<PAGE> 1
As filed with the Securities and Exchange Commission on May 29, 1996
Registration No. 333-02693
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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Unimed Pharmaceuticals, Inc.
(Exact name of registrant as specified in charter)
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price per Aggregate Offering Amount of
Securities to be Registered Registered share Price Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, $0.25 par value 1,400,000 shares $ 7. 375(1) $10,325,000 $ 3,560.36(2)
---------- ---------- ----------
Common Stock, $0.25 par value 2,153,529 shares $ 8.25(3) $17,766,614 $ 6,126.42
---------- ---------- ----------
Common Stock, $0.25 par value (4) 200,000 shares $ 8.25(3) $ 1,650,000 $ 568.97
---------- ---------- ----------
Common Stock, $0.25 par value (4) 50,000 shares $ 7.375 $ 368,750 $ 127.16(2)
---------- ---------- ----------
Common Stock, $0.25 par value (4) 140,000 shares $ 7.375 $ 1,032,500 $ 356.03(2)
---------- ---------- ----------
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the high and low
reported sales prices of the Common Stock on April 16, 1996.
(2) Previously paid on April 18, 1996.
(3) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low
reported sale prices of the Common Stock on May 22, 1996.
(4) Reserved for issuance upon exercise of options or warrants to purchase
shares of Common Stock. This Registration Statement also covers such
indeterminate number of additional shares, if any, as shall be
issuable from time to time as required pursuant to the terms of the
options or warrants.
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 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 3
PROSPECTUS
3,943,529 Shares
UNIMED PHARMACEUTICALS, INC.
COMMON STOCK
(par value $0.25 per share)
The shares offered hereby (the "Shares") consist of 3,943,529 shares
of common stock, $0.25 par value per share (the "Common Stock") of Unimed
Pharmaceuticals, Inc. ("Unimed" or the "Company") which are owned by the
persons listed herein as the Selling Stockholders (the "Selling Stockholders").
The Shares being offered pursuant to this Prospectus by the Selling
Stockholders represent approximately 44% of the total shares of Common Stock of
the Company outstanding as of March 8, 1996 (assuming the two warrants and
option described below have been exercised). The Shares may be offered from
time to time by the Selling Stockholders. All expenses of registration
incurred in connection herewith are being borne by the Company, but all
selling and other expenses incurred by the Selling Stockholders will be borne
by the Selling Stockholders.
Of the shares being registered herein, 50,000 shares are issuable upon
exercise of a Warrant (the "Life Sciences Warrant") currently held by Life
Sciences Corporation, 140,000 shares are issuable upon exercise of Warrants
(the "Sunrise Warrants") currently held by principals of Sunrise Securities
Corp. and 200,000 shares are issuable upon exercise of an option (the "Kapoor
Option") held by John N. Kapoor, Ph.D., the Chairman of the Board of the
Company. The resale of the shares issuable upon exercise of the Life Sciences
Warrant and the Sunrise Warrant are covered by this Prospectus.
While the Company will initially receive $418,750 if the Life Sciences
Warrant is fully exercised, $1,008,000 if the Sunrise Warrant is fully
exercised and $1,550,000 if the Kapoor Option is fully exercised, the Company
will not receive any proceeds from sales of the Shares by the Selling
Stockholders.
The Selling Stockholders have not advised the Company of any specific
plans for the distribution of the Shares covered by this Prospectus, but it is
anticipated that the Shares will be sold from time to time primarily in
transactions (which may include block transactions) on the National Association
of Securities Dealers Automated Quotation/National Market System ("NASDAQ") at
the price then prevailing, although sales may also be made in negotiated
transactions or otherwise. See "Plan of Distribution".
The Company's Common Stock is quoted on NASDAQ under the symbol UMED.
On May 22, 1996, the last reported sale price of the Common Stock was
$ 8.25 per share.
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the distribution
of the shares may be determined to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act"),
and any commissions received by them and any profit on the resale of such
securities purchased by them may be deemed to be underwriter's commissions or
discounts under the Securities Act (see "Selling Stockholders" and "Plan of
Distribution").
--------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is May 29, 1996
<PAGE> 4
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY UNIMED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports, proxy statements and other information
with the Securites and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facility maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at 75 Park Place, New York, New York 10007 and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621-25114.
Copies of such materials can be obtained in person from the Public Reference
Section of the Commission at its principal office located at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.
This Prospectus, which constitutes a part of a registration statement
on Form S-3 (the "Registration Statement") filed by the Company with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
omits certain of the information set forth in the Registration Statement.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and the securities
offered hereby. Copies of the Registration Statement and the exhibits thereto
are on file at the offices of the Commission and may be obtained upon payment
of the prescribed fee or may be examined without charge at the public reference
facilities of the Commission described below.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995 filed by the Company pursuant to Section 13
or 15(d) of the Exchange Act.
(b) The Company's definitive Proxy Statement dated April 10, 1996
for its Annual Meeting of Stockholders held on May 2, 1996.
(c) All other reports filed pursuant to Section 13 or 15(d) of the
Exchange Act, since December 31, 1995.
(d) The description of the Common Stock which is contained in the
Company's latest registration statement filed under the
Exchange Act, including any amendments or reports filed for
the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15 (d) of the Exchange Act, prior to termination of the
offering, shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of the filing of such documents.
