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As filed with the Securities and Exchange Commission on May 26, 2010
Registration No. 333-_______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933
MELA SCIENCES, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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13-3986004 |
(State or other jurisdiction of
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(I.R.S. Employer |
incorporation or organization)
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Identification No.) |
50 South Buckhout Street, Suite 1
Irvington, New York 10533
(914) 591-3783
(Address, including zip code, and telephone number, including
area code, of Registrants principal executive offices)
Joseph V. Gulfo, M.D.
President and Chief Executive Officer
MELA Sciences, Inc.
50 South Buckhout Street, Suite 1
Irvington, New York 10533
(914) 591-3783
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy To:
Valerie A. Price, Esq.
Golenbock Eiseman Assor Bell & Peskoe LLP
437 Madison Avenue
New York, New York 10022
(212) 907-7300
Approximate date of commencement of proposed sale to the public: From time to time after the
effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following box. þ
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. o
If this Form is a registration statement pursuant to general Instruction I.D. or a post-effective
amendment thereto that shall become effective upon filing with the commission pursuant to Rule
462(e) under the Securities Act, check the following box, o
If this Form is a post-effective amendment to a registration statement filed pursuant to General
Instruction I.D. filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following box. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller Reporting Company o |
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(Do not check if a smaller reporting company) |
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CALCULATION OF REGISTRATION FEE
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Title of each class of |
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Amount to be |
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Proposed maximum aggregate |
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Amount of |
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securities to be registered (1) |
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registered (1) |
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offering price per unit (2) |
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registration fee (3) |
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Common Stock, par value $0.001 per share |
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Warrants |
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Units |
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Total |
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75,000,000 |
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5,347.50 |
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(1) |
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There are being registered hereunder such indeterminate number of
shares of common stock, such indeterminate number of warrants to
purchase common stock and such indeterminate number of units as
shall have an aggregate initial offering price not to exceed
$75,000,000. Any securities registered hereunder may be sold
separately or as units with other securities registered
hereunder. Pursuant to Rule 416 under the Securities Act of 1933,
as amended (the Securities Act), the securities being
registered hereunder include such indeterminate number of shares
of common stock as may be issuable with respect to the shares
being registered hereunder as a result of stock splits, stock
dividends or similar transactions. |
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The proposed maximum aggregate offering price per class of
security will be determined from time to time by the Registrant
in connection with the issuance by the Registrant of securities
registered hereunder and is not specified as to each class of
security pursuant to General II.D. of Form S-3 under the
Securities Act. |
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(3) |
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Calculated pursuant to Rule 457(o) under the Securities Act. |
The Registrant hereby amends this registration statement on such date or dates as may be necessary
to delay its effective date until the Registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may
determine.
The information in this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities, and it is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED, MAY 26, 2010
PRELIMINARY PROSPECTUS
$75,000,000
MELA SCIENCES, INC.
Common Stock, Warrants and Units
We may from time to time sell any combination of securities described in this prospectus,
either individually or in units. The aggregate initial offering price of all securities sold by us
under this prospectus will not exceed $75,000,000.
This prospectus provides a general description of the securities we may offer. Each time we
sell securities, we will provide the specific terms of the securities offered in a supplement to
this prospectus. The prospectus supplement may also add, update or change information contained in
this prospectus. You should read this prospectus and the applicable prospectus supplement carefully
before you invest in any securities. This prospectus may not be used to consummate a sale of
securities unless accompanied by the applicable prospectus supplement.
Our common stock is listed on the Nasdaq Capital Market under the symbol MELA. On May 24,
2010, the last reported sale price of our common stock on the Nasdaq Capital Market was $6.11 per
share. The applicable prospectus supplement will contain information, where applicable, as to any
other listing on the Nasdaq Capital Market or any securities market or other exchange of the
securities, if any, covered by the prospectus supplement. If any agents or underwriters are
involved in the sale of any of these securities, the applicable prospectus supplement will provide
the names of the agents or underwriters and any applicable fees, commissions or discounts.
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS BEGINNING ON PAGE 2,
AS WELL AS THE RISKS DISCUSSED UNDER THE CAPTION RISK FACTORS IN DOCUMENTS WE SUBSEQUENTLY FILE
WITH THE SECURITIES AND EXCHANGE COMMISSION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2010
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
In this prospectus, unless we indicate otherwise, we, us, our, the Company and MELA
refer to MELA Sciences, Inc. MELA Sciences, Inc. was formerly known as Electro-Optical Sciences,
Inc.
This prospectus is a part of a registration statement that we filed with the Securities and
Exchange Commission, or SEC, utilizing a shelf registration process. Under this shelf
registration process, we may sell any combination of the securities described in this prospectus in
one or more offerings up to a total dollar amount of $75,000,000. This prospectus provides you with
a general description of the securities we may offer. Each time we sell securities under this shelf
registration, we will provide a prospectus supplement that will contain specific information about
the terms of that offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described under the heading Where You Can Find More
Information.
We have not authorized any dealer, salesman or other person to give any information or to make
any representation other than those contained or incorporated by reference in this prospectus and
the accompanying supplement to this prospectus. You must not rely upon any information or
representation not contained or incorporated by reference in this prospectus or the accompanying
prospectus supplement. This prospectus and the accompanying supplement to this prospectus do not
constitute an offer to sell or the solicitation of an offer to buy any securities other than the
registered securities to which they relate, nor do this prospectus and the accompanying supplement
to this prospectus constitute an offer to sell or the solicitation of an offer to buy securities in
any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. You should not assume that the information contained in this prospectus and the
accompanying prospectus supplement is accurate on any date subsequent to the date set forth on the
front of the document or that any information we have incorporated by reference is correct on any
date subsequent to the date of the document incorporated by reference, even though this prospectus
and any accompanying prospectus supplement is delivered or securities sold on a later date.
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This prospectus contains references to our U.S. registered trademark: MelaFind®.
All other trademarks, tradenames and service marks appearing in this prospectus are the property of
their respective owners.
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BUSINESS DESCRIPTION
We are a medical device company focused on the design, development and commercialization of a
non-invasive, point-of-care instrument to assist in the early diagnosis of melanoma. Our flagship
product, MelaFind®, features a hand-held imaging device that emits light of multiple
wavelengths to capture images of suspicious pigmented skin lesions and extract data. The data are
then analyzed utilizing image processing classification algorithms, trained on our proprietary
database of melanomas and benign lesions, to provide information to assist in the management of the
patient, including information useful in the decision of whether to biopsy the lesion. We currently
do not have any commercialized products or any significant source of revenue.
The MelaFind® pre-market approval (PMA) application was filed in June 2009 and is
under review at the U.S. Food and Drug Administration (FDA). The pivotal trial conducted to
establish the safety and effectiveness of MelaFind® was performed under the auspices of
a Protocol Agreement. In addition, the MelaFind® PMA has been granted Expedited Review
by the FDA. The Company is actively working with the FDA during the
review process. On March 19, 2010 the Company
received a series of questions from the FDA and was notified that the MelaFind® PMA was
not approvable at that time. In addition, the Company was advised that the review process had been
extended by a period of up to 180 days following the submission of our response to the FDA action
letter. Since receiving the questions from the FDA on March 19, the Company has had a series of
interactions with the FDA. A draft response was submitted to the FDA in mid-April. The Company also
had an in-person meeting with the FDA to review its draft response and to clarify several
questions. The final formal response to all questions provided by the FDA was submitted to the FDA
on May 7, 2010 and the Company was subsequently informed by the
FDA that the
MelaFind®
PMA would be reviewed by the General and Plastic Surgery Devices
Panel appointed by the FDA on August 26, 2010.
Upon obtaining approval from the FDA, we plan to launch MelaFind® commercially in
the United States. We are also concurrently using our efforts to obtain a CE Mark that will
facilitate commercialization in Europe and other countries.
We were incorporated in the State of New York in 1989 under the name Electro-Optical Sciences,
Inc. and subsequently reincorporated under the laws of the State of Delaware in 1997. In April
2010, we changed our name to MELA Sciences, Inc. Our executive offices are located at 50 South
Buckhout Street, Suite 1, Irvington, New York 10533. Our telephone number is (914) 591-3783. Our
website is www.melasciences.com. The information contained on our website is not a part of this
prospectus and should not be relied upon. We have included our website address in this document as
an inactive textual reference only.
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RISK FACTORS
Investing in our securities involves a high degree of risk. You should carefully consider the
following risk factors, as well as the other information contained in this prospectus and in
documents that are incorporated by reference into this prospectus. If any of the following risks
actually occur, our business, financial condition and results of operations would suffer. In that
case, the trading price of our common stock would likely decline and you might lose all or part of
your investment in our securities.
Risks Relating to Our Business
We currently do not have, and may never develop, any commercialized products.
We currently do not have any commercialized products or any significant source of revenue. We
have invested substantially all of our time and resources over the last eight years in developing
MelaFind®. MelaFind® may require additional development and clinical
evaluation and it will require regulatory approval, significant marketing efforts and substantial
additional investment before it can provide us with any revenue. On June 9, 2009 the MelaFind® PMA
was filed to the FDA. Our efforts may not lead to commercially successful products for a number of
reasons, including:
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we may not be able to obtain regulatory approvals for
MelaFind®, or the approved indication may be narrower than we
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MelaFind® may not prove to be safe and effective in clinical
trials to the FDAs satisfaction; |
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physicians may not receive any reimbursement from third-party payers, or
the level of reimbursement may be insufficient to support widespread adoption
of MelaFind®; |
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we may experience delays in our continuing development program; |
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any products that are approved may not be accepted in the marketplace by
physicians or patients; |
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we may not have adequate financial or other resources to complete the
continued development or to commence the commercialization of
MelaFind® and we will not have adequate financial or other
resources to achieve significant commercialization of MelaFind®; |
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we may not be able to manufacture our products in commercial quantities
or at an acceptable cost; and |
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rapid technological change may make our technology and products obsolete. |
If we are unable to obtain regulatory approval for or successfully commercialize
MelaFind®, we will be unable to generate revenue.
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We have not received, and may never receive, FDA approval to market MelaFind®.
We do not have the necessary regulatory approvals to market MelaFind® in the U.S.
or in any foreign market. We plan initially to launch MelaFind®, once approved, in the
U.S. The regulatory approval process for MelaFind® in the U.S. involves, among other
things, successfully completing clinical trials and obtaining PMA approval from the FDA. The PMA
process requires us to prove the safety and effectiveness of MelaFind® to the FDAs
satisfaction. This process is expensive and uncertain, and requires detailed and comprehensive
scientific and human clinical data. FDA review may take years after a PMA application is filed. The
FDA may never grant approval. The FDA can delay, limit or deny approval of a PMA application for
many reasons, including:
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MelaFind® may not be safe or effective to the FDAs satisfaction; |
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the data from our pre-clinical studies and clinical trials may be insufficient to
support approval; |
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the manufacturing process or facilities we use may not meet applicable requirements; and |
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changes in FDA approval policies or adoption of new regulations may require additional
data. |
No precedent has been established for FDA approval of a device such as MelaFind® to
assist in determining the appropriateness of biopsies of suspicious pigmented skin lesions. While
the Company believes that results from the MelaFind® pivotal trial support a favorable
PMA review, the FDA may not consider the data gathered in the trial sufficient to support approval
of a PMA. On March 19, 2010 the Company received a series of questions from the FDA and was
notified that the MelaFind® PMA was not approvable at that time. In addition, the
Company was advised that the review process had been extended by a period of up to 180 days
following the submission of our response to the FDA action letter. While the Company had a series
of interactions with the FDA in mid-April and submitted a formal response to all questions provided
by the FDA, there is no assurance that the FDA will consider the Companys response sufficient to
support approval of the PMA. The FDA may determine that additional clinical trials are necessary,
in which case the PMA approval may be delayed for several months or even years while the trials are
conducted and the data acquired are submitted in an amendment to the PMA. The occurrence of
unexpected findings in connection with any subsequent clinical trial that may be required by the
FDA may prevent or delay obtaining PMA approval, and may adversely affect coverage or reimbursement
determinations. If we are unable to complete subsequent clinical trials necessary to successfully
support the MelaFind® PMA application, our ability to commercialize MelaFind®, and our
business, financial condition, and results of operations would be materially adversely affected,
thereby threatening our ability to continue operations.
If MelaFind® is approved by the FDA, it may be approved only for narrow indications.
Even if approved, MelaFind® may not be approved for the indications that are
necessary or desirable for successful commercialization. Our preference is to obtain a broad
indication for use in assisting in the evaluation of almost all pigmented melanomas (other than
those on palms, soles of the feet, in or near the eye, and inaccessible areas such as the edge of
the nose). The final MelaFind® lesion classifier may not be able to identify the maximum
number of types of melanoma possible. The indications for use must specify those lesion types for
which the classifier has not been trained. Approximately five percent of melanoma lesions may be
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amelanotic, meaning they are not pigmented. These lesions cannot be differentiated by
MelaFind®, which will be restricted to pigmented lesions. Approximately ten percent of
pigmented melanoma lesions are nodular, a type of melanoma that is often missed by dermatologists
in early stages. If nodular melanoma lesions are not sufficiently well-represented in the
MelaFind® training database, the classifier may not differentiate nodular melanomas from
non-melanomas with sufficient sensitivity and specificity. If we restrict the indications for use
of MelaFind® to exclude certain melanoma lesion types, in addition to the other
restrictions, then the size of the market for MelaFind® and the rate of acceptance of
MelaFind® by physicians may be adversely affected.
