Filed Pursuant to Rule 424(b)(5)
Registration No. 333-233654
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 25, 2019)
12,500,000 Shares of Common Stock
Pre-Funded Warrants to Purchase
5,000,000 Shares of
Common Stock
We are offering 12,500,000 shares of our common stock and, to
certain investors in lieu thereof, pre-funded warrants to purchase
5,000,000 shares of our common stock, or the Pre-Funded
Warrants, in this offering.
We are an “emerging growth company” under applicable Securities and
Exchange Commission rules and are subject to reduced public company
reporting requirements.
The purchase price of each Pre-Funded Warrant equals the public
offering price per share of common stock, minus $0.0001, and the
exercise price of each Pre-Funded Warrant equals $0.0001 per share.
The Pre-Funded Warrants are exercisable at any time, provided that
each Pre-Funded Warrant holder will be prohibited from exercising
such Pre-Funded Warrants into shares of our common stock if, as a
result of such exercise, the holder, together with its affiliates,
would own more than 4.99% of the total number of shares of our
common stock then issued and outstanding, which percentage may
change at the holders’ election to any other number less than or
equal to 19.99% upon 61 days’ notice to us. This prospectus
supplement also relates to the offering of the shares of common
stock issuable upon exercise of such Pre-Funded Warrants.
Our common stock is listed on The Nasdaq Global Select Market under
the symbol “CHMA.” On June 29, 2020, the last reported sale
price of our common stock, as reported on The Nasdaq Global Select
Market, was $5.62 per share. There is no established public market
for the Pre-Funded Warrants, and we do not intend to list the
Pre-Funded Warrants on The Nasdaq Global Select Market, any other
national securities exchange or any other nationally recognized
trading system.
Investing in our common stock involves a high degree of risk.
Please read the section entitled “Risk Factors” beginning
on page S-8 of this
prospectus supplement and in the related sections noted in the
accompanying prospectus, and in the documents incorporated by
reference herein and therein.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or determined if this prospectus supplement or the
accompanying prospectus are truthful or complete. Any
representation to the contrary is a criminal offense.
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PER SHARE |
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PER
PRE-FUNDED
WARRANT |
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TOTAL |
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Public offering price
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$ |
4.00 |
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$ |
3.9999 |
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69,999,500 |
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Underwriting discounts and commissions(1)
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$ |
0.24 |
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$ |
0.2400 |
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4,200,000 |
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Proceeds to us (before expenses)
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$ |
3.76 |
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$ |
3.7599 |
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65,799,500 |
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(1) See the
section entitled “Underwriting” beginning on
page S-22 for a description
of the compensation payable to the underwriters.
We have granted the underwriters an option for 30 days after the
date of this prospectus supplement to purchase up to an additional
2,625,000 shares of our common stock from us, at the price set
forth above. If the underwriters exercise the option in full, the
total proceeds to us, before expenses will be $75,669,500.
Delivery of the shares of common stock and Pre-Funded Warrants is
expected to be made on or about July 6, 2020.
Book Running Managers
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| Jefferies |
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Piper Sandler |
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Cantor |
Lead Manager
H.C. Wainwright & Co.
Co-Manager
Brookline Capital Markets
a division of Arcadia Securities, LLC
July 1, 2020
TABLE OF CONTENTS
S-i
Neither we nor the underwriters have authorized anyone to provide
any information or make any representations other than those
contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus or any free writing
prospectus that we have authorized for use in connection with this
offering. We take no responsibility for, and can provide no
assurance as to the reliability of, any other information that
others may give you. This prospectus supplement and the
accompanying prospectus are an offer to sell only the shares
offered hereby, but only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this
prospectus supplement, the accompanying prospectus and any free
writing prospectus that we have authorized for use in connection
with this offering is current only as of their respective dates.
Our business, financial condition, results of operations and
prospects may have changed since those dates. You should read this
prospectus supplement, the accompanying prospectus, the documents
incorporated by reference in this prospectus supplement and the
accompanying prospectus and any free writing prospectus that we
have authorized for use in connection with this offering when
making your investment decision. You should also read and consider
the information in the documents to which we have referred you in
the section of this prospectus supplement entitled “Incorporation
of Certain Information by Reference.”
For investors outside the United States: We have not, and the
underwriters have not, done anything that would permit this
offering or possession or distribution of this prospectus
supplement or the accompanying prospectus in any jurisdiction where
action for that purpose is required, other than in the United
States. Persons outside the United States who come into possession
of this prospectus supplement or the accompanying prospectus must
inform themselves about, and observe any restrictions relating to,
this offering and the distribution of this prospectus supplement
and the accompanying prospectus outside the United States.
S-ii
ABOUT THIS PROSPECTUS
SUPPLEMENT
This document is in two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering of
common stock. The second part is the accompanying prospectus, which
provides more general information, some of which may not apply to
this offering. The information included or incorporated by
reference in this prospectus supplement also adds to, updates and
changes information contained or incorporated by reference in the
accompanying prospectus. If information included or incorporated by
reference in this prospectus supplement is inconsistent with the
accompanying prospectus or the information incorporated by
reference therein, then this prospectus supplement or the
information incorporated by reference in this prospectus supplement
will apply and will supersede the information in the accompanying
prospectus and the documents incorporated by reference therein.
This prospectus supplement is part of a registration statement that
we filed with the Securities and Exchange Commission, or SEC, using
a “shelf” registration process. Under the shelf registration
process, we may from time to time offer and sell any combination of
the securities described in the accompanying prospectus up to a
total dollar amount of $200.00 million, of which this offering
is a part.
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any free writing prospectus prepared by
us or on our behalf. We have not, and the underwriters have not,
authorized any other person to provide you with information
different from that contained in this prospectus supplement and the
accompanying prospectus or incorporated by reference in this
prospectus supplement and the accompanying prospectus. If anyone
provides you with different or inconsistent information, you should
not rely on it. We are not, and the underwriters are not, making an
offer to sell or soliciting an offer to buy these securities under
any circumstance in any jurisdiction where the offer or
solicitation is not permitted. You should assume that the
information contained in this prospectus supplement, the
accompanying prospectus and any free writing prospectus prepared by
us or on our behalf is accurate only as of the date of the
respective document in which the information appears, and that any
information in documents that we have incorporated by reference is
accurate only as of the date of the document incorporated by
reference, regardless of the time of delivery of this prospectus
supplement or any sale of a security. Our business, financial
condition, results of operations and prospects may have changed
since those dates.
It is important for you to read and consider all of the information
contained in this prospectus supplement and the accompanying
prospectus in making your investment decision. We include
cross-references in this prospectus supplement and the accompanying
prospectus to captions in these materials where you can find
additional related discussions. The table of contents in this
prospectus supplement provides the pages on which these captions
are located. You should read both this prospectus supplement and
the accompanying prospectus, together with the additional
information described in the sections entitled “Where You Can Find
More Information” and “Incorporation by Reference” of this
prospectus supplement, before investing in our common stock.
We are offering to sell, and seeking offers to buy, shares of
common stock only in jurisdictions where offers and sales are
permitted. The distribution of this prospectus supplement and the
accompanying prospectus and the offering of the common stock in
certain jurisdictions may be restricted by law. Persons outside the
United States who come into possession of this prospectus
supplement and the accompanying prospectus must inform themselves
about, and observe any restrictions relating to, the offering of
the common stock and the distribution of this prospectus supplement
and the accompanying prospectus outside the United States. This
prospectus supplement and the accompanying prospectus do not
constitute, and may not be used in connection with, an offer to
sell, or a solicitation of an offer to buy, any securities offered
by this prospectus supplement and the accompanying prospectus by
any person in any jurisdiction in which it is unlawful for such
person to make such an offer or solicitation.
Unless the context otherwise indicates, references in this
prospectus to “Chiasma”, “we”, “our”, “us” and “the Company” refer,
collectively, Chiasma, Inc. and its subsidiaries.
All references in this prospectus supplement to our consolidated
financial statements include, unless the context indicates
otherwise, the related notes thereto.
S-iii
We own various U.S. federal and foreign trademark registrations and
applications, as well as pending and unregistered trademarks and
service marks, including “CHIASMA”, “TPE”, “MYCAPSSA”, “MYCAPSSA
logo”, “ACROMEGALY CARE logo” and our corporate logo. “CHIASMA”,
“MYCAPSSA” and “TPE” are registered U.S. federal trademarks. All
trademarks or trade names referred to in this prospectus are the
property of their respective owners. Solely for convenience, the
trademarks and trade names in this prospectus may be referred to
without the ®
and ™ symbols,
but such references should not be construed as any indicator that
their respective owners will not assert, to the fullest extent
under applicable law, their rights thereto. We do not intend our
use or display of other companies’ trademarks and trade names to
imply a relationship with, or endorsement or sponsorship of us by,
any other companies.
The industry and market data and other statistical information
contained in the documents we incorporate by reference are based on
management’s own estimates, independent publications, government
publications, reports by market research firms or other published
independent sources and, in each case, are believed by management
to be reasonable estimates. Although we believe these sources are
reliable, we have not independently verified the information.
S-iv
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus,
including the documents that we incorporate by reference herein and
therein, contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act
of 1934, as amended, or the Exchange Act. Any statements about our
expectations, beliefs, plans, objectives, assumptions or future
events or performance are not historical facts and may be
forward-looking. These statements are often, but are not always,
made through the use of words or phrases such as “anticipate,”
“believe,” “contemplate,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “target,” “will,” “would,” and similar
expressions, or the negative of these terms, or similar
expressions. Accordingly, these statements involve estimates,
assumptions and uncertainties which could cause actual results to
differ materially from those expressed in them. Any forward-looking
statements are qualified in their entirety by reference to the
factors discussed throughout this prospectus supplement and the
accompanying prospectus, and in particular those factors referenced
in the sections entitled “Risk Factors.”
This prospectus supplement and the accompanying prospectus contain
forward-looking statements that are based on our management’s
belief and assumptions and on information currently available to
our management. These statements relate to future events or our
future financial performance, and involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. Forward-looking statements include, but are not limited
to, statements about:
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our expected commercial launch timing of MYCAPSSA in the United
States, if the U.S. Food and Drug Administration, or the FDA,
approval of our first planned prior approval manufacturing
supplement is obtained;
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our ability to obtain supply of sufficient amounts of MYCAPSSA to
support our planned commercial launch in the United States, if the
FDA approval of our planned prior approval manufacturing
supplements is obtained, and clinical trials;
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our views as to our readiness for commercial launch of MYCAPSSA in
the United States, including our plans with respect our
customer-facing team, the nature of our planned commercialization
activities and strategy, our pricing of MYCAPSSA, and related
assumptions;
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our views as to potential future results of our commercialization
efforts in the United States with respect to MYCAPSSA, including
our expectations with respect to the scope, level and availability
of reimbursement by private and government payors;
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our estimates of the size and characteristics of the markets that
may be addressed by MYCAPSSA;
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the commercial success and market acceptance of MYCAPSSA or any
future product candidates that are approved for marketing in the
United States or other countries;
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our development of octreotide capsules for the treatment of
acromegaly;
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our efforts to potentially obtain regulatory approval of octreotide
capsules in the European Union by conducting the MPOWERED Phase 3
clinical trial;
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the timing and receipt and announcement of top-line and other clinical data,
including our ability to release top-line data from the MPOWERED trial
during the fourth quarter of 2020;
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the therapeutic benefits, effectiveness and safety of MYCAPSSA;
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our ability to generate future revenue;
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the safety and efficacy of therapeutics marketed by our competitors
that are targeted to indications which MYCAPSSA has been developed
to treat;
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our ability to leverage our Transient Permeability Enhancer, or
TPE, platform to develop and commercialize novel oral product
candidates incorporating peptides that are currently only available
in injectable or other non-absorbable forms;
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the possibility that competing products or technologies may make
MYCAPSSA, other product candidates we may develop and successfully
commercialize or our TPE technology obsolete;
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S-v
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our ability to secure collaborators to license, manufacture, market
and sell octreotide capsules or any products for which we receive
regulatory approval in the future;
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our ability to protect our intellectual property and operate our
business without infringing upon the intellectual property rights
of others;
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our product development and operational plans generally;
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our expected use of proceeds from this offering; and
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our ability to continue as a going concern and estimates and
expectations regarding our capital requirements, cash and expense
levels and liquidity sources.
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We have included important factors in the cautionary statements
included in this prospectus supplement and the accompanying
prospectus and the documents we incorporate by reference herein and
therein, particularly in the “Risk Factors” sections of these
documents, that we believe could cause actual results or events to
differ materially from the forward-looking statements that we make.
Our forward-looking statements do not reflect the potential impact
of any future acquisitions, mergers, dispositions, joint ventures
or investments we may make. No forward-looking statement is a
guarantee of future performance.
You should read this prospectus supplement and the accompanying
prospectus and the documents that we incorporate by reference
herein and therein completely and with the understanding that our
actual future results may be materially different from what we
expect. The forward-looking statements in this prospectus
supplement and the accompanying prospectus and the documents we
incorporate by reference herein and therein represent our views as
of the date of this prospectus supplement. We anticipate that
subsequent events and developments will cause our views to change.
However, while we may elect to update these forward-looking
statements at some point in the future, we have no current
intention of doing so except to the extent required by applicable
law. You should, therefore, not rely on these forward-looking
statements as representing our views as of any date subsequent to
the date of this prospectus supplement.
S-vi
PROSPECTUS SUPPLEMENT
SUMMARY
The following summary of our business highlights some of the
information contained elsewhere in, or incorporated by reference
into, this prospectus supplement. Because this is only a summary,
however, it does not contain all of the information that may be
important to you. You should carefully read this prospectus
supplement and the accompanying prospectus, including the documents
incorporated by reference, which are described under “Incorporation
of Certain Information by Reference” in this prospectus supplement.
You should also carefully consider the matters discussed in the
section of this prospectus supplement entitled “Risk Factors” and
under similar sections of the accompanying prospectus and other
periodic reports incorporated herein and therein by
reference.
Company Overview
We are a commercial biopharmaceutical company focused on developing
and commercializing oral therapies to improve the lives of patients
who face challenges associated with their existing treatments for
rare and serious chronic disease. Employing our proprietary TPE
technology platform, we seek to develop oral medications that are
currently available only as injections. On June 26, 2020, we
received FDA approval of MYCAPSSA for long-term maintenance
treatment in acromegaly patients who have responded to and
tolerated treatment with octreotide or lanreotide. MYCAPSSA is the
first and only oral somatostatin analog, or SSA, approved by the
FDA and the first product approved by the FDA utilizing our TPE
technology. Acromegaly is a rare chronic disease often caused by a
benign pituitary tumor and characterized by excess production of
growth hormone and insulin-like growth factor-1 hormone that is frequently
treated with chronic burdensome injections. If left untreated,
acromegaly can lead to serious, and sometimes life-threatening
medical conditions. We estimate that approximately 8,000 patients
are on injectable SSAs in the United States. The worldwide market
for injectable SSAs is approximately $2.8 billion annually, of
which we estimate approximately $800 million represents annual
worldwide sales and approximately $400 million represents
annual U.S. sales for the treatment of acromegaly.
Acromegaly and Treatment Burden
Acromegaly is a rare and debilitating condition that results in the
body’s production of excess growth hormone, or GH, which in turn
elevates insulin-like growth factor 1, or IGF-1. These elevated hormone levels
result in a number of painful and disfiguring symptoms, including
some acute, such as headaches, joint pain and fatigue, and some
long-term, such as enlarged hands, feet and internal organs, as
well as altered facial features. If not treated promptly,
acromegaly can lead to serious illness and is associated with
premature death, primarily due to cardiovascular disease. According
to data published by the Mayo Clinic in 2013, the mortality rate of
people afflicted by acromegaly who go untreated is two to three
times higher than that of the general population. Data from a
published study presented at the Endocrine Society’s Annual Meeting
in 2015 suggest that the global prevalence of acromegaly may be
between 85 and 118 cases per million people.
Octreotide is an analog of somatostatin, a natural inhibitor of
growth hormone secretion. The current standard of care for patients
diagnosed with acromegaly and not otherwise cured by surgical
removal of the pituitary tumor consists of lifelong, once-monthly
injections of an extended release somatostatin analog, primarily
octreotide or lanreotide. These products contain a viscous
formulation and are typically administered by a healthcare
professional with large-gauge needles into the muscle or deep
subcutaneously, that is, deeply under the skin. While injectable
somatostatin analogs are generally effective at reducing GH and
IGF-1 levels and,
therefore, providing disease control, the injections are associated
with signification limitations and patient burdens, including
suboptimal symptom control, especially as the treatment effects
begin to wane near the end of the monthly cycle prior to the next
injection, inconvenience, pain and other injection-related side
effects. MYCAPSSA is the first FDA-approved somatostatin analog
available for oral administration. MYCAPSSA has been granted orphan
designation in the United States and the European Union for the
treatment of acromegaly, and now that MYCAPSSA has been approved by
the FDA, the company expects the FDA to render a decision on
MYCAPSSA’s eligibility for orphan drug exclusivity in the United
States.
S-1
Approved New Drug Application for MYCAPSSA®
In July 2019, we announced positive top-line results from the CHIASMA
OPTIMAL (Octreotide capsules vs. Placebo Treatment In MultinationAL
centers), a Phase 3 clinical trial of octreotide capsules for the
treatment of acromegaly conducted under a special protocol
assessment agreed to with the FDA and designed to support
regulatory approval in the United States. Based on the positive
results from the CHIASMA OPTIMAL trial, we resubmitted our new drug
application, or NDA, to the FDA in December 2019, seeking marketing
approval of MYCAPSSA capsules as a maintenance treatment for adult
patients with acromegaly. In January 2020, the FDA accepted for
review the resubmission of our NDA as a complete response to
deficiencies identified in the FDA’s April 2016 complete response
letter, or CRL, to our original NDA submission and assigned a PDUFA
action date of June 26, 2020. On June 26, 2020, we
received FDA approval of MYCAPSSA for long-term maintenance
treatment in acromegaly patients who have responded to and
tolerated treatment with octreotide or lanreotide.
CHIASMA OPTIMAL
The CHIASMA OPTIMAL trial was a randomized, double-blind,
placebo-controlled, nine-month clinical trial of octreotide
capsules and enrolled 56 adult acromegaly patients whose disease
was biochemically controlled by injectable somatostatin analogs
based upon levels of IGF-1,
a byproduct of increased GH levels caused by acromegaly (average
IGF-1 < 1.0 × upper
limit of normal, or ULN). The patients also had confirmed active
acromegaly following their last surgical intervention based upon an
elevated IGF-1 at that time
of < 1.3 × ULN. Patients were randomized on a 1:1 basis, to
octreotide capsules or placebo. Patients were dose titrated from 40
mg per day (equaling one capsule in the morning and one capsule in
the evening) to up to a maximum of 80 mg per day (equaling two
capsules in the morning and two capsules in the evening). Patients
who met the predefined withdrawal criteria, or discontinued from
oral treatment for any reason, in either treatment arm during the
course of the trial were considered treatment failures, reverted to
their original treatment of injections and monitored for the
remainder of the trial. The primary endpoint of the trial was the
proportion of patients who maintained their biochemical response at
the end of the nine-month, double-blind, placebo-controlled period
as measured using the average of the last two IGF-1 levels < 1.0 × ULN (assessed
at weeks 34 and 36). Hierarchical secondary endpoints include:
proportion of patients who maintain growth hormone, or GH, response
at week 36 compared to screening; time to loss of response:
IGF-1 of 2 consecutive
visits is > 1.0 × ULN; time to loss of response: IGF-1 of two consecutive visits is
³ 1.3 × ULN; and proportion of
patients requiring rescue treatment.
In the CHIASMA OPTIMAL trial:
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The primary endpoint was met: 58% of the patients on octreotide
capsules maintained their IGF-1 response compared to 19% of the
patients on placebo (p = 0.008).
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All secondary endpoints were met.
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78% of patients treated with octreotide capsules maintained their
GH levels below 2.5 ng/mL at the end of the core study compared to
30% of patients treated with placebo (p = 0.001).
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Median time to loss of response (IGF-1 >1.0 × ULN) was not reached
(>36 weeks) for patients treated with octreotide capsules
compared to 16 weeks for patients treated with placebo (p
<0.001).
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Median time to loss of response (IGF-1 ³1.3 × ULN) was not reached
(>36 weeks) for patients treated with octreotide capsules
compared to 16 weeks for patients treated with placebo (p
<0.001).
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25% of patients treated with octreotide capsules required rescue
medication with injectable somatostatin analogs (octreotide LAR or
lanreotide depot) anytime throughout the study compared to 68% of
patients treated with placebo (p = 0.003).
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Additionally, 75% of patients randomized to the octreotide capsules
treatment arm completed the 36-week trial of which 90% elected to
continue into the open label extension. Further, in a pre-specified exploratory endpoint,
mean IGF-1 values across
all 28 patients treated with octreotide capsules (including
primary
S-2
endpoint non-responders per
protocol), remained within normal limits with a 0.97 x ULN at the
end of oral treatment versus 1.69 x ULN at the end of treatment for
the patients on placebo. For purposes of this analysis, the end of
oral treatment value was the average of week 34 and week 36 values
for all patients who completed the study on octreotide capsules or
placebo and for those patients that required rescue medication, it
was their last observed value prior to the use of rescue
medication.
In the CHIASMA OPTIMAL trial, octreotide capsules appeared safe and
well tolerated in the trial patient population. No new or
unexpected safety signals were observed. The overall number of
treatment emergent adverse events, or TEAEs, was comparable between
the octreotide capsules and placebo treatment groups, 64% versus
54%, respectively. Two patients on octreotide capsules and one
patient on placebo discontinued treatment due to TEAEs. Two
patients on octreotide capsules and one patient on placebo had
serious adverse events, or SAEs, assessed as not related to study
drug. Severe TEAEs as well as TEAEs of special interest (acromegaly
symptoms) were more common in placebo treated patients than in
patients treated with octreotide capsules. The following table
summarizes the safety data observed in the CHIASMA OPTIMAL
trial:
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OCTREOTIDE CAPSULES |
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PLACEBO |
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SUBJECTS WITH:
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N |
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% |
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N |
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% |
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At least one TEAE
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28 |
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100.0 |
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27 |
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96.4 |
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Treatment-Related TEAE
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18 |
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64.3 |
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15 |
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53.6 |
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SAEs
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2 |
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7.1 |
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1 |
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3.6 |
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Treatment-Related SAEs
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0 |
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0.0 |
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0 |
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0.0 |
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Severe TEAEs
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3 |
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10.7 |
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7 |
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25.0 |
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TEAE Leading to Study Drug Discontinuation
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2 |
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7.1 |
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1 |
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3.6 |
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TEAEs of Special Interest (acromegaly symptoms)
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15 |
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53.6 |
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26 |
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92.9 |
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MPOWERED™
We are also conducting an international Phase 3 clinical trial,
referred to as MPOWERED (Maintenance of Acromegaly Patients with
Octreotide Capsules Compared With Injections -Evaluation of
REsponse Durability), of oral octreotide capsules for the
maintenance treatment of adult patients with acromegaly to support
regulatory approval in the European Union. The MPOWERED trial is
designed to show parallel comparative safety and effectiveness as
required by the EMA. Initiated in March 2016, the MPOWERED trial is
a randomized, open-label and active-controlled 15-month trial initially designed to
enroll up to 150 patients. The European Medicines Agency, or EMA,
requested that a minimum of at least 80 patients who are responders
to octreotide capsules following the six-month run-in phase be randomized to either
remain on octreotide capsules or return to injectable somatostatin
receptor ligands (octreotide or lanreotide), and then followed for
an additional nine months. We completed enrollment of 146 total
patients in the MPOWERED trial in June 2019. In January 2020, the
randomization of patients was completed. Of the 146 patients that
entered the six-month
run-in phase of the trial,
92 of these patients (or 63%) completed the run-in phase and were deemed to be
responders to octreotide capsules per protocol (IGF-1 <1.3 x ULN and GH<2.5
ng/mL). Responders to octreotide capsules were randomized (2:3) per
protocol to either go back to their original long-acting injectable
somatostatin analog or remain on octreotide capsules at the dose
identified during the run-in phase and then followed for an
additional nine months.
