<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 12, 1997
REGISTRATION NO. 333-_____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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KOS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Florida 67-0670898
(State of incorporation) (I.R.S. Employer Identification)
1001 BRICKELL BAY DRIVE, 25TH FLOOR
MIAMI, FLORIDA 33131
(305) 577-3464
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
KOS PHARMACEUTICALS, INC. 1996 STOCK OPTION PLAN AND
EMPLOYEE AND CONSULTANT STOCK OPTIONS
(Full title of plan)
DANIEL M. BELL
1001 BRICKELL BAY DRIVE, 25TH FLOOR
MIAMI, FLORIDA 33131
(305) 577-3464
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
COPIES OF ALL COMMUNICATIONS TO:
STEVEN SONBERG, ESQ.
HOLLAND & KNIGHT LLP
ONE EAST BROWARD BOULEVARD
FT. LAUDERDALE, FLORIDA 33301
(954) 525-1000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER SHARE OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 4,000,000 $36.625 $146,500,000 $44,394(2)
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Common Stock, par value
$.01 per share 325,000 $1.15 $373,750 $114(3)
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</TABLE>
(1) THIS REGISTRATION STATEMENT ALSO COVERS ANY ADDITIONAL SHARES THAT MAY
HEREAFTER BECOME PURCHASABLE AS A RESULT OF THE ADJUSTMENT PROVISIONS
OF THE PLAN OR THE AGREEMENTS PURSUANT TO WHICH SUCH SHARES ARE ISSUED.
(2) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
BASED UPON THE AVERAGE OF THE HIGH AND LOW PRICES REPORTED ON THE
NASDAQ NATIONAL MARKET ON SEPTEMBER 9, 1997, OF $36.625.
(3) DETERMINED IN ACCORDANCE WITH RULE 457(h), THE REGISTRATION FEE IS
BASED ON THE AVERAGE EXERCISE PRICE PER SHARE FOR SHARES PRESENTLY
SUBJECT TO OUTSTANDING OPTIONS.
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8 and is intended to be used to register shares to be
issued and sold pursuant to the Kos Pharmaceuticals, Inc. 1996 Stock Option Plan
(the "Plan") and pursuant to options awarded outside the Plan to an employee and
a consultant. The Reoffer Prospectus filed as part of this Registration
Statement has been prepared in accordance with the requirements of Part I of
Form S-3 and may be used for reofferings or resales of common stock previously
acquired or to be acquired by the participants in the Plan or an employee
awarded options outside the Plan, who are deemed to be control persons of the
Company.
<PAGE> 3
REOFFER PROSPECTUS
1,463,000 SHARES
[KOS LOGO]
KOS PHARMACEUTICALS, INC.
COMMON STOCK
PAR VALUE $.01 PER SHARE
---------------------------------------------------
The shares of common stock, $.01 par value (the "Common Stock"), of Kos
Pharmaceuticals, Inc. (the "Company") offered hereby (the "Shares") are being
sold by certain directors and executive officers of the Company (the "Selling
Shareholders"). The Shares have been or may be acquired by the Selling
Shareholders from time to time from the Company upon the exercise of options to
purchase such Shares granted to the Selling Shareholders by the Company pursuant
to the Company's 1996 Stock Option Plan (the "Plan") or pursuant to option
agreements entered into between such Selling Shareholder and the Company outside
the Plan. Options to purchase 1,188,000 Shares authorized pursuant to the Plan,
and options to purchase 275,000 Shares awarded outside the Plan, are currently
held by the Selling Shareholders. See "Selling Shareholders."
All expenses of registration incurred in connection with this offering
are being borne by the Company, but all brokerage commissions, discounts and
other expenses incurred by individual Selling Shareholders will be borne by the
individual Selling Shareholder. The Company will not be entitled to any of the
proceeds from such sales, although the Company is entitled to receive the
exercise price of the options under which the shares of Common Stock are
acquired by the Selling Shareholders.
The shares of Common Stock are quoted on the Nasdaq National Market
under the symbol "KOSP". On September 10, 1997, the last reported sales price of
the Common Stock on the Nasdaq National Market was $36.25 per share.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
---------------------------------------------------
No person has been authorized to give any information or to make any
representations, other than those in this Prospectus, in connection with the
offer contained in this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any of the securities offered hereby in any
state to or from any person to whom it is unlawful to make or solicit such offer
in such state. Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication that there has
been no change in the information herein since the date hereof.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 12, 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). All reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, Suite 1300, New York, New York 10048, and the Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained by mail at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission maintains a web site that contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the Commission with a web site address
of http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
ADDITIONAL INFORMATION
The following documents filed with the Securities and Exchange
Commission by the Company are incorporated herein by reference:
(1) The Company's annual report on Form 10-K for the period ending June
30, 1997;
(2) The Company's reports on Form 8-K filed with the Commission on July
29, 1997, and September 2, 1997;
(3) All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all remaining securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this prospectus and to be part
thereof from the date of filing of such documents; and
(4) The description of the Company's Common Stock contained under the
caption "Description of Registrant's Capital Stock" in the 424(b) Prospectus and
incorporated by reference into the Registration Statement of the Company on Form
8-A (Commission File No. 000-22171) filed with the Commission pursuant to
Section 12(g) of the Exchange Act on February 25, 1997.
Any statement in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or replaces 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.
The Company undertakes to provide without charge to each person,
including any beneficial owner, to whom this prospectus is delivered, upon
written or oral request of such person, a copy of any and all information that
has been incorporated by reference in this prospectus (not including exhibits to
the information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this prospectus
incorporates). Such request should be directed to the President, Kos
Pharmaceuticals, Inc., 1001 Brickell Bay Drive, 25th Floor, Miami, Florida
33131, telephone number (305) 577-3464.
2
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FORWARD LOOKING STATEMENTS
From time to time, information provided by the Company or statements
made by its directors, officers or employees may constitute "forward-looking"
statements under the Private Securities Litigation Reform Act of 1995 and are
subject to numerous risks and uncertainties. Any statements made in this
Registration Statement, including any statements incorporated herein by
reference, that are not statements of historical fact are forward-looking
statements (including, but not limited to, statements concerning the
characteristics and growth of the Company's market and customers, the Company's
objectives and plans for future operations and products and the Company's
expected liquidity and capital resources). Actual results may differ materially
from those projected or implied in the forward looking statements. Further,
certain forward looking statements are based upon assumptions of future events,
which may not prove to be accurate. These forward looking statements involve
risks and uncertainties including but not limited to the Company's future cash
flows, sales, gross margins and operating costs, regulatory developments, the
effect of conditions in the pharmaceutical industry and the economy in general,
legal proceedings, as well as certain other risks. Subsequent written and oral
forward looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by cautionary statements in
this paragraph and elsewhere in this Registration Statement, and in reports
filed by the Company with the Securities and Exchange Commission. For a further
discussion of these and other significant factors to consider in connection with
forward- looking statements, reference is made to the discussion in this
Registration Statement under the heading "Risk Factors."
NIASPAN(R) is a registered trademark of the Company.
Once-A-Night(TM) is a trademark for the Company's once-a-day at bedtime dosing
regimen.
3
<PAGE> 6
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS
PROSPECTUS, INCLUDING "RISK FACTORS" HEREIN.
THE COMPANY
Kos Pharmaceuticals, Inc. ("Kos", pronounced Kos, or the "Company") is
a fully integrated specialty pharmaceutical company engaged in developing and
commercializing proprietary prescription pharmaceutical products, primarily for
the treatment of certain chronic cardiovascular and respiratory diseases. The
Company developed and is currently manufacturing and marketing its lead product,
NIASPAN. The Company intends also to manufacture its products under development
and to market such products directly through its own specialty sales force. The
Company's cardiovascular products under development consist of
controlled-release, once-a-day, oral dosage formulations. The Company's
respiratory products under development consist of aerosolized inhalation
formulations to be used primarily with the Company's proprietary inhalation
devices.
