Filed Pursuant to
Rule 424(b)(3)
Registration No. 333-71808
PROSPECTUS
28,301,887 SHARES
TRIANGLE PHARMACEUTICALS, INC.
COMMON STOCK
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This prospectus relates to the resale of 28,301,887 shares of common stock
held by the selling stockholders identified in this prospectus.
The selling stockholders may offer their shares through public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices,
or at privately negotiated prices. We will not receive any part of the proceeds
from these sales.
Our common stock is traded on the Nasdaq National Market under the symbol
"VIRS." On February 12, 2002, the last reported sale price for the
common stock was $4.12 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3 TO READ ABOUT SOME IMPORTANT RISKS YOU SHOULD
CONSIDER BEFORE BUYING ANY SHARES OF OUR COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is February 13, 2002
TABLE OF CONTENTS
PAGE
I. OUR BUSINESS...........................................................3
II. RISK FACTORS...........................................................3
III. FORWARD-LOOKING STATEMENTS............................................20
IV. USE OF PROCEEDS.......................................................21
V. SELLING STOCKHOLDERS..................................................21
VI. PLAN OF DISTRIBUTION..................................................23
VII. LEGAL MATTERS.........................................................24
VIII. EXPERTS...............................................................24
IX. WHERE YOU CAN FIND MORE INFORMATION...................................24
X. INFORMATION INCORPORATED BY REFERENCE.................................25
You should rely only on the information in this prospectus or information
we have referred to in this prospectus. We have not authorized anyone to provide
you with information that is different. This prospectus may only be used where
it is legal to sell these securities. This prospectus is not an offer to sell,
or a solicitation of an offer to buy, in any state where the offer or sale is
prohibited. The information in this prospectus is accurate on the date of this
prospectus and may become obsolete later. Neither the delivery of this
prospectus, nor any sale made under this prospectus will, under any
circumstances, imply that the information in this prospectus is correct as of
any date after the date of this prospectus.
I. OUR BUSINESS
We develop new drug candidates primarily in the antiviral area, with a
particular focus on therapies for HIV, including AIDS, and the hepatitis B
virus. We have an existing portfolio of five licensed drug candidates in
clinical trials and several drug candidates that are in a pre-clinical stage
or for which we have an option to acquire a license. Members of our senior
management team, prior to joining Triangle, played instrumental roles in
developing and commercializing several leading antiviral therapies. Our goal
is to capitalize on our management team's expertise, as well as on advances
in virology and immunology, to identify, develop and commercialize new drug
candidates that can be used alone or in combination to treat serious diseases.
Triangle was incorporated in Delaware in July 1995. Our principal
executive offices are located at 4 University Place, 4611 University Drive,
Durham, North Carolina 27707, and our telephone number is (919) 493-5980.
II. RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE MAKING AN INVESTMENT DECISION. THE
OCCURRENCE OF ANY OF THE EVENTS OR CIRCUMSTANCES DESCRIBED IN THIS SECTION COULD
IMPAIR OUR BUSINESS OR FINANCIAL CONDITION, THE TRADING PRICE OF OUR COMMON
STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
ALL OF OUR DRUG CANDIDATES ARE IN DEVELOPMENT AND WE MAY NEVER SUCCESSFULLY
COMMERCIALIZE THEM.
Some of our drug candidates are at an early stage of development and all
of our drug candidates will require expensive and lengthy testing and regulatory
clearances before we may commercialize them. We do not expect any of our drug
candidates to be commercially available until at least the year 2003. There are
many reasons that we may fail in our efforts to develop our drug candidates,
including that:
o our drug candidates may be ineffective, toxic or may not
receive regulatory clearances,
o our drug candidates may be too expensive to manufacture or
market or may not achieve broad market acceptance,
o third parties may hold proprietary rights that preclude us
from developing or marketing our drug candidates, or
o third parties may market equivalent or superior products.
The success of our business depends on our ability to successfully develop
and market our drug candidates.
3
WE HAVE INCURRED LOSSES SINCE INCEPTION AND MAY NEVER ACHIEVE PROFITABILITY.
We formed Triangle in July 1995 and have incurred losses since our
inception. At September 30, 2001, our accumulated deficit was $393.2 million.
Our historical costs relate primarily to the acquisition and development of
our drug candidates and selling, general and administrative costs. We have
not generated any revenue from the sale of our drug candidates to date, and
do not expect to do so until at least the year 2003. In addition, we expect
annual losses to continue over the next several years as a result of our drug
development and commercialization efforts. To become profitable, we must
successfully develop and obtain regulatory approval for our drug candidates
and effectively manufacture, market and sell any products we develop. We may
never generate significant revenue or achieve profitability.
IF WE NEED ADDITIONAL FUNDS AND ARE UNABLE TO RAISE THEM, WE WILL HAVE TO
CURTAIL OR CEASE OPERATIONS.
Our drug development programs and our efforts to commercialize our drug
candidates require substantial working capital, including expenses for:
o preclinical testing,
o chemical synthetic scale-up,
o manufacture of drug substance for clinical trials,
o toxicology studies,
o clinical trials of drug candidates,
o sales and marketing,
o payments to our licensors, and
o potential commercial launch of our drug candidates.
Our future working capital needs will depend on many factors, including:
o the progress, magnitude and success of our drug development
programs,
o the scope and results of preclinical testing and clinical trials,
o the cost, timing and outcome of regulatory filings and reviews,
o the costs under current and future license and option agreements for
our drug candidates, including the costs of obtaining and enforcing
patent protection for our drug candidates,
o the costs of acquiring any additional drug candidates,
o the out-licensing of existing drug candidates,
o the rate of technological advances by us and other companies,
o the commercial potential of our drug candidates,
o the magnitude of our administrative and legal expenses,
o the costs of establishing sales and marketing functions, and
o the costs of establishing third party arrangements for
manufacturing.
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We have incurred negative cash flow from operations since we incorporated
Triangle and do not expect to generate positive cash flow from our operations
for at least the next several years. We believe that our existing cash, cash
equivalents and investments, considering our recent steps to reduce cash usage
and completed financings (including the sale of shares to Warburg Pincus Private
Equity VIII, L.P. and other investors on October 10, 2001), will be adequate
through the second quarter of 2003. We expect that we will need additional
future financings to fund our operations. We may not be able to obtain adequate
financing to fund our operations, and any additional financing we obtain may be
on terms that are not favorable to us. In addition, we may not receive the
contingent development milestone payments under our strategic alliance with
Abbott Laboratories, the Abbott Alliance. In addition, any future financings
could substantially dilute our stockholders. If adequate funds are not
available, we will be required to delay, reduce or eliminate one or more of our
drug development programs, to enter into new collaborative arrangements or to
modify the Abbott Alliance on terms that may not be favorable to us. These
collaborative arrangements or modifications could result in the transfer of
valuable rights to third parties. In addition, we may acquire technologies and
drug candidates that would increase our working capital requirements.
BECAUSE WE MAY NOT SUCCESSFULLY COMPLETE CLINICAL TRIALS REQUIRED FOR REGULATORY
APPROVAL OF OUR DRUG CANDIDATES, OUR BUSINESS MAY NEVER ACHIEVE PROFITABILITY.
The regulatory authorities have not approved any of our drug candidates.
To obtain regulatory approvals needed for the sale of our drug candidates, we
must demonstrate through preclinical testing and clinical trials that each drug
candidate is safe and effective. The clinical trial process is complex and
uncertain and the regulatory environment varies widely from country to country.
