e424b3
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-126710
Endologix, Inc.
4,150,000 Shares of Common Stock
This prospectus relates to the offer and sale from time to time of up to 4,150,000 shares of
our common stock which are held by certain of our stockholders named in this prospectus, who are
referred to herein as the selling stockholders, who purchased the shares of common stock pursuant
to stock purchase agreements, each dated as of July 5, 2005.
The selling stockholders may sell the shares of common stock described in this prospectus in
public or private transactions, on or off The Nasdaq National Market, at prevailing market prices,
or at privately negotiated prices. The selling stockholders may sell shares directly to purchasers
or through brokers or dealers. Brokers or dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders. We will not receive any
proceeds from the selling stockholders sale of the shares of common stock. We have agreed to bear
the expenses in connection with the registration and sale of the common stock offered by the
selling stockholders and to indemnify the selling stockholders against certain liabilities,
including liabilities under the Securities Act of 1933. See the section in this prospectus titled
Plan of Distribution for additional information on how selling stockholders may conduct sales of
our common stock.
Our common stock currently is traded on The Nasdaq National Market under the symbol ELGX. On
July 18, 2005 the closing price of our common stock was $5.41 per share.
See Risk Factors beginning on page 2 to read about the risks you should consider carefully
before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities, or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is July 29, 2005.
TABLE OF CONTENTS
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You should rely only on the information contained or incorporated by reference in this
prospectus and any applicable prospectus supplements. We have not authorized anyone to provide you
with information different from that contained in this prospectus. Offers to sell, and offers to
buy, the shares of common stock are valid only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as to the date of this
prospectus, regardless of the time of delivery of the prospectus or of any sale of the common
stock.
i
SUMMARY
We develop, manufacture, sell and market minimally invasive therapies for the treatment of
cardiovascular disease. Our product, the Powerlink® System, is a catheter-based alternative
treatment for abdominal aortic aneurysm, or AAA. AAA is a weakening of the wall of the aorta, the
largest artery of the body. Once AAA develops, it continues to enlarge and if left untreated
becomes increasingly susceptible to rupture. The overall patient mortality rate for ruptured AAAs
is approximately 75%, making it the 13th leading cause of death in the United States today.
The Powerlink System is a catheter and endoluminal graft, or ELG, system. The self-expanding
cobalt chromium alloy stent cage is covered by ePTFE, a common surgical graft material. The
Powerlink ELG is implanted in the abdominal aorta, which is accessed through the femoral artery.
Once deployed into its proper position, the blood flow is shunted away from the weakened or
aneurysmal section of the aorta, reducing pressure and the potential for the aorta to rupture.
We believe that implantation of our products will reduce the mortality and morbidity rates
associated with conventional AAA surgery, as well as provide a clinical alternative to many
patients that could not undergo conventional surgery.
We received marketing approval from the U.S. Food and Drug Administration, or FDA, in October
2004 to commercially distribute the Powerlink System in the United States.
More comprehensive information about our products and us is available through our worldwide
web site at www.endologix.com. The information on our website is not incorporated by reference
into this prospectus. Our main offices are located at 11 Studebaker, Irvine, California 92618, and
our telephone number is (949) 595-7200.
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RISK FACTORS
You should carefully consider the following risk factors, in addition to the other information
set forth in this prospectus. Each of these risk factors could adversely affect our business,
operating results and financial condition, as well as adversely affect the value of an investment
in our common stock. An investment in our common stock involves a high degree of risk.
Risks Related To Our Business
If our sole technology, the Powerlink System, does not gain commercial acceptance, our
business will suffer.
We have focused heavily on the development and commercial launch of a single technology, the
Powerlink System, because of our limited resources. If we are unable to successfully commercialize
the existing Powerlink System and reach positive cash flow from operations, we will be constrained
in our ability to fund development and commercialization improvements and other product lines.
If we are not successful in convincing a concentrated customer base to use our product over
alternative products and treatment modalities, our revenues will be impaired.
While we have demonstrated the safety and efficacy of the Powerlink System in our clinical
studies with our clinical investigators, market acceptance will depend on similar results with the
Powerlink System in general use. The physicians currently treating AAA have choices in treatment
approach, one of which is endovascular AAA stent graft placement. There are several competing
endovascular stent grafts to choose from and we expect that number to increase. Increasing revenues
from sales of Powerlink Systems will depend on us demonstrating that the Powerlink System is a
superior treatment alternative to watchful waiting, open surgery and competitive products. We
believe that this will require continued demonstration through clinical data and personal
experience of the efficacy of the Powerlink System. Any significant difficulties or adverse events
encountered in general use will impair the commercial success of the Powerlink System and our
business.