On July 28, 1997, Kos received clearance from the U.S. Food and Drug
Administration ("FDA") to market NIASPAN. NIASPAN is the first once-a-day
formulation of niacin approved by the FDA for the treatment of mixed lipid
disorders, which are primary risk factors for coronary heart disease ("CHD"). In
addition, NIASPAN is the only patient-friendly lipid-altering product that moves
all of the major lipid components in the proper direction. NIASPAN has been
approved for the following indications: (i) to reduce elevated total
cholesterol, low-density lipoprotein ("LDL") cholesterol, and apolipoprotein B;
(ii) to reduce elevated total and LDL cholesterol when used in combination with
a bile-acid binding resin; (iii) to reduce very high serum triglycerides; (iv)
to reduce the risk of recurrent nonfatal myocardial infarction; (v) to promote
the regression or slow the progression of atherosclerosis when used in
combination with a bile-acid binding resin. The Company began shipping NIASPAN
to wholesalers in mid-August 1997, and it began detailing NIASPAN to physicians
in September 1997.
Since the mid-1980's, clinical research has revealed that abnormal
levels of several lipids are atherogenic risk factors for CHD. Such lipid
disorders afflict approximately 56 million adults in the United States. Niacin,
the active ingredient in NIASPAN, is a water soluble vitamin long recognized by
the National Institutes of Health ("NIH") and the American Heart Association
("AHA") as an effective pharmacological agent for the treatment of mixed lipid
disorders, including elevated LDL cholesterol, total cholesterol, and
triglycerides and depressed high-density lipoprotein ("HDL") cholesterol. The
Company's NDA for NIASPAN was based principally on three double-blinded,
placebo-controlled pivotal clinical trials and one long-term, open label safety
study involving an aggregate of 633 NIASPAN-treated subjects at 17 sites
throughout the United States. The results of these trials produced statistically
significant changes in all major lipid components without serious
treatment-related adverse events. Treatment with NIASPAN demonstrated a 14% to
19% reduction in LDL cholesterol, a 25% to 35% reduction in triglycerides, a 22%
to 29% increase in HDL cholesterol, and a 24% to 29% reduction in lipoprotein
(a) ("Lp(a)"). Moreover, NIASPAN's controlled-release formulation and
Once-A-Night(TM) dosing regimen reduced the liver toxicity and intolerable side
effects generally associated with currently available formulations of niacin.
As of September 2, 1997, the Company's field sales force consisted of
94 experienced pharmaceutical sales representatives. These representatives have
begun marketing NIASPAN to the approximately 18,000 physicians who account for
approximately 40% of the prescriptions for lipid-altering medications in the
United States. Kos intends to expand its field sales force to more than 125
representatives and to use this sales force to inform the physicians as to
NIASPAN'S safety and efficacy profile and the manner in which NIASPAN achieves
such profile. In 1996, the market for cholesterol reducing drugs was nearly $3.0
billion in the United States and was one of the fastest growing sectors of the
cardiovascular market. The Company is seeking licensors to market NIASPAN
outside the United States, where sales of cholesterol reducing drugs
approximated $3.0 billion in 1996.
4
<PAGE> 7
The Company was founded in 1988 by the former Chief Executive Officer,
Chief Operating Officer, and Director of Product Development of Key
Pharmaceuticals, Inc., which was acquired by Schering-Plough Corporation in June
1986. The Company believes that substantial market opportunities exist for
developing drugs that are reformulations of existing approved prescription
pharmaceutical products but which offer certain safety advantages (such as
reduced harmful side effects) or patient compliance advantages (such as
once-a-day rather than multiple daily dosing regimens) over such products. Kos
believes that developing proprietary products based on currently approved drugs,
rather than new chemical entities ("NCEs"), may reduce regulatory and
development risks and, in addition, may facilitate the marketing of such
products because physicians are generally familiar with the safety and efficacy
of such products. Six of the Company's seven products under development require
new drug application ("NDA") filings with the FDA. Although such NDA filings are
more expensive and time consuming, developing products that require NDA approval
offers several advantages compared with generic products, including potential
for higher gross margins, limited competition resulting from significant
clinical and formulation development challenges, and a three-year statutory
barrier to generic competition.
The Company's management has significant experience in implementing the
principal elements of the Company's business strategy. These elements consist of
the following: (i) select products with unrealized commercial potential where
safety or patient compliance may be improved; (ii) focus initially on the large,
rapidly growing cardiovascular and respiratory markets, which include many
chronic diseases requiring long-term therapy; (iii) develop proprietary
formulations of currently approved pharmaceutical compounds, which can reduce
regulatory and development risks typically associated with the development of
new chemical entities; (iv) manage directly the clinical development of its
products; (v) manufacture its products internally; (vi) market its products
directly through the Company's specialty sales force; and (vii) leverage its
core competencies through corporate and academic alliances.
Kos has three other once-a-day, controlled-release cardiovascular
products that are currently under development: (i) Nicostatin(TM), a combination
of NIASPAN and a currently approved HMG CoA reductase inhibitor (or "statin")
for the treatment of mixed lipid disorders; (ii) a branded generic form of
isosorbide-5-mononitrate ("IS- 5-MN"), a nitrate for angina; and (iii) a
formulation of captopril, an angiotensin converting enzyme ("ACE") inhibitor for
hypertension. In 1996, the disease segments of the cardiovascular market for
which the Company is developing its products achieved aggregate sales in the
United States of approximately $11.5 billion.
Kos also is developing four respiratory products, dispensed in
aerosolized metered-dose inhalation ("MDI") devices for the treatment of asthma.
All four aerosol products use non-CFC propellants, which are generally regarded
as environmentally safe, and all four require NDA filings. The Company's aerosol
products consist of two inhaled steroids, triamcinolone and flunisolide,
dispensed in a proprietary breath coordinated inhaler being developed by the
Company; a beta-agonist, albuterol, dispensed in a generic MDI; and either
albuterol or triamcinolone dispensed in a proprietary breath actuated inhaler
being developed by the Company, principally for pediatric and geriatric uses.
The market for asthma products in 1996 was $2.5 billion in the United States.
The Company currently collaborates with third parties in the
development of certain products and sponsors basic research at universities. Kos
also intends to pursue the acquisition of products or drug-delivery technologies
for development by Kos, particularly acquisitions or licenses for currently
marketed or late-development-stage cardiovascular products that complement
NIASPAN for detailing by the Company's sales force.
The Company completed an initial public offering of its Common Stock on
March 12, 1997 (the "IPO"). Prior to the IPO, the Company's operations were
funded entirely by Kos Investments, Inc. ("Kos Investments"), which is
controlled by Michael Jaharis, one of the Company's founders and its Chairman.
At September 2, 1997, the Company employed 249 people, of whom 111 were in
marketing and sales, 76 were in product development, 39 were in manufacturing,
and 23 were in administration.
5
<PAGE> 8
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, PROSPECTIVE
INVESTORS SHOULD CONSIDER THE FOLLOWING FACTORS IN EVALUATING THE COMPANY AND
ITS BUSINESS BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED HEREBY.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT THE STATEMENTS IN THIS PROSPECTUS THAT
ARE NOT DESCRIPTIONS OF HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS THAT
ARE SUBJECT TO RISKS AND UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE CURRENTLY ANTICIPATED DUE TO A NUMBER OF FACTORS, INCLUDING THOSE
IDENTIFIED UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
The Company's success depends to a significant extent on whether its
lead product, NIASPAN, is successfully commercialized. There can be no assurance
as to the successful commercialization of NIASPAN. The successful
commercialization of NIASPAN may be affected by various factors, certain of
which are set forth below.