Any statement contained in a document, all or a portion of which is
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained or
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
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<PAGE> 5
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered a copy of any or all of
such documents which are incorporated herein by reference (other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates). Written or
oral requests for copies should be directed to David E. Riggs, Senior Vice
President and CFO, Unimed Pharmaceuticals, Inc., 2150 East Lake Cook Road,
Suite 210, Buffalo Grove, Illinois 60089 (847) 541-2575.
THE COMPANY
Unimed Pharmaceuticals, Inc. ("Unimed" or the "Company") develops and
markets prescription pharmaceutical products. Currently, the Company promotes
one approved drug and is developing others targeted for the HIV/AIDS,
endocrinology and urology markets. The Company is a Delaware corporation and
is the successor to a company incorporated in 1948. The Company's principal
executive officers are located at 2150 East Lake Cook Road, Suite 210, Buffalo
Grove, Illinois 60089, and its telephone number is (847) 541-2525.
RISK FACTORS
An investment in the shares offered hereby involves a high degree of
risk. Prospective investors should consider carefully the following risk
factors, in addition to the other information contained in this Prospectus
before purchasing the shares offered hereby.
GENERAL
Unimed's income in 1995 was principally derived from two products,
Marinol(R) and SERC(R). Unimed assigned its rights to the SERC(R) trademark
and approvals in all parts of the world where it sold SERC(R) and ceased sales
of SERC(R) on December 31, 1995. In return for the trademark assignment, Unimed
received cash and access rights to data which it expects to use in its efforts
to obtain licensing for SERC(R) in the United States. Marinol(R) is not patent
protected, is supplied by a single source and is subject to an exclusive
distribution contract.
Prior to 1994, Unimed had ten consecutive years of losses. In the
fall of 1994, a new President and Chief Executive Officer was hired and a new
business strategy was developed. The strategy includes efforts to increase
the sales of Unimed's principal product, Marinol(R), implementation of cost
control programs, and using the resulting positive cash flow, if any, as a
foundation to purchase or acquire rights to additional pharmaceutical products
under late stage development or already on the market. In 1995, Unimed licensed
rights to three late stage development products. There is no assurance that
Unimed will be able to increase positive cash flow, increase Marinol(R) sales,
license rights to currently marketed products on terms that are acceptable to
it, or obtain rights to other development products, or that any such products
will become marketable products. Marinol(R) and SERC(R) are the only products
Unimed has successfully brought from development to market.
RISKS RELATED TO MARINOL(R)
Approximately 82% of net sales and 94% of gross profit in the year
ended December 31, 1995 resulted from sales of Marinol(R). The introduction of
a competing product with a substantially lower cost structure could have a
material adverse effect on the sales of Marinol(R). In addition, claims have
been made that certain of the benefits of Marinol(R) may be available through
the use of marijuana, which is presently an illegal substance.
Unimed has no patent protection for Marinol(R). However, Unimed has
been granted Orphan Drug status for Marinol(R) for HIV/AIDS. This gives Unimed
the exclusive right to sell Marinol(R) for this indication through December
1999, but does not give it exclusive rights for any other indication.
Unimed has only one source of supply for Marinol(R). Unimed has
inventory, at current sales levels, for the next 36 months.
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<PAGE> 6
Without an alternative source of supply, Unimed would not be able to continue
sales of Marinol(R) after existing and anticipated inventory is exhausted.
The preparation of Marinol(R) is a long and technically complex
process. From start to finish, production of a batch of Marinol(R) takes
approximately 12 months. There is no assurance that the sole manufacturer will
be able to continue to produce Marinol(R) in the quantities and at the time it
is needed, if at all.
Roxane Laboratories, Inc. is the exclusive distributor of Marinol(R)
in the United States. Roxane is only required to use reasonable efforts to
distribute Marinol(R). There are no volume requirements which Roxane must meet
in order to maintain its exclusivity, nor is it precluded from distributing
competing or alternative products. Roxane may terminate the agreement at any
time, but it may not be terminated by Unimed. There can be no assurance that
Roxane will devote sufficient time and resources to the Marinol(R) product line.
Under the distribution agreement with Roxane, Roxane solely sets the
price of Marinol(R), and Unimed and Roxane split the proceeds of sales on a
50-50 basis. Unimed incurs all manufacturing costs except packaging. Under
the distribution agreement, Roxane could reduce the price to approximately 1/2
of Unimed's cost and the agreement could require Unimed to sell at a loss.
Based on a number of factors, including a recent price increase for Marinol(R),
Unimed does not believe that Roxane would take any action to voluntarily reduce
the price.
RISKS RELATED TO SERC(R)
SERC(R) (betahistine HCl) was developed by Unimed in the 1960's. The
product is widely used around the world, supplied by several manufacturers and
although it is not currently approved in the United States, and excluding
Unimed's sales, generates aggregate revenues of approximately $80 million per
year. The majority of international sales of SERC(R) are generated by a former
licensee of the Company, Solvay-Duphar. Unimed does not receive any of the
revenues nor any license fees from the sales by Solvay-Duphar. Prior to the
assignment by Unimed of its SERC(R) trademarks and approvals outside the United
States, Unimed sold SERC(R) through distributors in Canada, Australia and South
Africa. There is no patent protection for this product.
