F-1/A 1 t1401138-f1a.htm AMENDMENT NO. 1 TO FORM F-1
As filed with the U.S. Securities and Exchange Commission on July 15, 2014
Registration No. 333-196910
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
AMENDMENT NO. 1
TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
INNOCOLL AG
(Exact name of Registrant as specified in its charter)
 
Not Applicable
(Translation of Registrant’s name into English)
 
 
Federal Republic of Germany
2834
Not Applicable
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
Innocoll AG
Midlands Innovation and Research Centre
Dublin Road, Athlone
County Westmeath
Ireland
+353 (0) 90 6486834
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Michael Myers, Ph.D.
42662 Kitchen Prim Court
Ashburn, Virginia 20148
(703) 980-4182
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
Copies to:
 
Jeffrey A. Baumel, Esq.
Kristina E. Beirne, Esq.
Anthony D. Foti, Esq.
Dentons US LLP
1221 Avenue of the Americas
New York, New York 10020
(212) 768-6700
Michael D. Maline, Esq.
Thomas S. Levato, Esq.
Goodwin Procter LLP
The New York Times Building
620 Eighth Avenue
New York, New York 10018
(212) 813-8800
 
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 
 
 
CALCULATION OF REGISTRATION FEE
Title of each class of
securities to be registered(1)
Amount to be
registered(2)
Proposed maximum
offering price
per ordinary share
Proposed maximum
aggregate offering
price(3)
Amount of
registration fee
Ordinary Shares, €1.00 notional value per share
464,600
$
198.75
$
92,339,250
$
11,893.30
(4)
(1)
  • American Depositary Shares, or ADSs, issuable upon deposit of the ordinary shares registered hereby will be registered under a separate Registration Statement on Form F-6. Each ADS will represent 1/13.25 ordinary shares.
(2)
  • Includes 802,950 ADSs (60,600 ordinary shares) issuable upon exercise of an option to purchase additional shares granted to the underwriters.
(3)
  • Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.
(4)
  • The Registrant initially registered securities based upon an expected proposed maximum aggregate offering price of $86,250,000 and in connection therewith paid a registration fee of $11,109.00 and is paying the additional fee of $784.30 in connection herewith in this Amendment No. 1 to the Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the U.S. Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.
 
 

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or other jurisdiction where offers or sales are not permitted.
SUBJECT TO COMPLETION, DATED JULY 15, 2014
5,353,000 American Depositary Shares
Representing 404,000 Ordinary Shares
 
Innocoll AG
[MISSING IMAGE: lg_innocoll.jpg]

$      per American Depositary Share
 
  • Innocoll AG, a German stock corporation, is offering 5,353,000 American Depositary Shares, or ADSs. Each ADS will represent 1/13.25 ordinary shares with a notional value of 1.00 per share.
  • We currently estimate that the initial public offering price will be between $13.00 and $15.00 per ADS.
  • This is our initial public offering and no public market currently exists for our shares.
  • We have applied to list our ADSs on the NASDAQ Global Market under the symbol “INNL.”
  • We are an “emerging growth company,” as defined by the Jumpstart Our Business Startups Act of 2012, and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.
 
This investment involves risk. See “Risk Factors” beginning on page 14.
 
Per ADS
Total
Initial public offering price
$
     
$
        
Underwriting discounts and commissions(1)
$
$
Proceeds, before expenses, to us
$
$
(1)
  • In addition to the underwriting discounts payable by us, we have agreed to reimburse the underwriters for certain expenses in connection with this offering. See the section captioned “Underwriting” in this prospectus for additional information.
Funds affiliated with Sofinnova Ventures, Inc., or Sofinnova, have indicated an interest in purchasing up to $15.0 million of our ADSs at the initial public offering price and certain of our existing shareholders, including certain of our supervisory board members, have indicated an interest in purchasing up to $12.0 million of our ADSs at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, fewer or no ADSs to the above investors, and such investors could determine to purchase more, fewer or no ADSs in this offering. If Sofinnova purchases ADSs in this offering, we anticipate that it will have a right to nominate, in consultation with our Nominating and Corporate Governance Committee, one member for appointment to our supervisory board, subject to the approval of our supervisory board and our shareholders. In addition, the underwriters have reserved an aggregate of 5.0% of our ADSs being offered in this offering for purchase by certain affiliates of our supervisory board members, management board members, existing shareholders and others associated with us, through a directed share program.
We have granted the underwriters a 30-day option to purchase a total of up to 802,950 additional ADSs on the same terms and conditions set forth above.
The underwriters expect to deliver ADSs to purchasers against payment on            , 2014.
Neither the U.S. 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.
Piper Jaffray
 Stifel
JMP Securities
The date of this prospectus is            , 2014.

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TABLE OF CONTENTS
 
Page
 
Until 25 days after the date of this prospectus, all dealers that buy, sell or trade our ADSs or ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
 
Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. In addition, assumptions and estimates of our and our industry’s future performance are

necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Special Note Regarding Forward-Looking Statements.”
All references in this prospectus to “U.S.” dollars or “$” are to the legal currency of the United States and all references to “” or “euro” are to the currency introduced at the start of the third stage of the European economic and monetary union pursuant to the treaty establishing the European Community, as amended. Solely for the convenience of the reader, unless otherwise indicated, all amounts in U.S. dollars have been converted from euros to U.S. dollars at an exchange rate of $1.3791 per euro, the official exchange rate quoted as of December 31, 2013 by the European Central Bank. Such U.S. dollar amounts are not necessarily indicative of the amounts of U.S. dollars that could actually have been purchased upon exchange of euros at the dates indicated.
Our registered trademarks, XaraColl®, Cogenzia®, CollaGUARD®, our localized drug delivery technologies trademarked as CollaRx®, CollaFilm®, CollaPress and LiquiColl, the Innocoll logo and other trademarks or service marks of Innocoll appearing in this prospectus are our property. This prospectus contains additional trade names, trademarks and service marks of other companies. Solely for convenience, trademarks and tradenames referred to in this prospectus appear without the® and symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.

 
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including our consolidated financial statements and related notes, and the risk factors beginning on page 14, before deciding whether to purchase our ADSs. Unless the context otherwise requires, the terms “we,” “us,” “our,” “Innocoll” and the “Company” refer to Innocoll AG, a German stock corporation, and its direct and indirect subsidiaries Innocoll, Inc., a Delaware corporation, Innocoll Pharmaceuticals Ltd., an Irish private limited company, Innocoll Technologies Ltd., an Irish private limited company, and Syntacoll GmbH, a German limited liability company and a wholly-owned subsidiary of Innocoll Pharmaceuticals Ltd. On July 3, 2014, we transformed from Innocoll GmbH to Innocoll AG, which was required under German law in order to offer and sell our securities in a public offering. Because we have the same legal identity, operations and business after the transformation as we had before, the historical financial information for Innocoll AG is identical to the historical information previously reported for Innocoll GmbH.
Overview
Our Company
We are a global, commercial stage specialty pharmaceutical company with late stage development programs targeting areas of significant unmet medical need. We utilize our proprietary collagen-based technology platform to develop our biodegradable and fully bioresorbable products and product candidates which can be broken down by the body without the need for surgical removal. Using our proprietary processes at our manufacturing facility, we derive and purify bovine and equine collagen and then utilize our technology platform to incorporate the purified collagen into our topical and implantable products. These products combine proven therapeutics, including small molecules and biologics, with highly customized drug release profiles, localized drug delivery and superior handling properties.
Our lead product candidates are XaraColl® for the treatment of post-operative pain and Cogenzia® for the treatment of diabetic foot infections. We plan to initiate Phase 3 trials for XaraColl and Cogenzia in the second half of 2014 with final pivotal data for each expected in late 2015. CollaGUARD®, a barrier for the prevention of post-surgical adhesions, has been approved in 45 countries in Europe, Asia and emerging markets during the last 12 months, and we plan to commence the pivotal trial required for approval in the United States in the first quarter of 2015. In 2013, we generated €3.5 million of sales from three marketed products: CollaGUARD, and two gentamicin implants for the prevention of post-operative infections, our Collatamp Gentamicin surgical implant, or CollatampG, and Septocoll. We have strategic partnerships in place with large international healthcare companies, such as Takeda, Jazz Pharmaceuticals and Biomet, which market certain of our approved products in Europe, Asia, the Middle East, Canada, Australia and Latin America. Our corporate headquarters are located in Athlone, Ireland.
Our Product Candidates
XaraColl
Our first lead product candidate, XaraColl, is an implantable, bioresorbable collagen sponge that we designed to provide sustained post-operative pain relief, or analgesia, through controlled delivery of bupivacaine hydrochloride, or bupivacaine, at the surgical site. Bupivacaine is a local anesthetic drug which impairs the generation and conduction of nerve impulses by blocking the flow of sodium ions. The worldwide post-operative pain market was estimated to be $5.9 billion in 2010. The current standard of care for the treatment of post-operative pain relies heavily on the use of opioids supplemented by other classes of pain medications, the combination of which is known as multi-modal pain therapy. However, 75% of patients receiving standard treatments still report inadequate post-operative pain relief, and 79% of patients report adverse events from these medications. Opioid-related adverse events, such as nausea, constipation and respiratory depression, which are potentially severe, may require additional medications