EARLY STAGE OF DEVELOPMENT; HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE
PROFITABILITY
Through the end of the Company's fiscal year ended June 30, 1997, the
Company was a development stage company. To date, the Company has dedicated most
of its financial resources to the development and commercialization of NIASPAN,
the development of other products, and general and administrative expenses. The
Company expects to incur significant operating losses for at least the next six
months, primarily due to continued investments in its research and development
programs and for manufacturing and marketing, sales and administrative expenses
associated with the launch of NIASPAN. No assurance can be given that additional
significant losses will not continue thereafter. The Company's ability to
achieve and maintain profitability will depend, among other things, on the
commercial success of NIASPAN and on the Company's ability to successfully
complete the development of its products, obtain regulatory approvals, establish
manufacturing and sales and marketing capabilities, achieve market acceptance
for its products, and maintain sufficient funds to finance its activities. As of
June 30, 1997, the Company's accumulated deficit was $79.8 million. In
connection with the transfer of operations from Holdings to the Company on June
30, 1996, net operating loss carryforwards amounting to approximately $51.0
million and related tax benefits remained with Holdings and were not transferred
to the Company. Consequently, the Company had no tax assets or liabilities as of
June 30, 1996, and can only utilize net operating loss carryforwards sustained
subsequent to June 30, 1996 (amounting to $22.3 million as of June 30, 1997), to
offset future taxable net income, if any. There can be no assurance that the
Company will be able to achieve profitability or that profitability, if
achieved, can be sustained.
UNCERTAINTIES RELATED TO MARKET ACCEPTANCE OF NIASPAN AND PRODUCTS UNDER
DEVELOPMENT
The Company's ability to successfully commercialize NIASPAN will depend
in part on the acceptance of NIASPAN by physicians and their patients. The
Company believes that intolerable flushing is a principal reason why physicians
generally have been reluctant to prescribe or recommend currently available
formulations of niacin. Flushing episodes are often characterized by facial
redness, tingling or rash. Although most patients taking NIASPAN will sometimes
flush, the formulation and dosing regimen for NIASPAN have been designed to
maximize patient acceptance and minimize the occurrence of flushing. There can
be no assurance, however, that patients using NIASPAN will not suffer episodes
of flushing that they consider intolerable. The failure of physicians to
prescribe NIASPAN or the failure of patients to continue taking NIASPAN due to
intolerable flushing or other side effects would have a material adverse effect
on the Company. The Company believes that physicians have also been reluctant to
prescribe or recommend certain currently available formulations of niacin
because of potential liver toxicity associated with these formulations. Although
clinical trials conducted using NIASPAN demonstrated that fewer than 1% of
patients experienced clinically significant elevations in liver enzyme levels,
there can be no assurance that patients using NIASPAN in actual practice will
not experience clinically significant elevations of liver enzymes or other side
effects at a rate higher than those experienced in the Company's clinical
trials.
6
<PAGE> 9
Unanticipated side effects or unfavorable publicity concerning NIASPAN,
any of the Company's products under development, or any other product
incorporating technology similar to that used in NIASPAN or the Company's
products under development could have an adverse effect on the Company's ability
to obtain regulatory approvals; to achieve acceptance by prescribing physicians,
managed care providers, or patients; and to commercialize its products, any of
which could have a material adverse effect on the Company.
UNCERTAINTIES RELATED TO PRODUCT DEVELOPMENT
Although the Company recently obtained clearance from the FDA to market
NIASPAN, there can be no assurance that the Company will be able to successfully
formulate any of its other products as planned, or that the Company will be
successful in demonstrating the safety and efficacy of such products in human
clinical trials. These trials may be costly and time-consuming. The
administration of any product the Company develops may produce undesirable side
effects that could result in the interruption, delay or suspension of clinical
trials, or the failure to obtain FDA or other regulatory approval for any or all
targeted indications. Even if regulatory approval is secured, the Company's
products under development may later produce adverse effects that limit or
prevent their widespread use or that necessitate their withdrawal from the
market. The Company may discontinue the development of any of its products under
development at any time.
PATENTS AND TRADEMARKS; INTERFERENCE
The Company's ability to commercialize any of its products under
development will depend, in part, on its or its licensors' ability to obtain
patents, enforce those patents, preserve trade secrets, and operate without
infringing on the proprietary rights of third parties. In addition, the patents
for which the Company has applied relating to NIASPAN and certain other of the
Company's products under development are based on, among other things, the timed
administration of NIASPAN. If the indications treated by NIASPAN and such other
products under development could be treated using drugs without such timed
administration, the Company's patents, if issued, would not prevent the use of
such drugs for the treatment of such indications, which would have a material
adverse effect on the Company. There can be no assurance that the patent
applications licensed to or owned by the Company will result in issued patents,
that patent protection will be secured for any particular technology, that any
patents that have been or may be issued to the Company or its licensors will be
valid or enforceable or that any patents will provide meaningful protection to
the Company.
In general, the U.S. patents and patent applications owned by or
licensed to the Company are method-of-use patents that cover the timed use of
certain compounds to treat specified conditions. Composition-of-matter
protection is not available for the active ingredient in NIASPAN. The active
ingredient in NIASPAN, niacin, is currently sold in the United States and other
markets for lipid altering and for other uses. Even in jurisdictions where the
use of the active ingredient in NIASPAN for lipid altering and other indications
may be covered by the claims of a use patent licensed to the Company, off-label
sales might occur, especially if another company markets the active ingredient
at a price that is less than the price of NIASPAN, thereby potentially reducing
the sales of NIASPAN.
The Company has a patent application pending in the U.S. Patent and
Trademark Office ("PTO") with claims covering NIASPAN's method-of-use consistent
with its recommended once-a-day dosing regimen. The Company has been advised by
the patent examiner that certain of these claims are allowable, but none of the
claims have yet been issued as a patent. The patent examiner has, however,
indicated that the PTO's Board of Appeals may declare an interference between
such Kos application and a method-of-use patent issued to a generic manufacturer
allegedly claiming the same dosing regimen invention. On February 7, 1997, the
Company and such generic manufacturer entered into a cross-licensing agreement
(the "License Agreement") pursuant to which the parties agreed to resolve, as
between themselves, the effects of such potential interference by granting
licenses under their respective patent application and patent.
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<PAGE> 10
The Company is aware that certain European and U.S. patents have been
issued with claims covering products that contain certain non-CFC
propellant-driven aerosol formulations. The European patents are currently
subject to an opposition proceeding in Europe, and certain claims in such
patents have been held invalid in the United Kingdom. Certain or all of the
Company's aerosol products under development may use a formulation covered by
such European or U.S. patents. In such event, the Company would be prevented
from making, using or selling such products unless the Company obtains a license
under such patents, which license may not be available on commercially
reasonable terms, or at all, or unless such patents are determined to be invalid
or unenforceable in Europe or the United States, respectively. The Company's
development of products that are covered by such patents and its failure to
obtain licenses under such patents in the event such patents are determined to
be valid and enforceable could have an adverse effect on the Company's business.
The patent positions of pharmaceutical and biotechnology companies are
highly uncertain and involve complex legal and factual questions. There can be
no assurance that the patents owned and licensed by the Company, or any future
patents, will prevent other companies from developing similar or therapeutically
equivalent products or that others will not be issued patents that may prevent
the sale of Company products or require licensing and the payment of significant
fees or royalties by the Company. Furthermore, there can be no assurance that
any of the Company's future products or methods will be patentable, that such
products or methods will not infringe upon the patents of third parties, or that
the Company's patents or future patents will give the Company an exclusive
position in the subject matter claimed by those patents. The Company may be
unable to avoid infringement of third party patents and may have to obtain a
license, defend an infringement action, or challenge the validity of the patents
in court. There can be no assurance that a license will be available to the
Company, if at all, on terms and conditions acceptable to the Company, or that
the Company will prevail in any patent litigation. Patent litigation is costly
and time consuming, and there can be no assurance that the Company will have or
will devote sufficient resources to pursue such litigation. If the Company does
not obtain a license under such patents, is found liable for infringement or is
not able to have such patents declared invalid, the Company may be liable for
significant money damages, may encounter significant delays in bringing products
to market, or may be precluded from participating in the manufacture, use, or
sale of products or methods of treatment requiring such licenses.