Positive results from preclinical testing and early clinical trials do not
ensure positive results in pivotal clinical trials. Many companies in our
industry have suffered significant setbacks in pivotal clinical trials, even
after promising results in earlier trials. Any of our drug candidates may
produce undesirable side effects in humans. These side effects could cause us or
regulatory authorities to interrupt, delay or halt clinical trials of a drug
candidate, as occurred with mozenavir dimesylate, or could result in regulatory
authorities refusing to approve the drug candidate for any and all targeted
indications. In 2000, the South African Medicines Control Council terminated one
of our phase III clinical studies, study FTC-302, for our drug candidate
Coviracil and the Food and Drug Administration, the FDA, issued a clinical hold
on the study. Our planned submission of an U.S. New Drug Application for
Coviracil will likely be delayed until data from our ongoing FTC-301 study is
available for inclusion in the filing. We, the FDA, or foreign regulatory
authorities may suspend or terminate clinical trials at any time if we or they
believe the trial participants face unacceptable health risks.
CLINICAL TRIALS MAY TAKE LONGER TO COMPLETE AND COST MORE THAN WE EXPECT, WHICH
WOULD ADVERSELY AFFECT OUR ABILITY TO COMMERCIALIZE DRUG CANDIDATES AND ACHIEVE
PROFITABILITY.
Clinical trials are lengthy and expensive. They require adequate supplies
of drug substance and sufficient patient enrollment. Patient enrollment is a
function of many factors, including:
o the size of the patient population,
o the nature of the protocol,
o the proximity of patients to clinical sites,
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o the eligibility criteria for the clinical trial, and
o the perceived benefit of participating in a clinical trial.
Delays in patient enrollment can result in increased costs and longer
development times. Even if we successfully complete clinical trials, we may not
be able to file any required regulatory submissions in a timely manner and we
may not receive regulatory approval for the drug candidate. In addition, if the
FDA or foreign regulatory authorities require additional clinical trials we
could face increased costs and significant development delays.
Changes in regulatory policy or new regulations could also result in
delays or rejections of our applications for approval of our drug candidates.
The FDA has notified us that three of our drug candidates for the treatment of
HIV, Coviracil, Coactinon and amdoxovir, qualify for designation as "fast track"
products under provisions of the Food and Drug Administration Modernization Act
of 1997. The fast track provisions are designed to expedite the review of new
drugs intended to treat serious or life-threatening conditions and essentially
codified the criteria previously established by the FDA for accelerated
approval. These drug candidates may not, however, continue to qualify for
expedited review and our other drug candidates may fail to qualify for fast
track development or expedited review. Even though some of our drug candidates
have qualified for expedited review, the FDA may not approve them at all or any
sooner than other drug candidates that do not qualify for expedited review.
IF WE OR OUR LICENSORS ARE NOT ABLE TO OBTAIN AND MAINTAIN ADEQUATE PATENT
PROTECTION FOR OUR DRUG CANDIDATES, WE MAY BE UNABLE TO COMMERCIALIZE OUR DRUG
CANDIDATES OR TO PREVENT OTHER COMPANIES FROM USING OUR TECHNOLOGY IN
COMPETITIVE PRODUCTS.
Our success will depend on our ability and the ability of our licensors to
obtain and maintain patents and proprietary rights for our drug candidates and
to avoid infringing the proprietary rights of others, both in the United States
and in foreign countries. We have no patents solely in our own name and we have
a small number of patent applications of our own pending. We have one U.S.
patent which is jointly owned with another institution. We have licensed, or
have an option to license, patents, patent applications and other proprietary
rights from third parties for each of our drug candidates. If we breach our
licenses we may lose rights to important technology and drug candidates.
Our patent position on some of our drug candidates, like that of many
pharmaceutical companies, is uncertain and involves complex legal and factual
questions for which important legal principles are unresolved. We may not
develop or obtain rights to products or processes that are patentable. Even if
we do obtain patents, they may not adequately protect the technology we own or
have licensed. In addition, others may challenge, seek to invalidate, infringe
or circumvent any patents we own or license. If they do so successfully, rights
we receive under those patents may not provide competitive advantages to us.
Further, the manufacture, use or sale of our products or processes may infringe
the patent rights of others.
6
Several pharmaceutical and biotechnology companies, universities and
research institutions have filed patent applications or received patents that
cover our technologies or technologies similar to ours. Others have filed
patent applications and received patents that conflict with patents or patent
applications we own or have licensed, either by claiming the same methods or
compounds or by claiming methods or compounds that could dominate those owned
by or licensed to us. In addition, we may not be aware of all patents or
patent applications that may impact our ability to make, use or sell any of
our drug candidates. For example, United States patent applications are
confidential while pending in the Patent and Trademark Office, and patent
applications filed in foreign countries are often first published six months
or more after filing. Any conflicts resulting from third party patent
applications and patents could significantly reduce the coverage of our
patents and limit our ability to obtain meaningful patent protection. If
other companies obtain patents with conflicting claims, we may be required to
obtain licenses to these patents or to develop or obtain alternative
technology. We may not be able to obtain any license on acceptable terms or
at all. Any failure to obtain licenses could delay or prevent us from
pursuing the development or commercialization of our drug candidates, which
would adversely affect our ability to achieve profitability.
There are significant risks regarding the patent rights of two of our
licensed drug candidates. We may not be able to commercialize Coviracil or
amdoxovir due to patent rights held by third parties other than our licensors.
Third parties have filed numerous patent applications and have received numerous
issued patents in the United States and many foreign countries that relate to
these drug candidates and their use alone or in combination to treat HIV and
hepatitis B. As a result, our patent position regarding the use of Coviracil and
amdoxovir to treat HIV and/or hepatitis B is highly uncertain and involves
numerous complex legal and factual questions that are unknown or unresolved. If
any of these questions is resolved in a manner that is not favorable to us, we
would not have the right to commercialize Coviracil and/or amdoxovir in the
absence of a license from one or more third parties, which may not be available
on acceptable terms or at all. Even if any of these questions is resolved in our
favor, we may still attempt to obtain licenses from one or more third parties to
reduce the risks of challenges to our patent positions. These licenses may not
be available on acceptable terms or at all. Our inability to commercialize
either of these drug candidates would adversely affect our ability to achieve
profitability.
COVIRACIL (EMTRICITABINE)
Coviracil, a purified form of FTC, belongs to the same general class of
nucleosides as lamivudine. In the United States, the FDA has approved lamivudine
for the treatment of hepatitis B and for use in combination with zidovudine,
also known as AZT, for the treatment of HIV. Regulatory authorities have
approved lamivudine for the treatment of hepatitis B and for use in combination
with other nucleoside analogues for the treatment of HIV in a number of other
countries. GlaxoSmithKline plc, Glaxo, currently sells lamivudine for the
treatment of HIV and hepatitis B under a license agreement with Shire
Pharmaceuticals Group, plc. Shire Pharmaceuticals obtained its rights under this
license agreement through a merger with BioChem Pharma, Inc. We obtained rights
to Coviracil under a license from Emory University. In 1990 and 1991, Emory
filed in the United States and then in numerous foreign countries patent
applications with claims to compositions of matter and methods to treat HIV and
hepatitis B with Coviracil. In 1991, Yale University filed in the United States
patent applications on FTC, including emtricitabine and its use to treat
hepatitis B, and subsequently licensed its rights under those patent
applications to Emory. Our license arrangement with Emory includes all rights to
Coviracil and its uses claimed in the Yale patent applications.