If the number of AAA patients treated with endovascular devices does not grow, our results of
operations may suffer.
Of the estimated 1.7 million people with AAA in the United States, only about 220,000 are
diagnosed annually, and of that amount in 2004, only about 18,000 to 25,000 were treated with an
endovascular device. Our success with our Powerlink System will depend on an increasing percentage
of patients with AAA being diagnosed at earlier stages and on an increasing percentage of those
patients receiving endovascular, as opposed to conventional surgery. Initiatives to increase
screening for AAA are underway but are out of our control and such general screening programs may
never gain wide acceptance. The failure to diagnose more patients with AAA, at an earlier stage,
will impede sales of the Powerlink System.
We expect to incur losses for the foreseeable future and may never achieve profitability.
From our formation in 1992 to December 31, 2004, we incurred a cumulative net loss of
approximately $83.6 million. We incurred a net loss of $9.7 million for the year ended December 31,
2004 and incurred a net loss of $5.9 million for the year ended December 31, 2003. Although we
received FDA marketing approval for the Powerlink System in 2004, we do not expect to be profitable
in 2005, and it is possible that we may never achieve profitability.
If we are not able to effectively compete with our competitors, all of which are larger
companies with substantially greater resources, our revenues will be adversely affected.
The medical device industry is subject to intense competition. While we intend to commit
substantial resources to our marketing efforts, our competitors have superior resources to market
and promote their products. The most prominent devices that pose a competitive challenge to us
include:
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Medtronics AneuRx, W. L. Gores Excluder, and the Cook Zenith AAA system which are
available in the United States and Europe; |
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other AAA graft systems by Medtronic and Johnson & Johnson, which currently have
more limited availability; and |
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other technologies in various phases of development, including pharmaceutical
solutions. |
Any of these treatments could prove to be more effective or may achieve greater market
acceptance than the Powerlink System. Even if these treatments are not as effective as the
Powerlink System, many of the companies pursuing these treatments and technologies have:
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significantly greater financial, management and other resources; |
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more extensive research and development capability; |
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established market positions; and |
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larger sales and marketing organizations. |
In addition, we believe that many of the purchasers and potential purchasers of our
competitors products prefer to purchase medical devices from a single source. Accordingly, many of
our competitors will have an advantage over us because of their size and range of product
offerings. Any failure of our Powerlink System to achieve clinical and commercial acceptance over
our competitors products will harm our business.
Our future operating results are difficult to predict and may vary significantly from quarter
to quarter, which may negatively impact our stock price in the future.
We cannot predict revenues for the sales of the Powerlink System. Our quarterly revenues and
results of operations may fluctuate in the future due to:
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physician acceptance of the Powerlink System; |
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the conduct of clinical trials; |
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the timing of regulatory approvals, both in the United States and internationally; |
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fluctuations in our expenses associated with managing and expanding our operations; |
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variations in foreign exchange rates; and |
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changes in third-party payors reimbursement policies. |
Therefore, we believe that period to period comparison of our operating results may not
necessarily be reliable indicators of our future performance. It is likely that in some future
period our operating results will not meet investor expectations or those of public market
analysts.
Any unanticipated change in revenues or operating results is likely to cause our stock price
to fluctuate since such changes reflect new information available to investors and analysts. New
information may cause investors and analysts to revalue our stock, which could cause a decline in
the trading price of our common stock.
If we fail to increase our direct sales force in a timely manner, our revenues may be
adversely affected.
We have a limited domestic direct sales force and we utilize a distribution network for sales
outside of the
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United States. As we broaden our commercial launch of the Powerlink System, we will need to
expand the number of our sales and marketing personnel. In addition, if we launch new products we
will need to significantly expand the number of our direct sales personnel. The establishment and
development of a more extensive sales force will be expensive and time consuming. There is also
significant competition for sales personnel experienced in relevant medical device sales. If we are
unable to attract, motivate and retain qualified sales personnel and thereby increase our sales
force, we may not be able to take full advantage of market opportunities or increase our revenues.
Our third-party distributors may not effectively distribute our products, which could
negatively impact our revenues or cause us to incur additional expense to market our products.