The Company also relies on trade secrets and other unpatented
proprietary information in its product development activities. To the extent
that the Company relies on trade secrets and unpatented know-how to maintain its
competitive technological position, there can be no assurance that others may
not independently develop the same or similar technologies. The Company seeks to
protect trade secrets and proprietary knowledge in part through confidentiality
agreements with its employees, consultants, advisors and collaborators.
Nevertheless, these agreements may not effectively prevent disclosure of the
Company's confidential information and may not provide the Company with an
adequate remedy in the event of unauthorized disclosure of such information. If
the Company's employees, scientific consultants or collaborators develop
inventions or processes independently that may be applicable to the Company's
products under development, disputes may arise about ownership of proprietary
rights to those inventions and processes. Such inventions and processes will not
necessarily become the Company's property, but may remain the property of those
persons or their employers. Protracted and costly litigation could be necessary
to enforce and determine the scope of the Company's proprietary rights. Failure
to obtain or maintain patent and trade secret protection, for any reason, would
have a material adverse effect on the Company.
The Company engages in collaborations, sponsored research agreements,
and other arrangements with academic researchers and institutions that have
received and may receive funding from U.S. government agencies. As a result of
these arrangements, the U.S. government or certain third parties may have rights
in certain inventions developed during the course of the performance of such
collaborations and agreements as required by law or such agreements. Several
legislative bills affecting patent rights have been introduced in the United
States Congress. These bills address various aspects of patent law, including
publication, patent term, re-examination subject matter and enforceability. It
is not certain whether any of these bills will be enacted into law or what form
such new laws may take. Accordingly, the effect of such potential legislative
changes on the Company's intellectual property estate is uncertain.
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<PAGE> 11
LIMITED SALES AND MARKETING EXPERIENCE
Although the Company markets NIASPAN and intends to market its other
products under development through its own specialty sales force, its marketing
experience to date is limited. Moreover, substantial resources will continue to
be required for the Company to promote the sale of NIASPAN and its products
under development. There can be no assurance that the Company will be able to
devote resources to NIASPAN or its other products under development sufficient
to achieve market acceptance. The Company's failure to expend the resources to
adequately promote NIASPAN would have a material adverse effect on the Company.
The Company's failure to expend the resources to adequately promote any of its
other products under development could have a material adverse effect on the
Company.
COMPETITION AND TECHNOLOGICAL CHANGE
The active ingredient in NIASPAN, niacin, is available in several other
formulations, most of which do not require a prescription. Although the Company
believes that there are no other currently available niacin formulations that
have been approved by the FDA specifically for once-a-day dosing, there can be
no assurance that physicians will not prescribe or recommend some of these
unapproved niacin formulations, using the NIASPAN dosing regimen, to try to
achieve the same results as NIASPAN. Substitution of other niacin formulations
for NIASPAN could have a material adverse effect on the Company. Moreover,
manufacturers of other niacin formulations could promote their products using
the NIASPAN dosing regimen and could promote the sale of their products to treat
the indications for which the Company has received clearance to market Niaspan.
Although such promotion would be a violation of FDA regulations, the occurrence
of such practices would have a material adverse effect on the Company. Moreover,
many products are commercially available for the treatment of elevated LDL
cholesterol, and the manufacturers of such products have significantly greater
financial resources and sales and manufacturing capabilities than the Company.
There can be no assurance that NIASPAN or any other product developed by the
Company will be able to compete successfully with any of those products.
Many established pharmaceutical and biotechnology companies,
universities, and other research institutions with resources significantly
greater than the Company's may develop products that directly compete with the
Company's products. Even if the Company's products under development prove to be
more effective than those developed by other entities, such other entities may
be more successful in marketing their products than the Company because of
greater financial resources, stronger sales and marketing efforts, and other
factors. These entities may succeed in developing products that are safer, more
effective or less costly than the products developed by the Company. There can
be no assurance that any products developed by the Company will be able to
compete successfully with any of those products.
GOVERNMENT REGULATION; NO ASSURANCES OF REGULATORY APPROVAL
The Company's research and development activities, preclinical studies,
clinical trials, and the manufacturing and marketing of its products are
currently subject to extensive regulation by the FDA and may in the future be
subject to foreign regulations. The drug approval process takes many years and
requires the expenditure of substantial resources. Data obtained from
preclinical and clinical activities are susceptible to varying interpretations
that could delay, limit, or prevent regulatory approval. Although the Company
may consult the FDA for guidance in developing protocols for clinical trials,
that consultation provides no assurance that the FDA will accept the clinical
trials as adequate or well-controlled or accept the results of those trials. In
addition, delays or rejections of applications for regulatory approval may
result from changes in or additions to FDA regulations concerning the drug
approval process. Similar delays may also be encountered in foreign countries.
There can be no assurance that any regulatory review will be conducted in a
timely manner or that regulatory approvals will be obtained for any products
developed by the Company. Even if regulatory approval of a product is obtained,
the approval may be limited as to the indicated uses for which it may be
promoted or marketed. In addition, a marketed drug, its bulk chemical supplier,
its manufacturer and its manufacturing facilities are subject to continual
regulatory
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<PAGE> 12
review and periodic inspections, and later discovery of previously unknown
problems with a product, supplier, manufacturer or facility may result in
restrictions on such products or manufacturers, which may require a withdrawal
of the product from the market. Failure to comply with the applicable regulatory
requirements can, among other things, result in fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal prosecution, any
of which could have a material adverse effect on the Company.
The Company's business is also subject to regulation under state,
federal and local laws, rules, regulations and policies relating to the
protection of the environment and health and safety, including those governing
the use, generation, manufacture, storage, air emission, effluent discharge,
handling and disposal of certain materials. The Company believes that it is in
compliance in all material respects with all such laws, rules, regulations and
policies applicable to the Company. There can be no assurance that the Company
will not be required to incur significant costs to comply with such
environmental and health and safety laws and regulations in the future. The
Company's research and development involves the controlled use of hazardous
materials. Although the Company believes that its safety procedures for handling
and disposing of such materials comply with the standards prescribed by
applicable state, federal and local regulations, the risk of contamination or
injury from these materials cannot be completely eliminated. In the event of
such contamination or injury, the Company could be held liable for any damages
that result and any such liability could exceed the resources of the Company and
materially adversely affect the Company's business, financial condition and
results of operations.
DEPENDENCE ON CERTAIN COLLABORATORS
The Company relies on third parties for certain aspects of the
development of certain of its products under development. The Company has
entered into agreements with Fuisz Technologies Ltd. ("Fuisz"), including a
joint venture, pursuant to which the Company and Fuisz have agreed to
collaborate in the development of three products. Under the terms of these
agreements, Kos is responsible for conducting pharmacokinetic studies and
clinical trials and Fuisz is responsible for the formulation of such products.
The Company is not aware of any FDA approved products that have successfully
incorporated Fuisz' microsphere technology, which is intended to be used in
certain of the products being developed under such agreements. The Company's
ability to commercialize these products may depend to a significant extent on
the efforts of Fuisz, over which the Company has no control. There can be no
assurance that Fuisz will be successful in developing any of the Company's
products under development. The Company also relies on other third parties for
certain aspects of the development of the Company's presently planned or future
products. There can be no assurance that the Company will be able to enter into
future collaborative arrangements on favorable terms, or at all. Even if the
Company is successful in entering into such collaborative agreements, there can
be no assurance that any such arrangement will be successful. The success of any
such arrangement is dependent on, among other things, the skills, experience and
efforts of the third party's employees responsible for the project, the third
party's commitment to the arrangement, and the financial condition of the third
party, all of which are beyond the control of the Company.