In January, 1996, Unimed assigned its SERC(R) trademarks and approvals
outside the United States, in return for a cash payment, and access to data
and other technical information and know-how that may be useful to Unimed if it
attempts to obtain licensing of SERC(R) in the United States. Unimed obtained
FDA approval to market SERC(R) in the United States in the early 1970's, but
the approval was withdrawn when the FDA questioned certain data produced at one
clinical trial site in the multicenter study that supported the product's
approval. Unimed appealed the FDA decision that forced Unimed to withdraw
SERC(R) from the market and lost at the appellate level. There is no assurance
that Unimed can conduct those clinical trials necessary to prove the safety and
efficacy of SERC(R) in order to obtain FDA approval to market SERC(R) in the
United States. Now that United has assigned its SERC(R) trademarks and
approvals, Unimed has only one marketed product.
Approximately 14% of Unimed's net sales and 10% of gross profit for
the year ended December 31, 1995 resulted from sales of SERC(R). Without the
costs resulting from the discontinuance of over-the-counter products, the gross
profit for the year would have been 9% and 91% for SERC(R) and Marinol(R),
respectively.
FUTURE CAPITAL NEEDS - UNCERTAINTY OF FUNDING
Unimed expects that its existing capital resources are sufficient to
permit it to complete product development for existing products. However, the
acquisition of additional products, and the commitments of Unimed with respect
to those products, may place demands on Unimed's capital resources in excess of
existing capital and the proceeds of this offering. Unimed's future capital
requirements will depend on many factors, including the results of clinical
trials, the
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<PAGE> 7
cost of obtaining regulatory approvals, the commercial success of the products
under development, the future sales levels of Marinol(R), Unimed's decisions
with respect to SERC(R), competitive pressures and other factors not now
ascertainable. Unimed may be required to obtain additional capital to acquire
and complete development of existing or future products. There can be no
assurance that such capital will be available if and when needed.
NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT
Unimed's product candidates are at various stages of development.
There can be no assurance that Unimed's development will lead to products that
are shown to be safe and effective in clinical trials and are commercially
viable. Unimed's proposed products will require clinical testing, regulatory
approval and substantial additional investment prior to commercialization.
There can be no assurance that any such products will be successfully
developed, prove to be safe and effective in clinical trials, meet applicable
regulatory standards, be capable of being produced in commercial quantities at
acceptable costs, be eligible for third party reimbursement from governmental
or private insurers, be successfully marketed or achieve market acceptance.
Further, Unimed's products may prove to have undesirable or unintended side
effects that may prevent or limit their commercial use. Unimed may find, at
any stage of this complex process, that products that appeared promising in
Phase I and Phase II clinical trials do not demonstrate efficacy in
larger-scale, Phase III clinical trials and do not receive regulatory
approvals. Accordingly, any product development program undertaken by Unimed
may be curtailed, redirected or eliminated at any time. There can be no
assurance that Unimed's expected testing and development schedules will be met,
and the failure to meet those schedules could have a material adverse effect on
Unimed's financial condition and results of operations.
COST OF PRODUCT ACQUISITION - COMPETITION FOR PRODUCTS
Unimed intends to acquire, through outright purchase, license, joint
venture or other methods, late stage development products from others, and
assist in the final development of those products. There are a substantial
number of parties who have similar strategies to Unimed's, some of whom have
substantially greater resources than Unimed. It is difficult to determine the
value of a product which has not been approved or marketed, and the possibility
of significant competition for such products may tend to increase the cost to
Unimed beyond the point at which it will experience a reasonable return on its
investment. There is no assurance that Unimed will be able to acquire any
products, that any products that it may acquire will be approved by the FDA or
if approved, will be marketable, or that even if marketed, Unimed will be able
to obtain a sufficient return on its investment.
DEPENDENCE ON KEY PERSONNEL
Unimed has only 16 full-time and 1 part-time employee, including a
small number of executive employees. The part-time employee is the Chief
Financial Officer. Unimed generally does not have more than one person
responsible for each functional area, and in some cases, executives are
responsible for a number of important areas. The loss of any of the Company's
executives, and in some cases, its other employees, could have a material
adverse effect on the Company.
HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT
Prior to fiscal 1994, Unimed experienced losses in each of the prior
10 fiscal years. It is possible that Unimed will continue to experience losses
in the future as a result of its anticipated product development and for other
reasons. There can be no assurance that Unimed will be able to achieve or
sustain profitability.
RELIANCE ON THIRD PARTIES FOR MANUFACTURING; MARINOL(R) EXPOSURE
Unimed does not have any manufacturing facilities and is currently
relying on third party manufacturers for Marinol(R). Unimed intends to rely on
others to manufacture its products, including products that it may acquire
and has no plans to establish any manufacturing operations. The manufacture of
Unimed's products are subject to Good Manufacturing Practices regulations
prescribed by the FDA or other standards prescribed by the appropriate
regulatory agency in the country of use. There can be no assurance that
Unimed's current
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<PAGE> 8
manufacturers will comply with all applicable regulatory standards, or that
Unimed would be able to identify an alternative source of supply on terms
acceptable to Unimed, or on any terms. Unimed has been unable to obtain any
alternative manufacturer or source of supply for Marinol(R).