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HIV. Emory received a United States patent in 1993 covering a method to
treat HIV with Coviracil. Emory has also received United States and European
patents containing composition of matter claims that cover Coviracil. BioChem
Pharma, now Shire Pharmaceuticals, filed a patent application in the United
States in 1989 and received a patent in 1991 covering a group of nucleosides
in the same general class as Coviracil, but which did not include Coviracil.
Shire Pharmaceuticals filed foreign patent applications in 1990, which
expanded on its 1989 United States patent application to include FTC among a
large class of nucleosides. The foreign patent applications are pending in
many countries and patents have been issued in a number of countries with
claims directed to FTC that may cover Coviracil and its use to treat HIV. In
addition, Shire Pharmaceuticals filed a United States patent application in
1991 specifically directed to Coviracil. Shire Pharmaceuticals has received
two patents in the United States based on this patent application, one
directed to Coviracil and the other directed to a method for treating viral
diseases with Coviracil. The Patent and Trademark Office has determined that
there are conflicts between both Shire Pharmaceuticals patents and patent
applications filed by Emory because they have overlapping claims to the same
technology. The Patent and Trademark Office is conducting two adversarial
proceedings, interferences, to determine whether Shire Pharmaceuticals or
Emory is entitled to the patent claims in dispute regarding Shire
Pharmaceuticals' two issued patents. On July 5, 2001, the Patent and
Trademark Office issued a decision awarding the patent on the method for
treating HIV with Coviracil to Emory and ruled that Shire Pharmaceuticals'
patent on that subject matter is invalid. The time to appeal this decision
has now expired. Emory may not prevail in the remaining adversarial
proceeding, and the proceeding may also delay the decision of the Patent and
Trademark Office regarding Emory's patent application. Shire Pharmaceuticals
also filed patent applications in many foreign countries based on its 1991
United States patent application and has received patents in some of these
countries. Shire Pharmaceuticals may have additional patent applications
pending in the United States.
In the United States, the first to invent a technology is entitled to
patent protection on that technology. For patent applications filed prior to
January 1, 1996, United States patent law provides that a party who invented a
technology outside the United States is deemed to have invented the technology
on the earlier of the date it introduced the invention in the United States or
the date it filed its patent application. In a filing with the Securities and
Exchange Commission, Shire Pharmaceuticals stated that prior to January 1, 1996,
it conducted substantially all of its research activities outside the United
States. Shire Pharmaceuticals also stated that it considered this to be a
disadvantage in obtaining United States patents based on patent applications
filed before January 1, 1996 as compared to companies that mainly conducted
research in the United States. We do not know whether Emory or Shire
Pharmaceuticals was the first to invent the technology claimed in their
respective United States patent applications or patents. We also do not know
whether Shire Pharmaceuticals invented the technology disclosed in its patent
applications in the United States or introduced that technology in the United
States before the date of its patent applications.
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In foreign countries, the first party to file a patent application on a
technology, not the first to invent the technology, is entitled to patent
protection on that technology. We believe that Emory filed patent
applications disclosing Coviracil as a useful anti-HIV agent in many foreign
countries before Shire Pharmaceuticals filed its foreign patent applications
on that technology. However, Shire Pharmaceuticals has received patents in
several foreign countries. In addition, Shire Pharmaceuticals has filed
patent applications on Coviracil and its uses in countries in which Emory did
not file patent applications. Emory has opposed or otherwise challenged
patent claims on Coviracil granted to Shire Pharmaceuticals in Australia,
Europe and South Korea. Emory may not initiate patent opposition proceedings
in any other countries or be successful in any foreign proceeding attempting
to prevent the issuance of, revoke or limit the scope of patents issued to
Shire Pharmaceuticals. Shire Pharmaceuticals has opposed patent claims on
Coviracil granted to Emory in Europe, Japan, Australia and South Korea. The
South Korean patent office issued a decision upholding patent claims to Emory
that cover Coviracil. Shire Pharmaceuticals can appeal this decision. Shire
Pharmaceuticals may make additional challenges to Emory patents or patent
applications, which Emory may not succeed in defending. Our sales, if any, of
Coviracil for the treatment of HIV may be held to infringe United States and
foreign patent rights of Shire Pharmaceuticals. Under the patent laws of most
countries, a product can be found to infringe a third party patent either if
the third party patent expressly covers the product or method of treatment
using the product, or if the third party patent covers subject matter that is
substantially equivalent in nature to the product or method, even if the
patent does not expressly cover the product or method. If any governmental
authority determined that the sale of Coviracil for the treatment of HIV
infringes a Shire Pharmaceuticals patent, we would not have the right to
make, use or sell Coviracil for the treatment of HIV in that country in the
absence of a license from Shire Pharmaceuticals. We may be unable to obtain a
license from Shire Pharmaceuticals on acceptable terms or at all.
HEPATITIS B. Burroughs Wellcome Co. filed patent applications in March
1991 and May 1991 in Great Britain on a method to treat hepatitis B with FTC and
purified forms of FTC, that include emtricitabine. Burroughs Wellcome filed
similar patent applications in other countries, including the United States.
Glaxo subsequently acquired Burroughs Wellcome's rights under those patent
applications. Those patent applications were filed in foreign countries prior to
the date Emory filed its patent application on the use of emtricitabine to treat
hepatitis B. Burroughs Wellcome's foreign patent applications, therefore, have
priority over those filed by Emory. In July 1996, Emory instituted litigation
against Glaxo in the United States District Court to obtain ownership of the
patent applications filed by Burroughs Wellcome, alleging that Burroughs
Wellcome converted and misappropriated Emory's invention and property and that
an Emory employee is the inventor or a co-inventor of the subject matter covered
by the Burroughs Wellcome patent applications. In May 1999, Emory and Glaxo
settled the litigation, and we became the exclusive licensee of the United
States and all foreign patent applications and patents filed by Burroughs
Wellcome on the use of emtricitabine to treat hepatitis B. Under the license and
settlement agreements, Emory and we were also given access to development and
clinical data and drug substance held by Glaxo relating to emtricitabine.
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Shire Pharmaceuticals filed a patent application in May 1991 in Great
Britain also directed to a method to treat hepatitis B with FTC. Shire
Pharmaceuticals filed similar patent applications in other countries. In January
1996, Shire Pharmaceuticals received a patent in the United States, which
included a claim to treat hepatitis B with emtricitabine. The Patent and
Trademark Office has determined that there is a conflict between the Shire
Pharmaceuticals patent and patent applications filed by Yale and Emory. The
Patent and Trademark Office is conducting an adversarial proceeding, an
interference, to determine which party is entitled to the patent claims in
dispute. Yale licensed all of its rights relating to FTC, including
emtricitabine, and its uses claimed in this patent application to Emory, which
subsequently licensed these rights to us. Neither Emory nor Yale may prevail in
the adversarial proceeding, and the proceeding may delay the decision of the
Patent and Trademark Office regarding Yale's and Emory's patent applications. In
addition, the Patent and Trademark Office has recently added the U.S. patent
application filed by Burroughs Wellcome to this interference. Emory may not
pursue or succeed in these proceedings. We will not be able to sell
emtricitabine for the treatment of hepatitis B in the United States unless a
United States court or administrative body determines that the Shire
Pharmaceuticals patent is invalid or unless we obtain a license from Shire
Pharmaceuticals. We may be unable to obtain a license on acceptable terms or at
all. In July 1991, Shire Pharmaceuticals received a United States patent on the
use of lamivudine to treat hepatitis B and has corresponding patent applications
pending or issued in foreign countries. If the Patent and Trademark Office
determines that the use of emtricitabine to treat hepatitis B is not
substantially different from the use of lamivudine to treat hepatitis B, a court
could hold that the use of emtricitabine to treat hepatitis B infringes these
Shire Pharmaceuticals lamivudine patents.
