Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-145935
PROSPECTUS
SYNVISTA
THERAPEUTICS, INC.
628,268
SHARES OF COMMON STOCK
We
sold
10 million shares of our Series B Preferred Stock, $0.01 par value per
share
(the “Series B Preferred Stock”) and warrants to purchase 2.5 million shares of
our Series B Preferred Stock (the “Warrants”) for an aggregate purchase price of
approximately $25 million in a private placement to accredited institutional
investors which closed on July 25, 2007. This prospectus relates to the
resale
from time to time of a total of 598,391 shares of our common stock issuable
upon
conversion of the shares of Series B Preferred Stock, as well as 29,877
shares
of our common stock issuable upon exercise of warrants to purchase our
common stock issued to the placement agent in the private placement
immediately following the closing of the sale of our Series B
Preferred Stock, by the selling stockholders described in the section entitled
“Selling Stockholders” on page 20 of this prospectus.
The
selling stockholders will receive all of the proceeds from the disposition
of
the shares or interests therein and will pay any underwriting discounts and
selling commissions relating thereto. We have agreed to pay the legal,
accounting, printing and other expenses related to the registration of the
shares.
Our
common stock, par value $0.01 per share, is listed on the American Stock
Exchange under the symbol “SYI.” On November 13, 2007 the last reported
sale price of our common stock was $2.40 per share. Our principal executive
offices are located at 221 West Grand Avenue, Suite 200, Montvale, New Jersey
07645, and our telephone number is (201) 934-5000.
The
selling stockholders or their pledges, assignees or successors-in-interest
may
offer and sell or otherwise dispose of the shares of common stock described
in
this prospectus from time to time through public or private transactions
at
prevailing market prices, at prices related to prevailing market prices or
at
privately negotiated prices. See “Plan of Distribution” beginning on
page 24 for more information about how the selling stockholders may sell or
dispose of their shares of common stock.
The
selling stockholders may resell the common stock to or through underwriters,
broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions.
You
should consider carefully the risks that we have described in
“Risk
Factors”
beginning on page 5 before deciding whether to invest in our common
stock.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
THE
DATE OF THIS PROSPECTUS IS NOVEMBER 14, 2007
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
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1
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OUR
BUSINESS
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2
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RISK
FACTORS
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5
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FORWARD-LOOKING
STATEMENTS AND CAUTIONARY STATEMENTS
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18
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USE
OF PROCEEDS
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19
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SELLING
STOCKHOLDERS
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20
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PLAN
OF DISTRIBUTION
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24
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LEGAL
MATTERS
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25
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EXPERTS
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25
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WHERE
YOU CAN FIND MORE INFORMATION
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25
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INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
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26
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-3 that we filed
with
the Securities and Exchange Commission, or the SEC, using a “shelf” registration
or continuous offering process. Under this shelf process, certain selling
stockholders may from time to time sell the shares of common stock described
in
this prospectus in one or more offerings.
You
should read this prospectus and the information and documents incorporated
by
reference carefully. Such documents contain important information you should
consider when making your investment decision. See “Incorporation of Certain
Documents by Reference” on page 25. You should rely only on the information
provided in this prospectus or documents incorporated by reference into this
prospectus. We have not, and the selling stockholders have not, authorized
anyone to provide you with different information. The selling stockholders
are
offering to sell and seeking offers to buy shares of our common stock only
in
jurisdictions in which offers and sales are permitted. The information contained
in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of our
common stock.
In
this
prospectus, we refer to Synvista Therapeutics, Inc. as the “Company” or
“Synvista.” Reference to “selling stockholders” refers to those stockholders
listed herein under “Selling Stockholders,” who may sell shares from time to
time as described in this prospectus. All trade names used in this
prospectus are either our registered trademarks or trademarks of their
respective holders.
OUR
BUSINESS
The
following is only a summary and therefore does not contain all of the
information you should consider before investing in our securities. We urge
you
to read this entire prospectus, including the more detailed consolidated
financial statements, notes to the consolidated financial statements and
other
information incorporated by reference from our other filings with the Securities
and Exchange Commission. Investing in our common stock involves risks.
Therefore, please carefully consider the information provided under the heading
“Risk Factors” beginning on page 5.
Overview
We
are a
product-based biopharmaceutical company engaged in the development of drugs
to
treat and prevent cardiovascular disease and diabetes. We have identified
several promising product candidates that we believe represent novel approaches
to some of the largest pharmaceutical markets.
We
have
two lead product candidates in Phase 2 clinical trials:
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ALT-2074
is a glutathione peroxidase mimetic in clinical development for
reducing
the morbidity and mortality of patients with diabetes following
a
myocardial infarction. ALT-2074 has demonstrated potential efficacy
in
animal models of heart attack and in a 20-patient clinical trial
in
ulcerative colitis. Our goal is to develop ALT-2074 in acute coronary
syndrome as a targeted drug for high risk diabetic patients. The
compound
has demonstrated the ability to reduce infarct size by approximately
85
percent in a mouse model of heart attack called ischemia reperfusion
injury. It is currently being evaluated in a clinical trial for
evidence
of myocardial protection following angioplasty in high-risk diabetic
patients. This Phase 2 clinical study was opened for enrollment
in Israel,
in May 2006. We expect to report results of this trial in the first
half
of 2008. In June 2007, we initiated a Phase 2 study using ALT-2074
in
diabetic patients, testing positive for a marker of increased
cardiovascular risk (haptoglobin genotype testing). Patients are
being
treated with ascending doses of ALT-2074 or placebo for 28 days
as we
track inflammatory biomarkers and functional improvement in their
reverse
cholesterol transport. Results from this study are anticipated
in the
first quarter of 2008.
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Alagebrium
chloride or alagebrium (formerly ALT-711), is an advanced glycation
end-product crosslink breaker being developed for diastolic heart
failure
(“DHF”) and diabetic nephropathy. Alagebrium has demonstrated potential
efficacy in two clinical trials in heart failure, as well as in
animal
models of heart failure, nephropathy, hypertension and erectile
dysfunction (“ED”). These diseases represent rapidly growing markets of
unmet medical needs, particularly common among diabetic patients.
The
compound has been tested in approximately 1,000 patients, which
represents
a sizeable human safety database, in a number of Phase 2 clinical
studies
in another cardiovascular indication.
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We
have
been primarily focused on fund-raising activities and exploring strategic
relationships to support our development programs. Since we have been able
to complete our Series B Preferred Stock Financing, we hope to proceed with
several studies involving ALT-2074 and alagebrium. With respect to
ALT-2074, in addition to the myocardial protection study described above,
and
the Phase 2 biomarker study designed to correlate the dose and schedule of
ALT-2074 with an effect on inflammatory biomarker levels and various components
of cholesterol, we are considering other clinical development activities.
With respect to alagebrium, we plan, among other things, to initiate a small
Phase 2 study to examine the impact of alagebrium on heart function. As
previously reported, we also expect that alagebrium will be studied in a
clinical trial of patients with Type I diabetes and microalbuminuria (protein
in
the urine), funded by the Juvenile Diabetes Research Foundation.
We
continue to evaluate potential pre-clinical and clinical studies in other
therapeutic indications in which alagebrium and ALT-2074 may address significant
unmet needs. For alagebrium, in addition to our anticipated clinical studies
in
heart failure, we have conducted preclinical studies focusing on
atherosclerosis; Alzheimer's disease; photoaging of the skin; eye diseases,
including age-related macular degeneration (“AMD”), and glaucoma; and other
diabetic complications, including renal diseases. For ALT-2074, we plan the
exploration of indications for myocardial protection, atherosclerosis and
other
inflammatory diseases.
On
July
25, 2007, we closed a private placement of shares of our Series B Preferred
Stock. At the closing of the financing, we issued 10,000,000 shares of our
Series B Preferred Stock to the buyers. In connection with the closing of
the
financing, we also issued warrants to purchase 2,500,000 shares of Series
B
Preferred Stock to the buyers, and warrants to purchase 600,000 shares of
common
stock to the placement agent in the private placement, all of which warrants
are
exercisable for a period of five years commencing on July 25, 2007 at an
exercise price of $2.50 per share. This prospectus relates to 598,391
shares of our common stock that are issuable upon conversion of 598,391 of
the
shares of Series B Preferred Stock that we issued on July 25, 2007, along
with
29,877 shares of our common stock that are issuable upon exercise of warrants
issued to the placement agent in the private placement.
We
relied
upon the exemptions from registration provided by Section 4(2) of the Securities
Act and Regulation D promulgated under that section. Each investor represented
that it was an accredited investor, as such term is defined in Regulation
D
under the Securities Act, and that it was acquiring the common stock and
warrants for its own account and not with a view to or for sale in connection
with any distribution thereof, and appropriate legends are affixed to the
common
stock and warrants.
The
Series B Preferred Stock is convertible into shares of common stock at the
option of the holder at any time and is subject to automatic conversion into
shares of common stock as further described in "Selling
Stockholders-Conversion." The Series B Preferred Stock contains rights and
preferences that are superior to those of our common stock, including cumulative
dividends at an annual rate of 8% of the original issue price of the Series
B
Preferred Stock for a period of 5 years from the date of issuance, a liquidation
preference, weighted-average anti-dilution protection, and other rights.