We depend on medical device distributors for marketing and sales of our Powerlink System
outside the United States. We will depend directly on these distributors efforts to market our
product, yet we will be unable to control their efforts completely. If our distributors fail to
market and sell our products effectively, our operating results and business may suffer
substantially, or we may have to make significant additional expenditures to market our products.
If we fail to properly manage our anticipated growth, our results of operations could suffer.
We may experience periods of rapid growth and expansion, which could place a significant
strain on our limited personnel and other resources. In particular, the relocation and expansion of
our manufacturing facility and the ongoing increase in our direct sales force will require
significant management, technical and administrative resources. Any failure by us to manage our
growth effectively could have an adverse effect on our ability to achieve our development and
commercialization goals. To achieve our revenue goals, we must successfully relocate our
manufacturing capability in 2005, and substantially increase production as required by customer
demand. We may in the future experience difficulties in increasing production, including problems
with production yields, quality control and assurance, component supply, and shortages of qualified
personnel. These problems could result in delays in product availability and increases in expenses.
Any such delay or increased expense could adversely affect our ability to generate revenues. Future
growth will also impose significant added responsibilities on management, including the need to
identify, recruit, train and integrate additional employees. In addition, rapid and significant
growth will place a strain on our administrative and operational infrastructure. In order to manage
our operations and growth we will need to continue to improve our operational, financial and
management controls, reporting systems and procedures. If we are unable to manage our growth
effectively, it may be difficult for us to execute our business strategy and our operating results
and business could suffer.
We rely on a single vendor to supply our graft material for the Powerlink System, and any
disruption in our supply could delay or prevent us from producing the product for sale.
Currently, we rely on Bard Peripheral Vascular Systems, a subsidiary of C.R. Bard, Inc., to
supply us with graft material, which is a primary component for the Powerlink System. Our reliance
on a sole source supplier exposes our operations to disruptions in supply caused by:
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failure of our supplier to comply with regulatory requirements; |
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any strike or work stoppage; |
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disruptions in shipping; |
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a natural disaster caused by fire, floods or earthquakes; |
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a supply shortage experienced by our sole source supplier; and |
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the fiscal health and manufacturing strength of our sole source supplier. |
Although we retain a significant stock of the graft material, the occurrence of any of the
above disruptions in supply or other unforeseen events that could cause a disruption in supply from
our sole source graft supplier may
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cause us to halt or experience a disruption in manufacturing the Powerlink System. Because we
do not have alternative suppliers, our sales and profitability would be harmed in the event of a
disruption.
Our international operations subject us to additional business risks, such as business
interruption, increased costs and currency exchange rate fluctuations, and may cause our
profitability to decline.
A substantial portion of our revenues are derived from sales outside the United States. For
the fiscal years ended December 31, 2004, 2003 and 2002, international sales were 86%, 86%, 55% of
total product revenue, respectively. Our international sales expose us to a number of risks,
including:
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unexpected changes in regulatory requirements; |
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fluctuating exchange rates; |
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changes in tariffs and other trade restrictions; |
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less favorable third-party reimbursement policies; |
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political and economic instability; |
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longer payment cycles; |
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potentially limited intellectual property protection; and |
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difficulties with distributors. |
In particular, our international sales are denominated primarily in local currencies and not
in United States dollars, which means our revenue is subject to fluctuations in foreign exchange
rates. Foreign exchange gains or losses as a result of exchange rate fluctuations in any given
period could harm our operating results and negatively impact our revenues. Additionally, if the
effective price of our products were to increase as a result of fluctuations in foreign currency
exchange rates, demand for our products could decline and adversely affect our results of
operations and financial condition. If we experience any of the risks associated with
international operations, our business could be harmed.
If we are unable to effectively manage our inventory held on consignment by our intended
customers, we will not achieve our expected results.
A portion of our finished goods inventory is held on either temporary or permanent consignment
by hospitals which purchase the inventory as they use it. In these consignment locations, we do not
have physical possession of the consigned inventory. We therefore must rely on information from our
customers as well as periodic inspections by our sales personnel and third party inventory auditors
to determine when our products have been used. If we are not able to effectively manage consigned
inventory levels, we may suffer inventory losses which will reduce our gross profit. Our efforts
to strengthen our monitoring and management of consigned inventory may not be adequate to
meaningfully reduce the risk of inventory loss.
Our dependence upon key personnel to operate our business puts us at risk of a loss of
expertise if key personnel were to leave us.