In addition, Shire Pharmaceuticals has filed patent applications and
received patents in the United States and foreign countries on manufacturing
methods relating to a class of nucleosides that includes emtricitabine. If we
use a manufacturing method that is covered by any of Shire Pharmaceuticals'
patents, we will not be able to manufacture emtricitabine without a license from
Shire Pharmaceuticals. We may not be able to obtain a license on acceptable
terms or at all.
AMDOXOVIR (FORMERLY KNOWN AS DAPD)
We obtained our rights to amdoxovir under a license from Emory and the
University of Georgia Research Foundation, Inc., University of Georgia. Our
rights to amdoxovir include a number of issued United States patents that cover:
o composition of matter,
o a method for the synthesis of amdoxovir,
o methods for the use of amdoxovir alone or in combination with
several other agents for the treatment of hepatitis B, and
o a method to treat HIV with amdoxovir.
We also have rights to several foreign patents and patent applications
that cover methods for the use of amdoxovir alone or in combination with other
anti-hepatitis B agents for the treatment of hepatitis B. Additional foreign
patent applications are pending which contain claims for the use of amdoxovir to
treat HIV. Emory and the University of Georgia filed patent applications
claiming these inventions in the United States in 1990 and 1992.
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Shire Pharmaceuticals filed a patent application in the United States in
1988 on a group of nucleosides in the same general class as amdoxovir and their
use to treat HIV, and has filed corresponding patent applications in foreign
countries. The Patent and Trademark Office issued a patent to Shire
Pharmaceuticals in 1993 covering a class of nucleosides that includes amdoxovir
and its use to treat HIV. Corresponding patents have been issued to Shire
Pharmaceuticals in many foreign countries. Emory has filed an opposition to
patent claims granted to Shire Pharmaceuticals by the European Patent Office
based, in part, on Emory's assertion that Shire Pharmaceuticals' patent does not
disclose how to make amdoxovir. In a patent opposition hearing held at the
European Patent Office on March 4, 1999, the Opposition Division ruled that the
Shire Pharmaceuticals European patent covering amdoxovir is valid. Emory has
appealed this decision to the European Patent Office Technical Board of Appeal.
If the Technical Board of Appeal affirms the decision of the Opposition
Division, or if we or Emory do not pursue the appeal, we would not be able to
sell amdoxovir in Europe without a license from Shire Pharmaceuticals, which may
not be available on acceptable terms or at all. Shire Pharmaceuticals has
opposed patent claims granted to Emory on both amdoxovir and DXG, the parent
drug into which amdoxovir is converted in the body, in the Australian Patent
Office.
In a decision dated November 8, 2000, the Australian Patent Office held
that Emory's patent claims directed to amdoxovir are not patentable over an
earlier Shire Pharmaceuticals patent. Emory has appealed this decision of the
Australian Patent Office to the Australian Federal Court. If Emory, the
University of Georgia or we are unsuccessful in the appeal, then we will not
be able to sell amdoxovir in Australia without a license from Shire
Pharmaceuticals, which may not be available on acceptable terms or at all.
Shire Pharmaceuticals' opposition to Emory's patent claims on DXG in
Australia is ongoing. If Emory, the University of Georgia or we do not
challenge, or are not successful in any challenge to, Shire Pharmaceuticals'
issued patents, pending patent applications, or patents that may issue from
its applications, we will not be able to manufacture, use or sell amdoxovir
in the United States and any foreign countries in which Shire Pharmaceuticals
receives a patent without a license from Shire Pharmaceuticals. We may not be
able to obtain a license from Shire Pharmaceuticals on acceptable terms or at
all.
IMMUNOSTIMULATORY SEQUENCE PRODUCT CANDIDATES
In March 2000, we entered into a licensing and collaborative agreement
with Dynavax Technologies Corporation to develop immunostimulatory
polynucleotide sequence product candidates for the prevention and/or treatment
of serious viral diseases, which became effective in April 2000.
Immunostimulatory sequences are polynucleotides which stimulate the immune
system, and could potentially be used in combination with our small molecule
product candidates to increase the body's ability to defend against viral
infection. Immunostimulatory sequences can be stabilized for use through
internal linkages that do not occur in nature, including phosphorothioate
linkages.
There are a number of companies which have patent applications and issued
patents, both in the United States and in other countries, that cover
immunostimulatory sequences and their uses. Coley Pharmaceuticals, Inc. has
filed several patent applications in this area and has in addition exclusively
licensed a number of patent applications on this subject from the University of
Iowa and Isis Pharmaceuticals, Inc. A number of these patent applications have
been issued. A number of companies have also filed patent applications and have
or are expected to receive patents on a number of polynucleotides and methods
for their use and manufacture. These patents, if granted, could prevent us from
making, using or selling any immunostimulatory sequence that is covered by a
patent issued to a third party unless we obtain a license from that party which
may not be available on acceptable terms or at all.
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With respect to any of our drug candidates, litigation, patent opposition
and adversarial proceedings, including the currently pending proceedings, could
result in substantial costs to us. The costs of the currently pending
proceedings are significant and may increase significantly during the next
several years. We anticipate that additional litigation and/or proceedings will
be necessary or may be initiated to enforce any patents we own or are
significant and license, or to determine the scope, validity and enforceability
of other parties' proprietary rights and the priority of an invention. Any of
these activities could result in substantial costs and/or delays to us. The
outcome of any of these proceedings may significantly affect our rights to
develop and commercialize drug candidates and technology.
United States patents carry a presumption of validity and generally can
be invalidated only through clear and convincing evidence. As indicated
above, the Patent and Trademark Office is conducting three adversarial
proceedings in connection with the emtricitabine technology. A court or
administrative body may not hold our licensed patents valid or may not find
an alleged infringer to be infringing. Further, the license and option
agreements with Emory, the University of Georgia, The Regents of the
University of California, The DuPont Pharmaceuticals Company, Mitsubishi
Pharma Corporation (formerly, Mitsubishi-Tokyo Pharmaceuticals, Inc.) and
Dynavax provide that each of these licensors is primarily responsible for any
patent prosecution activities, such as litigation, patent conflict
proceeding, patent opposition or other actions, for the technology licensed
to us. These agreements also provide that we generally must reimburse these
licensors for the costs they incur in performing these activities. Similarly,
Yale and the University of Georgia, the licensors of clevudine to Bukwang
Pharm. Ind. Co., Ltd., are primarily responsible for patent prosecution
activities with respect to clevudine at our expense. As a result, we
generally do not have the ability to institute or determine the conduct of
any patent proceedings unless our licensors elect not to institute or to
abandon the proceedings. If our licensors elect to institute and prosecute
patent proceedings, our rights will depend in part on the manner in which
these licensors conduct the proceedings. In any proceedings they elect to
initiate and maintain, these licensors may not vigorously pursue or defend or
may decide to settle on terms that are unfavorable to us. An adverse outcome
of these proceedings could subject us to significant liabilities to third
parties, require disputed rights to be licensed from third parties or require
us to cease using technology, any of which could adversely affect our
business. Moreover, the mere uncertainty resulting from the initiation and
continuation of any technology related litigation or adversarial proceeding
could adversely affect our business pending resolution of the disputed
matters.
