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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND SPECIAL REPORTS
PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number: 0-25544
---------------
Miravant Medical Technologies
(Exact name of Registrant as specified in its charter)
Delaware 77-0222872
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
336 Bollay Drive, Santa Barbara, California 93117
(Address of principal executive offices, including zip code)
(805) 685-9880
(Registrant's telephone number, including area code)
Securities Registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The approximate aggregate market value of voting stock held by
non-affiliates as of March 10, 2000 based upon the last sale price of the Common
Stock reported on the Nasdaq National Market was approximately $316,762,249. For
purposes of this calculation only, the registrant has assumed that its directors
and executive officers, and any person, who has filed a Schedule 13D or 13G, is
an affiliate.
The number of shares of Common Stock outstanding as of March 10, 2000 was
18,182,761.
ITEM 1. BUSINESS
General
Miravant Medical Technologies, formerly PDT, Inc., is engaged in the
integrated development of drugs and medical device products for use in
PhotoPoint(TM), our proprietary technologies for photodynamic therapy.
PhotoPoint is a medical procedure which integrates the use of proprietary
light-activated drugs, proprietary light producing devices and light delivery
devices to achieve selective photochemical destruction of diseased cells. We
believe that PhotoPoint has the potential to be a safe, cost-effective,
minimally invasive primary or adjunctive treatment for indications in a broad
number of disease areas, including ophthalmology, oncology, cardiovascular
disease and dermatology. We are currently conducting clinical trials in
ophthalmology and oncology testing our leading drug candidate, SnET2 (tin ethyl
etiopurpurin). We are developing products in collaboration with our corporate
partners, including certain subsidiaries of Pharmacia & Upjohn, Inc.,
collectively, with Pharmacia & Upjohn, Inc., referred to as Pharmacia & Upjohn
in this report.
Effective September 15, 1997, we changed our name from PDT, Inc. to
Miravant Medical Technologies.
See "--Risk Factors" for a discussion of certain risks, including those
relating to our operating losses, our early stage of the development and our
products, strategic collaborations and forward-looking statements.
Background
Photodynamic therapy is generally a minimally invasive medical procedure
that uses photoselective, or light-activated, drugs to treat or diagnose
disease. The technology involves three components: photoselective drugs, light
producing devices and light delivery devices.
Photoselective drugs transform light energy into chemical energy in a
manner similar to the action of chlorophyll in green plants. Certain
photoselective drugs accumulate and are retained in fast-growing
(hyperproliferating) cells. Hyperproliferation is a characteristic of cells
associated with a variety of diseases such as cancer, certain vascular disorders
and skin diseases such as psoriasis.
A photoselective drug is typically administered by intravenous injection.
The drug is inactive until exposed to light of a specific wavelength, which can
vary depending on the drug's molecular structure. Exposing the target cells to
the appropriate light wavelength permits selective activation of the retained
drug and initiates a chemical reaction that generates a highly reactive form of
oxygen. High concentrations of this form of oxygen lead to destruction of the
cellular membrane and, ultimately, cell death. The response of the target cells
depends on, among other factors, the drug dose, the amount of light energy
delivered, the physiology of the cell and the vasculature in the diseased areas.
Neither the drug nor the light on its own can cause the desired effect. The drug
is a catalyst which transfers energy. The chemical reaction stops when the light
is turned off. The result of this process is that diseased cells are destroyed
with minimal damage to surrounding normal tissues, offering the potential for a
more selective method of treating disease than surgery, chemotherapy or
radiation and thermal laser therapy, which can damage both normal and abnormal
tissues.
Low-power, non-thermal light can be used to activate photoselective drugs.
As a result, there is little or no risk of thermal damage to surrounding tissue,
as with traditional thermal lasers. The light is typically generated by lasers
or for certain applications, non-coherent light sources, which have been
specifically modified for use in photodynamic therapy. The light is often
delivered from the light source to the patient via specially designed fiber
optics. These fiber optic light delivery devices produce patterns of light for
different disease applications and can be channeled into the body for internal
applications.
While light of a specific wavelength is used to cause a photoselective drug
to produce chemical reactions leading to cell death, light of a different
wavelength can be used to cause the same drug to fluoresce (glow). The
fluorescent property of photodynamic drugs offers the potential for their use in
diagnostic applications.
Industry
As early as 1900, scientists observed that certain compounds localized in
tissues would elicit a response to light. Since the mid-1970s, various aspects
of photodynamic therapy have been studied and established in humans.
Photodynamic therapy is currently being studied by a variety of companies,
physicians and researchers around the world for the treatment of a broad range
of disease applications. We believe that industry development has been hindered
by various drawbacks including inconsistent drug purity and performance, costly
difficult-to-maintain lasers and non-integrated drug and device development. We
are addressing these issues as part of our business strategy and in our
development programs.
Business Strategy
Our objective is to apply PhotoPoint -- our photodynamic therapy systems,
which integrate synthetic photoselective drugs, light producing devices and
light delivery devices -- as a primary therapy in targeted disease areas and as
an adjunct to lower cost surgery or other therapies in these same or other
disease areas. Although the potential applications for our PhotoPoint systems
are numerous, our focus targets large potential market opportunities or diseases
with significant unmet medical needs. With this strategy, we believe we may be
able to accelerate regulatory processes where appropriate and facilitate
commercial success. In addition, to facilitate development, regulatory approval,
manufacturing, marketing and distribution of our products, we have or seek to
form strategic collaborations with partners who are leaders in our targeted
disease areas.
Technology and Products
We are developing synthetic photoselective drugs together with
software-controlled desktop light producing devices and fiber optic light
delivery and measurement devices for the application of PhotoPoint to a broad
range of disease indications. We believe that by being an expert in both
PhotoPoint drugs and devices, and by integrating the development of these
technologies, we can produce easy-to-use PhotoPoint systems which offer the
potential for predictable and consistent results.
Drug Technology. We hold exclusive license rights under certain U.S. and
foreign patents to several classes of synthetic, photoselective compounds,
subject to certain governmental rights. From our classes of compounds, we have
selected SnET2 as our leading drug candidate and have used SnET2 in each of our
clinical trials to date. We have granted to Pharmacia & Upjohn an exclusive,
worldwide license to use SnET2 in the field of photodynamic therapy for disease
indications in the fields of ophthalmology, oncology and urology. We are
developing other potential photoselective drugs for additional disease
applications and future partnering opportunities.
We believe that our synthetic photoselective drugs may provide the
following benefits:
o Predictable. The synthetic nature of our photoselective compounds
permits us to design drugs with a single molecular structure. We
believe that this characteristic may facilitate consistency in
clinical treatment settings, as well as predictability in
manufacturing and quality control.
o Side effects. Treatments to date have been generally well-tolerated,
with the primary side effect being a mild, transient skin
photosensitivity in some patients.
o Versatile. We can select drugs with specific characteristics, such as
activation by a particular wavelength of light. This versatility
provides us with the potential to customize our drugs for particular
uses and to take advantage of semiconductor light technology.
Light Producing Devices. Because our photoselective drugs are synthetic, we
have been able to synthesize and select our drugs to be activated by light
produced by readily available, reliable and relatively inexpensive light
sources. Our light technologies include software-controlled microchip diodes,
light emitting diode, or LED, arrays and non-thermal lasers. We are
collaborating with Iridex Corporation, or Iridex, on the development of light
producing devices for PhotoPoint in the field of ophthalmology and have
co-developed a portable, solid state diode light device which is currently being
used in clinical trials.
We believe that our diode and LED array devices offer advantages over laser
technology historically used in photodynamic therapy. For example, our
software-controlled designs offer reliability and built-in control and measuring
features. In addition, our diode systems, which are roughly the size of a
desktop computer, are smaller and more portable than traditional laser systems.
We believe that our diode systems have the potential to offer light producing
devices that will be more affordable and convenient than surgical laser systems
historically used in photodynamic therapy.
Light Delivery and Measurement Devices. We are developing and manufacturing
light delivery and measurement devices, including a wide variety of fiber optic
light delivery devices with specialized tips for use in PhotoPoint. These
devices must be highly flexible and appropriate for endoscopic use and must be
able to deliver unique patterns of uniform, diffuse light for different disease
applications. Our products include microlenses that produce a tiny flashlight
beam for discrete surface lesions, the Flex(R) cylinder diffuser which delivers
light in a radial pattern along a flexible tip for sites such as the esophagus
and spherical diffusers which emit a diffuse ball of light for sites such as the
bladder or nasopharynx. Certain of our light delivery devices have been used in
our clinical trials. We have also developed light measurement devices for
PhotoPoint including devices that detect wavelength and fluorescence to
facilitate the measurement of light or drug dose.
Targeted Diseases and Clinical Trials
We believe that PhotoPoint has potential in a wide range of applications.
We have selected, based upon regulatory, clinical and market considerations, a
number of disease applications, discussed below, on which to focus. Of these
applications, age-related macular degeneration, or AMD, currently represents our
highest priority, and represents the largest collaborative effort with our
corporate partner Pharmacia & Upjohn. Our current clinical trials use SnET2
together with light producing devices and light delivery devices either
developed on our own or in collaboration with our partners. Our decision to
proceed to clinical trials in any application depends upon such factors as
preclinical results, governmental regulatory communications, competitive
factors, corporate partner commitment and resources, economic considerations and
our overall business strategy.
Ophthalmology
We believe that PhotoPoint has the potential to treat a variety of
ophthalmic disorders, including conditions caused by neovascularization, such as
AMD, as well as other ophthalmic conditions. Neovascularization is a condition
in which new blood vessels grow abnormally under the surface of the retina or
other parts of the eye. These fragile vessels can hemorrhage, causing scarring
and damage to the nerve tissue and lead to loss of vision. AMD is the leading
cause of blindness in Americans over age 50. We are conducting clinical trials
for the treatment of choroidal neovascularization associated with AMD. We
targeted this area because of the large potential market size as well as the
potential for expedited review by governmental regulatory bodies. In June 1998,
SnET2 received fast track designation from the U.S. Food and Drug
Administration, or FDA, for the treatment of choroidal neovascularization
associated with AMD. Under the FDA Modernization Act of 1997, the FDA gives fast
track designation to drugs and devices that treat serious or life-threatening
conditions that represent unmet medical needs. The designation means that we can
submit data during the clinical trial process based on clinical or surrogate
endpoints that are likely to predict clinical benefit, and the FDA can expedite
its regulatory review. We began Phase III clinical trials for AMD in the United
States in the fourth quarter of 1998. In November 1999, we announced that we
exceeded our enrollment goal, and clinical trial enrollment was subsequently
closed in December 1999. We are collaborating with Pharmacia & Upjohn on the
co-development of SnET2 in the field of ophthalmology and are collaborating with
Iridex, through its subsidiary company, Iris Medical Instruments, Inc., on the
co-development of light devices in this field. In addition, we have conducted
preclinical studies for the treatment of other ophthalmic diseases such as
corneal neovascularization, glaucoma and diabetic retinopathy.