We depend upon the experience and expertise of our executive management team. The competition
for executives, as well as for skilled product development and technical personnel, in the medical
device industry is intense and we may not able to retain or recruit the personnel we need. If we
are not able to attract and retain existing and additional highly qualified management, sales,
clinical and technical personnel, we may not be able to successfully execute our business strategy.
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If we are unable to raise additional funds in the future to fund our operations, we may have
to curtail our operations.
Our operations are capital intensive. Although we believe that our existing cash resources and
anticipated cash generated from operations will be sufficient to meet our planned cash requirements
through at least December 31, 2006, we may require additional capital to fund on-going operations.
Our cash requirements in the future may be significantly different from our current estimates and
depend on many factors, including:
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the results of our commercialization efforts for the Powerlink System; |
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the time and costs involved in obtaining additional regulatory approvals; |
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the costs involved in obtaining and enforcing patents or any litigation by third
parties regarding intellectual property; |
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the establishment of high volume manufacturing, sales and marketing capabilities; and |
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our success in entering into collaborative relationships with other parties. |
To finance these activities, we may seek funds through additional rounds of financing,
including private or public equity or debt offerings and collaborative arrangements with corporate
partners. We may be unable to raise funds on favorable terms, or at all. The sale of additional
equity or convertible debt securities could result in additional dilution to our stockholders. If
we issue debt securities, these securities could have rights superior to holders of our common
stock, and could contain covenants that will restrict our operations. We might have to obtain funds
through arrangements with collaborative partners or others that may require us to relinquish rights
to our technologies, product candidates or products that we otherwise would not relinquish. If
adequate funds are not available, we might have to delay, scale back or eliminate one or more of
our development programs, which would impair our ability to operate our business.
Our operations are currently conducted at a single location that may be at risk from natural
disasters.
We currently conduct all of our manufacturing, development and management activities at a
single location in Irvine, California, near known earthquake fault zones. We have taken precautions
to safeguard our facilities, including insurance, health and safety protocols, and off-site storage
of computer data. However, any future natural disaster, such as an earthquake, could cause
substantial delays in our operations, damage or destroy our equipment or inventory, and cause us to
incur additional expenses. A disaster could seriously harm our business and results of operations.
The insurance coverage we maintain against natural disasters may not be adequate to cover our
losses in any particular case.
Risks Related To Our Industry
Our products and manufacturing activities are subject to extensive governmental regulation
that could make it more expensive and time consuming for us to introduce new and improved products.
Our products must comply with regulatory requirements imposed by the FDA and similar agencies
in foreign countries. These requirements involve lengthy and detailed laboratory and clinical
testing procedures, sampling activities, an extensive FDA review process and other costly and
time-consuming procedures. It often takes several years to satisfy these requirements, depending on
the complexity and novelty of the product. We also are subject to numerous additional licensing and
regulatory requirements relating to safe working conditions, manufacturing practices, environmental
protection, fire hazard control and disposal of hazardous or potentially hazardous substances. Some
of the most important requirements we face include:
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FDA pre-market approval process; |
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California Department of Health Services requirements; |
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ISO 9001:1994 and ENISO 13485:2000; and |
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European Union CE Mark requirements. |
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Government regulation may impede our ability to conduct continuing clinical trials of
Powerlink System enhancements and to manufacture the Powerlink System and other prospective
products. Government regulation also could delay our marketing of new products for a considerable
period of time and impose costly procedures on our activities. The FDA and other regulatory
agencies may not approve any of our products on a timely basis, if at all. Any delay in obtaining,
or failure to obtain, such approvals could impede our marketing of any proposed products and reduce
our product revenues.
Our products remain subject to strict regulatory controls on manufacture, marketing and use.
We may be forced to modify or recall our product after release. Any such action could have a
material effect on the reputation of our products and on our business and financial position.
Further, regulations may change, and any additional regulation could limit or restrict our
ability to use any of our technologies, which could harm our business. We could also be subject to
new federal, state or local regulations that could affect our research and development programs and
harm our business in unforeseen ways. If this happens, we may have to incur significant costs to
comply with such laws and regulations.
If third-party payors do not provide reimbursement for the use of the Powerlink System, the
commercial success of the Powerlink System will be negatively impacted and our revenues could be
diminished.