 
or treatments and prolong a patient’s hospital stay, thereby increasing overall treatment costs significantly. Additionally, opioids are highly addictive and induce drug resistance and tolerance. Given the negative side effects and costs associated with opioid use in particular, there is increasing focus from hospitals, payors and regulators on treatments that reduce opioid use in the treatment of post-operative pain. We believe XaraColl addresses these concerns and is well positioned to become a cornerstone component of effective multi-modal treatment of post-operative pain.
We designed XaraColl to:
  • provide an initial rapid burst of bupivacaine followed by slower, sustained release that delivers effective analgesia over a 48 to 72 hour period, the crucial timeframe that impacts a patient’s quality and duration of recovery;
  • provide safe and effective pain relief as part of multi-modal therapy;
  • reduce opioid use and related adverse events;
  • target both the incisional and deep visceral pain components associated with moderate and major surgery;
  • reduce patient costs, including those associated with length of hospital stay;
  • be used in both open and laparoscopic surgery; and
  • be easily positioned at different layers within the surgical wound.
XaraColl has been studied in four completed Phase 2 clinical trials enrolling approximately 184 patients, including 103 patients in two independent, multicenter double-blind, placebo-controlled Phase 2 trials in hernia repair at doses of 100 mg and 200 mg of bupivacaine. Results from both trials demonstrated that XaraColl reduces both pain intensity and opioid consumption, with the 200 mg dose resulting in an overall greater combined effect at 48 hours. XaraColl-treated patients in the 100 mg dose trial experienced significantly less pain through 24 hours and 48 hours. In our subsequent 200 mg dose trial, XaraColl demonstrated a statistically significant reduction in opioid consumption through 24 and 48 hours and demonstrated a statistical trend in reduction in pain intensity through 24 hours. When we apply the Silverman method, a validated statistical analysis that integrates the patient’s pain intensity with opioid consumption, to these results, the 100 mg dose trial demonstrated a statistically significant reduction at 24 hours and the 200 mg dose trial demonstrated a statistically significant reduction at both 24 and 48 hours as well as a statistical trend through 72 hours. These results are indicative of a clear dose-related response. The primary endpoint in our two planned Phase 3 trials will use this integrated Silverman method assessment of pain and opioid consumption, as agreed to with the United States Food and Drug Administration, or FDA, in our end-of-Phase 2 meeting. In these trials, we will test both 200 mg and 300 mg doses in hernia repair. If a further dose response is observed in Phase 3, we believe statistical significance may be achieved at 72 hours for the 300 mg dose. This outcome may lead to an indication for XaraColl that may include both effective pain relief and a reduction in opioid consumption through 72 hours, resulting in a competitive advantage over currently available treatments. We plan to initiate these Phase 3 clinical trials for XaraColl in the second half of 2014, with pivotal data from the first trial expected in the first half of 2015 and from the second trial in the second half of 2015. We expect to file a new drug application, or NDA, for XaraColl in the first half of 2016.
Cogenzia
Our second lead product candidate, Cogenzia, is a topically applied, bioresorbable collagen sponge for the treatment of diabetic foot ulcer infections, or DFIs. Cogenzia is designed to release a high dose of gentamicin directly at the site of DFIs. There is a significant unmet medical need for more effective treatments of DFIs. Patients suffering from DFIs face a high rate of treatment failure, leading to hospitalization and potentially limb amputation which has a five-year mortality rate as high as 80%. Of the approximately 26.6 million patients globally who suffered a diabetic foot ulcer in 2013, 58%, or approximately 15.5 million, developed a DFI. DFIs are currently treated with systemic antibiotic therapy. However, peripheral vascular disease, or PVD, a frequent comorbidity of diabetes, leads to reduced blood

 
flow to the extremities thereby rendering systemic antibiotic therapy less effective in this patient population. Published data demonstrates that systemic antibiotics have a treatment failure rate of approximately 30% to 50%. Patients with a DFI face hospitalization risk that is more than 55 times higher and risk of amputation more than 150 times higher than diabetic patients with uninfected foot ulcers. The direct cost of an amputation associated with the diabetic foot is estimated to be between $30,000 and $60,000. In addition, major amputation is associated with mortality rates as high as 40% within one year and 80% within five years. We believe Cogenzia, when used in combination with standard systemic antibiotic therapy, addresses this significant unmet need and will provide substantially higher infection cure rates than those obtained from systemic therapy alone. Cogenzia acts by delivering a high dose of gentamicin directly to the wound site at a concentration that achieves broad eradication of both Gram positive and Gram negative bacteria, including methicillin-resistant Staphylococcus aureus, or MRSA, all of which may be present in DFIs. Delivering gentamicin topically avoids the toxicity side effects associated with systemic dosing and enables the drug to be used in higher concentrations, thus maximizing its effectiveness across a broader range of bacteria.
We believe that effective local antibiotic therapy with Cogenzia, which is designed to be administered in conjunction with systemic antibiotic therapy, can be shown to:
  • be the first topical therapy approved for treatment of all types of DFIs, including mild, moderate and severe infections;
  • significantly increase the infection cure rate over those currently achieved by standard systemic therapy, thereby reducing the risk of wound progression and amputation;
  • deliver a higher dose of gentamicin directly to the infection site than can be safely administered systemically, which may result in the reduction of bacteria;
  • allow for a safe administration of high dosages of gentamicin, without the side effects associated with systemic delivery;
  • enhance the spectrum of activity due to synergistic effects with systemic antibiotic therapy;
  • minimize the risk of resistance due to the high drug concentration delivered directly to the infection site; and
  • become recognized as the best-in-class standard for effective treatment of DFIs.
Cogenzia has been studied in a multicenter, randomized, placebo-controlled Phase 2 trial involving 56 patients with moderately infected DFIs. Cogenzia, administered in conjunction with systemic antibiotic therapy, achieved a 100% clinical cure rate compared to a 70% cure rate for patients who received systemic antibiotic therapy alone, which was a statistically significant difference. In addition, Cogenzia achieved baseline pathogen eradication of 100% of all microbes present at the wound site for all patients treated and a reduced time to pathogen eradication (both statistically significant). This is a critically important outcome as these results provide practitioners with a comfort level that treatment with Cogenzia results in wounds that not only appear to be free of infection, but actually have achieved complete eradication of the pathogens. Treatment with systemic antibiotic therapy alone frequently results in wounds that appear to have achieved a clinical cure of infection, but still carry residual pathogens, often leading to rapid reinfection. Since a diabetic foot ulcer cannot heal in the presence of pathogens, treatment with Cogenzia has the potential to provide practitioners with a more effective wound healing platform. We have confirmed the regulatory path for Cogenzia with the FDA under a special protocol assessment, or SPA, a process which allows us to agree with the FDA in writing on the design, endpoints and size of our planned clinical trials in advance, thereby providing greater regulatory certainty. Our protocols for these trials have also been accepted by the European Medicines Agency, or EMA under the Scientific Advice procedure, which aims to support sponsors in getting early advice from the EMA so that no major objections against the design of the study is likely to be raised during the evaluation of the marketing authorization application. We plan to initiate these trials in the second half of 2014 with pivotal data expected in late 2015. We expect to file an NDA in the first half of 2016 and we will also seek approval from the EMA for Cogenzia at that time. We intend to submit Cogenzia for designation under the FDA’s Fast Track program for the treatment of DFIs as an area of substantial unmet