UNCERTAINTY OF HEALTH CARE REIMBURSEMENT; HEALTH CARE REFORM
Unimed's ability to continue to recognize the benefits of Marinol(R),
and to commercialize new products, may depend in part on the extent to which
reimbursement for the costs of such products and related treatments continue to
be available from government health administration authorities, private health
insurers and others. Existing reimbursement plans are under continuing
pressure to cut costs, which can translate into lower prices and deferred
reimbursements. Significant uncertainty exists as to the reimbursement status
of newly approved health care products. There can be no assurance of the
availability of adequate third-party insurance reimbursement coverage that
enables Unimed to establish and maintain price levels sufficient for
realization of an appropriate return on its investment. Government and other
third-party payers are increasingly attempting to contain health care costs by
limiting both coverage and the level of reimbursement for new therapeutic
products approved for marketing by the FDA and by refusing, in some cases, to
provide any coverage for uses of approved products for disease indications for
which the FDA has not granted marketing approval. If adequate coverage and
reimbursement levels are not provided by government and third-party payers for
uses of Unimed's products, the market acceptance of these products could be
adversely affected.
Health care reform proposals have been introduced in Congress and in
various state legislatures. It is currently uncertain whether any health care
reform legislation will be enacted at the federal level, or what actions
governmental and private payers may take in response to the suggested reforms.
Unimed cannot predict when any suggested reforms will be implemented, if ever,
or the effect of any implemented reforms on Unimed's business. There can be no
assurance that any implemented reforms will not have a material adverse effect
on Unimed's future results of operations. Such reforms, if enacted, may affect
the availability of third-party reimbursement for products developed by Unimed
as well as the price levels at which Unimed is able to sell such products. In
addition, if, and to the extent that, Unimed is able to commercialize products
in overseas markets, Unimed's ability to achieve success in such markets will
depend, in part, on the health care financing and reimbursement policies of
such countries.
RELATIONSHIPS WITH OTHER ENTITIES; CONFLICTS OF INTEREST
Dr. John N. Kapoor, the Chairman of the Board of Unimed, owns,
controls or has significant interests in approximately 18 companies which are
engaged in various aspects of the health care and pharmaceutical
industry. Some of these companies may have or develop products which fit
Unimed's profile for product acquisition. Some of those companies could be, or
become, competitive with Unimed, or could sell or license products to others
who could compete with Unimed.
David E. Riggs, the Chief Financial Officer of the Company, is working
for the Company on a part-time basis. During the balance of his time, he is
functioning as the Chief Financial Officer of NeoPharm, Inc., a
biopharmaceutical company in which Dr. Kapoor owns a substantial interest.
VOTING CONTROL
Dr. John N. Kapoor owns, either directly or indirectly, a total of
2,353,529 shares of Common Stock of the Company. A portion of these shares are
owned by the John N. Kapoor Trust (the "Kapoor Trust"), a trust established by
John N. Kapoor for the benefit of himself and family members. The Kapoor Trust
also has the right to maintain its proportionate percentage interest in the
Company in connection with any sale by the Company of shares of Common
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<PAGE> 9
Stock. Such right may be exercised for a period of ten days following notice
from the Company to the Kapoor Trust of the terms of the sale (including the
parties in interest and the precise terms of the sale.) (The shares of Common
Stock of the Company owned and controlled by John N. Kapoor, together with any
shares issued upon exercise of the Trust Warrant and pursuant to the right of
the Kapoor Trust to maintain its percentage interest in the Company are
referred to herein as the "Kapoor Shares").
The holders of the Kapoor Shares have agreed that they will not sell
Shares until after April 19, 1997.
Assuming the exercise of exercisable options held by officers and
directors of the Company, the holders of the Kapoor Shares and the officers and
directors of the Company would own or control approximately 31% of the
outstanding Common Stock of the Company. Future stock option or stock grants,
if any, could increase this percentage. Also, the Kapoor Trust continues to
have a right to maintain its Common Stock ownership if securities are issued by
the Company in the future. Consequently, it is conceivable that the holders of
the Kapoor Shares and the officers and directors of the Company could exercise
control in the future. Moreover, although the Company has not considered
"going private", a large block of Common Stock in the hands of the holders of
the Kapoor Shares and officers and directors could facilitate a "going-private"
transaction.
GOVERNMENT REGULATION
The FDA and comparable agencies in foreign countries impose
substantial requirements on the introduction of therapeutic pharmaceutical
products through lengthy and detailed laboratory and clinical testing
procedures and other costly and time consuming procedures. Satisfaction of
these requirements typically takes a number of years and varies substantially
based upon the type, complexity and novelty of the pharmaceutical. In general,
the FDA approval process for pharmaceuticals involves the submission of an IND
application following preclinical studies, clinical trials in humans to
demonstrate the safety and efficacy of the product under the protocols set
forth in the IND, and submission of preclinical and clinical data as well as
other information to the FDA in an NDA. The conduct of clinical trials will
require substantial time and expense, and there can be no assurance that the
results of such trials will be sufficient to support the submission or the
approval of an NDA. Accordingly, there can be no assurance that FDA or other
regulatory approval for any products developed by Unimed will be granted on a
timely basis, or at all. There can be no assurance that Unimed will have
sufficient resources to complete the required regulatory review process, or
that Unimed could overcome the inability to obtain, or delays in obtaining,
such approvals. The failure of Unimed to receive FDA approval for its products
under development would preclude Unimed from marketing and selling new products
in the United States.
