) |
|
$ |
0.30 |
|
|
$ |
(0.77 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$ |
(2.75 |
) |
|
$ |
(12.34 |
) |
|
$ |
(0.93 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.77 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in
computing net (loss) income per share attributable to
common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
7,734,998 |
|
|
|
7,735,125 |
|
|
|
22,993,221 |
|
|
|
21,309,897 |
|
|
|
24,664,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
7,734,998 |
|
|
|
7,735,125 |
|
|
|
24,062,271 |
|
|
|
23,524,621 |
|
|
|
24,664,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2005 | |
|
|
| |
|
|
Actual | |
|
As adjusted | |
|
|
| |
|
| |
Balance Sheet Data
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
48,082 |
|
|
$ |
86,912 |
|
Working capital
|
|
|
41,093 |
|
|
|
79,923 |
|
Total assets
|
|
|
57,726 |
|
|
|
96,556 |
|
Total current liabilities
|
|
|
8,807 |
|
|
|
8,807 |
|
Accumulated deficit
|
|
|
(176,530 |
) |
|
|
(176,530 |
) |
Total stockholders equity
|
|
|
45,272 |
|
|
|
84,102 |
|
S-9
RISK FACTORS
If you purchase shares of our common stock, you will take on
financial risk. In deciding whether to invest, you should
carefully consider the following factors and the information
contained in this prospectus supplement and the accompanying
prospectus, including the additional information in our reports
and other documents on file with the SEC that are incorporated
by reference in the accompanying prospectus. If any of these
risks occur, our business, results of operation or financial
condition could suffer, the market price of our common stock
could decline and you could lose all or part of your investment
in our common stock.
Risks Related to Our Financial Results and Need for
Additional Financing
We have incurred losses since inception and anticipate
that we will incur continued losses for the foreseeable
future.
We have a limited operating history. As of June 30, 2005,
we had an accumulated deficit of $176.5 million, of which
$96.3 million related to non-cash dividends and adjustments
to the preferred stock redemption value. We have incurred losses
in each year since our inception in 1997. Net losses were
$22.3 million in 2004, $14.2 million in 2003 and
$11.9 million in 2002. For the six months ended
June 30, 2005, net losses were $19.1 million. We
expect to continue to incur significant and increasing operating
losses for the foreseeable future. These losses have had and
will continue to have an adverse effect on our
stockholders equity and working capital.
Because of the numerous risks and uncertainties associated with
developing small molecule drugs, we are unable to predict the
extent of any future losses or when we will become profitable,
if at all. We have financed our operations and internal growth
almost exclusively through sales of common stock and preferred
stock. In addition, we received an upfront license fee from
Ortho Biotech in March 2004 for our joint collaboration for the
development and commercialization of andarine and other licensed
SARM compounds that Ortho Biotech may choose to develop.
Fareston is currently our only commercial product and, we
expect, will account for all of our product revenue for the
foreseeable future. For the six months ended June 30, 2005,
we recognized approximately $1.8 million in net revenues
from the sale of Fareston.
We expect our research and development expenses to increase in
connection with our conduct of clinical trials. In addition,
subject to regulatory approval of any of our product candidates,
we expect to incur additional sales and marketing expenses and
increased manufacturing expenses.
We will need substantial additional funding and may be
unable to raise capital when needed, which would force us to
delay, reduce or eliminate our product development programs or
commercialization efforts.
We will need to raise additional capital to:
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|
|
|
|
fund our operations and clinical trials; |
|
|
|
continue our research and development; and |
|
|
|
commercialize our product candidates, if any such product
candidates receive regulatory approval for commercial sale. |
We believe that the net proceeds from this offering, our current
cash resources, interest on these funds and product revenue from
the sale of Fareston will be sufficient to meet our projected
operating requirements through the first half of 2007. Our
future funding requirements will depend on many factors,
including:
|
|
|
|
|
the scope, rate of progress and cost of our clinical trials and
other research and development activities; |
S-10
|
|
|
|
|
future clinical trial results; |
|
|
|
the terms and timing of any collaborative, licensing and other
arrangements that we may establish; |
|
|
|
the cost and timing of regulatory approvals; |
|
|
|
potential future licensing fees, milestone payments and royalty
payments; |
|
|
|
the cost and timing of establishing sales, marketing and
distribution capabilities; |
|
|
|
the cost of establishing clinical and commercial supplies of our
product candidates and any products that we may develop; |
|
|
|
the effect of competing technological and market developments; |
|
|
|
the cost of filing, prosecuting, defending and enforcing any
patent claims and other intellectual property rights; and |
|
|
|
the extent to which we acquire or invest in businesses, products
and technologies, although we currently have no commitments or
agreements relating to any of these types of transactions. |
Until we can generate a sufficient amount of product revenue, if
ever, we expect to finance future cash needs through public or
private equity offerings, debt financings or corporate
collaboration and licensing arrangements, such as our
collaboration with Ortho Biotech, as well as through interest
income earned on cash balances.
If we raise additional funds by issuing equity securities, our
stockholders will experience dilution. Debt financing, if
available, may involve restrictive covenants. Any debt financing
or additional equity that we raise may contain terms that are
not favorable to us or our stockholders. If we raise additional
funds through collaboration or licensing arrangements with third
parties, it will be necessary to relinquish some rights to our
technologies or our product candidates, or we may be required to
grant licenses on terms that may not be favorable to us.
Risks Related to Development of Product Candidates
We will not be able to commercialize our product
candidates if our preclinical studies do not produce successful
results or our clinical trials do not demonstrate safety and
efficacy in humans.
Preclinical and clinical testing is expensive, can take many
years and has an uncertain outcome. Success in preclinical
testing and early clinical trials does not ensure that later
clinical trials will be successful, and interim results of a
clinical trial do not necessarily predict final results.
Typically, the failure rate for development candidates is high.
Significant delays in clinical testing could materially impact
our product development costs. We do not know whether planned
clinical trials will begin on time, will need to be restructured
or will be completed on schedule, if at all. We may experience
numerous unforeseen events during, or as a result of,
preclinical testing and the clinical trial process that could
delay or prevent our ability to commercialize our product
candidates, including:
|
|
|
|
|
regulators or institutional review boards may not authorize us
to commence a clinical trial or conduct a clinical trial at a
prospective trial site; |
|
|
|
our preclinical or clinical trials may produce negative or
inconclusive results, which may require us to conduct additional
preclinical or clinical testing or to abandon projects that we
expect to be promising; |
S-11
|
|
|
|
|
registration or enrollment in our clinical trials may be slower
than we currently anticipate, resulting in significant delays; |
|
|
|
we might have to suspend or terminate our clinical trials if the
participating patients are being exposed to unacceptable health
risks; |
|
|
|
regulators or institutional review boards may suspend or
terminate clinical research for various reasons, including
noncompliance with regulatory requirements; and |
|
|
|
our product candidates may not have the desired effects or may
include undesirable side effects. |
If any of these events were to occur and, as a result, we have
significant delays in or termination of clinical trials, our
costs could increase and our ability to generate revenue could
be impaired, which would adversely impact our financial results.
Risks Related to Our Dependence on Third Parties
If third parties do not manufacture our product candidates
in sufficient quantities and at an acceptable cost, clinical
development and commercialization of our product candidates
would be delayed.
We do not currently own or operate manufacturing facilities, and
we rely, and expect to continue to rely, on third parties for
the production of clinical and commercial quantities of our
product candidates. Our current and anticipated future
dependence upon others for the manufacture of our product
candidates may adversely affect our future profit margins and
our ability to develop product candidates and commercialize any
product candidates on a timely and competitive basis.
We have agreed to purchase from Orion our worldwide requirements
of toremifene, the active pharmaceutical ingredient in
Acapodene, in finished tablet form at specified transfer prices
under a license and supply agreement. We rely on Orion as a
single source supplier for Acapodene. In the event that Orion
terminates the agreement due to our uncured material breach or
bankruptcy, we would not be able to manufacture Acapodene until
Orions patents with respect to the composition of matter
of toremifene, the active pharmaceutical ingredient in
Acapodene, expire. This could delay the development of and
impair our ability to commercialize Acapodene. In addition,
Orion may terminate its obligation to supply us with toremifene
if Orion ceases its manufacture of toremifene permanently, or if
Acapodene is not approved for commercial sale in the United
States by December 31, 2009. If such termination occurs
because Orion is no longer manufacturing toremifene, or because
such regulatory approval is not obtained prior to the specified
date, we will have the right to manufacture Acapodene, but we
would be required to make arrangements with a qualified
alternative supplier and obtain FDA approval of such supplier to
do so.
We also rely on Orion to cooperate with us in the filing and
maintenance of regulatory filings with respect to the
manufacture of Acapodene. Orion may terminate its obligation to
assist us in obtaining and maintaining regulatory approval of
Acapodene if we do not receive regulatory approval for Acapodene
by December 31, 2009. If Orion terminates its obligation to
cooperate in these activities, or does not cooperate with us or
otherwise does not successfully file or maintain these
regulatory filings, we would be required to make arrangements
with a qualified alternative supplier, which could delay or
prevent regulatory approval of Acapodene.
We have not entered into an agreement for supply of andarine or
ostarine. We currently rely on EaglePicher Pharmaceutical
Services, a division of EaglePicher Technologies, LLC, which has
filed for protection under the bankruptcy code, as our single
supplier of andarine for clinical use. Under our joint
collaboration and license agreement with Ortho Biotech, Ortho
Biotech is responsible for the manufacture, packaging and supply
of andarine for both clinical trials and commercialization.
EaglePicher was our sole supplier of ostarine, which Metrics,
Inc. packaged and supplied to our
S-12
Phase I clinical trial site. We are seeking to transfer the
manufacturing process for ostarine from EaglePicher to a new
contract manufacturer, which could take as long as nine months.
In the event that our current supply of ostarine is not
sufficient to complete our planned Phase II clinical trials, or
if we are unsuccessful in identifying a contract manufacturer or
negotiating a manufacturing agreement on a timely basis or at
all, we could experience a delay in receiving an adequate supply
of ostarine for use in our clinical trials.