 
medical need. In addition, we plan to further expand the market opportunity for Cogenzia by conducting additional Phase 2 trials for the prevention of DFIs as well as for the treatment of infected, or at risk of infection, wounds such as venous ulcers, burns and bed sores, among others. Expansion of the market opportunity for Cogenzia into the prevention of DFIs would widen the potential use of the product to cover the entire diabetic foot ulcer patient population.
We maintain full rights to Cogenzia in the United States and Europe and, upon obtaining marketing approval, intend to commercialize the product in the United States, and potentially in Europe, using our own specialized sales and marketing organization focused on high volume wound treatment centers and podiatrists. Cogenzia has been approved recently in Russia, Canada, Saudi Arabia and Jordan and we expect first launches, as well as approvals in additional countries, over the next 12 months. We plan to enter into a partnership to market and distribute Cogenzia in all emerging market countries.
CollaGUARD
CollaGUARD is our transparent, bioresorbable collagen film for the prevention of post-operative adhesions in multiple surgical applications, including digestive, colorectal, gynecological and urological surgeries. Post-operative adhesions are bands of scar tissue that abnormally bind together two surfaces and can develop naturally as part of the healing process. CollaGUARD is regulated as a Class III device in the United States and we expect it will require a single pivotal clinical trial for pre-market approval, or PMA, by the FDA. A Class III medical device in the FDA’s classification system for medical devices, is a device that is purported or represented to be for a use in supporting or sustaining human life, that is for a use which is of substantial importance in preventing impairment of human health, or that presents a potential unreasonable risk of illness or injury and is not substantially equivalent to a previously cleared marketed device and therefore requires proof of its safety and effectiveness, including through clinical trials. CollaGUARD has been approved in 45 countries in Europe, Asia and emerging markets during the last 12 months and we plan to commence a pivotal trial in the United States in the first quarter of 2015. The global market for anti-adhesion products was estimated at approximately $1.7 billion in 2012, and is projected to grow to $2.8 billion by 2018. We believe that CollaGUARD’s unique combination of features for optimal handling, ease-of-use, hemostatic properties, which causes the stoppage of bleeding, and anti-adhesion performance sets it apart from its competitors, as CollaGUARD:
  • can be used in both open and laparoscopic procedures;
  • is highly robust and can withstand suturing or stapling if required during a procedure;
  • is transparent which allows for constant visibility of the surgical field;
  • is highly stable at room temperature and has a four year shelf life; and
  • is fully biodegradable and is designed to be safely and completely resorbed over approximately three to five weeks post implantation.
We are preparing for a launch of the product in many of its currently approved countries through our established distribution partners, such as Takeda, which are expected to launch and distribute CollaGUARD in over 20 countries beginning in the second quarter of 2014.
Our current late-stage product candidate pipeline is summarized in the table below:
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*
  • Subject to positive pivotal results in U.S. in late 2015.
**
  • Takeda for Canada, Mexico, Russian Federation, Belarus, Ukraine, Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan, Azerbaijan, Armenia, Georgia and Mongolia; Pioneer for The People’s Republic of China (including Hong Kong, Macau and Taiwan), Vietnam, Cambodia, Malaysia, Singapore, Indonesia, Brunei Darussalam, Laos and Myanmar; and other smaller partners for various territories.
***
  • Approved in Russia, Canada, Saudi Arabia and Jordan; filed for approval in Mexico, India, Australia and Argentina.
****
  • Approved in 45 countries within Europe, Asia and emerging markets.
Our Collagen-Based Technology Platform
All of our products and product candidates are based on our proprietary collagen-based technology platform, which includes CollaRx®, a lyophilized sponge, a collagen matrix prepared by freeze-drying of dispersed purified collagen, which is the basis of our XaraColl and Cogenzia products, and CollaFilm®, a film cast membrane, a compact, thin and transparent film prepared by convective drying of dispersed purified collagen, which is the basis of CollaGUARD. We utilize highly purified, biocompatible, biodegradable and fully bioresorbable type-1 bovine and equine collagen. Type 1 collagen is the primary fibril-forming collagen in bone, dermis, tendons and ligaments and is the most abundant protein in the human body. Our collagen plays an integral role in the repair and replacement of both soft and hard tissue by providing an extracellular scaffold, stimulating certain growth factors and promoting tissue healing. Our proprietary processes and technologies also enable us to finely control the texture, consistency, drug elution dynamics, resorption time and other physical characteristics of the finished product. These characteristics provide us with the ability to tailor our products’ characteristics for superior performance and to provide clinically meaningful advantages over competing products. Our technologies have been fully scaled up and in some cases commercialized and our manufacturing processes are well controlled and cost efficient.
Manufacturing and Intellectual Property
Our wholly owned subsidiary, Syntacoll GmbH, located in Saal, Germany, is our commercial-scale manufacturing division, which exclusively produces both clinical and commercial supply for all our products on a global basis. We believe our ability to manufacture our products allows us to control more effectively the quality and cost of manufacturing, which will enable us to achieve higher operating margins. Our manufacturing processes are fully integrated and reliable and we have a highly trained manufacturing staff with a long history of producing collagen-based products. In our 30 years of producing collagen-based products, we have never experienced any material quality issues or recalls.
We have developed significant know-how regarding our manufacturing processes and protect our products, product candidates and technology through trade secrets and patents. We protect XaraColl through various patents and patent applications, including a U.S. patent extending through 2029. Our U.S. patent, which was issued in 2011, covers the formula relating to our combination of collagen with all classes of anesthetics for the purpose of providing pain relief. For Cogenzia, we have filed five patent applications in the United States, Europe, Canada, Australia and Japan, all of which are currently in the examination phase. These patent applications are intended to generally protect the use of our combination of Cogenzia with certain classes of systemic antibiotics for the purpose of generating improved DFI cure rates. If and when our patents are issued, we expect patent protection for Cogenzia in the United States and Europe to expire at the earliest in 2031. We submitted a family of patent applications aimed at protecting CollaGUARD on an international basis, including the United States, which is currently in the examination phase. If issued, these patents are expected to expire in 2033 or later in the United States.
Our Strategy
Our goal is to be a leading, fully integrated, specialty pharmaceutical company focused on the development, commercialization and manufacture of pharmaceutical and medical products based on our proprietary collagen-based technology platform. The key elements of our strategy are to:

 
  • Develop XaraColl for treatment of post-operative pain.   We plan to initiate our two planned Phase 3 trials for XaraColl in the second half of 2014, as established with the FDA at our end-of-Phase 2 meeting. We expect pivotal data from our first trial in the first half of 2015 and from our second trial in late 2015.
  • Develop Cogenzia for the treatment of DFIs.   We are focused on commencing two planned Phase 3 trials in patients with moderate to severe DFIs in the second half of 2014, as agreed to with the FDA under an SPA, the design of which has also been accepted by the EMA, with pivotal data expected in late 2015. We also plan to further pursue developing Cogenzia for the prevention of DFIs as well as the prevention and treatment of infections in wounds, such as venous ulcers, burns and bed sores.
  • Develop CollaGUARD for prevention of post-surgical adhesions.   CollaGUARD, already approved in Europe and other parts of the world, is regulated by the FDA as a Class III device and we plan to commence a single pivotal clinical trial for PMA in the first quarter of 2015 after our pre-investigational device exemption, or pre-IDE, meeting with the FDA, expected to occur in the fourth quarter of 2014. The pre-IDE meeting, which is encouraged by the FDA, allows us to explain CollaGUARD and our proposed trial protocols to the FDA review team informally, prior to submission of the full IDE. We expect that PMA approval, if obtained, will enable promotion of CollaGUARD for broad surgical application in the United States.
  • Enter into and leverage strategic partnerships for the development and commercialization of our products and product candidates.   We have entered, and intend to enter, into additional strategic partnerships for the development and commercialization of XaraColl, Cogenzia outside of the United States and Europe, CollaGUARD in numerous additional countries, and certain of our other marketed products with partners in various countries around the world. We believe that selectively partnering with healthcare companies who are well positioned to commercialize our products in specific markets will allow us to optimize our ability to obtain a greater return from our portfolio of products and product candidates.
  • Establish our own sales and marketing capabilities to commercialize Cogenzia in the United States and potentially in Europe.   Upon approval of Cogenzia in the United States for the treatment of DFIs, we intend to establish our own specialized sales and marketing organization focused on high volume wound treatment centers and podiatrists. This sales force will also market Cogenzia for other indications, if approved.
  • Manufacture all of our products and product candidates, including, XaraColl, Cogenzia and CollaGUARD.   We plan to manufacture exclusively all clinical and commercial global supply of our products and product candidates in our facility in Saal, Germany. This facility is currently approved for the manufacture of all of our approved products in Europe, Canada, Australia, the Middle East and elsewhere outside of the United States. We believe we currently have adequate production capability to support our current production needs and planned clinical trials for XaraColl and Cogenzia. We also expect the expansion of our production facility by the second half of 2015 to increase capacity significantly. We believe our ability to manufacture our products ourselves allows us to control more effectively the quality and cost of manufacturing, which in turn will enable us to achieve higher operating margins, providing us and our partners with a marketing advantage.
Risk Factors
Our business is subject to a number of risks you should be aware of before making an investment decision. These risks are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. These risks include the following:
  • We have a history of losses and anticipate that we will continue to incur losses in the future and may never achieve or sustain profitability.

 
  • If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our product candidates.
  • Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this prospectus.
  • Our business depends substantially on the success of certain of our lead product candidates, XaraColl and Cogenzia, which are still in development. If we are unable to successfully develop and subsequently commercialize XaraColl and Cogenzia, or experience significant delays in doing so, our business will be materially harmed.
  • Clinical drug development is expensive and involves uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results. If our Phase 3 clinical trials for XaraColl or Cogenzia are unsuccessful, or significantly delayed, we could be required to abandon development and our business will be materially harmed.
  • The results of clinical trials may not support our product candidate claims. Certain of our completed Phase 2 clinical trials failed to meet their primary endpoints and involved small patient populations.
  • We have not obtained regulatory approval for any of our late-stage product candidates in the United States, so we cannot yet generate any revenues from the sales of these products in the United States.
  • If we fail to manufacture XaraColl, Cogenzia, CollaGUARD or our other marketed products and product candidates in sufficient quantities and at acceptable quality and cost levels, or to fully comply with current Good Manufacturing Practice regulations, or cGMP, enforced by the FDA, or other applicable manufacturing regulations, we may face delays in the commercialization of our products, breach obligations to our licensing partners or be unable to meet market demand, and lose potential revenues.
  • Even if we obtain regulatory approval for our product candidates, the products may not gain market acceptance among hospitals, physicians, health care payors, patients and others in the medical community.
  • We will need to grow the size of our organization and we may experience difficulties in managing this growth.
  • As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and we are permitted to file less information with the SEC than U.S. companies. This may limit the information available to holders of ADSs.
Corporate History and Information
The legal predecessor of our company, Innocoll Holdings, Inc., was incorporated in Delaware under the name Innocoll, Inc. in December 1997 and renamed Innocoll Holdings, Inc. in May 2004. In July 2013, we re-domiciled Innocoll Holdings, Inc. from the United States to Germany pursuant to a contribution in kind and share for share exchange into the newly formed Innocoll GmbH, a German limited liability company.
Pursuant to a notarial deed entered into between the shareholders of Innocoll Holdings, Inc. and Innocoll GmbH in July 2013, the holders of ordinary shares, preferred shares and warrants to purchase ordinary shares of Innocoll Holdings contributed their shares and warrants by way of a contribution in kind to Innocoll GmbH in exchange for ordinary shares, preferred shares and options to purchase ordinary shares of Innocoll GmbH and as a result thereof, Innocoll Holdings, Inc. became Innocoll GmbH’s wholly-owned subsidiary. Innocoll Holdings, Inc. was subsequently liquidated and its assets consisting of subsidiary companies Innocoll Pharmaceuticals Ltd., Innocoll Technologies Ltd., both Irish companies, and Innocoll, Inc., a Delaware corporation, were distributed to Innocoll GmbH.

 
Pursuant to a notarial deed entered into on June 16, 2014, all shareholders of Innocoll GmbH agreed to amend and restate its articles of association and cancel and terminate all preference, redemption and cumulative dividend rights of the preferred shares (other than with respect to the series E shares regarding certain anti-dilution rights) in exchange for ordinary shares of Innocoll GmbH. On July 3, 2014, Innocoll GmbH transformed into a German stock corporation (Aktiengesellschaft or AG) in accordance with the provisions of the German Reorganization Act (Umwandlungsgesetz), and all shares of Innocoll GmbH became ordinary shares of Innocoll AG. Innocoll AG is registered in the commercial register of Regensburg, Germany under the number HRB 14298.
We are managed and controlled in Ireland and became an Irish tax resident as of January 1, 2014. Our principal executive offices are located at Midlands Innovation and Research Centre, Dublin Road, Athlone, County Westmeath, Ireland, and our telephone number is +353 (0) 90 648 6834. Our website address is www.innocollinc.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be part of this prospectus or in deciding whether to purchase our ADSs. Our agent for service of process in the United States is Michael Myers, Ph.D., 42662 Kitchen Prim Court, Ashburn, Virginia 20148.
XaraColl®, Cogenzia®, CollaGUARD®, our localized drug delivery technologies trademarked as CollaRx®, CollaFilm®, CollaPress™ and LiquiColl, the Innocoll logo and other trademarks or service marks of Innocoll appearing in this prospectus are our property. This prospectus contains additional trade names, trademarks and service marks of other companies.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion in revenues for our fiscal year ended December 31, 2013, we qualify as an “emerging growth company” as defined in Section 2(a) of the U.S. Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act, or the JOBS Act, which was enacted in April 2012. An emerging growth company may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to:
  • not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;
  • being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;
  • reduced disclosure obligations regarding executive compensation; and
  • not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements.
We may choose to take advantage of some or all of the available exemptions and have taken advantage of some of these exemptions in this prospectus. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold shares. We do not know if some investors will find our ADSs less attractive as a result of our utilization of these or other exemptions. The result may be a less active trading market for our ADSs and increased volatility in the price of our ADSs.
In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We currently prepare our financial statements in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB,

 
which do not have separate provisions for publicly traded and private companies. However, in the event we convert to generally accepted accounting principles in the United States, or U.S. GAAP, while we are still an emerging growth company, we may be able to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we had total annual gross revenues of at least $1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the date of the first sale of ADSs in this offering; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided to emerging growth companies in the JOBS Act.

 
THE OFFERING
American Depositary Shares offered by Innocoll AG
5,353,000 ADSs
Ordinary shares to be outstanding immediately after this offering
1,408,523 ordinary shares
Offering price
We currently estimate that the initial public offering price will be between $13.00 and $15.00 per ADS.
Over-allotment option
Up to 802,950 additional ADSs
The ADSs
Each ADS represents 1/13.25 ordinary shares.
   