The production and marketing of Unimed's proposed products, as well as
its ongoing development activities, also are subject to regulation by
governmental agencies of the United States and other countries. The effect of
government regulation may be to delay marketing of Unimed's products for a
considerable period of time, to impose costly procedures upon Unimed's
activities and to furnish a competitive advantage to larger companies that
compete with Unimed. Any delay in obtaining, or failure to obtain, FDA or
other necessary regulatory approvals would adversely affect the marketing of
Unimed's new products and the ability to generate additional product revenue.
In addition, the marketing and manufacturing of pharmaceuticals are subject to
continuing FDA review and surveillance and failure to comply with regulations
or discovery of previously unknown problems can result in FDA action against
the product or the manufacturer, including fines, recalls, product seizures,
and suspension or withdrawal of previously granted regulatory approvals.
Furthermore, government regulation may increase at any time, creating
additional hurdles for Unimed. The extent of potential adverse government
regulation that might arise from future legislation or administrative action
cannot be predicted.
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<PAGE> 10
PRODUCT LIABILITY
The Company's business could expose it to the potential liability
which is inherent in the production of pharmaceuticals for human use. The
Company has product liability insurance in the amount of $5,000,000 per year.
No significant product liability suit has ever been filed against the Company.
However, if a suit were filed and a judgment entered against the Company that
significantly exceeded the policy limits, it could have a material adverse
effect upon the business and financial condition of the Company. There can be
no assurance that the Company's product liability insurance in the future can
be renewed or renewed at a rate comparable to that now being paid by the
Company.
COMPETITION
There are many companies, both public and private, including
well-known pharmaceutical companies, chemical companies and specialized genetic
engineering companies, engaged in developing pharmaceuticals, including
biotechnological products, for human therapeutic applications. Many of these
companies have substantially greater financial, research and development,
manufacturing, marketing and human resources and experience than the Company
and represent significant competition for the Company. Such companies may
succeed in developing products that are more effective or less costly than any
that may be developed by the Company and may also prove to be more successful
than the Company in manufacturing and marketing. The Company does not have a
significant position in the pharmaceutical market.
UNCERTAIN ABILITY TO PROTECT PATENTS AND PROPRIETARY INFORMATION
Because of the substantial length of time and expense associated with
bringing new products through development and regulatory approval to the
marketplace, the pharmaceutical industry places considerable importance on
patent and trade secret protection for new technologies, products and
processes. However, Marinol(R) is not currently the subject of patents or
patent applications, (patents on each have expired) and Unimed does not expect
to obtain patent protection for Marinol(R). NTZ, when combined with a wetting
agent, and optimally, a starch derivative, in an oral composition, is the
subject of a patent and a patent application, and Unimed has certain rights
with respect to those patents under its license agreement; however, Unimed does
not now hold any patents directly, nor is there any other patent protection
available for Unimed's other products. The lack of patent protection could
have a material adverse effect on Unimed's operations. There can be no
assurance that others will not independently develop substantially equivalent
proprietary information or otherwise obtain access to Unimed's know-how or that
others may not be issued patents that may require licensing and the payment of
significant fees or royalties by Unimed for the pursuit of its proposed
business.
The pharmaceutical industry has experienced extensive litigation
regarding patent and other intellectual property rights. Accordingly, Unimed
could incur substantial costs in defending itself in suits that may be brought
against it claiming infringement of the patent rights of others or in asserting
Unimed's patent rights in a suit against another party. Unimed may also be
required to participate in interference proceedings declared by the United
States Patent and Trademark Office for the purpose of determining the priority
of inventions in connection with the patent applications of Unimed or other
parties. Adverse determinations in litigation or interference proceedings
could require Unimed to seek licenses (which may not be available on
commercially reasonable terms) or subject Unimed to significant liabilities to
third parties, and could therefore have a material adverse effect on Unimed.
Unimed also relies on trade secrets, know-how and technological
advancement to maintain its competitive position. Although Unimed uses
confidentiality agreements and employee proprietary information and invention
assignment agreements to protect its trade secrets and other unpatented
know-how, these agreements may be breached by the other party thereto or may
otherwise be of limited effectiveness or enforceability.
-8-
<PAGE> 11
FORWARD-LOOKING INFORMATION MAY PROVE INADEQUATE
This prospectus, including material incorporated herein by reference,
contains various forward-looking statements and information that are based on
management's beliefs as well as assumptions made by and information currently
available to management. When used in this document, the words "anticipates",
"estimate", "project" and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected.
CLASSIFIED BOARD OF DIRECTORS
The directors of the Company are classified into three classes, each
of which serves for a period of three years. In order to replace a majority of
the directors due to unsatisfactory performance or to effect a change of
control, a majority of stockholders will have to elect opposition candidates at
two annual meetings instead of one. The classified Board of Directors may have
an anti-takeover effect in that it will be more difficult to change the
composition or to take control of the Board of Directors against its will.