Holders
of Series B Preferred Stock are entitled to cast the number of votes equal
to
one-half of the number of shares of common stock into which their Series
B
Preferred Stock would be convertible on the applicable record date. At any
time
when any shares of Series B Preferred Stock remain outstanding, we may not,
without the consent of the holders of a majority of the shares held by holders
of at least $4,000,000 (measured as of the original issue date) worth of
Series
B Preferred Stock:
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incur
debt in excess of $2,000,000,
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authorize
securities at a price per share less than the price per share at
which the
Series B Preferred Stock has been sold under the Purchase Agreement,
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increase
our authorized capital,
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create
any new classes or series of stock with rights senior to the common
stock,
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issue
any shares of our Series A Preferred Stock, other than in accordance
with
our shareholder rights plan,
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amend
any provision of our Certificate of Incorporation or Bylaws that
changes
the rights of the Series B Preferred Stock,
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pay
or declare any dividend on any of our capital stock,
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purchase
or redeem any securities,
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issue
any securities to employees other than pursuant to our 2005 Stock
Plan, or
increase the number of shares of common stock reserved for issuance
under
the 2005 Stock Plan,
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liquidate,
dissolve or wind-up,
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merge
with another entity,
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sell
or dispose of any of our assets, including the sale or license
of our
intellectual property,
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change
the number of directors,
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amend
any portion of our Certificate of Incorporation or Bylaws,
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materially
change the nature of our business,
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intentionally
take any action that may result in our stock no longer being approved
for
quotation on the AMEX or NASDAQ, or that would cause our common
stock to
no longer be registered pursuant to Section 12 of the Securities
Exchange
Act of 1934, or
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amend
any material agreement that has been filed with the Securities
and
Exchange Commission.
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We
were
incorporated in Delaware in October 1986. Our headquarters are located at
221
West Grand Avenue, Suite 200, Montvale, New Jersey 07645. We maintain a web
site
at www.synvista.com and our telephone number is (201) 934-5000. Our annual
reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports
on
Form 8-K, and all amendments to those reports, are available to you free
of
charge through the “Investor Relations” section of our website as soon as
reasonably practicable after such materials have been electronically filed
with,
or furnished to, the U.S. Securities and Exchange Commission (SEC).
RISK
FACTORS
The
following factors should be considered carefully in evaluating whether to
purchase shares of Synvista common stock. These factors should be considered
in
conjunction with any other information included or incorporated by reference
herein, including in conjunction with forward-looking statements made herein.
See “Where You Can Find More Information” on Page 25.
We
will continue to need additional capital, but access to such capital is
uncertain.
As
of
August 31, 2007, we had cash and cash equivalents on hand of approximately
$18,001,000. Our future capital needs will depend on many factors, including
our
research and development activities and the success thereof, the scope of
our
clinical trial program, the timing of regulatory approval for our products
under
development and the successful commercialization of our products. Our needs
may
also depend on the magnitude and scope of our activities, the progress and
the
level of success in our clinical trials, the costs of preparing, filing,
prosecuting, maintaining and enforcing patent claims and other intellectual
property rights, competing technological and market developments, changes
in or
terminations of existing collaboration and licensing arrangements, the
establishment of new collaboration and licensing arrangements and the cost
of
manufacturing scale-up and development of marketing activities, if undertaken
by
us. In addition, the holders of our series B preferred stock have the option
to
receive dividends in the form of cash or additional shares of series B preferred
stock. The amount of funds that we will have available in the future for
the
development of our product candidates may be reduced if the holders of our
series B preferred stock choose to receive dividends in the form of cash.
We
currently do not have committed external sources of funding and may not be
able
to secure additional funding on any terms or on terms that are favorable
to us.
If we raise additional funds by issuing additional stock, further dilution
to
our existing stockholders will result, and new investors may negotiate for
rights superior to existing stockholders. If adequate funds are not available,
we may be required to:
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delay,
reduce the scope of or eliminate one or more of our development
programs;
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obtain
funds through arrangements with collaboration partners or others
that may
require us to relinquish rights to some or all of our technologies,
product candidates or products that we would otherwise seek to
develop or
commercialize ourselves;
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license
rights to technologies, product candidates or products on terms
that are
less favorable to us than might otherwise be
available;
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seek
a buyer for all or a portion of our business;
or
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wind
down our operations and liquidate our assets on terms that are
unfavorable
to us.
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We
have historically incurred operating losses and we expect these losses to
continue.
We
have
historically incurred substantial operating losses due to our research and
development and other operating activities and expect these losses to continue
for the foreseeable future. As of June 30, 2007, we had an accumulated deficit
of $252,309,586. Our net losses during fiscal years 2006, 2005 and 2004 were
$17,679,737, $12,614,459 and $13,958,646, respectively. Our net losses
applicable to common stockholders during fiscal years 2006, 2005 and 2004
were
$20,332,416, $17,100,795 and $18,093,791, respectively. We expect to expend
significant amounts on research and development programs for alagebrium and
ALT-2074. Research and development activities are time consuming and expensive,
and will involve the need to engage in additional fund-raising activities,
identify appropriate strategic and collaborative partners, reach agreement
on
basic terms, and negotiate and sign definitive agreements. We expect to continue
to incur significant operating losses for the foreseeable future.
Clinical
studies required for our product candidates are time-consuming, and their
outcome is uncertain.
Before
obtaining regulatory approvals for the commercial sale of any of our products
under development, we must demonstrate through preclinical and clinical studies
that the product is safe and effective for use in each target indication.
Success in preclinical studies of a product candidate may not be predictive
of
similar results in humans during clinical trials. None of our products has
been
approved for commercialization in the United States or elsewhere. In December
2004, we announced that findings of a routine two-year rodent toxicity study
indicated that male Sprague Dawley rats exposed to high doses of alagebrium
over
their natural lifetime developed dose-related increases in liver cell
alterations and tumors, and that the liver tumor rate was slightly over the
expected background rate in this gender and species of rat. In February 2005,
based on the initial results from one of the follow-on preclinical toxicity
experiments, we voluntarily and temporarily suspended enrollment of new subjects
into each of the ongoing clinical studies pending receipt of additional
preclinical data. We withdrew our investigational new drug application, or
IND,
for the EMERALD study (Efficacy and Safety of Alagebrium in Erectile Dysfunction
in Male Diabetics) in February 2006 in order to focus our resources on the
development of alagebrium in cardiovascular indications. We subsequently
submitted an IND to the Cardio-Renal Division of the U.S. Food and Drug
Administration, or FDA, for a trial using alagebrium to treat heart failure.
The
FDA has indicated that we may proceed with trials in this indication. The
BENEFICIAL trial, a double-blind, placebo-controlled, randomized trial
evaluating the efficacy and safety of alagebrium in patients with chronic
heart
failure, was planned and submitted under a Clinical Trial Application in
the
Netherlands, where the health authorities have permitted us to proceed with
initiation of the study. Freedom to initiate clinical studies does not mean
that
regulatory agencies will not require additional explanation of the two-year
rodent toxicity study.
If
we do
not prove in clinical trials that our product candidates are safe and effective,
we will not obtain marketing approvals from the FDA and other applicable
regulatory authorities. In particular, one or more of our product candidates
may
not exhibit the expected medical benefits in humans, may cause harmful side
effects, may not be effective in treating the targeted indication or may
have
other unexpected characteristics that preclude regulatory approval for any
or
all indications of use or limit commercial use if approved.
The
length of time necessary to complete clinical trials varies significantly
and is
difficult to predict. Factors that can cause delay or termination of our
clinical trials include:
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slower
than expected patient enrollment due to the nature of the protocol,
the
proximity of subjects to clinical sites, the eligibility criteria
for the
study, competition with clinical trials for other drug candidates
or other
factors;
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adverse
results in preclinical safety or toxicity
studies;
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lower
than expected recruitment or retention rates of subjects in a clinical
trial;
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inadequately
trained or insufficient personnel at the study site to assist in
overseeing and monitoring clinical
trials;
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delays
in approvals from a study site’s review board, or other required
approvals;
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longer
treatment time required to demonstrate effectiveness or determine
the
appropriate product dose;
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lack
of sufficient supplies of the product
candidate;
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adverse
medical events or side effects in treated
subjects;
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lack
of effectiveness of the product candidate being tested;
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Even
if
we obtain positive results from preclinical or clinical studies for a particular
product, we may not achieve the same success in future studies of that product.
Data obtained from preclinical and clinical studies are susceptible to varying
interpretations that could delay, limit or prevent regulatory approval. In
addition, we may encounter delays or rejections based upon changes in FDA
policy
for drug approval during the period of product development and FDA regulatory
review of each submitted new drug application. We may encounter similar delays
in foreign countries. Moreover, regulatory approval may entail limitations
on
the indicated uses of the drug. Failure to obtain requisite governmental
approvals or failure to obtain approvals of the scope requested will delay
or
preclude our licensees or marketing partners from marketing our products
or
limit the commercial use of such products and will have a material adverse
effect on our business, financial condition and results of
operations.
In
addition, some or all of the clinical trials we undertake may not demonstrate
sufficient safety and efficacy to obtain the requisite regulatory approvals,
which could prevent or delay the creation of marketable products. Our product
development costs will increase if we have delays in testing or approvals,
if we
need to perform more, larger or different clinical or preclinical trials
than
planned or if our trials are not successful. Delays in our clinical trials
may
harm our financial results and the commercial prospects for our
products.
The
FDA
regulates the development, testing, manufacture, distribution, labeling and
promotion of pharmaceutical products in the United States pursuant to the
Federal Food, Drug, and Cosmetic Act and related regulations. We must receive
pre-market approval by the FDA prior to any commercial sale of any drug
candidates. Before receiving such approval, we must provide preclinical data
and
proof in human clinical trials of the safety and efficacy of our drug
candidates, which trials can take several years. In addition, we must show
that
we can produce any drug candidates consistently at quality levels sufficient
for
administration in humans. Pre-market approval is a lengthy and expensive
process. We may not be able to obtain FDA approval for any commercial sale
of
any drug candidate. By statute and regulation, the FDA has 180 days to review
an
application for approval to market a drug candidate; however, the FDA frequently
exceeds the 180-day time period, at times taking up to 18 months. In addition,
based on its review, the FDA or other regulatory bodies may determine that
additional clinical trials or preclinical data are required. Except for any
potential licensing or marketing arrangements with other pharmaceutical or
biotechnology companies, we will not generate any revenues in connection
with
any of our drug candidates unless and until we obtain FDA approval to sell
such
products in commercial quantities for human application.