Cardiovascular Disease
We are investigating the use of PhotoPoint for the treatment of
cardiovascular disease. Early preclinical studies with PhotoPoint indicate that
certain photoselective drugs may be preferentially retained in the
hyperproliferating and lipid-rich components of arterial plaques, as they are in
cancer cells. We are conducting preclinical studies for the prevention of
restenosis, the renarrowing of arterial vessels following angioplasty. We
believe that PhotoPoint may provide a means of preventing restenosis, and may
even allow treatment of diffuse atherosclerosis.
Dermatology
A number of non-cancerous dermatological disorders have shown potential for
being treated with PhotoPoint. One of these is psoriasis, a chronic and
potentially debilitating skin disorder. We are currently evaluating topical
formulations of SnET2 and other compounds for psoriasis and other dermatological
diseases. We are continuing to evaluate psoriasis as a possible dermatology
indication and may advance to a clinical trial based on the progress of the
development of a topical formulation, preclinical studies, communications with
governmental regulatory agencies and other factors. Preparations include
development of light sources and delivery systems for use in dermatology
applications and protocol development for possible clinical trials.
Oncology
Cancer is a large group of diseases characterized by uncontrolled growth
and spread of hyperproliferating cells. We targeted this area for our initial
products both because of the large potential market size as well as the
potential for certain cancer treatments to receive expedited review by
governmental regulatory bodies.
Prostate Cancer. Prostate cancer is the most common malignancy in American
men, and mortality from it is second only to lung cancer. Prostate cancer
generally progresses slowly, and 58% of all prostate cancers are discovered
while still localized (cancer has not spread beyond the prostate gland). We are
conducting a Phase I clinical trial using SnET2 for the treatment of localized
prostate cancer. The decision whether or not to pursue additional clinical
trials in this area will be based in part on resulting data from this clinical
trial.
Other Cancers. In 1998, we announced that we would no longer pursue the
commercialization of cutaneous metastatic breast cancer, or CMBC. This decision
was made because of business considerations such as the need for increased
internal resources for the small market size, increased costs of meeting
regulatory approval requirements and a lack of a committed marketing partner for
this disease indication. We discontinued trials in AIDS-related Kaposi's sarcoma
for similar reasons, including our renewed focus on large market opportunities
and those with significant unmet medical need. The information we obtained from
these clinical trials has provided an invaluable amount of information on our
PhotoPoint treatment in cancer and has enabled us to advance in preclinical
studies for the treatment of a variety of other cancers. We have an existing
oncology Investigational New Drug application, or IND, under which we may choose
to submit protocols for clinical trials in oncology indications. In addition, we
continue to conduct research in oncology.
Other Disease Areas
We are investigating the use of PhotoPoint in additional disease areas. Our
decision to proceed to clinical trials depends upon such factors as preclinical
results, FDA communications, competitive factors, corporate partner commitment
and the availability of financial and internal resources, economic
considerations and our overall business strategy. This will allow us to focus
our activities and resources on disease applications which represent large
markets and significant unmet medical needs.
Strategic Collaborations
We are pursuing a strategy of establishing license agreements and
collaborative arrangements for the purpose of securing exclusive access to drug
and device technologies, funding development activities and providing market
access for our products. We seek to obtain from our collaborative partners
exclusivity in the field of photodynamic therapy and to retain certain
manufacturing and co-development rights. We intend to continue to pursue this
strategy where appropriate in order to enhance in-house research programs,
facilitate clinical testing and gain access to distribution channels and
additional technology.
Definitive Collaborative Agreements
Pharmacia & Upjohn
We have had a collaborative relationship with Pharmacia & Upjohn relating
to the development and commercialization of SnET2 since 1994. Our current
relationship is critical to our ophthalmology program.
Our original SnET2 license agreements with Pharmacia & Upjohn entered into
in 1994 and 1995 provided for:
o The co-development of, and exclusive marketing rights to, SnET2 in the
fields of oncology, urology and dermatology;
o A $13.0 million equity investment in Miravant; and
o Formulation of the SnET2 drug product.
In 1996, these agreements were amended to include the field of
ophthalmology.
In June 1998, significant amendments, referred to as the 1998 Amendments,
were made, resulting in:
o Additional financial commitment by Pharmacia & Upjohn to oncology;
o Additional flexibility in Miravant's oncology and urology programs;
o Increased reimbursement commitment by Pharmacia & Upjohn to the
ophthalmology program;
o The development and marketing rights for SnET2 in dermatology
reverting back to Miravant; and
o Transfer of the formulation of SnET2 drug product to Fresenius AG.
In February 1999, the agreements were again amended and supplemented,
collectively referred to as the 1999 Amendments, as follows:
o Pharmacia & Upjohn increased its participation in ophthalmology by
assuming operational control of the clinical and regulatory aspects of
the joint ophthalmic programs, including AMD;
o Pharmacia & Upjohn made an additional $19.0 million equity investment
in Miravant, referred to as the Equity Investment Agreement, and
extended a line of credit to Miravant of $22.5 million, referred to as
the Credit Agreement;
o Eliminated future AMD milestone payments and future oncology and
urology clinical reimbursements; and
o Added a right of first negotiation by Pharmacia & Upjohn for SnET2
marketing rights in the cardiovascular field, subject to certain
limitations.
License Agreements. Under the original 1995 development and license
agreement and the 1996, 1998 and 1999 amendments, described above, collectively
referred to as the License Agreements, we granted to Pharmacia & Upjohn an
exclusive, worldwide license to use, distribute and sell SnET2 for use in
PhotoPoint in the fields of ophthalmology, oncology, urology, and right of first
negotiation in cardiovascular diseases.
Under the License Agreements:
o Pharmacia & Upjohn is responsible for conducting certain aspects of
clinical trials involving SnET2 and to fund other current and future
preclinical studies and clinical trials conducted by us involving
SnET2;
o We are entitled to receive royalties on the sale of SnET2, payments
for certain contemplated indications upon the achievement of certain
milestones and reimbursement for certain expenses;
o Pharmacia & Upjohn has agreed to promote, market and sell SnET2 in
certain fields, subject to certain limitations, to refrain from
developing or selling other photodynamic therapy drugs in the fields
covered by the License Agreements during the agreement term; and
o Pharmacia & Upjohn has a right of first negotiation with respect to
the marketing rights to any new photodynamic therapy drug developed by
Miravant in the fields covered by the License Agreements, as well as
right of first negotiation for SnET2 for cardiovascular indications.
With respect to ophthalmology, the License Agreements remain in force for
the duration of the patents related to SnET2 or for a period of ten years from
the first commercial sale of SnET2 on a country-by-country basis, whichever is
longer. After those periods have expired, Pharmacia & Upjohn will have an
irrevocable, royalty-free, non-exclusive license to SnET2. With respect to
oncology and urology, the License Agreement remains in force for so long as
Pharmacia & Upjohn is required to pay royalties, and, under certain provisions,
may terminate the agreement as early as July 1, 2000.
Equity Investment Agreement. In connection with the 1999 Amendments, we
entered into the Equity Investment Agreement, under which Pharmacia & Upjohn
purchased from Miravant 1,136,533 shares of our Common Stock for an aggregate
purchase price of $19.0 million. This agreement is in addition to the 1995 and
1994 stock purchase agreements, under which Pharmacia & Upjohn purchased a total
of 725,001 shares of Common Stock from us for a total of $13.0 million.
Credit Agreement. In connection with the 1999 Amendments, we entered into
the Credit Agreement under which Pharmacia & Upjohn will lend us up to $22.5
million in the form of quarterly term loans to be used to support Miravant's
ophthalmology, oncology and other development programs, as well as for general
corporate purposes, subject to certain affirmative, negative and financial
covenants and requirements. In connection with the Credit Agreement, Pharmacia &
Upjohn may also receive a total of up to 360,000 warrants to purchase our Common
Stock, of which 240,000 warrants have been issued as of December 31, 1999.
Drug Supply Agreement. Under a Drug Supply Agreement we agreed to
manufacture, or have manufactured, and supply to Pharmacia & Upjohn, upon
specified payment terms, Pharmacia & Upjohn's requirements of SnET2 in finished
pharmaceutical form for clinical and commercial purposes in the area of
photodynamic therapy in the fields of oncology and ophthalmology. The Drug
Supply Agreement remains in force for the term of the License Agreements,
subject to termination under certain limited circumstances. Upon termination, we
have agreed to continue to provide SnET2 to Pharmacia & Upjohn on terms to be
negotiated by the parties.
Device Supply Agreement. Under a Device Supply Agreement, we appointed
Pharmacia & Upjohn as a non-exclusive worldwide distributor of certain
instruments developed, manufactured or licensed by Miravant that produce,
deliver or measure light, collectively known as light devices, for use with
SnET2 in photodynamic therapy in the fields contained in the License Agreements.
The Device Supply Agreement provides for the sale by Miravant to Pharmacia &
Upjohn of such light devices at specified rates and we are responsible for the
development and regulatory approval of the light devices. During the term of the
Device Supply Agreement, Pharmacia & Upjohn is prohibited from developing,
manufacturing or purchasing from third parties such light devices or
distributing or selling them for use with any photodynamic drug other than
SnET2. If, however, we decide not to or are unable to manufacture or supply a
particular light device, Pharmacia & Upjohn is entitled to manufacture that
device. The Device Supply Agreement remains in force for the term of the License
Agreements, subject to earlier termination under limited circumstances.