We may not be able to maintain or renew our existing or any
other third-party manufacturing arrangements on acceptable
terms, if at all. If we are unable to continue relationships
with Orion for Acapodene and EaglePicher or Ortho Biotech for
andarine, or to do so at an acceptable cost, or if these or
other suppliers fail to meet our requirements for these product
candidates or for ostarine for any reason, we would be required
to obtain alternate suppliers. However, we may not be permitted
to obtain alternate suppliers for Acapodene under our license
agreement with Orion if Orion terminates its supply of Acapodene
due to our uncured material breach or bankruptcy. Any inability
to obtain alternate suppliers, including an inability to obtain
approval of an alternate supplier from the FDA, would delay or
prevent the clinical development and commercialization of these
product candidates.
Use of third-party manufacturers may increase the risk
that we will not have adequate supplies of our product
candidates.
Reliance on third-party manufacturers entails risks to which we
would not be subject if we manufactured product candidates or
products ourselves, including:
|
|
|
|
|
reliance on the third party for regulatory compliance and
quality assurance; |
|
|
|
the possible breach of the manufacturing agreement by the third
party because of factors beyond our control; |
|
|
|
the possible termination or non-renewal of the agreement by the
third party, based on its own business priorities, at a time
that is costly or inconvenient for us; |
|
|
|
the possible exercise by Orion of its right to terminate its
obligation to supply us with toremifene if it permanently ceases
manufacture of toremifene or if we do not obtain regulatory
approval of Acapodene prior to December 31, 2009; and |
|
|
|
if Orion terminates due to our uncured material breach or
bankruptcy. |
If we are not able to obtain adequate supplies of our product
candidates, it will be more difficult for us to develop our
product candidates and compete effectively. Our product
candidates and any products that we may develop may compete with
other product candidates and products for access to
manufacturing facilities. For example, the active pharmaceutical
ingredient in Acapodene is also the active pharmaceutical
ingredient in Fareston. Orion also manufactures toremifene for
third parties for sale outside the United States for the
treatment of advanced breast cancer in post-menopausal women.
Our present or future manufacturing partners may not be able to
comply with FDA-mandated current Good Manufacturing Practice
regulations, other FDA regulatory requirements or similar
regulatory requirements outside the United States. Failure of
our third-party manufacturers or us to comply with applicable
regulations could result in sanctions being imposed on us,
including fines, injunctions, civil penalties, failure of
regulatory authorities to grant marketing approval of our
product candidates, delays, suspension or withdrawal of
approvals, license revocation, seizures or recalls of product
candidates or products, operating restrictions and criminal
prosecutions, any of which could significantly and adversely
affect supplies of our product candidates.
S-13
If third parties on whom we rely do not perform as
contractually required or expected, we may not be able to obtain
regulatory approval for or commercialize our product
candidates.
We do not have the ability to independently conduct clinical
trials for our product candidates, and we must rely on third
parties, such as contract research organizations, medical
institutions, clinical investigators and contract laboratories
to conduct our clinical trials. In addition, we rely on third
parties to assist with our preclinical development of product
candidates. If these third parties do not successfully carry out
their contractual duties or regulatory obligations or meet
expected deadlines, if the third parties need to be replaced, or
if the quality or accuracy of the data they obtain is
compromised due to the failure to adhere to our clinical
protocols or regulatory requirements or for other reasons, our
preclinical development activities or clinical trials may be
extended, delayed, suspended or terminated, and we may not be
able to obtain regulatory approval for or successfully
commercialize our product candidates.
We are dependent on our collaborative arrangement with
Ortho Biotech to develop and commercialize andarine, and we may
be dependent upon additional collaborative arrangements to
complete the development and commercialization of some of our
other product candidates. These collaborative arrangements may
place the development of our product candidates outside our
control, may require us to relinquish important rights or may
otherwise be on terms unfavorable to us.
Any loss of Ortho Biotech as a collaborator in the development
or commercialization of andarine, dispute over the terms of the
collaboration or other adverse development in our relationship
with Ortho Biotech could materially harm our business and might
accelerate our need for additional capital.
We may not be successful in entering into additional
collaborative arrangements with third parties. If we fail to
enter into additional collaborative arrangements on favorable
terms, it could delay or impair our ability to develop and
commercialize our product candidates and could increase our
costs of development and commercialization.
Dependence on collaborative arrangements, including our
arrangement with Ortho Biotech for the development of andarine,
subjects us to a number of risks, including:
|
|
|
|
|
we may not be able to control the amount and timing of resources
that our collaborators may devote to the product candidates; |
|
|
|
our collaborators may experience financial difficulties; |
|
|
|
we may be required to relinquish important rights such as
marketing and distribution rights; |
|
|
|
should a collaborator fail to develop or commercialize one of
our compounds or product candidates, we may not receive any
future milestone payments and will not receive any royalties for
this compound or product candidate; |
|
|
|
business combinations or significant changes in a
collaborators business strategy may also adversely affect
a collaborators willingness or ability to complete its
obligations under any arrangement; |
|
|
|
a collaborator could move forward with a competing product
candidate developed either independently or in collaboration
with others, including our competitors; and |
|
|
|
the collaborative arrangements are often terminated or allowed
to expire, which would delay the development and may increase
the cost of developing our product candidates. |
S-14
Risks Related to Our Intellectual Property
Our license agreement with Orion excludes the use of
toremifene in humans to treat breast cancer outside the United
States and may limit our ability to market Acapodene for human
uses of toremifene outside the United States.
Our exclusive license from Orion excludes the use of toremifene
for the treatment of breast cancer outside the United States.
Orion has licensed to other parties the right to market, sell
and distribute toremifene for the treatment of advanced breast
cancer outside the United States and could license additional
parties to market, sell and distribute toremifene for this
indication outside the United States.
Under the terms of our license agreement with Orion, Orion may
require us to modify our final Acapodene development plans for
specified major markets outside the United States if those
development plans could adversely affect Orions or
Orions other licensees activities related to
Fareston for breast cancer outside the United States or
toremifene-based animal health products. Although we do not
believe that our development plans adversely affect these
activities, any future modifications to our plans imposed by
Orion may limit our ability to maximize the commercial potential
of Acapodene.
Furthermore, we and our affiliates are prohibited from marketing
or selling products containing toremifene or related SERM
compounds for human use (1) in the United States and other
major countries located outside the European Union during the
term of Orions patents covering toremifene in such
countries and (2) in major countries in the European Union
through October 2006, other than in the dosage forms or
formulations which are, or may in the future be, manufactured by
Orion under our agreement with Orion. The binding effect of this
noncompetition provision on us and our affiliates may make it
more difficult for us to be acquired by some potential buyers
during the relevant time periods even if we determine that a
sale of the company would be in the best interests of our
stockholders.
If some or all of our, or our licensors, patents
expire or are invalidated or are found to be unenforceable, or
if some or all of our patent applications do not yield issued
patents or yield patents with narrow claims, or if we are
estopped from asserting that the claims of an issued patent
cover a product of a third party, we may be subject to
competition from third parties with products with the same
active pharmaceutical ingredients as our product
candidates.
Our commercial success will depend in part on obtaining and
maintaining patent and trade secret protection for our product
candidates, the methods for treating patients in the product
indications using these product candidates and the methods used
to synthesize these product candidates. We will be able to
protect our product candidates and the methods for treating
patients in the product indications using these product
candidates from unauthorized use by third parties only to the
extent that we or our exclusive licensors own or control such
valid and enforceable patents or trade secrets. Our rights to
specified patent applications relating to SARM compounds that we
have licensed from the University of Tennessee Research
Foundation, or UTRF, are subject to the terms of UTRFs
license with The Ohio State University, or OSU, and our rights
to future related improvements are subject to UTRFs
exercise of an exclusive option under its agreement with OSU for
such improvements, which UTRF can exercise at no additional cost
to it. In addition, under the terms of our agreements with the
diagnostic companies to which we provide clinical samples from
our Phase IIb clinical trial of Acapodene, we will not obtain
any intellectual property rights in any of their developments,
including any test developed to detect high grade PIN or
prostate cancer.
Even if our product candidates and the methods for treating
patients in the product indications using these product
candidates are covered by valid and enforceable patents and have
claims with sufficient scope and support in the specification,
the patents will provide protection only for a limited amount of
time. For example, the patent that we have licensed from Orion
covering the composition
S-15
of matter of toremifene expires in the United States in 2009.
Foreign counterparts of this patent have either already expired
or will expire in Australia, Italy, Sweden and Switzerland in
2008, that is, before we commercialize Acapodene. As a result,
outside the United States and in the United States after 2009,
we will need to rely primarily on the protection afforded by
method of use patents, relating to the use of Acapodene for the
relevant product indications, that have been issued or may be
issued from our owned or licensed patent applications. To date,
most of our applications for method of use patents filed for
Acapodene outside of the United States are still pending and
have not yielded issued patents. Although we intend to apply, if
appropriate, for regulatory market exclusivity and extensions of
patent term under applicable European and United States laws, we
might not be able to secure any such regulatory exclusivity or
extension of patent term. We are not eligible for any such
exclusivity or further extension of the composition of matter
patent of toremifene in the United States.
Our and our licensors ability to obtain patents can be
highly uncertain and involve complex and in some cases unsettled
legal issues and factual questions. Furthermore, different
countries have different procedures for obtaining patents, and
patents issued in different countries provide different degrees
of protection against the use of a patented invention by others.
Therefore, if the issuance to us or our licensors, in a given
country, of a patent covering an invention is not followed by
the issuance, in other countries, of patents covering the same
invention, or if any judicial interpretation of the validity,
enforceability or scope of the claims in a patent issued in one
country is not similar to the interpretation given to the
corresponding patent issued in another country, our ability to
protect our intellectual property in those countries may be
limited. Changes in either patent laws or in interpretations of
patent laws in the United States and other countries may
diminish the value of our intellectual property or narrow the
scope of our patent protection.
Even if patents are issued to us or our licensors regarding our
product candidates or methods of using them, those patents can
be challenged by our competitors who can argue such patents are
invalid or unenforceable or that the claims of the issued
patents should be limited or narrowly construed. Patents also
will not protect our product candidates if competitors devise
ways of making or using these product candidates without legally
infringing our patents. The Federal Food, Drug, and Cosmetic Act
and FDA regulations and policies create a regulatory environment
that encourages companies to challenge branded drug patents or
to create noninfringing versions of a patented product in order
to facilitate the approval of abbreviated new drug applications
for generic substitutes. These same types of incentives
encourage competitors to submit new drug applications that rely
on literature and clinical data not prepared for or by the drug
sponsor, providing another less burdensome pathway to approval.