Even
if a
clinical trial is commenced, the FDA may delay, limit, suspend or terminate
clinical trials at any time, or may delay, condition or reject approval of
any
of our product candidates, for many reasons. For example:
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ongoing
preclinical or clinical study results may indicate that the product
candidate is not safe or effective;
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the
FDA may interpret our preclinical or clinical study results to
indicate
that the product candidate is not safe or effective, even if we
interpret
the results differently; or
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the
FDA may deem the processes and facilities that our collaborative
partners,
our third-party manufacturers or we propose to use in connection
with the
manufacture of the product candidate to be
unacceptable.
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Our
success will largely depend on the development of ALT-2074, and we cannot
be
sure that the efforts to commercialize ALT-2074 will
succeed.
ALT-2074
is still in early clinical trials and any success to date should not be seen
as
indicative of the probability of any future success. The failure to complete
clinical development and commercialize ALT-2074 for any reason or due to
a
combination of reasons will have a material adverse impact on our
business.
We
are
dependent on the successful outcome of clinical trials and will not be able
to
successfully develop and commercialize products if clinical trials are not
successful.
We
received approval from Israel’s Ministry of Health to conduct Phase 2 trials in
diabetic patients recovering from a recent myocardial infarction or acute
coronary syndrome. The purpose of the study is to evaluate the biological
effects on cardiac tissue in patients treated with ALT-2074. The study was
opened for enrollment in May 2006 and we now have six sites open for enrollment.
Recruitment has been slow and while we predict that the study will be completed
in the first half of 2008, we can neither guarantee its completion nor the
likelihood of gaining positive results. The same is true for the biomarker
study
using ALT-2074 begun in June 2007.
If
we are unable to form the successful collaborative relationships that our
business strategy requires, our programs will suffer and we may not be able
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develop products.
Our
strategy for developing and deriving revenues from our products depends,
in
large part, upon entering into arrangements with research collaborators,
corporate partners and others. The potential market, preclinical and clinical
study results and safety profile of our product candidates may not be attractive
to potential corporate partners. We face significant competition in seeking
appropriate collaborators, and these collaborations are complex and
time-consuming to negotiate and document. We may not be able to negotiate
collaborations on acceptable terms, or at all. If that were to occur, we
may
have to curtail the development of a particular product candidate, reduce
or
delay our development program or one or more of our other development programs,
delay our potential commercialization or reduce the scope of our sales or
marketing activities, or increase our expenditures and undertake development
or
commercialization activities at our own expense. If we elect to increase
our
expenditures to fund development or commercialization activities on our own,
we
may need to obtain additional capital, which may not be available to us on
acceptable terms, or at all. If we do not have sufficient funds, we will
not be
able to bring our product candidates to market and generate product
revenue.
If
we are able to form collaborative relationships, but are unable to maintain
them, our product development may be delayed and disputes over rights to
technology may result.
We
may
form collaborative relationships that, in some cases, will make us dependent
upon outside partners to conduct preclinical testing and clinical studies
and to
provide adequate funding for our development programs.
In
general, collaborations involving our product candidates pose the following
risks to us:
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collaborators
may fail to adequately perform the scientific and preclinical studies
called for under our agreements with
them;
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collaborators
have significant discretion in determining the efforts and resources
that
they will apply to these
collaborations;
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collaborators
may not pursue further development and commercialization of our
product
candidates or may elect not to continue or renew research and development
programs based on preclinical or clinical study results, changes
in their
strategic focus or available funding or external factors, such
as an
acquisition that diverts resources or creates competing
priorities;
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collaborators
may delay clinical trials, provide insufficient funding for a clinical
program, stop a clinical study or abandon a product candidate,
repeat or
conduct new clinical trials or require a new formulation of a product
candidate for clinical testing;
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collaborators
could independently develop, or develop with third parties, products
that
compete directly or indirectly with our products or product candidates
if
the collaborators believe that competitive products are more likely
to be
successfully developed or can be commercialized under terms that
are more
economically attractive; collaborators with marketing and distribution
rights to one or more products may not commit enough resources
to their
marketing and distribution;
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collaborators
may not properly maintain or defend our intellectual property rights
or
may use our proprietary information in such a way as to invite
litigation
that could jeopardize or invalidate our proprietary information
or expose
us to potential litigation;
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disputes
may arise between us and the collaborators that result in the delay
or
termination of the research, development or commercialization of
our
product candidates or that result in costly litigation or arbitration
that
diverts management attention and resources;
and
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collaborations
may be terminated and, if terminated, may result in a need for
additional
capital to pursue further development of the applicable product
candidates.
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In
addition, there have been a significant number of business combinations among
large pharmaceutical companies that have resulted in a reduced number of
potential future collaborators. If a present or future collaborator of ours
were
to be involved in a business combination, the continued pursuit and emphasis
on
our product development program could be delayed, diminished or
terminated.
If
we are unable to attract and retain the key personnel on whom our success
depends, our product development, marketing and commercialization plans could
suffer.
We
depend
heavily on the principal members of our management and scientific staff to
realize our strategic goals and operating objectives. Over the past year,
due to
the reduction in our clinical trial activities, the number of our employees
has
decreased from 16 as of December 31, 2005 to 7 as of August 1, 2007. We depend
on Dr. Noah Berkowitz as the Company’s Chief Executive Officer and Dr. Malcolm
MacNab as the Company’s Vice President of Clinical Development. The loss of
services in the near term of any of our principal members of management and
scientific staff could impede the achievement of our development priorities.
Furthermore, recruiting and retaining qualified scientific personnel to perform
research and development work in the future will also be critical to our
success, and there is significant competition among companies in our industry
for such personnel. We may be required to provide additional retention and
severance benefits to our employees in the future if we prepare to effect
a
strategic transaction, such as a sale or merger with another company. However,
we cannot assure you that we will be able to attract and retain personnel
on
acceptable terms given the competition between pharmaceutical and healthcare
companies, universities and non-profit research institutions for experienced
managers and scientists, and given the recent clinical and regulatory setbacks
that we have experienced. In addition, we rely on consultants to assist us
in
formulating our research and development strategy. All of our consultants
are
employed by other entities and may have commitments to or consulting or advisory
contracts with those other entities that may limit their availability to
us.
If
we do not successfully develop any products, or are unable to derive revenues
from product sales, we will never be profitable.
Virtually
all of our revenues to date have been generated from collaborative research
agreements and investment income. We have not received any revenues from
product
sales. We may not realize product revenues on a timely basis, if at all,
and
there can be no assurance that we will ever be profitable.
At
June
30, 2007, we had an accumulated deficit of $252,309,586. We anticipate that
we
will incur substantial, potentially greater, losses in the future as we continue
our research, development and clinical studies. We have not yet requested
or
received regulatory approval for any product candidate from the FDA or any
other
regulatory body. All of our product candidates are still in research,
preclinical or clinical development. We may not succeed in the development
and
marketing of any therapeutic or diagnostic product. We do not have any product
candidates other than alagebrium and ALT-2074 in clinical development, and
there
can be no assurance that we will be able to bring any other compound into
clinical development. Adverse results of any preclinical or clinical study
could
cause us to materially modify our clinical development programs, resulting
in
delays and increased expenditures, or cease development for all or part of
our
ongoing studies of alagebrium.
To
achieve profitable operations, we must, alone or with others, successfully
identify, develop, introduce and market proprietary products. Such products
will
require significant additional investment, development and preclinical and
clinical testing prior to potential regulatory approval and commercialization.
The development of new pharmaceutical products is highly uncertain and expensive
and subject to a number of significant risks. Potential products that appear
to
be promising at early stages of development may not reach the market for
a
number of reasons. Potential products may be found ineffective or cause harmful
side effects during preclinical testing or clinical studies, fail to receive
necessary regulatory approvals, be difficult to manufacture on a large scale,
be
uneconomical, fail to achieve market acceptance or be precluded from
commercialization by proprietary rights of third parties. We may not be able
to
undertake additional clinical studies. In addition, our product development
efforts may not be successfully completed, we may not have the funds to complete
any ongoing clinical trials, we may not obtain regulatory approvals, and
our
products, if introduced, may not be successfully marketed or achieve customer
acceptance. We do not expect any of our products, including alagebrium, to
be
commercially available for a number of years, if at all.
Failure
to remediate the material weaknesses in our internal controls and to achieve
and
maintain effective internal control in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business
and stock price.
During
the review of our financial statements for the three and six-month periods
ended
June 30, 2007, our independent registered public accounting firm identified
material weaknesses regarding our internal control over financial reporting
relating to the recording of an obligation related to the restructuring of
a
licensing agreement related in part to the financing and an obligation to
purchase an investment during the second quarter ended June 30, 2007. As
defined
by the Public Company Accounting Oversight Board Auditing Standard No. 5,
a
material weakness is a deficiency or a combination of deficiencies in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the annual or interim financial statements
will
not be prevented or detected on a timely basis. Since this material weakness
was
identified by our independent registered public accounting firm in connection
with its review of the financial statements for the filing of our Form 10-Q
for
the period ended June 30, 2007, the transactions subject to these issues
are
correctly accounted for and disclosed by us in the financial statements included
in our Form 10-Q for the period ended June 30, 2007 and no restatement of
any
previously filed financial statements is required. However, on a going forward
basis, management will continue to evaluate our disclosure controls and
procedures concerning the recording of obligations in order to prevent the
recurrence of the circumstance that resulted in the material weakness identified
in connection with the review of the financial statements for the filing
of our
Form 10-Q for the period ended June 30, 2007. However, we cannot currently
assure you that the remedial measures that are currently being implemented
will
be sufficient to result in a conclusion that our internal controls no longer
contain any material weaknesses, and that our internal controls are effective.
In addition, we cannot assure you that, even if we are able to achieve effective
internal control over financial reporting, our internal controls will remain
effective for any period of time. The failure to maintain effective internal
control over financial reporting could have a material adverse effect on
our
business and stock price.
Our
product candidates will remain subject to ongoing regulatory review even
if they
receive marketing approval. If we fail to comply with continuing regulations,
we
could lose these approvals and the sale of our products could be
suspended.