If we wish to modify MelaFind® after receiving FDA approval, including changes in
indications or other modifications that could affect safety and effectiveness, additional approvals
could be required from the FDA. We may be required to submit extensive pre-clinical and clinical
data, depending on the nature of the changes. Any request by the FDA for additional data, or any
requirement by the FDA that we conduct additional clinical studies, could delay the
commercialization of MelaFind® and require us to make substantial additional research,
development and other expenditures. We may not obtain the necessary regulatory approvals to market
MelaFind® in the U.S. or anywhere else. Any delay in, or failure to receive or maintain,
approval for MelaFind® could prevent us from generating revenue or achieving
profitability, and our business, financial condition, and results of operations would be materially
adversely affected.
MelaFind® may not be commercially viable if we fail to obtain an adequate level of
reimbursement by Medicare and other third party payers. The markets for MelaFind® may
also be limited by the indications for which its use may be reimbursed.
The availability of medical insurance coverage and reimbursement for newly approved medical
devices is uncertain. In the U.S., physicians and other healthcare providers performing biopsies
for suspicious skin lesions are generally reimbursed for all or part of the cost of the diagnosis
and biopsy by Medicare, Medicaid, or other third-party payers.
The commercial success of MelaFind® in both domestic and international markets may
significantly depend on whether third-party coverage and reimbursement are available for services
involving MelaFind®. Medicare, Medicaid, health maintenance organizations and other
third-party payers are increasingly attempting to contain healthcare costs by limiting both the
scope of coverage and the level of reimbursement of new medical devices, and as a result, they may
not cover or provide adequate payment for the use of MelaFind®. In order to obtain
satisfactory reimbursement arrangements, we may have to agree to a fee or sales price lower than
the fee or sales price we might otherwise charge. Even if Medicare and other third-party payers
decide to cover procedures involving our product, we cannot be certain that the reimbursement
levels will be adequate. Accordingly, even if MelaFind® or future products we develop
are approved for commercial sale, unless government and other third-party payers provide adequate
coverage and reimbursement for our products, some physicians may be discouraged from using them,
and our sales would suffer.
Medicare reimburses for medical devices in a variety of ways, depending on where and how the
device is used. However, Medicare only provides reimbursement if the Centers for Medicare and
Medicaid Services (CMS) determines that the device should be covered and that the use of the
device is consistent with the coverage criteria. A coverage determination can be made at the local
level by the Medicare administrative contractor (formerly called carriers and fiscal
intermediaries), a private contractor that processes and pays claims on behalf of CMS for the
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geographic area where the services were rendered, or at the national level by CMS through a
national coverage determination. There are statutory provisions intended to facilitate coverage
determinations for new technologies, but it is unclear how these new provisions will be
implemented. Coverage presupposes that the device has been cleared or approved by the FDA and
further, that the coverage will be no broader than the approved intended uses of the device as
approved or cleared by the FDA, but coverage can be narrower. A coverage determination may be so
limited that relatively few patients will qualify for a covered use of the device. Should a very
narrow coverage determination be made for MelaFind®, it may undermine the commercial
viability of MelaFind®.
Obtaining a coverage determination, whether local or national, is a time-consuming, expensive
and highly uncertain proposition, especially for a new technology, and inconsistent local
determinations are possible. On average, according to an industry report, Medicare
coverage determinations for medical devices lag 15 months to five years or more behind FDA approval
for that device. The Medicare statutory framework is also subject to administrative rulings,
interpretations and discretion that affect the amount and timing of reimbursement made under
Medicare. Medicaid coverage determinations and reimbursement levels are determined on a state by
state basis, because Medicaid, unlike Medicare, is administered by the states under a state plan
filed with the Secretary of the U.S. Department of Health and Human Services (HHS). Medicaid
generally reimburses at lower levels than Medicare. Moreover, Medicaid programs and private
insurers are frequently influenced by Medicare coverage determinations.
We have incurred losses for a number of years, and anticipate that we will incur continued losses
for the foreseeable future.
We began operations in December 1989. At that time we provided research services, mostly to
U.S. government agencies, on classified projects. We have financed our operations primarily through
the sale of our equity securities and have devoted substantially all of our resources to research
and development relating to MelaFind®. Our net loss for the year ended December 31, 2009
was approximately $18.5 million and our net loss for the three months ended March 31, 2010 was
approximately $5.1 million. As of March 31, 2010, we had an accumulated deficit of approximately
$84.3 million. Our research and development expenses may continue to increase in connection with
our clinical trials and other development activities related to MelaFind®. If we receive
PMA approval for MelaFind® from the FDA, we expect to incur significant sales, marketing
expenses and manufacturing expenses which will require additional funding. As a result, we expect
to continue to incur significant and increasing operating losses for the foreseeable future. These
losses, among other things, have had and will continue to have an adverse effect on our
stockholders equity.
We expect to operate in a highly competitive market, we may face competition from large,
well-established medical device manufacturers with significant resources, and we may not be able to
compete effectively.
We do not know of any product possessing the diagnostic assistance capabilities of
MelaFind®. We believe that other products that enhance the visualization and analysis of
potential melanomas have been approved or are under development by: Welch Allyn, Inc.; Heine
Optotechnik; 3Gen, LLC; Derma Medical Systems, Inc.; Medical High Technologies S.P.A.; ZN Vision
Technologies AG; Polartechnics, Ltd.; Astron Clinica (now owned by Biocompatibles International),
Ltd.; Biomips Engineering, SciBase AB, Balter Medical, Michelson Diagnostics and others. The
broader market for precision optical imaging devices used for medical diagnosis is intensely
competitive, subject to rapid change, and significantly affected by new product
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introductions and other market activities of industry participants. If our products are approved
for marketing, we will potentially be subject to competition from major optical imaging companies,
such as: Raytheon Corporation, General Electric Co.; Siemens AG; Bayer AG; Eastman Kodak Company;
Welch Allyn, Inc.; Olympus Corporation; Carl Zeiss AG Deutschland; and others, each of which
manufactures and markets precision optical imaging products for the medical market, and could
decide to develop or acquire a product to compete with MelaFind®. These companies enjoy
numerous competitive advantages, including:
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significantly greater name recognition; |
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established relations with healthcare professionals, customers and third-party payers; |
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established distribution networks; |
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additional lines of products, and the ability to offer rebates, higher discounts or
incentives to gain a competitive advantage; |
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greater experience in conducting research and development, manufacturing, clinical
trials, obtaining regulatory approval for products, and marketing approved products; and |
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greater financial and human resources for product development, sales and marketing,
and patent litigation. |
As a result, we may not be able to compete effectively against these companies or their products.
Technological breakthroughs in the diagnosis or treatment of melanoma could render
MelaFind® obsolete.
The precision optical imaging field is subject to rapid technological change and product
innovation. MelaFind® is based on our proprietary technology, but a number of companies
and medical researchers are pursuing new technologies. Companies in the medical device industry
with significantly greater financial, technical, research, marketing, sales and distribution and
other resources have expertise and interest in the exploitation of computer-aided diagnosis,
medical imaging, and other technologies MelaFind® utilizes.
Some of these companies are working on potentially competing products or therapies, including
confocal microscopy (a type of scanning microscopy for 3-dimensional specimens, which produces
blur-free images at various depths), various forms of spectroscopy (a study of the way molecules
absorb and emit light), other imaging modalities, including molecular imaging in which tagged
antibodies search for cancer cell antigens, and molecular and genetic screening tests.
Molecular-based approaches are being investigated; Dermtech is exploring Messenger RNA analysis of
surface cells, for example. Several additional approaches to detecting Melanoma have been
identified. Balter Medical (Norway) uses Optical Transfer Diagnosis to identify Melanomas. The
technology measures how much light is absorbed in healthy versus diseased tissue to determine
whether cancer is present. Raytheon Corporation, partnered with Arizona Cancer Center, utilizes
satellite-based remote imaging technology in detecting skin changes that could indicate the
presence of cancer. Vanderbilt University has introduced technology called Confocal Raman
Micro-Spectroscopy. The technology uses a reflective laser to produce a molecular fingerprint of
the underlying tissue to indicate the presence or absence of disease. In addition, the National
Institutes of Health and other supporters of cancer research are presumptively seeking ways to
improve the diagnosis or treatment of melanoma by sponsoring
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corporate and academic research. Researchers at Ben Gurion University in Israel announced a new
device that detects cancerous skin tumors not visible to the naked eye. The Optical
Spectro-Polarimetric Imaging (OSPI) instrument reportedly diagnosed 73 types of lesions, some of
them cancerous, in initial testing. Michelson Diagnostics Ltd, a UK based developer and
manufacturer, announced that the FDA has awarded it 510(k) clearance for its VivoSighttm
OCT scanning product. VivoSighttm is a Multi-Beam OCT system indicated for use in the
two-dimensional, cross-sectional, real-time imaging of external tissues of the human body. There
can be no assurance that one or more of these companies will not succeed in developing or marketing
technologies and products or services that demonstrate better safety or effectiveness, superior
clinical results, greater ease of use or lower cost than MelaFind®, or that such
competitors will not succeed in obtaining regulatory approval for introducing or commercializing
any such products or services prior to us. FDA approval of a commercially viable alternative to
MelaFind® produced by a competitor could significantly reduce market acceptance of
MelaFind®. Any of the above competitive developments could have a material adverse
effect on our business, financial condition, and results of operations. There is no assurance that
products, services, or technologies introduced prior to or subsequent to the commercialization of
MelaFind® will not render MelaFind® less marketable or obsolete.
For any additional clinical trials required for MelaFind® by the FDA or with respect to
clinical trials relating to the development of our core technology for other applications, we
depend on clinical investigators and clinical sites and other third parties to manage the trials
and to perform related data collection and analysis, and, as a result, we may face costs and delays
that are outside of our control.
With respect to any additional clinical studies for MelaFind® which are required by
the FDA or with respect to clinical trials relating to the development of the Companys core
technology for other applications, we rely on clinical investigators and clinical sites, some of
which are private practices, and some of which are research university- or government-affiliated,
to enroll patients in our clinical trials. We rely on: pathologists and pathology laboratories; a
contract research organization to assist in monitoring, collection of data, and ensuring FDA Good
Clinical Practices (GCP) are observed at our sites; a consultant biostatistician; and other third
parties to manage the trial and to perform related data collection and analysis. However, we may
not be able to control the amount and timing of resources that clinical sites and other third
parties may devote to our clinical trials. If these clinical investigators and clinical sites fail
to enroll a sufficient number of patients in our clinical trials, or if the clinical sites fail to
comply adequately with the clinical protocols, we will be unable to complete these trials, which
could prevent us from obtaining regulatory approvals for MelaFind® or other products
developed from our core technology. Our agreements with clinical investigators and clinical sites
for clinical testing place substantial responsibilities on these parties and, if these parties fail
to perform as expected, our trials could be delayed or terminated. If these clinical investigators,
clinical sites or other third parties do not carry out their contractual duties or obligations or
fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain are
compromised due to their failure to adhere to our clinical protocols or for other reasons, our
clinical trials may be extended, delayed or terminated, and we may be unable to obtain regulatory
approval for, or successfully commercialize, MelaFind® or other products developed from
our core technology.
In addition to the foregoing, any additional clinical studies for MelaFind® which
are required by the FDA and any clinical trials relating to the development of the Companys core
technology for other applications may be delayed or halted, or be inadequate to support PMA
approval, for numerous other reasons, including, but not limited to, the following:
7
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the FDA, an Institutional Review Board (IRB) or other regulatory authorities
place our clinical trial on hold; |
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patients do not enroll in clinical trials at the rate we expect; |
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patient follow-up is not at the rate we expect; |
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IRBs and third-party clinical investigators delay or reject our trial protocol; |
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third-party organizations do not perform data collection and analysis in a
timely or accurate manner; |
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regulatory inspections of our clinical trials or manufacturing facilities,
among other things, require us to undertake corrective action or suspend or
terminate our clinical trials, or invalidate our clinical trials; |
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changes in governmental regulations or administrative actions; and |
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the interim or final results of the clinical trial are inconclusive or
unfavorable as to safety or effectiveness. |
If and when we pursue reimbursement for MelaFind® and it is approved for reimbursement,
we anticipate experiencing significant pressures on pricing.
Even if Medicare covers a device for certain uses, that does not mean that the level of
reimbursement will be sufficient for commercial success. We expect to experience pricing pressures
in connection with the commercialization of MelaFind® and our future products due to
efforts by private and government-funded payers to reduce or limit the growth of healthcare costs,
the increasing influence of health maintenance organizations, and additional legislative proposals
to reduce or limit increases in public funding for healthcare services. Private payers, including
managed care payers, increasingly are demanding discounted fee structures and the assumption by
healthcare providers of all or a portion of the financial risk. Efforts to impose greater discounts
and more stringent cost controls upon healthcare providers by private and public payers are
expected to continue. Payers frequently review their coverage policies for existing and new
diagnostic tools and can, sometimes without advance notice, deny or change their coverage policies.