LIMITED MANUFACTURING EXPERIENCE; RISK OF SCALE-UP
The Company currently manufactures NIASPAN in one manufacturing plant
that has been inspected and approved by the FDA, and it manufactures clinical
materials for its products under development in another manufacturing plant. The
Company believes both plants operate in substantial compliance with current Good
Manufacturing Practices ("cGMP") regulations for the manufacture of
pharmaceutical products. The Company may need to further scale-up certain of its
current manufacturing processes to achieve production levels consistent with the
commercial sale of its products. Further, modifications to the facilities,
systems and procedures may be necessary to maintain capacity at a level
sufficient to meet market demand or to maintain compliance with cGMP regulations
and other regulations prescribed by various regulatory agencies including the
Occupational Safety and Health Administration and the Environmental Protection
Agency. Failure by the Company to successfully further scale-up, expand in
connection with manufacture for commercial sale, or modify its manufacturing
process or to comply with cGMP regulations and other regulations could delay the
approval of the Company's products under
10
<PAGE> 13
development or limit the Company's ability to meet the demand for its products,
either of which would have a material adverse effect on the Company. Such
occurrences may require the Company to acquire alternative means of
manufacturing its products, which may not be available to the Company on a
timely basis, on commercially practicable terms, or at all.
NO ASSURANCE OF ADEQUATE THIRD-PARTY REIMBURSEMENT
The Company's ability to commercialize successfully its products under
development is dependent in part on the extent to which appropriate levels of
reimbursement for NIASPAN or the Company's products under development are
obtained from government authorities, private health insurers, and managed care
organizations such as health maintenance organizations ("HMOs"). Managed care
organizations and other third-party payors are increasingly challenging the
pricing of pharmaceutical products. The trend toward managed healthcare in the
United States, the growth of organizations such as HMOs, and legislative
proposals to reform healthcare and government insurance programs could
significantly influence the purchase of pharmaceutical products, resulting in
lower prices and reduced demand for NIASPAN or the Company's products under
development. Such cost containment measures and potential legislative reform
could affect the Company's ability to sell NIASPAN or its products under
development and may have a material adverse effect on the Company. Significant
uncertainty exists about the reimbursement status of newly approved
pharmaceutical products. There can be no assurance that reimbursement in the
United States or foreign countries will be available for NIASPAN or any of the
Company's products under development, that any reimbursement granted will be
maintained, or that limits on reimbursement available from third-party payors
will not reduce the demand for, or negatively affect the price of, NIASPAN or
the Company's products under development. The unavailability or inadequacy of
third-party reimbursement for NIASPAN or the Company's products under
development would have a material adverse effect on the Company.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company has experienced negative cash flows from operations since
its inception. The Company has spent and will continue to be required to spend
substantial funds to continue research and development, including clinical
trials of its products under development, and to commercialize NIASPAN and its
products under development if regulatory approvals are obtained for such
products under development. The Company may need or elect to raise additional
capital. The Company's capital requirements will depend on many factors,
primarily relating to the near-term commercial success of NIASPAN; the problems,
delays, expenses and complications frequently encountered by development stage
companies; the progress of the Company's research, development, and clinical
trial programs; the costs and timing of seeking regulatory approvals of the
Company's products under development; the Company's ability to obtain such
regulatory approvals; costs in filing, prosecuting, defending, and enforcing any
patent claims and other intellectual property rights; the extent and terms of
any collaborative research, manufacturing, marketing, or other arrangements; and
changes in economic, regulatory, or competitive conditions or the Company's
planned business. Estimates about the adequacy of funding for the Company's
activities are based on certain assumptions, including the assumption that the
Company's NIASPAN product is successfully commercialized, and that testing and
regulatory procedures relating to the Company's products under development can
be conducted at projected costs and within projected time frames. There can be
no assurances that any of these assumptions will prove to be accurate.
To satisfy its capital requirements, the Company may seek to raise
funds in the public or private capital markets. The Company's ability to raise
additional funds in the public or private markets will be adversely affected if
the initial marketing efforts for NIASPAN are not successful, if the results of
the Company's clinical trials for its products under development are not
favorable, or if regulatory approval for any of the Company's products under
development is not obtained. The Company may seek additional funding through
corporate collaborations and other financing vehicles. There can be no assurance
that any such funding will be available to the Company, or if available, that it
will be available on acceptable terms. If adequate funds are not available, the
Company may be required to curtail significantly one or more of its research or
development programs or it may be required to obtain
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<PAGE> 14
funds through arrangements with future collaborative partners or others that may
require the Company to relinquish rights to NIASPAN or to some or all of its
technologies or products under development. If the Company is successful in
obtaining additional financing, the terms of the financing may have the effect
of diluting or adversely affecting the holdings or the rights of the holders of
Common Stock.
DEPENDENCE ON SINGLE SOURCES OF SUPPLY
Some materials used in the Company's products, including niacin, the
active ingredient in NIASPAN, are currently sourced from a single qualified
supplier. The Company does not have a contractual arrangement with its sole
supplier of niacin. Although the Company has not experienced difficulty to date
in acquiring niacin, or other materials for product development, no assurance
can be given that supply interruptions will not occur in the future or that the
Company will not have to obtain substitute materials, which would require
additional product validations and regulatory submissions. Any such interruption
of supply could have a material adverse effect on the Company's ability to
manufacture its products or to obtain or maintain regulatory approval of such
products.
RISK OF PRODUCT LIABILITY CLAIMS; NO ASSURANCE OF ADEQUATE INSURANCE
Manufacturing, marketing, selling, and testing NIASPAN and the
Company's products under development entails a risk of product liability. The
Company could be subject to product liability claims in the event the Company's
products or products under development fail to perform as intended. Even
unsuccessful claims could result in the expenditure of funds in litigation and
the diversion of management time and resources and could damage the Company's
reputation and impair the marketability of the Company's products. While the
Company maintains liability insurance, there can be no assurance that a
successful claim could not be made against the Company, that the amount of
indemnification payments or insurance would be adequate to cover the costs of
defending against or paying such a claim or that damages payable by the Company
would not have a material adverse effect on the Company's business, financial
condition, and results of operations and on the price of the Company's Common
Stock.
DEPENDENCE ON KEY PERSONNEL
The success of the Company is dependent on its ability to attract and
retain highly qualified scientific and management personnel. The Company faces
intense competition for personnel from other companies, academic institutions,
government entities, and other organizations. There can be no assurance that the
Company will be successful in attracting and retaining key personnel. The loss
of key personnel, or the inability to attract and retain the additional,
highly-skilled employees required for the expansion of the Company's activities,
could adversely affect the Company's results of operations and its business.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
The Company has granted certain registration rights to the Company's
controlling shareholder and to Kos Investments, the holder of the Convertible
Note, which entitle such entities to cause the Company to effect three
registrations under the Securities Act of sales of shares of the Company's
Common Stock owned by such entities. These registration rights generally would
also permit the holders of such rights to include shares in any registration
statement otherwise filed by the Company. By exercising these registration
rights, these entities could cause a large number of shares to be registered and
become freely tradeable without restrictions under the Securities Act (except
for those purchased in the offering by affiliates of the Company) immediately
upon the effectiveness of such registration. Such sales may have an adverse
effect on the market price of the Common Stock and could impair the Company's
ability to raise additional capital.