We also rely on trade secrets to protect our technology,
especially where we do not believe that patent protection is
appropriate or obtainable. However, trade secrets are difficult
to protect. Our employees, consultants, contractors, outside
scientific collaborators and other advisors may unintentionally
or willfully disclose our confidential information to
competitors, and confidentiality agreements may not provide an
adequate remedy in the event of unauthorized disclosure of
confidential information. Enforcing a claim that a third party
illegally obtained and is using our trade secrets is expensive
and time-consuming, and the outcome is unpredictable. Moreover,
our competitors may independently develop equivalent knowledge,
methods and know-how. Failure to obtain or maintain trade secret
protection could adversely affect our competitive business
position.
Off-label sale or use of toremifene products could
decrease our sales of Acapodene and could lead to pricing
pressure if such products become available at competitive prices
and in dosages that are appropriate for the indications for
which we are developing Acapodene.
In all countries in which we hold or have licensed rights to
patents or patent applications related to Acapodene, the
composition of matter patents we license from Orion will expire
before our method of use patents, and in some countries outside
the United States, the composition of matter patents have
already expired. Our method of use patents may not protect
Acapodene from the risk
S-16
of off-label sale or use of other toremifene products in place
of Acapodene. Physicians are permitted to prescribe legally
available drugs for uses that are not described in the
drugs labeling and that differ from those uses tested and
approved by the FDA or its equivalent. Such off-label uses are
common across medical specialties and are particularly prevalent
for cancer treatments. Any off-label sales of toremifene may
adversely affect our ability to generate revenue from the sale
of Acapodene, if approved for commercial sale.
Even in the event that patents are issued from our pending
method of use patent applications, after the expiration of the
patent covering the composition of matter of toremifene in a
particular country, competitors could market and sell toremifene
products for uses for which Fareston has already been approved.
Thus, physicians in such countries would be permitted to
prescribe these other toremifene products for indications that
are protected by our method of use patents or patents issuing
from pending patent applications, even though these toremifene
products would not have been approved for those uses, and in
most cases the competitor would not be liable for infringing our
patents. Moreover, because Orion has licensed and could further
license other parties to market, sell and distribute toremifene
for breast cancer outside the United States, physicians in such
countries could prescribe these products sold pursuant to
another Orion license off-label. This further increases the risk
of off-label competition developing for Acapodene for the
indications for which we are developing this product candidate.
In addition, if no patents are issued with respect to our
pending method of use patent applications related to the use of
Acapodene, after the expiration of the patent covering the
composition of matter of toremifene in a particular country, we
would have no patent to prevent competitors from marketing and
selling generic versions of toremifene at doses and in
formulations equivalent to Acapodene for the indications covered
by our pending method of use patent applications.
If we infringe intellectual property rights of third
parties, it may increase our costs or prevent us from being able
to commercialize our product candidates.
There is a risk that we are infringing the proprietary rights of
third parties because numerous United States and foreign issued
patents and pending patent applications, which are owned by
third parties, exist in the fields that are the focus of our
drug discovery and development efforts. Others might have been
the first to make the inventions covered by each of our or our
licensors pending patent applications and issued patents
and might have been the first to file patent applications for
these inventions. In addition, because patent applications can
take many years to issue, there may be currently pending
applications, unknown to us or our licensors, which may later
result in issued patents that cover the production, manufacture,
commercialization, formulation or use of our product candidates.
In addition, the production, manufacture, commercialization,
formulation or use of our product candidates may infringe
existing patents of which we are not aware. Defending ourselves
against third-party claims, including litigation in particular,
would be costly and time consuming and would divert
managements attention from our business, which could lead
to delays in our development or commercialization efforts. If
third parties are successful in their claims, we might have to
pay substantial damages or take other actions that are adverse
to our business.
As a result of intellectual property infringement claims, or to
avoid potential claims, we might:
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be prohibited from selling or licensing any product that we may
develop unless the patent holder licenses the patent to us,
which the patent holder is not required to do; |
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be required to pay substantial royalties or grant a cross
license to our patents to another patent holder; or |
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be required to redesign the formulation of a product candidate
so it does not infringe, which may not be possible or could
require substantial funds and time. |
S-17
Risk Related to Regulatory Approval of Our Product
Candidates
If we are not able to obtain required regulatory
approvals, we will not be able to commercialize our product
candidates, and our ability to generate revenue will be
materially impaired.
Our product candidates and the activities associated with their
development and commercialization are subject to comprehensive
regulation by the FDA, and other regulatory agencies in the
United States and by comparable authorities in other countries.
Failure to obtain regulatory approval for a product candidate
will prevent us from commercializing the product candidate. We
have not received regulatory approval to market any of our
product candidates in any jurisdiction and have only limited
experience in preparing and filing the applications necessary to
gain regulatory approvals. The process of obtaining regulatory
approvals is expensive, often takes many years, if approval is
obtained at all, and can vary substantially based upon the type,
complexity and novelty of the product candidates involved.
Changes in the regulatory approval policy during the development
period, changes in or the enactment of additional regulations or
statutes, or changes in regulatory review for each submitted
product application, may cause delays in the approval or
rejection of an application. Even if the FDA approves a product
candidate, the approval may impose significant restrictions on
the indicated uses, conditions for use, labeling, advertising,
promotion, marketing and/or production of such product, and may
impose ongoing requirements for post-approval studies, including
additional research and development and clinical trials. The FDA
also may impose various civil or criminal sanctions for failure
to comply with regulatory requirements, including withdrawal of
product approval.
Furthermore, the approval procedure and the time required to
obtain approval varies among countries and can involve
additional testing beyond that required by the FDA. Approval by
one regulatory authority does not ensure approval by regulatory
authorities in other jurisdictions.
The FDA has substantial discretion in the approval process and
may refuse to accept any application or may decide that our data
are insufficient for approval and require additional
preclinical, clinical or other studies. For example, we believe
that if the results of our ongoing Phase III clinical trial of
Acapodene for the reduction in the incidence of prostate cancer
in men with high grade PIN are sufficiently positive, that trial
will be sufficient to serve as a single pivotal Phase III
clinical trial for this indication. We submitted our plan for
the Phase III clinical trial to the FDA under an SPA, filed a
revised SPA in response to comments from the FDA on our initial
filing, and received a response letter from the FDA related to
the SPA in September 2005. An SPA is designed to facilitate the
FDAs review and approval of drug products by allowing the
agency to evaluate the proposed design and size of clinical
trials that are intended to form the primary basis for
determining a drug products efficacy. If agreement is
reached with the FDA, an SPA documents the terms and conditions
under which the design of the subject trial will be adequate for
submission of the effectiveness portion of an NDA. We agree with
and intend to implement the FDAs September 2005
recommendations under the SPA, which we expect will be
sufficient to support the submission of the effectiveness
portion of an NDA. However, there are circumstances under which
we may not receive the benefits of the SPA, notably including if
the FDA subsequently identifies a substantial scientific issue
essential to determining the products safety or efficacy.
In addition, varying interpretations of the data obtained from
preclinical and clinical testing could delay, limit or prevent
regulatory approval of a product candidate. Furthermore, even if
we file an application with the FDA for marketing approval of a
product candidate, it may not result in marketing approval from
the FDA.
We do not expect to receive regulatory approval for the
commercial sale of any of our product candidates that are in
development for the next few years. The inability to obtain FDA
approval or approval from comparable authorities in other
countries for such candidates would prevent us from
commercializing our product candidates in the United States or
other countries. See the section entitled
Business Government Regulation in our
Annual Report on Form 10-K, as amended,
S-18
filed with the Securities and Exchange Commission, for
additional information regarding risks associated with approval,
as well as risks related to post-approval requirements.
Risks Related to Commercialization
The commercial success of any products that we may develop
will depend upon the degree of market acceptance among
physicians, patients, health care payors and the medical
community.
Any products that we may develop may not gain market acceptance
among physicians, patients, health care payors and the medical
community. If these products do not achieve an adequate level of
acceptance, we may not generate material product revenues, and
we may not become profitable. The degree of market acceptance of
our product candidates, if approved for commercial sale, will
depend on a number of factors, including:
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the prevalence and severity of any side effects; |
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potential advantages over alternative treatments; |
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the ability to offer our product candidates for sale at
competitive prices; |
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relative convenience and ease of administration; |
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the strength of marketing and distribution support; and |
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sufficient third-party coverage or reimbursement. |
Our only marketed product generating revenue is Fareston.
Fareston is subject to a number of risks that may cause sales of
Fareston to continue to decline.
Fareston is currently our only marketed product generating
sales. Sales of Fareston in the United States have been
declining. Continued sales of Fareston could be impacted by many
factors. The occurrence of one or more of the following risks
may cause sales of Fareston to decline:
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the loss of the availability of Orions website to market
Fareston, which is an important source of advertising; |
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the loss of one or more of our three largest wholesale drug
distributors, which accounted for approximately 96% of our
revenue generated from the sale of Fareston for the six months
ended June 30, 2005; |
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the continued success of competing products, including aromatase
inhibitors; |
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the loss of coverage or reimbursement for Fareston from Medicare
and Medicaid, private health insurers or other third-party
payors; |
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exposure to product liability claims related to the commercial
sale of Fareston, which may exceed our product liability
insurance; |
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the failure of Orion to maintain regulatory filings or comply
with applicable FDA requirements with respect to Fareston; |
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the ability of third parties to market and sell generic
toremifene products that will compete with Fareston for the
treatment of breast cancer after the composition of matter
patents that we license from Orion expire in the United States
in 2009; |
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the loss of Orion, upon which we rely as a single source, as our
supplier of Fareston; and |
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our inability to manufacture Fareston until Orions patents
with respect to the composition of matter of toremifene expire
if Orion terminates our license and supply agreement due to our
uncured material breach or bankruptcy. |
S-19
If we are unable to expand our sales and marketing
capabilities or enter into agreements with third parties to
market and sell our product candidates, we may be unable to
generate product revenue from such candidates.
We have limited experience as a company in the sales, marketing
and distribution of pharmaceutical products. There are risks
involved with building our own sales and marketing capabilities,
as well as entering into arrangements with third parties to
perform these services. For example, building a sales force is
expensive and time-consuming and could delay any launch of a
product candidate. In addition, to the extent that we enter into
arrangements with third parties to perform sales, marketing and
distribution services, our product revenues are likely to be
lower than if we market and sell any products that we develop
ourselves.