Significant limits on the scope of services covered or on reimbursement rates and fees on those
services that are covered could have a material adverse effect on our ability to commercialize
MelaFind® and therefore, on our liquidity and our business, financial condition, and
results of operations.
In some foreign markets, which we may seek to enter in the future, pricing and profitability
of medical devices are subject to government control. In the U.S., we expect that there will
continue to be federal and state proposals for similar controls. Also, the trends toward managed
healthcare in the US and proposed legislation intended to control the cost of publicly funded
healthcare programs could significantly influence the purchase of healthcare services and products,
and may force us to reduce prices for MelaFind® or result in the exclusion of
MelaFind® from reimbursement programs.
8
MelaFind® may never achieve market acceptance even if we obtain regulatory approvals.
To date, only those patients who were treated by physicians involved in our clinical trials
have been evaluated using MelaFind® and even if we obtain regulatory approval, patients
with suspicious lesions and physicians evaluating suspicious lesions may not endorse
MelaFind®. Physicians tend to be slow to change their diagnostic and medical treatment
practices because of perceived liability risks arising from the use of new products. Physicians may
not utilize MelaFind® until there is long-term clinical evidence to convince them to
alter their existing methods of diagnosing or evaluating suspicious lesions and there are
recommendations from prominent physicians that MelaFind® is effective. We cannot predict
the speed at which physicians may adopt the use of MelaFind®. By limiting the capital
cost of MelaFind® to the physician, we believe we will accelerate its adoption and
usage. However, by charging on a per patient basis we will increase the initial capital burden on
the Company. If MelaFind® receives the appropriate regulatory approvals but does not
achieve an adequate level of acceptance by patients, physicians and healthcare payers, we may not
generate significant product revenue and we may not become profitable. The degree of market
acceptance of MelaFind® will depend on a number of factors, including:
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perceived effectiveness of MelaFind®; |
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convenience of use; |
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cost of use of MelaFind®; |
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availability and adequacy of third-party coverage or reimbursement; |
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approved indications and product labeling; |
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publicity concerning MelaFind® or competitive products; |
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potential advantages over alternative diagnostic methodologies; |
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introduction and acceptance of competing products or technologies; and |
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extent and success of our sales, marketing and distribution efforts. |
The success of MelaFind® will depend upon the acceptance by dermatologists and
other physicians who perform skin examinations and treat skin disorders, including industry opinion
leaders, that the evaluation information provided by MelaFind® is medically useful and
reliable. We will be subject to intense scrutiny before physicians will be comfortable
incorporating MelaFind® in their diagnostic approaches. We believe that recommendations
by respected physicians will be essential for the development and successful marketing of
MelaFind®; however, there can be no assurance that any such recommendations will be
obtained. To date, the medical community outside the limited circle of certain dermatologists
specializing in melanoma has had little exposure to us and MelaFind®. Because the
medical community is often skeptical of new companies and new technologies, we may be unable to
gain access to potential customers in order to demonstrate the operation and effectiveness of
MelaFind®. Even if we gain access to potential customers, no assurance can be given that
members of the dermatological, or later the general practice, medical community will perceive a
need for or accept MelaFind®. In particular, given the potentially fatal consequences of
failing to detect melanoma at the early, curable stages,
9
practitioners may remain reluctant to rely upon MelaFind® even after we receive approval
from the FDA for marketing the product. Any of the foregoing factors, or other currently unforeseen
factors, could limit or detract from market acceptance of MelaFind®. Insufficient market
acceptance of MelaFind® would have a material adverse effect on our business, financial
condition and results of operations.
We may be unable to complete the development and commence commercialization of MelaFind®
or other products without additional funding and we will not be able to achieve significant
commercialization without additional funding.
As of March 31, 2010, we had $30 million in cash and cash equivalents. Our operations have
consumed substantial amounts of cash for each of the last eight years. The Company will require
additional funds to pursue regulatory approvals and to achieve significant commercialization of
MelaFind®. However, there can be no assurances that the Company will be able to raise
additional capital in the future. Additional funds may not become available on acceptable terms,
and there can be no assurance that any additional funding that the Company does obtain will be
sufficient to meet the Companys needs in the long term.
Any additional financing may be dilutive to stockholders, or may require us to grant a lender
a security interest in our assets. The amount of funding we will need will depend on many factors,
including:
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the schedule, costs, and results of clinical trials; |
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the success of our research and development efforts; |
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the costs and timing of regulatory approval; |
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reimbursement amounts for the use of MelaFind® that we are
able to obtain from Medicare and third party payers, or the amount of
direct payments we are able to obtain from patients and/or physicians
utilizing MelaFind®; |
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the cost of commercialization activities, including products, product
marketing and building a domestic direct sales force; |
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the emergence of competing or complementary technological developments; |
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the costs of filing, prosecuting, defending and enforcing any patent
claims and other rights, including litigation costs and the results of such
litigation; |
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the costs involved in defending any patent infringement actions
brought against us by third parties; and |
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our ability to establish and maintain any collaborative, licensing or
other arrangements, and the terms and timing of any such arrangements. |
If we are unable to obtain adequate financing on a timely basis, we may be
required to significantly curtail or cease one or more of our development and marketing programs.
We could be required to seek funds through arrangements with collaborators or others that may
require us to relinquish rights to some of our technologies, product candidates or products that we
would otherwise pursue on our own. We also may have to reduce marketing, customer support and other
10
resources devoted to our products. If we raise additional funds by issuing equity securities, our
then-existing stockholders will experience ownership dilution, could experience declines in our
share price and the terms of any new equity securities may have preferences over our common stock.
If we are unable to establish sales, marketing and distribution capabilities or enter into and
maintain arrangements with third parties to sell, market and distribute MelaFind®, our
business may be harmed.
We do not have a sales organization, and have no experience as a company in the marketing and
distribution of devices such as MelaFind®. To achieve commercial success for
MelaFind®, we must develop a sales and marketing force and enter into arrangements with
others to market and sell our products. Following product approval, we currently plan to establish
a small direct sales force to regionally market MelaFind® in the U.S., focused on
introducing it at high volume dermatologists offices and training their staff in its use, but we
have not made any final determinations regarding the use of a particular marketing channel. We
anticipate that we will need additional funds in order to fully implement this marketing plan. In
addition to being expensive, developing such a sales force is time consuming and could delay or
limit the success of any product launch. We may not be able to develop this capacity on a timely
basis or at all. Qualified direct sales personnel with experience in the medical device market are
in high demand, and there is no assurance that we will be able to hire or retain an effective
direct sales team. Similarly, qualified, independent medical device representatives both within and
outside the U.S. are in high demand, and we may not be able to build an effective network for the
distribution of our product through such representatives. We have no assurance that we will be able
to enter into contracts with representatives on terms acceptable or reasonable to us. Similarly,
there is no assurance that we will be able to build an alternate distribution framework, should we
attempt to do so.
We will need to contract with third parties in order to sell and install our products in
larger markets, including non-specialist dermatologists and primary care physicians. To the extent
that we enter into arrangements with third parties to perform marketing and distribution services
domestically or internationally, our product revenue could be lower and our costs higher than if we
directly marketed MelaFind®. Furthermore, to the extent that we enter into co-promotion
or other marketing and sales arrangements with other companies, any revenue received will depend on
the skills and efforts of others, and we do not know whether these efforts will be
successful. If we are unable to establish and maintain adequate sales, marketing and distribution
capabilities, independently or with others, we will not be able to generate product revenue, and
may not become profitable.
Our business model may not generate sufficient revenues in order to create a sustainable business.
Under our current business model, we plan to place MelaFind® systems in physicians
offices for a modest placement fee. We will then sell an electronic patient card to physicians
designed for a single use patient exam. There can give no assurance that our business model will be
successful and that physicians or patients will buy these cards in sufficient quantities to create
a sustainable business.
11
We have limited manufacturing capabilities and manufacturing personnel, and if our manufacturing
capabilities are insufficient to produce an adequate supply of MelaFind®, our growth
could be limited and our business could be harmed.
We have no experience in manufacturing MelaFind® for commercial distribution. We
currently have limited resources, facilities and experience to commercially manufacture
MelaFind®. In order to produce MelaFind® in the quantities we anticipate to
meet market demand, we will need to increase our third-party manufacturing capacity. There are
technical challenges to increasing manufacturing capacity, including equipment design and
automation, material procurement, problems with production yields, and quality control and
assurance. Developing commercial-scale manufacturing facilities that meet FDA requirements would
require the investment of substantial additional funds and the hiring and retaining of additional
management and technical personnel who have the necessary manufacturing experience.
We currently outsource production to contract manufacturers. Any difficulties in the ability
of third-party manufacturers to supply devices of the quality, at the times, and in the quantities
we need, could have a material adverse effect on our business, financial condition, and results of
operations. Similarly, when we enter into contracts for the third-party manufacture of our devices,
any revenue received will depend on the skills and efforts of others, and we do not know whether
these efforts will be successful. Manufacturers often encounter difficulties in scaling up
production of new products, including problems involving product yields, controlling and
anticipating product costs, quality control and assurance, component supply, and shortages of
qualified personnel. We cannot assure you that the third-party contract manufacturers with whom we
have developed or are developing relationships will have or sustain the ability to produce the
quantities of MelaFind® needed for development or commercial sales, or will be willing
to do so at prices that allow MelaFind® to compete successfully in the market.
Assuming that MelaFind® receives regulatory approval, if we are unable to
manufacture or obtain a sufficient supply of product, maintain control over expenses, or otherwise
adapt to anticipated growth, or if we underestimate growth, we may not have the capability to
satisfy market demand, and our business will suffer. Additionally, if MelaFind® receives
regulatory approval and we then need to make manufacturing changes, we may need to obtain
additional approval for these changes.
MelaFind® is complex and may contain undetected design defects and errors when
first introduced, or errors that may be introduced when enhancements are released. Such defects and
errors may occur despite our testing, and may not be discovered until after our devices have been
shipped to and used by our customers. The existence of these defects and errors could result in
costly repairs, returns of devices, diversion of development resources and damage to our reputation
in the marketplace. Any of these conditions could have a material adverse impact on our business,
financial condition and results of operations. In addition, when we contract with third-party
manufacturers for the production of our products, these manufacturers may inadvertently produce
devices that vary from devices we have produced in unpredictable ways that cause adverse
consequences.
12
Our manufacturing operations are dependent upon third-party suppliers, making us vulnerable to
supply problems and price fluctuations, which could harm our business. We anticipate contracting
for final device assembly and integration, but no contract for such services on a commercial basis
has yet been procured.
Our manufacturing efforts currently rely on several vendors for critical materials:
FillFactory, a subsidiary of Cypress Semiconductor Corp., to manufacture and supply the
complementary metal oxide semiconductor sensor in MelaFind®, on Carl Zeiss Jena GmbH
(Zeiss) for lens and lens objective assemblies, A/B Electronics, AAEON, AmeriCad, Applied Image,
EpiGap, Lamothermic Precision, Canvys Electronics, Sandisk, SL Power Electronics and others to
provide services or components of our devices. We are working with ASKION in Germany, which
specializes in precision optics for the provision of the hand-held imaging devices. In addition, we
are utilizing Nexcore Technology Inc., an FDA good manufacturing practices (GMP) compliant and
certified ISO13485 and ISO9001 original equipment manufacturer of medical devices in New Jersey, to
provide the assembled MelaFind® carts and tested MelaFind® systems.
There can be no assurance that these third parties will meet their obligations. Each of these
suppliers is a sole-source supplier. Our contract manufacturers also rely on sole-source suppliers
to manufacture some of the components used in our products. Our manufacturers and suppliers may
encounter problems during manufacturing due to a variety of reasons, including failure to procure
their raw material on time, failure to follow specific protocols and procedures, failure to comply
with applicable regulations, equipment malfunction and environmental factors, any of which could
delay or impede their ability to meet our demand. Our reliance on these outside manufacturers and
suppliers also subjects us to other risks that could harm our business, including:
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suppliers may make errors in manufacturing
components that could negatively impact the
effectiveness or safety of our products, or cause delays
in shipment of our products; |
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we may not be able to obtain adequate supply in a
timely manner or on commercially reasonable terms; |
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we may have difficulty locating and qualifying
alternative suppliers for our sole-source suppliers; |
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switching components may require product redesign
and submission to the FDA of a PMA supplement or
possibly a separate PMA, either of which could
significantly delay production; |
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our suppliers manufacture products for a range of
customers, and fluctuations in demand for the products
these suppliers manufacture for others may affect their
ability to deliver components to us in a timely manner;
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our suppliers may encounter financial hardships
unrelated to our demand for components, which could
inhibit their ability to fulfill our orders and meet our
requirements. |
Any interruption or delay in the supply of components or materials, or our
inability to obtain components or materials from alternate sources at acceptable prices in a timely
manner, could impair our ability to meet the demand of our customers and cause them to cancel
orders.