Even
if
we receive regulatory approval to market a particular product candidate,
the
approval could be granted with the condition that we conduct additional costly
post-approval studies or that we limit the indicated uses included in our
labeling. Moreover, the product may later cause adverse effects that limit
or
prevent its widespread use, force us to withdraw it from the market or impede
or
delay our ability to obtain regulatory approvals in additional countries.
In
addition, the manufacturer of the product and its facilities will continue
to be
subject to FDA review and periodic inspections to ensure adherence to applicable
regulations. After receiving marketing approval, the manufacturing, labeling,
packaging, adverse event reporting, storage, advertising, promotion and record
keeping related to the product will remain subject to extensive regulatory
requirements. We may be slow to adapt, or we may never adapt, to changes
in
existing regulatory requirements or adoption of new regulatory
requirements.
If
we
fail to comply with the regulatory requirements of the FDA and other applicable
United States and foreign regulatory authorities or if previously unknown
problems with our products, manufacturers or manufacturing processes are
discovered, we could be subject to administrative or judicially imposed
sanctions, including:
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restrictions
on the products, manufacturers or manufacturing
processes;
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civil
or criminal penalties;
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product
seizures or detentions;
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voluntary
or mandatory product recalls and publicity
requirements;
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suspension
or withdrawal of regulatory
approvals;
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total
or partial suspension of production;
and
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refusal
to approve pending applications for marketing approval of new drugs
or
supplements to approved
applications.
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In
similar fashion to the FDA, foreign regulatory authorities require demonstration
of product quality, safety and efficacy prior to granting authorization for
product registration which allows for distribution of the product for commercial
sale. International organizations, such as the World Health Organization,
and
foreign government agencies, including those for the Americas, Middle East,
Europe, Asia and the Pacific, have laws, regulations and guidelines for
reporting and evaluating the data on safety, quality and efficacy of new
drug
products. Although most of these laws, regulations and guidelines are very
similar, each of the individual nations reviews all of the information available
on the new drug product and makes an independent determination for product
registration. A finding of product quality, safety or efficiency in one
jurisdiction does not guarantee approval in any other jurisdiction, even
if the
other jurisdiction has similar laws, regulations and guidelines.
If
we cannot successfully form and maintain suitable arrangements with third
parties for the manufacturing of the products we may develop, our ability
to
develop or deliver products may be impaired.
We
have
no experience in manufacturing products and do not have manufacturing
facilities. Consequently, we will depend on contract manufacturers for the
production of any products for development and commercial purposes. The
manufacture of our products for clinical trials and commercial purposes is
subject to current good manufacturing practices, or cGMP, regulations
promulgated by the FDA. In the event that we are unable to obtain or retain
third-party manufacturing capabilities for our products, we will not be able
to
commercialize our products as planned. Our reliance on third-party manufacturers
will expose us to risks that could delay or prevent the initiation or completion
of our clinical trials, the submission of applications for regulatory approvals,
the approval of our products by the FDA or the commercialization of our products
or result in higher costs or lost product revenues. In particular, contract
manufacturers:
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could
encounter difficulties in achieving volume production, quality
control and
quality assurance and suffer shortages of qualified personnel,
which could
result in their inability to manufacture sufficient quantities
of drugs to
meet our clinical schedules or to commercialize our product
candidates;
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could
terminate or choose not to renew the manufacturing agreement, based
on
their own business priorities, at a time that is costly or inconvenient
for us;
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could
fail to establish and follow FDA-mandated cGMP, as required for
FDA
approval of our product candidates, or fail to document their adherence
to
cGMP, either of which could lead to significant delays in the availability
of material for clinical study and delay or prevent filing or approval
of
marketing applications for our product candidates;
and
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could
breach, or fail to perform as agreed, under the manufacturing
agreement.
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Changing
any manufacturer that we engage for a particular product or product candidate
may be difficult, as the number of potential manufacturers is limited, and
we
will have to compete with third parties for access to those manufacturing
facilities. cGMP processes and procedures typically must be reviewed and
approved by the FDA, and changing manufacturers may require re-validation
of any
new facility for cGMP compliance, which would likely be costly and
time-consuming. We may not be able to engage replacement manufacturers on
acceptable terms quickly or at all. In addition, contract manufacturers located
in foreign countries may be subject to import limitations or bans. As a result,
if any of our contract manufacturers are unable, for whatever reason, to
supply
the contracted amounts of our products that we successfully bring to market,
a
shortage would result which would have a negative impact on our
revenues.
Drug
manufacturers are subject to ongoing periodic unannounced inspection by the
FDA,
the U.S. Drug Enforcement Agency and corresponding state and foreign agencies
to
ensure strict compliance with cGMP, other government regulations and
corresponding foreign standards. While we are obligated to audit the performance
of third-party contractors, we do not have control over our third-party
manufacturers’ compliance with these regulations and standards. Failure by our
third-party manufacturers or us to comply with applicable regulations could
result in sanctions being imposed on us, including fines, injunctions, civil
penalties, failure of the government to grant pre-market approval of drugs,
delays, suspension or withdrawal of approvals, seizures or recalls of product,
operating restrictions and criminal prosecutions. Our dependence upon others
for
the manufacture of any products that we develop may adversely affect our
profit
margin, if any, on the sale of any future products and our ability to develop
and deliver such products on a timely and competitive basis.
If
we are not able to protect the intellectual property rights that are critical
to
our success, the development and any possible sales of our product candidates
could suffer and competitors could force our products completely out of the
market.
Our
success will depend on our ability to obtain patent protection for our products,
preserve our trade secrets, prevent third parties from infringing upon our
proprietary rights and operate without infringing upon the proprietary rights
of
others, both in the United States and abroad.
The
degree of patent protection afforded to pharmaceutical inventions is uncertain
and our potential products are subject to this uncertainty. Competitors may
develop competitive products outside the protection that may be afforded
by the
claims of our patents. We are aware that other parties have been issued patents
and have filed patent applications in the United States and foreign countries
with respect to other agents that have an effect on A.G.E.s, or the formation
of
A.G.E. crosslinks. In addition, although we have several patent applications
pending to protect proprietary technology and potential products, these patents
may not be issued, and the claims of any patents that do issue, may not provide
significant protection of our technology or products. In addition, we may
not
enjoy any patent protection beyond the expiration dates of our currently
issued
patents.
We
also
rely upon unpatented trade secrets and improvements, unpatented know-how
and
continuing technological innovation to maintain, develop and expand our
competitive position, which we seek to protect, in part, by confidentiality
agreements with our corporate partners, collaborators, employees and
consultants. We also have invention or patent assignment agreements with
our
employees and certain, but not all, corporate partners and consultants. Relevant
inventions may be developed by a person not bound by an invention assignment
agreement. Binding agreements may be breached, and we may not have adequate
remedies for such breach. In addition, our trade secrets may become known
to or
be independently discovered by competitors.
If
we are unable to operate our business without infringing upon intellectual
property rights of others, we may not be able to operate our business
profitably.
Our
success depends on our ability to operate without infringing upon the
proprietary rights of others. We are aware that patents have been applied
for
and/or issued to third parties claiming technologies for A.G.E.s or glutathione
peroxidase mimetics that may be similar to those needed by us. To the extent
that planned or potential products are covered by patents or other intellectual
property rights held by third parties, we would need a license under such
patents or other intellectual property rights to continue development and
marketing of our products. Any required licenses may not be available on
acceptable terms, if at all. If we do not obtain such licenses on reasonable
terms, we may not be able to proceed with the development, manufacture or
sale
of our products.
Litigation
may be necessary to defend against claims of infringement or to determine
the
scope and validity of the proprietary rights of others. Litigation or
interference proceedings could result in substantial additional costs and
diversion of management focus. If we are ultimately unsuccessful in defending
against claims of infringement, we may be unable to operate
profitably.
ALT-2074
and other compounds are licensed by third parties and if we are unable to
continue licensing this technology, our future prospects may be materially
adversely affected.
We
are a
party to various license agreements with third parties that give us exclusive
and partial exclusive rights to use specified technologies applicable to
research, development and commercialization of our products, including
alagebrium and ALT-2074. We anticipate that we will continue to license
technology from third parties in the future. To maintain the license for
certain
technology related to ALT-2074 that we received from OXIS, we are obligated
to
meet certain development and clinical trial milestones and to make certain
payments. There can be no assurance that we will be able to meet any milestone
or make any payment required under the license with OXIS. In addition, if
we
fail to meet any milestone or make any payment, there can be no assurance
that
we may be able to negotiate an arrangement with OXIS, as we have successfully
done in the past, whereby we will continue to have access to the ALT-2074
technology.
The
technology that our subsidiary HaptoGuard has licensed from third parties
would
be difficult or impossible to replace and the loss of this technology would
materially adversely affect our business, financial condition and any future
prospects.
If
we are not able to compete successfully with other companies in the development
and marketing of cures and therapies for cardiovascular diseases, diabetes,
and
the other conditions for which we seek to develop products, we may not be
able
to continue our operations.
We
are
engaged in pharmaceutical fields characterized by extensive research efforts
and
rapid technological progress. Many established pharmaceutical and biotechnology
companies with financial, technical and human resources greater than ours
are
attempting to develop, or have developed, products that would be competitive
with our products. Many of these companies have extensive experience in
preclinical and human clinical studies. Other companies may succeed in
developing products that are safer, more efficacious or less costly than
any we
may develop and may also be more successful than us in production and marketing.
Rapid technological development by others may result in our products becoming
obsolete before we recover a significant portion of the research, development
or
commercialization expenses incurred with respect to those products.
Certain
technologies under development by other pharmaceutical companies could result
in
better treatments for cardiovascular disease, and diabetes and its related
complications. Several large companies have initiated or expanded research,
development and licensing efforts to build pharmaceutical franchises focusing
on
these medical conditions, and some companies already have products approved
and
available for commercial sale to treat these indications. It is possible
that
one or more of these initiatives may reduce or eliminate the market for some
of
our products. In addition, other companies have initiated research in the
inhibition or crosslink breaking of A.G.E.s.