Iridex Corporation
In May 1996, we entered into a co-development and distribution agreement
with Iridex, a leading provider of semiconductor-based laser systems to treat
eye diseases. The agreement generally provides:
o Miravant with the exclusive right to co-develop with Iridex light
producing devices for use in photodynamic therapy in the field of
ophthalmology;
o We will conduct clinical trials and make regulatory submissions with
respect to all co-developed devices and Iridex will manufacture all
devices for such trials, with costs shared as set forth in the
agreement; and
o Iridex will have an exclusive, worldwide license to make, distribute
and sell all co-developed devices, on which it will pay us royalties.
The agreement remains in effect, subject to earlier termination in certain
circumstances, until ten (10) years after the date of the first FDA approval of
any co-developed device for commercial sale, subject to certain renewal rights.
The light producing device used in AMD clinical trials was co-developed with
Iris Medical Instruments Inc., a subsidiary of Iridex, under this agreement, and
its commercialization is governed in part by this agreement.
The University of Toledo, The Medical College of Ohio and St. Vincent Medical
Center
In July 1989, we entered into a License Agreement with the University of
Toledo, the Medical College of Ohio and St. Vincent Medical Center, of Toledo,
Ohio, collectively referred to as Toledo. This agreement provides us with, among
other items, exclusive, worldwide rights:
o To make, use, sell, license or sublicense certain photoselective
compounds (including SnET2) covered by certain Toledo patents and
patent applications, or not covered by Toledo patents or patent
applications but owned or licensed to Toledo (and which Toledo has the
right to sublicense);
o To make, use, sell, license or sublicense certain of the compounds for
which we have provided Toledo with financial support; and
o To make, use or sell any invention claimed in Toledo patents or
applications and any composition, method or device related to
compounds conceived or developed by Toledo under research funded by
Miravant.
The agreement further provides that we pay Toledo royalties on the sales of
the compounds. As of December 31, 1999, no royalties had been paid or accrued
since no drug or related product had been sold. Under the agreement, we are
required to satisfy certain development and commercialization objectives. This
agreement terminates upon the expiration or non-renewal of the last patent which
may issue under this agreement, currently 2013. By its terms, however, the
license extends upon issuance of any new Toledo patents. We do not have
contractual indemnification rights against Toledo under the agreement. Some of
the research relating to the compounds covered by the License Agreement,
including SnET2, has been or is being funded in part by certain governmental
grants under which the United States Government has or will have certain rights
in the technology developed, including the right under certain circumstances to
a non-exclusive license or to require Miravant to grant an exclusive license to
a third party.
Fresenius AG
Formulation Agreement. In August 1994, we entered into a supply contract
with Pharmacia & Upjohn to develop an emulsion formulation suitable for
intravenous administration of SnET2. Under this agreement, Pharmacia & Upjohn
agreed to the following:
o They will be our exclusive supplier of such emulsion products;
o They will manufacture and supply all of our worldwide requirements of
certain emulsion formulations containing SnET2; and
o They will not develop or supply formulations or services for use in
any photodynamic therapy applications for any other company.
This agreement continues indefinitely except that it may be terminated ten
(10) years after the first commercial sale of SnET2. Effective November 30,
1998, Pharmacia & Upjohn's rights and obligations under the Formulation
Agreement were assigned to Fresenius Kabi LLC, a subsidiary of Fresenius AG, as
part of an Asset Transfer Agreement between Pharmacia & Upjohn and Fresenius.
Operating terms of the Formulation Agreement were not changed as part of the
assignment.
Ramus Medical Technologies
In December 1996, our wholly owned subsidiary, Miravant Cardiovascular,
Inc., entered into a co-development agreement with Ramus, an innovator in the
development of autologous tissue stent-grafts for vascular bypass surgeries.
Generally the agreement provides us with the exclusive rights to co-develop our
photodynamic therapy technology with Ramus' proprietary technology in the
development of autologous vascular grafts for coronary arteries and other
vessels. Ramus shall provide, at no cost to us, products for use in preclinical
studies and clinical trials with all other preclinical and clinical costs to be
paid by us. The agreement remains in effect until the later of ten (10) years
after the date of the first FDA approval of any co-developed device for
commercial sale, or the life of any patent issued on a co-developed device,
subject to certain renewal rights.
In conjunction with the co-development agreement, we purchased a 33% equity
interest in Ramus for $2.0 million, and obtained an option to acquire the
remaining shares of Ramus. We have declined to exercise this option and the
option period has now expired. Further, we have first refusal rights and
pre-emptive rights for any issuance of new securities, whether debt or equity,
made by Ramus and Ramus must maintain certain financial and other covenants.
Additionally, we entered into a revolving credit agreement with Ramus which
provided Ramus with the ability to borrow up to $2.0 million, which has been
fully utilized. The revolving credit agreement, which was due in full in March
2000, has been subsequently extended to a period in the future, for which the
terms of the extension are currently being negotiated.
Xillix Technologies Corp.
In June 1998, Miravant purchased a 9% equity interest in Xillix
Technologies Corp. for $5.0 million. In conjunction with the investment, we also
entered into an exclusive strategic alliance agreement with Xillix to co-develop
proprietary systems incorporating PhotoPoint and Xillix's fluorescence imaging
technology for diagnosing and treating early stage cancer and pre-malignant
tissues. The agreement provides that both companies will own co-developed
products and will share the research and development costs associated with the
development program. Xillix will receive drug royalty payments from us based on
the sale of our drugs used in conjunction with the co-developed technology.
Laserscope
In April 1992, we entered into a seven (7) year License and Distribution
Agreement with Laserscope of San Jose, California, a leader in the surgical
laser industry. Under this agreement, among other terms:
o We granted to Laserscope rights to manufacture and sell a dye laser
module developed by us;
o We retained the right to manufacture and sell this system for use with
our own photoselective drugs; and
o Laserscope agreed to pay to us a license fee and royalties on
Laserscope's sales.
We had developed this light producing device prior to the development of
our current diode light systems. This agreement terminated in April 1999;
Laserscope now holds a fully paid-up, non-exclusive license to use the
technology.
Letter Agreements
Miravant has also entered into the following Letter Agreements. There is no
assurance that definitive agreements will evolve from these collaborations.
Boston Scientific Corporation
In December 1993, we executed a strategic development letter agreement with
Boston Scientific Corporation, a leading developer, manufacturer and marketer of
catheter-based medical technology, for the joint development of catheter-based
light delivery devices for photodynamic therapy in the fields of urology,
pulmonology and gastroenterology. The letter agreement is intended to provide
the framework for a more definitive agreement, relating to, among other things,
the distribution, manufacturing and licensing of developed products, and
continues until the parties enter into such an agreement.
Chiron Diagnostics
In November 1997, we executed a letter of intent with Chiron Diagnostics, a
subsidiary of Bayer Corporation and an international leader in in vitro
diagnostics, to collaborate on studies directed towards the early detection and
treatment of lung cancer. The alliance is designed to give us a potentially more
sensitive, less invasive and less costly way to identify patients in early
stages of cancer who are eligible for participation in PhotoPoint clinical
trials. In addition to assisting us in these clinical trials, Chiron has agreed
to work exclusively with us in the field of photodynamic therapy for certain
oncology indications.
Cordis Corporation
In December 1993, we executed a strategic development letter agreement with
Cordis Corporation, a Johnson & Johnson company and a leader in coronary
catheter devices, for the joint development of catheter-based light delivery
devices for photodynamic therapy in the cardiovascular field. The letter
agreement under which the parties are collaborating is intended to provide the
framework for a more definitive agreement, relating to, among other things, the
distribution, manufacturing and licensing of developed products, and continues
until the parties enter into a definitive agreement.
Medicis Pharmaceutical Corporation
In October 1997, we executed a letter of intent with Medicis Pharmaceutical
Corporation, the leading independent dermatology company in the United States,
to develop and commercialize certain PhotoPoint procedures for dermatology
applications. The letter agreement is intended to facilitate the clinical
development of PhotoPoint in dermatology and provide the framework for a more
definitive agreement, which would grant Medicis an exclusive license to
distribute and sell certain PhotoPoint products in the United States.
Research and Development Programs
Our research and development programs are devoted to the discovery and
development of drugs and devices for PhotoPoint. These research activities are
conducted in-house in our pharmaceutical and engineering laboratories or
elsewhere in collaboration with medical or other research institutions or with
other companies. We have expended, and expect to continue to spend, substantial
funds on our research and development programs.
Our pharmaceutical research program is focused on the ongoing evaluation of
our proprietary compounds for different disease applications. Among our outside
or extramural research, we are conducting preclinical studies at various
academic and medical research institutions in the United States. We are also
active in the research and development of devices for PhotoPoint. These programs
include development of fiber optic light delivery devices and measurement
devices for accuracy in dosimetry. Device research and development is presently
conducted either in-house or in collaboration with partners.
We have pursued and been awarded various government grants and contracts,
such as grants sponsored by the National Institutes of Health and the Small
Business Innovative Research Administration, which complement our research
efforts and facilitate new development.
Manufacturing
Our strategy is generally to retain manufacturing rights and maintain pilot
manufacturing capabilities and, where appropriate due to financial and
production constraints, to partner with leading pharmaceutical and medical
device companies for certain elements of our manufacturing processes. We are
licensed by the State of California to manufacture bulk drug substance at our
Santa Barbara, California facility for clinical trial use. We currently
manufacture SnET2 drug substance, light producing devices and light delivery
devices, and conduct other production and testing activities, at this location.
However, we have limited capabilities and experience in the manufacture of drug,
light producing and light delivery products and utilize outside suppliers,
contracted or otherwise, for certain materials and services related to our
manufacturing activities. Although most of our materials and components are
available from various sources, we are dependent on certain suppliers for key
materials or services used in our drug and light producing and light delivery
device development and production operations. One such supplier is Fresenius,
which processes SnET2 into a sterile injectable formulation and packages it in
vials for distribution by Miravant. We expect to continue to develop new
formulations which may or may not have similar dependencies on suppliers. In
addition, regulatory approval will be necessary before we can manufacture drug
substance for commercial use.
In February 1997, we received registration to ISO 9001 and EN 46001
signifying compliance to the International Standards Organization quality
systems requirements for design, manufacture and distribution of medical
devices. We chose to discontinue ISO 9001 as part of a cost savings program, as
it was unlikely to be used in the near future.