Our success in marketing the Powerlink System depends in large part on the extent to which
domestic and international government health administrative authorities, private health insurers
and other organizations will reimburse customers for the cost of our product. Reimbursement systems
in international markets vary significantly by country and by region within some countries, and
reimbursement approvals must be obtained on a country-by-country basis. Further, many international
markets have government managed healthcare systems that control reimbursement for new devices and
procedures. In most markets there are private insurance systems as well as government-managed
systems. If sufficient reimbursement is not available for the Powerlink System, or any other
product that we may develop, in either the United States or internationally, the demand for our
products will be adversely affected and we may not achieve commercial success.
If we are unable to protect our intellectual property from infringement, our ability to
operate our business will be adversely impacted.
The market for medical devices is subject to frequent litigation regarding patent and other
intellectual property rights. It is possible that our patents or licenses may not withstand
challenges made by others or protect our rights adequately.
Our success depends in large part on our ability to secure effective patent protection for our
products and processes in the United States and internationally. We have filed and intend to
continue to file patent applications for various aspects of our technology. However, we face the
risks that:
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we may fail to secure necessary patents prior to or after obtaining regulatory
clearances, thereby permitting competitors to market competing products; and |
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our already-granted patents may be re-examined, re-issued or invalidated. |
We also own trade secrets and confidential information that we try to protect by entering into
confidentiality agreements with other parties. However, the confidentiality agreements may not be
honored or, if breached, we may not have sufficient remedies to protect our confidential
information. Further, our competitors may independently learn our trade secrets or develop similar
or superior technologies. To the extent that our consultants, key employees or others apply
technological information to our projects that they develop independently or others develop,
disputes may arise regarding the ownership of proprietary rights to such information and such
disputes may not be resolved in our favor. If we are unable to protect our intellectual property
adequately, our business and commercial prospects likely will suffer.
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If we are subject to claims alleging infringement of intellectual property rights, the sale of
our products may be challenged and we may have to defend costly and time-consuming infringement
claims.
We may need to engage in expensive and prolonged litigation to assert any of our rights or to
determine the scope and validity of rights claimed by other parties. With no certainty as to the
outcome, litigation could be too expensive for us to pursue. Our failure to prevail in such
litigation or our failure to pursue litigation could result in the loss of our rights that could
hurt our business substantially. In addition, the laws of some foreign countries do not protect our
intellectual property rights to the same extent as the laws of the United States, if at all.
Our failure to obtain rights to intellectual property of third parties or the potential for
intellectual property litigation could force us to do one or more of the following:
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stop selling, making or using our products that use the disputed intellectual
property; |
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obtain a license from the intellectual property owner to continue selling, making,
licensing or using our products, which license may not be available on reasonable
terms, or at all; |
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redesign our products or services; and |
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subject us to significant liabilities to third parties. |
If any of the foregoing occurs, we may be unable to manufacture and sell our products or
license our technology and may suffer severe financial harm. Whether or not an intellectual
property claim is valid, the cost of responding to it, in terms of legal fees and expenses and the
diversion of management resources, could harm our business.
We may face product liability claims that could result in costly litigation and significant
liabilities.
Manufacturing and marketing of our commercial products, and clinical testing of our products
under development, may expose us to product liability claims. Although we have, and intend to
maintain insurance, the coverage limits of our insurance policies may not be adequate and one or
more successful claims brought against us may have a material adverse effect on our business,
financial condition and results of operations. Additionally, adverse product liability actions
could negatively affect the reputation and sales of our products, our ability to obtain and
maintain regulatory approval for our products and may divert managements attention from other
matters.
Risks Relating to Our Common Stock
The price of our stock may fluctuate unpredictably in response to factors unrelated to our
operating performance.
The stock market periodically experiences significant price and volume fluctuations that are
unrelated to the operating performance of particular companies. In particular, the market price of
securities of small medical device companies, like ours, has been very unpredictable and may vary
in response to:
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announcements by us or our competitors concerning technological innovations; |
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introductions of new products; |
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FDA and foreign regulatory actions; |
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developments or disputes relating to patents or proprietary rights; |
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failure of our results of operations to meet the expectations of stock market analysts and investors; |
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changes in stock market analyst recommendations regarding our common stock; |
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changes in healthcare policy in the United States or other countries; and |
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general stock market conditions. |
Any of these factors could result in broad price and volume fluctuations in the stock market
which may cause a decline in the trading price of our common stock.
Some provisions of our charter documents may make takeover attempts difficult, which could
depress the price of our stock and inhibit your ability to receive a premium price for your shares.
