<PAGE> 1
As filed with the Securities and Exchange Commission on June 11, 1998
Registration Statement No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
----------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
ASCENT PEDIATRICS, INC.
(Exact name of registrant as specified in its charter)
----------------------
DELAWARE 04-3047405
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
187 BALLARDVALE STREET
WILMINGTON, MASSACHUSETTS 01887
(978) 658-2500
(Address, including zip code, and
telephone number, including area code,
of registrant's principal
executive offices)
----------------------
ALAN R. FOX
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ASCENT PEDIATRICS, INC.
187 BALLARDVALE STREET
WILMINGTON, MASSACHUSETTS 01887
(978) 658-2500
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
COPY TO:
DAVID E. REDLICK, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 526-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
<PAGE> 2
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] __________
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
-------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
Proposed Proposed
Amount Maximum Maximum
to be Aggregate Aggregate Amount of
Title of Shares to be Registered Registered Price Offering Price(1) Registration Fee
Per Share(1)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.00004 par value per share.... 779,268 shares $2.78125 $2,167,339.13 $639.37
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act and based upon the
average of the high and low prices of the Company's Common Stock on the
Nasdaq National Market on June 8, 1998.
-------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
SHALL DETERMINE.
================================================================================
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 11, 1998
PROSPECTUS
ASCENT PEDIATRICS, INC.
779,268 Shares
Common Stock
($.00004 par value per share)
---------------------
This Prospectus covers the offer and sale of 779,268 shares (the
"Shares") of common stock, $.00004 par value ("Common Stock"), of Ascent
Pediatrics, Inc. ("Ascent" or the "Company"), which are issuable upon exercise
of warrants (the "Triumph Warrants") by the holders thereof (the "Selling
Stockholders"). The Company issued the Triumph Warrants to the Selling
Stockholders in connection with the issuance and sale on January 31, 1997 and
June 4, 1997 of an aggregate of $7.0 million of convertible subordinated secured
notes (the "Triumph Notes") to such Selling Stockholders. The Shares may be
offered and sold by the Selling Stockholders, or by their pledgees, donees,
transferees or other successors in interest, from time to time on the Nasdaq
National Market, in ordinary brokerage transactions, in negotiated transactions,
or otherwise, at market prices prevailing at the time of sale, at prices related
to such market prices or at negotiated prices. See "SELLING STOCKHOLDERS" and
"PLAN OF DISTRIBUTION."
The Company will not receive any of the proceeds from the sale of the
Shares covered by this Prospectus. The Company will bear all expenses incurred
in effecting the registration of the Shares, including all registration and
filing fees, "blue sky" fees, printing expenses, all legal fees of counsel to
the Company and counsel to the Selling Stockholders, applicable to the sale of
the Shares excluding brokerage or underwriting expenses or commissions, if any,
which will be paid by the Selling Stockholders. The Company and the Selling
Stockholders have agreed to certain indemnification arrangements with respect to
the sale of the Shares offered hereby. See "PLAN OF DISTRIBUTION."
The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "ASCT." On June 8, 1998, the closing sale price of the Common
Stock as reported on the Nasdaq National Market was $2.625 per share.
----------------------
THE SHARES OFFERED HEREBY INVOLVE 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 OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is __________ __, 1998.
<PAGE> 4
TABLE OF CONTENTS
PAGE
----
Available Information...................................................... 2
Incorporation of Certain Documents By Reference............................ 3
Special Note Regarding Forward-Looking Information......................... 4
The Company................................................................ 5
Risk Factors............................................................... 6
Use of Proceeds............................................................ 17
The Selling Stockholders................................................... 17
Plan of Distribution....................................................... 18
Legal Matters.............................................................. 19
Experts.................................................................... 19
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the
Commission's regional offices located at Seven World Trade Center, Suite 1300,
New York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials also may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, the Company is required
to file electronic versions of these documents through the Commission's
Electronic Data Gathering, Analysis and Retrieval system (EDGAR). The Commission
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The Common Stock of the Company is
quoted on the Nasdaq National Market. Reports and other information filed by the
Company can also be inspected at the offices of the National Association of
Securities Dealers, Inc., Reports Section, 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments, supplements, exhibits and schedules
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), with respect to the Shares offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
as certain items are omitted in accordance with the rules and regulations of the
Commission. For further information pertaining to the Company and the Shares,
reference is made to the Registration Statement. Statements contained in this
Prospectus regarding the contents of any agreement or other document are not
necessarily complete, and in each instance reference is made to the copy of such
agreement or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference. The
Registration Statement, including all exhibits and schedules thereto, may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of all or any part thereof may be
obtained from the Commission at prescribed rates.