If we are unable to obtain adequate coverage and
reimbursement from third-party payors for products we sell at
acceptable prices, our revenues and prospects for profitability
will suffer.
Many patients will not be capable of paying for any products
that we may develop and will rely on Medicare and Medicaid,
private health insurers and other third-party payors to pay for
their medical needs. If third-party payors do not provide
coverage or reimbursement for any products that we may develop,
our revenues and prospects for profitability may suffer. In
December 2003, the President of the United States signed into
law legislation creating a prescription drug benefit program for
Medicare recipients. The prescription drug program established
by the legislation may have the effect of reducing the prices
that we are able to charge for products we develop and sell
through the program. This prescription drug legislation may also
cause third-party payors other than the federal government,
including the states under the Medicaid program, to discontinue
coverage for products that we may develop or to lower the amount
that they pay.
State Medicaid programs generally have outpatient prescription
drug coverage, subject to state regulatory restrictions, for the
population eligible for Medicaid. The availability of coverage
or reimbursement for prescription drugs under private health
insurance and managed care plans varies based on the type of
contract or plan purchased.
A primary trend in the United States health care industry is
toward cost containment. In addition, in some foreign countries,
particularly the countries of the European Union, the pricing of
prescription pharmaceuticals is subject to governmental control.
In these countries, pricing negotiations with governmental
authorities can take six to 12 months or longer after the
receipt of regulatory marketing approval for a product. To
obtain reimbursement or pricing approval in some countries, we
may be required to conduct a clinical trial that compares the
cost effectiveness of our product candidates or products to
other available therapies. The conduct of such a clinical trial
could be expensive and result in delays in our
commercialization. Third-party payors are challenging the prices
charged for medical products and services, and many third-party
payors limit reimbursement for newly-approved health care
products. In particular, third-party payors may limit the
indications for which they will reimburse patients who use any
products that we may develop or products we sell. Cost-control
initiatives could decrease the price we might establish for
products that we may develop or that we sell, which would result
in lower product revenues to us.
Another development that may affect the pricing of drugs is
proposed Congressional action regarding drug reimportation into
the United States. The Medicare Prescription Drug, Improvement
and Modernization Act of 2003 gives discretion to the Secretary
of Health and Human Services to allow drug reimportation into
the United States under some circumstances from foreign
countries, including countries where the drugs are sold at a
lower price than in the United States. Proponents of drug
reimportation may attempt to pass legislation which would
directly allow reimportation under certain circumstances. If
legislation or regulations were passed allowing the
reimportation of drugs, they could decrease the price we receive
for any products that we may develop, negatively affecting our
revenues and prospects for profitability.
S-20
If product liability lawsuits are brought against us, we
will incur substantial liabilities and may be required to limit
commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related
to the testing of our product candidates in human clinical
trials and will face an even greater risk if we commercially
sell any product that we may develop. If we cannot successfully
defend ourselves against claims that our product candidates or
products caused injuries, we will incur substantial liabilities.
Regardless of merit or eventual outcome, liability claims may
result in:
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decreased demand for any product candidates or products; |
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injury to our reputation; |
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withdrawal of clinical trial participants; |
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costs to defend the related litigation; |
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substantial monetary awards to trial participants or patients; |
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loss of revenue; and |
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the inability to commercialize any products for which we obtain
or hold approvals. |
We have product liability insurance that covers our clinical
trials and commercial products up to a $20 million annual
aggregate limit. Insurance coverage is increasingly expensive.
We may not be able to maintain insurance coverage at a
reasonable cost and we may not be able to obtain insurance
coverage that will be adequate to satisfy any liability that may
arise.
If our competitors are better able to develop and market
products than any products that we may develop, our commercial
opportunity will be reduced or eliminated.
We face competition from established pharmaceutical and
biotechnology companies, as well as from academic institutions,
government agencies and private and public research
institutions. Our commercial opportunities will be reduced or
eliminated if our competitors develop and commercialize products
that are safer, more effective, have fewer side effects or are
less expensive than any products that we may develop. In
addition, significant delays in the development of our product
candidates could allow our competitors to bring products to
market before us and impair our ability to commercialize our
product candidates.
Various products are currently marketed or sold and used
off-label for some of the diseases and conditions that we are
targeting, and a number of companies are or may be developing
new treatments. The occurrence of such off-label uses could
significantly reduce our ability to market and sell any products
that we may develop. For example, although there are no products
that have been approved by the FDA to treat multiple side
effects of advanced prostate cancer therapy, we are aware of a
number of drugs marketed by Eli Lilly, Merck, Aventis, Proctor
& Gamble, Wyeth Pharmaceuticals, Boehringer and Bristol
Myers Squibb that are prescribed off-label to treat single side
effects of this therapy, that external beam radiation is used to
treat breast pain and enlargement and that Amgen Inc. may be
developing a product candidate for the treatment of bone loss in
post-cancer patients. Similarly, while there are no drugs that
have been approved by the FDA for the treatment of muscle
wasting weight loss from cancer, there are drugs marketed by
Steris Laboratories and Savient Pharmaceuticals that are being
prescribed off-label for the treatment of some types of muscle
wasting weight loss from cancer. Testosterone and other anabolic
agents are used to treat involuntary weight loss in patients who
have acute muscle wasting. In addition, there may be product
candidates of which we are not aware at an earlier stage of
development that may compete with our product candidates. If any
are successfully developed and approved, they could compete
directly with our product candidates. This could result in
reduced sales and pricing pressure on our product candidates, if
approved, which in turn would reduce our ability to generate
revenue and have a negative impact on our results of operations.
S-21
Many of our competitors have significantly greater financial
resources and expertise in research and development,
manufacturing, preclinical testing, conducting clinical trials,
obtaining regulatory approvals and marketing approved products
than we do. Smaller or early-stage companies may also prove to
be significant competitors, particularly through collaborative
arrangements with large and established companies. These third
parties compete with us in recruiting and retaining qualified
scientific and management personnel, establishing clinical trial
sites and patient registration for clinical trials, as well as
in acquiring technologies and technology licenses complementary
to our programs or advantageous to our business.
Risks Related to Employees and Growth
If we fail to attract and keep senior management and key
scientific personnel, we may be unable to successfully develop
or commercialize our product candidates.
Our success depends on our continued ability to attract, retain
and motivate highly qualified management, clinical and
scientific personnel and on our ability to develop and maintain
important relationships with leading academic institutions,
clinicians and scientists. If we are not able to attract and
keep senior management and key scientific personnel,
particularly Dr. Mitchell S. Steiner, we may not be able to
successfully develop or commercialize our product candidates.
All of our employees are at-will employees and can terminate
their employment at any time. We do not carry key
person insurance covering members of senior management,
other than $15 million of insurance covering
Dr. Steiner.
We will need to hire additional employees in order to
continue our clinical trials and commercialize our product
candidates. Any inability to manage future growth could harm our
ability to commercialize our product candidates, increase our
costs and adversely impact our ability to compete
effectively.
In order to continue our clinical trials and commercialize our
product candidates, we will need to expand the number of our
managerial, operational, financial and other employees. We
currently anticipate that we will need between 150 and 250
additional employees by the time that Acapodene or ostarine is
initially commercialized, including 50 to 80 sales
representatives. While to date we have not experienced
difficulties in recruiting and hiring qualified individuals, the
competition for qualified personnel in the biotechnology field
is intense.
Future growth will impose significant added responsibilities on
members of management, including the need to identify, recruit,
maintain and integrate additional employees. Our future
financial performance and our ability to commercialize our
product candidates and to compete effectively will depend, in
part, on our ability to manage any future growth effectively.
Risks Related to this Offering and Our Common Stock
Market volatility may cause our stock price and the value
of your investment to decline.
The market prices for securities of biotechnology companies in
general have been highly volatile and may continue to be highly
volatile in the future. The following factors, in addition to
other risk factors described in this section, may have a
significant impact on the market price of our common stock:
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adverse results or delays in our clinical trials; |
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the timing of achievement of our clinical, regulatory and other
milestones, such as the commencement of clinical development,
the completion of a clinical trial or the receipt of regulatory
approval; |
S-22
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announcement of FDA approval or non-approval of our product
candidates or delays in the FDA review process; |
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actions taken by regulatory agencies with respect to our product
candidates or products, our clinical trials or our sales and
marketing activities; |
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the commercial success of any product approved by the FDA or its
foreign counterparts; |
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the terms and timing of any collaborative, licensing or other
arrangements that we may establish; |
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regulatory developments in the United States and foreign
countries; |
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changes in the structure of health care payment systems; |
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any intellectual property infringement lawsuit involving us; |
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announcements of technological innovations or new products by us
or our competitors; |
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market conditions for the biotechnology or pharmaceutical
industries in general; |
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actual or anticipated fluctuations in our results of operation; |
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changes in financial estimates or recommendations by securities
analysts; |
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sales of large blocks of our common stock; |
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sales of our common stock by our executive officers, directors
and significant stockholders; |
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changes in accounting principles; and |
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the loss of any of our key scientific or management personnel. |
The stock markets in general, and the markets for biotechnology
stocks in particular, have experienced significant volatility
that has often been unrelated to the operating performance of
particular companies. These broad market fluctuations may
adversely affect the trading price of our common stock. In the
past, class action litigation has often been instituted against
companies whose securities have experienced periods of
volatility in market price. Any such litigation brought against
us could result in substantial costs, which would hurt our
financial condition and results of operations and divert
managements attention and resources, which could result in
delays of our clinical trials or commercialization efforts.
Our officers, directors and largest stockholders will
maintain the ability to control all matters submitted to
stockholders for approval.
As of June 30, 2005, our officers, directors and holders of
5% or more of our outstanding common stock beneficially owned
approximately 79% of our outstanding common stock. As a result,
these stockholders, acting together, will be able to control all
matters requiring approval by our stockholders, including the
election of directors and the approval of mergers or other
business combination transactions. The interests of this group
of stockholders may not always coincide with our interests or
the interests of other stockholders.
Anti-takeover provisions in our charter documents and
under Delaware law could make an acquisition of us, which may be
beneficial to our stockholders, more difficult and may prevent
attempts by our stockholders to replace or remove our current
management.
Provisions in our certificate of incorporation and our bylaws
may delay or prevent an acquisition of us or a change in our
management. In addition, these provisions may frustrate or
prevent any attempts by our stockholders to replace or remove
our current management by making it more difficult for
stockholders to replace members of our Board of Directors.