Marketing, Sales and Distribution
Our strategy is to partner with leading pharmaceutical and medical device
companies for the marketing, sales and distribution of our products. We have
granted to Pharmacia & Upjohn the exclusive, worldwide license to market and
sell our leading drug candidate SnET2 in certain disease fields. We have granted
to Iridex the worldwide license to market and sell all co-developed light
producing devices for use in PhotoPoint in the field of ophthalmology, subject
to certain provisions with Pharmacia & Upjohn. We have a limited letter
agreement with Medicis that provides for a worldwide license to market and sell
certain drugs for use in PhotoPoint in the field of dermatology. Also, under the
terms of our co-development arrangements with Boston Scientific and Cordis,
these companies have the option of negotiating to enter into long-term
agreements with Miravant, under which they will have a license to market and
sell the co-developed medical catheters - Boston Scientific in the fields of
urology, pulmonology and gastroenterology and Cordis in the field of
cardiovascular disease - on a worldwide basis. At this time, we have not entered
into such long-term agreements.
Where appropriate, we intend to seek additional arrangements with
collaborative partners, selected for experience in disease applications or
markets, to act as our marketing and sales arm and to establish distribution
channels for our drugs and devices. We may also distribute our products directly
or through independent distributors.
Patents and Proprietary Technology
We pursue a policy of seeking patent protection for our technology both in
the United States and in selected countries abroad. We plan to prosecute, assert
and defend our patent rights when appropriate. We also rely upon trade secrets,
know-how, continuing technological innovations and licensing opportunities to
develop and maintain our competitive position.
We are currently the record owner of thirty (30) United States patents,
expiring during the time frame 2010 through 2018, a substantial number of which
relate to certain light delivery and measurement devices and methods. We are
also the record owner of six (6) foreign patents expiring during the time frame
from 2012 to 2014. We have a number of United States (and related foreign)
patent applications filed and pending. In addition, we have exclusive license
rights under sixteen (16) issued United States patents, which expire during the
time frame from 2006 through 2013, and four (4) issued foreign patents expiring
in 2006, and under several pending United States and foreign patent
applications, relating to certain photoselective compounds, as well as rights to
four (4) method-of-use patents and one (1) co-owned formulation patent.
We obtained the majority of our photoselective compound patent rights,
including rights to SnET2, through an exclusive License Agreement with Toledo.
This agreement is the basis for our core drug technology. Certain of the
foregoing patents and applications are subject to certain governmental rights
described below.
It is our policy to require our employees, consultants, outside scientific
collaborators and sponsored researchers and other advisors to execute
confidentiality agreements upon the commencement of employment or consulting
relationships with us. These agreements provide that all confidential
information developed or made known to the individual during the course of our
relationship are to be kept confidential and not disclosed to third parties
except in specific limited circumstances. We also require signed confidentiality
or material transfer agreements from any company that is to receive confidential
data or proprietary compounds. In the case of employees and consultants, the
agreements generally provide that all inventions conceived by the individual
while rendering services to us, which relate to our business or anticipated
business, shall be assigned to us as our exclusive property.
Certain of our research, including research relating to certain
pharmaceutical compounds covered by the License Agreement with Toledo, including
SnET2, has been or is being funded in part by Small Business Innovation Research
Administration or National Institutes of Health grants. As a result, the United
States Government has or will have certain rights in the inventions developed
with the funding. These rights include a non-exclusive, paid-up, worldwide
license under such inventions for any governmental purpose. In addition, the
government has the right to require us to grant an exclusive license under any
of such inventions to a third party if the government determines that:
o Adequate steps have not been taken to commercialize such inventions;
o Such action is necessary to meet public health or safety needs; or
o Such action is necessary to meet requirements for public use under
federal regulations.
Federal law requires that any exclusive licensor of an invention that was
partially funded by federal grants (which is the case with the subject matter of
certain patents issued in our name or licensed from Toledo) agree that it will
not grant exclusive rights to use or sell the invention in the United States
unless the grantee agrees that any products embodying the invention will be
manufactured substantially in the United States, although such requirement is
subject to a discretionary waiver by the government. It is not expected that the
government will exercise any such rights or that such exercise would have a
material impact on us.
Government Regulation
The research, development, manufacture, marketing and distribution of our
products are subject to regulation for safety and efficacy by numerous
governmental authorities in the United States and other countries. In the United
States, pharmaceutical products and medical devices are regulated by the FDA
through the Food, Drug and Cosmetic Act, known as the FDC Act. The FDC Act and
various other federal and state statutes control and otherwise affect the
development, approval, manufacture, testing, storage, records and distribution
of drugs and medical devices. We are subject to regulatory requirements
governing both drugs and devices.
Drug Products. The FDA generally requires the following steps before a new
drug product may be marketed in the United States:
o Preclinical studies (laboratory and animal tests);
o The submission to the FDA of an application for an IND exemption,
which must become effective before human clinical trials may commence;
o Adequate and well-conducted clinical trials to establish safety and
efficacy of the drug for its intended use;
o The submission to the FDA of a New Drug Application, or NDA; and
review and approval of the NDA by the FDA before any commercial sale
or shipment of the drug.
In addition to obtaining FDA approval for each new drug product, each drug
manufacturing establishment must be registered with the FDA. Manufacturing
establishments, both domestic and foreign, are subject to inspections by or
under the authority of the FDA and by other federal, state or local agencies and
must comply with the FDA's current Good Manufacturing Practices, or GMP,
regulations. The FDA will not approve an NDA until a preapproval inspection of
the manufacturing facilities confirms that the drug is produced in accordance
with current drug GMPs. In addition, drug manufacturing establishments in
California must also be licensed by the State of California and must comply with
manufacturing, environmental and other regulations promulgated and enforced by
the California Department of Health Services.
Preclinical studies include laboratory evaluation of product chemistry,
conducted under Good Laboratory Practices, or GLP, regulations, and animal
studies to assess the potential safety and efficacy of the drug and its
formulation. The results of the preclinical studies are submitted to the FDA as
part of the IND. Unless the FDA objects to the IND, the IND becomes effective
thirty (30) days following its receipt by the FDA.
Clinical trials involve the administration of the investigational drug to
human subjects under FDA regulations and other guidance commonly known as Good
Clinical Practice, or GCP, requirements under the supervision of a qualified
physician. Clinical trials are conducted in accordance with protocols that
detail the objectives of the study, the parameters to be used to monitor safety
and the efficacy criteria to be evaluated. Each protocol is submitted to the FDA
as a part of the IND. Each clinical study must be conducted under the auspices
of an independent Institutional Review Board, or IRB. The IRB considers, among
other things, ethical factors, the safety of human subjects and the possible
liability of the testing institution.
Clinical trials are typically conducted in three sequential phases,
although the phases may overlap.
o Phase I represents the initial introduction of the drug to a small
group of humans to test for safety (adverse effects), dosage
tolerance, absorption, distribution, metabolism, excretion and
clinical pharmacology and, if possible, to gain early evidence of
effectiveness;
o Phase II involves studies in a limited sample of the intended patient
population to assess the efficacy of the drug for a specific
indication, to determine dose tolerance and optimal dose range and to
identify possible adverse effects and safety risks; and
o Once a compound is found to have some efficacy and to have an
acceptable safety profile in Phase II evaluations, Phase III clinical
trials are initiated for definitive clinical safety and efficacy
studies in a broader sample of the patient population at multiple
study sites. The results of the preclinical studies and clinical
trials are submitted to the FDA in the form of an NDA for marketing
approval.
Completing clinical trials and obtaining FDA approval for a new drug
product is likely to take several years and require expenditure of substantial
resources. If an NDA application is submitted, there can be no assurance that
the FDA will approve the NDA. Even if initial FDA approval is obtained, further
studies may be required to gain approval for the use of a product as a treatment
for clinical indications other than those for which the product was initially
approved. Also, the FDA requires post-market surveillance programs to monitor
and report the drug's side effects. For certain drugs, the FDA may also,
concurrent with marketing approval, seek agreement from the sponsor to conduct
post-marketing ("Phase IV") studies to obtain further information about the
drug's risks, benefits and optimal use. Results of such monitoring and of Phase
IV post-marketing studies may affect the further marketing of the product.
Where appropriate, we may seek to obtain accelerated review and/or approval
of products and to use expanded access programs that may provide broader
accessibility and, if approved by the FDA, payment for an investigational drug
product. For instance, we requested and received fast track designation from the
FDA for the treatment of choroidal neovascularization associated with AMD. Under
the FDA Modernization Act of 1997, the FDA gives fast track designation to drugs
and devices that treat serious or life-threatening conditions that represent
unmet medical needs. The designation means that we can submit data during the
clinical trial process based on clinical or surrogate endpoints that are likely
to predict clinical benefit, and the FDA can expedite its regulatory review.
Other examples of such activities include pursuing programs such as treatment
IND or parallel track IND classifications which allow expanded availability of
an investigational treatment to patients not in the ongoing clinical trials, and
seeking physician or cross-referenced INDs which allow individual physicians to
use an investigational drug before marketing approval and for an indication not
covered by the ongoing clinical trials. However, there can be no assurance that
we will seek such avenues at any time, or that such activities will be
successful or result in accelerated review or approval of any of our products.
Medical Device Products. Our medical device products are subject to
government regulation in the United States and foreign countries. In the United
States, we are subject to the rules and regulations established by the FDA
requiring that our medical device products are safe and efficacious and are
designed, tested, developed, manufactured and distributed in accordance with FDA
regulations.
Under the FDC Act, medical devices are classified into one of three classes
(i.e., class I, II, or III) on the basis of the controls necessary to reasonably
ensure their safety and effectiveness. Safety and effectiveness can reasonably
be assured for class I devices through general controls (e.g., labeling,
premarket notification and adherence to GMPs) and for class II devices through
the use of general and special controls (e.g., performance standards, postmarket
surveillance, patient registries and FDA guidelines). Generally, class III
devices are those which must receive premarket approval by the FDA to ensure
their safety and effectiveness (e.g., life-sustaining, life-supporting and
implantable devices, or new devices which have been found not to be
substantially equivalent to legally marketed devices).
Before a new device can be introduced to the market, the manufacturer
generally must obtain FDA clearance through either a 510(k) premarket
notification or a premarket approval application, or PMA. A PMA requires the
completion of extensive clinical trials comparable to those required of new
drugs and typically requires several years before FDA approval, if any, is
obtained. A 510(k) clearance will be granted if the submitted data establish
that the proposed device is "substantially equivalent" to a legally marketed
class I or class II medical device, or to a class III medical device for which
the FDA has not called for PMAs. Currently, devices indicated for use in
photodynamic therapy, such as our devices, regardless of classification, must be
evaluated in conjunction with an IND as a combination drug-device product.