Provisions of our restated certificate of incorporation could make it more difficult for a
third party to acquire control of our business, even if such change in control would be beneficial
to our stockholders. Our restated certificate of incorporation allows our board of directors to
issue up to five million shares of preferred stock and to fix the rights and preferences of such
shares without stockholder approval. Any such issuance could make it more difficult for a third
party to acquire our business and may adversely affect the rights of our stockholders. In addition,
our board of directors is divided into three classes for staggered terms of three years. These
provisions may delay, deter or prevent a change in control of us, adversely affecting the market
price of our common stock.
Substantial future sales of our common stock in the public market may depress our stock price
and make it difficult for you to recover the full value of your investment in our shares.
We have approximately 36.1 million shares of common stock outstanding, most of which are
freely tradable. The market price of our common stock could drop due to sales of a large number of
shares or the perception that such sales could occur. These factors also could make it more
difficult to raise funds through future offerings of common stock.
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FORWARD-LOOKING STATEMENTS
This prospectus, including reports and documents incorporated by reference, contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including statements regarding our capital
needs, product development programs, clinical trials, receipt of regulatory approval, intellectual
property, expectations and intentions. Forward-looking statements necessarily involve risks and
uncertainties, and our actual results could differ materially from those anticipated in the
forward-looking statements due to a number of factors, including those set forth under the section
entitled Risk Factors in this prospectus. You should read the factors set forth in the section
entitled Risk Factors and other cautionary statements made in this prospectus carefully, and
understand that those factors and statements are applicable to all related forward-looking
statements wherever they appear in this prospectus and in documents incorporated by reference.
These forward-looking statements are subject to a number of risks, uncertainties, and assumptions
relating to, among other things:
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market acceptance of our sole product, the Powerlink System; |
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our ability to effectively manage our anticipated growth; |
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our ability to protect our intellectual property rights and proprietary technology; |
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research and development of our products; |
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development and management of our business and anticipated trends of our business; |
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our ability to attract, retain and motivate qualified personnel; |
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our ability to attract and retain customers; |
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the market opportunity for our products and technology; |
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the nature of regulatory requirements that apply to us, our suppliers and
competitors and our ability to obtain and maintain any required regulatory approvals; |
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our future capital expenditures and needs; |
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our ability to compete; |
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general economic and business conditions; and |
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other risks set forth under Risk Factors in this prospectus. |
You can identify forward-looking statements generally by the use of forward-looking
terminology such as believes, expects, may, will, intends, plans, should, could,
seeks, anticipates, estimates, continues, or other variations thereof, including their use
in the negative, or by discussions of strategies, opportunities, plans or intentions.
Unless otherwise required by law, we undertake no obligation to publicly update or revise any
forward-looking statements, either as a result of new information, future events or otherwise after
the date of this prospectus. The forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ in significant ways from
any future results expressed or implied by the forward-looking statements.
10
USE OF PROCEEDS
All proceeds from the sale of our common stock covered by this prospectus will belong to the
selling stockholders who offer and sell their shares. We will not receive any proceeds from the
sale of the common stock by the selling stockholders.
SELLING STOCKHOLDERS
In connection with the private placement of common stock to the selling stockholders pursuant
to stock purchase agreements, dated as of July 5, 2005, we agreed to file a registration statement
with the Securities and Exchange Commission to register the shares of our common stock that we
issued to the selling stockholders for resale by the selling stockholders, and to keep the
registration statement effective for a period not exceeding the earliest of (i) July 8, 2007, (ii)
the date on which the selling stockholders may sell all shares of common stock then held by the
selling stockholders pursuant to Rule 144(k) promulgated under the Securities Act of 1933, as
amended, or (iii) such time as all shares of common stock held by the selling stockholders have
been sold. The registration statement, of which this prospectus is a part, was filed with the
Securities and Exchange Commission pursuant to the registration rights provisions included in the
stock purchase agreements. The registration of these shares of common stock for resale does not
necessarily mean that the selling stockholders will sell all or any of the shares.
The following table sets forth, as of July 11, 2005: (1) the name of the stockholder for whom
we are registering shares under this registration statement; (2) the number of shares of our common
stock owned by the stockholder prior to this offering; (3) the number of shares of our common stock
being offered pursuant to this prospectus; and (4) the amount and (if one percent or more) the
percentage of the class to be owned by such stockholder after completion of the offering. The
percentage of outstanding common stock owned upon completion of the offering is calculated based on
36,068,205 shares of common stock issued and outstanding at July 11, 2005.