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<PAGE> 15
POSSIBLE STOCK PRICE VOLATILITY
The stock market, including the Nasdaq National Market, on which the
Company's shares are listed, has from time to time experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
particular companies. In addition, the market price of the Common Stock, like
the stock prices of many publicly traded pharmaceutical and biotechnology
companies, has been and may continue to be highly volatile. The sale by the
Company's controlling shareholder or members of the Company's management of
shares of Common Stock, announcements of technological innovations or new
commercial products by the Company or its competitors, developments or disputes
concerning patent or proprietary rights, publicity regarding actual or potential
medical results relating to NIASPAN or to products under development by the
Company or its competitors, regulatory developments in either the United States
or foreign countries, public concern as to the safety of pharmaceutical and
biotechnology products and economic and other external factors, as well as
period-to-period fluctuations in financial results, among other factors, may
have a significant impact on the market price of the Common Stock.
CONTROL BY EXISTING SHAREHOLDER
As of August 31, 1997, Michael Jaharis, the Chairman of the Board of
Directors of the Company and one of its founders, beneficially owned
approximately 69.6% of the outstanding Common Stock, including 948,683 shares of
Common Stock issuable as of August 31, 1997, to Kos Investments upon conversion
of the Convertible Note. Accordingly, this shareholder can control the outcome
of certain shareholder votes, including votes concerning the election of
directors, the adoption or amendment of provisions in the Company's Articles of
Incorporation, and the approval of mergers and other significant corporate
transactions. This level of concentrated ownership by one person, along with the
factors described in "Risk Factors -- Anti-Takeover Provisions," may have the
effect of delaying or preventing a change in the management or voting control of
the Company.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Articles of Incorporation and
Bylaws, as well as the Florida Business Corporation Act, could discourage a
third party from attempting to acquire, or make it more difficult for a third
party to acquire, control of the Company without approval of the Company's Board
of Directors. Such provisions could also limit the price that certain investors
might be willing to pay in the future for shares of the Common Stock. Certain of
such provisions allow the Board of Directors to authorize the issuance of
preferred stock with rights superior to those of the Common Stock. Moreover,
certain provisions of the Company's Articles of Incorporation or Bylaws
generally permit removal of directors only for cause by a 60% vote of the
shareholders of the Company, require a 60% vote of the shareholders to amend the
Company's Articles of Incorporation or Bylaws, require a demand of at least 50%
of the Company's shareholders to call a special meeting of shareholders, and
prohibit shareholder actions by written consent.
DILUTION; ABSENCE OF DIVIDENDS
Purchasers of shares of Common Stock in this offering will experience
dilution in net tangible book value per share upon the exercise of outstanding
stock options. The Company has not paid any cash dividends since inception. The
Company intends to retain earnings, if any, for use in its business and does not
anticipate paying any cash dividends in the foreseeable future.
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<PAGE> 16
SELLING SHAREHOLDERS
The following table lists the names of the Selling Shareholders, the
number of shares of the Common Stock beneficially owned by each of them
(including shares subject to options exercisable within 60 days) as of September
2, 1997, and the number of shares each Selling Shareholder will be eligible to
sell pursuant to this Prospectus upon the exercise of options granted to them
under the Plan or outside the Plan, and the number and the percent of shares of
Common Stock to be held by such Selling Shareholder after the offering. As of
September 2, 1997, the Company had 14,772,718 shares of Common Stock issued and
outstanding. Unless otherwise indicated, each stockholder listed has the sole
power to vote and direct disposition of the shares of Common Stock shown as
beneficially owned by such stockholder.
<TABLE>
<CAPTION>
AMOUNT TO BE HELD
AFTER OFFERING
NUMBER OF NUMBER OF -------------------
SHARES SHARES COVERED % OF
BENEFICIALLY BY THIS NUMBER OF COMMON
SELLING SHAREHOLDER OWNED PROSPECTUS SHARES STOCK
- ------------------- ------------ -------------- --------- -------
<S> <C> <C> <C> <C>
Robert E. Baldini(1) 50,001 200,000 1 *
Daniel M. Bell(2) 750,026 750,000 26 *
David J. Bova(3) 279,101 275,000 4,101 *
John Brademas -- 5,000 -- --
Duncan H. Cocroft -- 80,000 -- --
Anthony J. Cutie(4) 50,201 50,000 201 *
David L. Heatherman(5) 10,001 40,000 1 *
Steven Jaharis(6) 5,001 8,000 1 *
Louis C. Lasagna -- 5,000 -- --
Mark Novitch -- 5,000 -- --
Frederick A. Sexton(7) 10,173 40,000 173 *
Frederick B. Whittemore -- 5,000 -- --
</TABLE>
- ----------
* Less than one percent.
(1) Includes 50,000 shares of Common Stock that may be purchased by Mr.
Baldini pursuant to an option, which is currently exercisable.
(2) Includes 750,000 shares of Common Stock that may be purchased by Mr.
Bell pursuant to an option, which is currently exercisable.
(3) Includes 275,000 shares of Common Stock that may be purchased by Mr.
Bova pursuant to an option, which is currently exercisable.
(4) Includes 50,000 shares of Common Stock that may be purchased by Dr.
Cutie pursuant to an option, which is currently exercisable. Also
includes 200 shares owned by Dr. Cutie's son, with respect to which Dr.
Cutie disclaims beneficial ownership.
(5) Includes 10,000 shares of Common Stock that may be purchased by Mr.
Heatherman pursuant to an option, which is currently exercisable.
(6) Includes 5,000 shares of Common Stock that may be purchased by Dr.
Jaharis pursuant to an option, which is currently exercisable.
(7) Includes 10,000 shares of Common Stock that may be purchased by Mr.
Sexton pursuant to an option, which is currently exercisable. Also
includes 172 shares owned by Mr. Sexton's wife, with respect to which
Mr. Sexton disclaims beneficial ownership.
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<PAGE> 17
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Shareholders, although the Company is entitled to receive the
exercise price of the options under which the Shares are acquired by the Selling
Shareholders. The proceeds received by the Company as a result of the exercise
of the options may be used for general corporate purposes.
PLAN OF DISTRIBUTION
The shares of Common Stock are being registered for reoffers and
resales by the Selling Shareholders for their own accounts. Such shares of
Common Stock may be resold from time to time by any of the Selling Shareholders
or by pledgees, donees, transferees or other successors in interest, directly to
purchasers, in one or more transactions (which may involve one or more block
transactions) on the Nasdaq National Market, in sales occurring in the public
market outside of the Nasdaq National Market in separately negotiated
transactions or in a combination of such transactions, at market prices
prevailing at the time of such sale, at prices related to such prevailing prices
or at prices otherwise negotiated.
Certain of the Selling Shareholders may be limited in the amount of
shares of Common Stock which they may sell during any three month period as a
result of the volume limitations contained in Rule 144 of the Securities Act of
1933 (the "Securities Act"). The amount of shares of Common Stock which may be
sold by such Selling Shareholders within any three month period may not exceed
the greater of (i) one percent of the shares of Common Stock of the Company
outstanding as shown by the most recent report filed by the Company; (ii) the
average weekly reported volume of trading in shares of Common Stock on the
Nasdaq National Market during the four calendar weeks preceding the filing of
the forms required under Rule 144 (or if no such notice is required, the date of
receipt of the order by a broker-dealer to execute the transaction directly with
a market maker), or (iii) the average weekly volume of trading in the shares of
Common Stock reported through the consolidated transaction reporting system
under the Exchange Act during such four week period.
The Selling Shareholders may effect such transactions by selling the
shares to or through broker-dealers and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Shareholders and/or the purchasers of the shares for whom such
broker-dealers may act as agent (which compensation may be less than or in
excess of customary commissions). The Selling Shareholders and any
broker-dealers that participate in the distribution of the shares may be deemed
"underwriters" within the meaning of Section 2(11) of the Securities Act and any
commissions received by them and any profit on the resale of the shares sold by
them may be deemed to be underwriting discounts and commissions under the
Securities Act.