Combination Drug-Device Products. Medical products containing a combination
of drugs, devices or biological products may be regulated as "combination
products." A combination product is generally defined as a product comprised of
components from two or more regulatory categories (drug/device, device/biologic,
drug/biologic, etc.) and in which the various components are required to achieve
the intended effect and are labeled accordingly. Each component of a combination
product is subject to the rules and regulations established by the FDA for that
component category, whether drug, biologic or device. Primary responsibility for
the regulation of a combination product depends on the FDA's determination of
the "primary mode of action" of the combination product, whether drug, biologic
or device.
In order to facilitate premarket review of combination products, the FDA
designates one of its centers to have primary jurisdiction for the premarket
review and regulation of both components, in most cases eliminating the need to
receive approvals from more than one center. The determination whether a product
is a combination product or two separate products is made by the FDA on a
case-by-case basis. Market approval authority for combination photodynamic
therapy drug/device products is vested in the FDA Center for Drug Evaluation and
Research, or CDER, which is required to consult with the FDA Center for Devices
and Radiological Health. As the lead agency, the CDER administers and enforces
the premarket requirements for both the drug and device components of the
combination product. The FDA has reserved the decision on whether to require
separate submissions for each component until the product is ready for premarket
approval. Although, to date, photodynamic therapy products have been categorized
by the FDA as combination drug-device products, the FDA may change that
categorization in the future, resulting in different submission and/or approval
requirements.
If separate applications for approval are required in the future for
PhotoPoint devices, it may be necessary for us to submit a PMA or a 510(k) to
the FDA for our PhotoPoint devices. Submission of a PMA would include the same
clinical studies submitted under the IND to show the safety and efficacy of the
device for its intended use in the combination product. A 510(k) notification
would include information and data to show that our device is substantially
equivalent to previously marketed devices. There can be no assurance as to the
exact form of the premarket approval submission required by the FDA or
post-marketing controls for our PhotoPoint devices.
Post-Approval Compliance. Once a product is approved for marketing, we must
continue to comply with various FDA, and in some cases Federal Trade Commission,
requirements for design, safety, advertising, labeling, record keeping and
reporting of adverse experiences associated with the use of a product. The FDA
actively enforces regulations prohibiting marketing of products for non-approved
uses. Failure to comply with applicable regulatory requirements can result in,
among other things, fines, injunctions, civil penalties, failure of the
government to grant premarket clearance, premarket approval or export
certificates for devices or drugs, delays or suspensions or withdrawals of
approvals, seizures or recalls of products, operating restrictions and criminal
prosecutions. Changes in existing requirements or adoption of new requirements
could have a material adverse effect on our business, financial condition and
results of operations.
International. We are also subject to foreign regulatory requirements
governing testing, development, marketing, licensing, pricing and/or
distribution of drugs and devices in other countries. These regulations vary
from country to country. Beginning in 1995, a new regulatory system to approve
drug market registration applications was implemented in the European Union, or
EU. The system provides for new centralized, decentralized and national (member
state by member state) registration procedures through which a company may
obtain drug marketing registrations. The centralized procedure allows for
expedited review and approval of biotechnology and high technology/innovative
product marketing applications by a central Committee for Proprietary Medicinal
Products that is binding on all member states in the EU. The decentralized
procedure allows a company to petition individual EU member states to review and
recognize a market application previously approved in one member state by the
national route. Our devices must also meet the new Medical Device Directive
effective in Europe in 1998. The Directive requires that our manufacturing
quality assurance systems and compliance with technical essential requirements
be certified with a CE Mark authorized by a registered notified body of an EU
member state prior to free sale in the EU. Registration and approval of a
photodynamic therapy product in other countries, such as Japan, may include
additional procedures and requirements, nonclinical and clinical studies, and
may require the assistance of native corporate partners.
Competition
The pharmaceutical and medical device industries are characterized by
extensive worldwide research and development efforts and rapid technological
change. Competition from other domestic and foreign pharmaceutical or medical
device companies and research and academic institutions in the areas of product
development, product and technology acquisition, manufacturing and marketing is
intense and is expected to increase. These competitors may succeed in obtaining
approval from the FDA or other regulatory agencies for their products more
rapidly than Miravant. Competitors have also developed or are in the process of
developing technologies that are, or in the future may be, the basis for
competitive products.
We believe that a primary competitive issue will be the performance
characteristics of photoselective drugs, including product efficacy and safety,
as well as availability, price and patent position, among other issues. As the
photodynamic therapy industry evolves, we believe that new and more
sophisticated devices will be required and that the ability of any group to
develop advanced devices will be important to market position. We believe that,
after approval, competition will be based on product reliability, clinical
utility, patient outcomes, marketing and distribution partner capabilities,
availability, price and patent position.
We are aware of various competitors involved in the photodynamic therapy
arena. We understand that these companies are conducting preclinical studies
and/or clinical trials in various countries and for a variety of disease
indications. One such company is QLT PhotoTherapeutics or QLT. We understand
that QLT's drug Photofrin(R) has received marketing approval in the United
States and certain other countries for various specific disease indications. QLT
has also received an "approvable" letter from the FDA for their drug Visudyne(R)
for the treatment of AMD, and therefore may be first to market in this disease
area.
Employees
As of March 10, 2000, we employed 147 individuals, approximately 80 of
which were engaged in research and development, 22 were engaged in manufacturing
and clinical activities and 45 in general and administrative activities. We
believe that our relationship with our employees is good and none of the
employees are represented by a labor union.
RISK FACTORS
This Annual Report on Form 10-K contains forward-looking statements, which
involve known and unknown risks and uncertainties. These statements relate to
our future plans, objectives, expectations and intentions. These statements may
be identified by the use of words such as "may," "will," "should," "potential,"
"expects," "anticipates," "intends," "plans" and similar expressions. These
statements are based on our current beliefs, expectations and assumptions and
are subject to a number of risks and uncertainties. Our actual results could
differ materially from those discussed in these statements. The factors listed
below are not intended to represent a complete list of the general or specific
risks that may affect us. It should be recognized that other risks may be
significant, presently or in the future, and the risks set forth below may
affect us to a greater extent than indicated.
RISKS RELATED TO OUR BUSINESS
Our products are in an early stage of development and may never be successfully
commercialized.
Our products are at an early stage of development and our ability to
successfully commercialize these products is dependent upon:
o Successfully completing our research or product development efforts or
those of our collaborative partners;
o Successfully transforming our drugs or devices currently under
development into marketable products;
o Obtaining the required regulatory approvals;
o Manufacturing our products at an acceptable cost and with appropriate
quality;
o Favorable acceptance of any products marketed; and
o Successful marketing and sales efforts of our corporate partner(s).
We may not be successful in achieving any of the above, and if we are not
successful, our business, financial condition and operating results would be
adversely affected. The time frame necessary to achieve these goals for any
individual product is long and uncertain. Most of our products currently under
development will require significant additional research and development and
preclinical studies and clinical trials, and all will require regulatory
approval prior to commercialization. The likelihood of our success must be
considered in light of these and other problems, expenses, difficulties,
complications and delays.
Our products may not successfully complete the clinical trials process and we
may be unable to prove that our products are safe and efficacious.
All of our drug and device products currently under development will
require extensive preclinical studies and clinical trials prior to regulatory
approval for commercial use, which is a lengthy and expensive process. None of
our products have completed testing for efficacy or safety in humans. Some of
the risks and uncertainties related to safety and efficacy testing and the
completion of preclinical studies and clinical trials include:
o Our ability to demonstrate to the FDA that SnET2 or any other of our
products is safe and efficacious;
o Our ability to successfully complete the testing for any of our
compounds within any specified time period, if at all;
o Clinical data reported may change as a result of the continuing
evaluation of patients;
o Data obtained from preclinical studies and clinical trials are subject
to varying interpretations which can delay, limit or prevent approval
by the FDA or other regulatory authorities;
o Problems in research and development, preclinical studies or clinical
trials that will cause us to delay, suspend or cancel clinical trials;
and
o As a result of changing economic considerations, competitive or new
technological developments, market approvals or changes, clinical or
regulatory conditions, or clinical trial results, our focus may shift
to other indications, or we may determine not to further pursue one or
more of the indications currently being pursued.
To date, we have limited experience in conducting clinical trials. We will
either need to rely on third parties, including our collaborative partners, to
design and conduct any required clinical trials or expend resources to hire
additional personnel or engage outside consultants or contract research
organizations to administer the clinical trials. We may not be able to find
appropriate third parties to design and conduct clinical trials or we may not
have the resources to administer clinical trials in-house.
Our ability to complete clinical trials is dependent upon the rate of
patient enrollment. Patient enrollment is a function of many factors including:
o The nature of our clinical trial protocols;
o Existence of competing protocols or treatments;
o Size and longevity of the target patient population;
o Proximity of patients to clinical sites; and
o Eligibility criteria for the trials.
There can be no assurance that we will obtain adequate levels of patient
enrollment in current or future clinical trials. Delays in planned patient
enrollment may result in increased costs, delays or termination of clinical
trials, which could have material adverse effects. In addition, the FDA may
suspend clinical trials at any time if, among other reasons, it concludes that
patients participating in such trials are being exposed to unacceptable health
risks.
Data already obtained from preclinical studies and clinical trials of our
products under development do not necessarily predict the results that will be
obtained from future preclinical studies and clinical trials. A number of
companies in the pharmaceutical industry, including biotechnology companies like
us, have suffered significant setbacks in advanced clinical trials, even after
promising results in earlier trials. The failure to adequately demonstrate the
safety and effectiveness of a product under development could delay or prevent
regulatory clearance of the potential product and would materially harm our
business. Our clinical trials may not demonstrate the sufficient levels of
safety and efficacy necessary to obtain the requisite regulatory approval or may
not result in marketable products.
Our collaborative partners may control aspects of our clinical trials and
regulatory submission.
Our collaborative partners have certain rights to control aspects of our
product and device development and clinical programs. As a result, we may not be
able to conduct these programs in the manner we currently contemplate.
Pharmacia & Upjohn
In accordance with the 1999 Amendments, we transitioned the majority of the
operations of the Phase III clinical trials in AMD to Pharmacia & Upjohn.