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We have a development agreement with ASKION to continue developmental engineering, production
and testing of our hand-held imaging device. Failure to maintain such an agreement with ASKION on
mutually acceptable terms would require us to expand our own manufacturing facilities or obtain
such services elsewhere. Similarly, through ASKION we have entered into a production agreement with
Zeiss for lenses and lens objective assemblies. The manufacturing agreement with ASKION includes
the integration of the Zeiss lenses in the hand-held imaging devices. Our planned reliance upon an
outside provider for assembly and production services subjects us to the risk of adverse
consequences from delays and defects caused by the failure of such outside supplier to meet its
contractual obligations, including confidentiality obligations in the case of Zeiss, which is an
affiliate of Carl Zeiss AG, a potential competitor. The failure by us or our supplier to produce a
sufficient number of hand-held imaging devices that can operate according to our specifications
could delay the commercial sale of MelaFind®, and would adversely affect both our
ability to successfully commercialize MelaFind® and our business, financial condition
and results of operations.
We will not be able to sell MelaFind® unless and until its design is verified and
validated in accordance with current good manufacturing practices as set forth in the U.S. medical
device Quality System Regulation.
We are in the process, but have not yet successfully completed, all the steps necessary to
verify and validate the design of the MelaFind® system that are required to be performed
prior to commercialization. If we are delayed or unable to complete verification and validation
successfully, we will not be able to sell MelaFind®, and we will not be able to meet our
plans for the commercialization of MelaFind®. Later discovery of previously unknown
problems with MelaFind®, including manufacturing problems, or failure to comply with
regulatory requirements such as the FDA QSR, may result in restrictions on MelaFind® or
its manufacturing processes, withdrawal of MelaFind® from the market, patient or
physician notification, voluntary or mandatory recalls, fines, withdrawal of regulatory approvals,
refusal to approve pending applications or supplements to approved applications, refusal to permit
the import or export of our products, product seizures, injunctions or the imposition of civil or
criminal penalties. Should any of these enforcement actions occur, our business, financial
condition and results of operations could be materially and adversely affected.
Assuming that MelaFind® is approved by regulatory authorities, if we or our suppliers
fail to comply with ongoing regulatory requirements, or if we experience unanticipated problems
with MelaFind®, it could be subject to restrictions or withdrawal from the market.
Any product for which we obtain marketing approval, along with the manufacturing processes,
post-approval clinical data and promotional activities for such product, will be subject to
continuous review and periodic inspections by the FDA and other regulatory bodies. In particular,
we and our suppliers are required to comply with the QSR and other regulations which cover the
methods and documentation of the design, testing, production, control, quality assurance, labeling,
packaging, storage, promotion, distribution, and shipping of MelaFind®, and with record
keeping practices. We also will be subject to ongoing FDA requirements, including required
submissions of safety and other post-market information and reports and registration and listing
requirements. To the extent that we contract with third parties to manufacture some of our
products, our manufacturers will be required to adhere to current cGMP requirements enforced by the
FDA as part of QSR, or similar regulations required by regulatory agencies in other countries. The
manufacturing facilities of our contract manufacturers must be in full compliance with cGMP
requirements before approval for marketing. The FDA enforces the QSR and other regulatory
requirements through unannounced inspections.
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If we are found to be deficient in cGMP or QSR, we could be subject to FDA action of a type
described below, which could negatively affect our ability to commercialize MelaFind®.
There can be no assurance that the future interpretations of legal requirements made by the FDA or
other regulatory bodies with possible retroactive effect, or the adoption of new requirements or
policies, will not adversely affect us. We may be slow to adapt, or may not be able to adapt, to
these changes or new requirements. Failure by us or one of our suppliers to comply with statutes
and regulations administered by the FDA and other regulatory bodies, or failure to take adequate
response to any observations, could result in, among other things, any of the following actions:
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warning letters; |
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fines and civil penalties; |
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unanticipated expenditures; |
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delays in approving or refusal to approve MelaFind®; |
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withdrawal of approval by the FDA or other regulatory bodies; |
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product recall or seizure; |
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interruption of production; |
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operating restrictions; |
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injunctions; and |
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criminal prosecution. |
If any of these actions were to occur, it would harm our reputation and cause our product sales and
profitability to suffer.
We are involved in a heavily regulated sector, and our ability to remain viable will depend on
favorable government decisions at various points by various agencies.
From time to time, legislation is introduced in the U.S. Congress that could significantly
change the statutory provisions governing the approval, manufacture and marketing of a medical
device. Additionally, healthcare is heavily regulated by the federal government, and by state and
local governments. The federal laws and regulations affecting healthcare change constantly, thereby
increasing the uncertainty and risk associated with any healthcare related venture, including our
business and MelaFind®. In addition, FDA regulations and guidance are often revised or
reinterpreted by the agency in ways that may significantly affect our business and our products. It
is impossible to predict whether legislative changes will be enacted or FDA regulations, guidance,
or interpretations changed, and what the impact of such changes, if any, may be.
The federal government regulates healthcare through various agencies, including but not
limited to the following: (i) the FDA, which administers the Food, Drug, and Cosmetic Act, as well
as other relevant laws; (ii) CMS, which administers the Medicare and Medicaid programs; (iii) the
Office of Inspector General (OIG) which enforces various laws aimed at curtailing
15
fraudulent or abusive practices, including by way of example, the Anti-Kickback Law, the
Anti-Physician Referral Law, commonly referred to as Stark, the Anti-Inducement Law, the Civil
Money Penalty Law, and the laws that authorize the OIG to exclude healthcare providers and others
from participating in federal healthcare programs; and (iv) the Office of Civil Rights, which
administers the privacy aspects of the Health Insurance Portability and Accountability Act of 1996
(HIPAA). All of the aforementioned are agencies within HHS. Healthcare is also provided or
regulated, as the case may be, by the Department of Defense through its TriCare program, the Public
Health Service within HHS under the Public Health Service Act, the Department of Justice through
the Federal False Claims Act and various criminal statutes, and state governments under Medicaid
and other state sponsored or funded programs and their internal laws regulating all healthcare
activities.
In addition to regulation by the FDA as a medical device manufacturer, we are subject to
general healthcare industry regulations. The healthcare industry is subject to extensive federal,
state and local laws and regulations relating to:
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billing for services; |
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quality of medical equipment and services; |
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confidentiality, maintenance and security issues
associated with medical records and individually
identifiable health information; |
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false claims; and |
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labeling products. |
These laws and regulations are extremely complex and, in some cases, still evolving. In many
instances, the industry does not have the benefit of significant regulatory or judicial
interpretation of these laws and regulations. If our operations are found to be in violation of any
of the federal, state or local laws and regulations that govern our activities, we may be subject
to the applicable penalty associated with the violation, including civil and criminal penalties,
damages, fines or curtailment of our operations. The risk of being found in violation of these laws
and regulations is increased by the fact that many of them have not been fully interpreted by the
regulatory authorities or the courts, and their provisions are open to a variety of
interpretations. Any action against us for violation of these laws or regulations, even if we
successfully defend against it, could cause us to incur significant legal expenses and divert our
managements time and attention from the operation of our business.
Healthcare policy changes, including legislation recently enacted by the U.S. Congress to reform
the U.S. healthcare system, may have a material adverse effect on us.
Recently, new legislation was adopted to implement significant reforms to the healthcare
system in the United States. This legislation imposes an excise tax on medical device makers. This
tax could result in a significant increase in our tax burden, which could have a material, negative
impact on our Company. Various healthcare reform proposals have also emerged at the state level. We
cannot predict how healthcare reform initiatives and subsequent regulations, if any, will be
implemented at the U.S. federal or state level, or the effect any new legislation or regulation
will have on us. Significant changes to the healthcare system in the United States may increase
operational and other costs, and could materially adversely affect our business and results of
operations.
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We must comply with complex statutes prohibiting fraud and abuse, and both we and physicians
utilizing MelaFind® could be subject to significant penalties for noncompliance.
There are extensive federal and state laws and regulations prohibiting fraud and abuse in the
healthcare industry that can result in significant criminal and civil penalties. These federal laws
include: the anti-kickback statute which prohibits certain business practices and relationships,
including the payment or receipt of remuneration for the referral of patients whose care will be
paid by Medicare or other federal healthcare programs; the physician self-referral prohibition,
commonly referred to as the Stark Law; the anti-inducement law, which prohibits providers from
offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or
services covered by either program; the Civil False Claims Act, which prohibits any person from
knowingly presenting or causing to be presented false or fraudulent claims for payment by the
federal government, including the Medicare and Medicaid programs and; the Civil Monetary Penalties
Law, which authorizes HHS to impose civil penalties administratively for fraudulent or abusive
acts. Sanctions for violating these federal laws include criminal and civil penalties that range
from punitive sanctions, damage assessments, money penalties, imprisonment, denial of Medicare and
Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both. As federal and
state budget pressures continue, federal and state administrative agencies may also continue to
escalate investigation and enforcement efforts to root out waste and to control fraud and abuse in
governmental healthcare programs. Private enforcement of healthcare fraud has also increased, due
in large part to amendments to the Civil False Claims Act in 1986 that were designed to encourage
private persons to sue on behalf of the government. A violation of any of these federal and state
fraud and abuse laws and regulations could have a material adverse effect on our liquidity and
financial condition. An investigation into the use of MelaFind® by physicians may
dissuade physicians from either purchasing or using MelaFind® and could have a material
adverse effect on our ability to commercialize MelaFind®.
The application of the privacy provisions of HIPAA is uncertain.
HIPAA, among other things, protects the privacy and security of individually identifiable
health information by limiting its use and disclosure. HIPAA directly regulates covered entities
(insurers, clearinghouses, and most healthcare providers) and indirectly regulates business
associates with respect to the privacy of patients medical information. Certain entities that
receive and process protected health information are required to adopt certain procedures to
safeguard the security of that information. It is uncertain whether we would be deemed to be a
covered entity under HIPAA, and it is unlikely that based on our current business model, we would
be a business associate. Nevertheless, we will likely be contractually required to physically
safeguard the integrity and security of the patient information that we or our physician customers
receive, store, create or transmit. If we fail to adhere to our contractual commitments, then our
physician customers may be subject to civil monetary penalties, and this could adversely affect our
ability to market MelaFind®. We also may be liable under state laws governing the
privacy of health information.
We may become subject to claims of infringement or misappropriation of the intellectual property
rights of others, which could prohibit us from shipping affected products, require us to obtain
licenses from third parties or to develop non-infringing alternatives, and subject us to
substantial monetary damages and injunctive relief. Our patents may also be subject to challenge on
validity grounds, and our patent applications may be rejected.
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Third parties could, in the future, assert infringement or misappropriation claims against us
with respect to our current or future products. Whether a product infringes a patent involves
complex legal and factual issues, the determination of which is often uncertain. Therefore, we
cannot be certain that we have not infringed the intellectual property rights of such third
parties. Our potential competitors may assert that some aspect of MelaFind® infringes
their patents. Because patent applications may take years to issue, there also may be applications
now pending of which we are unaware that may later result in issued patents that
MelaFind® infringes. There also may be existing patents of which we are unaware that one
or more components of our MelaFind® system may inadvertently infringe.
Any infringement or misappropriation claim could cause us to incur significant costs, could
place significant strain on our financial resources, divert managements attention from our
business and harm our reputation. If the relevant patents were upheld as valid and enforceable and
we were found to infringe, we could be prohibited from selling our product that is found to
infringe unless we could obtain licenses to use the technology covered by the patent or are able to
design around the patent. We may be unable to obtain a license on terms acceptable to us, if at
all, and we may not be able to redesign MelaFind® to avoid infringement. A court could
also order us to pay compensatory damages for such infringement, plus prejudgment interest and
could, in addition, treble the compensatory damages and award attorney fees. These damages could be
substantial and could harm our reputation, business, financial condition and operating results. A
court also could enter orders that temporarily, preliminarily or permanently enjoin us and our
customers from making, using, selling, offering to sell or importing MelaFind®, and/or
could enter an order mandating that we undertake certain remedial activities. Depending on the
nature of the relief ordered by the court, we could become liable for additional damages to third
parties.
We also may rely on our patents, patent applications and other intellectual property rights to
give us a competitive advantage. Whether a patent is valid, or whether a patent application should
be granted, is a complex matter of science and law, and therefore we cannot be certain that, if
challenged, our patents, patent applications and/or other intellectual property rights would be
upheld. If one or more of those patents, patent applications and other intellectual property rights
are invalidated, rejected or found unenforceable, that could reduce or eliminate any competitive
advantage we might otherwise have had.
New product development in the medical device industry is both costly and labor intensive with very
low success rates for successful commercialization; if we cannot successfully develop or obtain
future products, our growth would be delayed.
Our long-term success is dependent, in large part, on the design, development and
commercialization of MelaFind® and other new products and services in the medical device
industry. The product development process is time-consuming, unpredictable and costly. There can be
no assurance that we will be able to develop or acquire new products, successfully complete
clinical trials, obtain the necessary regulatory clearances or approvals required from the FDA on a
timely basis, or at all, manufacture our potential products in compliance with regulatory
requirements or in commercial volumes, or that MelaFind® or other potential products
will achieve market acceptance. In addition, changes in regulatory policy for product approval
during the period of product development, and regulatory agency review of each submitted new
application, may cause delays or rejections. It may be necessary for us to enter into licensing
arrangements in order to market effectively any new products or new indications for existing
products. There can be no assurance that we will be successful in entering into such licensing
arrangements on terms favorable to us or at all. Failure to develop, obtain necessary regulatory
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clearances or approvals for, or successfully market potential new products could have a material
adverse effect on our business, financial condition and results of operations.