LACK OF DIVIDENDS
The Company has never paid and does not intend to pay any dividends in
the foreseeable future. The Company intends to retain earnings, if any, in
order to finance the expansion and development of its business.
SELLING STOCKHOLDERS
All of the Shares are being sold by the Selling Stockholders. The
Selling Stockholders will receive all of the proceeds from the sale of the
Shares owned by the Selling Stockholders. The following table sets forth
certain information with respect to the ownership of shares of Common Stock by
the Selling Stockholders.
<TABLE>
<CAPTION>
Total Shares of Number of Shares Number of Shares
Name of Common Stock to be Offered to be Held
Selling Stockholder Held at 4/10/96 by Selling Stockholder(1) After Sale(2)
------------------- --------------- ----------------------- ----------------
<S> <C> <C> <C>
A.B. Cook Overseas, Ltd 3,720 3,720 0
Abraham Steinmetz 12,000 12,000 0
Alan J. Rubin 15,000 15,000 0
Alan M. Swerdoff 2,000 2,000 0
Alex Brown Employees Hedge Fund 2,550 2,550 0
The Aries Trust 42,500 42,500 0
Aries Domestic Fund L.P. 42,500 42,500 0
Axiom Partners L.P. 20,000 20,000 0
Bert Loebmann 5,000 5,000 0
Bruce Barron 5,000 5,000 0
Bulldog Capital Partners L.P. 150,000 150,000 0
Capital Trust Management 60,000 60,000 0
</TABLE>
-9-
<PAGE> 12
<TABLE>
<CAPTION>
Total Shares of Number of Shares Number of Shares
Name of Common Stock to be Offered to be Held
Selling Stockholder Held at 4/10/96 by Selling Stockholder(1) After Sale(2)
------------------- --------------- ---------------------- ----------------
<S> <C> <C> <C>
Cerinox Finance, Inc. 20,000 20,000 0
Chaim H. Schnur 32,500 8,333 24,167
Chase Manhattan Bank (Ireland) PLC as 100,000 100,000 0
Trustee for GT Healthcare Fund
Churchill Associates LP 10,000 10,000 0
Cradock Asset Management 27,500 27,500 0
Couderay Partners 30,000 10,000 20,000
David Rozen 17,500 17,500 0
David Stone 16,000 16,000 0
David Walker 5,000 5,000 0
Davidowitz Foundation 20,000 20,000 0
Eli Jacobson 8,000 6,000 2,000
Everest Capital International Ltd. 33,650(3) 33,650 0
Everest Capital Fund L.P. 16,350(3) 16,350 0
Fred Holubow(4) 10,000 10,000(5) 0
Gross Foundation Inc. 70,000 70,000 0
Harris Foundation 30,000 14,000 16,000
Irving B. Harris Revocable Trust dtd 7/31/87 116,600(6) 18,000 98,600
Jerome Kahn Jr. Revocable Trust dtd 10/16/87 20,000(7) 5,000 15,000
Jerry Heymann 7,500 7,500 0
JIBS Equities 20,000 20,000 0
John N. Kapoor, Ph.D.(8) 2,353,529 2,353,529(5) 0
Joseph Telushkin 8,000 8,000 0
Kurt N. Feshbach Trust 10,000 10,000 0
Lawrence Zaslow(9) 2,000 2,000 0
Leonard Gubar 4,000 4,000 0
Life Sciences Corporation(10) 50,000 50,000 0
MPA Profit Sharing Plan, P.C. 5,000 5,000 0
Mark B. Fisher 28,000 28,000 0
Mercury Capital Partners 23,730 23,730 0
Mitchell I. Dolins as Trustee of the 6,000 5,000 1,000
Mitchell I. Dolins Revocable Trust
U/D/A 12/24/91
</TABLE>
-10-
<PAGE> 13
<TABLE>
<CAPTION>
Total Shares of Number of Shares Number of Shares
Name of Common Stock to be Offered to be Held
Selling Stockholder Held at 4/10/96 by Selling Stockholder(1) After Sale(2)
------------------- --------------- ---------------------- ----------------
<S> <C> <C> <C>
Mordachi Jofen 9,166 9,166 0
Nathan Low(9) 152,185 152,185 0
Oldfield Company 10,000 10,000 0
Paul M. Michalousky 5,000 5,000 0
Paul Scharfer(9) 46,103 46,103 0
Penn Footwear Co. 20,000 20,000 0
Penn Footwear Retirement Trust 20,000 20,000 0
Pequot Scout Fund, L.P. 41,000 41,000 0
Peter J. Carini 10,000 10,000 0
Phillip T. George MD 10,000 10,000 0
Philip S. Wilson 10,000 10,000 0
Porter Partners, L.P. 80,000 80,000 0
Preston Tsao(9) 2,310 2,310 0
Razel Faskowitz 3,334 3,334 0
Richard Stone(9) 35,402 35,402 0
Robert W. Kiley 5,000 5,000 0
Roland Weiser, Smith Barney Inc. IRA(11) 3,340 2,000(3) 1,340
Shaindel Devorah Steinmetz 2,000 2,000 0
Sonz Partners, L.P. 40,000 40,000 0
State Capital Partners 10,000 10,000 0
Steven & Robin Abramow 5,000 5,000 0
Steven M. Oliveira and Bernadette Oliveira 8,000 8,000 0
JTWROS
Zvi Steven Weinreb 11,667 11,667 0
Theodore H. Friedman 8,000 8,000 0
Victor A. Morgenstern 50,000 50,000 0
Virginia R. Saul Trustee of the Virginia 3,000 3,000 0
R. Saul Revocable Trust dated 10/25/95
Westfield Performance Fund 50,000 50,000 0
William Davidowitz 10,000 10,000 0
</TABLE>
-11-
<PAGE> 14
- ------------
(1) Does not constitute a commitment to sell the Shares. The number of
Shares offered shall be determined from time to time by the Selling
Stockholders in their sole discretion. This list assumes that all of
the Shares listed in this column are sold by the Selling Stockholders.