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Common Stock |
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Common Stock |
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Percentage of |
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Common Stock |
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Being Offered |
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Owned Upon |
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Outstanding Common |
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Owned Prior to |
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Pursuant to this |
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Completion of |
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Stock Owned Upon |
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Selling Stockholder |
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Offering |
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Prospectus |
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Offering (1) |
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Completion of Offering |
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Goldman, Sachs & Co. |
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2,561,696 |
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1,700,000 |
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861,696 |
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2.4 |
% |
UBS OConnor LLC FBO
OConnor PIPES Corporate
Strategies Master
Limited (2) |
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250,000 |
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Federated Kaufmann Fund,
a portfolio of Federated
Equity Funds (3) |
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7,981,406 |
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1,250,000 |
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6,731,406 |
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18.7 |
% |
Wasatch Funds, Inc. on
behalf of Wasatch Micro
Cap Fund (4) |
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829,750 |
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Wasatch Funds, Inc. on
behalf of Wasatch Micro
Cap Value Fund (4) |
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120,250 |
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* |
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Less than one percent. |
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(1) |
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Assumes the sale by the selling stockholders of all of the shares of common stock available
for resale under this prospectus. |
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(2) |
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UBS OConnor LLC FBO OConnor PIPES Corporate Strategies Master Limited is a fund managed
by UBS OConnor LLC. UBS OConnor LLC is a wholly owned subsidiary of UBS AG. UBS AG is a
publicly held company listed on the New York Stock Exchange. |
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(3) |
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Federated Kaufmann Fund (FKF) is a portfolio of Federated Equity Funds, a registered
investment company. |
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FKFs advisor is Federated Investment Management Company (FIMC) which has delegated daily
management of the funds assets to Federated Global Investment Management Corp. (FGIMC), as
subadvisor. While the officers and directors of FIMC have dispositive power over FKFs
portfolio securities, they customarily delegate this dispositive power, and therefore the day to
day dispositive decisions are made by the portfolio managers of FKF, currently Lawrence Auriana
and Hans P. Utsch. Messrs. Auriana and Utsch disclaim any beneficial ownership of the shares.
With respect to voting power, FKF has delegated the authority to vote proxies to FIMC. FIMC has
established a Proxy Voting Committee to cast proxy votes on behalf of FKF in accordance with
proxy voting policies and procedures approved by FKF. |
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(4) |
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Wasatch Advisors, Inc. is the investment advisor to Wasatch Funds, Inc., a registered
investment company comprised of a series of funds under the Investment Company Act of 1940,
and to a number of private separate client accounts which are the beneficial owners of the
common stock of Endologix, Inc. The funds and private accounts hold the common stock of
Endologix, Inc. solely for investment purposes, with no intent to control the business or
affairs of Endologix, Inc. John Malooly or another designee of Wasatch Advisors, Inc. has
voting and investment power over the shares that this selling shareholder beneficially owns. |
12
PLAN OF DISTRIBUTION
We will not receive any of the proceeds from the sale of common stock offered pursuant to this
prospectus. The shares of our common stock offered pursuant to this prospectus may be offered and
sold from time to time by the selling stockholders listed in the preceding section, or their
donees, transferees, pledgees or other successors in interest that receive such shares as a gift or
other non-sale related transfer. These selling stockholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. All or a portion of the common
stock offered by this prospectus may be offered for sale from time to time on The Nasdaq National
Market or on one or more exchanges, or otherwise at prices and terms then obtainable, or in
negotiated transactions. The distribution of these securities may be effected in one or more
transactions that may take place on the over-the-counter market, including, among others:
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ordinary brokerage transactions; |
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privately negotiated transactions or through sales to one or more dealers for resale
of such securities as principals; |
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at market prices prevailing at the time of sale; |
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at prices related to such prevailing market prices; or |
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at negotiated prices. |
The selling stockholders may pay usual and customary or specifically negotiated brokerage fees
or commissions.
To the extent required, we may amend or supplement this prospectus from time to time to
describe a specific plan of distribution. In effecting sales, broker-dealers engaged by the
selling stockholders may arrange for other broker-dealers to participate in the resales.