We face the risk of product liability claims and may not be able to obtain or maintain adequate
insurance.
Our business exposes us to the risk of product liability claims that is inherent in the
testing, manufacturing and marketing of medical devices, including those which may arise from the
misuse or malfunction of, or design flaws in, our products. We may be subject to product liability
claims if MelaFind® causes, or merely appears to have caused, an injury or if a patient
alleges that MelaFind® failed to provide appropriate evaluation information on a lesion
where melanoma was subsequently found to be present. Claims may be made by patients, healthcare
providers or others involved with MelaFind®. MelaFind® will require PMA
approval prior to commercialization in the U.S. The clinical studies of MelaFind® are
considered by the FDA as Non-Significant Risk. Consequently, the trials are conducted under the
auspices of an abbreviated Investigational Device Exemption. We therefore only maintain limited
domestic clinical trial liability insurance, as required by certain clinical sites. We have
obtained clinical trial liability insurance in certain European countries where required by statute
or clinical site policy. Although we have general liability insurance that we believe is
appropriate, and anticipate obtaining adequate product liability insurance before commercialization
of MelaFind®, this insurance is and will be subject to deductibles and coverage
limitations. Our anticipated product liability insurance may not be available to us in amounts and
on acceptable terms, if at all, and if available, the coverage may not be adequate to protect us
against any future product liability claims. If we are unable to obtain insurance at an acceptable
cost or on acceptable terms with adequate coverage, or otherwise protect against potential product
liability claims, we will be exposed to significant liabilities, which may harm our business. A
product liability claim, recall or other claim with respect to uninsured liabilities or for amounts
in excess of insured liabilities could result in significant costs and significant harm to our
business.
We may be subject to claims against us even if the apparent injury is due to the actions of
others. For example, we rely on the expertise of physicians, nurses and other associated medical
personnel to operate MelaFind®. If these medical personnel are not properly trained or
are negligent, we may be subjected to liability. These liabilities could prevent or interfere with
our product commercialization efforts. Defending a suit, regardless of merit, could be costly,
could divert management attention and might result in adverse publicity, which could result in the
withdrawal of, or inability to recruit, clinical trial volunteers, or result in reduced acceptance
of MelaFind® in the market.
Insurance and surety companies have reassessed many aspects of their business and, as a
result, may take actions that could negatively affect our business. These actions could include
increasing insurance premiums, requiring higher self-insured retentions and deductibles, reducing
limits, restricting coverages, imposing exclusions, and refusing to underwrite certain risks and
classes of business. Any of these actions may adversely affect our ability to obtain appropriate
insurance coverage at reasonable costs, which could have a material adverse effect on our business,
financial condition and results of operations.
We may be adversely affected by a data center failure.
The success of MelaFind® is dependent upon our ability to protect our data center
against damage from fire, power loss, telecommunications failure, natural disaster, sabotage or a
similar catastrophic event. Substantially all of our computer equipment and data operations are
located in
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a single facility. Our prospective failure to maintain off-site copies of information contained in
our MelaFind® database, or our inability to use alternative sites in the event we
experience a natural disaster, hardware or software malfunction or other interruption of our data
center could adversely impact our business, financial condition and results of operations. While
the Company does provide off-site back-up for its critical data which we believe to be sufficient
to meet our needs, there can be no assurance that our current plan can anticipate every possible
eventuality.
We may be adversely affected by breaches of online security.
Our MelaFind® lesion database does not contain any information that allows us to
identify specific patients. However, we must identify certain data as belonging to or as derived
from specific patients for regulatory, quality assurance and billing purposes. To the extent that
our activities involve the storage and transmission of confidential information, security breaches
could damage our reputation and expose us to a risk of loss, or to litigation and possible
liability. Our business may be materially adversely affected if our security measures do not
prevent security breaches. In addition, such information may be subject to HIPAA privacy and
security regulations, the potential violation of which may trigger concerns by healthcare
providers, which may adversely impact our business, financial condition and results of operations.
We are dependent upon telecommunications and the internet.
Presently, there is no connection between the MelaFind® hand-held imaging device
and the central server in our offices. However, if in the future a connection between the
MelaFind® hand-held imaging device and the central server in our offices is established,
it will be dependent on the internet. We may use the internet as a medium to provide quality
control calibration services to physicians. We also plan to use the internet to inform the public
about the availability of our products and to market to and communicate with physicians who are
potential or actual customers. Our success will therefore depend in part on the continued growth
and use of the internet. If our ability to use the internet fails, it may materially adversely
affect our business.
We will be obligated to comply with Federal Communications Commission regulations for radio
transmissions used by our products.
Versions of MelaFind® may rely on radio transmissions from the hand-held imaging
device to a base station that may be connected to the internet. Applicable requirements will
restrict us to a particular band of frequencies allocated to low power radio service for
transmitting data in support of specific diagnostic or therapeutic functions. Failure to comply
with all applicable restrictions on the use of such frequencies, or unforeseeable difficulties with
the use of such frequencies, could impede our ability to commercialize MelaFind®.
All of our operations are conducted at a single location. Any disruption at our facility could
increase our expenses.
All of our operations are conducted at a single building in Irvington, New York. We take
precautions to safeguard our facility, including insurance, health and safety protocols, contracted
off-site engineering services, and storage of computer data. However, a natural disaster, such as a
fire, flood or earthquake, could cause substantial delays in our operations, damage or cause us to
incur additional expenses. The insurance we maintain against fires, floods, earthquakes and other
natural disasters may not be adequate to cover our losses in any particular case.
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We may be liable for contamination or other harm caused by materials that we handle, and changes in
environmental regulations could cause us to incur additional expense.
Our manufacturing, research and development and clinical processes do not generally involve
the handling of potentially harmful biological materials or hazardous materials, but they may
occasionally do so. We are subject to federal, state and local laws and regulations governing the
use, handling, storage and disposal of hazardous and biological materials. If violations of
environmental, health and safety laws occur, we could be held liable for damages, penalties and
costs of remedial actions. These expenses or this liability could have a significant negative
impact on our business, financial condition and results of operations. We may violate
environmental, health and safety laws in the future as a result of human error, equipment failure
or other causes. Environmental laws could become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with violations. We may be subject
to potentially conflicting and changing regulatory agendas of political, business and environmental
groups. Changes to or restrictions on permitting requirements or processes, hazardous or biological
material storage or handling might require an unplanned capital investment or relocation. Failure
to comply with new or existing laws or regulations could harm our business, financial condition and
results of operations.
Failure to obtain and maintain regulatory approval in foreign jurisdictions will prevent us from
marketing abroad.
In addition to our pursuit of FDA approval and the commercialization of MelaFind®
in the U.S., we may market MelaFind® internationally. Outside the U.S., we can market a
product only if we receive a marketing authorization and, in some cases, pricing approval, from the
appropriate regulatory authorities. The approval procedure varies among countries and can involve
additional testing, and the time required to obtain approval may differ from that required to
obtain FDA approval.
The foreign regulatory approval process may include all of the risks associated with obtaining
FDA approval, in addition to other risks. Foreign regulatory bodies have established varying
regulations governing product standards, packaging requirements, labeling requirements, import
restrictions, tariff regulations, duties and tax requirements. We may not obtain foreign regulatory
approvals on a timely basis, if at all. Foreign regulatory agencies, as well as the FDA,
periodically inspect manufacturing facilities both in the U.S. and abroad. Approval by the FDA does
not ensure approval by regulatory authorities in other countries, and approval by one foreign
regulatory authority does not ensure approval by regulatory authorities in other foreign countries
or by the FDA. While we are currently attempting to obtain a CE Mark in Europe, we may not be
successful in doing so. Our inability or failure to comply with varying foreign regulations, or the
imposition of new regulations, could restrict our sale of products internationally.
Our success will depend on our ability to attract and retain our personnel.
We are highly dependent on our senior management, especially Joseph V. Gulfo, M.D., our
President and Chief Executive Officer and Dina Gutkowicz-Krusin, Ph.D., our Director of Clinical
Research. Our success will depend on our ability to retain our current senior management and to
attract and retain qualified personnel in the future, including scientists, clinicians, engineers
and other highly skilled personnel.
Competition for senior management personnel, as well as scientists, clinicians, engineers, and
experienced sales and marketing individuals, is intense, and we may not be able to retain our
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personnel. The loss of the services of members of our senior management, scientists, clinicians or
engineers could prevent the implementation and completion of our objectives, including the
development and introduction of MelaFind®. The loss of a member of our senior management
or our professional staff would require the remaining executive officers to divert immediate and
substantial attention to seeking a replacement. Each of our officers may terminate their employment
at any time without notice and without cause or good reason.
We expect to expand our operations and grow our research and development, product development
and administrative operations. This expansion is expected to place a significant strain on our
management, and will require hiring a significant number of qualified personnel. Accordingly,
recruiting and retaining such personnel in the future will be critical to our success. There is
competition from other companies and research and academic institutions for qualified personnel in
the areas of our activities. If we fail to identify, attract, retain and motivate these highly
skilled personnel, we may be unable to continue our development and commercialization activities.
Our financial results for future periods will be affected by the attainment of milestones.
We have granted to certain employees stock options that vest with the attainment of various
time-based or controllable performance milestones. During the attainment of these milestones we
recognize a stock based compensation expense in an amount based on the fair value of the options.
We have also granted options that vest upon attainment of development milestones out of our
control. Upon the attainment of each of these relevant development milestones, which include FDA
approval of the MelaFind® PMA, there will be a significant compensation charge based on
the fair value of such options.
Climate control policy changes, including legislation pending in the U.S. Congress and negotiated
international treaties, could have an impact on our Company.
We cannot predict whether climate control legislation will be enacted and treaties ratified,
the final form any legislation or treaties might take, or the effects of such legislation or
treaties. If climate control legislation is enacted or treaties ratified, our operations or the
operations of our suppliers could be adversely impacted affecting our ability to successfully
launch MelaFind® in the U.S. marketplace.
Results could be impacted by the effects of, and changes in, world-wide economic and capital market
conditions.
The Companys business may be adversely affected by factors in the United States and other
countries that are beyond its control, such as disruptions in the financial markets or downturns in
economic activity. The current world-wide economic conditions could have an adverse impact on the
availability and cost of capital, interest rates, tax rates, or regulations.
Risks Relating to our Common Stock
If we fail to maintain the adequacy of our internal controls, our ability to provide accurate
financial statements could be impaired and any failure to maintain our internal controls could have
an adverse effect on our stock price.
The Sarbanes-Oxley Act of 2002 (SOX), as well as rules subsequently implemented by the SEC,
the Public Company Accounting Oversight Board and the NASDAQ Capital Market, have
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required changes in the corporate governance practices of public companies. Monitoring compliance
with the existing rules and implementing changes required by new rules may increase our legal and
financial compliance costs, divert management attention from operations and strategic
opportunities, and make legal, accounting and administrative activities more time-consuming and
costly. On each of June 30, 2007, 2008 and 2009, our market capitalization exceeded $75 million. As
a result we had our independent registered public accounting firm attest to our compliance with
Section 404 of SOX as of December 31, 2007, 2008 and 2009. Since 2007, we have retained a
consultant experienced in SOX that assists us in the process of instituting changes to our internal
procedures to satisfy the requirements of the SOX. We have evaluated our internal control systems
in order to allow us to report on, and our independent registered public accounting firm to attest
to, our internal controls, as required by Section 404 of the SOX. As a small company with limited
capital and human resources, going forward we may need to divert managements time and attention
away from our business in order to ensure continued compliance with these regulatory requirements.
We may require new information technologies systems, the auditing of our internal controls, and
compliance training for our directors, officers and personnel. Such efforts may entail a
significant expense. If we fail to maintain the adequacy of our internal controls as such standards
are modified, supplemented or amended from time to time, we may not be able to ensure that we can
conclude on an ongoing basis that we have effective internal control over financial reporting in
accordance with Section 404 of the SOX. Any failure to maintain the adequacy of our internal
controls could have an adverse effect on timely and accurate financial reporting and the trading
price of our common stock.
An active trading market for our common stock may not be sustained.
An active public market for our common stock may not be sustained. Further, we cannot be
certain that the market price of our common stock will not decline below the amount required by
NASDAQ to maintain a listing on its Capital Market. Should we fail to meet the minimum standards
established by NASDAQ for its Capital Market, we could be de-listed, meaning shareholders might be
subject to limited liquidity.
Our stock price may be volatile, meaning purchasers of our common stock could incur substantial
losses.