The depositary will hold the ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement. You may cancel your ADSs and withdraw the underlying ordinary shares. The depositary will charge you fees for, among other acts, any cancellation. In certain limited instances described in the deposit agreement, we may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs, you agree to be bound by the terms of the deposit agreement then in effect.
To better understand the terms of the ADSs, you should carefully read “Description of American Depositary Shares” in this prospectus. You should also read the deposit agreement, which is an exhibit to the Registration Statement that includes this prospectus.
Depositary
Citibank, N.A.
Custodian
Citigroup Global Markets Deutschland AG
Use of proceeds
We expect to receive total estimated net proceeds from this offering of approximately $66.8 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering for the following purposes: (i) developing XaraColl, Cogenzia and CollaGUARD, (ii) expanding our manufacturing infrastructure, and (iii) general corporate purposes. See “Use of Proceeds.”
Dividend policy
Neither we nor our predecessor entity, Innocoll GmbH, have ever declared any cash dividends on our ordinary shares, and we have no present intention of declaring or paying any dividends in the foreseeable future. See “Dividend Policy.”
Risk factors
You should carefully read the information set forth under “Risk Factors” beginning on page 14 of this prospectus and the other information set forth in this prospectus before deciding whether to invest in our ADSs.
Proposed NASDAQ Global Market Symbol
INNL
Sofinnova has indicated an interest in purchasing up to $15.0 million of our ADSs at the initial public offering price and certain of our existing shareholders, including certain of our supervisory board members, have indicated an interest in purchasing up to $12.0 million of our ADSs at the initial public

 
offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, fewer or no ADSs to the above investors, and such investors could determine to purchase more, fewer or no ADSs in this offering. If Sofinnova purchases ADSs in this offering, we anticipate that it will have a right to nominate, in consultation with our Nominating and Corporate Governance Committee, one member for appointment to our supervisory board, subject to the approval of our supervisory board and our shareholders. If elected by our shareholders, we expect Sofinnova’s nominee to join our supervisory board at a special meeting of our shareholders to elect supervisory board members after the completion of our initial public offering or in connection with a court appointment procedure. Given that German law requires the total number of our supervisory board members to be divisible by three, Sofinnova’s nominee would replace an existing supervisory board member who would have to resign prior to the election or appointment of such nominee. In addition, the underwriters have reserved an aggregate of 5.0% of our ADSs being offered in this offering for purchase by certain affiliates of our supervisory board members, management board members, existing shareholders and others associated with us, through a directed share program.
Unless otherwise indicated, all information in this prospectus, including information relating to the number of ordinary shares to be outstanding immediately after the completion of this offering:
  • is based on 1,004,523 ordinary shares outstanding as of the date of this prospectus, giving effect to the conversion of all our outstanding preferred shares into ordinary shares which includes, 85,414 ordinary shares awarded under our 2014 Restricted Share Plan that are subject to repurchase;
  • excludes 205,199 ordinary shares authorized and issuable upon the exercise of options outstanding and exercisable as of March 31, 2014, at a weighted average exercise price of 100 per share;
  • excludes 24,784 ordinary shares reserved for options that can be awarded in the future;
  • excludes 72,370 ordinary shares, authorized to be issued upon the exercise of Phantom Shares awarded in 2014 pursuant to our Phantom Share award agreements, subject to our agreement to issue such shares in lieu of cash;
  • excludes any shares that may be issuable to the holders of ordinary shares and series E preferred shares, or the ordinary shares issuable upon conversion thereof, if the price per ADS in this offering is not above $13.85 per ADS (based on an exchange rate of $1.3592 per euro, the official exchange rate quoted as of July 7, 2014); and
  • assumes no exercise by the underwriters of their over-allotment option to purchase up to 802,950 additional ADSs.

 
SUMMARY CONSOLIDATED FINANCIAL DATA
The following tables set forth a summary of the consolidated historical financial data as of, and for the periods ended on, the dates indicated for Innocoll AG (formerly known as Innocoll GmbH). We have derived the consolidated statement of comprehensive income data for the years ended December 31, 2013 and 2012 and the consolidated statement of financial position data as of December 31, 2013 and 2012 from our audited consolidated financial statements included elsewhere in this prospectus, which have been prepared in accordance with IFRS, as issued by the IASB, and audited in accordance with the standards of the Public Company Accounting Oversight Board (United States). The financial data as of March 31, 2014 and 2013 and for the three months ended March 31, 2014 and 2013 have been derived from our unaudited interim financial statements and the related notes, which are included elsewhere in this prospectus. Our historical results for any prior period are not necessarily indicative of our future results. You should read this information in conjunction with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our financial statements and related notes, each included elsewhere in this prospectus.
 
Three Months Ended March 31,
Years Ended December 31,
2014
2014
2013
2013
2013
2012
(in thousands, except for per share data)
(unaudited)
(in thousands except for per share data)
Consolidated Statement of Comprehensive Income Data:
Revenue
Revenue – continuing operations
$
1,772
1,285
1,116
$
4,889
3,546
4,312
Cost of sales
(2,140
)
(1,552
)
(1,116
)
(6,275
)
(4,551
)
(4,553
)
Gross loss
(368
)
(267
)
(1,386
)
(1,005
)
(241
)
Operating expense
Research and development expenses
(702
)
(509
)
(471
)
(2,293
)
(1,663
)
(1,696
)
General and administrative expenses
(3,370
)
(2,444
)
(829
)
(5,682
)
(4,121
)
(3,266
)
Other operating expense – net
112
81
(26
)
(212
)
(154
)
(556
)
Total operating expense – net
(3,960
)
(2,872
)
(1,326
)
(8,187
)
(5,938
)
(5,518
)
Loss from operating activities – continuing operations
(4,328
)
(3,139
)
(1,326
)
(9,573
)
(6,943
)
(5,759
)
Finance expense
(2,252
)
(1,633
)
(3,346
)
(9,581
)
(6,949
)
(6,379
)
Other income
22,161
16,073
407
(Loss)/profit before income tax
(6,580
)
(4,772
)
(4,672
)
3,007
2,181
(11,731
)
Income tax expense
(28
)
(20
)
(17
)
(99
)
(72
)
(74
)
(Loss)/profit for the period – all attributable to equity holders of the Company
(6,608
)
(4,792
)
(4,689
)
2,908
2,109
(11,805
)
Currency translation adjustment
(7
)
(5
)
(804
)
214
155
573
Total comprehensive (loss)/income
$
(6,615
)
(4,797
)
(5,493
)
$
3,122
2,264
(11,232
)
(Loss)/earnings per share:
Basic
(170.5
)
(123.7
)
(92.0
)
64.8
(1)
47.0
(1)
(231.7
)(1)
Diluted
(170.5
)
(123.7
)
(92.0
)
(13.1
)(1)
(9.5
)(1)
(231.7
)(1)
Basic and Diluted loss per share – pro forma
(5.4
)
(3.9
)
(13.0
)
(9.4
)
 
(1)
  • The basic and diluted loss per share amounts of 159.4 and 97.3 for the years ended December 31, 2013 and December 31, 2012, respectively, as originally reported in the historical financial statements have been restated. In the historical financial

 
statements, we excluded in error from the basic loss per share numerator the effect of the gains on settlement of promissory notes and preferred stock, the extinguishment of related liabilities, together with the interest expense on these notes and stock. The restated basic and diluted earnings/(loss) per share gives effect to the correction of this error. See Note 25 to our audited consolidated financial statements for further analysis.
 
As of March 31,
As of December 31,
March 31,
2014
(Pro Forma
As Adjusted)(2)(3)
March 31,
2014
(Pro Forma)(1)
2014
(Actual)
2014
2013
(Actual)
2013
2012
(in thousands)
(unaudited)
Consolidated Statement of Financial Position Data:
Current assets
$
88,038
$
21,243
$
4,072
2,953
$
6,651
4,824
1,830
Total assets
89,141
22,346
5,175
3,753
7,661
5,556
2,500
Current liabilities
(13,617
)
(13,617
)
(13,617
)
(9,876
)
(12,476
)
(9,048
)
(57,788
)
Long term debt
(89,159
)
(64,664
)
(86,900
)
(63,026
)
(17,700
)
Other non-current liabilities
(105
)
(105
)
(105
)
(76
)
(112
)
(81
)
(941
)
Total equity attributable to equity holders of the company
75,419
8,624
(97,706
)
(70,863
)
(91,827
)
(66,599
)
(73,929
)
Total equity and liabilities
89,141
22,346
5,175
3,753
7,661
5,556
2,500
 