The primary endpoint of the MPOWERED trial is the proportion of
patients who are biochemically controlled throughout the
randomized, controlled phase of the study, defined as a time
weighted average of IGF-I
< 1.3 ULN. In addition to measures of biochemical control, the
MPOWERED trial is expected to provide data on the impact of
treatment on acromegaly symptoms and patients’ quality of life
through multiple validated instruments. Secondary and exploratory
endpoints are designed to explore overall health assessments and
whether more patients experience maintenance or improvement of
acromegaly symptoms between treatments, both individually and as an
overall composite score. The trial is also designed to generate
data on when patients experience their acromegaly symptoms and any
interference with work productivity and the ability to perform
regular activities of daily living. The impact of octreotide
capsules versus injectable treatment is also
S-3
expected to be measured from a standpoint of gastrointestinal
adverse events and the burden of receiving injections in a
healthcare setting versus the fasting requirements of MYCAPSSA
capsules.
We expect to release top-line data from the MPOWERED trial
in the fourth quarter of 2020. Assuming positive data from the
MPOWERED trial, we expect to submit a marketing authorization
application, or MAA, to the European Medicines Agency, or EMA, in
the first half of 2021 seeking marketing approval of MYCAPSSA
capsules as a maintenance therapy for adult patients with
acromegaly in the European Union.
Commercial Manufacturing Supply of MYCAPSSA
We began implementing commercial launch readiness plans in 2019 in
preparation for a potential commercial launch of MYCAPSSA capsules
in the United States in the fourth quarter of 2020, pending the
FDA’s approval of the NDA. At this time, we expect to have
sufficient commercial supply of MYCAPSSA to support our planned
commercial launch in the fourth quarter of 2020, pending the FDA’s
timely approval of a planned prior approval manufacturing
supplement to the NDA. To secure commercial supply for our planned
launch, following FDA approval of our NDA, we expect to submit for
FDA review two prior approval manufacturing supplements to our NDA
for our commercial sources of generic active pharmaceutical
ingredient, or API, octreotide acetate. Now that the FDA has
approved the NDA, we plan to submit shortly the first prior
approval manufacturing supplement to the NDA to provide for the
approval of our primary API manufacturer and one of its large-scale
manufacturing sites. We must obtain the approval of this first
planned prior approval manufacturing supplement in order to have
commercial product available for commercial launch in the fourth
quarter of 2020. We also plan to file a second prior approval
manufacturing supplement to the NDA to provide for a large-scale
manufacturing site affiliated with the small-scale manufacturing
site currently referenced in the NDA resubmission. In April 2020,
the FDA requested that we include certain stability data in this
second planned prior approval manufacturing supplement, which we
expect will delay our planned submission of this supplement until
early 2021.
The timing of the FDA’s review process related to our planned prior
approval manufacturing supplements and the outcome of such reviews
are inherently uncertain, and we can provide no assurances that
either planned prior approval manufacturing supplement will be
approved in a timely manner or at all.
Company Information
We were incorporated in 2001 and commenced active operations in the
same year. Our operations to date have been limited to organizing
and staffing our company, business planning, raising capital,
developing our TPE technology, identifying potential drug
candidates, undertaking nonclinical studies and, beginning in 2010,
conducting clinical trials and preparing for regulatory
submissions. To date, we have financed our operations primarily
through our initial and follow-on public offerings and our
revenue interest financing agreement with Healthcare Royalty
Partners. We have no product revenues to date.
Our principal executive offices are located at 140 Kendrick Street,
Building C East, Needham, MA 02494 and our telephone number is
(617) 928-5300. Our website
address is www.chiasma.com. The reference to our website is
intended to be an inactive textual reference and, except for the
documents incorporated by reference as noted below, the information
on, or accessible through, our website is not part of this
prospectus supplement.
Implications of Being an Emerging Growth Company
As a company with less than $1.07 billion in revenue during
our most recently completed fiscal year, we qualify as an “emerging
growth company” as defined in Section 2(a) of the Securities
Act of 1933, as amended, or the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an
emerging growth company, we may take advantage of specified reduced
disclosure and other requirements that are otherwise applicable, in
general, to public companies that are not emerging growth
companies. These provisions include:
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reduced disclosure about our executive compensation
arrangements;
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S-4
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exemption from the non-binding stockholder advisory votes
on executive compensation or golden parachute arrangements;
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exemption from the auditor attestation requirement in the
assessment of our internal control over financial reporting;
and
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reduced disclosure of financial information in this prospectus,
such as being permitted to include only two years of audited
financial information and two years of selected financial
information in addition to any required unaudited interim financial
statements, with correspondingly reduced “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”
disclosure.
|
We plan to take advantage of these exemptions until the end of
2020.
The JOBS Act permits an emerging growth company to take advantage
of an extended transition period to comply with new or revised
accounting standards applicable to public companies. We have
irrevocably elected not to avail ourselves of this extended
transition period and, as a result, we will adopt new or revised
accounting standards on the relevant dates on which adoption of
such standards is required for non-emerging growth companies.
S-5
THE OFFERING
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Common Stock Offered by Us
|
12,500,000 shares |
|
Pre-Funded Warrants offered by us
|
In lieu of shares of common stock, we are offering to certain
purchasers Pre-Funded Warrants to purchase 5,000,000 shares of
common stock. The purchase price of each Pre-Funded Warrant will
equal the public offering price per share of common stock, minus
$0.0001, and the exercise price of each Pre-Funded Warrant will be
$0.0001 per share. Each Pre-Funded Warrant will be exercisable upon
issuance. This prospectus supplement also relates to the offering
of the shares of common stock issuable upon exercise of such
Pre-Funded Warrants. |
| |
There is currently no market for the
Pre-Funded Warrants and none is expected to develop after this
offering. We do not intend to list the Pre-Funded Warrants on The
Nasdaq Stock Market, any other national securities exchange or
other nationally recognized trading system. See “Description of
Pre-Funded Warrants—Pre-Funded Warrants” for additional
information. |
|
Common Stock To Be Outstanding After This Offering
|
54,765,341 shares (or 57,390,341 shares, if the underwriters
exercise their option in full to purchase additional shares), in
each case excluding any shares of common stock issuable upon the
exercise of the Pre-Funded Warrants |
|
Underwriters’ Option To Purchase Additional Shares
|
Up to an aggregate of 2,625,000 shares. The number of shares
subject to the underwriters’ option will equal 15% of the total
number of shares of common stock we are offering plus the shares
underlying the Pre-Funded Warrants. |
|
Use of Proceeds
|
We intend to use the net proceeds from this offering primarily
for advancing the ongoing commercialization of MYCAPSSA in the
United States for the treatment of acromegaly; activities to
support the planned submission of an MAA to the EMA for regulatory
approval of MYCAPSSA in the European Union for acromegaly, assuming
positive data from the MPOWERED Phase 3 trial; early clinical
development of one or more potential pipeline candidates using our
TPE platform technology; and working capital and other general
corporate purposes. See “Use of Proceeds” for additional
information. |
|
Risk Factors
|
Your investment involves a high degree of risk. See the
information contained in or incorporated by reference under “Risk
Factors” beginning on page S-8 of this prospectus supplement, and
in the related sections of the accompanying prospectus and in the
documents incorporated by reference herein and therein. |
|
The NASDAQ Global Select Market Symbol
|
“CHMA” |
S-6
The number of shares of our common stock that will be outstanding
immediately after this offering as shown above is based on
42,265,341 shares outstanding as of March 31, 2020. The number
of shares outstanding as of March 31, 2020 as used throughout
this prospectus, unless otherwise indicated, excludes:
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∎ |
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7,408,536 shares of common stock issuable upon the exercise of
stock options outstanding as of March 31, 2020 at a
weighted-average exercise price of $5.03 per share;
|
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∎ |
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3,567,015 shares of common stock issuable upon the exercise of
warrants outstanding as of March 31, 2020 at exercise prices
ranging from $0.09 per share to $9.13 per share;
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∎ |
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1,598,475 shares of common stock reserved for future issuance under
our 2015 Stock Option and Incentive Plan;
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260,000 shares of common stock reserved for the future issuance
under our 2015 Employee Stock Purchase Plan; and
|
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∎ |
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5,000,000 shares of our common stock underlying the Pre-Funded
Warrants being offered hereby.
|
If the underwriters’ option to purchase additional shares is
exercised in full, we will issue and sell an additional 2,625,000
shares of our common stock and will have 57,390,341 shares
outstanding after the offering.
Except as otherwise noted, all information in this prospectus
supplement assumes no exercise of the Pre-Funded Warrants and no
exercise of the underwriters’ option to purchase additional
shares.
S-7
RISK FACTORS
Your investment in our common stock involves a high degree of
risk. Before deciding whether to invest in our common stock, you
should carefully consider the risks discussed under the section
captioned “Risk Factors” contained in our Quarterly Report on Form
10-Q for the first quarter
ended March 31, 2020 which is incorporated by reference in
this prospectus supplement and the accompanying prospectus in their
entirety, together with other information in this prospectus
supplement, the accompanying prospectus, the information and
documents incorporated by reference herein and therein, and in any
free writing prospectus that we have authorized for use in
connection with this offering. If any of these risks actually
occurs, our business, financial condition, results of operations or
cash flow could be seriously harmed. This could cause the trading
price of our common stock to decline, resulting in a loss of all or
part of your investment.
Risks Related to this Offering
Our management team may invest or spend the proceeds of this
offering in ways with which you may not agree or in ways which may
not yield a significant return.
Our management will have broad discretion over the use of proceeds
from this offering, including for any of the purposes described in
the section entitled “Use of Proceeds,” as well as our existing
cash and cash equivalents, and you will be relying on the judgment
of our management regarding such application. Our management will
have considerable discretion in the application of the net
proceeds, and you will not have the opportunity, as part of your
investment decision, to assess whether the proceeds are being used
appropriately. The net proceeds may be used for corporate purposes
that do not improve our operating results or enhance the value of
our common stock.
You will experience immediate and substantial
dilution.
The offering price per share in this offering may exceed the net
tangible book value per share of our common stock outstanding prior
to this offering. Based on the public offering price of $4.00 per
share of common stock and $3.9999 per pre-funded warrant (which
equals the public offering price of the common stock less the
$0.0001 per share exercise price of each such pre-funded warrant)
(and excluding shares of common stock issued and any proceeds
received upon exercise of the warrants or any resulting accounting
associated with the warrants), and a net book value of
$71.7 million, or $1.70 per share of common stock, as of
March 31, 2020, if you purchase shares of common stock or
Pre-Funded Warrants in this offering, you will suffer immediate and
substantial dilution of $1.49 per share in the net tangible book
value of the common stock you purchase. The exercise of outstanding
stock options and warrants will result in further dilution of your
investment. See the section titled “Dilution” below for a more
detailed illustration of the dilution you would incur if you
participate in this offering.
You may experience future dilution as a result of future
equity offerings.
In order to raise additional capital, we may in the future offer
additional shares of our common stock or other securities
convertible into or exchangeable for our common stock at prices
that may not be the same as the price per share in this offering.
We may sell shares or other securities in any other offering at a
price per share that is less than the price per share paid by
investors in this offering, and investors purchasing shares or
other securities in the future could have rights superior to those
of existing stockholders. The price per share at which we sell
additional shares of our common stock, or securities convertible or
exchangeable into common stock, in future transactions may be
higher or lower than the price per share paid by investors in this
offering.
Sales of a substantial number of shares of our common stock
in the public market after this offering could cause our stock
price to fall.
Sales of a substantial number of shares of our common stock in the
public market or the perception that these sales might occur could
depress the market price of our common stock and could impair our
ability to raise capital through the sale of additional equity
securities. We are unable to predict the effect that sales may have
on the prevailing market price of our common stock. In addition,
the sale of substantial amounts of our common stock could adversely
impact the price of our common stock. As of March 31, 2020,
42,265,341 shares of our common stock were outstanding. The sale,
or the availability for sale, of a large number of shares of our
common stock in the public market could cause the price of our
common stock to decline.
The trading price of the shares of our common stock could be
highly volatile, and purchasers of our common stock could incur
substantial losses.
The market price for our common stock could be highly volatile and
could continue to be subject to wide fluctuations in response to
various factors. The market price for our common stock has varied
between a high price
S-8
of $9.25 on July 23, 2019 and a low price of $2.88 on
March 19, 2020 in the twelve-month period ending on
June 19, 2020. This volatility may affect the price at which
you could sell the shares of our common stock, and the sale of
substantial amounts of our common stock could adversely affect the
price of our common stock. Our stock price is likely to continue to
be volatile and subject to significant price and volume
fluctuations in response to market and other factors, including
those described, and incorporated by reference, in this “Risk
Factors” section.
As a result, you may not be able to sell your shares of common
stock at or above the price at which you purchase them. In
addition, the stock market in general, and the Nasdaq Global Select
Market and the stock of biotechnology and emerging pharmaceutical
companies in particular, have experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to
the operating performance of these companies. Broad market and
industry factors may negatively affect the market price of our
common stock, regardless of our actual operating performance.
There is no public market for the Pre-Funded Warrants being
offered in this offering.
There is no established public trading market for the Pre-Funded
Warrants being offered in this offering, and we do not expect a
market to develop. In addition, we do not intend to apply to list
these warrants on any securities exchange or nationally recognized
trading system, including The Nasdaq Global Select Market. Without
an active market, the liquidity of these warrants will be
limited.
Holders of Pre-Funded Warrants purchased in this offering
will have no rights as common stockholders until such holders
exercise their warrants and acquire our common stock.
Until holders of Pre-Funded Warrants acquire shares of our common
stock upon exercise of such warrants, the holders will have no
rights with respect to the shares of our common stock underlying
such warrants. Upon exercise of the Pre-Funded Warrants, the
holders will be entitled to exercise the rights of a common
stockholder only as to matters for which the record date occurs
after the exercise date.
Our prospects are highly dependent on the successful
commercialization of MYCAPSSA, which received approval from the FDA
in June 2020. To the extent that MYCAPSSA is not commercially
successful, our business, financial condition and results of
operations will be materially adversely affected and the price of
our common stock will materially decline.
MYCAPSSA is our only product that has been approved for sale by the
FDA. We have not yet begun to commercialize MYCAPSSA and the
commercial launch of MYCAPSSA is not expected to commence until the
fourth quarter of 2020, subject to the FDA’s approval of our first
planned prior approval manufacturing supplement for our primary API
manufacturer. We have invested a significant portion of our
activities and resources toward the development of MYCAPSSA, and we
believe our prospects are highly dependent on, and a significant
portion of the value of our company relates to, our ability to
successfully commercialize MYCAPSSA in the United States.
Successful commercialization of MYCAPSSA is subject to many risks.
We have never, as an organization, launched or commercialized a
product, and there is no guarantee that we will be able to do so
successfully with MYCAPSSA for its approved indication. There are
numerous examples of other companies that have experienced
unsuccessful product launches and failed to meet high expectations
of market potential, including pharmaceutical companies with
significantly more experience and resources than us.
The future success of MYCAPSSA, including the expected timing of
the commercial launch, and the rate and degree of market
acceptance, of MYCAPSSA in the United States, will depend on a
number of factors, including:
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the efficacy and safety of MYCAPSSA in a larger number of patients
in a non-clinical setting
than those demonstrated in our clinical trials;
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our ability to manufacture sufficient commercial supplies of
MYCAPSSA in compliance with regulatory requirements;
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the effectiveness of our sales and marketing efforts, particularly
during the remote, COVID-19
environment;
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the incidence and prevalence of acromegaly patients in the U.S.
that respond to and tolerate treatment with octreotide or
lanreotide;
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the timing of market introduction of MYCAPSSA;
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the ability of MYCAPSSA to successfully compete against other
products;
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S-9
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acceptance by the medical community and patients of MYCAPSSA as a
safe and effective product;
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the potential and perceived advantages of MYCAPSSA over alternative
products;
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the ability to distinguish safety and efficacy from existing
alternatives;
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the willingness of medical professionals to prescribe and patients
to use MYCAPSSA and continue to use MYCAPSSA instead of alternative
products;
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the prevalence and severity of adverse side effects;
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the convenience of prescribing, administrating and initiating
patients on MYCAPSSA;
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the potential and perceived value and relative cost of MYCAPSSA
over alternative products, including generic products or
treatments;
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the availability of coverage and adequate reimbursement and pricing
by private and government payors;
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the successful completion of any clinical trials, regulatory
approval and commercialization of MYCAPSSA for one or more label
expansion indications; and
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our ability to enforce our intellectual property rights with
respect to MYCAPSSA.
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While we have implemented our commercial launch readiness plans, we
will need to incur significant additional expenses and commit
significant additional management time to further develop our
commercialization capabilities and to hire, develop and train a
sales force in order to be prepared to successfully coordinate the
launch and commercialization of MYCAPSSA in the United States. We
may not be able to successfully establish these capabilities on our
expected timing or at all. Even if we are successful in building
out our commercial team and sales force, there are many factors
that could cause the launch and commercialization of MYCAPSSA to be
unsuccessful and/or delayed, including a number of factors that are
outside our control.
The commercial success of MYCAPSSA depends on the extent to which
medical professionals and patients accept and adopt MYCAPSSA as a
product for the for the treatment of acromegaly, and we do not know
whether our or others’ revenue estimates in this regard will be
accurate. For example, if the patient population suffering from
acromegaly is smaller than we estimate or if medical professionals
are unwilling to prescribe or patients are unwilling to try and
then continue to use MYCAPSSA, the commercial potential of MYCAPSSA
will be limited. We also do not know how medical professionals,
patients and third-party payors will respond to the pricing of
MYCAPSSA. Medical professionals may not prescribe MYCAPSSA and
patients may be unwilling to use MYCAPSSA if coverage is not
provided or reimbursement is inadequate to cover a significant
portion of the cost, and we may find it necessary or desirable to
provide rebates on MYCAPSSA to customers or third-party payors or
to implement patient assistance programs, including co-pay assistance programs, which could
materially adversely affect our profitability.
While the FDA granted approval of MYCAPSSA based on the data
included in the NDA, we do not know whether the results when a
larger number of patients are exposed to MYCAPSSA, including
results related to safety and efficacy, will be consistent with the
results from our clinical studies of MYCAPSSA that served as the
basis of FDA approval of MYCAPSSA. New data relating to MYCAPSSA,
including from any adverse event reports or any negative results
during our MPOWERED trial or clinical development for additional
indications of oral octreotide capsules, may adversely impact the
commercial results and potential of MYCAPSSA. Thus, significant
uncertainty remains regarding the commercial potential success of
MYCAPSSA. In addition, such new data or any serious or unexpected
side effects caused by MYCAPSSA may result in a number of
potentially significant negative consequences, including:
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the FDA could withdraw its approval of MYCAPSSA, impose
restrictions on its distribution or require the addition of
labeling warnings or restrictions;
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we could be required to change the way MYCAPSSA is promoted or
administered or conduct additional clinical studies;
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we could be sued and held liable for any harm caused to patients;
or
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our reputation may suffer.
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If the launch or commercialization of MYCAPSSA is delayed,
unsuccessful or perceived as disappointing, our stock price could
decline significantly and the long-term success of the product and
our company could be materially harmed.
S-10
While the FDA granted approval of MYCAPSSA, such approval does not
guarantee FDA approval for any future product candidates. FDA
approval of MYCAPSSA also does not guarantee that MYCAPSSA will be
approved by the FDA for additional indications or by regulatory
entities in countries outside of the United States.
See “Risk Factors—Risks Related to the Development and Potential
Regulatory Approval and Commercialization of Octreotide Capsules
and any Future Product Candidates” in our Quarterly Report on Form
10-Q for the quarter ended
March 31, 2020, which is incorporated by reference in this
prospectus supplement, for a more detailed discussion of the risks
related to the manufacturing, commercialization and ongoing
regulation of drug products.
S-11
USE OF PROCEEDS
Based on the public offering price of $4.00 per share of common
stock and $3.9999 per pre-funded warrant (which equals the public
offering price of the common stock less the $0.0001 per share
exercise price of each such pre-funded warrant) (and excluding
shares of common stock issued and any proceeds received upon
exercise of the warrants or any resulting accounting associated
with the warrants), we estimate that the net proceeds to us from
the sale of the shares of common stock and Pre-Funded Warrants that
we are offering will be approximately $65.5 million or
approximately $75.4 million, if the option to purchase
additional shares is exercised in full by the underwriters, in each
case, after deducting underwriting discounts, commissions and
estimated offering expenses payable by us.
We expect to use the net proceeds received from this offering
primarily for advancing the ongoing commercialization of MYCAPSSA
in the United States for the treatment of acromegaly; activities to
support the planned submission of an MAA to the EMA for regulatory
approval of MYCAPSSA in the European Union for acromegaly, assuming
positive data from the MPOWERED Phase 3 trial; early clinical
development of one or more potential pipeline candidates using our
TPE platform technology; and working capital and other general
corporate purposes.
The expected use of the net proceeds from this offering represents
our current intentions based upon our present plans and business
conditions, which could change in the future as our plans and
business conditions evolve. We cannot predict with certainty all of
the particular uses for the net proceeds to be received upon the
completion of this offering or the amounts that we will actually
spend on the uses set forth above. The amount and timing of our
actual expenditures will depend upon numerous factors, including
the results of our commercialization efforts, the timing of
regulatory submissions, particularly our planned manufacturing
supplements, and the feedback from regulatory authorities, the
timing and success of our ongoing MPOWERED clinical trial, as well
as any collaborations that we may enter into with third parties for
octreotide capsules, and any unforeseen cash needs. We may also use
a portion of the net proceeds to in-license, acquire or invest in
additional businesses, technologies, products or assets, although
currently we have no specific agreements, material commitments or
understandings in this regard. As a result, our management will
have broad discretion over the use of the net proceeds from this
offering.
The costs and timing of successfully commercializing MYCAPSSA are
highly uncertain, are subject to substantial risks and can often
change. Accordingly, we may change the allocation of these proceeds
as a result of contingencies such as the progress and results of
our commercialization efforts, ongoing and planned clinical trials
and other development activities, the establishment of
collaborations, our manufacturing requirements and regulatory or
competitive developments.
Pending the application of the net proceeds as described above or
otherwise, we may invest the proceeds in short-term,
investment-grade, interest-bearing securities or guaranteed
obligations of the U.S. government or other securities.