Because our Board of Directors is responsible for appointing the
members of our management team, these provisions
S-23
could in turn affect any attempt by our stockholders to replace
current members of our management team. These provisions include:
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a classified Board of Directors; |
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a prohibition on actions by our stockholders by written consent; |
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the ability of our Board of Directors to issue preferred stock
without stockholder approval, which could be used to institute a
poison pill that would work to dilute the stock
ownership of a potential hostile acquirer, effectively
preventing acquisitions that have not been approved by our Board
of Directors; and |
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limitations on the removal of directors. |
Moreover, because we are incorporated in Delaware, we are
governed by the provisions of Section 203 of the Delaware
General Corporation Law, which prohibits a person who owns in
excess of 15% of our outstanding voting stock from merging or
combining with us for a period of three years after the date of
the transaction in which the person acquired in excess of 15% of
our outstanding voting stock, unless the merger or combination
is approved in a prescribed manner. Finally, these provisions
establish advance notice requirements for nominations for
election to our Board of Directors or for proposing matters that
can be acted upon at stockholder meetings. These provisions
would apply even if the offer may be considered beneficial by
some stockholders.
We have broad discretion in the use of the net proceeds
from this offering and may not use them effectively.
Our management will have broad discretion in the application of
the net proceeds from this offering and could spend the proceeds
in ways that do not necessarily improve our results of
operations or enhance the value of our common stock. The failure
by our management to apply these funds effectively could result
in financial losses that could have a material adverse effect on
our business, cause the price of our common stock to decline and
delay the development of our product candidates.
A significant portion of our total outstanding shares are
restricted from immediate resale but may be sold into the market
in the near future. This could cause the market price of our
common stock to drop significantly, even if our business is
doing well.
For the 12-month period ended September 30, 2005, the
average daily trading volume of our common stock on the Nasdaq
National Market was less than 41,000 shares. As a result,
future sales of a substantial number of shares of our common
stock in the public market, or the perception that such sales
may occur, could adversely affect the then-prevailing market
price of our common stock. As of September 30, 2005, we had
24,666,133 shares of common stock outstanding.
In connection with this offering, all of our executive officers
and directors and their affiliated entities have entered into
lock-up agreements with the underwriters of this offering. As a
result of these lock-up agreements, approximately
17.1 million shares are subject to contractual restriction
on resale through the date 90 days after the date of this
prospectus supplement.
The market price for shares of our common stock may drop
significantly if stockholders subject to the lock-up agreements
sell a substantial number of shares when the restrictions on
resale lapse, or if the underwriters waive the lock-up
agreements and allow the stockholders to sell some or all of
their shares. Based on information currently available to us,
all of the shares to be outstanding after this offering will be
eligible for sale in the public market following expiration of
the lock-up agreements in connection with this offering, subject
in some cases to volume and other limitations under federal
securities laws.
S-24
Moreover, J.R. Hyde, III, Oracle Partners, L.P. and Memphis
Biomed Ventures I, L.P., three of our largest stockholders,
and their affiliates, who hold in the aggregate approximately
11.1 million shares of common stock, have rights, subject
to some conditions, to require us to file registration
statements covering their shares or to include their shares in
registration statements that we may file for ourselves or other
stockholders. Additionally, all shares of common stock that we
may issue under our employee benefit plans can be freely sold in
the public market upon issuance.
S-25
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the
documents incorporated by reference include and incorporate
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These
statements involve known and unknown risks, uncertainties and
other important factors which may cause our actual results,
performance or achievements to be materially different from any
future results, performances or achievements expressed or
implied by the forward-looking statements. Forward-looking
statements include statements about:
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the anticipated progress of our research, development and
clinical programs; |
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our ability to market, commercialize and achieve market
acceptance for our product candidates or products that we may
develop; |
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our ability to generate additional product candidates for
clinical testing; |
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our ability to protect our intellectual property and operate our
business without infringing upon the intellectual property
rights of others; and |
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our estimates regarding the sufficiency of our cash resources. |
In some cases, you can identify forward-looking statements by
terms such as anticipates, believes,
could, estimates, expects,
intends, may, plans,
potential, predicts,
projects, should, will,
would and similar expressions intended to identify
forward-looking statements. Forward-looking statements reflect
our current views with respect to future events, are based on
assumptions and subject to risks, uncertainties and other
important factors. We discuss many of these risks, uncertainties
and other important factors in this prospectus supplement in
greater detail under the heading Risk Factors. Given
these risks, uncertainties and other important factors, you
should not place undue reliance on these forward-looking
statements. Also, forward-looking statements represent our
estimates and assumptions only as of the date of this prospectus
supplement. You should read this prospectus supplement, the
accompanying prospectus and the documents that we incorporate by
reference and have filed as exhibits to the registration
statement, of which this prospectus supplement is a part,
completely and with the understanding that our actual future
results may be materially different from what we expect.
Except as required by law, we assume no obligation to update any
forward-looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in
any forward-looking statements, even if new information becomes
available in the future.
S-26
USE OF PROCEEDS
We estimate that our net proceeds from the sale of
5,000,000 shares of common stock in this offering will be
approximately $38.8 million, and $44.7 million if the
underwriters exercise their over-allotment option in full, based
upon an assumed price to public of $8.36 per share and
after deducting estimated underwriting discounts and commissions
and estimated offering expenses payable by us.
We expect to use the net proceeds from this offering to fund
clinical development and other research and development
activities and for working capital and general corporate
purposes. In addition, we may use a portion of the net proceeds
from this offering to acquire equipment, products, technologies
or businesses, although we currently have no commitments or
agreements relating to any of these types of transactions. We
believe that the net proceeds from this offering, our current
cash resources, interest on these funds and product revenue from
the sale of Fareston will be sufficient to meet our projected
operating requirements through the first half of 2007.
While we have estimated the particular uses for the net proceeds
to be received upon the completion of this offering, we cannot
specify these uses with certainty. Accordingly, our management
will have broad discretion in the application of the net
proceeds, and investors will be relying on the judgment of our
management regarding the application of the proceeds of this
offering. Pending these uses, we plan to invest the net proceeds
in short-term, interest bearing obligations, investment grade
instruments, certificates of deposit or direct or guaranteed
obligations of the United States. The goal with respect to the
investment of these net proceeds is capital preservation and
liquidity so that such funds are readily available to fund our
research and development operations.
PRICE RANGE OF OUR COMMON STOCK
Since February 3, 2004, our common stock has been quoted on
the Nasdaq National Market under the symbol GTXI.
The following table sets forth, for the periods indicated, the
reported high and low closing sale prices of our common stock on
the Nasdaq National Market:
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Year ended December 31, 2004 |
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High | |
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Low | |
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First quarter (from
February 3, 2004)
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$ |
12.90 |
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$ |
9.67 |
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Second quarter
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14.14 |
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10.41 |
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Third quarter
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11.66 |
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8.51 |
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Fourth quarter
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14.86 |
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11.15 |
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Year ending December 31, 2005 |
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High | |
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Low | |
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First quarter
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$ |
13.66 |
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$ |
9.10 |
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Second quarter
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11.48 |
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8.68 |
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Third quarter
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12.00 |
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8.84 |
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Fourth quarter (through
October 6, 2005)
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9.46 |
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8.36 |
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The reported last sale price of our common stock on the Nasdaq
National Market on October 6, 2005 was $8.36 per
share. As of August 31, 2005, there were approximately 55
holders of record and approximately 2,700 beneficial holders of
our common stock.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common
stock. We currently intend to retain earnings, if any, to
support the development of our business and do not anticipate
paying cash dividends for the foreseeable future.
S-27
CAPITALIZATION
The following table sets forth our capitalization as of
June 30, 2005:
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on an actual basis; and |
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on an as adjusted basis to reflect the sale by us in this
offering of 5,000,000 shares of common stock at an assumed price
to public of $8.36 per share, after deducting estimated
underwriting discounts and commissions and estimated offering
expenses payable by us. |
The information in this table is based on shares outstanding as
of June 30, 2005 and excludes:
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1,238,374 shares of common stock underlying options outstanding
as of June 30, 2005 at a weighted-average exercise price of
$8.01 per share; and |
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1,785,633 shares available for issuance or future grant under
our current stock option plans, as of June 30, 2005. |
You should read the information in the following table in
conjunction with the financial statements and the related notes
thereto and Managements Discussion and Analysis of
Financial Condition and Results of Operations incorporated
by reference in the accompanying prospectus.
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As of June 30, 2005 | |
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Actual | |
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As adjusted | |
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(unaudited) | |
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(in thousands, except share | |
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data) | |
Cash and cash equivalents
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$ |
48,082 |
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$ |
86,912 |
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Stockholders equity:
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Common stock, par value $0.001 per
share; 60,000,000 shares authorized and 24,664,716 shares issued
and outstanding, actual; 60,000,000 shares authorized and
29,664,716 shares issued and outstanding, as adjusted
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25 |
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30 |
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Deferred stock compensation
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(2,286 |
) |
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(2,286 |
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Additional paid-in capital
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224,063 |
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262,888 |
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Accumulated deficit
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(176,530 |
) |
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(176,530 |
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Total stockholders equity
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45,272 |
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84,102 |
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Total capitalization
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$ |
45,272 |
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84,102 |
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S-28
DILUTION
Our net tangible book value as of June 30, 2005 was
approximately $45.3 million, or approximately $1.84 per
share. Net tangible book value per share is equal to the amount
of our total tangible assets, less total liabilities, divided by
the number of shares of common stock outstanding as of
June 30, 2005. Dilution in net tangible book value per
share represents the difference between the amount per share
paid by purchasers of shares of common stock in this offering
and the net tangible book value per share of our common stock
immediately afterwards. After giving effect to the sale of
5,000,000 shares of common stock in this offering at an
assumed price to public of $8.36 per share and after deducting
the estimated underwriting discounts and commissions and
estimated offering expenses payable by us, our net tangible book
value as of June 30, 2005 would have been approximately
$84.1 million, or $2.84 per share. This represents an
immediate increase in net tangible book value of $1.00 per
share to existing stockholders and an immediate dilution of
$5.52 per share to new investors purchasing shares of
common stock in this offering. The following table illustrates
this dilution:
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Assumed price to public per share
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$ |
8.36 |
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Net tangible book value per share
as of June 30, 2005
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$ |
1.84 |
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Increase per share attributable to
new investors
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1.00 |
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Net tangible book value per share
after this offering
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2.84 |
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Dilution per share to new investors
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$ |
5.52 |
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The foregoing table does not take into effect further dilution
to new investors that could occur upon the exercise of
outstanding options having a per share exercise price less than
the offering price per share in this offering. As of
June 30, 2005, there were:
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1,238,374 shares of common stock underlying options outstanding
at a weighted-average exercise price of $8.01 per share; and |
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1,785,633 shares available for issuance or future grant under
our current stock option plans. |
S-29
UNDERWRITING
GTx and the underwriters named below have entered into an
underwriting agreement with respect to the shares being offered.