Our stock price is likely to be volatile. Between October 28, 2005 (the date of our initial
public offering) and April 30, 2010, our stock price has ranged from $2.29 to $12.24 per share. The
stock market in general and the market for medical technology companies in particular have
experienced extreme volatility that has often been unrelated to the operating performance of
particular companies. The following factors, in addition to other risk factors described in this
section and general market and economic conditions, may have a significant impact on the market
price of our common stock:
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results of our research and development efforts and our clinical trials; |
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the timing of regulatory approval for our products; |
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failure of any of our products, if approved, to achieve commercial success; |
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the announcement of new products or product enhancements by us or our competitors; |
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regulatory developments in the US and foreign countries; |
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ability to manufacture our products to commercial standards; |
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developments concerning our clinical collaborators, suppliers or marketing partners; |
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changes in financial estimates or recommendations by securities analysts; |
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public concern over our products; |
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developments or disputes concerning patents or other intellectual property rights; |
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product liability claims and litigation against us or our competitors; |
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the departure of key personnel; |
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the strength of our balance sheet; |
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variations in our financial results or those of companies that are perceived to be
similar to us; |
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changes in the structure of and third-party reimbursement in the US and other countries; |
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changes in accounting principles or practices; |
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general economic, industry and market conditions; and |
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future sales of our common stock. |
A decline in the market price of our common stock could cause you to lose some or
all of your investment and may adversely impact our ability to attract and retain employees and
raise capital. In addition, stockholders may initiate securities class action lawsuits if the
market price of our stock drops significantly. Whether or not meritorious, litigation brought
against us could result in substantial costs and could divert the time and attention of our
management. Our insurance to cover claims of this sort may not be adequate.
Our charter documents and Delaware law may inhibit a takeover that stockholders consider favorable
and could also limit the market price of our stock.
Provisions of our amended and restated certificate of incorporation and bylaws and applicable
provisions of Delaware law may make it more difficult for or prevent a third party from acquiring
control of us without the approval of our board of directors. These provisions:
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set limitations on the removal of directors; |
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limit who may call a special meeting of stockholders; |
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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 stockholder
meetings; |
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do not permit cumulative voting in the election of
our directors, which would otherwise permit less than a
majority of stockholders to elect directors; |
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prohibit stockholder action by written consent,
thereby requiring all stockholder actions to be taken at
a meeting of our stockholders; and |
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provide our board of directors the ability to
designate the terms of and issue a new series of
preferred stock without stockholder approval. |
In addition, Section 203 of the Delaware General Corporation Law generally limits our ability
to engage in any business combination with certain persons who own 15% or more of our outstanding
voting stock or any of our associates or affiliates who at any time in the past three years have
owned 15% or more of our outstanding voting stock.
These provisions may have the effect of entrenching our management team and may deprive you of
the opportunity to sell your shares to potential acquirers at a premium over prevailing prices.
This potential inability to obtain a control premium could reduce the price of our common stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements contained or incorporated by reference in this prospectus that are not
historical facts are forward-looking. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such statements include,
without limitation, our expectations regarding sales, earnings or other future financial
performance and liquidity, conduct and completion of clinical trials, product introductions, entry
into new geographic regions, and general optimism about future operations or operating results.
Some of these statements can be identified by the use of forward-looking terminology such as
prospects, outlook, believes, estimates, intends, may, will, should, anticipates,
expects or plans, or the negative or other variation of these or similar words, or by
discussion of trends and conditions, strategy or risks and uncertainties.
These forward-looking expectations are based on current assumptions within the bounds of
managements knowledge of our business and operations and which management believes are reasonable.
These assumptions are subject to risks and uncertainties, and actual results could differ
materially from expectations because of issues and uncertainties such as those listed under the
caption Risk Factors and elsewhere in this prospectus and in documents incorporated into this
prospectus which, among others, should be considered in evaluating our future financial
performance. All subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the cautionary statements
in this prospectus. Readers are advised to consult any further disclosures we may make on related
subjects in subsequent reports filed with the SEC.
Additional information on factors that may affect our business and financial results can be
found in our filings with the SEC. All forward-looking statements should be considered in light of
these risks and uncertainties. We assume no responsibility to update forward-looking statements
made in this prospectus.
USE OF PROCEEDS
Unless otherwise provided in the applicable prospectus supplement, we intend to use the net
proceeds from the sale of the securities under this prospectus for general corporate purposes,
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which may include, among other things, working capital, acquisition or investments in our
businesses and capital expenditures. Pending the application of the net proceeds, we intend to
invest the net proceeds in short-term, investment grade, interest-bearing securities.
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PLAN OF DISTRIBUTION
Unless otherwise set forth in a prospectus supplement accompanying this prospectus, we may
sell the offered securities in any one or more of the following ways from time to time:
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through agents; |
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to or through underwriters; |
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through dealers; |
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directly to purchasers; or |
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through remarketing firms. |
The prospectus supplement with respect to the offered securities will set
forth the terms of the offering of the offered securities, including:
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the name or names of any underwriters, dealers or agents; |
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the purchase price of the offered securities and the proceeds to us from such sale; |
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any underwriting discounts and commissions or agency fees and other items
constituting underwriters or agents compensation; |
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any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers; and |
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any securities exchange on which such offered securities may be listed. |
Any initial public offering price, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
The distribution of the offered securities may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at negotiated prices.
Offers to purchase the offered securities may be solicited by agents designated by us from
time to time. Any agent involved in the offer or sale of the offered securities will be named, and
any commissions payable by us to such agent will be set forth, in the applicable prospectus
supplement. Unless otherwise indicated in the prospectus supplement, the agent will be acting on a
reasonable best efforts basis for the period of its appointment.
If underwriters are used in the sale of the offered securities, the offered securities will be
acquired by the underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at fixed public offering prices or at varying
prices determined by the underwriters at the time of sale. The offered securities may be offered to
the public either through underwriting syndicates represented by managing underwriters or directly
by the managing underwriters. Unless otherwise indicated in the applicable prospectus supplement,
the underwriters are subject to certain conditions precedent and will be obligated to purchase all
the offered securities of a series if they purchase any of the offered securities.
If a dealer is used in the sale of the offered securities, we will sell the offered securities
to the dealer as principal. The dealer may then resell the offered securities to the public at
varying prices to be determined by the dealer at the time of resale. The name of the dealer and the
terms of the transaction will be set forth in the applicable prospectus supplement.
Offers to purchase the offered securities may be solicited directly by us and the sale thereof
may be made by us directly to institutional investors or others. The terms of any such sales will
be described in the applicable prospectus supplement.
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The offered securities may also be offered and sold by a remarketing firm in connection with a
remarketing arrangement upon their purchase. Remarketing firms will act as principals for their own
accounts or as agents for us. These remarketing firms will offer or sell the offered securities
pursuant to the terms of the offered securities. Any remarketing firm will be identified and the
terms of its agreements, if any, with us and its compensation will be described in the applicable
prospectus supplement.
We may authorize underwriters, dealers and agents to solicit from third parties offers to
purchase the offered securities under contracts providing for payment and delivery on future dates.
The applicable prospectus supplement will describe the material terms of these contracts, including
any conditions to the purchasers obligations, and will include any required information about
commissions we may pay for soliciting these contracts.
In connection with the sale of the offered securities, agents, underwriters, dealers or
remarketing firms may receive compensation from us or from purchasers of the offered securities for
whom they act as agents in the form of discounts, concessions or commissions. Underwriters may sell
the offered securities to or through dealers, and those dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters or commissions from the
purchasers for whom they may act as agents. Agents, underwriters, dealers and remarketing firms
that participate in the distribution of the offered securities, and any institutional investors or
others that purchase offered securities directly and then resell the securities, may be deemed to
be underwriters, and any discounts or commissions received by them from us and any profit on the
resale of the securities by them may be deemed to be underwriting discounts and commissions under
the Securities Act.
The maximum commission or discount to be received by any member of the Financial Industry
Regulatory Authority (FINRA) or independent broker-dealer will not be greater than 8% of the
initial gross proceeds received by us for the sale of any securities being registered pursuant to
SEC Rule 415.
Agents, underwriters, dealers and remarketing firms may be entitled under relevant agreements
entered into with us to indemnification by us against certain civil liabilities, including
liabilities under the Securities Act or to contribution with respect to payments which the agents,
underwriters or dealers may be required to make.
Each series of the offered securities will be a new issue and, other than the shares of common
stock which are listed on the Nasdaq Capital Market, will have no established trading market. Any
underwriters to whom we sell the offered securities for public offering and sale may make a market
in the securities, but such underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. We may elect to list any series of offered securities on
an exchange, and in the case of common stock, on any additional exchange, but, unless otherwise
specified in the applicable prospectus supplement, we will not be obligated to do so. We cannot
predict the liquidity of the trading market for any of the offered securities.
In connection with an offering, the underwriters may purchase and sell the offered securities
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 offered securities than they are required to purchase in an
offering. Stabilizing transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the offered securities while an offering
is in progress.
The underwriters also may 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
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underwriters have repurchased offered securities sold by or for the account of that underwriter in
stabilizing or short-covering transactions.
These activities by the underwriters may stabilize, maintain or otherwise affect the market
price of the offered securities. As a result, the price of the offered securities may be higher
than the price that otherwise might exist in the open market. If these activities are commenced,
they may be discontinued by the underwriters at any time. These transactions may be effected on an
exchange or automated quotation system, if the offered securities are listed on that exchange or
admitted for trading on that automated quotation system, or in the over-the-counter market or
otherwise.
Underwriters, dealers, agents and remarketing firms, or their affiliates, may be customers of,
engage in transactions with, or perform services for, us and our subsidiaries in the ordinary
course of business.
DESCRIPTION OF CAPITAL STOCK
The following information describes our common stock and provisions of our Fifth Amended and
Restated Certificate of Incorporation and our Third Amended and Restated By-laws as in effect as of
the date of this prospectus. This description is only a summary.
Common Stock
We are authorized to issue up to 45,000,000 shares of common stock, $0.001 par value per
share. As of April 30, 2010, there were 23,026,035 shares of our common stock issued and
outstanding.
Holders of our common stock are entitled to one vote per share on matters on which our
stockholders vote. There are no cumulative voting rights. Holders of common stock are entitled to
receive dividends, if declared by our Board of Directors, out of funds that we may legally use to
pay dividends. If we liquidate or dissolve, holders of common stock are entitled to share ratably
in our assets once our debts are paid. All shares of common stock that are outstanding as of the
date of this prospectus are fully-paid and non-assessable.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock Transfer & Trust
Company, 59 Maiden Lane, New York, New York 10038.
DESCRIPTION OF WARRANTS
The following description, together with the additional information we may include
in any applicable prospectus supplements, summarizes the material terms and provisions of the
warrants that we may offer under this prospectus. While the terms we have summarized below will
apply generally to any warrants that we may offer under this prospectus, we will describe the
particular terms of any series of warrants in more detail in the applicable prospectus supplement.
The terms of any warrants offered under a prospectus supplement may differ from the terms described
below. 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.
We will file as exhibits to the registration statement of which this prospectus is a part, or
will incorporate by reference from another report that we file with the SEC, the form of warrant
29
that describes the terms of the series of warrants we are offering before the issuance of the
related series of warrants. The following summaries of material terms and provisions of the
warrants are subject to, and qualified in their entirety by reference to, all the provisions of the
warrant. We urge you to read the applicable prospectus supplements related to the particular series
of warrants that we sell under this prospectus, as well as the complete warrant.
General
The warrants may be issued under a warrant agreement independently or together with any other
securities offered by any prospectus supplement and may be attached to or separate from such other
offered securities. If warrants are offered, the applicable prospectus supplement will describe the
designation and terms of the warrants, including:
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the offering price, if any; |
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the designation and terms of the common stock purchasable upon exercise of
the warrants; |
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if applicable, the date on and after which the warrants and the related
offered securities will be separately transferable; |
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the number of shares of common stock purchasable upon exercise of one warrant
and the initial price at which the shares may be purchased upon exercise; |
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the date on which the right to exercise the warrants will commence and expire; |
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a discussion of certain United States Federal income tax considerations; |
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the call provisions, if any; |
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the currency, currencies or currency units in which the offering price, if
any, and exercise price are payable; |
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any antidilution provisions of the warrants; and |
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any other terms of the warrants. |
The shares of common stock issuable upon exercise of the warrants will, when issued in
accordance with the warrant agreement, be fully paid and nonassessable.
Exercise of Stock Warrants
Warrants may be exercised by surrendering the warrant to the warrant agent, which may be the
Company, with the form of election to purchase properly completed and signed and by payment in full
of the exercise price, as set forth in the applicable prospectus supplement. Upon receipt of the
exercise paperwork, the warrant agent will requisition from the transfer agent for the common stock
for issuance and delivery to or upon the written order of the exercising warrantholder, a
certificate representing the number of shares of common stock purchased. If less than all of the
warrants evidenced by any warrant are exercised, the warrant agent will deliver to the exercising
warrantholder a new warrant representing the unexercised warrants.
30
No Rights as Stockholders
Holders of warrants will not be entitled, by virtue of being such holders, to vote, to
consent, to receive dividends, to receive notice as stockholders with respect to any meeting of
stockholders for the election of our directors or any other matter, or to exercise any rights
whatsoever as our stockholders.
Outstanding Warrants
In connection with our initial public offering in October 2005, we issued 150,000 warrants to
the underwriters to purchase shares of our common stock at $6.25 per share. These 5-year warrants
became exercisable on October 28, 2006, and 68,125 remain outstanding at April 30, 2010.
In connection with our November 2006 and August 2007 private placements, we issued warrants to
purchase up to 346,857 and 500,041 shares of our common stock, respectively. At April 30, 2010,
none of the November 2006 warrants and 346,781 of the August 2007 warrants were outstanding. The
August 2007 outstanding warrants are exercisable for five years at a price of $8.00 per share.