S-12
DILUTION
If you purchase our common stock in this offering, your ownership
interest will be diluted to the extent of the difference between
the price per share you pay in this offering and the net tangible
book value per share of our common stock immediately after this
offering. Our net tangible book value as of March 31, 2020 was
approximately $71.7 million, or approximately $1.70 per share
of common stock, based upon 42,265,341 shares outstanding as of
that date. Net tangible book value per share is equal to our total
tangible assets, less our total liabilities, divided by the total
number of shares outstanding.
After giving effect to the sale of 12,500,000 shares of our common
stock and Pre-Funded Warrants to purchase 5,000,000 shares of our
common stock in this offering at a public offering price of $4.00
per share of common stock and $3.9999 per Pre-Funded Warrant (which
equals the public offering price per share, minus the $0.0001
exercise price per Pre-Funded Warrant) (and excluding shares of
common stock issued and any proceeds received upon exercise of the
Pre-Funded Warrants or any resulting accounting associated with the
Pre-Funded Warrants), and after deducting underwriting discounts
and commissions and estimated offering expenses payable by us, and
excluding the proceeds, if any, from the exercise of the Pre-Funded
Warrants issued pursuant to this offering, our adjusted net
tangible book value as of March 31, 2020 would have been
approximately $137.3 million, or approximately $2.51 per
share. This represents an immediate increase in net tangible book
value of approximately $0.81 per share to our existing
stockholders, and an immediate dilution of $1.49 per share to
investors purchasing shares of common stock in the offering.
The following table illustrates the per share dilution to investors
purchasing shares of common stock and Pre-Funded Warrants in the
offering:
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Public offering price per share of common stock
|
|
|
|
|
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$ |
4.00 |
|
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Net tangible book value per share as of March 31, 2020
|
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$ |
1.70 |
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|
|
|
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Increase per share attributable to sale of common stock and
Pre-Funded Warrants to investors
|
|
|
0.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net tangible book value per share after the offering
|
|
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|
|
|
|
2.51 |
|
|
|
|
|
|
|
|
|
|
|
Dilution per share to investors
|
|
|
|
|
|
$ |
1.49 |
|
|
|
|
|
|
|
|
|
|
Assuming all of the Pre-Funded Warrants issued pursuant to this
offering were immediately exercised, this would result in an as
adjusted net tangible book value per share, after giving effect to
this offering and such warrant exercise, of $2.30, which represents
an immediate increase in net tangible book value of $0.60 per share
to existing stockholders and immediate dilution in net tangible
book value of $1.70 per share to investors purchasing our
securities in this offering.
The above calculation is based on 42,265,341 shares of common stock
outstanding as of March 31, 2020 and excludes as of that
date:
| |
∎ |
|
7,408,536 shares of common stock issuable upon the exercise of
stock options outstanding as of March 31, 2020 at a
weighted-average exercise price of $5.03 per share;
|
| |
∎ |
|
3,567,015 shares of common stock issuable upon the exercise of
warrants outstanding as of March 31, 2020 at exercise prices
ranging from $0.09 per share to $9.13 per share;
|
| |
∎ |
|
1,598,475 shares of common stock reserved for future issuance under
our 2015 Stock Option and Incentive Plan;
|
| |
∎ |
|
260,000 shares of common stock reserved for the future issuance
under our 2015 Employee Stock Purchase Plan; and
|
| |
∎ |
|
5,000,000 shares of our common stock underlying the Pre-Funded
Warrants being offered hereby.
|
In addition, the amounts in the table above assume no exercise by
the underwriters of their option to purchase additional shares.
S-13
If the underwriters exercise their option to purchase 2,625,000
shares of common stock in full, the as adjusted net tangible book
value after this offering would be approximately $2.56 per share,
representing an increase in net tangible book value of
approximately $0.86 per share to existing stockholders and
immediate dilution in net tangible book value of approximately
$1.44 per share to investors purchasing our common stock in this
offering at the public offering price.
S-14
DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock.
We currently intend to retain all available funds and any future
earnings, if any, to fund the development and expansion of our
business and we do not anticipate paying any cash dividends in the
foreseeable future. Moreover, our revenue interest financing
agreement with Healthcare Royalty Partners precludes us from paying
dividends. Any future determination to pay dividends will be made
at the discretion of our board of directors. Investors should not
purchase our common stock with the expectation of receiving cash
dividends.
S-15
DESCRIPTION OF PRE-FUNDED WARRANTS
Pre-Funded Warrants
General
The term “pre-funded” refers to the fact
that the purchase price of the Pre-Funded Warrants in this offering
includes almost the entire exercise price that will be paid under
the Pre-Funded Warrants,
except for a nominal remaining exercise price of $0.0001. The
purpose of the Pre-Funded
Warrants is to enable investors that may have restrictions on their
ability to beneficially own more than 4.99% of our outstanding
common stock following the consummation of this offering the
opportunity to invest capital into the Company without triggering
their ownership restrictions, by receiving Pre-Funded Warrants in lieu of shares
of our common stock which would result in such ownership of more
than 4.99%, and receiving the ability to exercise their option to
purchase the shares underlying the Pre-Funded Warrants at a nominal price
at a later date.
The following is a brief summary of certain terms and conditions of
the Pre-Funded Warrants
being offered by this prospectus supplement. The following
description is subject in all respects to the provisions contained
in the Pre-Funded
Warrants.
Form
The Pre-Funded Warrants
will be issued as individual warrant agreements to the investors.
The form of Pre-Funded
Warrant will be filed as an exhibit to our Current Report on
Form 8-K that we
expect to file with the SEC in connection with this offering.
Exercise price
Pre-Funded Warrants will
have an exercise price of $0.0001 per share. The exercise price is
subject to appropriate adjustment in the event of certain stock
dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting our common stock and
also upon any distributions of assets, including cash, stock or
other property to our stockholders.
Exercisability
The Pre-Funded Warrants are
exercisable at any time after their original issuance. The
Pre-Funded Warrants will be
exercisable, at the option of each holder, in whole or in part by
delivering to us a duly executed exercise notice and by payment in
full of the exercise price in immediately available funds for the
number of shares of common stock purchased upon such exercise. As
an alternative to payment in immediately available funds, the
holder may elect to exercise the Pre-Funded Warrant through a cashless
exercise, in which the holder would receive upon such exercise the
net number of shares of common stock determined according to the
formula set forth in the Pre-Funded Warrant. No fractional
shares of common stock will be issued in connection with the
exercise of a Pre-Funded
Warrant.
Exercise limitations
The Pre-Funded Warrants may
not be exercised by the holder to the extent that the holder,
together with its affiliates, would beneficially own, after such
exercise more than 4.99% of the shares of our common stock then
outstanding (including for such purpose the shares of our common
stock issuable upon such exercise). However, any holder may
increase or decrease such beneficial ownership limitation upon
notice to us, provided that such limitation cannot exceed 19.99%,
and provided that any increase in the beneficial ownership
limitation shall not be effective until 61 days after such notice
is delivered).
Term
The Pre-Funded Warrants do
not expire.
Transferability
Subject to applicable laws, the Pre-Funded Warrants may be offered for
sale, sold, transferred or assigned without our consent.
Exchange listing
There is no established trading market for the Pre-Funded Warrants and we do not
expect a market to develop. In addition, we do not intend to apply
for the listing of the Pre-Funded Warrants on any national
securities exchange or other trading market. Without an active
trading market, the liquidity of the Pre-Funded Warrants will be
limited.
S-16
Fundamental transactions
In the event of a fundamental transaction, as described in the
Pre-Funded Warrants and
generally including any reorganization, recapitalization or
reclassification of our common stock, the sale, transfer or other
disposition of all or substantially all of our properties or
assets, our consolidation or merger with or into another person,
the acquisition of more than 50% of our outstanding common stock,
or any person or group becoming the beneficial owner of 50% of the
voting power represented by our outstanding common stock, upon
consummation of such a fundamental transaction, the holders of the
Pre-Funded Warrants will be
entitled to receive upon exercise of the Pre-Funded Warrants the kind and amount
of securities, cash or other property that the holders would have
received had they exercised the Pre-funded Warrants immediately prior
to such fundamental transaction without regard to any limitations
on exercise contained in the Pre-Funded Warrants.
No rights as a stockholder
Except by virtue of such holder’s ownership of shares of our common
stock, the holder of a Pre-Funded Warrant does not have the
rights or privileges of a holder of our common stock, including any
voting rights, until the holder exercises the Pre-Funded Warrant.
S-17
MATERIAL U.S. FEDERAL INCOME
TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
The following is a summary of the material U.S. federal income tax
considerations applicable to non-U.S. holders (defined below) with
respect to their ownership and disposition of our common stock or
Pre-Funded Warrants, but does not purport to be a complete analysis
of all the potential tax considerations relating thereto. This
summary is based upon the provisions of the Internal Revenue Code
of 1986, as amended, or the Code, Treasury regulations promulgated
thereunder, administrative rulings and judicial decisions, all as
of the date hereof. These authorities may be changed or subject to
differing interpretations, possibly with retroactive effect, so as
to result in U.S. federal income tax consequences different from
those set forth below. We have not sought any ruling from the
Internal Revenue Service (the IRS) with respect to the statements
made and the conclusions reached in the following summary, and
there can be no assurance that the IRS will agree with such
statements and conclusions.
This summary also does not address the tax considerations arising
under the laws of any U.S. state or local or any non-U.S.
jurisdiction, U.S. federal estate or gift tax laws, the Medicare
tax on net investment income or any alternative minimum tax
consequences. In addition, this discussion does not address tax
considerations applicable to an investor’s particular circumstances
or to investors that may be subject to special tax rules,
including, without limitation:
| |
∎ |
|
banks, insurance companies or other financial institutions;
|
| |
∎ |
|
tax-exempt organizations;
|
| |
∎ |
|
dealers in securities or currencies;
|
| |
∎ |
|
traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings;
|
| |
∎ |
|
certain former citizens or long-term residents of the United
States;
|
| |
∎ |
|
persons who hold our common stock and/or Pre-Funded Warrants as a
position in a hedging transaction, “straddle,” “conversion
transaction” or other risk reduction transaction;
|
| |
∎ |
|
persons who do not hold our common stock and/or Pre-Funded Warrants
as a capital asset within the meaning of Section 1221 of the Code
(generally, for investment purposes);
|
| |
∎ |
|
partnerships or other entities or arrangements treated as
pass-through entities for U.S. federal income tax purposes (or
investors in any such entities);
|
| |
∎ |
|
persons deemed to sell our common stock and/or Pre-Funded Warrants
under the constructive sale provisions of the Code;
|
| |
∎ |
|
controlled foreign corporations;
|
| |
∎ |
|
passive foreign investment companies; or
|
| |
∎ |
|
persons that acquire our common stock and/or Pre-Funded Warrants as
compensation for services.
|
In addition, if a partnership, including any entity or arrangement
classified as a partnership for U.S. federal income tax purposes,
holds our common stock or Pre-Funded Warrants, the tax treatment of
a partner generally will depend on the status of the partner and
upon the activities of the partnership. Accordingly, partnerships
that hold our common stock or Pre-Funded Warrants, and partners in
such partnerships, should consult their tax advisors.
You are urged to consult your tax advisor with respect to the
application of the U.S. federal income tax laws to your particular
situation, as well as any tax consequences of the purchase,
ownership and disposition of our common stock or Pre-Funded
Warrants arising under the U.S. federal estate or gift tax rules or
under the laws of any U.S. state or local or any non-U.S. or other
taxing jurisdiction or under any applicable tax treaty.
Non-U.S. Holder Defined
For purposes of this discussion, you are a non-U.S. holder if you
are a beneficial owner of our common stock or Pre-Funded Warrants
that is for U.S. federal income tax purposes (i) a corporation
or other organization classified as a corporation for U.S. federal
income tax purposes that is created or organized in or under laws
other than the laws of the United States, any state thereof, or the
District of Columbia, (ii) a nonresident alien individual,
(iii) an estate that is not subject to U.S. federal income tax
on a net-income basis; or (iv) a trust that (1) is not
subject to U.S. federal income tax on a net-income basis,
(2) is not subject to the primary supervision of a court
within the United
S-18
States or over which no U.S. persons have authority to control all
substantial decisions and (3) has not made an election to be
treated as a U.S. person under applicable U.S. Treasury
Regulations.
Pre-Funded Warrants
Although the law in this area is not completely settled, the
Pre-Funded Warrants are generally expected to be treated as
outstanding stock for U.S. federal income tax purposes.
Accordingly, no gain or loss should be recognized upon the exercise
of a Pre-Funded Warrant, and, upon exercise, the holding period of
a Pre-Funded Warrant should carry over to the shares of common
stock received. In addition, the tax basis of the Pre-Funded
Warrant should carry over to the shares of common stock received
upon exercise, increased by the exercise price of $0.0001 per
share. If you are a non-U.S. holder that is contemplating the
acquisition of Pre-Funded Warrants, you should discuss with your
personal tax advisor the consequences of the purchase, ownership
and disposition of the Pre-Funded Warrants, as well as the exercise
of the Pre-Funded Warrants into our common stock. The balance of
this discussion generally assumes that the characterization
described above is respected for U.S. federal income tax
purposes.
Distributions on our Common Stock
As discussed under “Dividend Policy,” above, we do not anticipate
paying any dividends on our capital stock in the foreseeable
future. If we were to make distributions on our common stock, those
payments will constitute dividends for U.S. federal income tax
purposes to the extent paid from our current or accumulated
earnings and profits, as determined under U.S. federal income tax
principles. To the extent those distributions exceed both our
current and our accumulated earnings and profits, they will
constitute a return of capital and will first reduce your basis in
our common stock, but not below zero, and then will be treated as
gain from the sale of stock, subject to the tax treatment described
in the discussion below regarding taxable dispositions of our
common stock. Any such distributions would also be subject to the
discussions below regarding backup withholding and FATCA.
Subject to the discussion below regarding a dividend received by
you that is effectively connected with the conduct of a U.S. trade
or business, a dividend paid to you generally will be subject to
U.S. withholding tax either at a rate of 30% of the gross amount of
the dividend or such lower rate as may be specified by an
applicable income tax treaty. In order to receive a reduced treaty
rate, you must provide us with an IRS Form W-8BEN (generally
including a U.S. taxpayer identification number), IRS Form W-8BEN-E
or another appropriate version of IRS Form W-8 (or a successor
form), in each case, certifying qualification for the reduced
rate.
Dividends received by you that are effectively connected with the
conduct of a U.S. trade or business (and, if required by an
applicable income tax treaty, are attributable to a permanent
establishment maintained by you in the United States) generally are
exempt from such withholding tax. In order to obtain this
exemption, you must provide us with an IRS Form W-8ECI or successor
form or other applicable IRS Form W-8 properly certifying such
exemption. Such effectively connected dividends, although not
subject to withholding tax, are taxed at the same graduated rates
applicable to U.S. persons, net of certain deductions and credits,
subject to an applicable income tax treaty providing otherwise. In
addition, if you are a corporate non-U.S. holder, you may also be
subject to a branch profits tax at a rate of 30% or such lower rate
as may be specified by an applicable income tax treaty on such
effectively connected dividends.
If you are eligible for a reduced rate of withholding tax pursuant
to a tax treaty, you may be able to obtain a refund of any excess
amounts currently withheld if you file an appropriate claim for
refund with the IRS.
The Pre-Funded Warrants are not entitled to any distributions until
such warrant is exercised. Upon the exercise of a Pre-Funded
Warrant, a holder shall be entitled to receive distributions
declared on our common stock prior to the exercise of such
Pre-Funded Warrant. It is possible that such entitlement to
distributions may cause the declaration of a distribution on our
common stock to be currently taxable to holders of Pre-Funded
Warrants under the principles governing Section 305 of the Code.
Each holder should consult his, her or its own tax advisor
regarding the potential taxation of distributions declared on our
common stock.
Gain on Sale or Other Taxable Disposition of Common Stock and/or
Pre-Funded Warrants
Subject to the discussion below regarding backup withholding and
FATCA, a non-U.S. holder generally will not be required to pay U.S.
federal income tax on any gain realized upon the sale or other
taxable disposition of our common stock and/or Pre-Funded Warrants
unless:
| |
∎ |
|
the gain is effectively connected with the conduct of a U.S. trade
or business (and, if required by an applicable income tax treaty,
the gain is attributable to a permanent establishment maintained by
you in the
|
S-19
| |
U.S.), in which case you will be required to pay tax on the net
gain derived from the sale under regular graduated U.S. federal
income tax rates, and for a non-U.S. holder that is a corporation,
such non-U.S. holder may be subject to the branch profits tax on
any earnings and profits attributable to such gains at a 30% rate
or such lower rate as may be specified by an applicable income tax
treaty;
|
| |
∎ |
|
you are an individual who is present in the United States for a
period or periods aggregating 183 days or more during the calendar
year in which the sale or disposition occurs and certain other
conditions are met, in which case you will be required to pay a
flat 30% tax on the gain derived from the sale, which tax may be
offset by U.S. source capital losses in the taxable year of
disposition (even though you are not considered a resident of the
United States) (subject to applicable income tax treaties); or
|
| |
∎ |
|
our common stock constitutes a U.S. real property interest by
reason of our status as a “U.S. real property holding corporation”
(a USRPHC) for U.S. federal income tax purposes at any time within
the shorter of the five-year period preceding the disposition or
your holding period for our common stock. We believe that we are
not currently and will not become a USRPHC. However, because the
determination of whether we are a USRPHC depends on the fair market
value of our U.S. real property relative to the fair market value
of our other business assets, there can be no assurance that we
will not become a USRPHC in the future. Even if we become a USRPHC,
however, as long as our common stock, is regularly traded on an
established securities market (as determined under the Code), such
common stock will be treated as U.S. real property interests only
if you actually or constructively hold more than five percent of
such regularly traded common stock at any time during the
applicable period that is specified in the Code. Our Pre-Funded
Warrants are expected to constitute a class of stock for purposes
of the rules described above. However, we do not expect our
Pre-Funded Warrants to be regularly traded on an established
securities market for purposes of such rules.
|
Backup Withholding and Information Reporting
Generally, we must report annually to the IRS the amount of
dividends paid to you, your name and address, and the amount of tax
withheld, if any. A similar report will generally be sent to you.
Pursuant to applicable income tax treaties or other agreements, the
IRS may make these reports available to tax authorities in your
country of residence.
Payments of dividends or of proceeds on the disposition of our
common stock and/or Pre-Funded Warrants made to you may be subject
to additional information reporting and backup withholding at the
then applicable rate unless you establish an exemption, for example
by properly certifying your non-U.S. status on an IRS Form W-8BEN,
IRS Form W-8BEN-E or another appropriate version of IRS Form W-8
(or a successor form). Notwithstanding the foregoing, backup
withholding and information reporting may apply if either we or our
paying agent has actual knowledge, or reason to know, that you are
a U.S. person.
Information reporting and backup withholding will generally apply
to the proceeds of a disposition of our common stock and/or
Pre-Funded Warrants effected by you by or through the U.S. office
of any broker, U.S. or foreign, unless you certify your status as a
non-U.S. holder and satisfy certain other requirements, or
otherwise establish an exemption. Generally, information reporting
and backup withholding will not apply to a payment of disposition
proceeds to a non-U.S. holder where the transaction is effected
outside the United States through a non-U.S. office of a broker.
However, for information reporting purposes, dispositions effected
through a non-U.S. office of a broker with substantial U.S.
ownership or operations generally will be treated in a manner
similar to dispositions effected through a U.S. office of a
broker.
Backup withholding is not an additional tax; rather, the U.S.
federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund or credit
may generally be obtained from the IRS, provided that the required
information is furnished to the IRS in a timely manner.
Foreign Account Tax Compliance Act (FATCA)
Provisions commonly referred to as “FATCA” may impose withholding
tax on certain types of payments made to “foreign financial
institutions” and certain other non-U.S. entities. The legislation
imposes a 30% withholding tax on
S-20
dividends on our common stock paid to a foreign financial
institution or to certain non-financial foreign entities, unless
(i) the foreign financial institution undertakes certain
diligence, reporting and withholding obligations, (ii) the
non-financial foreign entity either certifies it does not have any
substantial U.S. owners or furnishes identifying information
regarding each substantial U.S. owner and such entity meets certain
other specified requirements, or (iii) the foreign financial
institution or non-financial foreign entity otherwise qualifies for
an exemption from these rules. Such withholding may also apply to
gross proceeds from the sale or other disposition of our common
stock and/or Pre-Funded Warrants, although under recently proposed
U.S. Treasury Regulations, no withholding would apply to such gross
proceeds. The preamble to the proposed regulations specifies that
taxpayers (including withholding agents) are permitted to rely on
the proposed regulations pending finalization. If withholding under
FATCA is required on any payment related to our common stock and/or
Pre-Funded Warrants, under certain circumstances, a non-U.S. holder
may be eligible for refunds or credits of this withholding tax. An
intergovernmental agreement between the United States and an
applicable foreign country may modify the requirements described in
this paragraph. Non-U.S. holders should consult their tax advisors
regarding the possible implications of FATCA on their investment in
our common stock and/or Pre-Funded Warrants and the entities
through which they hold our common stock.
The preceding discussion of U.S. federal income tax
considerations is for information only. It is not tax advice. Each
prospective investor should consult its own tax advisor regarding
the particular U.S. federal, state and local and non-U.S. tax
consequences of purchasing, holding and disposing of our common
stock and/or Pre-Funded Warrants, including the consequences of any
proposed change in applicable laws.
S-21
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement, dated July 1, 2020, among us and Jefferies LLC, Piper
Sandler & Co. and Cantor Fitzgerald & Co., as the
representatives of the underwriters named below and the joint
book-running managers of this offering, we have agreed to sell to
the underwriters, and each of the underwriters has agreed,
severally and not jointly, to purchase from us the respective
number of shares of common stock and Pre-Funded Warrants shown
opposite its name below:
|
|
|
|
|
|
|
|
|
|
UNDERWRITER
|
|
NUMBER OF
SHARES |
|
|
NUMBER OF
PRE-FUNDED
WARRANTS |
|
|
Jefferies LLC
|
|
|
5,000,000 |
|
|
|
2,000,000 |
|
|
Piper Sandler & Co.
|
|
|
3,812,500 |
|
|
|
1,525,000 |
|
|
Cantor Fitzgerald & Co.
|
|
|
2,937,500 |
|
|
|
1,175,000 |
|
|
H.C. Wainwright & Co., LLC
|
|
|
625,000 |
|
|
|
250,000 |
|
|
Brookline Capital Markets, a division of Arcadia Securities,
LLC
|
|
|
125,000 |
|
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
12,500,000 |
|
|
|
5,000,000 |
|
|
|
|
|
|
|
|
|
|
The underwriting agreement provides that the obligations of the
several underwriters are subject to certain conditions precedent
such as the receipt by the underwriters of officers’ certificates
and legal opinions and approval of certain legal matters by their
counsel. The underwriting agreement provides that the underwriters
will purchase all of the shares of common stock and Pre-Funded
Warrants if any of them are purchased. If an underwriter defaults,
the underwriting agreement provides that the purchase commitments
of the nondefaulting underwriters may be increased or the
underwriting agreement may be terminated. We have agreed to
indemnify the underwriters and certain of their controlling persons
against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments that the underwriters
may be required to make in respect of those liabilities.
The underwriters have advised us that, following the completion of
this offering, they currently intend to make a market in the common
stock as permitted by applicable laws and regulations. However, the
underwriters are not obligated to do so, and the underwriters may
discontinue any market-making activities at any time without notice
in their sole discretion. Accordingly, no assurance can be given as
to the liquidity of the trading market for the common stock, that
you will be able to sell any of the common stock held by you at a
particular time or that the prices that you receive when you sell
will be favorable.