Subject to certain conditions, each underwriter has severally
agreed to purchase the number of shares indicated in the
following table. Lazard Capital Markets LLC and SG Cowen &
Co., LLC are the representatives of the underwriters.
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Number of | |
Underwriters |
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Shares | |
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Lazard Capital Markets LLC
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SG Cowen & Co., LLC
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Total
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5,000,000 |
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The underwriters are committed to take and pay for all of the
shares being offered, if any are taken, other than the shares
covered by the option described below unless and until this
option is exercised.
If the underwriters sell more shares than the total number set
forth in the table above, the underwriters have an option to buy
up to an additional 750,000 shares from GTx to cover such
sales. They may exercise that option for 30 days. If any
shares are purchased pursuant to this option, the underwriters
will severally purchase shares in approximately the same
proportion as set forth in the table above.
The following table shows the per share and total underwriting
discounts and commissions to be paid to the underwriters by GTx.
Such amounts are shown assuming both no exercise and full
exercise of the underwriters option to purchase 750,000
additional shares.
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Paid by GTx | |
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No Exercise | |
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Full Exercise | |
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Per Share
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$ |
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$ |
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Total
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$ |
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$ |
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Shares sold by the underwriters to the public will initially be
offered at the initial public offering price set forth on the
cover of this prospectus supplement. Any shares sold by the
underwriters to securities dealers may be sold at a discount of
up to
$ per
share from the initial public offering price. Any such
securities dealers may resell any shares purchased from the
underwriters to certain other brokers or dealers at a discount
of up to
$ per
share from the initial public offering price. If all of the
shares are not sold at the initial public offering price, the
representatives may change the offering price and the other
selling terms.
GTx and each of its directors and executive officers and their
affiliated entities have agreed with the underwriters, subject
to certain exceptions, not to dispose of or hedge any of their
common stock or securities convertible into or exchangeable for
shares of common stock during the period from the date of this
prospectus supplement continuing through the date 90 days
after the date of this prospectus supplement, except with the
prior written consent of the representatives of the
underwriters. This agreement does not apply to any existing
employee benefit plans of GTx.
The 90-day restricted period described in the preceding
paragraph will be automatically extended if: (1) during the
last 17 days of the 90-day restricted period GTx issues an
earnings release or announces material news or a material event;
or (2) prior to the expiration of the 90-day restricted
period, GTx announces that it will release earnings results
during the 15-day period following the last day of the 90-day
period, in which case the restrictions described in the
preceding paragraph will continue to apply until the expiration
of the 18-day period beginning on the issuance of the earnings
release or the announcement of the material news or material
event.
S-30
J.R. Hyde, III, our chairman and the beneficial owner of
approximately 39.8% of our common stock as of September 30,
2005, has indicated an initial interest in purchasing, directly
or through his affiliates, up to $10.0 million worth of
shares of our common stock in this offering at the price to
public, but has no legal obligation to do so.
In connection with the offering, the underwriters may purchase
and sell shares of common stock in the open market. These
transactions may include short sales, stabilizing transactions
and purchases to cover positions created by short sales. Short
sales involve the sale by the underwriters of a greater number
of shares than they are required to purchase in the offering.
Covered short sales are sales made in an amount not
greater than the underwriters option to purchase
additional shares from GTx in the offering. The underwriters may
close out any covered short position by either exercising their
option to purchase additional shares or purchasing shares in the
open market. In determining the source of shares to close out
the covered short position, the underwriters will consider,
among other things, the price of shares available for purchase
in the open market as compared to the price at which they may
purchase additional shares pursuant to the option granted to
them. Naked short sales are any sales in excess of
such option. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of
the common stock in the open market after pricing that could
adversely affect investors who purchase in the offering.
Stabilizing transactions consist of various bids for or
purchases of common stock made by the underwriters in the open
market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because the
representatives have repurchased shares sold by or for the
account of such underwriter in stabilizing or short-covering
transactions.
Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or retarding a decline in the
market price of GTxs stock, and together with the
imposition of the penalty bid, may stabilize, maintain or
otherwise affect the market price of the common stock. As a
result, the price of the common stock may be higher than the
price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued at any time.
These transactions may be effected on the Nasdaq National
Market, in the over-the-counter market or otherwise.
Any underwriters who are qualified market makers on the Nasdaq
National Market may engage in passive market making transactions
in the securities on the Nasdaq National Market in accordance
with Rule 103 of Regulation M under the Securities
Exchange Act of 1934, during the business day prior to the
pricing of the offering, before the commencement of offers or
sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified
as passive market makers. In general, a passive market maker
must display its bid at a price not in excess of the highest
independent bid for such security; if all independent bids are
lowered below the passive market makers bid, however, the
passive market makers bid must then be lowered when
certain purchase limits are exceeded.
Each of the underwriters has represented and agreed that:
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it has not made or will not make an offer of shares to the
public in the United Kingdom within the meaning of
section 102B of the Financial Services and Markets Act 2000
(as amended) (FSMA) except to legal entities which are
authorised or regulated to operate in the financial markets or,
if not so authorised or regulated, whose corporate purpose is
solely to invest in securities or otherwise in circumstances
which do not require the publication by GTx of a prospectus
pursuant to the Prospectus Rules of the Financial Services
Authority (FSA); |
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it has only communicated or caused to be communicated and will
only communicate or cause to be communicated an invitation or
inducement to engage in investment activity |
S-31
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(within the meaning of section 21 of FSMA) to persons who
have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 or in
circumstances in which section 21 of FSMA does not apply to GTx;
and |
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it has complied with, and will comply with all applicable
provisions of FSMA with respect to anything done by it in
relation to the shares in, from or otherwise involving the
United Kingdom. |
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a Relevant
Member State), each underwriter has represented and agreed that
with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the
Relevant Implementation Date) it has not made and will not make
an offer of shares to the public in that Relevant Member State
prior to the publication of a prospectus in relation to the
shares which has been approved by the competent authority in
that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with
the Prospectus Directive, except that it may, with effect from
and including the Relevant Implementation Date, make an offer of
shares to the public in that Relevant Member State at any time:
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to legal entities which are authorised or regulated to operate
in the financial markets or, if not so authorised or regulated,
whose corporate purpose is solely to invest in securities; |
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to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than
43,000,000 and
(3) an annual net turnover of more than
50,000,000, as shown
in its last annual or consolidated accounts; or |
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in any other circumstances which do not require the publication
by GTx of a prospectus pursuant to Article 3 of the
Prospectus Directive. |
For the purposes of this provision, the expression an
offer of shares to the public in relation to any
shares in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the shares to be offered so as to enable an
investor to decide to purchase or subscribe the shares, as the
same may be varied in that Relevant Member State by any measure
implementing the Prospectus Directive in that Relevant Member
State and the expression Prospectus Directive means Directive
2003/71/ EC and includes any relevant implementing measure in
each Relevant Member State.
The shares may not be offered or sold by means of any document
other than to persons whose ordinary business is to buy or sell
shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap. 32) of Hong
Kong, and no advertisement, invitation or document relating to
the shares may be issued, whether in Hong Kong or elsewhere,
which is directed at, or the contents of which are likely to be
accessed or read by, the public in Hong Kong (except if
permitted to do so under the securities laws of Hong Kong) other
than with respect to shares which are or are intended to be
disposed of only to persons outside Hong Kong or only to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap. 571) of Hong Kong and any
rules made thereunder.
Neither this prospectus supplement nor the accompanying
prospectus has been registered as a prospectus with the Monetary
Authority of Singapore. Accordingly, this prospectus supplement,
the accompanying prospectus and any other document or material
in connection with the offer or sale, or invitation or
subscription or purchase, of the shares may not be circulated or
distributed, nor may the shares be offered or sold, or be made
the subject of an invitation for subscription or purchase,
whether directly or indirectly, to persons in Singapore other
than under circumstances in which such
S-32
offer, sale or invitation does not constitute an offer or sale,
or invitation for subscription or purchase, of the shares to the
public in Singapore.
The shares have not been and will not be registered under the
Securities and Exchange Law of Japan (the Securities and
Exchange Law) and each underwriter has agreed that it will not
offer or sell any shares, directly or indirectly, in Japan or
to, or for the benefit of, any resident of Japan (which term as
used herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan),
or to others for re-offering or resale, directly or indirectly,
in Japan or to a resident of Japan, except pursuant to an
exemption from the registration requirements of, and otherwise
in compliance with, the Securities and Exchange Law and any
other applicable laws, regulations and ministerial guidelines of
Japan.
GTx estimates that its share of the total expenses of the
offering, excluding underwriting discounts and commissions, will
be approximately $461,770.
GTx has agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities
Act of 1933.
In the ordinary course of its business, certain of the
underwriters and their respective affiliates have, from time to
time, performed, and may in the future perform, various
investment banking and financial advisory services for GTx, for
which they have received or will receive customary fees and
expenses.
VALIDITY OF COMMON STOCK
The validity of the common stock offered by this prospectus
supplement and the accompanying prospectus will be passed upon
for us by Cooley Godward LLP, Palo Alto, California. Certain
legal matters will also be passed upon for us by Bass, Berry
& Sims PLC, Memphis, Tennessee. Certain legal matters in
connection with this offering will be passed upon for the
underwriters by Wilmer Cutler Pickering Hale and Dorr LLP,
Boston, Massachusetts.
S-33
PROSPECTUS
GTx, INC.
$100,000,000
Common Stock
From time to time, we may sell common stock in one or more
offerings for an aggregate initial offering price of up to
$100,000,000.
We will provide the specific terms of any offering in one or
more supplements to this prospectus. You should read this
prospectus and any prospectus supplement, as well as any
documents incorporated by reference in this prospectus and any
prospectus supplement, carefully before you invest.