(2) The listing of Shares in this column is not a commitment to hold these
Shares until completion of the offering. It merely states that these
Shares are not being sold as a part of this offering.
(3) Everest Capital International Ltd. and Everest Capital Fund L.P.
are under common control, and shares owned by each may be deemed to
be beneficially owned by the other.
(4) Director of the Company since January, 1995. Does not include 17,500
Shares subject to options issued under the Company's stock option
plan, exercisable within 60 days.
(5) The holders of these shares have agreed that they will not sell any of
these shares prior to April 19, 1997.
(6) Does not include 237,500 Shares in client accounts managed by William
Harris Investors, Inc., a registered investment advisor, of which
Irving Harris is an owner and officer.
(7) Does not include 334,100 Shares in client accounts managed by William
Harris Investors, Inc., a registered investment advisor, of which
Jerome Kahn, Jr. is an officer.
(8) Chairman of the Board of the Company, and Chief Executive Officer
prior to November 5, 1993. Includes 200,000 shares issuable upon
exercise of the Kapoor Option at an exercise price of $7.75 per share,
1,648,524 Shares held by the John Kapoor Trust, of which Dr. Kapoor
is the trustee, 485,000 Shares held by EJ Financial Investors III,
L.P., a limited partnership of which Dr. Kapoor is the general
partner, and 20,000 Shares in trust for the benefit of Dr. Kapoor's
minor children. Does not include 10,000 Shares subject to exercisable
options issued to Dr. Kapoor under the Company's stock option plan.
(9) Sunrise Securities Corp. acted as placement agent in a private
placement by the Company of 1,400,000 Shares. Sunrise received a
commission of $658,800 and a nonaccountable expense allowance of
$252,000. Of this aggregate $910,800, it used $588,000 to purchase
98,000 Shares at a price of $6.00 per Share. These Shares were
distributed to principals and employees of Sunrise (Nathan Low-59,585
Shares, Preston Tsao-1,060 Shares, Richard Stone-16,227 Shares and Paul
Scharfer-21,128 Shares). The Company also agreed to issue the
Sunrise Warrants to Sunrise, who directed that the Sunrise
Warrants be issued to Nathan Low-92,600 Warrants, Preston Tsao-1,250
Warrants, Richard Stone-19,175 Warrants, Paul Scharfer-24,975
Warrants and Lawrence Zaslow - 2,000 Warrants. The Sunrise Warrants
are exercisable beginning March 1, 1997, and expiring on March
1, 2001, for an aggregate of 140,000 Shares, which are included in
the number of Shares to be offered hereunder.
(10) Represent shares issuable to Life Science Corporation upon exercise
of Life Sciences Warrant.
(11) Roland Weiser, the beneficiary of this IRA account, is a director of
the Company and has been for more than three years. The Shares
shown as beneficially owned by this account does not include 41,170
Shares of Common Stock subject to exercisable options issued to
Mr. Weiser under the Company's stock option plan.
The Company has been advised that the Shares may be sold from time to
time by the Selling Stockholders. Such sales may be made in the
NASDAQ National Market or otherwise at prices and on terms then prevailing or
in negotiated transactions. The Selling Stockholders may sell some or all of
the Shares in transactions involving broker-dealers, who may act as agent or
acquire the Shares as principal. Any broker-dealer participating in such
transactions as agent may receive commissions from the Selling Stockholders
(and, if they act as agent for the purchaser of such Shares, from such
purchaser). Broker-dealers may agree with the Selling Stockholders to sell a
specified number of Shares at stipulated price per Share and, to the extent
such a broker-dealer is unable to do so acting as agent for a Selling
Stockholder, to purchase as principals any unsold Shares at the price required
to fulfill the respective broker-dealer's commitment to the Selling
Stockholder. Broker-dealers who acquire Shares as principals may thereafter
resell such Shares from time to time in transactions (which may involve cross
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive commissions from the
purchasers of such Shares.
The Company is bearing all costs relating to the registration of the
Shares. Any commissions or other fees payable to broker-dealers in connection
with any sale of the Shares will be borne by the Selling Stockholders.