The underwriters are offering the shares of common stock and
Pre-Funded Warrants subject to their acceptance of the shares of
common stock and Pre-Funded Warrants from us and subject to prior
sale. The underwriters reserve the right to withdraw, cancel or
modify offers to the public and to reject orders in whole or in
part.
Commission and Expenses
The underwriters have advised us that they propose to offer the
shares of common stock to the public at the initial public offering
price set forth on the cover page of this prospectus, and the
Pre-Funded Warrants to certain investors at the public offering
price per share, minus $0.0001, and to certain dealers, which may
include the underwriters, at that price less a concession not in
excess of $0.144 per share of common stock and $0.144 per
Pre-Funded Warrant. After the offering, the public offering price,
concession and reallowance to dealers may be reduced by the
representatives. No such reduction will change the amount of
proceeds to be received by us as set forth on the cover page of
this prospectus.
S-22
The following table shows the public offering price, the
underwriting discounts and commissions that we are to pay the
underwriters and the proceeds, before expenses, to us in connection
with this offering. Such amounts are shown assuming both no
exercise and full exercise of the underwriters’ option to purchase
additional shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
PER
PRE-FUNDED
WARRANT |
|
|
PER SHARE |
|
|
TOTAL |
|
| |
|
WITHOUT
OPTION TO
PURCHASE
ADDITIONAL
SHARES |
|
|
WITH
OPTION TO
PURCHASE
ADDITIONAL
SHARES |
|
|
WITHOUT
OPTION TO
PURCHASE
ADDITIONAL
SHARES |
|
|
WITH
OPTION TO
PURCHASE
ADDITIONAL
SHARES |
|
|
Public offering price
|
|
$ |
3.9999 |
|
|
$ |
4.00 |
|
|
$ |
4.00 |
|
|
$ |
69,999,500 |
|
|
$ |
80,499,500 |
|
|
Underwriting discounts and commissions paid by us
|
|
$ |
0.2400 |
|
|
$ |
0.24 |
|
|
$ |
0.24 |
|
|
$ |
4,200,000 |
|
|
$ |
4,830,000 |
|
|
Proceeds to us, before expenses
|
|
$ |
3.7599 |
|
|
$ |
3.76 |
|
|
$ |
3.76 |
|
|
$ |
65,799,500 |
|
|
$ |
75,669,500 |
|
We estimate expenses payable by us in connection with this
offering, other than the underwriting discounts and commissions
referred to above, will be approximately $0.3 million.
Listing
Our common stock is listed on The Nasdaq Global Select Market under
the trading symbol “CHMA”. There is no established public market
for the Pre-Funded Warrants, and we do not intend to list the
Pre-Funded Warrants on The Nasdaq Global Select Market, any other
national securities exchange or any other nationally recognized
trading system.
Stamp Taxes
If you purchase shares of common stock offered in this prospectus
supplement, you may be required to pay stamp taxes and other
charges under the laws and practices of the country of purchase, in
addition to the offering price listed on the cover page of this
prospectus.
Option to Purchase Additional Shares
We have granted to the underwriters an option, exercisable for 30
days from the date of this prospectus supplement, to purchase, from
time to time, in whole or in part, up to an aggregate of 2,625,000
shares of common stock from us at the public offering price set
forth on the cover page of this prospectus supplement, less
underwriting discounts and commissions. The number of shares
subject to the underwriters’ option will equal 15% of the total
number of shares of common stock we are offering plus the shares
underlying the Pre-Funded Warrants. If the underwriters exercise
this option, each underwriter will be obligated, subject to
specified conditions, to purchase a number of additional shares of
common stock proportionate to that underwriter’s initial purchase
commitment as indicated in the table above.
No Sales of Similar Securities
We, our officers, directors and affiliates of MPM Capital, our
largest stockholder, have agreed, subject to specified exceptions,
not to directly or indirectly:
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sell, offer, contract or grant any option to sell (including any
short sale), pledge, transfer, establish an open “put equivalent
position” within the meaning of Rule 16a-l(h) under the Securities Exchange
Act of 1934, as amended, or
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otherwise dispose of any shares of common stock, options or
warrants to acquire shares of common stock, or securities
exchangeable or exercisable for or convertible into shares of
common stock, currently or hereafter owned either of record or
beneficially, or
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publicly announce an intention to do any of the foregoing for a
period of 60 days after the date of this prospectus without the
prior written consent of Jefferies LLC and Piper Sandler &
Co.
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This restriction terminates after the close of trading of the
common stock on and including the 60th day after the date of this
prospectus.
Jefferies LLC and Piper Sandler & Co. may, each in their sole
discretion and at any time or from time to time before the
termination of the 60-day
period, jointly release all or any portion of the securities
subject to lock-up
agreements. There are no existing agreements between the
underwriters and any of our shareholders who will execute a
lock-up agreement,
providing consent to the sale of shares prior to the expiration of
the lock-up period.
Stabilization
The underwriters have advised us that they, pursuant to Regulation
M under the Exchange Act, certain persons participating in the
offering may engage in short sale transactions, stabilizing
transactions, syndicate covering transactions or the imposition of
penalty bids in connection with this offering. These activities may
have the effect of stabilizing or maintaining the market price of
the common stock at a level above that which might otherwise
prevail in the open market. Establishing short sales positions may
involve either “covered” short sales or “naked” short sales.
“Covered” short sales are sales made in an amount not greater than
the underwriters’ option to purchase additional shares of our
common stock in this offering. The underwriters may close out any
covered short position by either exercising their option to
purchase additional shares of our common stock or purchasing shares
of our common stock in the open market. In determining the source
of shares to close out the covered short position, the underwriters
will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which
they may purchase shares through the option to purchase additional
shares.
“Naked” short sales are sales in excess of the option to purchase
additional shares of our common stock. The underwriters must close
out any naked short position by purchasing shares in the open
market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on
the price of the shares of our common stock in the open market
after pricing that could adversely affect investors who purchase in
this offering.
A stabilizing bid is a bid for the purchase of shares of common
stock on behalf of the underwriters for the purpose of fixing or
maintaining the price of the common stock. A syndicate covering
transaction is the bid for or the purchase of shares of common
stock on behalf of the underwriters to reduce a short position
incurred by the underwriters in connection with the offering.
Similar to other purchase transactions, the underwriters’ purchases
to cover the syndicate short sales may have the effect of raising
or maintaining the market price of our common stock or preventing
or retarding a decline in the market price of our common stock. As
a result, the price of our common stock may be higher than the
price that might otherwise exist in the open market. A penalty bid
is an arrangement permitting the underwriters to reclaim the
selling concession otherwise accruing to a syndicate member in
connection with the offering if the common stock originally sold by
such syndicate member is purchased in a syndicate covering
transaction and therefore has not been effectively placed by such
syndicate member.
Neither we nor any of the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of our common
stock. The underwriters are not obligated to engage in these
activities and, if commenced, any of the activities may be
discontinued at any time.
The underwriters may also engage in passive market making
transactions in our common stock on The Nasdaq Global Select Market
in accordance with Rule 103 of Regulation M during a
period before the commencement of offers or sales of shares of our
common stock in this offering and extending through the completion
of distribution. A passive market maker must display its bid at a
price not in excess of the highest independent bid of that
security. However, if all independent bids are lowered below the
passive market maker’s bid, that bid must then be lowered when
specified purchase limits are exceeded.
Electronic Distribution
This prospectus supplement and accompanying prospectus in
electronic format may be made available by e-mail or on the web sites or through
online services maintained by one or more of the underwriters or
their affiliates. In those
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cases, prospective investors may view offering terms online and may
be allowed to place orders online. The underwriters may agree with
us to allocate a specific number of shares of common stock for sale
to online brokerage account holders. Any such allocation for online
distributions will be made by the underwriters on the same basis as
other allocations. Other than the prospectus supplement and
accompanying prospectus in electronic format, the information on
the underwriters’ web sites and any information contained in any
other web site maintained by any of the underwriters is not part of
this prospectus supplement and accompanying prospectus, has not
been approved and/or endorsed by us or the underwriters and should
not be relied upon by investors.
Other Activities and Relationships
The underwriters and certain of their respective affiliates are
full service financial institutions engaged in various activities,
which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment
research, principal investment, hedging, financing and brokerage
activities. The underwriters and certain of their respective
affiliates have, from time to time, performed, and may in the
future perform, various commercial and investment banking and
financial advisory services for us and our affiliates, for which
they received or will receive customary fees and expenses. For
example, Jefferies LLC is the sales agent under an SMOpen Market
Sale Agreement dated April 7, 2020, by and between us and
Jefferies LLC, pursuant to which we may offer and sell, from time
to time, shares of our common stock through Jefferies LLC through
an “at the market offering” as defined in Rule 415(a)(4)
promulgated under the Securities Act, and for which Jefferies LLC
is entitled to receive customary commissions.
In the ordinary course of their various business activities, the
underwriters and certain of their respective affiliates may make or
hold a broad array of investments and actively trade debt and
equity securities (or related derivative securities) and financial
instruments (including bank loans) for their own account and for
the accounts of their customers, and such investment and securities
activities may involve securities and/or instruments issued by us
and our affiliates. If the underwriters or their respective
affiliates have a lending relationship with us, they routinely
hedge their credit exposure to us consistent with their customary
risk management policies. The underwriters and their respective
affiliates may hedge such exposure by entering into transactions
which consist of either the purchase of credit default swaps or the
creation of short positions in our securities or the securities of
our affiliates, including potentially the common stock offered
hereby. Any such short positions could adversely affect future
trading prices of the common stock offered hereby. The underwriters
and certain of their respective affiliates may also communicate
independent investment recommendations, market color or trading
ideas and/or publish or express independent research views in
respect of such securities or instruments and may at any time hold,
or recommend to clients that they acquire, long and/or short
positions in such securities and instruments.
Disclaimers About Non-U.S. Jurisdictions
Australia
Nether this prospectus supplement nor the accompanying prospectus
is a disclosure document for the purposes of Australia’s
Corporations Act 2001 (Cth) of Australia, or Corporations Act, has
not been lodged with the Australian Securities &
Investments Commission and is only directed to the categories of
exempt persons set out below. Accordingly, if you receive this
prospectus supplement and accompanying prospectus in Australia:
You confirm and warrant that you are either:
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a “sophisticated investor” under section 708(8)(a) or (b) of
the Corporations Act;
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a “sophisticated investor” under section 708(8)(c) or (d) of
the Corporations Act and that you have provided an accountant’s
certificate to the company which complies with the requirements of
section 708(8)(c)(i) or (ii) of the Corporations Act and
related regulations before the offer has been made
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a person associated with the company under Section 708(12) of
the Corporations Act; or
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a “professional investor” within the meaning of section 708(11)(a)
or (b) of the Corporations Act.
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To the extent that you are unable to confirm or warrant that you
are an exempt sophisticated investor, associated person or
professional investor under the Corporations Act any offer made to
you under this prospectus supplement and accompanying prospectus is
void and incapable of acceptance.
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You warrant and agree that you will not offer any of the securities
issued to you pursuant to this prospectus supplement for resale in
Australia within 12 months of those shares being issued unless any
such resale offer is exempt from the requirement to issue a
disclosure document under section 708 of the Corporations Act.
Canada
The distribution of the shares in Canada is being made only in the
provinces of Ontario, Quebec, Alberta and British Columbia on a
private placement basis exempt from the requirement that we prepare
and file a prospectus with the securities regulatory authorities in
each province where trades of these securities are made. Any resale
of the shares in Canada must be made under applicable
securities laws which may vary depending on the relevant
jurisdiction, and which may require resales to be made under
available statutory exemptions or under a discretionary exemption
granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of
the securities.
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(B) |
Representations of Canadian Purchasers
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By purchasing the shares in Canada and accepting delivery of a
purchase confirmation, a purchaser is representing to us and the
dealer from whom the purchase confirmation is received that:
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the purchaser is entitled under applicable provincial securities
laws to purchase the shares without the benefit of a prospectus
qualified under those securities laws as it is an “accredited
investor” as defined under National Instrument 45-106 – Prospectus Exemptions,
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the purchaser is a “permitted client” as defined in National
Instrument 31-103—Registration Requirements,
Exemptions and Ongoing Registrant Obligations,
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where required by law, the purchaser is purchasing as principal and
not as agent, and
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the purchaser has reviewed the text above under Resale
Restrictions.
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(C) |
Conflicts of Interest
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Canadian purchasers are hereby notified that certain of the
underwriters are relying on the exemption set out in section 3A.3
or 3A.4, if applicable, of National Instrument 33-105 – Underwriting Conflicts from
having to provide certain conflict of interest disclosure in this
document.
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(D) |
Statutory Rights of Action
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Securities legislation in certain provinces or territories of
Canada may provide a purchaser with remedies for rescission or
damages if the offering memorandum (including any amendment
thereto) such as this document contains a misrepresentation,
provided that the remedies for rescission or damages are exercised
by the purchaser within the time limit prescribed by the securities
legislation of the purchaser’s province or territory. The purchaser
of these securities in Canada should refer to any applicable
provisions of the securities legislation of the purchaser’s
province or territory for particulars of these rights or consult
with a legal advisor.
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(E) |
Enforcement of Legal Rights
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All of our directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may
not be possible for Canadian purchasers to effect service of
process within Canada upon us or those persons. All or a
substantial portion of our assets and the assets of those persons
may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against us or those persons in
Canada or to enforce a judgment obtained in Canadian courts against
us or those persons outside of Canada.
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(F) |
Taxation and Eligibility for Investment
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Canadian purchasers of the shares should consult their own legal
and tax advisors with respect to the tax consequences of an
investment in the shares in their particular circumstances and
about the eligibility of the shares for investment by the purchaser
under relevant Canadian legislation.
S-26
European Economic Area and the United Kingdom
In relation to each member state of the European Economic Area and
the United Kingdom (each, a “Relevant State”), an offer to the
public of any securities which are the subject of the offering
contemplated by this prospectus supplement and the accompanying
prospectus may not be made in that Relevant State except that an
offer to the public in that Relevant State of any securities may be
made at any time under the following exemptions under the
Prospectus Regulation:
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to any legal entity which is a “qualified investor” as
defined in the Prospectus Regulation;
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to fewer than 150 natural or legal persons (other than
qualified investors as defined in the Prospectus Regulation), as
permitted under the Prospectus Regulation, subject to obtaining the
prior consent of the underwriters or the underwriters nominated by
us for any such offer; or
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in any other circumstances falling within Article 1(4)
of the Prospectus Regulation,
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provided that no such offer of securities shall require us or any
of the underwriters to publish a prospectus pursuant to Article 3
of the Prospectus Regulation or supplement a prospectus pursuant to
Article 23 of the Prospectus Regulation.
For the purposes of this provision, the expression “offer to the
public” in relation to any securities in any Relevant State means
the communication in any form and by any means of sufficient
information on the terms of the offer and the securities to be
offered so as to enable an investor to decide to purchase or
subscribe the securities, and the expression “Prospectus
Regulation” means Regulation (EU) 2017/1129.
Hong Kong
No securities have been offered or sold, and no securities may be
offered or sold, in Hong Kong, by means of any document, other than
to persons whose ordinary business is to buy or sell shares or
debentures, whether as principal or agent; or to “professional
investors” as defined in the Securities and Futures Ordinance (Cap.
571) of Hong Kong (“SFO”) and any rules made under that Ordinance;
or in other circumstances which do not result in the document being
a “prospectus” as defined in the Companies Ordinance (Cap. 32) of
Hong Kong (“CO”) or which do not constitute an offer or invitation
to the public for the purpose of the CO or the SFO. No document,
invitation or advertisement relating to the securities has been
issued or may be issued or may be in the possession of any person
for the purpose of issue (in each case whether in Hong Kong or
elsewhere), which is directed at, or the contents of which are
likely to be accessed or read by, the public of Hong Kong (except
if permitted under the securities laws of Hong Kong) other than
with respect to securities which are or are intended to be disposed
of only to persons outside Hong Kong or only to “professional
investors” as defined in the SFO and any rules made under that
Ordinance.
Neither this prospectus supplement nor the accompanying prospectus
has been registered with the Registrar of Companies in Hong Kong.
Accordingly, this prospectus supplement and accompanying prospectus
may not be issued, circulated or distributed in Hong Kong, and the
securities may not be offered for subscription to members of the
public in Hong Kong. Each person acquiring the securities will be
required, and is deemed by the acquisition of the securities, to
confirm that he is aware of the restriction on offers of the
securities described in this prospectus supplement and accompanying
prospectus and the relevant offering documents and that he is not
acquiring, and has not been offered any securities in circumstances
that contravene any such restrictions.
Israel
This document does not constitute a prospectus under the Israeli
Securities Law, 5728-1968, or the Securities Law, and has not been
filed with or approved by the Israel Securities Authority. In
Israel, this prospectus supplement and accompanying prospectus is
being distributed only to, and is directed only at, and any offer
of the shares is directed only at, (i) a limited number of
persons in accordance with the Israeli Securities Law and
(ii) investors listed in the first addendum, or the Addendum,
to the Israeli Securities Law, consisting primarily of joint
investment in trust funds, provident funds, insurance companies,
banks, portfolio managers, investment advisors, members of the Tel
Aviv Stock Exchange, underwriters, venture capital funds, entities
with equity in excess of NIS 50 million and “qualified
individuals,” each as defined in the Addendum (as it may be amended
from time to time), collectively referred to as qualified investors
(in each case, purchasing for their own account or, where permitted
under the Addendum, for the accounts of their clients who are
investors listed in the Addendum). Qualified investors are required
to submit written confirmation that they fall within the scope of
the Addendum, are aware of the meaning of same and agree to it.
S-27
Japan
The offering has not been and will not be registered under the
Financial Instruments and Exchange Law of Japan (Law No. 25 of
1948 of Japan, as amended), or FIEL, and the underwriters will not
offer or sell any securities, directly or indirectly, in Japan or
to, or for the benefit of, any resident of Japan (which term as
used herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan), or
to others for re-offering
or resale, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan, except pursuant to an exemption
from the registration requirements of, and otherwise in compliance
with, the FIEL and any other applicable laws, regulations and
ministerial guidelines of Japan.
Singapore
Neither this prospectus supplement nor the accompanying prospectus
has been and will not be lodged or registered as a prospectus with
the Monetary Authority of Singapore. Accordingly, this prospectus
supplement and accompanying prospectus and any other document or
material in connection with the offer or sale, or invitation for
subscription or purchase, of the shares may not be circulated or
distributed, nor may the shares be offered or sold, or be made the
subject of an invitation for subscription or purchase, whether
directly or indirectly, to persons in Singapore other than
(i) to an institutional investor under Section 274 of the
Securities and Futures Act, Chapter 289 of Singapore (the “SFA”),
(ii) to a relevant person pursuant to Section 275(1), or any
person pursuant to Section 275(1A), and in accordance with the
conditions specified in Section 275, of the SFA, or
(iii) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
Where the shares are subscribed or purchased under Section 275
of the SFA by a relevant person which is:
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a corporation (which is not an accredited investor (as
defined in Section 4A of the SFA)) the sole business of which
is to hold investments and the entire share capital of which is
owned by one or more individuals, each of whom is an accredited
investor; or
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a trust (where the trustee is not an accredited
investor) whose sole purpose is to hold investments and each
beneficiary of the trust is an individual who is an accredited
investor,
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securities (as defined in Section 239(1) of the SFA) of that
corporation or the beneficiaries’ rights and interest (howsoever
described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the shares
pursuant to an offer made under Section 275 of the SFA
except:
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to an institutional investor or to a relevant person
defined in Section 275(2) of the SFA, or to any person arising
from an offer referred to in Section 275(1A) or
Section 276(4)(i)(B) of the SFA;
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where no consideration is or will be given for the
transfer;
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where the transfer is by operation of law;
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as specified in Section 276(7) of the SFA; or
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as specified in Regulation 32 of the Securities and
Futures (Offers of Investments) (Shares and Debentures) Regulations
2005 of Singapore.
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Switzerland
The securities may not be publicly offered in Switzerland and will
not be listed on the SIX Swiss Exchange (“SIX”) or on any other
stock exchange or regulated trading facility in Switzerland. This
prospectus supplement and accompanying prospectus has been prepared
without regard to the disclosure standards for issuance
prospectuses under art. 652a or art. 1156 of the Swiss Code of
Obligations or the disclosure standards for listing prospectuses
under art. 27 ff. of the SIX Listing Rules or the listing rules of
any other stock exchange or regulated trading facility in
Switzerland. Neither this prospectus supplement and accompanying
prospectus nor any other offering or marketing material relating to
the securities or the offering may be publicly distributed or
otherwise made publicly available in Switzerland.
Neither this prospectus supplement, the accompanying prospectus nor
any other offering or marketing material relating to the offering,
the company or the securities have been or will be filed with or
approved by any Swiss regulatory authority. In particular, this
prospectus supplement and accompanying prospectus will not be filed
with, and the offer of securities will not be supervised by, the
Swiss Financial Market Supervisory Authority FINMA, and the offer
of securities has not been and will not be authorized under the
Swiss Federal Act on Collective Investment
S-28
Schemes (“CISA”). The investor protection afforded to acquirers of
interests in collective investment schemes under the CISA does not
extend to acquirers of securities.
United Kingdom
This prospectus supplement and accompanying prospectus is only
being distributed to, and is only directed at, persons in the
United Kingdom that are qualified investors within the meaning of
Article 2(1)(e) of the Prospectus Regulation that are also
(i) investment professionals falling within Article 19(5) of
the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005, as amended, or the Order, and/or (ii) high net
worth entities falling within Article 49(2)(a) to (d) of the
Order and other persons to whom it may lawfully be communicated
(each such person being referred to as a relevant person).
This prospectus supplement, the accompanying prospectus and their
contents are confidential and should not be distributed, published
or reproduced (in whole or in part) or disclosed by recipients to
any other persons in the United Kingdom. Any person in the United
Kingdom that is not a relevant person should not act or rely on
this document or any of its contents.
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LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for us by Goodwin Procter LLP, Boston, Massachusetts.
Certain legal matters relating to this offering will be passed upon
for the underwriters by Duane Morris LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus supplement
by reference from the Company’s Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their report, which is incorporated
herein by reference. Such financial statements have been so
incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE
INFORMATION
This prospectus supplement is part of a registration statement that
we have filed with the SEC. Certain information in the registration
statement has been omitted from this prospectus in accordance with
the rules of the SEC. We are subject to the information
requirements of the Exchange Act and, in accordance therewith, file
annual, quarterly and special reports, proxy statements and other
information with the SEC. These documents also may be accessed
through the SEC’s electronic data gathering, analysis and retrieval
system, or EDGAR, via electronic means, including the SEC’s home
page on the Internet (www.sec.gov). You may also inspect the
registration statement and this prospectus on this website.
We have the authority to designate and issue more than one class or
series of stock having various preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption. We will
furnish a full statement of the relative rights and preferences of
each class or series of our stock which has been so designated and
any restrictions on the ownership or transfer of our stock to any
shareholder upon request and without charge. Written requests for
such copies should be directed to Chiasma, Inc., 140 Kendrick
Street, Building C East, Needham, MA 02494, Attention: Secretary,
or by telephoning us at (617) 928-5300. Our website is located at
www.chiasma.com. Information contained on our website is not
incorporated by reference into this prospectus, and, except for the
documents incorporated by reference as noted below, you should not
consider any information on, or that can be accessed from, our
website as part of this prospectus or any accompanying prospectus
supplement.