12
BECAUSE WE MAY NOT BE ABLE TO MAINTAIN THE CONFIDENTIALITY OF OUR TRADE SECRETS
AND KNOW-HOW, WE MAY LOSE A COMPETITIVE ADVANTAGE.
We also rely on unpatented trade secrets and know-how to maintain our
competitive position, which we seek to protect, in part, by confidentiality
agreements with employees, consultants and others. These parties may breach or
terminate these agreements, and we may not have adequate remedies for any
breach. Our trade secrets may also be independently discovered by competitors.
We rely on technologies to which we do not have exclusive rights or which may
not be patentable or proprietary and may be available to competitors. We have
filed applications for, but have not obtained, trademark registrations for
various marks in the United States and other jurisdictions. We have received
U.S. trademark registrations for our corporate name and our corporate name and
logo, as well as the marks Coactinon(R) and Coviracil(R). We have received
Canadian trademark registrations for the marks Coactinon(R) and Coviracil(R). We
have also received registrations in the European Union for the mark Coactinon(R)
and our corporate logo. Our pending application in the European Union for the
mark CoviracilTM has been opposed by Orsem, based on registrations for the mark
Coversyl in various countries, and Les Laboratories Serveir, based on a French
registration for the mark Coversyl. We do not believe that the marks Coviracil
and Coversyl are confusingly similar, but, in the event they are found to be
confusingly similar, we may need to adopt a different product name for
emtricitabine in the applicable jurisdictions. Several other companies use trade
names that are similar to our name for their businesses. If we are unable to
obtain any licenses that may be necessary for the use of our corporate name, we
may be required to change our name. Our management personnel were previously
employed by other pharmaceutical companies. The prior employers of these
individuals may allege violations of trade secrets and other similar claims
relating to their drug development activities for us.
THE COSTS AND TIME REQUIRED TO COMPLY WITH EXTENSIVE GOVERNMENT REGULATIONS
COULD PREVENT OR DELAY THE COMMERCIALIZATION OF OUR PRODUCTS.
In addition to preclinical testing, clinical trials and other approval
procedures for human pharmaceutical products, we are subject to numerous
domestic and international regulations covering the development and registration
of pharmaceutical products. These regulations affect:
o manufacturing,
o safety,
o labeling,
o storage,
o record keeping,
o reporting, and
o marketing and promotion.
We must also comply with regulations governing non-clinical and clinical
laboratory practices, safe working conditions, and the use and disposal of
hazardous substances, including radioactive compounds and infectious disease
agents we use in connection with our development work. The requirements vary
widely from country to country and some requirements may vary from state to
state in the United States. We expect the process of obtaining these approvals
and complying with appropriate government regulations to be time consuming and
expensive. Even if our drug candidates receive regulatory approval, we may still
face difficulties in marketing and manufacturing those drug candidates. Any
approval may be contingent on postmarketing studies or other conditions. The
approval of any of our drug candidates may limit the indicated uses of the drug
candidate. A marketed product, its manufacturer and the manufacturer's
facilities are subject to continual review and periodic inspections. The
discovery of previously unknown problems with a product, manufacturer or
facility may result in restrictions on the product or manufacturer, including
withdrawal of the product from the market. The failure to comply with applicable
regulatory requirements can, among other things, result in:
13
o fines,
o suspended regulatory approvals,
o refusal to approve pending applications,
o refusal to permit exports from the United States,
o product recalls,
o seizure of products,
o injunctions,
o operating restrictions, and
o criminal prosecutions.
In addition, adverse clinical results by others could negatively impact
the development and approval of our drug candidates. Some of our drug candidates
are intended for use as combination therapy with one or more other drugs, and
adverse safety, effectiveness or regulatory developments in connection with the
other drugs will also have an adverse effect on our business.
INTENSE COMPETITION MAY RENDER OUR DRUG CANDIDATES NONCOMPETITIVE OR OBSOLETE.
We are engaged in segments of the drug industry that are highly
competitive and rapidly changing. Any of our current drug candidates that we
successfully develop will compete with numerous existing therapies. In addition,
many companies are pursuing novel drugs that target the same diseases we are
targeting. We believe that a significant number of drugs are currently under
development and will become available in the future for the treatment of HIV and
hepatitis B. We anticipate that we will face intense and increasing competition
as new products enter the market and advanced technologies become available. Our
competitors' products may be more effective, or more effectively marketed and
sold, than any of our products. Competitive products may render our products
obsolete or noncompetitive before we can recover the expenses of developing and
commercializing our drug candidates. Furthermore, the development of a cure or
new treatment methods for the diseases we are targeting could render our drug
candidates noncompetitive, obsolete or uneconomical. Many of our competitors:
o have significantly greater financial, technical and human resources
than we have and may be better equipped to develop, manufacture and
market products,
14
o have extensive experience in preclinical testing and clinical trials,
obtaining regulatory approvals and manufacturing and marketing
pharmaceutical products, and
o have products that have been approved or are in late stage development
and operate large, well-funded research and development programs.
Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large pharmaceutical and
biotechnology companies. Academic institutions, governmental agencies and other
public and private research organizations are also becoming increasingly aware
of the commercial value of their inventions and are more actively seeking to
commercialize the technology they have developed.
If we successfully develop and obtain approval for our drug candidates, we
will face competition based on many factors including:
o the safety and effectiveness of our products,
o the timing and scope of regulatory approvals,
o the availability of supply,
o marketing and sales capability,
o reimbursement coverage,
o price, and
o patent position.
Our competitors may develop or commercialize more effective or more
affordable products, or obtain more effective patent protection, than we do.
Accordingly, our competitors may commercialize products more rapidly or
effectively than we do, which could hurt our competitive position.
IF OUR LICENSORS TERMINATE THEIR AGREEMENTS WITH US, WE COULD LOSE OUR RIGHTS TO
OUR DRUG CANDIDATES.
We have licensed or obtained an option to license our drug candidates
under agreements with our licensors. These agreements permit our licensors to
terminate the agreements in circumstances such as our failure to achieve
development milestones or the occurrence of an uncured material breach by us.
The termination of any of these agreements would result in the loss of our
rights to a drug candidate. On the termination of most of our license
agreements, we are required to return the licensed technology to our licensors.
In addition, most of these agreements provide that we generally must reimburse
our licensors for the costs they incur in performing any patent prosecution
activities such as litigation, patent conflict, patent opposition or other
actions, for the technology licensed to us. We believe that these costs as well
as other costs under our license and option agreements will be substantial and
may increase significantly during the next several years. Our inability or
failure to pay any of these costs with respect to any drug candidate could
result in the termination of the license or option agreement for the drug
candidate.
IF WE ARE NOT ABLE TO SUCCESSFULLY MANUFACTURE OUR DRUG CANDIDATES, OUR BUSINESS
MAY NEVER ACHIEVE PROFITABILITY.
We do not have any internal manufacturing capacity and we rely on third
party manufacturers for the manufacture of all of our clinical trial material.
We plan to use
15
our existing relationships or to establish relationships with additional third
party manufacturers for products that we develop. The terms of the Abbott
Alliance provide that Abbott Laboratories will manufacture all or a portion of
our product requirements for those products that are or become covered by the
Abbott Alliance. We may be unable to maintain our relationship with Abbott or to
establish or maintain relationships with other manufacturers on acceptable
terms, and manufacturers may be unable to manufacture products in commercial
quantities on a cost effective basis. Our dependence on third parties for the
manufacture of our products may adversely affect our profit margins and our
ability to develop and commercialize products on a timely and competitive basis.