The Company has agreed to indemnify, to the extent permitted by law,
the Selling Stockholders, their officers and directors and each person who
controls a Selling Stockholder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in the
registration statement of which this Prospectus is a part, or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by the Selling Stockholders
expressly for use therein or by a Selling Stockholder's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Selling Stockholder
with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company has agreed to indemnify such underwriters,
their officers and directors and each person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Selling Stockholder.
-12-
<PAGE> 15
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will
be passed upon for the Company by Schwartz & Freeman, Chicago, Illinois.
EXPERTS
The consolidated balance sheets as of December 31, 1995 and 1994, and
the consolidated statements of operations, stockholders' equity and cash flows
for each of the three years in the period ending December 31, 1995, and the
related financial statement schedule incorporated by reference in this
prospectus, have been incorporated herein in reliance on the report of Coopers
& Lybrand, L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
-13-
<PAGE> 16
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
UNIMED PHARMACEUTICALS, INC.
3,943,529 Shares
Common Stock
($0.25 par value)
--------------
PROSPECTUS
--------------
May 29, 1996
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth an itemized estimate (other than the
SEC registration fee which is the actual, not estimated, fee) of fees and
expenses payable by the registrant in connection with the offering described in
this registration statement, other than underwriting discounts and commissions:
<TABLE>
<S> <C>
SEC registration fee $ 10,739
-----------------
Counsel fees and expenses 7,500
-----------------
Accounting Fees 3,000
Printing 2,500
-----------------
Total $ 23,739
-----------------
</TABLE>
All expenses of registration incurred in connection herewith are being
borne by the Company, but all selling and other expenses incurred by the
Selling Stockholders will be borne by the Selling Stockholders.
II-1
<PAGE> 18
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
5.1 Opinion of Schwartz & Freeman as to validity of Common Stock
24 Consent of Coopers & Lybrand, L.L.P., independent
public accountants
24.3 Consent of Schwartz & Freeman (contained in Exhibit 5.1)
</TABLE>
II-2
<PAGE> 19
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act
of 1933, the Registrant has duly caused this Amendment to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Buffalo Grove, State of Illinois, on May 29, 1996.
UNIMED PHARMACEUTICALS, INC.
By: /s/ Stephen M. Simes
--------------------------------------------
Stephen M. Simes
President and Chief Executive Officer
II-3
<PAGE> 20
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement has been signed on May 29, 1996, by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Stephen M. Simes President, Chief Executive Officer and
Director (principal executive officer)
David E. Riggs Senior Vice President, Chief Financial
Officer (principal financial officer
and principal accounting officer),
Treasurer and Secretary
Fred Holubow Director
John N. Kapoor, Ph.D. Director
James J. Lempenau Director
Roland Weiser Director
</TABLE>
The undersigned, Stephen M. Simes, by signing his name hereto, does hereby
execute this Amendment to Registration Statement on behalf of each of the
above-named persons pursuant to the powers of attorney executed by each person
and filed with the Securities and Exchange Commission.
By: /s/ Stephen M. Simes
-----------------------------
Stephen M. Simes
II-4
<PAGE> 21
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
5.1 Opinion of Schwartz & Freeman as to validity of Common Stock
24 Consent of Coopers & Lybrand, L.L.P., independent public accountants
24.3 Consent of Schwartz & Freeman (contained in Exhibit 5.1)
</TABLE>
<PAGE> 1
SCHWARTZ & FREEMAN EXHIBIT 5.1
LAW OFFICES
401 N. Michigan Ave.
Suite 1900
Chicago, Illinois 60611-4206
(312) 222-0800
May 28, 1996
Unimed Pharmaceuticals, Inc.
2150 E. Lake Cook Road
Buffalo Grove, IL 60089
Gentlemen:
We have been engaged as your counsel in connection with the registration
statement on Form S-3 (the "Registration Statement"), of shares of common
stock, $0.25 par value (the "Common Stock"), of Unimed Pharmaceuticals, Inc.
(the "Company"), of which 3,553,529 shares have been issued and an additional
390,000 shares may be issued upon exercise of options and warrants.
We have examined the Certificate of Incorporation of the Company and all
amendments thereto to date; the By-Laws of the Company as presently in effect;
the Registration Statement including the Exhibits thereto; the minutes of all
pertinent meetings of directors of the Company relating to the issues of the
shares; and such other corporate records and documents as we have deemed
necessary in order to enable us to express the opinion set forth below.
Based on the foregoing examination and assumptions, it is our opinion that the
3,553,529 shares of Common Stock covered by the Registration Statement which
have been issued have been duly and validly issued and are fully paid and
non-assessable and the 390,000 shares which may be issued upon exercise of the
options and warrants, upon exercise in accordance with their terms, including
payment in full of the exercise price as provided therein, will be duly
and validly issued, fully paid and non-assessable.
We understand that you may file this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. We consent to that
filing and to the use of our firm name in the Registration Statement.
Very truly yours,
SCHWARTZ & FREEMAN
/s/ Stephen E. Goodman
Stephen E. Goodman
SEG/ds
<PAGE> 1
Coopers
& Lybrand
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report dated February 13, 1996, except for Note 14, as to
which the date is February 29, 1996, on our audits of the financial statements
and financial statement schedule of Unimed Pharmaceuticals, Inc. We also
consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
May 29, 1996