S-30
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference into this prospectus
supplement the information contained in other documents we file
with the SEC, which means that we can disclose important
information to you by referring you to those documents. Any
statement contained in any document incorporated or deemed to be,
incorporated by reference herein shall be deemed to be modified or
superseded, for purposes of this prospectus supplement, to the
extent that a statement contained in or omitted from this
prospectus supplement, or in any other subsequently filed document
that also is, or is deemed to be, incorporated by reference herein,
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus supplement.
We incorporate by reference the documents listed below, which have
been filed by us:
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our Annual Report on
Form 10-K for the year
ended December 31, 2019, filed with the SEC on March 16,
2020;
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our Quarterly Report on
Form 10-Q for the
quarter ended March 31, 2020, filed with the SEC on
May 7, 2020;
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our Current Reports on Form 8-K filed with the SEC on
January 10, 2020,
January 13, 2020,
February 21, 2020,
April 8, 2020,
June 15, 2020 and
June 26, 2020 (other than the portions of the filing that
are furnished rather than filed pursuant to Items 2.02 and
7.01 of a Current Report on Form 8-K); and
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our
Definitive Proxy Statement on Schedule 14A filed with the SEC
on April 28, 2020 (with respect to those portions incorporated
by reference into our Annual Report on Form 10-K for the year ended
December 31, 2019).
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Additionally, all documents filed by us with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act (other than any
portions of filings that are furnished rather than filed pursuant
to Items 2.02 and 7.01 of a Current Report on Form 8-K), after the date of this prospectus
supplement and before the termination or completion of this
offering shall be deemed to be incorporated by reference into this
prospectus supplement from the respective dates of filing of such
documents. Any information that we subsequently file with the SEC
that is incorporated by reference as described above will
automatically update and supersede any previous information that is
part of this prospectus supplement.
Upon written or oral request, we will provide you without charge, a
copy of any or all of the documents incorporated by reference,
other than exhibits to those documents unless the exhibits are
specifically incorporated by reference in the documents. You may
request a copy of any or all of these filings by writing to us at:
Chiasma, Inc., 140 Kendrick Street, Building C East, Needham, MA
02494, Attention: Secretary, or by telephoning us at (617)
928-5300.
S-31
PROSPECTUS
$200,000,000
Common Stock
Preferred Stock
Debt Securities
Warrants
Units
We may from time to time issue, in one or more series or classes,
up to $200,000,000 in aggregate principal amount of our common
stock, preferred stock, debt securities, warrants and/or units. We
may offer these securities separately or together in units. We will
specify in the accompanying prospectus supplement the terms of the
securities being offered. We may sell these securities to or
through underwriters and also to other purchasers or through
agents. We will set forth the names of any underwriters or agents,
and any fees, conversions, or discount arrangements, in the
accompanying prospectus supplement. We may not sell any securities
under this prospectus without delivery of the applicable prospectus
supplement.
You should read this document and any prospectus supplement or
amendment carefully before you invest in our securities.
Our common stock is listed on The NASDAQ Global Select Market under
the symbol “CHMA.” On September 13, 2019, the closing price for our
common stock, as reported on The NASDAQ Global Select Market, was
$5.22 per share. Our principal executive offices are located at 460
Totten Pond Road, Suite 530, Waltham, MA 02451.
Investing in our securities involves a high degree of risk. You
should review carefully the risks and uncertainties described under
the heading “Risk
Factors” contained in this prospectus beginning on page 2 and
any applicable prospectus supplement, and under similar headings in
the other documents that are incorporated by reference into this
prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is September 25,
2019.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed
with the Securities and Exchange Commission, or the SEC, using a
“shelf” registration process. Under this shelf registration
process, we may from time to time sell any combination of the
securities described in this prospectus in one or more offerings
for an aggregate initial offering price of up to $200,000,000.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will
provide one or more prospectus supplements that will contain
specific information about the terms of the offering. The
prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus
and the accompanying prospectus supplement together with the
additional information described under the heading “Where You Can
Find More Information”.
You should rely only on the information contained in or
incorporated by reference in this prospectus, any accompanying
prospectus supplement or in any related free writing prospectus
filed by us with the SEC. We have not authorized anyone to provide
you with different information. This prospectus and the
accompanying prospectus supplement do not constitute an offer to
sell or the solicitation of an offer to buy any securities other
than the securities described in the accompanying prospectus
supplement or an offer to sell or the solicitation of an offer to
buy such securities in any circumstances in which such offer or
solicitation is unlawful. You should assume that the information
appearing in this prospectus, any prospectus supplement, the
documents incorporated by reference and any related free writing
prospectus is accurate only as of their respective dates. Our
business, financial condition, results of operations and prospects
may have changed materially since those dates.
Unless the context otherwise indicates, references in this
prospectus to “Chiasma”, “we”, “our”, “us” and “the Company” refer,
collectively, to Chiasma, Inc. and its subsidiaries.
We own various U.S. federal and foreign trademark registrations and
applications, as well as pending and unregistered trademarks and
service marks, including “CHIASMA”, “TPE”, “MYCAPSSA”, “MYCAPSSA
logo”, “ACROMEGALY CARE logo” and our corporate logo. “CHIASMA”,
“MYCAPSSA” and “TPE” are registered U.S. federal trademarks. All
trademarks or trade names referred to in this prospectus are the
property of their respective owners. Solely for convenience, the
trademarks and trade names in this prospectus may be referred to
without the ®
and ™ symbols,
but such references should not be construed as any indicator that
their respective owners will not assert, to the fullest extent
under applicable law, their rights thereto.
1
RISK FACTORS
Investing in our securities involves a high degree of risk. You
should carefully consider the risks described below and in the
documents incorporated by reference in this prospectus and any
prospectus supplement, as well as other information we include or
incorporate by reference into this prospectus and any applicable
prospectus supplement, before making an investment decision. Our
business, financial condition or results of operations could be
materially adversely affected by the materialization of any of
these risks. The trading price of our securities could decline due
to the materialization of any of these risks, and you may lose all
or part of your investment. This prospectus and the documents
incorporated herein by reference also contain forward-looking
statements that involve risks and uncertainties. Actual results
could differ materially from those anticipated in these
forward-looking statements as a result of certain factors,
including the risks described below and in the documents
incorporated herein by reference, including (i) our annual
report on Form 10-K for the
fiscal year ended December 31, 2018, which is on file with the
SEC and is incorporated herein by reference, and (ii) other
documents we file with the SEC that are deemed incorporated by
reference into this prospectus.
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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, or
the Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended, or the Exchange Act. Any statements about
our expectations, beliefs, plans, objectives, assumptions or future
events or performance are not historical facts and may be
forward-looking. These statements are often, but are not always,
made through the use of words or phrases such as “anticipate,”
“believe,” “contemplate,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “target,” “will,” “would,” and similar
expressions, or the negative of these terms, or similar
expressions. Accordingly, these statements involve estimates,
assumptions and uncertainties which could cause actual results to
differ materially from those expressed in them. Any forward-looking
statements are qualified in their entirety by reference to the
factors discussed throughout this report, and in particular those
factors referenced in the section “Risk Factors.”
This prospectus contains forward-looking statements that are based
on our management’s belief and assumptions and on information
currently available to our management. These statements relate to
future events or our future financial performance, and involve
known and unknown risks, uncertainties and other factors that may
cause our actual results, levels of activity, performance or
achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or
implied by these forward-looking statements. Forward-looking
statements include, but are not limited to, statements about:
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our efforts to potentially obtain regulatory approval of octreotide
capsules, conditionally trade-named MYCAPSSA, in the United
States;
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the timing of release of clinical data, regulatory filings,
regulatory review process, and expected commercial launch timing of
octreotide capsules in the United States;
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our development of octreotide capsules for the treatment of
acromegaly and other product candidates we may develop;
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our efforts to potentially obtain regulatory approval of octreotide
capsules in the European Union by conducting the MPOWERED Phase 3
clinical trial;
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the timing and receipt and announcement of top-line and other clinical data,
including our ability to release top-line data from the MPOWERED trial
during the second half of 2020;
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the therapeutic benefits, effectiveness and safety of octreotide
capsules and other product candidates we may develop;
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our estimates of the size and characteristics of the markets that
may be addressed by octreotide capsules and other product
candidates we may develop;
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the commercial success and market acceptance of octreotide capsules
or any future product candidates that are approved for marketing in
the United States or other countries;
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our ability to generate future revenue;
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the number, designs, results and timing of our clinical trials of
octreotide capsules and other product candidates we may develop and
the timing and the commencement and availability of data from these
trials;
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the safety and efficacy of therapeutics marketed by our competitors
that are targeted to indications which octreotide capsules and
other product candidates we may develop have been developed to
treat;
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our ability to leverage our Transient Permeability Enhancer, or
TPE, platform to develop and commercialize novel oral product
candidates incorporating peptides that are currently only available
in injectable or other non-absorbable forms;
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the possibility that competing products or technologies may make
octreotide capsules, other product candidates we may develop and
successfully commercialize or our TPE technology obsolete;
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our ability to manufacture sufficient amounts of octreotide
capsules and other product candidates we may develop for clinical
trials and commercialization activities;
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our ability to secure collaborators to license, manufacture, market
and sell octreotide capsules or any products for which we receive
regulatory approval in the future;
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our ability to protect our intellectual property and operate our
business without infringing upon the intellectual property rights
of others;
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our product development and operational plans generally; and
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our estimates and expectations regarding our capital requirements,
cash and expense levels and liquidity sources.
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4
THE COMPANY
We are a clinical-stage biopharmaceutical company focused on
improving the lives of patients who face challenges associated with
their existing treatments for rare and serious chronic disease.
Employing our proprietary Transient Permeability Enhancer, or TPE,
technology platform, we seek to develop oral medications that are
currently available only as injections. We are developing oral
octreotide capsules, conditionally trade-named MYCAPSSA, our sole
TPE platform-based clinical product candidate, for the treatment of
acromegaly. In July 2019, we announced positive top-line results from CHIASMA OPTIMAL,
the second Phase 3 clinical trial we have completed of octreotide
capsules for the maintenance therapy of adult patients with
acromegaly. Based on the results from CHIASMA OPTIMAL, we plan to
resubmit our New Drug Application, or NDA, by year-end 2019. We expect the United
States Food and Drug Administration, or the FDA, will aim to
complete its review of our anticipated NDA, if accepted for filing,
within six months based on our expectation that the NDA will be
designated a Class 2 resubmission by the FDA to address its
April 2016 complete response letter, or CRL, to our original
NDA.
Acromegaly is a rare and debilitating condition that results in the
body’s production of excess growth hormone, which in turn elevates
insulin-like growth factor 1, or IGF-1, as a result of increased growth
hormone. These elevated hormone levels result in a number of
painful and disfiguring symptoms, including some acute, such as
headaches, joint pain and fatigue, and some long-term, such as
enlarged hands, feet and internal organs, as well as altered facial
features. If not treated promptly, acromegaly can lead to serious
illness and is associated with premature death, primarily due to
cardiovascular disease. Octreotide is an analog of somatostatin, a
natural inhibitor of growth hormone secretion. The current standard
of care for patients diagnosed with acromegaly and not otherwise
cured by surgical removal of the pituitary tumor consists of
lifelong, once-monthly injections of an extended release
somatostatin analog. We believe that octreotide capsules, if
approved by regulatory authorities, will be the first somatostatin
analog available for oral administration. Octreotide capsules have
been granted orphan designation in the United States and the
European Union for the treatment of acromegaly. The worldwide
market for injectable somatostatin analogs is approximately
$2.7 billion annually, of which we estimate approximately
$810 million represents annual sales for the treatment of
acromegaly. We retain worldwide rights to develop and commercialize
octreotide capsules with no royalty obligations to third
parties.
Our CHIASMA OPTIMAL trial was a randomized, double-blind,
placebo-controlled, nine-month clinical trial of octreotide
capsules that was conducted under a special protocol assessment, or
SPA, agreement with the FDA. The trial enrolled 56 adult acromegaly
patients whose disease was biochemically controlled by injectable
somatostatin analogs (average IGF-1 £ 1.0 × upper limit of normal, or ULN).
The patients also had confirmed active acromegaly following their
last surgical intervention based upon an elevated IGF-1 at that time of ³ 1.3 × ULN. Patients were randomized
on a 1:1 basis, to octreotide capsules or placebo. Patients were
dose titrated from 40 mg per day (equaling one capsule in the
morning and one capsule in the evening) to up to a maximum of
80 mg per day (equaling two capsules in the morning and two
capsules in the evening). Patients who met the predefined
withdrawal criteria, or discontinued from oral treatment for any
reason, in either treatment arm during the course of the trial were
considered treatment failures and reverted to their original
treatment of injections and monitored for the remainder of the
trial. The primary endpoint of the trial was the proportion of
patients who maintained their biochemical response at the end of
the nine-month, double-blind, placebo-controlled period as measured
using the average of the last two IGF-1 levels £ 1.0 × ULN (assessed at weeks 34 and
36). Hierarchical secondary endpoints that are expected to be
considered by the FDA in evaluating the totality of evidence for
octreotide capsules treatment include: proportion of patients who
maintain growth hormone, or GH, response at week 36 compared to
screening; time to loss of response: IGF-1 of 2 consecutive visits is >
1.0 × ULN; time to loss of response: IGF-1 of 2 consecutive visits is
³ 1.3 × ULN; and proportion
of patients requiring rescue treatment.
In the CHIASMA OPTIMAL trial, the primary endpoint was met: 58% of
the patients on octreotide capsules maintained their IGF-1 response compared to 19% of the
patients on placebo (p = 0.008). All secondary endpoints were also
met. Additionally, in a pre-specified exploratory endpoint,
mean IGF-1 values across
all
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patients treated with octreotide capsules (including primary
endpoint non-responders per
protocol), remained within normal limits (£ 1.0 x ULN) up to the end of oral
treatment. For purposes of this analysis, the end of oral treatment
value was the average of week 34 and week 36 values for all
patients who completed the study on octreotide capsules and for
those patients that required rescue medication, it was their last
observed value prior to the use of rescue medication. In the
CHIASMA OPTIMAL trial, octreotide capsules appeared safe and well
tolerated. No new or unexpected safety signals were observed. The
overall number of treatment emergent adverse events, or TEAEs, was
comparable between the octreotide capsules and placebo treatment
groups. Two patients on octreotide capsules and one patient on
placebo discontinued treatment due to TEAEs. Two patients on
octreotide capsules and one patient on placebo had serious adverse
events, or SAEs, assessed as not related to study drug. Severe
TEAEs as well as TEAEs of special interest (acromegaly symptoms)
were more common in placebo treated patients than in patients
treated with octreotide capsules.
We plan to submit an NDA by year-end 2019 for octreotide capsules
for the maintenance treatment of adults with acromegaly. The
CHIASMA OPTIMAL trial was conducted under a SPA agreement with the
FDA, which indicates that the FDA agreed that the design and
planned analysis of the CHIASMA OPTIMAL results adequately address
the objectives necessary to support a regulatory submission.
However, a SPA is not a guarantee of regulatory approval. We
anticipate that the FDA will review the totality of the data
collected from the CHIASMA OPTIMAL trial, including both primary
and secondary endpoints, together with certain data from our other
clinical trials of octreotide capsules, including but not limited
to data related to the loss of biochemical response when switching
from injectable somatostatin analogs to octreotide capsules, in
evaluating any NDA. We continue to believe that the data from the
CHIASMA OPTIMAL trial alone is designed to address the clinical
concerns raised by the FDA in its CRL to our first NDA submission
and that the FDA only expects to review safety data from our
MPOWERED trial as part of its review of our planned NDA
resubmission. We anticipate that our planned NDA resubmission will
be classified by the FDA for a six-month review period. Any future
requirement by the FDA to submit additional data including the
efficacy data from our MPOWERED clinical trial as part of our
planned NDA resubmission may delay or prevent the filing, review or
approval of our NDA.
We are also conducting an international Phase 3 clinical trial,
referred to as MPOWERED, of oral octreotide capsules for the
maintenance treatment of adult patients with acromegaly to support
regulatory approval in the European Union. The MPOWERED trial is a
randomized, open-label and active-controlled 15-month trial initially designed to
enroll up to 150 patients. The European Medicines Agency, or EMA,
requested that a minimum of at least 80 patients who are responders
to octreotide capsules following the six-month run-in phase be randomized to either
remain on octreotide capsules or return to injectable somatostatin
receptor ligands (octreotide or lanreotide), and then followed for
an additional nine months. In July 2018, we completed the
enrollment of 135 adult acromegaly patients into the run-in phase of the trial. In October
2018, 80 patients were randomized following the six-month run-in phase in the MPOWERED trial. In
October 2018, we also elected to resume enrollment in the trial in
an effort to enroll up to 15 additional patients exclusively
located in the United States in order to gain further U.S.
investigator and patient experience with octreotide capsules. In
June 2019, we completed the enrollment of 146 total patients in
MPOWERED and expect to release top-line data from the MPOWERED trial
in the second half of 2020.
The current standard of care for patients diagnosed with acromegaly
and not otherwise cured by surgical removal of the pituitary tumor
consists of lifelong, once-monthly injections of an extended
release somatostatin analog, primarily octreotide or lanreotide.
These products contain a viscous formulation and are typically
administered by a healthcare professional with large-gauge needles
into the muscle or deep subcutaneously, that is, deeply under the
skin. While injectable somatostatin analogs are generally effective
at reducing GH and IGF-1
levels and therefore providing disease control, the injections are
associated with significant limitations and patient burdens,
including suboptimal symptom control, pain, injection-site
reactions and other injection-related side effects, inconvenience,
lost work days and emotional issues. We believe that approximately
8,000 adult acromegaly patients are chronically treated with
somatostatin analogs in the United States, and that approximately
90% of these patients are managed by fewer than 1,000 patient care
centers. Patients with
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acromegaly undergoing treatment in the United States are generally
treated by endocrinologists at a small number of academic
institutions with pituitary experts (pituitary centers), regional
academic centers or hospital systems (regional referral centers)
and some community endocrinologists.
We retain worldwide rights to develop and commercialize octreotide
capsules with no royalty obligations to third parties. If approved,
we plan to commercialize octreotide capsules ourselves in the
United States and to explore the strategic merits of collaboration
opportunities for commercializing octreotide capsules in the
European Union and the rest of the world. Octreotide capsules are
currently protected by issued patents lasting until at least 2029
in the United States, the European Union, United Kingdom, Japan and
several other jurisdictions, and by pending patent applications in
additional jurisdictions that will last until 2029, if granted. We
are also pursuing additional patent applications relating to
particular uses, dosages and packaging for octreotide capsules. On
March 26, 2019, a United States patent which is directed to
specific methods of using octreotide capsules was granted. This
patent will expire in 2036.
We were incorporated in 2001 and commenced active operations in the
same year. Our operations to date have been limited to organizing
and staffing our company, business planning, raising capital,
developing our TPE technology, identifying potential drug
candidates, undertaking nonclinical studies and, beginning in 2010,
conducting clinical trials and preparing for regulatory
submissions. To date, we have financed our operations primarily
through private placements, our initial public offering and
follow-on public offerings.
We have no products approved for sale and all of our historical
revenue has been related to one license agreement, which has been
terminated.
Our principal executive offices are located at 460 Totten Pond
Road, Suite 530, Waltham, MA 02451 and our telephone number is
(617) 928-5300.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of any securities
offered under this prospectus for general corporate purposes unless
otherwise indicated in the applicable prospectus supplement.
General corporate purposes may include research and development
costs, including the conduct of one or more clinical trials,
commercialization of MYCAPSSA, if approved, potential strategic
acquisitions of complementary businesses, services or technologies,
expansion of our technology infrastructure and capabilities,
working capital, capital expenditures and general corporate
purposes. We may temporarily invest the net proceeds in a variety
of capital preservation instruments, including investment grade,
interest bearing instruments and U.S. government securities, until
they are used for their stated purpose. We have not determined the
amount of net proceeds to be used specifically for such purposes.
As a result, management will retain broad discretion over the
allocation of net proceeds.
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SECURITIES WE MAY OFFER
This prospectus contains summary descriptions of the securities we
may offer from time to time. These summary descriptions are not
meant to be complete descriptions of each security. The particular
terms of any security will be described in the applicable
prospectus supplement.
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DESCRIPTION OF CAPITAL
STOCK
The following description of our common stock and preferred stock,
together with the additional information we include in any
applicable prospectus supplements, summarizes the material terms
and provisions of the common stock and preferred stock that we may
offer under this prospectus. The following description of our
capital stock does not purport to be complete and is subject to,
and qualified in its entirety by, our Amended and Restated
Certificate of Incorporation and our Amended and Restated Bylaws,
which are exhibits to the registration statement of which this
prospectus forms a part, and by applicable law. We refer in this
section to our Amended and Restated Certificate of Incorporation as
our “certificate of incorporation”, and we refer to our Amended and
Restated Bylaws as our “bylaws.” The terms of our common stock and
preferred stock may also be affected by Delaware law.
Authorized Capital Stock
Our authorized capital stock consists of 125,000,000 shares of
common stock, par value $0.01 per share, and 5,000,000 shares of
preferred stock, par value $0.01 per share. As of September 13,
2019, we had 41,955,465 shares of common stock outstanding and no
shares of preferred stock outstanding.
Common Stock
Holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of shareholders
and do not have any cumulative voting rights. Holders of our common
stock are entitled to receive ratably any dividends declared by the
board of directors out of funds legally available for that purpose,
subject to any preferential dividend rights of any outstanding
preferred stock. Our common stock has no preemptive rights,
conversion rights or other subscription rights or redemption or
sinking fund provisions. In the event of our liquidation,
dissolution or winding up, holders of our common stock will be
entitled to share ratably in all assets remaining after payment of
all debts and other liabilities and any liquidation preference of
any outstanding preferred stock. All outstanding shares are
fully-paid and non-assessable.
Listing
Our common stock is listed on The NASDAQ Global Select Market under
the symbol “CHMA.” On September 13, 2019, the closing price for our
common stock, as reported on The NASDAQ Global Select Market, was
$5.22 per share.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American
Stock Transfer & Trust Company, LLC.
Preferred Stock
Our board of directors is authorized to issue up to 5,000,000
shares of preferred stock in one or more series without shareholder
approval. Our board of directors may determine the rights,
preferences, privileges and restrictions, including voting rights,
dividend rights, conversion rights, redemption privileges and
liquidation preferences, of each series of preferred stock.
The purpose of authorizing our board of directors to issue
preferred stock in one or more series and determine the number of
shares in the series and its rights and preferences is to eliminate
delays associated with a shareholder vote on specific issuances.
Examples of rights and preferences that the board of directors may
fix are:
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terms of redemption; and
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liquidation preferences.