(1)
  • Gives effect to (a) the issuance of Series E preferred shares in May 2014 and ordinary shares in June 2014 and the receipt of the proceeds therefrom; (b) the conversion of all of our preferred shares into ordinary shares, effective June 25, 2014; and (c) the transformation of Innocoll GmbH, a German limited liability company, into “Innocoll AG,” a German stock corporation, effective July 3, 2014.
(2)
  • Gives effect to the transactions described in footnote (1) and gives further effect to our issuance and sale of 5,353,000 ADSs in this offering at an assumed initial public offering price of $14.00 per ADS, the midpoint of the price range listed on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
(3)
  • Each $1.00 increase (decrease) in the assumed initial public offering price of $14.00 per ADS, the midpoint of the price range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of total shareholders’ equity (deficit) and total capitalization by approximately $5.0 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 500,000 ADSs offered by us at the assumed initial public offering price per ADS, the midpoint of the price range listed on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and short-term investments, total shareholders’ equity (deficit) and total capitalization by approximately $6.5 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and continued offering expenses payable by us. The pro forma as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

RISK FACTORS
Investing in our ADSs involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our ADSs. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our ADSs could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks Related to Our Financial Position and Capital Requirements
We have a history of operating losses and anticipate that we will continue to incur operating losses in the future and may never sustain profitability.
We have incurred operating losses in each year since inception because our research and development and general and administrative expenses exceeded our revenue. Our operating loss for the years ended December 31, 2012 and 2013 was 5.8 million and 6.9 million, respectively, and 3.1 million for the three months ended March 31, 2014. As of March 31, 2014, we had an accumulated deficit of 90.8 million and our current liabilities exceeded our current assets by 6.9 million.
Our ability to become profitable depends on our ability to develop and commercialize our lead product candidates. Our lead product candidates, XaraColl and Cogenzia are not yet approved for commercial sale in the United States or Europe and we do not know when, or if, we will generate significant revenues from their sale in the future. Our third late-stage product candidate, CollaGUARD, is approved for commercial sale in 45 countries, but not yet approved for commercial sale in the United States and we do not know when, or if, we will generate significant revenue from its sale in the United States in the future. We do not anticipate generating revenue from sales of XaraColl for at least the next several years and we will never generate revenue from XaraColl if we do not obtain regulatory approval. While we have products approved or commercialized and available for sale in certain markets, including Cogenzia, CollatampG and Septocoll, our revenues to date from these products have been limited.
Even if we do generate product sales, we may never achieve or sustain profitability. We anticipate that our operating losses will substantially increase over the next several years as we execute our plan to expand our research, development and commercialization activities, including the clinical development and planned commercialization of our product candidates, and incur the additional costs of operating as a public company. In addition, if we obtain regulatory approval of our product candidates, we may incur significant sales and marketing expenses. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable, if ever.
If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our product candidates.
Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to continue the clinical development of our product candidates, including our planned Phase 3 clinical trials. If our product candidates are approved, we will require significant additional funds in order to launch and commercialize such product candidates in the United States and potentially in the European Union, or EU. We would also need to spend substantial amounts to significantly expand our manufacturing infrastructure. Finally, we have trade and other payables of 7.6 million and deferred income of 2.3 million (representing products to be delivered for which payment has already been received) as of March 31, 2014.
We estimate that our net proceeds from this offering will be approximately $66.8 million, based upon an assumed initial public offering price of $14.00 per ADS (the midpoint of the price range set forth on the

cover page of this prospectus), after deducting the estimated underwriting discounts and commissions and offering expenses payable by us. We believe that such proceeds, together with our existing cash and cash equivalents, will be sufficient to fund our operations for at least the next 18 months. Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section entitled “Use of Proceeds.” We expect that the net proceeds from this offering will allow us to develop XaraColl, Cogenzia and CollaGUARD; fund research and development and clinical trials for additional product candidates in our pipeline; and expand our manufacturing infrastructure. However, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. We will require additional capital for the further development and commercialization of our product candidates. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:
  • the initiation, progress, timing, costs and results of clinical trials for our product candidates, particularly XaraColl and Cogenzia;
  • the clinical development plans we establish for these product candidates;
  • the number and characteristics of product candidates that we develop and seek regulatory approval for;
  • the outcome, timing and cost of regulatory approvals by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities to require that we perform more studies than those that we currently expect;
  • the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
  • the effects of competing technological and market developments;
  • the cost and timing of completion of commercial-scale manufacturing activities; and
  • the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own.
We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidates or other research and development initiatives. We also could be required to seek collaborators for our product candidates at an earlier stage than would otherwise be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to our product candidates in markets in which we would otherwise seek to pursue development or commercialization ourselves.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our ADSs to decline.
Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this prospectus.
Our report from our independent registered public accounting firm for the year ended December 31, 2013 includes an explanatory paragraph stating that certain conditions indicate the existence of a substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited consolidated financial statements, and it is likely that investors will lose all or a

part of their investment. After this offering, future reports from our independent registered public accounting firm may also contain statements expressing doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all.
Risks Related to the Clinical Development and Regulatory Approval of Our Product Candidates
Our business depends substantially on the success of certain of our lead product candidates, XaraColl and Cogenzia, which are still in development. If we are unable to successfully develop and subsequently commercialize XaraColl and Cogenzia, or experience significant delays in doing so, our business will be materially harmed.
We have invested a significant portion of our efforts and financial resources in the development of XaraColl and Cogenzia, our two lead product candidates, which have not yet been approved for commercial sale in the United States. There remains a significant risk that we will fail to successfully develop either XaraColl or Cogenzia, or both. We expect to commence our Phase 3 clinical trials for XaraColl and Cogenzia in the second half of 2014. We do not expect to have final pivotal data from our XaraColl and Cogenzia Phase 3 trials available until late 2015. Even if we ultimately obtain statistically significant, positive results from our Phase 3 clinical trials, we do not expect to submit applications for marketing approval for XaraColl and Cogenzia until the first half of 2016. The success of our product candidates will depend on several factors, including:
  • successful completion of clinical trials;
  • receipt of regulatory approvals from applicable regulatory authorities;
  • maintaining regulatory compliance for our manufacturing facility;
  • manufacturing sufficient quantities in acceptable quality;
  • achieving meaningful commercial sales of our product candidates, if and when approved;
  • obtaining reimbursement from third-party payors for product candidates, if and when approved;
  • sourcing sufficient quantities of raw materials used to manufacture our products;
  • successfully competing with other products;
  • continued acceptable safety and effectiveness profiles for our product candidates following regulatory approval, if and when received;
  • obtaining and maintaining patent and trade secret protection and regulatory exclusivity; and
  • protecting our intellectual property rights.
If we do not achieve one or more of these factors in a timely manner, or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business and we may not be able to earn sufficient revenues and cash flows to continue our operations.
Our ability to generate future revenues depends heavily on our success in:
  • developing and securing U.S. and/or foreign regulatory approvals for our product candidates;
  • manufacturing commercial quantities of our product candidates at acceptable costs;
  • commercializing our product candidates, assuming we receive regulatory approval;
  • achieving broad market acceptance of our product candidates in the medical community and with third-party payors and patients; and
  • pursuing clinical development of our product candidates for additional indications.