Our
ability to compete successfully against currently existing and future
alternatives to our product candidates and systems, and competitors who compete
directly with us in the small molecule drug industry will depend, in part,
on
our ability to:
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attract
and retain skilled scientific and research
personnel;
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develop
technologically superior products;
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develop
competitively priced products;
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obtain
patent or other required regulatory approvals for our
products;
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be
early entrants to the market; and
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manufacture,
market and sell our products, independently or through
collaborations.
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We
depend on third parties for research and development activities necessary
to
commercialize certain of our patents.
We
utilize the services of several scientific and technical consultants to oversee
various aspects of our protocol design, clinical trial oversight and other
research and development functions. We contract out most of our research
and
development operations using third-party contract manufacturers for drug
inventory and shipping services and third-party contract research organizations
in connection with preclinical and/or clinical studies in accordance with
our
designed protocols, as well as conducting research at medical and academic
centers.
Because
we rely on third parties for much of our research and development work, we
have
less direct control over our research and development. We face risks that
these
third parties may not be appropriately responsive to our time frames and
development needs and could devote resources to other customers. In addition,
certain of these third parties may have to comply with FDA regulations or
other
regulatory requirements in the conduct of this research and development work,
which they may fail to do.
If
governments and third-party payers continue their efforts to contain or decrease
the costs of healthcare, we may not be able to commercialize our products
successfully.
In
the
United States, we expect that there will continue to be federal and state
initiatives to control and/or reduce pharmaceutical expenditures. In certain
foreign markets, pricing and/or profitability of prescription pharmaceuticals
are subject to government control. In addition, increasing emphasis on managed
care in the United States will continue to put pressure on pharmaceutical
pricing. Cost control initiatives could decrease the price that we receive
for
any products for which we may receive regulatory approval to develop and
sell in
the future and could have a material adverse effect on our business, financial
condition and results of operations. Further, to the extent that cost control
initiatives have a material adverse effect on our corporate partners, our
ability to commercialize our products may be adversely affected.
Our
ability to commercialize pharmaceutical products may depend, in part, on
the
extent to which reimbursement for the products will be available from government
health administration authorities, private health insurers and other third-party
payers. Significant uncertainty exists as to the reimbursement status of
newly
approved healthcare products, and third-party payers, including Medicare,
frequently challenge the prices charged for medical products and services.
In
addition, third-party insurance coverage may not be available to subjects
for
any products developed by us. Government and other third-party payers are
attempting to contain healthcare costs by limiting both coverage and the
level
of reimbursement for new therapeutic products and by refusing in some cases
to
provide coverage for uses of approved products for disease indications for
which
the FDA has not granted labeling approval. If government and other third-party
payers for our products do not provide adequate coverage and reimbursement
levels, the market acceptance of these products would be adversely
affected.
If
the users of the products that we are developing claim that our products
have
harmed them, we may be subject to costly and damaging product liability
litigation, which could have a material adverse effect on our business,
financial condition and results of operations.
We
may
face exposure to product liability and other claims due to allegations that
our
products cause harm. These risks are inherent in the clinical trials for
pharmaceutical products and in the testing, and future manufacturing and
marketing of, our products. Although we currently maintain product liability
insurance, such insurance is becoming increasingly expensive, and we may
not be
able to obtain adequate insurance coverage in the future at a reasonable
cost,
if at all. If we are unable to obtain product liability insurance in the
future
at an acceptable cost or to otherwise protect against potential product
liability claims, we could be inhibited in the commercialization of our
products, which could have a material adverse effect on our business. The
coverage will be maintained and limits reviewed from time to time as the
combined company progresses to later stages of its clinical trials, and as
the
length of the trials and the number of patients enrolled in the trials
changes.
We
intend
to obtain a combined coverage policy that includes tail coverage in order
to
cover any claims that are made for any events that have occurred prior to
the
merger. We currently have a policy covering $10 million of product liability
for
our clinical trials, for which our annual premium is approximately $118,000.
However, insurance coverage and our resources may not be sufficient to satisfy
any liability resulting from product liability claims. A successful product
liability claim or series of claims brought against us could have a material
adverse effect on our business, financial condition and results of
operations.
Risks
Related to Owning Synvista’s Common Stock
The
holders of the Series B Preferred Stock are entitled to rights
and preferences that are significantly greater than the rights and preferences
of the holders of our common stock, including preferential payments upon
a
liquidation, as well as a dividend and registration rights associated with
their
shares.
Holders
of the Company’s Series B Preferred Stock are entitled to a number of rights and
preferences which holders of shares of our outstanding common stock do not
and
will not have. Among these rights and preferences is a preference on liquidation
of the Company, which means that holders of the Series B Preferred Stock
will be
entitled to receive the proceeds out of any sale or liquidation of the Company
before any such proceeds are paid to holders of our common stock. In general,
if
the proceeds received upon any sale or liquidation do not exceed the total
liquidation proceeds payable to the holders of the Series B Preferred Stock,
holders of common stock would received no value for their shares upon such
a
sale or liquidation. In addition, shares of the Series B Preferred Stock
accrue
dividends at a rate of 8% per year for a period of five years from the date
on
which the shares of Series B Preferred Stock were issued.
Holders
of the Series B Preferred Stock also have significant rights with respect
to
certain actions that we may wish to take from time to time. At any time when
any
shares of Series B Preferred Stock remain outstanding, we may not, without
the
consent of the holders of a majority of the shares held by holders of at
least
$4,000,000 (measured as of the original issue date) worth of Series B Preferred
Stock:
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incur
debt in excess of $2,000,000;
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authorize
securities at a price per share less than the price per share that
the
Series B Preferred Stock has been sold under the Series B Purchase
Agreement;
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increase
our authorized capital;
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create
any new classes or series of stock with rights senior to the common
stock;
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issue
any shares of Series A Preferred Stock, other than in accordance
with our
shareholder rights plan;
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amend
any provision of our Certificate of Incorporation or Bylaws that
changes
the rights of the Series B Preferred Stock;
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pay
or declare any dividend on any of our capital stock;
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purchase
or redeem any securities;
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issue
any securities to employees other than pursuant to our 2005 Stock
Plan, or
increase the number of shares of common stock reserved for issuance
under
the 2005 Stock Plan;
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liquidate,
dissolve or wind-up;
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merge
with another entity;
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sell
or dispose of any of our assets, including the sale or license of
our
intellectual property;
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change
the number of directors;
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amend
any portion of our Certificate of Incorporation or Bylaws;
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materially
change the nature of our business;
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intentionally
take any action that may result in our stock no longer being approved
for
quotation on the AMEX or NASDAQ, or that would cause our common
stock to
no longer be registered pursuant to Section 12 of the Securities
Exchange
Act of 1934; or
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amend
any material agreement that has been filed with the Securities
and
Exchange Commission.
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As
a
result, we will not be able to take any of these actions without first seeking
and obtaining the approval of the holders of the Series B Preferred Stock.
We
may not be able to obtain such approval in a timely manner or at all, even
if we
think that taking the action for which we seek approval is in our best
interests.
We
have
also entered into a Registration Rights Agreement with the holders of the
Series
B Preferred Stock, under which we have agreed to register the resale by those
holders of the shares of common stock issuable upon conversion of the shares
of
Series B Preferred Stock, as well as upon conversion of the shares of Series
B
Preferred Stock underlying the Warrants sold in the financing. A failure
to file
a registration statement or to have a registration statement declared effective
in a timely manner, among other things, would result in payment by us to
each
investor of liquidated damages in cash, subject to limitations set forth
in the
Registration Rights Agreement. These liquidated damages would generally be
equal
to 1% of the aggregate purchase price paid by the holder of the Series B
Preferred Stock, payable on the date the failure occurs and on each monthly
anniversary of such date until the event is cured, subject to an overall
limit
of 8% for each calendar year. If we are required to pay liquidated damages
under
this agreement, the payments could have a material adverse effect on our
results
of operations.
The
holders of the Series B Preferred Stock represent a significant voting interest
in the Company.
The
Series B Preferred Stock is convertible into common stock at any time at
the
option of the holder at an initial conversion rate of 1:1, subject to
adjustment. Assuming the full conversion of all of the shares of Series B
Preferred Stock into our common stock, and the exercise all of warrants to
acquire shares of Series B Preferred Stock which are then converted into
shares
of our common stock, the holders of the Series B Preferred Stock would represent
approximately 83% of our issued and outstanding capital stock as of June
30,
2007. Accordingly, in the event that all of the shares of Series B Preferred
Stock were to be converted into our common stock, a change in control of
the
Company would occur. Prior to such conversion, each holder of Series B Preferred
Stock is entitled to cast the number of votes equal to one-half of the number
of
whole shares of common stock into which the shares of Series B Preferred
Stock
held by such holder are convertible. Therefore, on the date of issuance of
the
Series B Preferred Stock, the holders of Series B Preferred Stock held
approximately 41% of the voting power of the Company.
We
have been notified by the American Stock Exchange, Inc. (“AMEX”) that we are not
in compliance with continued listing standards, which may result in a delisting
of our common stock if we cannot regain compliance.
On
January 30, 2007, we reported that we had received a notice from AMEX indicating
that AMEX has accepted our plan to regain compliance with AMEX continued
listing
standards, and that our listing will be continued pursuant to an extension
until
April 9, 2008. We submitted a plan of compliance to AMEX on November 6, 2006,
outlining our operational plan and strategic objectives, and amended our
plan of
compliance on January 3, 2007 and January 5, 2007 (the “Plan of Compliance”).
The Plan of Compliance was prepared in response to a notice we received from
AMEX on October 9, 2006, indicating that we were below certain AMEX continuing
listing standards due to (i) sustaining losses from continuing operations
and/or
net losses in two out of our three most recent fiscal years with stockholders’
equity below $2,000,000; (ii) sustaining losses from continuing operations
and/or net losses in three out of our four most recent fiscal years with
stockholders’ equity below $4,000,000; and (iii) sustaining losses from
continuing operations and/or net losses in our five most recent fiscal years
with stockholders’ equity below $6,000,000. To date, we have not regained
compliance with such continued listing standards and cannot assure you that
we
can achieve the Plan of Compliance in such a way as to regain compliance
with
AMEX’s continuing listing standards.