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The existence of authorized but unissued shares of preferred stock
may enable our board of directors to render more difficult or to
discourage an attempt to obtain control of us by means of a merger,
tender offer, proxy contest or otherwise. For example, if in the
due exercise of its fiduciary obligations, our board of directors
were to determine that a takeover proposal is not in the best
interests of us or our stockholders, our board of directors could
cause shares of preferred stock to be issued without stockholder
approval in one or more private offerings or other transactions
that might dilute the voting or other rights of the proposed
acquirer, stockholder or stockholder group. The rights of holders
of our common stock described above will be subject to, and may be
adversely affected by, the rights of any preferred stock that we
may designate and issue in the future. The issuance of shares of
preferred stock could decrease the amount of earnings and assets
available for distribution to holders of shares of common stock.
The issuance may also adversely affect the rights and powers,
including voting rights, of these holders and may have the effect
of delaying, deterring or preventing a change in control of us.
We will incorporate by reference as an exhibit to the registration
statement, which includes this prospectus, the form of any
certificate of designation that describes the terms of the series
of preferred stock we are offering. This description and the
applicable prospectus supplement will include:
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the title and stated value;
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the number of shares authorized;
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the liquidation preference per share;
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the dividend rate, period and payment date, and method of
calculation for dividends;
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whether dividends will be cumulative or non-cumulative and, if cumulative, the
date from which dividends will accumulate;
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the procedures for any auction and remarketing, if any;
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the provisions for a sinking fund, if any;
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the provisions for redemption or repurchase, if applicable, and any
restrictions on our ability to exercise those redemption and
repurchase rights;
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any listing of the preferred stock on any securities exchange or
market;
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whether the preferred stock will be convertible into our common
stock, and, if applicable, the conversion price, or how it will be
calculated, and the conversion period;
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whether the preferred stock will be exchangeable into debt
securities, and, if applicable, the exchange price, or how it will
be calculated, and the exchange period;
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voting rights, if any, of the preferred stock;
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preemptive rights, if any;
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restrictions on transfer, sale or other assignment, if any;
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whether interests in the preferred stock will be represented by
depositary shares;
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a discussion of any material United States federal income tax
considerations applicable to the preferred stock;
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the relative ranking and preferences of the preferred stock as to
dividend rights and rights if we liquidate, dissolve or wind up our
affairs;
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any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with the series of preferred
stock as to dividend rights and rights if we liquidate, dissolve or
wind up our affairs; and
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any other specific terms, preferences, rights or limitations of, or
restrictions on, the preferred stock.
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When we issue shares of preferred stock under this prospectus, the
shares will fully be paid and nonassessable and will not have, or
be subject to, any preemptive or similar rights.
Provisions of our Certificate of Incorporation and Bylaws and
Delaware Anti-Takeover Law
Certain provisions of the Delaware General Corporation Law and of
our certificate of incorporation and bylaws could have the effect
of delaying, deferring or discouraging another party from acquiring
control of us. These provisions, which are summarized below, are
expected to discourage certain types of coercive takeover practices
and inadequate takeover bids and, as a consequence, they might also
inhibit temporary fluctuations in the market price of our common
stock that often result from actual or rumored hostile takeover
attempts. These provisions are also designed in part to encourage
anyone seeking to acquire control of us or considering unsolicited
tender offers or other unilateral takeover proposals to first
negotiate with our board of directors rather than pursue
non-negotiated takeover
attempts. These provisions might also have the effect of preventing
changes in our management. It is possible that these provisions
could make it more difficult to accomplish transactions that
stockholders might otherwise deem to be in their best interests.
However, we believe that the advantages gained by protecting our
ability to negotiate with any unsolicited and potentially
unfriendly acquirer outweigh the disadvantages of discouraging such
proposals, including those priced above the then-current market
value of our common stock, because, among other reasons, the
negotiation of such proposals could improve their terms.
Board Composition and Filling Vacancies.
Our certificate of incorporation provides for a classified board of
directors consisting of three classes of directors, each of which
shall consist, as nearly as may be possible, of one-third of the total number of
directors. Each class serves for a staggered three-year term. Our
certificate of incorporation also provides that directors may be
removed only with cause and only by the affirmative vote of the
holders of 75% or more of the voting power of the outstanding
shares of capital stock entitled to vote thereon. Furthermore, any
vacancy on our board of directors, however occurring, including a
vacancy resulting from an increase in the size of our board, may
only be filled by the affirmative vote of a majority of our
directors then in office even if less than a quorum.
No Written Consent of Stockholders.
Our certificate of incorporation provides that all stockholder
actions are required to be taken by a vote of the stockholders at
an annual or special meeting, and that stockholders may not take
any action by written consent in lieu of a meeting.
Meetings of Stockholders.
Our certificate of incorporation and bylaws provide that only a
majority of the members of our board of directors then in office
may call special meetings of stockholders and only those matters
set forth in the notice of the special meeting may be considered or
acted upon at a special meeting of stockholders. Our bylaws limit
the business that may be conducted at an annual meeting of
stockholders to those matters properly brought before the
meeting.
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Advance Notice Requirements.
Our bylaws establish advance notice procedures with regard to
stockholder proposals relating to the nomination of candidates for
election as directors or new business to be brought before meetings
of our stockholders. These procedures provide that notice of
stockholder proposals must be timely given in writing to our
corporate secretary prior to the meeting at which the action is to
be taken. Generally, to be timely, notice must be received at our
principal executive offices not less than 90 days nor more than 120
days prior to the first anniversary date of the annual meeting for
the preceding year. Our bylaws specify the requirements as to form
and content of all stockholders’ notices.
Amendment to Certificate of Incorporation and
Bylaws. As required by the Delaware General
Corporation Law, any amendment of our certificate of incorporation
must first be approved by a majority of our board of directors, and
if required by law or our certificate of incorporation, must
thereafter be approved by a majority of the outstanding shares
entitled to vote on the amendment and a majority of the outstanding
shares of each class entitled to vote thereon as a class, except
that the amendment of the provisions relating to stockholder
action, board composition, limitation of liability and the
amendment of our certificate of incorporation must be approved by
not less than 75% of the outstanding shares entitled to vote on the
amendment, and not less than 75% of the outstanding shares of each
class entitled to vote thereon as a class. Our bylaws may be
amended by the affirmative vote of a majority of the directors then
in office, subject to any limitations set forth in the bylaws; and
may also be amended by the affirmative vote of at least 75% of the
outstanding shares entitled to vote on the amendment, or, if our
board of directors recommends that the stockholders approve the
amendment, by the affirmative vote of the majority of the
outstanding shares entitled to vote on the amendment, in each case
voting together as a single class.
Delaware Anti-Takeover Law
We are subject to the provisions of Section 203 of the
Delaware General Corporation Law. In general, Section 203
prohibits a publicly-held Delaware corporation from engaging in a
“business combination” with an “interested stockholder” for a
three-year period following the time that this stockholder becomes
an interested stockholder, unless the business combination is
approved in a prescribed manner. A “business combination” includes,
among other things, a merger, asset or stock sale or other
transaction resulting in a financial benefit to the interested
stockholder. An “interested stockholder” is a person who, together
with affiliates and associates, owns, or did own within three years
prior to the determination of interested stockholder status, 15% or
more of the corporation’s voting stock. Under Section 203, a
business combination between a corporation and an interested
stockholder is prohibited unless it satisfies one of the following
conditions:
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before the stockholder became interested, the board of directors
approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder;
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upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock outstanding,
shares owned by persons who are directors and also officers, and
employee stock plans, in some instances; or
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at or after the time the stockholder became interested, the
business combination was approved by the board of directors of the
corporation and authorized at an annual or special meeting of the
stockholders by the affirmative vote of at least two-thirds of the outstanding voting
stock which is not owned by the interested stockholder.
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Exclusive Jurisdiction of Certain Actions.
Our certificate of incorporation and bylaws provide that, unless we
consent in writing to the selection of an alternative forum, the
Court of Chancery of the State of Delaware shall be the sole and
exclusive forum for any
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state law claim for (i) any derivative action or proceeding
brought on our behalf, (ii) any action asserting a claim of
breach of a fiduciary duty owed by any of our directors, officers
or other employees to us or our stockholders, (iii) any action
asserting a claim arising pursuant to any provision of the Delaware
General Corporation Law, our certificate of incorporation or our
bylaws, or (iv) any action asserting a claim against us
governed by the internal affairs doctrine; provided, however, that
this Delaware forum provision does not apply to any actions arising
under the Securities Act or the Exchange Act. Although we believe
this provision benefits us by providing increased consistency in
the application of Delaware law in the types of lawsuits to which
it applies, the provision may impose additional litigation costs on
stockholders in pursuing such claims, particularly if the
stockholders do not reside in or near the State of Delaware.
Additionally, the provision may limit our stockholders’ ability to
bring a claim in a judicial forum that they find favorable for
disputes with us or our directors, officers or employees, which may
discourage the filing of such lawsuits. The Court of Chancery of
the State of Delaware may also reach different judgment or results
than would other courts, including courts where a stockholder
considering an action may be located or would otherwise choose to
bring the action, and such judgments may be more or less favorable
to us than our stockholders. The enforceability of similar
exclusive forum provisions in other companies’ certificates of
incorporation has been challenged in legal proceedings, and it is
possible that a court could rule that this provision in our
certificate of incorporation is inapplicable or unenforceable.
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DESCRIPTION OF DEBT
SECURITIES
The paragraphs below describe the general terms and provisions of
the debt securities we may issue. When we offer to sell a
particular series of debt securities, we will describe the specific
terms of the securities in a supplement to this prospectus,
including any additional covenants or changes to existing covenants
relating to such series. The prospectus supplement also will
indicate whether the general terms and provisions described in this
prospectus apply to a particular series of debt securities. You
should read the actual indenture if you do not fully understand a
term or the way we use it in this prospectus.
We may offer senior or subordinated debt securities. Each series of
debt securities may have different terms. The senior debt
securities will be issued under one or more senior indentures,
dated as of a date prior to such issuance, between us and the
trustee identified in the applicable prospectus supplement, as
amended or supplemented from time to time. We will refer to any
such indenture throughout this prospectus as the “senior
indenture.” Any subordinated debt securities will be issued under
one or more separate indentures, dated as of a date prior to such
issuance, between us and the trustee identified in the applicable
prospectus supplement, as amended or supplemented from time to
time. We will refer to any such indenture throughout this
prospectus as the “subordinated indenture” and to the trustee under
the senior or subordinated indenture as the “trustee.” The senior
indenture and the subordinated indenture are sometimes collectively
referred to in this prospectus as the “indentures.” The indentures
will be subject to and governed by the Trust Indenture Act of 1939,
as amended. We included copies of the forms of the indentures as
exhibits to our registration statement and they are incorporated
into this prospectus by reference.
If we issue debt securities at a discount from their principal
amount, then, for purposes of calculating the aggregate initial
offering price of the offered securities issued under this
prospectus, we will include only the initial offering price of the
debt securities and not the principal amount of the debt
securities.
We have summarized below the material provisions of the indentures
and the debt securities, or indicated which material provisions
will be described in the related prospectus supplement. The
prospectus supplement relating to any particular securities offered
will describe the specific terms of the securities, which may be in
addition to or different from the general terms summarized in this
prospectus. Because the summary in this prospectus and in any
prospectus supplement does not contain all of the information that
you may find useful, you should read the documents relating to the
securities that are described in this prospectus or in any
applicable prospectus supplement. Please read “Where You Can Find
More Information” to find out how you can obtain a copy of those
documents. Except as otherwise indicated, the terms of the
indentures are identical. As used under this caption, the term
“debt securities” includes the debt securities being offered by
this prospectus and all other debt securities issued by us under
the indentures.
General
The indentures:
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do not limit the amount of debt securities that we may issue;
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allow us to issue debt securities in one or more series;
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do not require us to issue all of the debt securities of a series
at the same time;
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allow us to reopen a series to issue additional debt securities
without the consent of the holders of the debt securities of such
series; and
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provide that the debt securities will be unsecured, except as may
be set forth in the applicable prospectus supplement.
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Unless we give you different information in the applicable
prospectus supplement, the senior debt securities will be
unsubordinated obligations and will rank equally with all of our
other senior unsecured and
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unsubordinated indebtedness. Payments on the subordinated debt
securities will be subordinated to the prior payment in full of all
of our senior indebtedness, as described under “Description of Debt
Securities — Subordination” and in the applicable prospectus
supplement.
Each indenture provides that we may, but need not, designate more
than one trustee under an indenture. Any trustee under an indenture
may resign or be removed and a successor trustee may be appointed
to act with respect to the series of debt securities administered
by the resigning or removed trustee. If two or more persons are
acting as trustee with respect to different series of debt
securities, each trustee shall be a trustee of a trust under the
applicable indenture separate and apart from the trust administered
by any other trustee. Except as otherwise indicated in this
prospectus, any action described in this prospectus to be taken by
each trustee may be taken by each trustee with respect to, and only
with respect to, the one or more series of debt securities for
which it is trustee under the applicable indenture.
The prospectus supplement for each offering will provide the
following terms, where applicable:
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the title of the debt securities and whether they are senior or
subordinated;
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the aggregate principal amount of the debt securities being
offered, the aggregate principal amount of the debt securities
outstanding as of the most recent practicable date and any limit on
their aggregate principal amount, including the aggregate principal
amount of debt securities authorized;
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the price at which the debt securities will be issued, expressed as
a percentage of the principal and, if other than the principal
amount thereof, the portion of the principal amount thereof payable
upon declaration of acceleration of the maturity thereof or, if
applicable, the portion of the principal amount of such debt
securities that is convertible into common stock or other
securities of ours or the method by which any such portion shall be
determined;
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if convertible, the terms on which such debt securities are
convertible, including the initial conversion price or rate and the
conversion period and any applicable limitations on the ownership
or transferability of common stock or other securities of ours
received on conversion;
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the date or dates, or the method for determining the date or dates,
on which the principal of the debt securities will be payable;
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the fixed or variable interest rate or rates of the debt
securities, or the method by which the interest rate or rates is
determined;
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the date or dates, or the method for determining the date or dates,
from which interest will accrue;
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the dates on which interest will be payable;
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the record dates for interest payment dates, or the method by which
such dates will be determined;
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the persons to whom interest will be payable;
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the basis upon which interest will be calculated if other than that
of a 360-day year of twelve
30-day months;
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any make-whole amount, which is the amount in addition to principal
and interest that is required to be paid to the holder of a debt
security as a result of any optional redemption or accelerated
payment of such debt security, or the method for determining the
make-whole amount;
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the place or places where the principal of, and any premium or
make-whole amount, and interest on, the debt securities will be
payable;
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where the debt securities may be surrendered for registration of
transfer or conversion or exchange;
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where notices or demands to or upon us in respect of the debt
securities and the applicable indenture may be served;
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the times, prices and other terms and conditions upon which we may
redeem the debt securities;
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any obligation we have to redeem, repay or purchase the debt
securities pursuant to any sinking fund or analogous provision or
at the option of holders of the debt securities, and the times and
prices at which we must redeem, repay or purchase the debt
securities as a result of such obligation;
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the currency or currencies in which the debt securities are
denominated and payable if other than United States dollars, which
may be a foreign currency or units of two or more foreign
currencies or a composite currency or currencies and the terms and
conditions relating thereto, and the manner of determining the
equivalent of such foreign currency in United States dollars;
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whether the principal of, and any premium or make-whole amount, or
interest on, the debt securities of the series are to be payable,
at our election or at the election of a holder, in a currency or
currencies other than that in which the debt securities are
denominated or stated to be payable, and other related terms and
conditions;
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whether the amount of payments of principal of, and any premium or
make-whole amount, or interest on, the debt securities may be
determined according to an index, formula or other method and how
such amounts will be determined;
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whether the debt securities will be in registered form, bearer
form, or both, and (i) if in registered form, the person to
whom any interest shall be payable, if other than the person in
whose name the security is registered at the close of business on
the regular record date for such interest, or (ii) if in
bearer form, the manner in which, or the person to whom, any
interest on the security shall be payable if otherwise than upon
presentation and surrender upon maturity;
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any restrictions applicable to the offer, sale or delivery of
securities in bearer form and the terms upon which securities in
bearer form of the series may be exchanged for securities in
registered form of the series and vice versa, if permitted by
applicable laws and regulations;
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whether any debt securities of the series are to be issuable
initially in temporary global form and whether any debt securities
of the series are to be issuable in permanent global form with or
without coupons and, if so, whether beneficial owners of interests
in any such permanent global security may, or shall be required to,
exchange their interests for other debt securities of the series,
and the manner in which interest shall be paid;
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the identity of the depositary for securities in registered form,
if such series are to be issuable as a global security;
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the date as of which any debt securities in bearer form or in
temporary global form shall be dated if other than the original
issuance date of the first security of the series to be issued;
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the applicability, if any, of the defeasance and covenant
defeasance provisions described in this prospectus or in the
applicable indenture;
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whether and under what circumstances we will pay any additional
amounts on the debt securities in respect of any tax, assessment or
governmental charge and, if so, whether we will have the option to
redeem the debt securities in lieu of making such a payment;
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whether and under what circumstances the debt securities being
offered are convertible into common stock or other securities of
ours, as the case may be, including the conversion price or rate
and the manner or calculation thereof;
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the circumstances, if any, specified in the applicable prospectus
supplement, under which beneficial owners of interests in the
global security may obtain definitive debt securities and the
manner in which payments on a permanent global debt security will
be made if any debt securities are issuable in temporary or
permanent global form;
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any provisions granting special rights to holders of securities
upon the occurrence of such events as specified in the applicable
prospectus supplement;
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if the debt securities of such series are to be issuable in
definitive form only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and/or
terms of such certificates, documents or conditions;
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the name of the applicable trustee and the nature of any material
relationship with us or any of our affiliates, and the percentage
of debt securities of the class necessary to require the trustee to
take action;
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any deletions from, modifications of or additions to our events of
default or covenants with regard to such debt securities and any
change in the right of any trustee or any of the holders to declare
the principal amount of any of such debt securities due and
payable;
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applicable CUSIP numbers; and
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any other terms of such debt securities not inconsistent with the
provisions of the applicable indenture.
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We may issue debt securities that provide for less than the entire
principal amount thereof to be payable upon declaration of
acceleration of the maturity of the debt securities. We refer to
any such debt securities throughout this prospectus as “original
issue discount securities.” The applicable prospectus supplement
will describe the United States federal income tax consequences and
other relevant considerations applicable to original issue discount
securities.
We also may issue indexed debt securities. Payments of principal
of, and premium and interest on, indexed debt securities are
determined with reference to the rate of exchange between the
currency or currency unit in which the debt security is denominated
and any other currency or currency unit specified by us, to the
relationship between two or more currencies or currency units or by
other similar methods or formulas specified in the prospectus
supplement.
Except as described under “— Merger, Consolidation or Sale of
Assets” or as may be set forth in any prospectus supplement, the
debt securities will not contain any provisions that (i) would
limit our ability to incur indebtedness or (ii) would afford
holders of debt securities protection in the event of (a) a
highly leveraged or similar transaction involving us, or (b) a
change of control or reorganization, restructuring, merger or
similar transaction involving us that may adversely affect the
holders of the debt securities. In the future, we may enter into
transactions, such as the sale of all or substantially all of our
assets or a merger or consolidation, that may have an adverse
effect on our ability to service our indebtedness, including the
debt securities, by, among other things, substantially reducing or
eliminating our assets.
Our governing instruments do not define the term “substantially
all” as it relates to the sale of assets. Additionally, Delaware
cases interpreting the term “substantially all” rely upon the facts
and circumstances of each particular case. Consequently, to
determine whether a sale of “substantially all” of our assets has
occurred, a holder of debt securities must review the financial and
other information that we have disclosed to the public.
We will provide you with more information in the applicable
prospectus supplement regarding any deletions, modifications, or
additions to the events of default or covenants that are described
below, including any addition of a covenant or other provision
providing event risk or similar protection.
Payment
Unless we give you different information in the applicable
prospectus supplement, the principal of, and any premium or
make-whole amount, and interest on, any series of the debt
securities will be payable at the corporate trust office of the
trustee. We will provide you with the address of the trustee in the
applicable prospectus supplement. We may also pay interest by
mailing a check to the address of the person entitled to it as it
appears in the applicable register for the debt securities or by
wire transfer of funds to that person at an account maintained
within the United States.
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All monies that we pay to a paying agent or a trustee for the
payment of the principal of, and any premium or make-whole amount,
or interest on, any debt security will be repaid to us if unclaimed
at the end of two years after the obligation underlying payment
becomes due and payable. After funds have been returned to us, the
holder of the debt security may look only to us for payment,
without payment of interest for the period which we hold the
funds.
Denomination, Interest, Registration and Transfer
Unless otherwise described in the applicable prospectus supplement,
the debt securities of any series will be issuable in denominations
of $1,000 and integral multiples of $1,000.
Subject to the limitations imposed upon debt securities that are
evidenced by a computerized entry in the records of a depository
company rather than by physical delivery of a note, a holder of
debt securities of any series may:
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exchange them for any authorized denomination of other debt
securities of the same series and of a like aggregate principal
amount and kind upon surrender of such debt securities at the
corporate trust office of the applicable trustee or at the office
of any transfer agent that we designate for such purpose; and
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surrender them for registration of transfer or exchange at the
corporate trust office of the applicable trustee or at the office
of any transfer agent that we designate for such purpose.
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Every debt security surrendered for registration of transfer or
exchange must be duly endorsed or accompanied by a written
instrument of transfer satisfactory to the applicable trustee or
transfer agent. Payment of a service charge will not be required
for any registration of transfer or exchange of any debt
securities, but we or the trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith. If in addition to the applicable trustee, the
applicable prospectus supplement refers to any transfer agent
initially designated by us for any series of debt securities, we
may at any time rescind the designation of any such transfer agent
or approve a change in the location through which any such transfer
agent acts, except that we will be required to maintain a transfer
agent in each place of payment for such series. We may at any time
designate additional transfer agents for any series of debt
securities.
Neither we, nor any trustee, will be required to:
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issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before the day that the notice of redemption of any debt securities
selected for redemption is mailed and ending at the close of
business on the day of such mailing;
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register the transfer of or exchange any debt security, or portion
thereof, so selected for redemption, in whole or in part, except
the unredeemed portion of any debt security being redeemed in part;
and
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issue, register the transfer of or exchange any debt security that
has been surrendered for repayment at the option of the holder,
except the portion, if any, of such debt security not to be so
repaid.
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Merger, Consolidation or Sale of Assets
The indentures provide that we may, without the consent of the
holders of any outstanding debt securities, (i) consolidate
with, (ii) sell, lease or convey all or substantially all of
our assets to, or (iii) merge with or into, any other entity
provided that:
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either we are the continuing entity, or the successor entity, if
other than us, assumes the obligations (a) to pay the
principal of, and any premium or make-whole amount, and interest
on, all of the debt securities and (b) to duly perform and
observe all of the covenants and conditions contained in each
indenture;
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after giving effect to the transaction, there is no event of
default under the indentures and no event which, after notice or
the lapse of time, or both, would become such an event of default,
occurs and continues; and
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an officers’ certificate and legal opinion covering such conditions
are delivered to each applicable trustee.
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Covenants
Existence. Except as described under “— Merger,
Consolidation or Sale of Assets,” the indentures require us to do
or cause to be done all things necessary to preserve and keep in
full force and effect our existence, rights and franchises.
However, the indentures do not require us to preserve any right or
franchise if we determine that any right or franchise is no longer
desirable in the conduct of our business.