In connection with our May 2009 financing with Kingsbridge Capital, we issued a 5 year warrant
to Kingsbridge to purchase up to 200,000 shares of our common stock at an exercise price of $11.35
per share. These 200,000 warrants are outstanding at April 30, 2010.
DESCRIPTION OF UNITS
The following description, together with the additional information we may include in any
applicable prospectus supplements, summarizes the material terms and provisions of the units that
we may offer under this prospectus. While the terms we have summarized below will apply generally
to any units that we may offer under this prospectus, we will describe the particular terms of any
series of units in more detail in the applicable prospectus supplement. The terms of any units
offered under a prospectus supplement may differ from the terms described below. 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.
We will file as exhibits to the registration statement of which this prospectus is a part, or
will incorporate by reference from another report that we file with the SEC, the form of unit
agreement that describes the terms of the series of units we are offering, and any supplemental
agreements, before the issuance of the related series of units. The following summaries of material
terms and provisions of the units are subject to, and qualified in their entirety by reference to,
all the provisions of the unit agreement and any supplemental agreements applicable to a particular
series of units. We urge you to read the applicable prospectus supplements related to the
particular series of units that we sell under this prospectus, as well as the complete unit
agreement and any supplemental agreements that contain the terms of the units.
General
We may issue units comprised of common stock and warrants in any combination. Each unit will
be issued so that the holder of the unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of a holder of each included
31
security. The unit agreement under which a unit is issued may provide that the securities included
in the unit may not be held or transferred separately, at any time or at any time before a
specified date.
We will describe in the applicable prospectus supplement the terms of the series of units,
including:
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the designation and terms of the units and of the
securities comprising the units, including whether and
under what circumstances those securities may be held or
transferred separately; |
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any provisions of the governing unit agreement that
differ from those described below; and |
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any provisions for the issuance, payment,
settlement, transfer or exchange of the units or of the
securities comprising the units. |
The provisions described in this section, as well as those described under Description of
Capital Stock and Description of Warrants will apply to each unit and to any common stock or
warrant included in each unit, respectively.
Issuance in Series
We may issue units in such amounts and in numerous distinct series as we determine.
Enforceability of Rights by Holders of Units
Each unit agent will act solely as our agent under the applicable unit agreement and will not
assume any obligation or relationship of agency or trust with any holder of any unit. A single bank
or trust company may act as unit agent for more than one series of units. A unit agent will have no
duty or responsibility in case of any default by us under the applicable unit agreement or unit,
including any duty or responsibility to initiate any proceedings at law or otherwise, or to make
any demand upon us. Any holder of a unit may, without the consent of the related unit agent or the
holder of any other unit, enforce by appropriate legal action its rights as holder under any
security included in the unit.
LEGAL MATTERS
For the purposes of this offering, Golenbock Eiseman Assor Bell & Peskoe LLP, New York, New
York is passing upon the validity of the securities offered by this prospectus.
EXPERTS
The financial statements incorporated in this prospectus by reference from our Annual Report
on Form 10-K, for the year ended December 31, 2009 have been audited by Eisner LLP, an independent
registered public accounting firm as stated in their report incorporated herein by reference, which
report has been so incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
32
WHERE YOU CAN FIND MORE INFORMATION
Federal securities laws require us to file information with the SEC concerning our business
and operations. Accordingly, we file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at the SECs public
reference rooms, including those located at 100 F Street, N.E., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on public reference rooms. Our SEC filings are
also available to the public from the SECs web site at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3 under the Securities Act with
respect to the securities being offering under this prospectus. This prospectus, which is a part of
that registration statement, does not include all the information contained in the registration
statement and its exhibits. For further information with respect to our company and the securities,
you should consult the registration statement and its exhibits. Statements contained in this
prospectus concerning the provisions of any documents are summaries of those documents, and we
refer you to the document filed with the SEC for more information. The registration statement and
any of its amendments, including exhibits filed as a part of the registration statement or an
amendment to the registration statement, are available for inspection and copying as described
above.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference certain information we file with them in this
prospectus. This means that we can disclose important information to you by referring you to the
other information we have filed with the SEC. The information that we incorporate by reference is
considered to be part of this prospectus. Information that we file later with the SEC will
automatically update and supersede this information. Further, all filings we make under the
Exchange Act prior to the termination of the offering shall be deemed to be incorporated by
reference into this prospectus. The following documents filed by us with the SEC and any future
filings under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (File No. 000-51481) made
prior to the termination of this offering are incorporated by reference:
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our Annual Report on Form 10-K for the year ended December 31, 2009
(including information specifically incorporated by reference into our Form 10-K
from our Proxy Statement for our 2010 Annual Meeting of Stockholders); |
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our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010; |
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our Current Reports on Forms 8-K filed on January 11,
2010, March 24, 2010, April 30, 2010 and May 26, 2010; and |
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the description of our common stock contained in our registration statement
on Form 8-A and any amendments or reports filed for the purpose of updating such
description. |
This prospectus may contain information that updates, modifies or is contrary to information
in one or more of the documents incorporated by reference in this prospectus. Reports we file with
the SEC after the date of this prospectus may also contain information that updates, modifies or is
contrary to information in this prospectus or in documents incorporated by reference in this
prospectus. Investors should review these reports as they may disclose a change in our business,
prospectus, financial condition or other affairs after the date of this prospectus.
33
We will also provide paper copies of our filings free of charge upon written or oral request.
You can request a free copy of the above filings or any filings subsequently incorporated by
reference into this prospectus by writing or calling us at:
MELA Sciences, Inc.
50 South Buckhout Street, Suite 1
Irvington, New York 10533
Attention: Richard I. Steinhart
(914) 591-3783
WE HAVE NOT AUTHORIZED ANY DEALER, SALES PERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER
OF THESE SECURITIES IN ANY STATE WHERE AN OFFER IS NOT PERMITTED. THE INFORMATION IN THIS
PROSPECTUS IS CURRENT AS OF THE DATE OF THIS PROSPECTUS AND YOU SHOULD NOT ASSUME THAT THIS
PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE.
34
MELA SCIENCES, INC.
$75,000,000
Common Stock
Warrants
Units
PROSPECTUS
, 2010
35
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses Of Issuance And Distribution
The following table sets forth the costs and expenses, other than placement agent
commissions, if any, which will be paid by us, in connection with the distribution of the
securities being registered. All amounts are estimated, except the SEC registration fee:
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SEC registration fee |
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$ |
5,347.50 |
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Accounting fees and expenses |
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$ |
10,000.00 |
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Legal fees and expenses |
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$ |
20,000.00 |
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Printing and miscellaneous expenses |
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$ |
5,000.00 |
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Total |
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$ |
40,347.50 |
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Item 15. Indemnification Of Directors And Officers
Section 145 of the Delaware General Corporation Law permits a corporation to include in its
charter documents, and in agreements between the corporation and its directors and officers,
provisions expanding the scope of indemnification beyond that specifically provided by the current
law.
Article IX of our Fifth Amended and Restated Certificate of Incorporation provides for the
indemnification of our officers and directors to the fullest extent permissible under Delaware law.
Article VI of our Third Amended and Restated Bylaws provides for the indemnification of
officers, directors or other agents acting on our behalf if such person acted in good faith and in
a manner reasonably believed to be in and not opposed to our best interest and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe his or her conduct
was unlawful.
We have agreed to enter into Indemnification Agreements with each of our current directors and
officers to provide such directors and officers additional contractual assurances regarding the
scope of the indemnification set forth in our certificate of incorporation and bylaws and to
provide additional procedural protections. At present, there is no pending litigation or proceeding
involving any of our directors, officers or employees regarding which indemnification is sought.
The indemnification provision in our certificate of incorporation and bylaws and the
indemnification agreements between us and each of our directors and officers may be sufficiently
broad to permit indemnification of our directors and officers for liabilities arising under the
Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to our directors, officers and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and is, therefore,
unenforceable.
II-1
Item 16. Exhibits
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No. |
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Description |
1.1
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Form of Underwriting Agreement 1 |
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3.1
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Fifth Amended and Restated Certificate of Incorporation of the Company* |
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3.2
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Third Amended and Restated By-laws of Company2 |
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4.1
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Specimen Common Stock Certificate2 |
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4.2
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Form of Common Stock Warrant Agreement and Warrant Certificate1 |
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4.3
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Form of Unit Agreement1 |
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5.1
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Opinion of Golenbock Eiseman Assor Bell & Peskoe LLP* |
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23.1
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Consent of Golenbock Eiseman Assor Bell & Peskoe LLP (included in Exhibit 5.1). |
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23.2
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Consent of Eisner LLP* |
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24.1
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Power of Attorney (included as part of the signature page of this Registration Statement) |
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* |
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Filed herewith. |
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1 |
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To be filed, if necessary, subsequent to
the effectiveness of this registration
statement by an amendment to this
registration statement or incorporated by
reference pursuant to a Current Report on
Form 8-K in connection with the offering of
securities. |
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2 |
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Incorporated by reference to our
Registration Statement on Form S-1, as
amended (File No. 333-125517), as filed on
August 8, 2005. |
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high and of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the Calculation of Registration Fee table in the effective
registration statement.
II-2
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in
the registration statement.
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the registration statement is on Form S-3 and the information required to be included in a
post-effective amendment by those paragraphs is contained in reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration statement, or is contained in a form
of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(i) If the registrant is relying on Rule 430B
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be
part of the registration statement as of the date the filed prospectus was deemed part of and
included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to
Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section
10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used after effectiveness
or the date of the first contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is
at that date an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that
is part of the registration statement will, as to a purchaser with a time of contract of sale prior
to such effective date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document
immediately prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to
be part of and included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of sale prior to such first
use, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such
date of first use.
II-3
(5) That, for the purpose of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of
the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii)
any free writing prospectus relating to the offering prepared by or on behalf of the undersigned
registrant or used or referred to by the undersigned registrant; (iii) the portion of any other
free writing prospectus relating to the offering containing material information about the
undersigned registrant or its securities provided by or on behalf of the undersigned registrant;
and (iv) any other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrants annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plans annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act will be deemed to be part of this registration statement
as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus will be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that
time will be deemed to be the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Irvington, New York, on this 26th day of May, 2010.
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MELA SCIENCES, INC.
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By: |
/s/ Joseph V. Gulfo, M.D.
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Joseph V. Gulfo, M.D. |
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Chief Executive Officer |
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POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Joseph V.
Gulfo and Richard I. Steinhart and each of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including, without limitation,
post-effective amendments) to this Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as each of them might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the date indicated.
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Name and Signature |
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Title |
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Date |
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/s/ Joseph V. Gulfo, M.D.
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Director, President and Chief Executive
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May 26, 2010 |
|
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Officer
(Principal Executive Officer) |
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/s/ Richard I. Steinhart
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Vice President, Finance and Chief
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May 26, 2010 |
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Financial
Officer (Principal
Financial and Accounting Officer) |
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/s/ Breaux Castleman
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Chairman of the Board of Directors
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May 26, 2010 |
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/s/ Sidney Braginsky
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Director
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May 26, 2010 |
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/s/ George C. Chryssis
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Director
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May 26 2010 |
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/s/ Martin D. Cleary
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Director
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May 26, 2010 |
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/s/ Anne Egger
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Director
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May 26, 2010 |
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II-5
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Name and Signature |
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Title |
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Date |
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/s/ Charles Stiefel
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Director
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May 26, 2010 |
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/s/ Gerald Wagner, PhD.
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Director
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May 26, 2010 |
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II-6
Exhibit Index
|
|
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No. |
|
Description |
1.1
|
|
Form of Underwriting Agreement 1 |
|
|
|
3.1
|
|
Fifth Amended and Restated Certificate of Incorporation of the Company* |
|
|
|
3.2
|
|
Third Amended and Restated By-laws of Company2 |
|
|
|
4.1
|
|
Specimen Common Stock Certificate2 |
|
|
|
4.2
|
|
Form of Common Stock Warrant Agreement and Warrant Certificate1 |
|
|
|
4.3
|
|
Form of Unit Agreement1 |
|
|
|
5.1
|
|
Opinion of Golenbock Eiseman Assor Bell & Peskoe LLP* |
|
|
|
23.1
|
|
Consent of Golenbock Eiseman Assor Bell & Peskoe LLP (included in Exhibit 5.1) |
|
|
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23.2
|
|
Consent of Eisner LLP* |
|
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24.1
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Power of Attorney (included as part of the signature page of this Registration Statement) |
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* |
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Filed herewith. |
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1 |
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To be filed, if necessary, subsequent to
the effectiveness of this registration
statement by an amendment to this
registration statement or incorporated by
reference pursuant to a Current Report on
Form 8-K in connection with the offering of
securities. |
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3 |
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Incorporated by reference to our
Registration Statement on Form S-1, as
amended (File No. 333-125517), as filed on
August 8, 2005. |
exv3w1
Exhibit 3.1
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ELECTRO-OPTICAL SCIENCES, INC.