Upon the Company being notified by a Selling Shareholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares of Common Stock through a block trade, a special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplemental prospectus will be filed, if required, pursuant to Rule 424(c) of
the Securities Act, disclosing (i) the name of each such Selling Shareholder and
of the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares were sold, (iv) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus and (vi) other facts
material to the transaction.
There can be no assurances that any of the Selling Shareholders will
sell any or all of the shares of Common Stock offered by them hereunder.
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<PAGE> 18
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company, a Florida corporation, has included in its Bylaws
provisions to indemnify its directors and officers to the fullest extent
permitted by the Florida Business Corporation Act. The Company believes that
these provisions are necessary to attract and retain qualified persons as
directors and officers. The Company has obtained a director and officer
liability insurance policy for the benefit of its directors and officers. Under
the policy, such persons are insured against certain liabilities incurred in the
discharge of their duties in their capacity as directors and officers of the
Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company,
the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
LEGAL MATTERS
Certain legal matters in connection with the sale of the shares of
Common Stock offered hereby will be passed upon for the Company by Holland &
Knight LLP, One East Broward Boulevard, Ft. Lauderdale, Florida 33301.
EXPERTS
The consolidated financial statements incorporated by reference in this
prospectus and this registration statement have been audited by Arthur Andersen
LLP, independent certified public accountants, to the extent and for the periods
set forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon the authority of said firm, as experts in giving said
report.
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<PAGE> 19
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission by the Kos Pharmaceuticals, Inc. (the "Company") are incorporated
herein by reference:
(1) The Company's annual report on Form 10-K filed for the period
ending June 30, 1997;
(2) The Company's reports on Form 8-K filed with the Commission on July
29, 1997, and September 2, 1997;
(3) All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment which indicates that all remaining securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this prospectus and to be part
thereof from the date of filing of such documents; and
(4) The description of the Company's Common Stock contained under the
caption "Description of Registrant's Capital Stock" in the 424(b) Prospectus and
incorporated by reference into the Registration Statement of the Company on Form
8-A (Commission File No. 000-22171) filed with the Commission pursuant to
Section 12(g) of the Exchange Act on February 25, 1997.
Any statement in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or replaces 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.
The Company undertakes to provide without charge to each person,
including any beneficial owner, to whom this prospectus is delivered, upon
written or oral request of such person, a copy of any and all information that
has been incorporated by reference in this prospectus (not including exhibits to
the information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this prospectus
incorporates). Such request should be directed to the President, Kos
Pharmaceuticals, Inc., 1001 Brickell Bay Drive, 25th Floor, Miami, Florida
33131, telephone number (305) 577-3464.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable; the class of securities to be offered is registered
under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act ("FBCA") and the Company's Bylaws
provide that in certain cases, each officer and director of the Company shall be
indemnified by the Company against certain costs, expenses and liabilities which
he or she may incur in his or her capacity as such. The Company has also
purchased directors' and officers' liability insurance consistent with the
provisions of the Florida Business Corporation Act to protect directors and
officers from liabilities against various laws, including the Securities Act of
1933.
II-1
<PAGE> 20
The Company's Bylaws provide:
RIGHT TO INDEMNIFICATION. Any person, his heirs, or personal
representative, made, or threatened to be made a party to any
threatened, pending, or completed action or proceeding, whether civil,
criminal, administrative, regulatory, or investigative ("Proceeding")
because he is or was a director or officer of this Corporation or
serves or served any other corporation or other enterprise in any
capacity at the request of this Corporation, shall be indemnified by
this Corporation, to the full extent permitted by the Florida Business
Corporation Act; provided, however, that the Corporation shall
indemnify any such person seeking indemnity in connection with a
Proceeding (or part thereof) initiated by such person only if such
Proceeding (or part thereof) was authorized by the Board of Directors
of the Corporation. In discharging his duty, any director or officer,
when acting in good faith, may rely upon information, opinions,
reports, or statements, including financial statements and other
financial data, in each case prepared or presented by (1) one or more
officers or employees of the Corporation whom the director or officer
reasonably believes to be reliable and competent in the matters
presented, (2) counsel, public accountants, or other persons as to
matters that the director or officer believes to be within that
person's professional or expert competence, or (3) in the case of a
director, a committee of the board of directors upon which he does not
serve, duly designated according to law, as to matters within its
designated authority, if the director reasonably believes that the
committee is competent.
ADVANCES. The rights set forth above in this Article VI shall include
the right to be paid by the Corporation expenses incurred in defending
or being represented in any such Proceeding in advance of its final
disposition; provided, however, that the payment of such expenses
incurred by a director or officer because he is or was a director of
officer of this Corporation or serves or served any other corporation
or enterprise in any capacity at the request of this Corporation (and
not in any other capacity in which service was or is rendered by such
person while a director or officer, including service to an employee
benefit plan) in advance of the final disposition of such Proceeding,
shall be made only upon delivery to the Corporation of an undertaking,
by or on behalf of such director or officer, to repay all amounts so
advanced if it should be determined ultimately that such director or
officer is not entitled to be indemnified under this Article VI or
otherwise.
CONTRACT RIGHT. All rights to indemnification, including advancement of
expenses, shall be deemed to be provided by a contract between the
Corporation and the director or officer who serves in such capacity at
any time while this Article VI and other relevant provisions of the
Florida Business Corporation Act and other applicable law, if any, are
in effect, such that any repeal or modification thereof shall not
adversely affect any right existing at the time of such repeal or
modification.
RIGHT TO BRING SUIT. If a claim under the preceding paragraphs of this
Article VI is not paid in full by the Corporation within 90 days after
a written claim therefor has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation
to recover the unpaid amount of the claim and, if successful in whole
or in part, the claimant shall be entitled to be paid also the expense,
including attorney's fees, of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in advance of
its final disposition where the required undertaking has been tendered
to the Corporation) that the claimant has not met the applicable
standard of conduct which makes it permissible under the Florida
Business Corporation Act for the Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel, or its shareholders)
to have made a determination prior to the commencement of such action
that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the
Florida Business Corporation Act, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel,
II-2
<PAGE> 21
or its shareholders) that the claimant had not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of
conduct.
NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this
Article VI shall not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of these
Bylaws, the Articles of Incorporation, agreement, vote of shareholders
or disinterested directors or otherwise.
INSURANCE. The Corporation may maintain insurance, at its expense, for
the purpose of indemnifying itself and any director, officer, employee
or agent of the Corporation or another corporation, partnership, trust
or other enterprise, whether or not the Corporation would have the
power to provide such indemnity under the Florida Business Corporation
Act.