Payment of taxes and other claims. The indentures require us
to pay, discharge or cause to be paid or discharged, before they
become delinquent (i) all taxes, assessments and governmental
charges levied or imposed on us, and (ii) all lawful claims
for labor, materials and supplies which, if unpaid, might by law
become a lien upon our property. However, we will not be required
to pay, discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings.
Provision of financial information. The indentures require
us to (i) within 15 days of each of the respective dates by
which we are required to file our annual reports, quarterly reports
and other documents with the SEC, file with the trustee copies of
the annual report, quarterly report and other documents that we
file with the SEC under Section 13 or 15(d) of the Exchange
Act, (ii) file with the trustee and the SEC any additional
information, documents and reports regarding compliance by us with
the conditions and covenants of the indentures, as required,
(iii) within 30 days after the filing with the trustee, mail
to all holders of debt securities, as their names and addresses
appear in the applicable register for such debt securities, without
cost to such holders, summaries of any documents and reports
required to be filed by us pursuant to (i) and (ii) above, and
(iv) supply, promptly upon written request and payment of the
reasonable cost of duplication and delivery, copies of such
documents to any prospective holder.
Additional covenants. The applicable prospectus supplement
will set forth any of our additional covenants relating to any
series of debt securities.
Events of Default, Notice and Waiver
Unless the applicable prospectus supplement states otherwise, when
we refer to “events of default” as defined in the indentures with
respect to any series of debt securities, we mean:
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default in the payment of any installment of interest on any debt
security of such series continuing for 30 days;
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default in the payment of principal of, or any premium or
make-whole amount on, any debt security of such series for five
business days at its stated maturity;
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default in making any sinking fund payment as required for any debt
security of such series for five business days;
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default in the performance or breach of any covenant or warranty in
the debt securities or in the indenture by us continuing for 60
days after written notice as provided in the applicable indenture,
but not of a covenant added to the indenture solely for the benefit
of a series of debt securities issued thereunder other than such
series;
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a default under any bond, debenture, note, mortgage, indenture or
instrument:
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having an aggregate principal amount of at least
$30,000,000; or
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under which there may be issued, secured or evidenced
any existing or later created indebtedness for money borrowed by
us, if we are directly responsible or liable as obligor or
guarantor,
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if the default results in the indebtedness becoming or being
declared due and payable prior to the date it otherwise would have,
without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within 30 days
after notice to the issuing company specifying such default. Such
notice shall be given to us by the trustee, or to us and the
trustee by the holders of at least 10% in principal amount of the
outstanding debt securities of that series. The written notice
shall specify such default and require us to cause such
indebtedness to be discharged or cause such acceleration to be
rescinded or annulled and shall state that such notice is a “Notice
of Default” under such indenture;
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bankruptcy, insolvency or reorganization, or court appointment of a
receiver, liquidator or trustee of us; and
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any other event of default provided with respect to a particular
series of debt securities.
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If an event of default occurs and is continuing with respect to
debt securities of any series outstanding, then the applicable
trustee or the holders of 25% or more in principal amount of the
debt securities of that series will have the right to declare the
principal amount of all the debt securities of that series to be
due and payable. If the debt securities of that series are original
issue discount securities or indexed securities, then the
applicable trustee or the holders of 25% or more in principal
amount of the debt securities of that series will have the right to
declare the portion of the principal amount as may be specified in
the terms thereof to be due and payable. However, at any time after
such a declaration of acceleration has been made, but before a
judgment or decree for payment of the money due has been obtained
by the applicable trustee, the holders of at least a majority in
principal amount of outstanding debt securities of such series or
of all debt securities then outstanding under the applicable
indenture may rescind and annul such declaration and its
consequences if:
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we have deposited with the applicable trustee all required payments
of the principal, any premium or make-whole amount, interest and,
to the extent permitted by law, interest on overdue installment of
interest, plus applicable fees, expenses, disbursements and
advances of the applicable trustee; and
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all events of default, other than the non-payment of accelerated principal,
or a specified portion thereof, and any premium or make-whole
amount, have been cured or waived.
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The indentures also provide that the holders of at least a majority
in principal amount of the outstanding debt securities of any
series or of all debt securities then outstanding under the
applicable indenture may, on behalf of all holders, waive any past
default with respect to such series and its consequences, except a
default:
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in the payment of the principal, any premium or make-whole amount,
or interest;
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in respect of a covenant or provision contained in the applicable
indenture that cannot be modified or amended without the consent of
the holders of the outstanding debt security that is affected by
the default; or
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in respect of a covenant or provision for the benefit or protection
of the trustee, without its express written consent.
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The indentures require each trustee to give notice to the holders
of debt securities within 90 days of a default unless such default
has been cured or waived. However, the trustee may withhold notice
if specified persons of such trustee consider such withholding to
be in the interest of the holders of debt securities. The trustee
may not withhold notice of a default in the payment of principal,
any premium or interest on any debt security of such series or in
the payment of any sinking fund installment in respect of any debt
security of such series.
The indentures provide that holders of debt securities of any
series may not institute any proceedings, judicial or otherwise,
with respect to such indenture or for any remedy under the
indenture, unless the trustee fails to act for a period of 60 days
after the trustee has received a written request to institute
proceedings in
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respect of an event of default from the holders of 25% or more in
principal amount of the outstanding debt securities of such series,
as well as an offer of indemnity reasonably satisfactory to the
trustee. However, this provision will not prevent any holder of
debt securities from instituting suit for the enforcement of
payment of the principal of, and any premium or make-whole amount,
and interest on, such debt securities at the respective due dates
thereof.
The indentures provide that, subject to provisions in each
indenture relating to its duties in the case of a default, a
trustee has no obligation to exercise any of its rights or powers
at the request or direction of any holders of any series of debt
securities then outstanding under the indenture, unless the holders
have offered to the trustee reasonable security or indemnity. The
holders of at least a majority in principal amount of the
outstanding debt securities of any series or of all debt securities
then outstanding under an indenture shall have the right to direct
the time, method and place of conducting any proceeding for any
remedy available to the applicable trustee, or of exercising any
trust or power conferred upon such trustee. However, a trustee may
refuse to follow any direction which:
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is in conflict with any law or the applicable indenture;
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may involve the trustee in personal liability; or
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may be unduly prejudicial to the holders of debt securities of the
series not joining the proceeding.
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Within 120 days after the close of each fiscal year, we will be
required to deliver to each trustee a certificate, signed by one of
our several specified officers, stating whether or not that officer
has knowledge of any default under the applicable indenture. If the
officer has knowledge of any default, the notice must specify the
nature and status of the default.
Modification of the Indentures
The indentures provide that modifications and amendments may be
made only with the consent of the affected holders of a majority in
principal amount of all outstanding debt securities issued under
that indenture. However, no such modification or amendment may,
without the consent of the holders of the debt securities affected
by the modification or amendment:
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change the stated maturity of the principal of, or any premium or
make-whole amount on, or any installment of principal of or
interest on, any such debt security;
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reduce the principal amount of, the rate or amount of interest on,
or any premium or make-whole amount payable on redemption of, any
such debt security;
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reduce the amount of principal of an original issue discount
security that would be due and payable upon declaration of
acceleration of the maturity thereof or would be provable in
bankruptcy, or adversely affect any right of repayment of the
holder of any such debt security;
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change the place of payment or the coin or currency for payment of
principal of, or any premium or make-whole amount, or interest on,
any such debt security;
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impair the right to institute suit for the enforcement of any
payment on or with respect to any such debt security;
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reduce the percentage in principal amount of any outstanding debt
securities necessary to modify or amend the applicable indenture
with respect to such debt securities, to waive compliance with
particular provisions thereof or defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth
in the applicable indenture; and
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modify any of the foregoing provisions or any of the provisions
relating to the waiver of particular past defaults or covenants,
except to increase the required percentage to effect such action or
to provide that some of the other provisions may not be modified or
waived without the consent of the holder of such debt security.
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The holders of a majority in aggregate principal amount of the
outstanding debt securities of each series may, on behalf of all
holders of debt securities of that series, waive, insofar as that
series is concerned, our compliance with material restrictive
covenants of the applicable indenture.
We and our respective trustee may make modifications and amendments
of an indenture without the consent of any holder of debt
securities for any of the following purposes:
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to evidence the succession of another person to us as obligor under
such indenture;
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to add to our covenants for the benefit of the holders of all or
any series of debt securities or to surrender any right or power
conferred upon us in such indenture;
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to add events of default for the benefit of the holders of all or
any series of debt securities;
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to add or change any provisions of an indenture (i) to change
or eliminate restrictions on the payment of principal of, or
premium or make-whole amount, or interest on, debt securities in
bearer form, or (ii) to permit or facilitate the issuance of
debt securities in uncertificated form, provided that such action
shall not adversely affect the interests of the holders of the debt
securities of any series in any material respect;
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to change or eliminate any provisions of an indenture, provided
that any such change or elimination shall become effective only
when there are no debt securities outstanding of any series created
prior thereto which are entitled to the benefit of such
provision;
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to secure the debt securities;
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to establish the form or terms of debt securities of any
series;
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to provide for the acceptance of appointment by a successor trustee
or facilitate the administration of the trusts under an indenture
by more than one trustee;
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to cure any ambiguity, defect or inconsistency in an indenture,
provided that such action shall not adversely affect the interests
of holders of debt securities of any series issued under such
indenture; and
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to supplement any of the provisions of an indenture to the extent
necessary to permit or facilitate defeasance and discharge of any
series of such debt securities, provided that such action shall not
adversely affect the interests of the holders of the outstanding
debt securities of any series.
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Voting
The indentures provide that in determining whether the holders of
the requisite principal amount of outstanding debt securities of a
series have given any request, demand, authorization, direction,
notice, consent or waiver under the indentures or whether a quorum
is present at a meeting of holders of debt securities:
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the principal amount of an original issue discount security that
shall be deemed to be outstanding shall be the amount of the
principal thereof that would be due and payable as of the date of
such determination upon declaration of acceleration of the maturity
thereof;
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the principal amount of any debt security denominated in a foreign
currency that shall be deemed outstanding shall be the United
States dollar equivalent, determined on the issue date for such
debt security, of the principal amount or, in the case of an
original issue discount security, the United States dollar
equivalent on the issue date of such debt security of the amount
determined as provided in the preceding bullet point;
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the principal amount of an indexed security that shall be deemed
outstanding shall be the principal face amount of such indexed
security at original issuance, unless otherwise provided for such
indexed security under such indenture; and
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debt securities owned by us or any other obligor upon the debt
securities or by any affiliate of ours or of such other obligor
shall be disregarded.
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The indentures contain provisions for convening meetings of the
holders of debt securities of a series. A meeting will be permitted
to be called at any time by the applicable trustee, and also, upon
request, by us or the holders of at least 25% in principal amount
of the outstanding debt securities of such series, in any such case
upon notice given as provided in such indenture. Except for any
consent that must be given by the holder of each debt security
affected by the modifications and amendments of an indenture
described above, any resolution presented at a meeting or adjourned
meeting duly reconvened at which a quorum is present may be adopted
by the affirmative vote of the holders of a majority of the
aggregate principal amount of the outstanding debt securities of
that series represented at such meeting.
Notwithstanding the preceding paragraph, except as referred to
above, any resolution relating to a request, demand, authorization,
direction, notice, consent, waiver or other action that may be
made, given or taken by the holders of a specified percentage,
which is less than a majority of the aggregate principal amount of
the outstanding debt securities of a series, may be adopted at a
meeting or adjourned meeting duly reconvened at which a quorum is
present by the affirmative vote of such specified percentage.
Any resolution passed or decision taken at any properly held
meeting of holders of debt securities of any series will be binding
on all holders of such series. The quorum at any meeting called to
adopt a resolution, and at any reconvened meeting, will be persons
holding or representing a majority in principal amount of the
outstanding debt securities of a series. However, if any action is
to be taken relating to a consent or waiver which may be given by
the holders of at least a specified percentage in principal amount
of the outstanding debt securities of a series, the persons holding
such percentage will constitute a quorum.
Notwithstanding the foregoing provisions, the indentures provide
that if any action is to be taken at a meeting with respect to any
request, demand, authorization, direction, notice, consent, waiver
or other action that such indenture expressly provides may be made,
given or taken by the holders of a specified percentage in
principal amount of all outstanding debt securities affected by
such action, or of the holders of such series and one or more
additional series:
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there shall be no minimum quorum requirement for such meeting;
and
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the principal amount of the outstanding debt securities of such
series that vote in favor of such request, demand, authorization,
direction, notice, consent, waiver or other action shall be taken
account in determining whether such request, demand, authorization,
direction, notice, consent, waiver or other action has been made,
given or taken under such indenture.
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Subordination
Unless otherwise provided in the applicable prospectus supplement,
subordinated debt securities will be subject to the following
subordination provisions.
Upon any distribution to our creditors in a liquidation,
dissolution or reorganization, the payment of the principal of and
interest on any subordinated debt securities will be subordinated
to the extent provided in the applicable indenture in right of
payment to the prior payment in full of all senior debt. However,
our obligation to make payments of the principal of and interest on
such subordinated debt securities otherwise will not be affected.
No payment of principal or interest will be permitted to be made on
subordinated debt securities at any time if a default on senior
debt exists that permits the holders of such senior debt to
accelerate its maturity and the default is the subject of judicial
proceedings or we receive notice of the default. After all senior
debt is paid in full and until the subordinated debt securities are
paid in full, holders of subordinated debt securities will be
subrogated to the rights of holders of senior debt to the extent
that distributions otherwise payable to holders of subordinated
debt securities have been applied to the payment of senior debt.
The subordinated indenture will not restrict the amount of senior
debt or other indebtedness of ours. As a result of these
subordination provisions, in the event of a distribution of assets
upon insolvency, holders of subordinated debt securities may
recover less, ratably, than our general creditors.
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The term “senior debt” will be defined in the applicable indenture
as the principal of and interest on, or substantially similar
payments to be made by us in respect of, other outstanding
indebtedness, whether outstanding at the date of execution of the
applicable indenture or subsequently incurred, created or assumed.
The prospectus supplement may include a description of additional
terms implementing the subordination feature.
No restrictions will be included in any indenture relating to
subordinated debt securities upon the creation of additional senior
debt.
If this prospectus is being delivered in connection with the
offering of a series of subordinated debt securities, the
accompanying prospectus supplement or the information incorporated
in this prospectus by reference will set forth the approximate
amount of senior debt outstanding as of the end of our most recent
fiscal quarter.
Discharge, Defeasance and Covenant Defeasance
Unless otherwise indicated in the applicable prospectus supplement,
the indentures allow us to discharge our obligations to holders of
any series of debt securities issued under any indenture when:
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either (i) all securities of such series have already been
delivered to the applicable trustee for cancellation; or
(ii) all securities of such series have not already been
delivered to the applicable trustee for cancellation but
(a) have become due and payable, (b) will become due and
payable within one year, or (c) if redeemable at our option,
are to be redeemed within one year, and we have irrevocably
deposited with the applicable trustee, in trust, funds in such
currency or currencies, currency unit or units or composite
currency or currencies in which such debt securities are payable,
an amount sufficient to pay the entire indebtedness on such debt
securities in respect of principal and any premium or make-whole
amount, and interest to the date of such deposit if such debt
securities have become due and payable or, if they have not, to the
stated maturity or redemption date;
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we have paid or caused to be paid all other sums payable; and
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an officers’ certificate and an opinion of counsel stating the
conditions to discharging the debt securities have been satisfied
has been delivered to the trustee.
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Unless otherwise indicated in the applicable prospectus supplement,
the indentures provide that, upon our irrevocable deposit with the
applicable trustee, in trust, of an amount, in such currency or
currencies, currency unit or units or composite currency or
currencies in which such debt securities are payable at stated
maturity, or government obligations, or both, applicable to such
debt securities, which through the scheduled payment of principal
and interest in accordance with their terms will provide money in
an amount sufficient to pay the principal of, and any premium or
make-whole amount, and interest on, such debt securities, and any
mandatory sinking fund or analogous payments thereon, on the
scheduled due dates therefor, the issuing company may elect
either:
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to defease and be discharged from any and all obligations with
respect to such debt securities; or
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to be released from its obligations with respect to such debt
securities under the applicable indenture or, if provided in the
applicable prospectus supplement, its obligations with respect to
any other covenant, and any omission to comply with such
obligations shall not constitute an event of default with respect
to such debt securities.
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Notwithstanding the above, we may not elect to defease and be
discharged from the obligation to pay any additional amounts upon
the occurrence of particular events of tax, assessment or
governmental charge with respect to payments on such debt
securities and the obligations to register the transfer or exchange
of such debt securities, to replace temporary or mutilated,
destroyed, lost or stolen debt securities, to maintain an office or
agency in respect of such debt securities, or to hold monies for
payment in trust.
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The indentures only permit us to establish the trust described in
the paragraph above if, among other things, we have delivered to
the applicable trustee an opinion of counsel to the effect that the
holders of such debt securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of
such defeasance or covenant defeasance and will be subject to
United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred. Such opinion of
counsel, in the case of defeasance, will be required to refer to
and be based upon a ruling received from or published by the
Internal Revenue Service or a change in applicable United States
federal income tax law occurring after the date of the indenture.
In the event of such defeasance, the holders of such debt
securities would be able to look only to such trust fund for
payment of principal, any premium or make-whole amount, and
interest.
When we use the term “government obligations,” we mean securities
that are:
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direct obligations of the United States or the government that
issued the foreign currency in which the debt securities of a
particular series are payable, for the payment of which its full
faith and credit is pledged; or
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obligations of a person controlled or supervised by and acting as
an agency or instrumentality of the United States or other
government that issued the foreign currency in which the debt
securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by
the United States or such other government, which are not callable
or redeemable at the option of the issuer thereof and shall also
include a depository receipt issued by a bank or trust company as
custodian with respect to any such government obligation or a
specific payment of interest on or principal of any such government
obligation held by such custodian for the account of the holder of
a depository receipt. However, except as required by law, such
custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount
received by the custodian in respect of the government obligation
or the specific payment of interest on or principal of the
government obligation evidenced by such depository receipt.
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Unless otherwise provided in the applicable prospectus supplement,
if after we have deposited funds and/or government obligations to
effect defeasance or covenant defeasance with respect to debt
securities of any series, (i) the holder of a debt security of
such series is entitled to, and does, elect under the terms of the
applicable indenture or the terms of such debt security to receive
payment in a currency, currency unit or composite currency other
than that in which such deposit has been made in respect of such
debt security, or (ii) a conversion event occurs in respect of
the currency, currency unit or composite currency in which such
deposit has been made, the indebtedness represented by such debt
security will be deemed to have been, and will be, fully discharged
and satisfied through the payment of the principal of, and premium
or make-whole amount, and interest on, such debt security as they
become due out of the proceeds yielded by converting the amount so
deposited in respect of such debt security into the currency,
currency unit or composite currency in which such debt security
becomes payable as a result of such election or such cessation of
usage based on the applicable market exchange rate.
When we use the term “conversion event,” we mean the cessation of
use of:
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a currency, currency unit or composite currency both by the
government of the country that issued such currency and for the
settlement of transactions by a central bank or other public
institutions of or within the international banking community;
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the European Currency Unit both within the European Monetary System
and for the settlement of transactions by public institutions of or
within the European Communities; or
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any currency unit or composite currency other than the European
Currency Unit for the purposes for which it was established.
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Unless otherwise provided in the applicable prospectus supplement,
all payments of principal of, and any premium or make-whole amount,
and interest on, any debt security that is payable in a foreign
currency that ceases to be used by its government of issuance shall
be made in United States dollars.
In the event that (i) we effect covenant defeasance with
respect to any debt securities and (ii) those debt securities
are declared due and payable because of the occurrence of any event
of default, the amount in the currency, currency unit or composite
currency in which such debt securities are payable, and government
obligations on deposit with the applicable trustee, will be
sufficient to pay amounts due on such debt securities at the time
of their stated maturity but may not be sufficient to pay amounts
due on such debt securities at the time of the acceleration
resulting from such event of default. However, the issuing company
would remain liable to make payments of any amounts due at the time
of acceleration.
The applicable prospectus supplement may further describe the
provisions, if any, permitting such defeasance or covenant
defeasance, including any modifications to the provisions described
above, with respect to the debt securities of or within a
particular series.
Conversion Rights
The terms and conditions, if any, upon which the debt securities
are convertible into common stock or other securities of ours will
be set forth in the applicable prospectus supplement. The terms
will include whether the debt securities are convertible into
shares of common stock or other securities of ours, the conversion
price, or manner of calculation thereof, the conversion period,
provisions as to whether conversion will be at the issuing
company’s option or the option of the holders, the events requiring
an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of the debt securities
and any restrictions on conversion.
Global Securities
The debt securities of a series may be issued in whole or in part
in the form of one or more global securities that will be deposited
with, or on behalf of, a depository identified in the applicable
prospectus supplement relating to such series. Global securities,
if any, issued in the United States are expected to be deposited
with The Depository Trust Company, or DTC, as depository. We may
issue global securities in either registered or bearer form and in
either temporary or permanent form. We will describe the specific
terms of the depository arrangement with respect to a series of
debt securities in the applicable prospectus supplement relating to
such series. We expect that unless the applicable prospectus
supplement provides otherwise, the following provisions will apply
to depository arrangements.
Once a global security is issued, the depository for such global
security or its nominee will credit on its book-entry registration
and transfer system the respective principal amounts of the
individual debt securities represented by such global security to
the accounts of participants that have accounts with such
depository. Such accounts shall be designated by the underwriters,
dealers or agents with respect to such debt securities or by us if
we offer such debt securities directly. Ownership of beneficial
interests in such global security will be limited to participants
with the depository or persons that may hold interests through
those participants.
We expect that, under procedures established by DTC, ownership of
beneficial interests in any global security for which DTC is the
depository will be shown on, and the transfer of that ownership
will be effected only through, records maintained by DTC or its
nominee, with respect to beneficial interests of participants with
the depository, and records of participants, with respect to
beneficial interests of persons who hold through participants with
the depository. Neither we nor the trustee will have any
responsibility or liability for any aspect of the records of DTC or
for maintaining, supervising or reviewing any records of DTC or any
of its participants relating to beneficial ownership interests in
the debt securities. The laws of some states require that certain
purchasers of securities take physical delivery of such securities
in definitive form. Such limits and laws may impair the ability to
own, pledge or transfer beneficial interest in a global
security.
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So long as the depository for a global security or its nominee is
the registered owner of such global security, such depository or
such nominee, as the case may be, will be considered the sole owner
or holder of the debt securities represented by the global security
for all purposes under the applicable indenture. Except as
described below or in the applicable prospectus supplement, owners
of beneficial interest in a global security will not be entitled to
have any of the individual debt securities represented by such
global security registered in their names, will not receive or be
entitled to receive physical delivery of any such debt securities
in definitive form and will not be considered the owners or holders
thereof under the applicable indenture. Beneficial owners of debt
securities evidenced by a global security will not be considered
the owners or holders thereof under the applicable indenture for
any purpose, including with respect to the giving of any direction,
instructions or approvals to the trustee under the indenture.
Accordingly, each person owning a beneficial interest in a global
security with respect to which DTC is the depository must rely on
the procedures of DTC and, if such person is not a participant with
the depository, on the procedures of the participant through which
such person owns its interests, to exercise any rights of a holder
under the applicable indenture. We understand that, under existing
industry practice, if DTC requests any action of holders or if an
owner of a beneficial interest in a global security desires to give
or take any action which a holder is entitled to give or take under
the applicable indenture, DTC would authorize the participants
holding the relevant beneficial interest to give or take such
action, and such participants would authorize beneficial owners
through such participants to give or take such actions or would
otherwise act upon the instructions of beneficial owners holding
through them.