Electro-Optical Sciences, Inc., a corporation organized and existing under the laws of the
State of Delaware (the Corporation), certifies that:
A. The name of the Corporation is Electro-Optical Sciences, Inc. The Corporations original
Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on
September 3, 1997 under the name Electro-Optical Sciences, Inc.
B. The
Corporations Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on June 19, 2003.
C. The Corporations Second Amended and Restated Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on April 7, 2004.
D. The Corporations Third Amended and Restated Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on October 26, 2004.
E. The Corporations Fourth Amended and Restated Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on November 1, 2005.
F. This
Fifth Amended and Restated Certificate of Incorporation of the Corporation was duly adopted in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware (the
DGCL), and restates, integrates and further amends the provisions of the Corporations Fourth Amended
and Restated Certificate of Incorporation as follows:
ARTICLE I
The name of the Corporation is MELA Sciences, Inc.
ARTICLE II
The purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the DGCL.
The address of the Corporations registered office in the State of Delaware is c/o United
Corporate Services, Inc., 874 Walker Road, Suite C, Dover, DE 19904. The name of the registered
agent at such address is United Corporate Services, Inc.
ARTICLE III
The total number of shares of stock that the Corporation shall have authority to issue is
55,000,000 consisting of 45,000,000 shares of Common Stock, $0.001 par value per share, and
10,000,000 shares of Preferred Stock, $0.10 par value per share.
The Preferred Stock may be issued in one or more series at such time or times and for such
consideration or considerations as the Board of Directors of the Corporation may determine. Each
series shall be so designated as to distinguish the shares thereof from the shares of all other
series and classes. Except as to the relative preferences, powers, qualifications, rights and
privileges which may be determined by the Board of Directors of the Corporation as described below,
all shares of Preferred Stock shall be identical. Except as and to the extent otherwise specified
herein, different series of Preferred Stock shall not be construed to constitute different classes of shares for the purpose of voting by
class.
The Board of Directors of the Corporation is expressly authorized by a vote of all of the
members of the Board of Directors then in office, subject to the limitations prescribed by law and
the provisions of this Fifth Amended and Restated Certificate of Incorporation, as amended from
time to time, to provide by adopting a vote or votes, a certificate of which shall be filed in
accordance with the DGCL, for the issue of the Preferred Stock in one or more classes or series,
each with the designations, rights and privileges that shall be stated in the vote or votes
creating such classes or series. The authority of the Board of Directors of the Corporation with
respect to each such class or series of Preferred Stock shall include, without limitation of the foregoing, the right to
determine and fix:
(a) The distinctive designation of such class or series and the number of shares to constitute
such class or series;
(b) The rate at which dividends on the shares of such class or series shall be declared and
paid, or set aside for payment, whether dividends at the rate so determined shall be cumulative,
and whether the shares of such class or series shall be entitled to any participating or other
dividends in addition to dividends at the rate so determined, and if so on what terms;
(c) The right, if any, of the Corporation to redeem shares of the particular class or series
and, if redeemable, the price, terms and manner of such redemption;
(d) The special and relative rights and preferences, if any, and the amount or amounts per
share, which the shares of such class or series shall be entitled to receive upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
(e) The terms and conditions, if any, upon shares of such class or series shall be convertible
into, or exchangeable for, shares of stock, or any other class or classes,
including the price or prices or the rate or rates of conversion or exchange and the terms of
adjustment, if any;
(f) The obligation, if any, of the Corporation to retire or purchase shares of such class or
series pursuant to a sinking fund or fund of a similar nature or otherwise, and the terms and
conditions of such obligation;
(g) The voting rights, if any, including special voting rights with respect to the election of
directors and matters adversely affecting any such class or series;
(h) The limitations, if any, on the issuance of additional shares of such class or series or
any shares of any other class or series of Preferred Stock; and
(i) Any other preferences, powers, qualifications, special or relative rights and privileges
thereof that the Board of Directors of the Corporation may deem advisable and that are not
inconsistent with law and the provisions of this Fifth Amended and Restated Certificate of
Incorporation.
ARTICLE IV
The Corporation reserves the right to amend, alter, change, or repeal any provision contained
in this Fifth Amended and Restated Certificate of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon the stockholders herein are granted subject to
this right.
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
1. The number of directors which constitutes the whole Board of Directors of the Corporation
shall be designated in the Bylaws of the Corporation.
2. Any director may be removed from office by the stockholders of the Corporation only for
cause. Vacancies occurring on the Board of Directors for any reason and newly created directorships
resulting from an increase in the authorized number of directors may be filled only by vote of a
majority of the remaining members of the Board of Directors, although less than a quorum, or by a
sole remaining director, at any meeting of the Board of Directors. A person so elected by the Board
of Directors to fill a vacancy or newly created directorship shall hold office until his or her
successor shall have been duly elected and qualified.
3. Elections of directors need not be by written ballot unless the Bylaws of the Corporation
shall so provide.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by statute, the Board of
Directors of the Corporation is expressly authorized to make, alter, amend or repeal the Bylaws of
the Corporation.
ARTICLE VIII
No action shall be taken by the stockholders of the Corporation except at an annual or special
meeting of the stockholders called in accordance with the Bylaws and no action shall be taken by
the stockholders by written consent.
ARTICLE IX
1. To the fullest extent permitted by the Delaware General Corporation Law as the same exists
or as may hereafter be amended, a director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director.
2. The Corporation may indemnify to the fullest extent permitted by law any person made or
threatened to be made a party to an action or proceeding, whether criminal, civil, administrative
or investigative, by reason of the fact that he, his testator or intestate is or was a director,
officer or employee of the Corporation or any predecessor of the Corporation or serves or served at
any other enterprise as a director, officer or employee at the request of the Corporation or any
predecessor to the Corporation.
3. Neither any amendment nor repeal of this Article IX, nor the adoption of any provision of
this Fifth Amended and Restated Certificate of Incorporation inconsistent with this Article IX,
shall eliminate or reduce the effect of this Article IX, in respect of any matter occurring, or any
action or proceeding accruing or arising or that, but for this Article IX, would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE X
Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws
may provide. The books of the Corporation may be kept (subject to any provision contained in the
statutes) outside of the State of Delaware at such place or places as may be designated from time
to time by the Board of Directors or in the Bylaws of the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Fifth Amended and Restated Certificate of Incorporation this 30th day of April, 2010.
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By: |
/s/ Joseph V. Gulfo, M.D.
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Joseph V. Gulfo, M.D. |
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Chief Executive Officer |
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exv5w1
Exhibit 5.1
Golenbock Eiseman Assor Bell & Peskoe
437 Madison Avenue
New York, New York 10022
May 26, 2010
MELA Sciences, Inc.
50 South Buckhout Street, Suite 1
Irvington, New York 10533
Ladies and Gentlemen:
We have acted as counsel to MELA Sciences, Inc., a Delaware corporation (the Company), in
connection with its filing on the date hereof of the Registration Statement on Form S-3 (the
Registration Statement) under the Securities Act of 1933, as amended (the Act), with the
Securities and Exchange Commission (the SEC). The Registration Statement relates to the proposed
offer and sale by the Company from time to time, as set forth in the prospectus contained in the
Registration Statement (the Prospectus) and as shall be set forth in one or more supplements to
the Prospectus (each, a Prospectus Supplement), of up to an aggregate of $75,000,000 of
securities (the Securities), which may include any or all of the following: (i) shares of common
stock, par value $0.001 per share, of the Company (the Common Stock); (ii) warrants to purchase
shares of Common Stock (the Warrants); and (iii) units comprised of Common Stock and Warrants
(the Units).
In connection with this opinion letter, we have examined the Registration Statement, the
Companys Fifth Amended and Restated Certificate of Incorporation (the Charter), Third Amended
and Restated Bylaws (the Bylaws), and such other documents, records and other instruments as we
have deemed appropriate for purposes of the opinion set forth herein. With respect to such
examination, we have assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all documents submitted to us
as reproduced or certified copies, and the authenticity of the originals of those latter documents.
As to questions of fact material to this opinion, we have, to the extent deemed appropriate, relied
upon certain representations of certain officers and employees of the Company.
For the purpose of the opinions set forth below, we have also assumed, without independent
investigation or verification, that:
(a) the issuance, sale, number or amount, as the case may be, and terms of Securities to be
offered from time to time will be duly authorized and established, in accordance with the Charter,
the Bylaws and applicable Delaware law (each, a Corporate Action), and will not conflict with or
constitute a breach of the terms of any agreement or instrument to which the Company is subject;
(b) any Warrants will be issued under one or more warrant agreements (each, a Warrant
Agreement) between the Company and the person identified in the Warrant Agreement as a warrant
agent (each, a Warrant Agent) and/or the person or persons identified in the Warrant Agreement as
the holder or holders of such Warrants (each a Warrant Holder) and the execution, delivery and
performance of the applicable Warrant Agreement will be duly authorized by Corporate Action, and
will not conflict with or constitute a breach of the terms of any agreement or instrument to which
the Company is subject;
(c) any Units will be issued under one or more unit agreements (each, a Unit Agreement and
together with Warrant Agreements, the Agreements) between the Company and the person identified
in the Unit Agreement as a unit agent (each, a Unit Agent) and/or the person or persons
identified in the Unit Agreement as the holder or holders of such Units (each a Unit Holder) and
the execution, delivery and performance of the applicable Unit Agreement will be duly authorized by
Corporate Action, and will not conflict with or constitute a breach of the terms of any agreement
or instrument to which the Company is subject;
(d) the Registration Statement and any amendments thereto (including post-effective
amendments) will have become effective and will comply with all applicable federal and state laws
at the time the Securities are offered and issued as contemplated by the Registration Statement;
(e) a Prospectus Supplement will have been prepared and filed with the SEC describing the
Securities offered thereby and will comply with all applicable laws at the time the Securities are
offered and issued as contemplated by the Registration Statement;
(f) all Securities will be issued and sold in compliance with applicable federal and state
securities laws; and
(g) a definitive purchase, underwriting or similar agreement with respect to any Securities
offered or issued will have been duly authorized and validly executed and delivered by the Company
and the other parties thereto.
Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of
the date hereof:
1. Upon due authorization by Corporate Action of the issuance and sale of shares of the
Common Stock and upon issuance and delivery of such shares of Common Stock against payment for such
shares (in an amount at least equal to the aggregate par value of such shares of the Common Stock)
in accordance with the terms of the Corporate Action and as contemplated by the Registration
Statement and the applicable Prospectus Supplement, and, if applicable, upon the conversion,
exchange or exercise of any other Securities in accordance with their respective terms, the terms
of the Corporate Action and as contemplated by the Registration Statement and the applicable
Prospectus Supplement (which shall, in each case, provide for payment of consideration that shall
be at least equal to the aggregate par value of such shares of the Common Stock), such shares of
Common Stock will be validly issued, fully paid and nonassessable.
2. When a Warrant Agreement providing for the specific terms of a particular issuance of
Warrants has been duly authorized by Corporate Action and has been duly executed and delivered by
the Company, the Warrant Agent named in such Warrant Agreement and such Warrants and/or the Warrant
Holder named in such Warrant Agreement and such Warrants, conforming to the requirements of such
Warrant Agreement, have been duly countersigned or authenticated, as required, by such Warrant
Agent and/or Warrant Holder and duly executed and delivered by the Company against payment for such
Warrants in accordance with the terms and provisions of such Warrant Agreement, the terms of the
Corporate Action and as contemplated by the Registration Statement and the applicable Prospectus
Supplement, such Warrants will be valid, binding and enforceable obligations of the Company.
3. When a Unit Agreement providing for the specific terms of a particular issuance of Units
has been duly authorized by Corporate Action and has been duly executed and delivered by the
Company, the Unit Agent named in such Unit Agreement and such Units and/or the Unit Holder named in
such Unit Agreement and such Units, conforming to the requirements of such Unit Agreement, have
been duly countersigned or authenticated, as required, by such Unit Agent and/or Unit Holder and
duly executed and delivered by the Company against payment for such Units in accordance with the
terms and provisions of such Unit Agreement, the terms of the Corporate Action and as contemplated
by the Registration Statement and the applicable Prospectus Supplement, such Units will be valid,
binding and enforceable obligations of the Company.
In giving this opinion, we have assumed that, prior to their issuance, all certificates
representing the shares of Common Stock will be duly executed on behalf of the Company by the
transfer agent for the Company and registered by the registrar for the Company, if necessary, and
will conform, except to denominations, to specimens we have examined.
We hereby consent to the use of this opinion as an exhibit to the Registration Statement, to
the use of our firm name as your counsel, and to all references made to us in the Registration
Statement and in the Prospectus forming a part thereof. In giving this consent, we do not hereby
admit that we are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder.
Very truly yours
/s/ Golenbock Eiseman Assor Bell & Peskoe LLP
exv23w2
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statement on Form S-3 of our
reports dated March 3, 2010 on our audit of the financial statements of MELA Sciences, Inc.
(formerly known as Electro-Optical Sciences, Inc. (the Company)) as of December 31, 2009 and
2008, and for each of the years in the three-year period ended December 31, 2009, and our audit of
the Companys internal control over financial reporting as of December 31, 2009 included in the
Companys annual report on Form 10-K. We also consent to the reference to our firm under the
heading Experts.
/s/ Eisner, LLP
New
York, New York
May 26, 2010