Our
stock price is volatile and you may not be able to resell your shares at
a
profit.
We
first
publicly issued common stock on November 8, 1991 at $15.00 per share in our
initial public offering and it has been subject to fluctuations since that
time.
For example, during 2007, the closing sale price of our common stock has
ranged
from a high of $7.50 per share to a low of $2.26 per share. The market price
of
our common stock could continue to fluctuate substantially due to a variety
of
factors, including:
|
·
|
quarterly
fluctuations in results of
operations;
|
|
·
|
material
weaknesses in our internal control over financial
reporting;
|
|
·
|
the
announcement of new products or services by us or
competitors;
|
|
·
|
sales
of common stock by existing stockholders or the perception that
these
sales may occur;
|
|
·
|
adverse
judgments or settlements obligating the combined company to pay
damages;
|
|
·
|
developments
concerning proprietary rights, including patents and litigation
matters;
and
|
|
·
|
clinical
trial or regulatory developments in both the United States and
foreign
countries.
|
In
addition, overall stock market volatility has often significantly affected
the
market prices of securities for reasons unrelated to a company’s operating
performance. In the past, securities class action litigation has been commenced
against companies that have experienced periods of volatility in the price
of
their stock. Securities litigation initiated against the combined company
could
cause it to incur substantial costs and could lead to the diversion of
management’s attention and resources, which could have a material adverse effect
on revenue and earnings.
We
have a large number of authorized but unissued shares of common stock, which
our
Board of Directors may issue without further stockholder approval, thereby
causing dilution of your holdings of our common
stock.
As
of
August 1, 2007, there were 283,642,857 shares of authorized but unissued
shares
of our common stock. Our management will continue to have broad discretion
to
issue shares of our common stock in a range of transactions, including
capital-raising transactions, mergers, acquisitions, for anti-takeover purposes,
and in other transactions, without obtaining stockholder approval, unless
stockholder approval is required for a particular transaction under the rules
of
AMEX, Delaware law, or other applicable laws. If our management determines
to
issue shares of our common stock from the large pool of such authorized but
unissued shares for any purpose in the future without obtaining stockholder
approval, your ownership position would be diluted without your further ability
to vote on that transaction.
The
sale of a substantial number of shares of our common stock could cause the
market price of our common stock to decline and may impair the company’s ability
to raise capital through additional offerings.
We
currently have outstanding warrants and options to purchase an aggregate
of
3,757,966 shares of our common stock. Sales of these shares and the sale
of the
shares issued in the recent private financing, in the public market, or the
perception that future sales of such shares could occur, could have the effect
of lowering the market price of our common stock below current levels and
make
it more difficult for us and our stockholders to sell our equity securities
in
the future.
Our
executive officers, directors and holders of more than 5% of our common stock
collectively beneficially own approximately 29% of the outstanding common
stock,
which includes fully vested options to purchase common stock. In addition,
approximately 171,424 shares of common stock issuable upon exercise of vested
stock options could become available for immediate resale if such options
were
exercised.
Sale
or
the availability for sale, of shares of common stock by stockholders could
cause
the market price of our common stock to decline and could impair our ability
to
raise capital through an offering of additional equity securities.
Anti-takeover
provisions may frustrate attempts to replace our current management and
discourage investors from buying our common stock.
We
have
entered into a Stockholders’ Rights Agreement pursuant to which each holder of a
share of our common stock is granted a Right to purchase our Series A Preferred
Stock (“Preferred Stock”) under certain circumstances if a person or group
acquires, or commences a tender offer for, 20% of our outstanding common
stock.
In addition, the Board of Directors has the authority, without further action
by
the common stockholders, to fix the rights and preferences of, and issue
shares
of, Preferred Stock. These and other provisions of our charter and Delaware
corporate law may discourage certain types of transactions involving an actual
or potential change in control.
FORWARD-LOOKING
STATEMENTS AND CAUTIONARY STATEMENTS
Statements
in this prospectus and the documents incorporated by reference herein that
are
not statements or descriptions of historical facts are “forward-looking”
statements under Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the Private Securities Litigation Reform Act
of 1995, and are subject to numerous risks and uncertainties. These
forward-looking statements and other forward-looking statements made by us
or
our representatives are based on a number of assumptions. The words “believe”,
“expect”, “anticipate”, “intend”, “estimate”, “plan”, “predict”, “could”,
“will”, “should”, “seek”, “potential”, “continue” or other expressions, which
are predictions of or indicate future events and trends and which do not
relate
to historical matters, identify forward-looking statements. The forward-looking
statements represent our judgments and expectations as of the date of this
prospectus. We assume no obligation to update any such forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, as they involve risks and uncertainties, and
actual
results could differ materially from those currently anticipated due to a
number
of factors, including those set forth in this section and elsewhere in this
prospectus. These factors include, but are not limited to, the risks set
forth
in this prospectus.
The
forward-looking statements set forth in this document represent our judgment
and
expectations as of the date of this prospectus. We assume no obligation to
update any such forward-looking statements.
Discussions
containing these forward-looking statements are also contained in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
incorporated by reference from our most recent Annual Report on Form 10-K,
our Quarterly Reports on Form 10-Q for the quarters ended since our most
recent Annual Report, our Current Reports on Form 8-K, as well as any
amendments we make to those filings with the SEC.
USE
OF PROCEEDS
The
proceeds from the sale or other disposition of the common stock covered by
this
prospectus are solely for the accounts of the selling stockholders named
in this
prospectus. We will not receive any proceeds from the sale or other disposition
of these shares of common stock.
The
selling stockholders will pay any underwriting discounts and commissions
and
expenses incurred by the selling stockholders for brokerage, accounting,
tax or
legal services or any other expenses incurred by the selling stockholders
in
disposing of the shares. We will bear all other costs, fees and expenses
incurred in effecting the registration of the shares covered by this prospectus,
including, without limitation, all registration and filing fees, Nasdaq listing
fees and fees and expenses of our counsel and our independent registered
public
accounting firm.
SELLING
STOCKHOLDERS
On
July
25, 2007, we issued approximately $25 million worth of our Series B
Preferred Stock and warrants to purchase our Series B Preferred Stock in
a
private placement exempt from the registration requirements of the Securities
Act (the "Financing"), which shares are comprised of the following securities:
(i) 10,000,000 shares of common stock issuable upon conversion of the Series
B
Preferred Stock, and (ii) 2,500,000 shares of common stock issuable upon
conversion of the Series B Preferred Stock underlying the Warrants, at an
exercise price of $2.50 per share.
This
prospectus relates to the resale from time to time of up to a total of
598,391
shares of our common stock issuable upon conversion of the shares of the
Series
B Preferred Stock issued in the Financing, as well as 29,877 shares of
our
common stock issuable upon exercise of warrants to purchase our common
stock issued to the placement agent immediately following the closing of
the Financing.
The
following is a summary of the rights and preferences of the Series B Preferred
Stock and warrants that were issued in the Financing:
Dividends.
Holders
of Series B Preferred Stock will be entitled to receive cumulative dividends
at
an annual rate of 8% of the Series B Preferred Stock original issue price
for a
period of 5 years from the date of issuance. Such dividends, shall, at
the
option of the holders of a majority of the Series B Preferred Stock outstanding,
be paid in cash or in shares of Series B Preferred Stock. We will not declare
any dividends on our junior preferred or common stock until after we have
paid
all accrued but unpaid dividends on our Series B Preferred Stock.
Voting.
Holders
of Series B Preferred Stock are entitled to cast the number of votes equal
to
one-half of the number of shares of common stock into which their Series
B
Preferred Stock would be convertible on the applicable record date. The
Series B
Preferred Stock votes on a 1-for-1 basis following its conversion into
common
stock.
Liquidation
Preference.
Upon
liquidation, including deemed liquidations pursuant to a merger, consolidation
or a sale of all or substantially all of our assets, holders of Series
B
Preferred Stock are entitled to a payment per share equal to the price
at which
shares of Series B Preferred Stock were sold in the Financing, plus accrued
but
unpaid dividends, prior to payment of any amounts on our junior preferred
or
common stock. The holders of the Series B Preferred Stock are entitled
to
receive the proceeds out of any sale or liquidation of our company before
any
such proceeds are paid to holders of our common stock. In general, if the
proceeds received upon any sale or liquidation do not exceed the total
liquidation proceeds payable to the holders of the Series B Preferred Stock,
which, prior to any adjustment in accordance with the terms of the Series
B
Preferred Stock is equal to the aggregate cash proceeds received by us
in the
Financing, holders of common stock would receive no value for their shares
upon
such a sale or liquidation.
Protective
Provisions.
At any
time when any shares of Series B Preferred Stock remain outstanding, we
may not,
without the consent of the holders of a majority of the shares held by
holders
of at least $4,000,000 (measured as of the original issue date) worth of
Series
B Preferred Stock: (i) incur debt in excess of $2,000,000,
(ii) authorize securities at a price per share less than the price per
share that the Series B Preferred Stock was sold, (iii) increase our
authorized capital, (iv) create any new classes or series of stock with
rights senior to the common stock, (v) issue any shares of our Series A
preferred stock, other than in accordance with our shareholder rights plan,
(vi) amend any provision of our amended and restated certificate of
incorporation or bylaws that changes the rights of the Series B Preferred
Stock,
(vii) pay or declare any dividend on any capital stock,
(viii) purchase or redeem any securities, (ix) issue any securities to
employees other than pursuant to our 2005 Stock Plan, or increase the number
of
shares of common stock reserved for issuance under the 2005 Stock Plan,
(x) liquidate, dissolve or wind-up, (xi) merge with another entity or
(xii) sell or dispose of any of our assets, including the sale or
license of our intellectual property, (xiii) change the number of
directors, (xiv) amend any portion of our amended and restated certificate
of incorporation or bylaws, (xv) materially change the nature of our
business, (xvi) intentionally take any action that may result in our common
stock no longer being approved for quotation on the AMEX or NASDAQ, or
that
would cause our common stock to no longer be registered pursuant to Section
12
of the Securities Exchange Act of 1934, or (xvii) amend any material
agreement that has been filed with the Securities and Exchange
Commission.