Further, third party manufacturers may encounter manufacturing or quality
control problems in manufacturing our products and may be unable to maintain the
necessary governmental licenses and approvals to continue manufacturing our
products.
BECAUSE WE DEPEND ON THIRD PARTIES, WE MAY BE UNABLE TO SUCCESSFULLY MARKET,
SELL OR DISTRIBUTE PRODUCTS WE DEVELOP.
In the United States, we currently intend to market the products covered
by the Abbott Alliance in collaboration with Abbott and to market other products
that we successfully develop, that do not become part of the Abbott Alliance,
through a direct sales force or through arrangements or collaborations with
third parties. Outside of the United States, we expect Abbott to market products
covered by the Abbott Alliance and, for any other drug candidates that we
successfully develop that do not become part of the Abbott Alliance, we intend
to market and sell through arrangements or collaborations with third parties. In
addition, we expect Abbott to handle the distribution and sale of products
covered by the Abbott Alliance both inside and outside the United States. With
respect to the United States, our ability to market the products that we
successfully develop may be contingent on recruitment, training and deployment
of a sales and marketing force as well as the performance of Abbott under the
Abbott Alliance. We may be unable to establish marketing or sales capabilities
or to maintain arrangements or enter into new arrangements with third parties to
perform those activities on favorable terms. In addition, third parties may have
significant control or influence over important aspects of the commercialization
of our drug candidates, including market identification, marketing methods,
pricing, composition of sales force and promotional activities. We may have
limited control over the amount and timing of resources that a third party
devotes to our products. Our business may never achieve profitability if we fail
to establish or maintain a sales force and marketing, sales and distribution
capabilities.
BECAUSE WE DEPEND ON THIRD PARTIES FOR THE DISCOVERY AND DEVELOPMENT OF DRUG
CANDIDATES, WE MAY NOT SUCCESSFULLY ACQUIRE ADDITIONAL DRUG CANDIDATES OR
DEVELOP OUR CURRENT DRUG CANDIDATES.
We do not currently intend to engage in drug discovery. Our strategy for
obtaining additional drug candidates is to utilize the relationships of our
management team and scientific consultants to identify drug candidates for
in-licensing from companies, universities, research institutions and other
organizations. We may not succeed in acquiring additional drug candidates on
acceptable terms or at all.
Because we have engaged and intend to continue to engage third party
contract research organizations and other third parties to help us develop our
drug candidates, many important aspects of our drug development programs have
been and will continue to be outside of our direct control. In addition, the
contract research organizations may not perform all of their obligations under
arrangements with us. If the contract research organizations do not perform
16
clinical trials in a satisfactory manner or breach their obligations to us, the
development and commercialization of any drug candidate may be delayed or
precluded.
BECAUSE WE MAY NOT BE ABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND ADVISORS, WE
MAY NOT SUCCESSFULLY DEVELOP OUR DRUG CANDIDATES OR ACHIEVE OUR OTHER BUSINESS
OBJECTIVES.
We are highly dependent on our senior management and scientific staff.
The loss of the services of any member of our senior management or scientific
staff may significantly delay or prevent the achievement of product
development and other business objectives. In order to pursue our drug
development programs and marketing plans, we will need to hire additional
qualified scientific and management personnel. Competition for qualified
individuals is intense and we face competition from numerous pharmaceutical
and biotechnology companies, universities and other research institutions. If
we are not able to attract and retain these individuals we may not be able to
successfully commercialize our drug candidates.
HEALTH CARE REFORM MEASURES AND THIRD PARTY REIMBURSEMENT PRACTICES ARE
UNCERTAIN AND MAY DELAY OR PREVENT THE COMMERCIALIZATION OF OUR DRUG CANDIDATES.
The efforts of governments and third party payors to contain or reduce the
cost of health care will continue to affect the business and financial condition
of drug companies. A number of legislative and regulatory proposals to change
the health care system have been considered in recent years. In addition, an
increasing emphasis on managed care in the United States has and will continue
to increase pressure on drug pricing. Legislative or regulatory proposals or
changes in managed care systems may be adopted that may have a negative effect
on our business. The announcement and/or adoption of proposals could have an
adverse effect on our ability to earn profits and financial condition. Sales of
prescription drugs depend significantly on the availability of reimbursement to
the consumer from third party payors, such as government and private insurance
plans. These third party payors frequently require that drug companies give them
predetermined discounts from list prices, and they are increasingly challenging
the prices for medical products and services. Present combination treatment
regimens for the treatment of HIV are expensive and costs may increase as new
combinations are developed. These costs have resulted in limitations in the
reimbursement available from third party payors for the treatment of HIV
infection, and we expect these limitations will continue in the future. Third
party payors may not consider products we may bring to the market cost
effective and may not reimburse the consumer sufficiently to allow us to sell
our products on a profitable basis.
IF OUR PRODUCTS DO NOT ACHIEVE MARKET ACCEPTANCE, OUR BUSINESS MAY NEVER ACHIEVE
PROFITABILITY.
Our success will depend on the market acceptance of any products we
develop. The degree of market acceptance will depend on a number of factors,
including:
o the receipt and scope of regulatory approvals,
o the establishment and demonstration in the medical community
of the safety and effectiveness of our products and their
potential advantages over existing treatment methods, and
o reimbursement policies of government and third party payors.
17
Physicians, patients, payors or the medical community in general may not
accept or utilize any product that we may develop.
WE MAY NOT HAVE ADEQUATE INSURANCE PROTECTION AGAINST PRODUCT LIABILITY.
Our business exposes us to potential product liability risks that are
inherent in the testing of drug candidates and the manufacturing and marketing
of drug products and we may face product liability claims in the future. We
currently have only limited product liability insurance. We may be unable to
maintain our existing insurance and/or obtain additional insurance in the future
at a reasonable cost or in sufficient amounts to protect against potential
losses. A successful product liability claim or series of claims brought against
us could require us to pay substantial amounts that would decrease our
profitability, if any.
WE MAY INCUR SUBSTANTIAL COSTS RELATED TO OUR USE OF HAZARDOUS MATERIALS.
We use hazardous materials, chemicals, viruses and various radioactive
compounds in our drug development programs. Although we believe that our
handling and disposing of these materials comply with state and federal
regulations, the risk of accidental contamination or injury still exists. We
could be held liable for any damages or fines that result from any accidental
contamination or injury and the liability could exceed our resources.
OUR CONTROLLING STOCKHOLDERS MAY MAKE DECISIONS YOU DO NOT CONSIDER TO BE IN
YOUR BEST INTEREST.
As of December 31, 2001, our directors, executive officers and their
affiliates, excluding Abbott and Warburg Pincus Private Equity VIII, L.P., owned
approximately 12.7% of our outstanding common stock. Abbott owned approximately
10.3% of our outstanding common stock and Warburg Pincus owned approximately
30.4% of our outstanding common stock. Under the terms of the Abbott Alliance,
Abbott has the right to purchase additional shares of our common stock up to a
maximum aggregate percentage of 21% of our outstanding common stock and has
rights to purchase shares directly from us in order to maintain its existing
level of ownership. For so long as Warburg Pincus continues to own at least
5,846,222 shares of our common stock and at least 10% of our outstanding common
stock, Warburg Pincus has the right to participate in any sales of equity
securities by Triangle, other than sales in connection with a registered
underwritten offering, a merger or similar transaction or a stock option or
similar plan, in proportion to the percentage of all outstanding securities of
Triangle held by Warburg Pincus at the time of the transaction. Abbott has the
right to designate one person to serve as a member of our Board of Directors and
Warburg Pincus has the right to designate two people to serve as members of our
Board of Directors. As a result, our controlling stockholders are able to
significantly influence all matters requiring stockholder approval, including
the election of directors and the approval of significant corporate
transactions. This concentration of ownership could also delay or prevent a
change in control of Triangle that may be favored by other stockholders.