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<PAGE> 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(i) The Company's Annual Report on Form 10-K for the year
ended December 31, 1997, as filed with the Commission
on March 31, 1998;
(ii) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, as filed with the
Commission on May 15, 1998;
(iii) The Company's Current Report on Form 8-K dated as of
June 1, 1998, as filed with the Commission on June 2,
1998; and
(iv) The description of the Common Stock of the Company as
contained in the Company's Registration Statement on
Form 8-A, as filed with the Commission on April 4,
1997, including any amendments or reports filed for
the purpose of updating such description.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Shares registered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing such documents. Any statement
contained 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 supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). All such requests shall be
directed to: Ascent Pediatrics, Inc., 187 Ballardvale Street, Wilmington,
Massachusetts 01887, Attention: Vice President, Finance, Telephone: (978)
658-2500.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION OF AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE HEREOF.
---------------------
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<PAGE> 6
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this Prospectus and in the documents incorporated
herein constitute "forward-looking statements" within the meaning of Section 27A
of the Act and Section 2B of the Exchange Act. For this purpose, any statements
contained herein or incorporated herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "may," "anticipates," "plans," "expects,"
"intends" and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the results
of the Company to differ materially from those indicated by such forward-looking
statements. These factors include those set forth in "Risk Factors" herein.
-4-
<PAGE> 7
THE COMPANY
Ascent Pediatrics, Inc. ("Ascent" or the "Company") is a drug
development and marketing company focused exclusively on the pediatric market.
The Company's strategy is to address unmet medical needs of children through the
development of differentiated, proprietary products based on approved compounds
with well known clinical profiles. The Company introduced its first two
products, Feverall(R) acetaminophen suppositories and Pediamist(R) nasal saline
spray, to the market in the second half of 1997 and began to copromote a third
product, Duricef(R) oral suspension, with Bristol-Myers Squibb U.S.
Pharmaceuticals Group ("Bristol-Myers Squibb") in March 1998. Ascent has four
other principal products in development. The Company markets its products in the
United States through a direct sales force consisting of over 60 representatives
focused exclusively on the pediatric market.
Ascent was incorporated in Delaware in 1989. On June 28, 1996, the
Company changed its name to Ascent Pediatrics, Inc. from Ascent Pharmaceuticals,
Inc. The Company's principal executive offices are located at 187 Ballardvale
Street, Suite B-125, Wilmington, Massachusetts 01887, and its telephone number
is (978) 658-2500.
The Company holds United States trademark registrations for "ASCENT,"
"FEVERALL," "PEDIAMIST" and "PRIMSOL." All other brand names or trademarks
appearing in this Prospectus are the property of their respective owners.
-5-
<PAGE> 8
RISK FACTORS
The shares of Common Stock offered hereby involve a high degree of
risk. Prospective purchasers of the Common Stock offered hereby should carefully
consider the following risk factors in addition to the other information set
forth or incorporated by reference in this Prospectus.
CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company has no committed external sources of capital. On June 1,
1998, the Company issued and sold $7.0 million of Series G convertible
exchangeable preferred stock, $9.0 million of 8% seven-year subordinated notes
and seven-year warrants to purchase 2,116,958 shares of Common Stock
(collectively, the "1998 Financing") to funds affiliated with Furman Selz
Investments and BancBoston Ventures (collectively, the "1998 Investors"). Based
on its 1998 operating plan, the Company anticipates that its existing capital
resources, taken together with the proceeds of the 1998 Financing and internally
generated funds, will be adequate to satisfy its capital requirements and
continue its operations through the first quarter of 1999.