Conversion.
Holders
of Series B Preferred Stock have an option to convert their Series B Preferred
Stock at any time, plus, prior to the fifth anniversary of the original
issuance
of Series B Preferred Stock, all accrued and unpaid dividends, into common
stock
at the initial conversion price equal to the price at which shares of Series
B
Preferred Stock were sold in the Financing, as adjusted in accordance with
the
provisions of our amended and restated certificate of incorporation. An
equivalent of $7,500,000 (measured as of the original issue date) of Series
B
Preferred Stock will automatically be converted into common stock when
(i) the thirty-day prior trailing average closing price of our common
stock, as reported by the American Stock Exchange, for the entire six months
preceding such time is equal to at least the price at which shares of Series
B
Preferred Stock were sold in the Financing and (ii) the registration
statement for resale of securities issued in the Financing has been declared
effective by the SEC and is continuously effective for a one and one-half
year
period. Thereafter, the remainder of the outstanding Series B Preferred
Stock
will automatically be converted into common stock when (i) the 30-day prior
trailing average closing price of our common stock, as reported by the
American
Stock Exchange for the entire six months preceding such time is equal to
at
least two times the price at which shares of Series B Preferred Stock were
sold
in the Financing and (ii) the registration statement for resale of
securities issued in the Financing has been declared effective by the SEC
and
continuously effective for a one and one-half year period.
Anti-Dilution
Protection.
The
rights and preferences of the Series B Preferred Stock include weighted-average
anti-dilution protection. Each share of Series B Preferred Stock is initially
convertible into shares of our common stock by multiplying the number of
shares
of Series B Preferred Stock to be converted, by a ratio, the numerator
of which
is the purchase price, or the price per share at which the Series B Preferred
Stock was initially sold, and the denominator of which is the conversion
price.
Initially, the purchase price and the conversion price are the same, which
makes
the initial conversion rate of the Series B Preferred Stock 1:1. In the
event we
issue securities at a price per share less than the initial price per share
of
the Series B Preferred Stock (other than certain excluded issuances such
as
options pursuant to our approved stock option plans), the conversion price
would
decrease based upon a formula in the our amended and restated certificate
of
incorporation, and the ratio against which the number of shares of Series
B
Preferred Stock to be converted is multiplied would become greater than
1:1,
thus increasing the number of shares of common stock into which shares
of the
Series B Preferred Stock will convert.
The
warrants
that were issued in the Financing are immediately exercisable for shares
of our
Series B Preferred Stock, for a period of five years, at an exercise price
of
$2.50 per share. In addition, the warrants may be exercised by means of
a
cashless exercise. The exercise price of the warrants is adjustable, from
time
to time, in the event of stock splits, rights offerings, fundamental
transactions or dilutive issuances.
We
also
issued warrants to purchase 600,000 shares of our common stock to the placement
agent in the private placement, which warrants are immediately exercisable
at an
exercise price of $2.50 per share.
Pursuant
to the terms of the Financing, we filed a Registration Statement on Form
S-3, of
which this prospectus constitutes a part, in order to permit the selling
stockholders to resell to the public 598,391 shares of our common stock issuable
upon conversion of the Series B Preferred Stock, and 29,877 shares of our
common
stock issuable upon exercise of warrants to purchase our common
stock issued to a placement agent immediately following the
Financing. Pursuant
to the terms of the Financing, we are required to file additional registration
statements covering all of the shares of common stock issuable upon conversion
of the Series B Preferred Stock issued in the Financing and issuable upon
conversion of the warrants, as well as the common stock underlying the warrant
issued to the placement agent. The selling stockholders have each
represented to us that they have obtained the shares for their own account
for
investment only and not with a view to, or resale in connection with, a
distribution of the shares, except through sales registered under the Securities
Act or exemptions thereto.
We
are registering the above-referenced shares to permit each of the selling
stockholders and their pledgees, donees, transferees or other
successors-in-interest that receive their shares after the date of this
prospectus to resell or otherwise dispose of the shares in the manner
contemplated under the “Plan of Distribution.” The selling stockholders may sell
some, all or none of their shares. We do not know how long the selling
stockholders will hold the shares before selling them. We currently have
no
agreements, arrangements or understandings with the selling stockholders
regarding the sale of any of the shares. The shares offered by this prospectus
may be offered from time to time by the selling stockholders.
The
following table, to our knowledge, sets forth information regarding the
beneficial ownership of our common stock by the selling stockholders as of
August 22, 2007 and the number of shares being offered hereby by each selling
stockholder. For purposes of the following description, the term “selling
stockholder” includes pledgees, donees, permitted transferees or other permitted
successors-in-interest selling shares received after the date of this prospectus
from the selling stockholders. The information is based in part on information
provided by or on behalf of the selling stockholders. Beneficial ownership
is
determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting or investment power with respect to shares,
as
well as any shares as to which the selling stockholder has the right to acquire
beneficial ownership within sixty (60) days after August 22, 2007 through
the exercise or conversion of any stock options, warrants, convertible debt
or
otherwise. All shares that are issuable to a selling stockholder upon exercise
of the warrants are included in the number of shares being offered in the
table
below. Unless otherwise indicated below, each selling stockholder has sole
voting and investment power with respect to its shares of common stock. The
inclusion of any shares in this table does not constitute an admission of
beneficial ownership by the selling stockholder. We will not receive any
of the
proceeds from the sale of our common stock by the selling
stockholders.
|
|
SHARES
|
|
|
|
SHARES
|
|
|
|
BENEFICALLY
|
|
|
|
BENEFICALLY
|
|
|
|
OWNED
BEFORE
|
|
SHARES
|
|
OWNED
AFTER
|
|
|
|
OFFERING(1)
|
|
BEING
|
|
OFFERING(2)
|
|
SELLING
STOCKHOLDER
|
|
NUMBER
|
|
PERCENT
|
|
OFFERED
|
|
NUMBER
|
|
PERCENT
|
|
Baker/Tisch
Investments, L.P. (3)
|
|
|
70,971
|
|
|
2.67
|
%
|
|
3,397
|
|
|
67,574
|
|
|
2.55
|
%
|
Baker
Biotech Fund I, L.P.(4)
|
|
|
2,740,840
|
|
|
51.45
|
%
|
|
131,208
|
|
|
2,609,632
|
|
|
50.22
|
%
|
Baker
Brothers Life Sciences, L.P. (5)
|
|
|
7,438,590
|
|
|
74.20
|
%
|
|
356,095
|
|
|
7,082,495
|
|
|
73.25
|
%
|
14159,
L.P. (6)
|
|
|
240,276
|
|
|
8.5
|
%
|
|
11,502
|
|
|
228,774
|
|
|
8.13
|
%
|
Baker
Brothers Investments II, L.P.(7)
|
|
|
9,323
|
|
|
*
|
%
|
|
446
|
|
|
8,877
|
|
|
*
|
%
|
Atticus
Global Advisors, Ltd. L.P. (8)
|
|
|
1,750,000
|
|
|
40.36
|
%
|
|
83,775
|
|
|
1,666,225
|
|
|
39.18
|
%
|
Green
Way Managed Acct. Series, Ltd.(9)
|
|
|
250,000
|
|
|
8.81
|
%
|
|
11,968
|
|
|
238,032
|
|
|
8.43
|
%
|
Rodman
& Renshaw, LLC (10)
|
|
|
624,106
|
|
|
*
|
%
|
|
29,877
|
|
|
594,229
|
|
|
*
|
%
|
_____________
*Less
than 1%
(1)
|
Percentages
prior to the offering are based on 2,586,377 shares
of common stock that were issued and outstanding as of August 22,
2007. We
deem shares of common stock that may be acquired by an individual
or group
within 60 days of August 22, 2007 pursuant to the exercise of options
or warrants or the conversion of convertible securities to be outstanding
for the purpose of computing the percentage ownership of such individual
or group, but such shares are not deemed to be outstanding for
the purpose
of computing the percentage ownership of any other individual or
entity
shown in the table.
|
(2)
|
We
do not know when or in what amounts the selling stockholders may
offer for
sale the shares of common stock pursuant to this offering. The
selling
stockholders may choose not to sell any of the shares offered by
this
prospectus. Because the selling stockholders may offer all or some
of the
shares of common stock pursuant to this offering, and because there
are
currently no agreements, arrangements or undertakings with respect
to the
sale of any of the shares of common stock, we cannot estimate the
number
of shares of common stock that the selling stockholders will hold
after
completion of the offering. For purposes of this table, we have
assumed
that the selling stockholders will have sold all of the shares
covered by
this prospectus upon the completion of the
offering.
|
(3)
|
The
number of shares beneficially owned before the offering includes
56,777
shares of common stock issuable upon conversion of Series B Preferred
Stock and 14,194 shares of common stock issuable upon conversion
of Series
B Preferred Stock issuable upon exercise of the warrants that are
exercisable beginning as of the date of issuance of the Warrants
for a
period of five years at an exercise price of $2.50 per share. The
number
of shares being offered consists of 3,397 shares of common stock
issuable
upon conversion of Series B Preferred Stock. Felix Baker and Julian
Baker,
as managing members, have the power to vote or dispose of the securities
owned by Baker Biotech Fund I, L.P.
|
(4)
|
The
number of shares beneficially owned before the offering includes
2,192,672
shares of common stock issuable upon conversion of Series B Preferred
Stock and 548,168 shares of common stock issuable upon conversion
of
Series B Preferred Stock issuable upon exercise of the warrants
that are
exercisable beginning as of the date of issuance of the Warrants
for a
period of five years at an exercise price of $2.50 per share. The
number
of shares being offered consists of 131,208 shares of common stock
issuable upon conversion of Series B Preferred Stock. Felix Baker
and
Julian Baker, as managing members, have the power to vote or dispose
of
the securities owned by Baker/Tisch Investments,
L.P.