Pharmacia & Upjohn will now be responsible for directly funding the majority of
the Phase III AMD clinical trial costs. We will continue to be responsible for
the majority of the preclinical studies and part of the drug and device
development and manufacturing necessary for the NDA submission in AMD and will
be reimbursed for those costs in accordance with the 1999 Amendments.
Iridex
In May 1996, we entered into a co-development and distribution agreement
with Iridex, a leading provider of semiconductor-based laser systems to treat
eye diseases. The agreement generally provides Miravant with the exclusive right
to co-develop with Iridex light producing devices for use in photodynamic
therapy in the field of ophthalmology. We will conduct clinical trials and make
regulatory submissions with respect to all co-developed devices and Iridex will
manufacture all devices for such trials, with costs shared as set forth in the
agreement.
Acceptance of our products in the marketplace is uncertain, and failure to
achieve market acceptance will harm our business.
Even if approved for marketing, our products may not achieve market
acceptance. The degree of market acceptance will depend upon a number of
factors, including:
o The establishment and demonstration in the medical community of the
safety and clinical efficacy of our products and their potential
advantages over existing therapeutic products and diagnostic and/or
imaging techniques;
o Pricing and reimbursement policies of government and third-party
payors such as insurance companies, health maintenance organizations
and other plan administrators; and
o The possibility that physicians, patients, payors or the medical
community in general may be unwilling to accept, utilize or recommend
any of our products.
We will need additional funds to continue our operations in the future.
We will need substantial additional resources to develop our products. The
timing and magnitude of our future capital requirements will depend on many
factors, including:
o The pace of scientific progress in our research and development
programs;
o The magnitude of our research and development programs;
o The scope and results of preclinical studies and clinical trials;
o The time and costs involved in obtaining regulatory approvals;
o The costs involved in preparing, filing, prosecuting, maintaining and
o The costs involved in any potential litigation;
o Competing technological and market developments;
o Our ability to establish additional collaborations;
o Changes in existing collaborations;
o Our dependence on others for development and commercialization of our
potential products;
o The cost of manufacturing, marketing and distribution; and
o The effectiveness of our commercialization activities.
We believe that our cash and anticipated sources of funding, the net
proceeds of future offerings and debt or equity financings will be adequate to
satisfy our anticipated capital needs through the second quarter of 2001. We
intend to seek any additional capital needed to fund our operations through new
collaborations, the extension of our existing collaboration or through public or
private equity or debt financings. However, additional financing may not be
available on acceptable terms or at all. Any inability to obtain additional
financing would adversely affect our business.
We have a history of significant operating losses and expect to continue to have
losses in the future, which may fluctuate significantly.
We have incurred significant operating losses since our inception in 1989
and, as of December 31, 1999, had an accumulated deficit of approximately $131.2
million. We expect to continue to incur significant, and possibly increasing,
operating losses over the next few years as we continue to incur increasing
costs for research and development, preclinical studies, clinical trials,
manufacturing and general corporate activities. Our ability to achieve
profitability depends upon our ability, alone or with others, to successfully
complete the development of our proposed products, obtain the required
regulatory clearances and manufacture and market our proposed products. No
revenues have been generated from sales of our drugs and only limited revenues
have been generated from sales of our devices. We do not expect to achieve
significant levels of revenues for the next few years. Our revenues to date have
consisted, and for the foreseeable future are expected to consist, principally
of clinical reimbursements, grants awarded, license fees, royalties, milestone
payments, payments for our devices, and interest income.
We may not be able to successfully maintain and establish collaborative and
licensing arrangements.
We have entered into collaborative relationships with certain corporations
and academic institutions for the research and development, preclinical studies
and clinical trials, licensing, manufacturing, sales and distribution of our
products. These collaborative relationships include:
o The License Agreements under which we granted to Pharmacia & Upjohn an
exclusive worldwide license to use, distribute and sell SnET2 for
therapeutic or diagnostic applications in photodynamic therapy for
ophthalmology, oncology and urology;
o Letter agreement with Boston Scientific and Cordis for the
co-development of catheters for use in photodynamic therapy;
o Letter agreement with Medicis for the clinical development of
PhotoPoint in dermatology;
o Letter agreement with Chiron for the early detection and treatment of
lung cancer;
o Definitive agreements with Iridex, Ramus and Xillix for the
development of devices for use in photodynamic therapy in the fields
of ophthalmology, cardiovascular disease and oncology, respectively;
and
o Definitive agreement with Fresenius for final drug formulation and
drug product supply.
The amount of royalty revenues and other payments, if any, ultimately paid
by Pharmacia & Upjohn globally to Miravant for sales of SnET2 is dependent, in
part, on the amount and timing of resources Pharmacia & Upjohn commits to
research and development, clinical testing and regulatory and marketing and
sales activities, which are entirely within the control of Pharmacia & Upjohn.
Pharmacia & Upjohn may not pursue the development and commercialization of SnET2
and/or may not perform its obligations as expected. Additionally, in March 2000,
Pharmacia & Upjohn announced that their merger plans entered into with Monsanto
Company are expected to be completed on or before April 1, 2000, pending
shareholder approval. We do not know what impact, if any, this consummation of
proposed merger will have on our relationship with Pharmacia & Upjohn. We have
not yet entered into any definitive collaborative agreements with Boston
Scientific, Cordis, Medicis or Chiron. These collaborations may not culminate in
definitive collaborative agreements or marketable products. Additionally,
Iridex, Ramus and Xillix may not continue the development of devices for use in
photodynamic therapy, or such development may not result in marketable products.
We are currently at various stages of discussions with other companies
regarding the establishment of collaborations. Our current and future
collaborations are important to us because they allow us greater access to
funds, to research, development or testing resources and to manufacturing, sales
or distribution resources that we would otherwise not have. We intend to
continue to rely on such collaborative arrangements. Some of the risks and
uncertainties related to the reliance on collaborations include:
o Our ability to negotiate acceptable collaborative arrangements,
including those based upon existing letter agreements;
o Future or existing collaborative arrangements may not be successful or
may not result in products that are marketed or sold;
o Such collaborative relationships may limit or restrict us;
o Collaborative partners are free to pursue alternative technologies or
products either on their own or with others, including our
competitors, for the diseases targeted by our programs and products;
o Our partners may fail to fulfil their contractual obligations or
terminate the relationships described above, and we may be required to
seek other partners, or expend substantial resources to pursue these
activities independently. These efforts may not be successful; and
o Our ability to manage, interact and coordinate our timelines and
objectives with our strategic partners may not be successful.
Our ability to establish and maintain agreements with outside suppliers may not
be successful and our failure to do so could adversely affect our business.
We depend on outside suppliers for certain raw materials and components for
our products. Such raw materials or components may not continue to be available
to our standards or on acceptable terms, if at all, and alternative suppliers
may not be available to us on acceptable terms, if at all. Further, we may not
be able to adequately produce needed materials or components in-house. We are
currently dependent on single, contracted sources for a couple of key materials
or services used by us in our drug development, light producing and light
delivery device development and production operations. Although most of our raw
materials and components are available from various sources, we are currently
developing qualified backup suppliers for each of these resources. We have or
will enter into agreements with these suppliers, which may or may not be
successful or which may encounter delays or other problems, which may materially
adversely affect our business.
We may not have adequate protection against product liability or recall.
The testing, manufacture, marketing and sale of human pharmaceutical
products entail significant inherent, industry-wide risks of allegations of
product liability. The use of our products in clinical trials and the sale of
our products may expose us to liability claims. These claims could be made
directly by patients or consumers, or by companies, institutions or others using
or selling our products. The following are some of the risks related to
liability and recall:
o We are subject to the inherent risk that a governmental authority or
third party may require the recall of one or more of our products;
o We have not obtained liability insurance that would cover a claim
relating to the clinical or commercial use or recall of our products;
o In the absence of liability insurance, claims made against us or a
product recall could have a material adverse effect on us;
o If we obtain insurance coverage in the future, this coverage may not
be available at a reasonable cost and in amounts sufficient to protect
us against claims that could have a material adverse effect on our
financial condition and prospects; and
o Liability claims relating to our products or a product recall could
negatively effect our ability to obtain or maintain regulatory
approval for our products.
We have agreed to indemnify certain of our collaborative partners against
certain potential liabilities relating to the manufacture and sale of SnET2 and
PhotoPoint light devices. A successful product liability claim could materially
adversely affect our business, financial condition or results of operations.
We have limited manufacturing and marketing capability and experience and thus
rely heavily upon third parties.
To be successful, our products must be manufactured in commercial
quantities under current GMP, prescribed by the FDA and at acceptable costs.
Although we intend to manufacture drugs and devices, we have not yet
manufactured any products in commercial quantities under GMP and have no
experience in such commercial manufacturing. We currently have the capacity, in
conjunction with our manufacturing partners Fresenius and Iridex, to manufacture
products at certain commercial levels and will be able to do so upon FDA
approval. If we receive an FDA or other regulatory approval we may need to
expand our manufacturing capabilities and/or depend on our collaborators,
licensees or contract manufacturers for the expanded commercial manufacture of
our products. If we expand our manufacturing capabilities, we will need to
expend substantial funds, hire and retain significant additional personnel and
comply with extensive regulations. We may not be able to expand successfully or
we may be unable to manufacture products in increased commercial quantities for
sale at competitive prices. Further, we may not be able to enter into future
manufacturing arrangements with collaborators, licensees, or contract
manufacturers on acceptable terms or at all. If we are not able to expand our
manufacturing capabilities or enter into additional commercial manufacturing
agreements, our business growth could be limited and could be materially and
adversely affected.
We have no direct experience in marketing, distributing and selling
pharmaceutical or medical device products. We will need to develop a sales force
or rely on our collaborators or licensees or make arrangements with others to
provide for the marketing, distribution and sale of our products. We currently
intend to rely on Pharmacia & Upjohn and Iridex for these needs for the AMD
project. Our marketing, distribution and sales capabilities or current or future
arrangements with third parties for such activities may not be adequate for the
successful commercialization of our products.
We may fail to adequately protect or enforce our intellectual property rights,
our patents and our proprietary technology.