Our common stock is quoted on the Nasdaq National Market under
the trading symbol GTXI. On August 3, 2005, the
last reported sale price of our common stock on the Nasdaq
National Market was $11.50 per share.
THIS PROSPECTUS MAY NOT BE USED TO OFFER OR SELL ANY SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
If any underwriters are involved in the sale of any securities
with respect to which this prospectus is being delivered, the
names of such underwriters and any applicable commissions or
discounts will be set forth in a prospectus supplement. The net
proceeds we expect to receive from such sale will also be set
forth in a prospectus supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE
THE SECTION ENTITLED RISK FACTORS ON PAGE 2 OF THIS
PROSPECTUS.
The date of this prospectus is August 17, 2005
TABLE OF CONTENTS
GTX, INC.
GTx, Inc. is a biopharmaceutical company dedicated to the
discovery, development and commercialization of therapeutics for
serious mens health conditions. Our drug discovery and
development programs are focused on small molecules that
selectively modulate the effects of estrogens and androgens.
We have four clinical programs. We are developing Acapodene
(toremifene citrate) in two clinical programs in men: (1) a
pivotal Phase III clinical trial for the prevention of prostate
cancer in high risk men and (2) a pivotal Phase III
clinical trial for the treatment of serious side effects of
androgen deprivation therapy for advanced prostate cancer. In
our third clinical program, we and our partner, Ortho Biotech
Products, L.P., a subsidiary of Johnson & Johnson, are
developing andarine, a selective androgen receptor modulator, or
SARM, for cancer cachexia. We are working with Ortho Biotech to
progress andarine into a Phase II clinical trial. In our fourth
clinical program, we are developing our second SARM, ostarine,
for andropause and other chronic wasting conditions related to
aging, including frailty and sarcopenia. We also have the
exclusive right to market Fareston (toremifene citrate 60 mg)
tablets, which have been approved by the U.S. Food and Drug
Administration for the treatment of metastatic breast cancer, in
the United States. The active pharmaceutical ingredient in
Fareston is the same as in Acapodene, but at a different dose.
We were originally incorporated under the name Genotherapeutics,
Inc. in Tennessee in September 1997. We changed our name to GTx,
Inc. in 2001, and we reincorporated in Delaware in 2003. Our
principal executive office is located at 3 N. Dunlap Street, Van
Vleet Building, Memphis, Tennessee, and our telephone number is
(901) 523-9700. Our website address is www.gtxinc.com. The
information contained in our website is not a part of this
prospectus or any prospectus supplement.
Service marks, trademarks and trade names referred to in this
prospectus are the property of their respective owners.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission using a
shelf registration process. Under this shelf
registration process, we may sell common stock in one or more
offerings, up to a total dollar amount of $100,000,000. This
prospectus provides you with a general description of the
securities we may offer. Each time we sell common stock, we will
provide a prospectus supplement that will contain more specific
information about the terms of that offering. We may also add,
update or change in the prospectus supplement any of the
information contained in this prospectus. However, no prospectus
supplement will fundamentally change the terms that are set
forth in this prospectus or offer a security that is not
registered and described in this prospectus at the time of its
effectiveness. This prospectus, together with applicable
prospectus supplements, includes all material information
relating to this offering. If there is any inconsistency between
the information in this prospectus and the information in the
accompanying prospectus supplement, you should rely on the
information in the prospectus supplement. Please carefully read
both this prospectus and any prospectus supplement together with
the additional information described below under Where You
Can Find More Information.
You should rely only on the information we have provided or
incorporated by reference in this prospectus or any prospectus
supplement. We have not authorized anyone to provide you with
different information. No dealer, salesperson or other person is
authorized to give any information or to represent anything not
contained in this prospectus or any prospectus supplement. You
must not rely on any unauthorized information or representation.
This prospectus is an offer to sell only the securities offered
hereby, but only under circumstances and in jurisdictions where
it is lawful to do so. You should assume that the information in
this prospectus or any prospectus supplement is accurate only as
of the date on the front of the document and that any
information we have incorporated by reference is accurate only
as of the date of the document incorporated by reference,
regardless of the time of delivery of this prospectus or any
sale of a security.
Unless otherwise mentioned or unless the context requires
otherwise, all references in this prospectus to GTx,
we, our or similar references mean GTx,
Inc.
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RISK FACTORS
Investment in our securities involves a high degree of risk. You
should consider carefully the risk factors in any prospectus
supplement and in our filings with the Securities and Exchange
Commission, as well as other information in this prospectus and
any prospectus supplement and the documents incorporated by
reference herein or therein, before purchasing any of our
securities. Each of the risk factors could adversely affect our
business, operating results and financial condition, as well as
adversely affect the value of an investment in our securities.
FORWARD-LOOKING INFORMATION
This prospectus, any prospectus supplement and the documents
that we incorporate by reference contain statements indicating
expectations about future performance and other forward-looking
statements that involve risks and uncertainties. We usually use
words such as may, will,
should, expect, plan,
anticipate, believe,
estimate, predict, future,
intend, potential or
continue or the negative of these terms or similar
expressions to identify forward-looking statements. These
statements appear throughout this prospectus, any prospectus
supplement and the documents that we incorporate by reference
and are statements regarding our current intent, belief or
expectation, primarily with respect to our operations and
related industry developments. Examples of these statements
include, but are not limited to, statements regarding the
following: our current and anticipated clinical trials; the
progress of our research and development programs; our corporate
collaborations, including potential future licensing fees and
milestone and royalty payments; our research and development
expenses; protection of our intellectual property; sufficiency
of our cash resources; and our operations and legal risks. You
should not place undue reliance on these forward-looking
statements. Our actual results could differ materially from
those anticipated in these forward-looking statements for many
reasons. Important factors that could cause or contribute to
such differences include, but are not limited to, those
discussed in any prospectus supplement or in the documents we
incorporate by reference in this prospectus, particularly in the
section entitled Additional Factors That Might Affect
Future Results contained in our filings made with the
Securities and Exchange Commission from time to time. Any
forward-looking statement speaks only as of the date on which it
is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances
after the date on which the statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time
to time, and it is not possible for us to predict which factors
will arise. In addition, we cannot assess the impact of each
factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
statements.
USE OF PROCEEDS
Except as described in any prospectus supplement, we intend to
use the net proceeds from the sale of our common stock for
research and development and general corporate purposes. We may
also use a portion of the net proceeds to acquire or invest in
businesses, products and technologies that are complementary to
our own. Pending these uses, the net proceeds will be invested
in investment-grade, interest-bearing securities.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 60,000,000 shares of
common stock, $0.001 par value per share, and 5,000,000 shares
of preferred stock, $0.001 par value per share. As of
July 25, 2005, there were 24,664,716 shares of our common
stock outstanding and no shares of preferred stock outstanding.
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Common Stock
The holders of common stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the
stockholders and do not have cumulative voting rights. The
affirmative vote of the holders of a majority of the shares of
common stock entitled to vote on a matter is required to approve
the matter (except when a different vote is required by law,
Nasdaq rules, our certificate if incorporation or our bylaws),
and directors are elected by plurality vote. Subject to
preferences that may be applicable to any outstanding shares of
preferred stock, the holders of common stock are entitled to
receive ratably such dividends as may be declared by the board
of directors out of legally available funds. Upon our
liquidation, dissolution or winding up, holders of our common
stock are entitled to share ratably in all assets remaining
after payment of liabilities and the liquidation preferences of
any outstanding shares of preferred stock. Holders of common
stock have no preemptive rights and no right to convert their
common stock into any other securities. There are no redemption
or sinking fund provisions applicable to our common stock. All
outstanding shares of our common stock are, and all shares of
common stock that may be issued under this prospectus will be,
fully paid and non-assessable.
The foregoing summary description of our common stock is based
on the provisions of our certificate of incorporation and bylaws
and the applicable provisions of the Delaware General
Corporation Law. This information may not be complete in all
respects and is qualified entirely by reference to the
provisions of our certificate of incorporation, bylaws and the
Delaware General Corporation Law. For information on how to
obtain copies of our certificate of incorporation and bylaws,
see Where You Can Find More Information.
The rights of the holders of our common stock are subject to,
and may be adversely affected by, the rights of holders of
shares of any preferred stock that we may designate and issue in
the future.
Preferred Stock
Pursuant to our certificate of incorporation, our board of
directors has the authority, without further action by the
stockholders (unless such stockholder action is required by
applicable law or Nasdaq rules), to issue up to 5,000,000 shares
of preferred stock in one or more series, to establish from time
to time the number of shares to be included in each such series,
to fix the rights, preferences and privileges of the shares of
each wholly unissued series and any qualifications, limitations
or restrictions thereon, and to increase or decrease the number
of shares of any such series, but not below the number of shares
of such series then outstanding. Our board of directors may
authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power
or other rights of the holders of the common stock. The issuance
of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could,
among other things, have the effect of delaying, deferring or
preventing a change in control of us and may adversely affect
the market price of the common stock and the voting and other
rights of the holders of common stock. We have no present plans
to issue preferred stock.
Registration Rights
As of the date of this prospectus, holders of approximately
11,141,057 shares of our common stock are entitled to rights
with respect to the registration of those shares of common stock
under the Securities Act of 1933. If we propose to register any
of our securities under the Securities Act, either for our own
account or for the account of others, the holders of these
shares are entitled to notice of the registration and are
entitled to include, at our expense, their shares of common
stock in the registration and any related underwriting,
provided, among other conditions, that the underwriters may
limit the number of shares to be included in the registration.
In addition, the holders of certain of these shares may require
us, at our expense and subject to certain limitations, to file a
registration statement under the Securities Act with respect to
their shares of our common stock. These holders
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have waived these registration rights in connection with the
offerings that might be made under this registration statement.
Anti-Takeover Effects of Provisions of Delaware Law and Our
Charter Documents
Delaware Takeover Statute. We are subject to the
provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a
publicly-held Delaware corporation such as us from engaging in a
business combination with an interested stockholder for a period
of three years after the date of the transaction in which the
person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of
Section 203, a business combination includes a merger,
asset or stock sale or other transaction resulting in a
financial benefit to the interested stockholder, and an
interested stockholder is a person who, together with affiliates
and associates, owns, or within three years prior, did own, 15%
or more of our voting stock. Section 203 of the Delaware
General Corporation Law will generally have an anti-takeover
effect for transactions not approved in advance by our board of
directors, including discouraging attempts that might result in
a premium over the market price for the shares of common stock
held by our stockholders.