Section 607.0850 of the FBCA, "Indemnification of officers, directors, employees
and agents," provides:
(1) A corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right
of, the corporation), by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any proceeding by judgment,
order, settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person, who was or
is a party to any proceeding by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors,
the estimated expense of litigating the proceeding to conclusion,
actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, except that no indemnification shall
be made under this subsection in respect of any claim, issue, or matter
as to which such person shall have been adjudged to be liable unless,
and only to the extent that, the court in which such proceeding was
brought, or any other court of competent jurisdiction, shall determine
upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense
of any proceeding referred to in subsection (1) or subsection (2), or
in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(4) Any indemnification under subsection (1) or subsection (2), unless
pursuant to a determination by a court, shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
or agent is proper in the circumstances because he has
II-3
<PAGE> 22
met the applicable standard of conduct set forth in subsection (1) or
subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such
proceeding;
(b) If such a quorum is not obtainable or, even if
obtainable, by majority vote of a committee duly designated by
the board of directors (in which directors who are parties may
participate) consisting solely of two or more directors not at
the time parties to the proceeding;
(c) By independent legal counsel;
1. Selected by the board of directors
prescribed in paragraph (a) or the committee
prescribed in paragraph (b); or
2. If a quorum of the directors cannot be
obtained for paragraph (1) and the committee cannot
be designated under paragraph (b), selected by
majority vote of the full board of directors (in
which directors who are parties may participate); or
(d) By the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such
proceeding or, if no such quorum is obtainable, by a majority
vote of shareholders who were not parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination
that indemnification is permissible. However, if the determination of
permissibility is made by independent legal counsel, persons specified
by paragraph (4)(c) shall evaluate the reasonableness of expenses and
may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the
final disposition of such proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if he is
ultimately found not to be entitled to indemnification by the
corporation pursuant to this section. Expenses incurred by other
employees and agents may be paid in advance upon such terms or
conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and a corporation may make any other
or further indemnification or advancement of expenses of any of its
directors, officers, employees, or agents, under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office. However, indemnification or advancement of
expenses shall not be made to or on behalf of any director, officer,
employee, or agent if a judgment or other final adjudication
establishes that his actions, or omissions to act, were material to the
cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the
director, officer, employee, or agent had reasonable cause to
believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful;
(b) A transaction from which the director, officer,
employee, or agent derived an improper personal benefit;
II-4
<PAGE> 23
(c) In the case of a director, a circumstance under
which the liability provisions of s. 607.0834 are applicable;
or
(d) Willful misconduct or a conscious disregard for
the best interests of the corporation in a proceeding by or in
the right of the corporation to procure a judgment in its
favor or in a proceeding by or in the right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person, unless otherwise
provided when authorized or ratified.
(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or
of the shareholders in the specific case, a director, officer,
employee, or agent of the corporation who is or was a party to a
proceeding may apply for indemnification or advancement of expenses, or
both, to the court conducting the proceeding, to the circuit court, or
to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice that it considers
necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent is
entitled to mandatory indemnification under subsection (3), in
which case the court shall also order the corporation to pay
the director reasonable expenses incurred in obtaining
court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is
entitled to indemnification or advancement of expenses, or
both, by virtue of the exercise by the corporation of its
power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is
fairly and reasonably entitled to indemnification or
advancement of expenses, or both, in view of all the relevant
circumstances, regardless of whether such person met the
standard of conduct set forth in subsection (1), subsection
(2), or subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director,
officer, employee, or agent of a constituent corporation, or is or was
serving at the request of a constituent corporation as a director,
officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, is in the same position under this
section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(11) For purposes of this section;
(a) The term "other enterprises" includes employee
benefit plans;
(b) The term "expenses" includes counsel fees,
including those for appeal;
(c) The term "liability" includes obligations to pay
a judgment, settlement, penalty, fine (including an excise tax
assessed with respect to any employee benefit plan), and
expenses actually and reasonably incurred with respect to a
proceeding;
II-5
<PAGE> 24
(d) The term "proceeding" includes any threatened,
pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the
corporation" includes any service as a director, officer,
employee, or agent of the corporation that imposes duties on
such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in
good faith and in a manner he reasonably believes to be in the
best interests of the participants and beneficiaries of an
employee benefit plan.
(12) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of this section.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company,
the Company has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-6
<PAGE> 25
ITEM 8. EXHIBITS.
The exhibits filed as part of this Registration Statement are as
follows:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 -- Articles of Incorporation of the Company, as amended, (incorporated by reference to
Exhibit 3.1 of the Registrant's Registration Statement on Form S-1 filed with the
Commission on December 17, 1997, as amended (File No. 333-17991))
4.2 -- Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant's
Registration Statement on Form S-1 filed with the Commission on December 17, 1997,
as amended (File No. 333-17991))
5 -- Opinion of Holland & Knight LLP
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Holland & Knight LLP (included in opinion filed as Exhibit 5)
24 -- Powers of Attorney (included on the signature page to this Registration Statement)
</TABLE>
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
A. (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in The
Registration Statement;
provided, however, that paragraphs (a) (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed or furnished to the Commission
by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-7
<PAGE> 26
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-8
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Kos Pharmaceuticals, Inc., certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Miami, State of Florida,
on the 12th day of September, 1997.
KOS PHARMACEUTICALS, INC.
By: /s/ Daniel M. Bell
-------------------------
Daniel M. Bell, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Daniel M. Bell and George Blews and each of them, his
true and lawful attorney-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that each of
said attorneys-in-fact or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael Jaharis Chairman of the Board of Directors September 12, 1997
- --------------------------------------------
Michael Jaharis
/s/ Daniel M. Bell President, Chief Executive September 12, 1997
- -------------------------------------------- Officer and Director
Daniel M. Bell (Principal Executive Officer)
/s/ Duncan H. Cocroft Senior Vice President, Chief September 12, 1997
- -------------------------------------------- Administrative Officer
Duncan H. Cocroft (Principal Financial Officer)
/s/ Juan F. Rodriguez Controller September 12, 1997
- -------------------------------------------- (Principal Accounting Officer)
Juan F. Rodriguez
- -------------------------------------------- Vice Chairman of the Board of Directors
Robert E. Baldini
/s/ John Brademas Director August 27, 1997
- --------------------------------------------
John Brademas
/s/ Steven Jaharis Director September 12, 1997
- --------------------------------------------
Steven Jaharis
/s/ Louis C. Lasagna Director September 12, 1997
- --------------------------------------------
Louis C. Lasagna
/s/ Mark Novitch Director August 28, 1997
- --------------------------------------------
Mark Novitch
- -------------------------------------------- Director
Frederick B. Whittemore
</TABLE>
<PAGE> 28
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
5 -- Opinion of Holland & Knight LLP
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Holland & Knight LLP
(included in opinion filed as Exhibit 5)
<PAGE> 1
Exhibit 5
HOLLAND & KNIGHT LLP
One East Broward Boulevard
Fort Lauderdale, Florida 33301
September 11, 1997
Kos Pharmaceuticals, Inc.
1001 Brickell Bay Drive
Suite 2502
Miami, Florida 33131
Re: Kos Pharmaceuticals, Inc. (the "Company") - Registration
Statement on Form S-8
Ladies & Gentlemen:
You have requested our opinion in connection with the above-referenced
Registration Statement, (the "Registration Statement") in connection with the
registration for sale of (i) an aggregate of 4,000,000 shares (the "Plan
Shares") of the common stock, $.01 par value per share, of the Company (the
"Common Stock"), which may be issued by the Company to participants in The Kos
Pharmaceuticals, Inc. 1996 Stock Option Plan (the "Plan"), and (ii) 325,000
shares of Common Stock, which may be issued by the Company to an employee and a
consultant of the Company pursuant to stock options issued outside the Plan
(together with the Plan Shares, the "Shares").
We have reviewed copies of the Articles of Incorporation and Bylaws of the
Company, and have examined such corporate documents and records and other
certificates, and have made such investigations of law, as we have deemed
necessary in order to render the opinion hereinafter set forth.
Based upon and subject to the foregoing, we are of the opinion that the Shares
are duly authorized, and, assuming the Company receives greater than par value
for the Shares, when the Shares are fully paid for in accordance with the terms
and conditions set forth in the Plan and/or the agreements relating to the
issuance of such Shares, such Shares will be, assuming no changes in the
applicable law or pertinent facts, validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
HOLLAND & KNIGHT LLP
By: /s/ Steven Sonberg
-------------------------
Steven Sonberg
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this Form S-8 Registration Statement of our report
dated July 25, 1997, included in Kos Pharmaceuticals, Inc.'s Form 10-K for the
year ended June 30, 1997 and to all references to our Firm included in this Form
S-8 Registration Statement.
ARTHUR ANDERSEN LLP
Miami, Florida,
September 12, 1997.