Our success will depend, in part, on our and our licensors' ability to
obtain, assert and defend our patents, protect trade secrets and operate without
infringing the proprietary rights of others. The exclusive license relating to
various drug compounds, including our leading drug candidate SnET2, may become
non-exclusive if we fail to satisfy certain development and commercialization
objectives. The termination or restriction of our rights under this or other
licenses for any reason would likely have a material adverse impact on our
business and financial condition. Although we believe we should be able to
achieve such objectives, we may not be successful.
The patent position of pharmaceutical and medical device firms generally is
highly uncertain. Some of the risks and uncertainties include:
o The patent applications owned by or licensed to us may not result in
issued patents;
o Our issued patents may not provide us with proprietary protection or
competitive advantages;
o Our issued patents may be infringed upon or designed around by others;
o Our issued patents may be challenged by others and held to be invalid
or unenforceable;
o The patents of others may have a material adverse effect on us; and
o Significant time and funds may be necessary to defend our patents.
We are aware that our competitors and others have been issued patents
relating to photodynamic therapy. In addition, our competitors and others may
have been issued patents or filed patent applications relating to other
potentially competitive products of which we are not aware. Further, our
competitors and others may in the future file applications for, or otherwise
obtain proprietary rights to, such products. These existing or future patents,
applications or rights may conflict with our or our licensors' patents or
applications. Such conflicts could result in a rejection of our or our
licensors' applications or the invalidation of the patents. This could have a
material adverse effect on our competitive position. If such conflicts occur, or
if we believe that such products may infringe on our proprietary rights, we may
pursue litigation or other proceedings, or may be required to defend against
such litigation. Such proceedings may materially adversely affect our
competitive position, and we may not be successful in any such proceeding.
Litigation and other proceedings can be expensive and time consuming, regardless
of whether we prevail. This can result in the diversion of substantial
financial, managerial and other resources from other activities. An adverse
outcome could subject us to significant liabilities to third parties or require
us to cease any related research and development activities or product sales.
Some of the risks and uncertainties include:
o We do not have contractual indemnification rights against the
licensors of the various drug patents;
o We may be required to obtain licenses under dominating or conflicting
patents or other proprietary rights of others;
o Such licenses may not be made available on terms acceptable to us, if
at all; and
o If we do not obtain such licenses, we could encounter delays or could
find that the development, manufacture or sale of products requiring
such licenses is foreclosed.
We also seek to protect our proprietary technology and processes in part by
confidentiality agreements with our collaborative partners, employees and
consultants. These agreements could be breached and we may not have adequate
remedies for any breach. Also, our trade secrets may become known or be
independently discovered by competitors. Certain research activities relating to
the development of certain patents owned by or licensed to us were funded, in
part, by agencies of the United States Government. When the United States
Government participates in research activities, it retains certain rights that
include the right to use the resulting patents for government purposes under a
royalty-free license.
We also rely upon unpatented trade secrets, and no assurance can be given
that others will not independently develop substantially equivalent proprietary
information and techniques, or otherwise gain access to our trade secrets or
disclose such technology, or that we can meaningfully protect its rights to its
unpatented trade secrets and know-how.
We may not be able to attract and retain key personnel and consultants.
Our success will depend in large part on our ability to attract and retain
highly qualified scientific, management and other personnel and to develop and
maintain relationships with leading research institutions and consultants. We
are highly dependent upon principal members of our management, key employees,
scientific staff and consultants which we may retain from time to time.
Competition for such personnel and relationships is intense, and we may not be
able to continue to attract and retain such personnel. Our consultants may be
affiliated with or employed by others, and some have consulting or other
advisory arrangements with other entities that may conflict or compete with
their obligations to us. Inventions or processes discovered by such persons will
not necessarily become our property and may remain the property of such persons
or others.
The price of our Common Stock has been and may continue to be volatile.
The market prices for our Common Stock, and the securities of emerging
pharmaceutical and medical device companies, have historically been highly
volatile and subject to extreme price fluctuations, which may have a material
adverse effect on the market price of the Common Stock. Extreme price
fluctuations could be the result of the following:
o Future announcements concerning Miravant or our collaborators,
competitors or industry;
o The results of our testing, technological innovations or new
commercial products;
o The results of preclinical studies and clinical trials by us or our
competitors;
o Technological innovations or new therapeutic products;
o Litigation;
o Public concern as to the safety, efficacy or marketability of products
developed by us or others;
o Comments by securities analysts;
o The achievement of or failure to achieve certain milestones; and
o Governmental regulations, rules and orders, or developments concerning
safety of our products.
In addition, the stock market has experienced extreme price and volume
fluctuations. This volatility has significantly affected the market prices of
securities of many emerging pharmaceutical and medical device companies for
reasons frequently unrelated or disproportionate to the performance of the
specific companies. These broad market fluctuations may materially adversely
affect the market price of the Common Stock.
Our charter and bylaws contain provisions that may prevent transactions that
could be beneficial to stockholders.
Our charter and bylaws restrict certain actions by our stockholders. For
example:
o Our stockholders can act at a duly called annual or special meeting
but they may not act by written consent;
o Special meetings can only be called by our chief executive officer,
president, or secretary at the written request of a majority of our
Board of Directors; and
o Stockholders also must give advance notice to the secretary of any
nominations for director or other business to be brought by
stockholders at any stockholders' meeting.
Some of these restrictions can only be amended by a super-majority vote of
members of the Board and/or the stockholders. These and other provisions of our
charter and bylaws, as well as certain provisions of Delaware law, could prevent
changes in our management and discourage, delay or prevent a merger, tender
offer or proxy contest, even if the events could be beneficial to our
stockholders. These provisions could also limit the price that investors might
be willing to pay for our stock. At this time we do not have a Shareholder
Rights Plan in place. In the future we may consider implementing a Shareholder
Rights Plan, however, even if implemented, there is no assurance that it will be
approved.
In addition, our charter authorizes our Board of Directors to issue shares
of undesignated preferred stock without stockholder approval on terms that the
Board may determine. The issuance of preferred stock could decrease the amount
of earnings and assets available for distribution to our other stockholders or
otherwise adversely affect their rights and powers, including voting rights.
Moreover, the issuance of preferred stock may make it more difficult for another
party to acquire, or may discourage another party from acquiring, voting control
of us.
RISKS RELATED TO OUR INDUSTRY
We are subject to uncertainties regarding health care reimbursement and reform.
Our products may not be covered by the various health care providers and
third party payors. If they are not covered, our products may or may not be
purchased or sold as expected. Our ability to commercialize our products
successfully may depend, in part, on the extent to which reimbursement for these
products and related treatment will be available from collaborative partners,
government health administration authorities, private health insurers, managed
care entities and other organizations. These payers are increasingly challenging
the price of medical products and services and establishing protocols and
formularies, which effectively limit physicians' ability to select products and
procedures. Uncertainty exists as to the reimbursement status of health care
products (especially innovative technologies). Additionally, reimbursement
coverage, if available, may not be adequate to enable us to achieve market
acceptance of our products or to maintain price levels sufficient for
realization of an appropriate return on our products.
The efforts of governments and third-party payors to contain or reduce the
cost of healthcare will continue to affect our business and financial condition
as a biotechnology company. In foreign markets, pricing or profitability of
medical products and services may be subject to government control. In the
United States, we expect that there will continue to be federal and state
proposals for government control of pricing and profitability. In addition,
increasing emphasis on managed healthcare has increased pressure on pricing of
medical products and will continue to do so. These cost controls may have a
material adverse effect on our revenues and profitability and may affect our
ability to raise additional capital.
In addition, cost control initiatives could adversely affect our business
in a number of ways, including:
o Decreasing the price we, or any of our partners or licensees, receive
for any of our products;
o Preventing the recovery of development costs, which could be
substantial; and
o Minimizing profit margins.
Further, our commercialization strategy depends on our collaborators. As a
result, our ability to commercialize our products and realize royalties may be
hindered if cost control initiatives adversely affect our collaborators.
Failure to obtain product approvals or comply with ongoing governmental
regulations could adversely affect our business.
The production and marketing of our products and our ongoing research and
development, preclinical studies and clinical trial activities are subject to
extensive regulation and review by numerous governmental authorities in the
United States, including the FDA, and in other countries. All drugs and most
medical devices we develop must undergo rigorous preclinical studies and
clinical trials and an extensive regulatory approval process administered by the
FDA under the FDC Act, and comparable foreign authorities, before they can be
marketed. These processes involve substantial cost and can often take many
years. We have limited experience in, and limited resources available for
regulatory activities and we rely on our collaborators and outside consultants.
Failure to comply with the applicable regulatory requirements can, among other
things, result in non-approval, suspensions of regulatory approvals, fines,
product seizures and recalls, operating restrictions, injunctions and criminal
prosecution. To date, none of our product candidates being developed have been
submitted for approval or have been approved by the FDA or any other regulatory
authority for marketing.
Some of the risks and uncertainties relating to United States Government
regulation include:
o Delays in obtaining approval or rejections due to regulatory review of
each submitted new drug, device or combination drug/device application
or product license application, as well as changes in regulatory
policy during the period of product development;
o If regulatory approval of a product is granted, such approval may
entail limitations on the uses for which the product may be marketed;
o If regulatory approval is obtained, the product, our manufacturer and
the manufacturing facilities are subject to continual review and
periodic inspections;
o If regulatory approval is obtained, such approval may be conditional
on the satisfaction of the completion of clinical trials or require
additional clinical trials;
o Later discovery of previously unknown problems with a product,
manufacturer or facility may result in restrictions on such product or
manufacturer, including withdrawal of the product from the market and
litigation; and
o Photodynamic therapy products have been categorized by the FDA as
combination drug-device products. If current or future drug/device
products do not continue to be categorized for regulatory purposes as
combination products, then:
- The FDA may require separate drug and device submissions; and
- The FDA may require separate approval by regulatory authorities.
Some of the risks and uncertainties of international governmental
regulation include:
o Foreign regulatory requirements governing testing, development,
marketing, licensing, pricing and/or distribution of drugs and devices
in other countries;
o Our drug products may not qualify for the centralized review procedure
or we may not be able to obtain a national market application that
will be accepted by other EU member states;
o Our devices must also meet the new Medical Device Directive effective
in Europe in 1998. The Directive requires that our manufacturing
quality assurance systems and compliance with technical essential
requirements be certified with a CE Mark authorized by a registered
notified body of an EU member state prior to free sale in the EU; and
o Registration and approval of a photodynamic therapy product in other
countries, such as Japan, may include additional procedures and
requirements, nonclinical and clinical studies, and may require the
assistance of native corporate partners.