Clinical drug development is expensive and involves uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results. If our Phase 3 clinical trials for XaraColl or Cogenzia are unsuccessful, or significantly delayed, we could be required to abandon development and our business will be materially harmed.
Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of our Phase 2 clinical trials for XaraColl and Cogenzia may not be predictive of the results of our planned Phase 3 clinical trials. Adverse events may occur or other risks may be discovered in Phase 3 clinical trials that will cause us to suspend or terminate our clinical trials. In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including changes in or adherence to trial protocols, differences in the size and type of patient populations and the dropout rates among clinical trial participants. Our future clinical trial results, therefore, may not demonstrate efficacy and safety sufficient to obtain regulatory approval for our product candidates.
Flaws in the design of a clinical trial may not become apparent until the clinical trial is well under way. We have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support regulatory approval. In addition, clinical trials often reveal that it is not practical or feasible to continue development efforts.
We may voluntarily suspend or terminate our clinical trials if at any time we believe that they present an unacceptable risk to participants. Further, regulatory agencies, institutional review boards or data safety monitoring boards may at any time order the temporary or permanent discontinuation of our clinical trials or request that we cease using certain investigators in the clinical trials if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, or that they present an unacceptable safety risk to participants.
If the results of our clinical trials for our current product candidates or clinical trials for any future product candidates do not achieve their primary efficacy endpoints or raise unexpected safety issues, the prospects for approval of our product candidates will be materially adversely affected. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have failed to achieve similar results in later clinical trials, or have ultimately failed to obtain regulatory approval of their product candidates. Many products that initially showed promise in clinical trials or earlier stage testing have later been found to cause undesirable or unexpected adverse effects that have prevented their further development. Our upcoming trials for our primary product candidates, XaraColl and Cogenzia, may not produce the results that we expect.
In addition, we may experience numerous unforeseen events that could cause our clinical trials to be delayed, suspended or terminated, or which could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including:
  • delay or failure in reaching agreement with the FDA or comparable foreign regulatory authorities on trial designs that we are able to execute;
  • the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;
  • clinical trials of our product candidates may produce negative, inconclusive or inconsistent results, and we may decide, or regulators may require us, to conduct additional clinical trials or implement a clinical hold;
  • we may elect or be required to suspend or terminate clinical trials of our product candidates, including based on a finding that the participants are being exposed to unacceptable health risks;

  • regulators or institutional review boards may not authorize us or our investigators to commence or continue a clinical trial, or conduct or continue a clinical trial at a prospective trial site;
  • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
  • we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
  • the cost of clinical trials of our product candidates may be greater than we anticipate;
  • changes in government regulation or administrative actions;
  • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; and
  • our product candidates may have undesirable adverse effects or other unexpected characteristics.
Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of subjects to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, ability to obtain and maintain patient consents, risk that enrolled subjects will drop out before completion, competing clinical trials and clinicians’ and patients’ perceptions of the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.
If we experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be materially harmed, and our ability to generate product revenues from any of these product candidates will cease or be delayed. In addition, any termination of, or delays in completing, our clinical trials will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to a delay in the commencement or completion of or early termination of, clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.
The results of clinical trials may not support our product candidate claims. Certain of our completed Phase 2 clinical trials failed to meet their primary endpoints and involved small patient populations.
Even if our clinical trials are completed as planned, we cannot be certain that the results will support our product candidate claims or that the FDA or government authorities in other countries will agree with our conclusions regarding such results. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful and the results of later clinical trials often do not replicate the results of prior clinical trials and preclinical testing.
In addition, we were unable to achieve certain primary efficacy endpoints in connection with the Phase 2 clinical studies for our two lead product candidates, XaraColl and Cogenzia. In our two Phase 2 trials for XaraColl, which enrolled 53 and 50 patients, respectively, our primary endpoints were reduction of pain, based on patient’s summed pain intensity, or SPI, scores and the total consumption of opioid analgesia, respectively. Over the first 24 hours post operation, XaraColl-treated patients experienced significantly less pain in study 1 with a XaraColl dose of 100 mg (44% reduction; p = 0.001) but showed merely a trend towards significance for pain reduction in study 2 with a XaraColl dose of 200 mg (22% reduction; p = 0.080). Over the same time period, patients in the XaraColl group took significantly less opioid medication in study 2 (44% reduction; p = 0.004) but the results did not show a statistically significant reduction in opioid use in study 1 (25% reduction; p = 0.123). As a result of meetings with the FDA, we plan to integrate these endpoints for our planned Phase 3 trials using a well-validated statistical analysis known as the Silverman method for XaraColl but we may fail to reach these endpoints and demonstrate efficacy for XaraColl.

In our Phase 2 trial for Cogenzia involving 56 patients, Cogenzia (50 mg) was applied daily for up to four weeks in combination with systemic antibiotic therapy for the treatment of moderately-infected diabetic foot ulcers, with the control group receiving systemic therapy alone. The primary efficacy endpoint was the percentage of patients with a clinical outcome of ‘‘clinical cure’’ on a study visit on day 7 of treatment. Efficacy versus the control group was not achieved. However, based on the modified intent-to-treat population, 100% of the patients who received Cogenzia and who completed the trial achieved a clinical cure two weeks after completion of treatment (test-of-cure date), compared to just 70% of patients who received systemic antibiotic therapy alone, which was a statistically significant difference (p = 0.024). We have selected clinical cure measured approximately 10-14 days after the last dose of treatment has been administered as our primary endpoint for our planned Phase 3 trials for Cogenzia, but we may fail to reach these endpoints and demonstrate efficacy for Cogenzia.
In addition, our completed clinical trials involved a small patient population. Because of the small sample size, the results of these clinical trials may not be indicative of future results in a larger and more diverse patient population. The clinical trial process may fail to demonstrate that our product candidates are safe for humans and effective for indicated uses. This failure could cause us to abandon a product candidate and may delay development of other product candidates. Any delay in, or termination of, our clinical trials will delay the filing of our NDAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues.
If our drug product candidates, such as XaraColl and Cogenzia, receive regulatory approval, we will be subject to ongoing regulatory requirements and we may face future development, manufacturing and regulatory difficulties.
Our drug product candidates, such as XaraColl and Cogenzia, if approved, will be subject to ongoing regulatory requirements for labeling, packaging, storage, advertising, promotion, sampling, record-keeping, submission of safety and other post-market approval information, importation and exportation. In addition, approved products, manufacturers and manufacturers’ facilities are required to comply with extensive FDA and EMA requirements and the requirements of other similar agencies, including ensuring that quality control and manufacturing procedures conform to cGMP requirements.
Accordingly, we will be required to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. We will also be required to report certain adverse reactions and production problems, if any, to the FDA and EMA and other similar agencies and to comply with certain requirements concerning advertising and promotion for our potential products.
If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, it may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If our potential products fail to comply with applicable regulatory requirements, a regulatory agency may, among other actions:
  • issue warning letters or untitled letters;
  • require product recalls;
  • mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;
  • require us or our potential future collaborators to enter into a consent decree or permanent injunction;
  • impose other administrative or judicial civil or criminal actions, including monetary or other penalties, or pursue criminal prosecution;
  • withdraw regulatory approval;
  • refuse to approve pending applications or supplements to approved applications filed by us or by our potential future collaborators;

  • impose restrictions on operations, including costly new manufacturing requirements; or
  • seize or detain products.
Risks Related to Our Business and Strategy
If we fail to manufacture XaraColl, Cogenzia, CollaGUARD or our other marketed products and product candidates in sufficient quantities and at acceptable quality and cost levels, or to fully comply with current Good Manufacturing Practices, or cGMP, or other applicable manufacturing regulations, we may face a bar to or delays in the commercialization of our products, breach obligations to our licensing partners or be unable to meet market demand, and lose potential revenues.
The manufacture of our products based on our collagen-based technology platform, including XaraColl and Cogenzia, requires significant expertise and capital investment. Currently, we are manufacturing all commercial and clinical supply for all of our marketed products and product candidates in our sole facility in Saal, Germany without the benefit of any redundant or backup facilities, and we are planning to continue to do so in the future. We need to spend substantial amounts to significantly expand our manufacturing infrastructure in order to satisfy any increases in future demand. Also, substantially all of our inventory of raw material and finished goods is held at this location. We take precautions to safeguard our facility, including acquiring insurance, employing back-up generators, adopting health and safety protocols and utilizing off-site storage of computer data. However, vandalism, terrorism or a natural or other disaster, such as a fire or flood, could damage or destroy our manufacturing equipment or our inventory of raw material or finished goods, cause substantial delays in our operations, result in the loss of key information, and cause us to incur additional expenses. Our insurance may not cover our losses in any particular case. In addition, regardless of the level of insurance coverage, damage to our facilities may have a material adverse effect on our business, financial condition and operating results. Also, our management has limited experience commercializing products on a large scale, whereas many of our competitors have substantially greater financial, technical and other resources, such as a larger staff and experienced manufacturing organizations.
We must comply with federal, state and foreign regulations, including FDA regulations governing cGMP enforced by the FDA through its facilities inspection program and by similar regulatory authorities in other jurisdictions where we do business. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. For our medical device products, we are required to comply with the FDA’s Quality System Regulation, or QSR, which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our medical device products.
Our facility has not yet been inspected by the FDA for cGMP compliance. If we do not successfully complete the cGMP process for our facility or fail to do so in a timely manner, commercialization of our products could be prohibited or significantly delayed. Even after cGMP compliance has been received, the FDA or similar foreign regulatory authorities at any time may implement new standards, or change their interpretation and enforcement of existing standards for manufacture, packaging, testing of or other activities related to our products. For our marketed medical device products, the FDA audits compliance with the QSR through periodic announced and unannounced inspections of manufacturing and other facilities. The FDA may impose inspections or audits at any time. Similar audit rights exist in Europe and other foreign jurisdictions. Any failure to comply with applicable cGMP, QSR and other regulations may result in fines and civil penalties, suspension of production, product seizure or recall, imposition of a consent decree, or withdrawal of product approval, and would limit the availability of our product. Any manufacturing defect or error discovered after products have been produced and distributed also could result in significant consequences, including adverse health consequences, injury or death to patients, costly recall procedures, re-stocking costs, damage to our reputation and potential for product liability claims. If we are required to find a new manufacturer or supplier, the process would likely require prior FDA and/or equivalent foreign regulatory authority approval, and would be very time consuming. An inability to continue manufacturing adequate supplies of our products at our facility in Saal, Germany,