Charter Documents. Our certificate of incorporation and
bylaws provide that our board of directors be divided into three
classes of directors, with each class serving a staggered
three-year term. The classification system of electing directors
may tend to discourage a third party from making a tender offer
or otherwise attempting to obtain control of us and may maintain
the composition of our current board of directors, as the
classification of the board of directors generally increases the
difficulty of replacing a majority of directors. In addition,
our certificate of incorporation and bylaws:
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provide that any action required or permitted to be taken by our
stockholders must be effected at a duly called annual or special
meeting of stockholders and may not be effected by any consent
in writing; |
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establish advance notice requirements for nominations for
election to our board of directors or for proposing matters that
can be acted upon at a stockholder meeting; |
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provide that the authorized number of directors may be changed
only by resolution of the board of directors; and |
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provide that special meetings of our stockholders may be called
only by the chairman of our board of directors, our chief
executive officer or our board of directors pursuant to a
resolution adopted by a majority of the total number of
authorized directors. |
The Delaware corporate law statute provides generally that the
affirmative vote of a majority of the shares entitled to vote is
required to amend a corporations bylaws, unless a
corporations certificate of incorporation requires a
greater percentage or also confers the power upon the
corporations directors. Our bylaws may be amended or
repealed by:
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the affirmative vote of a majority of our directors then in
office; or |
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the affirmative vote of the holders of at least
66-2/3%
of the voting power of all then-outstanding shares of our
capital stock entitled to vote generally in the election of
directors. |
The provisions described in the preceding paragraph that are
included in our certificate of incorporation may only be amended
or repealed by the affirmative vote of a majority of our
directors and the affirmative vote of the holders of at least
662/3%
of the voting power of all then-outstanding shares of our
capital stock entitled to vote generally in the election of
directors.
These and other provisions contained in our certificate of
incorporation and bylaws could delay or discourage some types of
transactions involving an actual or potential change in our
control or change in our management, including transactions in
which stockholders might otherwise receive a
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premium for their shares over then current prices, and may limit
the ability of stockholders to remove current management or
approve transactions that stockholders may deem to be in their
best interests and, therefore, could adversely affect the price
of our common stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is
Computershare. Its address is 150 Royall Street, Canton, MA
02021.
PLAN OF DISTRIBUTION
We may sell the common stock through underwriters or dealers,
through agents, or directly to one or more purchasers. One or
more prospectus supplements will describe the terms of the
offering of the common stock, including:
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the name or names of any agents or underwriters; |
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the purchase price of the common stock and the proceeds we will
receive from the sale; |
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any over-allotment options under which underwriters may purchase
additional shares of common stock from us; |
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any agency fees or underwriting discounts and other items
constituting agents or underwriters compensation; |
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any discounts or concessions allowed or reallowed or paid to
dealers; and |
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any securities exchange or market on which the common stock may
be listed. |
Only underwriters named in the prospectus supplement are
underwriters of the common stock offered by the prospectus
supplement.
If underwriters are used in the sale, they will acquire the
common stock for their own account and may resell the common
stock 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 obligations
of the underwriters to purchase the common stock will be subject
to the conditions set forth in the applicable underwriting
agreement. We may offer the common stock to the public through
underwriting syndicates represented by managing underwriters or
by underwriters without a syndicate. Subject to certain
conditions, the underwriters will be obligated to purchase all
the common stock offered by the prospectus supplement if they
are to purchase any of such offered shares. Any public offering
price and any discounts or concessions allowed or reallowed or
paid to dealers may change from time to time. We may use
underwriters with whom we have a material relationship. We will
describe in the prospectus supplement naming the underwriter,
the nature of any such relationship.
We may sell the common stock directly or through agents we
designate from time to time. We will name any agent involved in
the offering and sale of the common stock and we will describe
any commissions we will pay the agent in the prospectus
supplement. Unless the prospectus supplement states otherwise,
our agent will act on a best-efforts basis for the period of its
appointment.
We may authorize agents or underwriters to solicit offers by
certain types of institutional investors 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. We will describe the conditions to these contracts and
the commissions we must pay for solicitation of these contracts
in the prospectus supplement.
We may provide agents and underwriters with indemnification
against certain civil liabilities, including liabilities under
the Securities Act, or contribution with respect to payments
that the agents
5
or underwriters may make with respect to such liabilities.
Agents and underwriters may engage in transactions with, or
perform services for, us in the ordinary course of business.
Any underwriter may engage in overallotment, stabilizing
transactions, short covering transactions and penalty bids in
accordance with Regulation M under the Securities Exchange
Act of 1934. Overallotment involves sales in excess of the
offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying shares of
common stock so long as the stabilizing bids do not exceed a
specified maximum price. Short covering transactions involve
exercise by underwriters of an over-allotment option or
purchases of the common stock in the open market after the
distribution is completed to cover short positions. Penalty bids
permit the underwriters to reclaim a selling concession from a
dealer when the shares of common stock originally sold by the
dealer are purchased in a short covering transaction. Those
activities may cause the price of the common stock to be higher
than it would otherwise be. If commenced, the underwriters may
discontinue any of the activities at any time.
Our common stock is quoted on the Nasdaq National Market. One or
more underwriters may make a market in our common stock, but the
underwriters will not be obligated to do so and may discontinue
market making at any time without notice. We cannot give any
assurance as to liquidity of the trading market for our common
stock.
Any underwriters who are qualified market makers on the Nasdaq
National Market may engage in passive market making transactions
in the securities on the Nasdaq National Market in accordance
with Rule 103 of Regulation M under the Securities
Exchange Act of 1934, during the five business days prior to the
pricing of the offering, before the commencement of offers or
sales of the securities. Passive market makers must comply with
applicable volume and price limitations and must be identified
as passive market makers. In general, a passive market maker
must display its bid at a price not in excess of the highest
independent bid for such security; if all independent bids are
lowered below the passive market makers bid, however, the
passive market makers bid must then be lowered when
certain purchase limits are exceeded.
In compliance with guidelines of the National Association of
Securities Dealers, or NASD, the maximum consideration or
discount to be received by any NASD member or independent broker
dealer may not exceed 8% of the aggregate amount of the
securities offered pursuant to this prospectus and any
applicable prospectus supplement.
LEGAL MATTERS
The validity of the securities being offered hereby will be
passed upon by Cooley Godward LLP, Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent registered public accounting
firm, has audited our financial statements included in our
Annual Report on Form 10-K for the year ended
December 31, 2004, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in
the registration statement. Our financial statements are
incorporated by reference in reliance on Ernst & Young
LLPs report, given on their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company and file annual, quarterly and
current reports, proxy statements and other information with the
Securities and Exchange Commission. We have filed with the
Securities and Exchange Commission a registration statement on
Form S-3 under the Securities Act with respect to the
common stock we are offering under this prospectus. This
prospectus does not contain all of the information set forth in
the registration statement and the exhibits to the registration
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statement. For further information with respect to us and the
common stock we are offering under this prospectus, we refer you
to the registration statement and the exhibits filed as a part
of the registration statement. You may read and copy the
registration statement, as well as our reports, proxy statements
and other information, at the Securities and Exchange
Commissions public reference room at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. You can request copies
of these documents by writing to the Securities and Exchange
Commission and paying a fee for the copying cost. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for
more information about the operation of the public reference
room. Our Securities and Exchange Commission filings are also
available at the Securities and Exchange Commissions
website at http://www.sec.gov.
The Securities and Exchange Commission allows us to
incorporate by reference information that we file
with it, which means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is an important part of this
prospectus. Information in this prospectus supersedes
information incorporated by reference that we filed with the
Securities and Exchange Commission prior to the date of this
prospectus, while information that we file later with the
Securities and Exchange Commission will automatically update and
supersede this information. We incorporate by reference into
this registration statement and prospectus the documents listed
below and any future filings we will make 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, after
the date of this prospectus but prior to the termination of the
offering of the securities covered by this prospectus, except in
each case for information contained in any such filing where we
indicate that such information is being furnished and is not to
be considered filed under the Securities Exchange
Act of 1934, as amended.
The following documents filed with the Securities and Exchange
Commission are incorporated by reference in this prospectus:
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our Annual Report on Form 10-K, as amended, for the year
ended December 31, 2004, filed with the Securities and
Exchange Commission on March 24, 2005; |
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our Quarterly Report on Form 10-Q, as amended, for the
quarter ended March 31, 2005, filed with the Securities and
Exchange Commission on April 29, 2005; |
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our Current Report on Form 8-K filed with the Securities
and Exchange Commission on February 1, 2005; |
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our Current Report on Form 8-K filed with the Securities
and Exchange Commission on February 2, 2005; |
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our Current Report on Form 8-K/ A filed with the Securities
and Exchange Commission on March 7, 2005; |
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our Current Report on Form 8-K filed with the Securities
and Exchange Commission on June 2, 2005; |
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our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2005, filed with the Securities and Exchange
Commission on July 27, 2005; |
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our Current Report on Form 8-K filed with the Securities
and Exchange Commission on August 12, 2005; and |
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the description of our common stock contained in our
registration statement on Form 8-A filed with the
Securities and Exchange Commission on January 13, 2004,
including all amendments and reports filed for the purpose of
updating such information. |
We will furnish without charge to you, upon written or oral
request, a copy of any or all of the documents incorporated by
reference, including exhibits to these documents. You should
direct any requests for documents to GTx, Inc., Attention:
Corporate Secretary, 3 N. Dunlap Street, Van Vleet Building,
Memphis, TN 38163. Our phone number is (901) 523-9700.
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No dealer, salesperson or
other person is authorized to give any information or to
represent anything not contained in this prospectus supplement
or the accompanying prospectus. You must not rely on any
unauthorized information or representations. This prospectus
supplement is an offer to sell only the shares offered hereby,
but only under circumstances and in jurisdictions where it is
lawful to do so. The information contained in this prospectus
supplement and the accompanying prospectus is current only as of
their respective dates.
TABLE OF CONTENTS
Prospectus Supplement
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S-10 |
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S-26 |
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S-27 |
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S-27 |
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S-27 |
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S-28 |
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S-29 |
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S-30 |
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5,000,000 Shares
GTx, Inc.
Common Stock
Lazard Capital Markets
SG Cowen & Co.