We face intense competition and technological uncertainty.
Many of our competitors have substantially greater financial, technical and
human resources than we do, and may also have substantially greater experience
in developing products, conducting preclinical studies or clinical trials,
obtaining regulatory approvals and manufacturing and marketing. Further, our
competitive position could be materially adversely affected by the establishment
of patent protection by our competitors. The existing competitors or other
companies may succeed in developing technologies and products that are more
safe, effective or affordable than those being developed by us or that would
render our technology and products less competitive or obsolete.
We are aware of various competitors involved in the photodynamic therapy
arena. We understand that these companies are conducting preclinical studies
and/or clinical trials in various countries and for a variety of disease
indications. One such company is QLT PhotoTherapeutics or QLT. We understand
that QLT's drug Photofrin(R) has received marketing approval in the United
States and certain other countries for various specific disease indications. QLT
has also received an "approvable" letter from the FDA for their drug Visudyne(R)
for the treatment of AMD, and therefore may be first to market in this disease
area.
The pharmaceutical industry is subject to rapid and substantial
technological change. Developments by others may render our products under
development or technologies noncompetitive or obsolete, or we may be unable to
keep pace with technological developments or other market factors. Technological
competition in the industry from pharmaceutical and biotechnology companies,
universities, governmental entities and others diversifying into the field is
intense and is expected to increase. These entities represent significant
competition for us. Acquisitions of, or investments in, competing pharmaceutical
or biotechnology companies by large corporations could increase such
competitors' financial, marketing, manufacturing and other resources.
We are a relatively new enterprise and are engaged in the development of
novel therapeutic technologies, specifically photodynamic therapy. As a result,
our resources are limited and we may experience technical challenges inherent in
such novel technologies. Competitors have developed or are in the process of
developing technologies that are, or in the future may be, the basis for
competitive products. Some of these products may have an entirely different
approach or means of accomplishing similar therapeutic, diagnostic and imaging
effects than our products. We are aware that one of our competitors in the
market for photodynamic therapy drugs has received marketing approval of a
product for certain uses in the United States and other countries. Our
competitors may develop products that are safer, more effective or less costly
than our products and, therefore, present a serious competitive threat to our
product offerings.
The widespread acceptance of therapies that are alternatives to ours may
limit market acceptance of our products even if commercialized. The diseases for
which we are developing our therapeutic products can also be treated, in the
case of cancer, by surgery, radiation and chemotherapy, and in the case of
atherosclerosis, by surgery, angioplasty, drug therapy and the use of devices to
maintain and open blood vessels. These treatments are widely accepted in the
medical community and have a long history of use. The established use of these
competitive products may limit the potential for our products to receive
widespread acceptance if commercialized.
Our products are subject to other state and federal laws, future legislation and
regulations.
In addition to the regulations for drug or device approvals, we are subject
to regulation under state, federal or other law, including regulations for
worker occupational safety, laboratory practices, environmental protection and
hazardous substance control. We continue to make capital and operational
expenditures for protection of the environment in amounts which are not
material. Some of the risks and uncertainties related to laws and future
legislation or regulations include:
o Our future capital and operational expenditures related to these
matters may increase and become material;
o We may also be subject to other present and possible future local,
state, federal and foreign regulation;
o Heightened public awareness and concerns regarding the growth in
overall health care expenditures in the United States, combined with
the continuing efforts of governmental authorities to contain or
reduce costs of health care, may result in the enactment of national
health care reform or other legislation or regulations that impose
limits on the number and type of medical procedures which may be
performed or which have the effect of restricting a physician's
ability to select specific products for use in certain procedures;
o Such new legislation or regulations may materially adversely affect
the demand for our products. In the United States, there have been,
and we expect that there will continue to be, a number of federal and
state legislative proposals and regulations to implement greater
governmental control in the health care industry;
o The announcement of such proposals may materially adversely affect our
ability to raise capital or to form collaborations; and
o Legislation or regulations that impose restrictions on the price that
may be charged for health care products or medical devices may
adversely affect our results of operations.
We are unable to predict the likelihood of adverse effects which might
arise from future legislative or administrative action, either in the United
States or abroad.
Our business involves environmental risks.
We are subject to federal, state, county and local laws and regulations
relating to the protection of the environment. In the course of our business, we
are involved in the handling, storage and disposal of materials that are
classified as hazardous. Our safety procedures for the handling, storage and
disposal of such materials are designed to comply with applicable laws and
regulations. However, we may be involved in contamination or injury from these
materials. If this occurs, we could be held liable for any damages that result,
and any such liability could materially and adversely affect us. Further, the
cost of complying with these laws and regulations may increase materially in the
future.
ITEM 2. PROPERTIES
We have entered into four leases for approximately 101,100 square feet of
office, laboratory and potential manufacturing space in Santa Barbara,
California. The first lease for approximately 18,900 square feet of space was
entered into in 1992 and the base rent, which is adjusted annually based on
increases in the consumer price index, is approximately $24,400 per month. This
lease was extended in August 1999 and expires in December 2003. The facility is
equipped and licensed to allow certain laboratory testing and manufacturing. We
manufacture and distribute our active SnET2 drug substance from this facility.
In the second half of 1996, we entered into two additional leases for
approximately 54,800 square feet of office, laboratory and manufacturing space.
Each lease provides for rent to be adjusted annually based on increases in the
consumer price index and the base rent for both leases is approximately $56,900
per month. These leases were extended in March 1999 and expire in August 2002.
Each leased property is located in a business park and is subject to a master
lease agreement. We manufacture our light producing and light delivery devices
and perform research and development of drugs, light delivery and light
producing devices from these facilities.
In July 1998, we entered into a fourth lease agreement for approximately
27,400 square feet of primarily office space. The base rent for this lease is
approximately $34,300 per month. The lease expires in October 2003 and provides
for rent to be adjusted annually based on increases in the consumer price index.
The lease also allows us the ability to sublet the property, which we did in
December 1999. The sublease agreements expire in October 2003, with rent based
upon the percentage of square footage occupied. Rental income, which is
approximately $32,900 per month, is also subject to increases based upon the
consumer price index. The leased property is located in a business park and is
subject to a master lease agreement.
For each of the four facilities noted above, we may continue to incur
additional costs for the construction of the manufacturing, laboratory and
office space associated with these facilities.
During 1997, we entered into a letter of intent with a local developer to
have a facility constructed to house our operations for the foreseeable future.
We continue to work with the developer with the expected completion date
approximately late 2001 or early 2002. Depending on our future needs and
financial capabilities we may or may not continue this project.
In July 1997, the Company began to sublease approximately 3,900 square feet
of one of its buildings to Ramus Medical Technologies. The sublease agreement
was for two years with rent based upon the percentage of square footage
occupied. The sublease was extended in September 1999 to March 2000 and
thereafter will revert to a month to month basis. Rental income from Ramus,
which is approximately $4,100 per month, is also subject to increases based upon
the consumer price index.
ITEM 3. LEGAL PROCEEDINGS
We are not currently party to any material litigation or proceeding and are
not aware of any material litigation or proceeding threatened against us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
Our Common Stock is traded on The Nasdaq National Market under the symbol
MRVT. From August 30, 1995 to September 12, 1997, our Common Stock was traded on
The Nasdaq National Market under the symbol PDTI. Effective September 15, 1997,
we changed our name to Miravant Medical Technologies and our ticker symbol to
MRVT. The following table sets forth high and low sales prices per share of
Common Stock as reported on The Nasdaq National Market based on published
financial sources.
High Low
---- ---
1999:
Fourth quarter.....................................$ 14.50 $ 9.00
Third quarter...................................... 11.88 7.00
Second quarter..................................... 10.13 6.31
First quarter...................................... 16.25 6.81
1998:
Fourth quarter.....................................$ 17.69 $ 6.13
Third quarter...................................... 28.75 4.69
Second quarter..................................... 36.00 21.88
First quarter...................................... 39.00 28.56
As of March 10, 2000, there were approximately 317 stockholders of record
of the Common Stock, which does not include "street accounts" of securities
brokers. Based on the number of proxies requested by brokers in connection with
our annual meeting of stockholders, we estimate that the total number of
stockholders of the Common Stock exceeds 5,500. Except for the three for two
split of the Common Stock declared for stockholders of record at July 24, 1995,
we have never paid dividends, cash or otherwise, on our capital stock and do not
anticipate paying any dividends in the foreseeable future. We currently intend
to retain future earnings, if any, to finance the growth and development of our
business. Any future determination to pay dividends will be at the discretion of
the Board of Directors and will be dependent upon our financial condition,
results of operations, capital requirements and such other factors as the Board
of Directors deems relevant. Our credit agreement with Pharmacia & Upjohn
prohibits the payment of dividends on the Common Stock.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
In the table below, we provide you with summary historical financial data
of Miravant Medical Technologies. We have prepared this information using the
consolidated financial statements of Miravant for the five years ended December
31, 1999. The consolidated financial statements for the five fiscal years ended
December 31, 1999 have been audited by Ernst & Young LLP, independent auditors.
When you read this summary of historical financial data, it is important
that you read along with it the historical financial statements and related
notes in our annual and quarterly reports filed with the SEC, as well as the
section of our annual and quarterly reports titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
Year Ended December 31,
----------------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------------- --------------- --------------- --------------- ---------------
(in thousands, except share and per share data)
Statement of Operations Data:
Revenues ....................... $ 14,577 $ 10,179 $ 2,278 $ 3,598 $ 521
Costs and expenses.............. 37,639 41,788 35,065 22,113 12,416
--------------- --------------- --------------- --------------- ---------------
Loss from operations............ (23,062) (31,609) (32,787) (18,515) (11,895)
Net interest and other income... 806 3,545 2,578 2,373 185
--------------- --------------- --------------- --------------- ---------------
Net loss........................ $ (22,256) $ (28,064) $ (30,209) $ (16,142) $ (11,710)
=============== =============== =============== =============== ===============
Net loss per share (1) ......... $ (1.25) $ (1.94) $ (2.36) $ (1.37) $ (1.19)
=============== =============== =============== =============== ===============
Shares used in computing net
loss per share (1) .......... 17,768,670 14,464,044 12,791,044 11,786,429 9,861,212