THE MARKET PRICE OF OUR STOCK MAY FALL AS A RESULT OF MARKET VOLATILITY AND
FUTURE DEVELOPMENTS IN OUR INDUSTRY.
The market price of our common stock is likely to be volatile and could
fluctuate widely in response to many factors, including:
o announcements of the results of clinical trials by us or our
competitors,
18
o announcements of the timing of regulatory submissions and/or
approvals by us or our competitors,
o developments with respect to patents or proprietary rights,
o announcements of technological innovations by us or our
competitors,
o announcements of new products or new contracts by us or our
competitors,
o actual or anticipated variations in our operating results, including
targeted cash usage, due to the level of development expenses and other
factors,
o changes in financial estimates by securities analysts and
whether our earnings meet or exceed analysts' estimates,
o conditions and trends in the pharmaceutical and other
industries,
o new accounting standards,
o general economic, political and market conditions and other
factors, and
o the occurrence of any of the risks described in these "Risk
Factors."
In the past, following periods of volatility in the market price of the
securities of companies in our industry, securities class action law suits have
often been brought against those companies. If we face litigation in the future,
it would result in substantial costs and a diversion of management attention and
resources, which would negatively impact our business.
APPROXIMATELY 29,600,000 SHARES OF OUR COMMON STOCK MAY BE SOLD WITHOUT
RESTRICTION AND APPROXIMATELY 37,360,000 SHARES ARE REGISTERED FOR SALE. SALES
OF A LARGE NUMBER OF OUR SHARES MAY CAUSE OUR STOCK PRICE TO FALL EVEN IF OUR
BUSINESS IS DOING WELL.
If our stockholders sell a substantial number of shares of our common
stock in the public market, the market price of our common stock could decline.
As of December 31, 2001, there were 76,828,854 shares of common stock
outstanding, of which approximately 29,600,000 were immediately eligible for
resale in the public market without restriction. Holders of approximately
40,600,000 shares have rights to cause us to register their shares for sale to
the public. We have filed registration statements to register the sale of
approximately 37,360,000 of these shares. In addition, Abbott will have the
right on or after June 30, 2002 to cause us to register for resale in the public
market the 6,571,428 shares of common stock purchased at the closing of the
Abbott Alliance.
Declines in our stock price might harm our ability to issue equity or
secure other types of financing arrangements. The price at which we issue shares
is generally based on the market price of our common stock and a decline in our
stock price would result in our needing to issue a greater number of shares to
raise a given amount of funds or acquire a given amount of goods or services.
For this reason, a decline in our stock price might also result in increased
ownership dilution to our stockholders.
19
PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD DELAY OR PREVENT A
CHANGE IN MANAGEMENT OR A TAKEOVER ATTEMPT THAT YOU CONSIDER TO BE IN YOUR BEST
INTEREST.
We have adopted a number of provisions that could deter an acquisition of
Triangle which was not approved by the Board of Directors of Triangle. We have
adopted a preferred stock purchase rights plan, commonly referred to as a
"poison pill." The rights plan is intended to deter an attempt to acquire
Triangle in a manner or on terms not approved by the Board of Directors. The
rights plan will not prevent an acquisition of Triangle which is approved by the
Board of Directors. Our charter authorizes the Board of Directors to determine
the terms of any shares of undesignated preferred stock and issue them without
stockholder approval. The issuance of preferred stock may make it more difficult
for a third party to acquire, or may discourage a third party from acquiring,
voting control of Triangle.
Provisions in our charter and bylaws, as well as some provisions of
Delaware law could delay or prevent the removal of incumbent directors and could
make more difficult a merger, tender offer or proxy contest involving Triangle,
even if the events could be beneficial to our stockholders. For example, our
bylaws divide the Board of Directors into three classes of directors with each
class serving a three year term. These provisions could also limit the price
that investors might be willing to pay for our common stock.
III. FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements, other
than statements of historical facts, included in, or incorporated by reference
into this prospectus, are forward-looking statements. In addition, when we use
the words "anticipate," "estimate," "project," and similar expressions in this
document, we are identifying forward-looking statements. These forward-looking
statements are subject to various risks and uncertainties and are based on our
assumptions. If one or more of these risks or uncertainties materialize, or if
our underlying assumptions prove incorrect, actual results may vary materially
from those contained in these forward looking statements. We have outlined risks
we can identify under "Risk Factors," which may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, future results, levels of activity, performance or
achievements may vary significantly from our expectations. We are under no duty
to update any of the forward-looking statements after the date of this
prospectus or to conform these statements to actual results unless required by
law.
20
IV. USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders.
V. SELLING STOCKHOLDERS
We are registering all 28,301,887 shares of common stock covered by this
prospectus on behalf of the selling stockholders named in the table below. We
issued and sold all of the shares to the selling stockholders in a private
placement completed in two stages. We completed the first stage on August 24,
2001 by issuing 9,628,002 shares and completed the second stage on October 10,
2001 by issuing 18,673,885 shares. We have registered the shares of common stock
to permit the selling stockholders and their pledgees, donees, transferees or
other successors-in-interest that receive their shares from a selling
stockholder as a gift, partnership distribution or other non-sale related
transfer after the date of this prospectus to resell the shares when they deem
appropriate.
We have agreed to file any amendments and supplements to the registration
statement that are necessary to keep the registration statement effective until
the earlier of the date on which all of the shares may be sold under Rule 144
under the Securities Act or two years from the effective date of the
registration statement.
The following table contains:
o the name of each of the selling stockholders,
o the number of shares owned by each of the selling stockholders as of
December 31, 2001,
o the number of shares that may be offered under this prospectus, and
o the number of shares of our common stock owned by each of the selling
stockholders after this offering is completed.
Except as described in the table below, none of the selling stockholders
has had a material relationship with us within the past three years other than
as a result of the ownership of the shares or other securities of Triangle. The
number of shares in the column "Number of Shares Being Offered" represent all of
the shares that each selling stockholder may offer under this prospectus. We do
not know how long the selling stockholders will hold the shares before selling
them or if they will sell them and we currently have no agreements, arrangements
or understandings with any of the selling stockholders regarding the sale of any
of the shares other than our agreement to register the shares covered by this
prospectus.
The registration statement of which this prospectus is a part will also
cover any additional shares of common stock which are issued to the selling
stockholders as a result of any stock dividend, stock split, recapitalization or
other similar transaction which results in an increase in the number of
Triangle's outstanding shares of common stock.
Except as indicated in the table below, each person has sole investment
and voting power with respect to the shares listed in the table. For purposes of
this table, a person or group of persons is deemed to have "beneficial
ownership" of any shares which the person has the right to acquire within 60
days. Percentage ownership is based on 76,828,854 shares of common stock of
Triangle outstanding on December 31, 2001. For purposes of computing the
percentage of outstanding shares held by each person named below, any security
which a person has the right to acquire within 60 days is deemed to be
outstanding for the purpose of computing the
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percentage ownership for that person, but is not deemed to be outstanding for
the purpose of computing the percentage ownership for other persons.