|
(5)
|
The
number of shares beneficially owned before the offering includes
5,950,872
shares of common stock issuable upon conversion of Series B Preferred
Stock and 1,487,718 shares of common stock issuable upon conversion
of
Series B Preferred Stock issuable upon exercise of the warrants
that are
exercisable beginning as of the date of issuance of the Warrants
for a
period of five years at an exercise price of $2.50 per share. The
number
of shares being offered consists of 356,095 shares of common stock
issuable upon conversion of Series B Preferred Stock. Felix Baker
and
Julian Baker, as managing members, have the power to vote or dispose
of
the securities owned by Baker Brothers Life Sciences,
L.P.
|
(6)
|
The
number of shares beneficially owned before the offering includes
192,221
shares of common stock issuable upon conversion of Series B Preferred
Stock and 48,055 shares of common stock issuable upon conversion
of Series
B Preferred Stock issuable upon exercise of the warrants that are
exercisable beginning as of the date of issuance of the Warrants
for a
period of five years at an exercise price of $2.50 per share. The
number
of shares being offered consists of 11,502 shares of common stock
issuable
upon conversion of Series B Preferred Stock. Felix Baker and Julian
Baker,
as managing members, have the power to vote or dispose of the securities
owned by 14159, L.P.
|
(7)
|
The
number of shares beneficially owned before the offering includes
7,458
shares of common stock issuable upon conversion of Series B Preferred
Stock and 1,865 shares of common stock issuable upon conversion
of Series
B Preferred Stock issuable upon exercise of the warrants that are
exercisable beginning as of the date of issuance of the Warrants
for a
period of five years at an exercise price of $2.50 per share. The
number
of shares being offered consists of 446 shares of common stock
issuable
upon conversion of Series B Preferred Stock. Felix Baker and Julian
Baker,
as managing members, have the power to vote or dispose of the securities
owned by Baker Brothers Investments II,
L.P.
|
(8)
|
The
number of shares beneficially owned before the offering includes
1,400,000
shares of common stock issuable upon conversion of Series B Preferred
Stock and 350,000 shares of common stock issuable upon conversion
of
Series B Preferred Stock issuable upon exercise of the warrants
that are
exercisable beginning as of the date of issuance of the Warrants
for a
period of five years at an exercise price of $2.50 per share. The
number
of shares being offered consists of 83,775 shares of common stock
issuable
upon conversion of Series B Preferred Stock. Timothy R. Barakett
may be
deemed to have control over the voting or disposition of the securities
owned by Atticus Global Advisors, Ltd.
L.P.
|
(9)
|
The
number of shares beneficially owned before the offering includes
200,000
shares of common stock issuable upon conversion of Series B Preferred
Stock and 50,000 shares of common stock issuable upon conversion
of Series
B Preferred Stock issuable upon exercise of the warrants that are
exercisable beginning as of the date of issuance of the Warrants
for a
period of five years at an exercise price of $2.50 per share. The
number
of shares being offered consists of 11,968 shares of common stock
issuable
upon conversion of Series B Preferred Stock. Timothy R. Barakett
may be
deemed to have control over the voting or disposition of the securities
owned by Green Way Managed Account Series, Ltd.
|
(10) |
The
number of shares beneficially owned before the offering includes
624,106
shares of common stock issuable upon exercise of warrants.
The number of
shares being offered consists of 29,877 shares of common stock
issuable
upon exercise of warrants to purchase our common stock that are
exercisable beginning as of the date of issuance of the warrants
for a
period of five years at an exercise price of $2.50 per share.
|
Each
Selling Stockholder (the “Selling Stockholders”) of the common stock and any of
their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of common stock on the American Stock Exchange
or any other stock exchange, market or trading facility on which the shares
are
traded or in private transactions. These sales may be at fixed or negotiated
prices. A Selling Stockholder may use any one or more of the following methods
when selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
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block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal
to
facilitate the transaction;
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purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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privately
negotiated transactions;
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settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
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broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
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through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
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a
combination of any such methods of sale;
or
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any
other method permitted pursuant to applicable
law.
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The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if available, rather than under
this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers
to
participate in sales. Broker-dealers may receive commissions or discounts
from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an
agency
transaction not in excess of a customary brokerage commission in compliance
with
NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
in compliance with NASDR IM-2440.
In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or
more
derivative securities which require the delivery to such broker-dealer or
other
financial institution of shares offered by this prospectus, which shares
such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of
the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed
the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In
no
event shall any broker-dealer receive fees, commissions and markups which,
in
the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under
the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Each Selling Stockholder has advised us that they have not entered into any
written or oral agreements, understandings, or arrangements with any underwriter
or broker-dealer regarding the sale of the resale shares. There is no
underwriter or coordinating broker acting in connection with the proposed
sale
of the resale shares by the Selling Stockholders.
We
agreed
to keep this prospectus effective until the earlier of (i) the date on which
the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities
Act
or any other rule of similar effect. The resale shares will be sold only
through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not
be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement
is
available and is complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged
in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.
The
validity of the common stock offered in this prospectus has been passed upon
for
us by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston,
Massachusetts.
The
consolidated financial statements of Synvista as of December 31, 2006 and
2005,
and for each of the years in three year period ended December 31, 2006, have
been incorporated by reference herein in reliance upon the report, which
includes an explanatory paragraph relating to our ability to continue as
a going
concern, of J.H. Cohn LLP, independent registered public accounting firm,
and
upon the authority of that firm as experts in accounting and
auditing.
We
are a
public company and file annual, quarterly and special reports, proxy statements
and other information with the U.S. Securities and Exchange Commission. You
may
read and copy any document we file at the SEC’s Public Reference Room at Station
Place, 100 F Street, N.E., Washington, D.C. 20549. You can request copies
of
these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the Public Reference Room. Our SEC filings are also available to the public
at the SEC’s web site at http://www.sec.gov, or at our web site at
www.synvista.com. In addition, our common stock is listed for trading on
the
American Stock Exchange under the symbol “SYI.”
This
prospectus is only part of a Registration Statement on Form S-3 that we have
filed with the SEC under the Securities Act and therefore omits certain
information contained in the Registration Statement. We have also filed exhibits
and schedules with the Registration Statement that are excluded from this
prospectus, and you should refer to the applicable exhibit or schedule for
a
complete description of any statement referring to any contract or other
document. You may:
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inspect
a copy of the Registration Statement, including the exhibits
and
schedules, without charge at the Public Reference
Room,
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obtain
a copy from the SEC upon payment of the fees prescribed by the
SEC,
or
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obtain
a copy from the SEC’s web
site.
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The
SEC
allows us to “incorporate by reference” information from other documents that we
file with them, which means that we can disclose important information in
this
prospectus by referring to those documents. The information incorporated
by
reference is considered to be part of this prospectus, and information that
we
file later with the SEC will automatically update and supersede the information
in this prospectus. We incorporate by reference the documents listed below
and
any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of
the Securities Exchange Act of 1934. The documents we are incorporating by
reference as of their respective dates of filing are:
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Our
Annual Report on Form 10-K for the year ended December 31, 2006,
filed on
March 30, 2007 (File No.
001-16043);
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Our
Annual Report on Form 10-K/A for the year ended December 31,
2006, filed
on April 30, 2007 (File No. 001-16043);
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Our
Annual Report on Form 10-K/A for the year ended December 31,
2006, filed
on October 16, 2007 (File No.
001-16043);
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Our
Quarterly Report on Form 10-Q for the quarter ended March 31,
2007, filed
on May 14, 2007 (File No.
001-16043);
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Our
Quarterly Report on Form 10-Q for the quarter ended June 30,
2007, filed
on August 14, 2007 (File No. 001-16043);
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Our
Quarterly Report on Form 10-Q for the quarter ended September 30,
2007, filed on November 14, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on January 16, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on January 22, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on January 30, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on February 2, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on February 8, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on April 5, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on April 6, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on April 11, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on May 18, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on June 7, 2007 (File No.
001-16043);
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·
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Our
Current Report on Form 8-K, filed on June 28, 2007 (File No.
001-16043);
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·
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Our
Current Report on Form 8-K, filed on July 25, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on July 31, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on September 13, 2007 (File No.
001-16043);
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Our
Current Report on Form 8-K, filed on October 1, 2007 (File No.
001-16043);
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The
portions of the Registrant’s Definitive Proxy Statement on Schedule 14A
that are deemed “filed” with the Commission under the Exchange Act, filed
on June 22, 2007;
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The
description of our common stock, $0.01 par value per share, which
is
contained in our Registration Statement on Form 8-A, filed on
November 1,
1991, including any amendments or reports filed for the purpose
of
updating such description; and
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The
description of the Rights under the Registrant’s Stockholders’ Rights
Agreement (which are currently transferred with the Registrant’s common
stock) contained in the Registrant’s Registration Statement on Form 8-A
(File No. 000-19529), filed under the Exchange Act, filed on
August 4,
1995, including any amendment or report filed for the purposes
of updating
such description.
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You
may
request, orally or in writing, a copy of these filings, which will be provided
to you at no cost, by contacting Investor Relations c/o Nancy Regan, at our
principal executive offices, which are located at 221 West Grand Avenue,
Suite
200, Montvale, New Jersey 07645, (201) 934-5000.
To
the
extent that any statements contained in a document incorporated by reference
are
modified or superseded by any statements contained in this prospectus, such
statements shall not be deemed incorporated in this prospectus except as
so
modified or superseded.
All
documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or
15(d)
of the Exchange Act after the date of this prospectus and prior to the
termination of this offering are incorporated by reference and become a part
of
this prospectus from the date such documents are filed. We also specifically
incorporate by reference any documents filed by us with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the
initial registration statement and prior to the effectiveness of the
registration statement. Any statement contained in this prospectus or in
a
document incorporated by reference is modified or superseded for purposes
of
this prospectus to the extent that a statement contained in any subsequent
filed
document modifies or supersedes such statement.
Synvista
Therapeutics, Inc.
628,268
shares of common stock
Prospectus
November 14,
2007