Broker-dealers or agents may receive compensation in the form of commissions, discounts or
concessions from the selling stockholders. Broker-dealers or agents also may receive compensation
from the purchasers of the shares for whom they act as agents or to whom they sell as principals,
or both. Compensation as to a particular broker-dealer might be in excess of customary commissions
and will be in amounts to be negotiated in connection with the sale. Broker-dealers or agents and
any other participating broker-dealers or the selling stockholders may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act of 1933 in connection with sales of the
shares offered pursuant to this prospectus. Accordingly, any such commission, discount or
concession received by them and any profit on the resale of the shares purchased by them may be
deemed to be underwriting discounts or commissions under the Securities Act of 1933. Because the
selling stockholders may be deemed to be underwriters within the meaning of Section 2(11) of the
Securities Act of 1933, the selling stockholders will be subject to the prospectus delivery
requirements of the Securities Act of 1933.
In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act of 1933 or other exemption from registration may be sold
under Rule 144 or other exemption rather than pursuant to this prospectus. There is no underwriter
or coordinating broker acting in connection with the proposed sale of shares by the selling
stockholders. The shares will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states the shares may not
be sold unless they have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is complied with.
Under current applicable rules and regulations of the Securities Exchange Act of 1934, any
person engaged in the distribution of the shares may not simultaneously engage in market making
activities with respect to our common stock for a period of two business days prior to the
commencement of such distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Securities Exchange Act of 1934 and the associated rules and
regulations under the Securities Exchange Act of 1934, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the selling stockholders.
We will make copies of this prospectus available to the selling stockholders and will inform them
of the need for delivery of copies of this prospectus to purchasers at or prior to the time of any sale of the
shares being offered pursuant to this prospectus.
13
The selling stockholders are not obligated to, and there is no assurance that the selling
stockholders will, sell any or all of the shares.
We will bear all costs, expenses and fees in connection with the registration of the resale of
the shares covered by this prospectus. We have agreed to indemnify the selling stockholders, and
each underwriter, if any, for, among other things, liabilities based on untrue material facts, or
omissions of material facts, contained in this prospectus. The selling stockholders have agreed to
indemnify us for liabilities based on untrue material facts, or omissions of material facts,
contained in this prospectus, but only to the extent that such material fact or omission is made in
reliance on written information furnished by the selling stockholders specifically for use in
preparation of the registration statement, of which this prospectus is a part. The selling
stockholders will pay any applicable underwriters commissions and expenses, brokerage fees or
transfer taxes. The selling stockholders may agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the shares against certain liabilities, including
liabilities arising under the Securities Act of 1933.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed upon for us by
Stradling Yocca Carlson & Rauth, a Professional Corporation.
EXPERTS
The consolidated financial statements and managements assessment of the effectiveness of
internal control over financial reporting (which is included in Managements Report on Internal
Control Over Financial Reporting) incorporated in this prospectus by reference to the Annual Report
on Form 10-K for the year ended December 31, 2004 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference the information we file with it, which means
that we can disclose important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus and information that
we file subsequently with the SEC will automatically update and supercede this prospectus. We
incorporate by reference the following documents listed below and any future filings we make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this
offering of securities is terminated, except for information furnished under Item 2.02 or Item 7.01
of Form 8-K which is not deemed filed and not incorporated by reference herein:
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Annual Report on Form 10-K for the fiscal year ended December 31, 2004 as filed with
the SEC on March 31, 2005; |
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Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005 as filed
with the SEC on May 9, 2005; |
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Current Reports on Form 8-K as filed with the SEC on January 5, 2005, January 12,
2005, January 31, 2005, February 11, 2005, May 20, 2005, June 14, 2005 and July 8,
2005; and |
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Registration Statement on Form 8-A, relating to the description of our Common Stock,
filed with the SEC on May 3, 1996, including any amendment or report filed for the
purposed of updating such description. |
You may request a copy of these filings (other than an exhibit to a filing unless that exhibit
is specifically incorporated by reference into that filing) at no cost, by writing to or
telephoning us at the following address: Investor Relations, Endologix, Inc., 11 Studebaker,
Irvine, California 92618; (949) 595-7200.
14
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the SEC with respect to the common
stock offered by this prospectus. This prospectus does not include all of the information contained
in the registration statement. You should refer to the registration statement and its exhibits for
additional information. Whenever we make reference in this prospectus to any of our contracts,
agreements or other documents, the references are not necessarily complete and you should refer to
the exhibits attached to the registration statement for copies of the actual contract, agreement or
other document.
We are subject to the informational requirements of the Securities Exchange Act of 1934 and in
accordance therewith file reports, proxy statements and other information with the SEC. You may
read and copy any document we file at the SECs public reference room at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC toll free at 1-800-SEC-0330 for information about its
public reference room. You may also read our filings at the SECs web site at http://www.sec.gov.
15