SHARES NUMBER OF SHARES
BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING BEING AFTER OFFERING (1)
NAME OF SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
------------------------------- ---------- ------- ----------- ----------- --------
Caduceus Capital II, L.P. 950,000 1.2% 540,000 410,000 *
PW Eucalyptus Fund, L.L.C. 1,940,000 2.5 940,000 1,000,000 1.3%
PW Eucalyptus Fund, Ltd. 227,000 * 147,000 80,000 *
QFinance, Inc. (2) 3,803,000 4.9 2,275,000 1,528,000 2.0
Warburg Pincus Private Equity 23,384,887 30.4 23,384,887 0 *
VIII, L.P. (3)
Winchester Global Trust Company
Limited as Trustee for
Caduceus Capital Trust 1,825,000 2.4 1,015,000 810,000 1.1
TOTAL 32,129,887 28,301,887 3,828,000
========== ========== =========
----------
* Represents beneficial ownership of less than one percent.
(1) Assumes the sale of all shares offered by this prospectus and no other
purchases or sales of Triangle's common stock.
(2) Includes 20,000 shares of common stock and 8,000 shares of common stock
issuable upon the exercise of options beneficially owned by Dennis B. Gillings.
QFinance, Inc. is a wholly-owned subsidiary of Quintiles Transnational Corp. Dr.
Gillings, a director of Triangle, is Chairman of Quintiles Transnational Corp.
Dr. Gillings disclaims beneficial ownership of shares beneficially owned by
QFinance, Inc.
(3) Warburg, Pincus & Co. is the sole general partner of Warburg Pincus Private
Equity VIII, L.P., which is managed by Warburg Pincus LLC. Lionel I. Pincus is
the managing partner of Warburg, Pincus & Co. and the managing member of Warburg
Pincus LLC, and may be deemed to control both entities. Jonathan S. Leff, a
director of Triangle, is a general partner of Warburg, Pincus & Co. and a
managing director and member of Warburg Pincus LLC. Stewart J. Hen, a Vice
President of Warburg Pincus LLC, is also a director of Triangle.
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VI. PLAN OF DISTRIBUTION
The selling stockholders or donees, pledgees or transferees of any selling
stockholders may effect the sale or distribution of the shares directly to
purchasers as principals or through one or more underwriters, brokers, dealers
or agents from time to time in one or more transactions, which may involve block
transactions, or
(i) on any exchange or in the over-the-counter market,
(ii) in transactions otherwise than in the over-the counter market,
(iii) through the writing of put or call options, whether the
options are listed on an options exchange or otherwise,
(iv) through the distribution of the shares by any selling
stockholder to its partners, members or shareholders, or
(v) through a combination of any of the above.
Any of these transactions may be effected at market prices, at prices
related to market prices, at prices determined at the time of sale or at
negotiated or fixed prices, in each case as determined by the selling
stockholder or by agreement between the selling stockholder and underwriters,
brokers, dealers, agents or purchasers. If the selling stockholders effect
transactions by selling shares to or through underwriters, brokers, dealers
or agents, the underwriters, brokers, dealers or agents may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders or commissions from purchasers of shares for whom they
may act as agent, which discounts, concessions or commissions as to
particular underwriters, brokers, dealers or agents may be in excess of those
customary in the types of transactions involved. Brokers, dealers or agents
and any other participating brokers, dealers or the selling stockholders may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, in connection with sales of the shares. Accordingly, any
commission, discount or concession received by them and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
discounts or commissions under the Securities Act. Because selling
stockholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the selling stockholders will be subject to the
prospectus delivery requirements of the Securities Act.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with hedging
transactions, broker-dealers or other financial institutions may engage in short
sales of Triangle's common stock in the course of hedging the positions they
assume with selling stockholders. The selling stockholders may also enter into
options or other transactions with broker-dealers or other financial
institutions which require the delivery to the broker-dealer or other financial
institution of shares offered under this prospectus. The broker-dealer or other
financial institution may then resell those shares pursuant to this prospectus,
as supplemented or amended to reflect the transaction.
23
Under the securities laws of some states, the shares may be sold in those
states only through registered or licensed brokers or dealers. In addition, in
some states the shares may not be sold unless the shares have been registered or
qualified for sale in the state or an exemption from registration or
qualification is available and is complied with.
Selling stockholders may also resell all or a portion of the shares in
open market transactions in reliance on Rule 144 under the Securities Act,
rather than under this prospectus, provided they meet the criteria and conform
to the requirements of Rule 144.
Under applicable rules and regulations under the Securities Exchange Act
of 1934, as amended, any person engaged in the distribution of the shares may
not simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of the
distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the
selling stockholders. We will make copies of this prospectus available to the
selling stockholders and have informed them of the need to deliver copies of
this prospectus to purchasers at or prior to the time of any sale of the shares.
We will pay all of the expenses incident to the registration, offering and
sale of the shares to the public under this prospectus other than commissions,
fees and discounts of underwriters, brokers, dealers and agents. We have agreed
to indemnify the selling stockholders against a number of liabilities, including
liabilities under the Securities Act. The selling stockholders may agree to
indemnify any agent, dealer or broker that participates in sales of the shares
against liabilities, including liabilities under the Securities Act. We will not
receive any of the proceeds from the sale of any of the shares by the selling
stockholders.
We have agreed to keep the registration statement of which this prospectus
constitutes a part effective until the earlier of the date on which all of the
shares may be sold under Rule 144 under the Securities Act or two years from the
effective date of the registration statement.
VII. LEGAL MATTERS
For purposes of this offering, Smith, Anderson, Blount, Dorsett, Mitchell
& Jernigan, L.L.P., Raleigh, North Carolina, is giving its opinion as to the
legality of the selling stockholders' shares.
VIII. EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K of Triangle for the year ended December 31, 2000,
have been incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
IX. WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. You
may read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public on the SEC's website at
http://www.sec.gov.
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X. INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered part of this prospectus. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934 until this offering is complete.
1. Our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2001 filed on May 10, 2001;
2. Our Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2001 filed on August 13, 2001;
3. Our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2001 filed on November 9, 2001;
4 Our Annual Report on Form 10-K for the fiscal year ended December
31, 2000 filed on February 26, 2001, including information in our
Definitive Proxy Statement in connection with our 2001 Annual
Meeting of Stockholders;
5. Our Current Reports on Form 8-K filed March 21, 2001, August 7,
2001, August 10, 2001, August 24, 2001, October 10, 2001,
December 7, 2001, January 18, 2002 and January 29, 2002; and
6. The description of our common stock contained in our Registration
Statements on Form 8-A filed October 18, 1996, February 10, 1999,
June 18, 1999 and August 24, 2001.
The reports and other documents that we file after the date of this
prospectus will update and supersede the information in this prospectus.
We will provide a copy of these filings, at no cost, if you so request by
writing or telephoning us at:
Triangle Pharmaceuticals, Inc.
4611 University Drive
P.O. Box 50530
Durham, North Carolina, 27717
(919) 493-5980
Attn: General Counsel
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WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT AN OFFER TO BUY, THESE SECURITIES IN ANY STATE IN WHICH
THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS
COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER THAT
DATE.
28,301,887 Shares
TRIANGLE
PHARMACEUTICALS, INC.
COMMON STOCK
-----------------------------
PROSPECTUS
-----------------------------
FEBRUARY 13, 2002