Payments of principal of, and any premium or make-whole amount, and
interest on, individual debt securities represented by a global
security registered in the name of a depository or its nominee will
be made to or at the direction of the depository or its nominee, as
the case may be, as the registered owner of the global security
under the applicable indenture. Under the terms of the applicable
indenture, we and the trustee may treat the persons in whose name
debt securities, including a global security, are registered as the
owners thereof for the purpose of receiving such payments.
Consequently, neither we nor the trustee have or will have any
responsibility or liability for the payment of such amounts to
beneficial owners of debt securities including principal, any
premium or make-whole amount, or interest. We believe, however,
that it is currently the policy of DTC to immediately credit the
accounts of relevant participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests
in the relevant global security as shown on the records of DTC or
its nominee. We also expect that payments by participants to owners
of beneficial interests in such global security held through such
participants will be governed by standing instructions and
customary practices, as is the case with securities held for the
account of customers in bearer form or registered in street name,
and will be the responsibility of such participants. Redemption
notices with respect to any debt securities represented by a global
security will be sent to the depository or its nominee. If less
than all of the debt securities of any series are to be redeemed,
we expect the depository to determine the amount of the interest of
each participant in such debt securities to be redeemed to be
determined by lot. Neither we, the trustee, any paying agent nor
the security registrar for such debt securities will have any
responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in
the global security for such debt securities or for maintaining any
records with respect thereto.
Neither we nor the trustee will be liable for any delay by the
holders of a global security or the depository in identifying the
beneficial owners of debt securities, and we and the trustee may
conclusively rely on, and will be protected in relying on,
instructions from the holder of a global security or the depository
for all purposes. The rules applicable to DTC and its participants
are on file with the SEC.
If a depository for any debt securities is at any time unwilling,
unable or ineligible to continue as depository and we do not
appoint a successor depository within 90 days, we will issue
individual debt securities in exchange for the global security
representing such debt securities. In addition, we may at any time
and at our sole discretion, subject to any limitations described in
the applicable prospectus supplement relating to such debt
securities, determine not to have any of such debt securities
represented by one or more global securities and in such event will
issue individual debt securities in exchange for the global
security or securities representing such
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debt securities. Individual debt securities so issued will be
issued in denominations of $1,000 and integral multiples of
$1,000.
The debt securities of a series may also be issued in whole or in
part in the form of one or more bearer global securities that will
be deposited with a depository, or with a nominee for such
depository, identified in the applicable prospectus supplement. Any
such bearer global securities may be issued in temporary or
permanent form. The specific terms and procedures, including the
specific terms of the depositary arrangement, with respect to any
portion of a series of debt securities to be represented by one or
more bearer global securities will be described in the applicable
prospectus supplement.
No Recourse
There is no recourse under any obligation, covenant or agreement in
the applicable indenture or with respect to any security against
any of our or our successor’s past, present or future shareholders,
employees, officers or directors.
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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 and the related warrant agreements and
warrant certificates. While the terms summarized below will apply
generally to any warrants that we may offer, we will describe the
particular terms of any series of warrants in more detail in the
applicable prospectus supplement. If we indicate in the prospectus
supplement, the terms of any warrants offered under that prospectus
supplement may differ from the terms described below. Specific
warrant agreements will contain additional important terms and
provisions and will be incorporated by reference as an exhibit to
the registration statement, which includes this prospectus.
General
We may issue warrants for the purchase of common stock, preferred
stock and/or debt securities in one or more series. We may issue
warrants independently or together with common stock, preferred
stock and/or debt securities, and the warrants may be attached to
or separate from these securities.
We will evidence each series of warrants by warrant certificates
that we will issue under a separate warrant agreement. We will
enter into the warrant agreement with a warrant agent. We will
indicate the name and address of the warrant agent in the
applicable prospectus supplement relating to a particular series of
warrants.
We will describe in the applicable prospectus supplement the terms
of the series of warrants, including:
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the offering price and aggregate number of warrants offered;
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the currency for which the warrants may be purchased;
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if applicable, the designation and terms of the securities with
which the warrants are issued and the number of warrants issued
with each such security or each principal amount of such
security;
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if applicable, the date on and after which the warrants and the
related securities will be separately transferable;
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in the case of warrants to purchase debt securities, the principal
amount of debt securities purchasable upon exercise of one warrant
and the price at, and currency in which, this principal amount of
debt securities may be purchased upon such exercise;
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in the case of warrants to purchase common stock or preferred
stock, the number of shares of common stock or preferred stock, as
the case may be, purchasable upon the exercise of one warrant and
the price at which these shares may be purchased upon such
exercise;
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the effect of any merger, consolidation, sale or other disposition
of our business on the warrant agreement and the warrants;
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the terms of any rights to redeem or call the warrants;
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any provisions for changes to or adjustments in the exercise price
or number of securities issuable upon exercise of the warrants;
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the periods during which, and places at which, the warrants are
exercisable;
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the manner of exercise;
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the dates on which the right to exercise the warrants will commence
and expire;
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the manner in which the warrant agreement and warrants may be
modified;
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federal income tax consequences of holding or exercising the
warrants;
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the terms of the securities issuable upon exercise of the warrants;
and
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any other specific terms, preferences, rights or limitations of or
restrictions on the warrants.
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30
DESCRIPTION OF UNITS
We may issue units comprised of shares of common stock, shares of
preferred stock, debt securities and warrants in any combination.
We may issue units in such amounts and in as many distinct series
as we wish. This section outlines certain provisions of the units
that we may issue. If we issue units, they will be issued under one
or more unit agreements to be entered into between us and a bank or
other financial institution, as unit agent. The information
described in this section may not be complete in all respects and
is qualified entirely by reference to the unit agreement with
respect to the units of any particular series. The specific terms
of any series of units offered will be described in the applicable
prospectus supplement. If so described in a particular supplement,
the specific terms of any series of units may differ from the
general description of terms presented below. We urge you to read
any prospectus supplement related to any series of units we may
offer, as well as the complete unit agreement and unit certificate
that contain the terms of the units. If we issue units, forms of
unit agreements and unit certificates relating to such units will
be incorporated by reference as exhibits to the registration
statement, which includes this prospectus.
Each unit that we may issue 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 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. The applicable prospectus
supplement may describe:
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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;
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the price or prices at which such units will be issued;
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the applicable United States federal income tax considerations
relating to the units;
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any provisions for the issuance, payment, settlement, transfer or
exchange of the units or of the securities comprising the units;
and
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any other terms of the units and of the securities comprising the
units.
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The provisions described in this section, as well as those
described under “Description of Capital Stock,” “Description of
Debt Securities” and “Description of Warrants” will apply to the
securities included in each unit, to the extent relevant and as may
be updated in any prospectus supplements.
Issuance in Series
We may issue units in such amounts and in as many distinct series
as we wish. This section summarizes terms of the units that apply
generally to all series. Most of the financial and other specific
terms of your series will be described in the applicable prospectus
supplement.
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Unit Agreements
We will issue the units under one or more unit agreements to be
entered into between us and a bank or other financial institution,
as unit agent. We may add, replace or terminate unit agents from
time to time. We will identify the unit agreement under which each
series of units will be issued and the unit agent under that
agreement in the applicable prospectus supplement. The following
provisions will generally apply to all unit agreements unless
otherwise stated in the applicable prospectus supplement:
Modification without Consent
We and the applicable unit agent may amend any unit or unit
agreement without the consent of any holder:
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to cure any ambiguity, including modifying any provisions of the
governing unit agreement that differ from those described
below;
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to correct or supplement any defective or inconsistent provision;
or
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to make any other change that we believe is necessary or desirable
and will not adversely affect the interests of the affected holders
in any material respect.
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We do not need any approval to make changes that affect only units
to be issued after the changes take effect. We may also make
changes that do not adversely affect a particular unit in any
material respect, even if they adversely affect other units in a
material respect. In those cases, we do not need to obtain the
approval of the holder of the unaffected unit; we need only obtain
any required approvals from the holders of the affected units.
Modification with Consent
We may not amend any particular unit or a unit agreement with
respect to any particular unit unless we obtain the consent of the
holder of that unit, if the amendment would:
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impair any right of the holder to exercise or enforce any right
under a security included in the unit if the terms of that security
require the consent of the holder to any changes that would impair
the exercise or enforcement of that right; or
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reduce the percentage of outstanding units or any series or class
the consent of whose holders is required to amend that series or
class, or the applicable unit agreement with respect to that series
or class, as described below.
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Any other change to a particular unit agreement and the units
issued under that agreement would require the following
approval:
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If the change affects only the units of a particular series issued
under that agreement, the change must be approved by the holders of
a majority of the outstanding units of that series; or
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If the change affects the units of more than one series issued
under that agreement, it must be approved by the holders of a
majority of all outstanding units of all series affected by the
change, with the units of all the affected series voting together
as one class for this purpose.
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These provisions regarding changes with majority approval also
apply to changes affecting any securities issued under a unit
agreement, as the governing document.
In each case, the required approval must be given by written
consent.
Unit Agreements Will Not Be Qualified under Trust Indenture
Act
No unit agreement will be qualified as an indenture, and no unit
agent will be required to qualify as a trustee, under the Trust
Indenture Act. Therefore, holders of units issued under unit
agreements will not have the protections of the Trust Indenture Act
with respect to their units.
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Mergers and Similar Transactions Permitted; No Restrictive
Covenants or Events of Default
The unit agreements will not restrict our ability to merge or
consolidate with, or sell our assets to, another corporation or
other entity or to engage in any other transactions. If at any time
we merge or consolidate with, or sell our assets substantially as
an entirety to, another corporation or other entity, the successor
entity will succeed to and assume our obligations under the unit
agreements. We will then be relieved of any further obligation
under these agreements.
The unit agreements will not include any restrictions on our
ability to put liens on our assets, nor will they restrict our
ability to sell our assets. The unit agreements also will not
provide for any events of default or remedies upon the occurrence
of any events of default.
Governing Law
The unit agreements and the units will be governed by Delaware
law.
Form, Exchange and Transfer
Unless the accompanying prospectus supplement states otherwise, we
will issue each unit in global — i.e., book-entry — form only.
Units in book-entry form will be represented by a global security
registered in the name of a depositary, which will be the holder of
all the units represented by the global security. Those who own
beneficial interests in a unit will do so through participants in
the depositary’s system, and the rights of these indirect owners
will be governed solely by the applicable procedures of the
depositary and its participants. We will describe book-entry
securities, and other terms regarding the issuance and registration
of the units in the applicable prospectus supplement.
Unless the accompanying prospectus supplement states otherwise,
each unit and all securities comprising the unit will be issued in
the same form.
If we issue any units in registered, non-global form, the following will
apply to them.
The units will be issued in the denominations stated in the
applicable prospectus supplement. Holders may exchange their units
for units of smaller denominations or combined into fewer units of
larger denominations, as long as the total amount is not
changed.
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Holders may exchange or transfer their units at the office of the
unit agent. Holders may also replace lost, stolen, destroyed or
mutilated units at that office. We may appoint another entity to
perform these functions or perform them ourselves.
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Holders will not be required to pay a service charge to transfer or
exchange their units, but they may be required to pay for any tax
or other governmental charge associated with the transfer or
exchange. The transfer or exchange, and any replacement, will be
made only if our transfer agent is satisfied with the holder’s
proof of legal ownership. The transfer agent may also require an
indemnity before replacing any units.
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If we have the right to redeem, accelerate or settle any units
before their maturity, and we exercise our right as to less than
all those units or other securities, we may block the exchange or
transfer of those units during the period beginning 15 days before
the day we mail the notice of exercise and ending on the day of
that mailing, in order to freeze the list of holders to prepare the
mailing. We may also refuse to register transfers of or exchange
any unit selected for early settlement, except that we will
continue to permit transfers and exchanges of the unsettled portion
of any unit being partially settled. We may also block the transfer
or exchange of any unit in this manner if the unit includes
securities that are or may be selected for early settlement.
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Only the depositary will be entitled to transfer or exchange a unit
in global form, since it will be the sole holder of the unit.
Payments and Notices
In making payments and giving notices with respect to our units, we
will follow the procedures as described in the applicable
prospectus supplement.
34
PLAN OF DISTRIBUTION
We may sell securities:
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directly to purchasers; or
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through a combination of any of these methods or any other method
permitted by law.
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In addition, we may issue the securities as a dividend or
distribution or in a subscription rights offering to our existing
security holders.
We may directly solicit offers to purchase securities, or agents
may be designated to solicit such offers. In the prospectus
supplement relating to such offering, we will name any agent that
could be viewed as an underwriter under the Securities Act and
describe any commissions that we must pay to any such agent. Any
such agent will be acting on a best efforts basis for the period of
its appointment or, if indicated in the applicable prospectus
supplement, on a firm commitment basis. This prospectus may be used
in connection with any offering of our securities through any of
these methods or other methods described in the applicable
prospectus supplement.
The distribution of the securities may be effected from time to
time in one or more transactions:
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at a fixed price, or prices, which may be changed from time to
time;
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at market prices prevailing at the time of sale;
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at prices related to such prevailing market prices; or
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Each prospectus supplement will describe the method of distribution
of the securities and any applicable restrictions.
The prospectus supplement with respect to the securities of a
particular series will describe the terms of the offering of the
securities, including the following:
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the name of the agent or any underwriters;
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the public offering or purchase price;
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any discounts and commissions to be allowed or paid to the agent or
underwriters;
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all other items constituting underwriting compensation;
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any discounts and commissions to be allowed or paid to dealers;
and
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any exchanges on which the securities will be listed.
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If any underwriters or agents are used in the sale of the
securities in respect of which this prospectus is delivered, we
will enter into an underwriting agreement, sales agreement or other
agreement with them at the time of sale to them, and we will set
forth in the prospectus supplement relating to such offering the
names of the underwriters or agents and the terms of the related
agreement with them.
In connection with the offering of securities, we may grant to the
underwriters an option to purchase additional securities with an
additional underwriting commission, as may be set forth in the
accompanying prospectus supplement. If we grant any such option,
the terms of such option will be set forth in the prospectus
supplement for such securities.
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If a dealer is used in the sale of the securities in respect of
which the prospectus is delivered, we will sell such securities to
the dealer, as principal. The dealer, who may be deemed to be an
“underwriter” as that term is defined in the Securities Act, may
then resell such securities to the public at varying prices to be
determined by such dealer at the time of resale.
If we offer securities in a subscription rights offering to our
existing security holders, we may enter into a standby underwriting
agreement with dealers, acting as standby underwriters. We may pay
the standby underwriters a commitment fee for the securities they
commit to purchase on a standby basis. If we do not enter into a
standby underwriting arrangement, we may retain a dealer-manager to
manage a subscription rights offering for us.
Agents, underwriters, dealers and other persons may be entitled
under agreements which they may enter into with us to
indemnification by us against certain civil liabilities, including
liabilities under the Securities Act, and may be customers of,
engage in transactions with or perform services for us in the
ordinary course of business.
If so indicated in the applicable prospectus supplement, we will
authorize underwriters or other persons acting as our agents to
solicit offers by certain institutions to purchase securities from
us pursuant to delayed delivery contracts providing for payment and
delivery on the date stated in the prospectus supplement. Each
contract will be for an amount not less than, and the aggregate
amount of securities sold pursuant to such contracts shall not be
less nor more than, the respective amounts stated in the prospectus
supplement. Institutions with whom the contracts, when authorized,
may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but shall in all
cases be subject to our approval. Delayed delivery contracts will
not be subject to any conditions except that:
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the purchase by an institution of the securities covered under that
contract shall not at the time of delivery be prohibited under the
laws of the jurisdiction to which that institution is subject;
and
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if the securities are also being sold to underwriters acting as
principals for their own account, the underwriters shall have
purchased such securities not sold for delayed delivery. The
underwriters and other persons acting as our agents will not have
any responsibility in respect of the validity or performance of
delayed delivery contracts.
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Offered securities may also be offered and sold, if so indicated in
the prospectus supplement, in connection with a remarketing upon
their purchase, in accordance with a redemption or repayment
pursuant to their terms, or otherwise, by one or more remarketing
firms, acting as principals for their own accounts or as agents for
us. Any remarketing firm will be identified and the terms of its
agreement, if any, with us and its compensation will be described
in the applicable prospectus supplement. Remarketing firms may be
deemed to be underwriters in connection with their remarketing of
offered securities.
Certain agents, underwriters and dealers, and their associates and
affiliates, may be customers of, have borrowing relationships with,
engage in other transactions with, or perform services, including
investment banking services, for us or one or more of our
respective affiliates in the ordinary course of business.
In order to facilitate the offering of the securities, any
underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the securities or any other
securities the prices of which may be used to determine payments on
such securities. Specifically, any underwriters may overallot in
connection with the offering, creating a short position for their
own accounts. In addition, to cover overallotments or to stabilize
the price of the securities or of any such other securities, the
underwriters may bid for, and purchase, the securities or any such
other securities in the open market. Finally, in any offering of
the securities through a syndicate of underwriters, the
underwriting syndicate may reclaim selling concessions allowed to
an underwriter or a dealer for distributing the securities in the
offering if the syndicate repurchases previously distributed
securities in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these
activities
36
may stabilize or maintain the market price of the securities above
independent market levels. Any such underwriters are not required
to engage in these activities and may end any of these activities
at any time.
We may engage in at the market offerings into an existing trading
market in accordance with Rule 415(a)(4) under the Securities Act.
In addition, we may enter into derivative transactions with third
parties, or sell securities not covered by this prospectus to third
parties in privately negotiated transactions. If the applicable
prospectus supplement so indicates, in connection with those
derivatives, the third parties may sell securities covered by this
prospectus and the applicable prospectus supplement, including in
short sale transactions. If so, the third party may use securities
pledged by us or borrowed from us or others to settle those sales
or to close out any related open borrowings of stock, and may use
securities received from us in settlement of those derivatives to
close out any related open borrowings of stock. The third party in
such sale transactions will be an underwriter and, if not
identified in this prospectus, will be named in the applicable
prospectus supplement (or a post-effective amendment). In addition,
we may otherwise loan or pledge securities to a financial
institution or other third party that in turn may sell the
securities short using this prospectus and an applicable prospectus
supplement. Such financial institution or other third party may
transfer its economic short position to investors in our securities
or in connection with a concurrent offering of other
securities.
Under Rule 15c6-1 of the
Exchange Act, trades in the secondary market generally are required
to settle in two business days, unless the parties to any such
trade expressly agree otherwise. The applicable prospectus
supplement may provide that the original issue date for your
securities may be more than two scheduled business days after the
trade date for your securities. Accordingly, in such a case, if you
wish to trade securities on any date prior to the second business
day before the original issue date for your securities, you will be
required, by virtue of the fact that your securities initially are
expected to settle in more than two scheduled business days after
the trade date for your securities, to make alternative settlement
arrangements to prevent a failed settlement.
The securities may be new issues of securities and may have no
established trading market. The securities may or may not be listed
on a national securities exchange. We can make no assurance as to
the liquidity of or the existence of trading markets for any of the
securities.
The specific terms of any lock-up provisions in respect of any
given offering will be described in the applicable prospectus
supplement.
The underwriters, dealers and agents may engage in transactions
with us, or perform services for us, in the ordinary course of
business for which they receive compensation.
The anticipated date of delivery of offered securities will be set
forth in the applicable prospectus supplement relating to each
offer.
37
LEGAL MATTERS
Certain legal matters in connection with this offering will be
passed upon for us by Goodwin Procter LLP, Boston, Massachusetts.
Any underwriters will also be advised about the validity of the
securities and other legal matters by their own counsel, which will
be named in the prospectus supplement.
EXPERTS
The financial statements incorporated in this Prospectus by
reference from the Company’s Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their report, which is incorporated
herein by reference. Such financial statements have been so
incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE
INFORMATION
We are subject to the information requirements of the Exchange Act
and, in accordance therewith, file annual, quarterly and special
reports, proxy statements and other information with the SEC. You
may read and copy any document we file at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You
may call the SEC at 1-800-SEC-0330 for
further information on the operation of the Public Reference Room.
These documents also may be accessed through the SEC’s electronic
data gathering, analysis and retrieval system, or EDGAR, via
electronic means, including the SEC’s home page on the Internet
(www.sec.gov).
We have the authority to designate and issue more than one class or
series of stock having various preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption. See
“Description of Capital Stock.” We will furnish a full statement of
the relative rights and preferences of each class or series of our
stock which has been so designated and any restrictions on the
ownership or transfer of our stock to any shareholder upon request
and without charge. Written requests for such copies should be
directed to Chiasma, Inc., 460 Totten Pond Road, Suite 530,
Waltham, MA 02451, Attention: Secretary, or by telephone request to
(617) 928-5300. Our website
is located at www.chiasmapharma.com. Information contained
on our website is not incorporated by reference into this
prospectus and, therefore, is not part of this prospectus or any
accompanying prospectus supplement.
INCORPORATION BY
REFERENCE
The SEC allows us to incorporate by reference the information and
reports we file with it, which means that we can disclose important
information to you by referring you to these documents. The
information incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC will
automatically update and supersede the information already
incorporated by reference. We are incorporating by reference the
documents listed below, which we have already filed with the SEC,
and any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, including all filings made
after the date of the filing of this registration statement and
prior to the effectiveness of this registration statement, except
as to any portion of any future report or document that is not
deemed filed under such provisions, until we sell all of the
securities:
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our Annual Report on Form 10-K for the year ended
December 31, 2018, filed with the SEC on
March 8, 2019;
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our Definitive Proxy Statement on Schedule 14A filed
with the SEC on
April 29, 2019 (with respect to those portions
incorporated by reference into our Annual Report on Form 10-K for the
year ended December 31, 2018);
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the description of our common stock contained in our registration
statement on
Form 8-A, which was
filed with the SEC on July 14, 2015, including any amendment
or report filed for the purpose of updating such description.
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Upon request, we will provide, without charge, to each person,
including any beneficial owner, to whom a copy of this prospectus
is delivered, a copy of the documents incorporated by reference
into this prospectus but not delivered with the prospectus. You may
request a copy of these filings, and any exhibits we have
specifically incorporated by reference as an exhibit in this
prospectus, at no cost by writing or telephoning us at the
following address:
Chiasma, Inc., 460 Totten Pond Road, Suite 530, Waltham, MA 02451,
Attention: Secretary, or by telephone request to (617) 928-5300.
This prospectus is part of a registration statement we filed with
the SEC. We have incorporated exhibits into this registration
statement. You should read the exhibits carefully for provisions
that may be important to you.
You should rely only on the information incorporated by reference
or provided in this prospectus or any prospectus supplement. We
have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that
the information in this prospectus or in the documents incorporated
by reference is accurate as of any date other than the date on the
front of this prospectus or those documents.
39
12,500,000 Shares of Common Stock
Pre-Funded Warrants to Purchase 5,000,000 Shares
of
Common Stock
PROSPECTUS SUPPLEMENT
Book Running Managers
Jefferies
Piper Sandler
Cantor
Lead Manager
H.C. Wainwright & Co.
Co-Manager
Brookline Capital Markets
a division of Arcadia Securities, LLC
July 1, 2020