could result in a disruption in the supply of our products. We have licensed the commercial rights in specified foreign territories to market and sell our products. Under those licenses, we have obligations to manufacture commercial product for our commercial partners. If we are unable to fill the orders placed with us by our commercial partners in a timely manner, we may potentially lose revenue and be in breach of our licensing obligations under agreements with them.
We have not obtained regulatory approval for any of our late-stage product candidates in the United States, so we cannot yet generate any revenues from the sales of these products in the United States.
Our late-stage product candidates, XaraColl, Cogenzia and CollaGUARD, have not yet been approved for commercial sale in the United States. We cannot commercialize product candidates in the United States without first obtaining regulatory approval from the FDA to market each product. We plan to advance XaraColl and Cogenzia to Phase 3 clinical trials in the United States in the second half of 2014. We plan to advance CollaGUARD to a pivotal trial in the United States in the first quarter of 2015.
Before obtaining regulatory approvals for the commercial sale of any product candidate for a target indication, we must demonstrate in non-clinical, or preclinical, studies and clinical trials, and, with respect to approval in the United States, to the satisfaction of the FDA, that the product candidate is safe and effective for use under the labeled conditions for use and that the manufacturing facilities, processes and controls are adequate. In the United States, we have not submitted an NDA for either XaraColl or Cogenzia. An NDA must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each desired indication. The NDA must also include significant information regarding the chemistry, manufacturing and controls for the product and its components, and draft labeling. Obtaining approval of an NDA is a lengthy, expensive and uncertain process, and approval may not be obtained. If we submit an NDA to the FDA, the FDA must decide whether to accept or reject the submission for filing. We cannot be certain that any of our submissions will be accepted for filing and review by the FDA, or if the FDA will approve the application if it accepts it.
Even though we have an SPA with the FDA in place for our Phase 3 registrational trial for Cogenzia, this SPA is subject to change by the FDA until we commence the trial and even thereafter, the FDA may change our SPA agreement if it determines that a substantial issue essential to determining the safety and effectiveness of the drug was identified after the trial began. Similarly, advice given by the EMA relating to the registrational trial for Cogenzia under the Scientific Advice procedure is only given in the light of the current scientific knowledge, based on the documentation provided by us. The Scientific Advice procedure is designed to avoid major objections regarding the design of the clinical trials being raised during evaluation of the marketing-authorization application but is not legally binding on the EMA.
Regulatory authorities outside of the United States, such as in Europe and in emerging markets, also have requirements for approval of products for commercial sale with which we must comply prior to marketing in those areas. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our product candidates. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and obtaining regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could require additional non-clinical studies or clinical trials, which could be costly and time consuming. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval, and potentially may include additional risks.
The process to develop, obtain regulatory approval for, and commercialize product candidates is long, complex and costly both inside and outside of the United States, and approval is not guaranteed. Even if we were to successfully obtain approval from the regulatory authorities for our product candidates, any approval might significantly limit the approved indications for use, or require that precautions, contraindications or warnings be included on the product labeling that limit its commercialization, or limit its commercialization through a Risk Evaluation and Mitigation Strategy, or REMS, that restricts

who may prescribe or dispense the product or imposes other significant limits to assure safe use, or require expensive and time-consuming post-approval clinical studies or surveillance as conditions of approval. Following any approval for commercial sale of our product candidates, certain changes to the product, such as changes in manufacturing processes and additional labeling claims, will be subject to additional regulatory review and approval. In addition, regulatory approval for any of our product candidates may be withdrawn. If we are unable to obtain regulatory approval for our product candidates in one or more jurisdictions, or if any approval we do obtain contains significant limitations, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed. Furthermore, we may not be able to obtain sufficient funding or generate sufficient revenue and cash flows to continue the development of any other product candidate in the future.
If we fail to develop and commercialize additional product candidates, we may be unable to grow our business.
If we decide to pursue the development and commercialization of any additional product candidates, we may be required to invest significant resources to acquire or in-license the rights to such product candidates or to conduct product discovery activities. In addition, any other product candidates will require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, extensive clinical trials and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to the risks of failure that are inherent in therapeutic product development, including the possibility that the product candidate will not be shown to be sufficiently safe and/or effective for approval by regulatory authorities. In addition, we cannot assure you that we will be able to acquire, discover or develop any additional product candidates, or that any additional product candidates we may develop will be approved, manufactured or produced economically, successfully commercialized or widely accepted in the marketplace or be more effective than other commercially available alternatives. Research programs to identify new product candidates require substantial technical, financial and human resources whether or not we ultimately identify any candidates. If we are unable to develop or commercialize additional product candidates, our business and prospects will suffer.
We have engaged in only limited sales of our products to date.
While we are a global, commercial stage, specialty pharmaceutical company, with late stage development programs targeting areas of significant unmet medical need, we have engaged in only limited sales of our products to date with approximately 86% of our sales being generated by one customer. Our sales to date have been generated by certain of our approved products outside of the United States. Our products may never gain significant acceptance in the marketplace and, therefore, never generate substantial revenue or profits for the Company. We must establish a market for our products and build that market through marketing campaigns to increase awareness of, and consumer confidence in, our products. If we are unable to expand our current customer base and obtain market acceptance of our products, our operations could be disrupted and our business may be materially adversely affected. Even if we achieve profitability, we may not be able to sustain or increase profitability.
We face significant competition from other pharmaceutical and medical device companies and our operating results will suffer if we fail to compete effectively.
The pharmaceutical and medical device industry is characterized by intense competition and rapid innovation. Although we believe that we hold a leading position in our understanding of collagen-based therapeutic products, our competitors may be able to develop other products that are able to achieve similar or better results. Our potential competitors include established and emerging pharmaceutical and biotechnology companies and universities and other research institutions. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations and well-established sales forces. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Mergers and acquisitions in the

pharmaceutical and biotechnology industries may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing on an exclusive basis products that are more effective or less costly than our product candidates. We believe the key competitive factors that will affect the development and commercial success of our product candidates are efficacy, safety and tolerability profile, reliability, price and reimbursement.
We anticipate that XaraColl will compete in the United States with currently marketed bupivacaine and opioid analgesics such as morphine, as well as elastomeric bag/catheter devices intended to provide bupivacaine over several days, which have been marketed by I-FLOW Corporation (acquired by Kimberly-Clark Corporation in 2009) since 2004; and Pacira Pharmaceutical’s Exparel, a liposomal injection of bupivacaine, indicated for single-dose infiltration into the surgical site to produce postsurgical analgesia recently approved by the FDA. While there are currently no topically applied antibiotics approved for the treatment of DFIs that we anticipate would compete directly with Cogenzia, DFIs are currently treated with systemic antibiotics and physicians may choose not to use Cogenzia in conjunction with these products. Once approved in the United States, CollaGUARD will compete with a number of well accepted marketed adhesion barriers manufactured and marketed in the United States and elsewhere by well-established companies, including Sa