The Company's future capital requirements will depend on many factors,
including continued progress in its product development programs, the magnitude
of these programs, the results of preclinical studies and clinical trials, the
time and cost involved in obtaining regulatory approvals, the costs involved in
filing, prosecuting, enforcing and defending patent claims, competing
technological and market developments, the ability of the Company to maintain
and, in the future, expand its sales and marketing capability and product
development, manufacturing and marketing relationships, and the costs and
success of commercialization activities and arrangements, particularly the level
of product sales. The Company's business strategy requires a significant
commitment of funds to conduct clinical testing of potential products, to pursue
regulatory approval of such products and maintain sales and marketing
capabilities and manufacturing relationships necessary to bring such products to
market.
EARLY STAGE OF DEVELOPMENT; HISTORY OF OPERATING LOSSES AND CUMULATIVE DEFICIT
Ascent has incurred net operating losses since its inception. At March
31, 1998, the Company's cumulative deficit was approximately $36,819,000. Such
losses have resulted primarily from costs incurred in the Company's product
development programs, general and administrative costs associated with the
Company's product development and costs associated with raising equity capital
and the establishment of the Company's sales force. The Company first began to
market products in the second half of 1997 and most of its products are still in
development.
The Company expects to incur additional operating losses at least
through the next two years, as it continues its product development programs and
maintains its sales and marketing organization and introduces products to the
market. The Company expects cumulative losses to increase over this period. The
Company expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial. The Company's ability to achieve profitability
is dependent in part upon obtaining regulatory approval for new products,
commercial acceptance of products that are introduced to the market after
required approvals have been obtained, the successful development and
commercialization of its products and sales of such products and margins on such
sales. There can be no assurance that the Company will obtain required
regulatory approvals, successfully develop, commercialize, manufacture and
market its products or ever achieve sales or profitability.
-6-
<PAGE> 9
UNCERTAINTY RELATED TO APPROVAL OF PRIMSOL TRIMETHOPRIM SOLUTION
In 1996, the Company filed two NDA's covering 25mg and 50mg strengths
of Primsol trimethoprim solution for the treatment of acute otitis media
("AOM"), or middle ear infection, for children age six months to 12 years. In
June 1997, the FDA approved the Company's NDA for its 25mg strength of Primsol
solution. The Company's NDA for its 50mg strength of Primsol solution is still
pending. In February 1998, the Company received a letter from the FDA citing
certain deficiencies in the Company's NDA for the 50mg strength. In May 1998,
the FDA notified the Company that, in connection with the Company's NDA for the
50mg strength of Primsol solution, the Company will be required to conduct a
pre-approval clinical use study to determine the adverse event profile of
Primsol solution in children. The Company is currently in discussions with the
FDA to determine the parameters of this study. There can be no assurance as to
when or if the Company will receive approval of such NDA. If the FDA does not
grant marketing approval of the 50mg strength of Primsol solution for this
indication, or if there are significant additional delays in such approval, the
business, financial condition and operating results of the Company would be
adversely affected, possibly materially.
PRODUCTS IN DEVELOPMENT; TECHNOLOGICAL UNCERTAINTY
Ascent has introduced only one internally-developed product, Pediamist
nasal saline spray, into the market. Although the Company has completed
development of three other products and has filed with the FDA applications for
marketing approval, many of the Company's product candidates are in development
and require additional formulation, preclinical studies, clinical trials and
regulatory approval prior to any commercial sales. With respect to certain
product candidates, the Company must successfully address a number of
technological challenges to complete its development efforts. In addition, there
can be no assurance that the Company will be permitted to undertake and complete
human clinical trials of certain of the Company's potential products, either in
the United States or elsewhere, or, if permitted, that such products will be
demonstrated to be safe and efficacious. 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. In addition, there can be
no assurance that any of the Company's product candidates will obtain the
approval of the FDA or other regulatory approvals or that any approved product
will be capable of being produced in commercial quantities at reasonable cost
and successfully marketed.
LIMITED SALES AND MARKETING EXPERIENCE
The Company markets and sells its products in the United States through
its own dedicated marketing staff and sales force. The Company only recruited
its marketing staff and sales force in the second half of 1997 and has limited
experience in marketing and sales. The Company believes that its success will
depend in significant part upon its ability to maintain a dedicated marketing
staff and sales force capable of promoting its products. However, there can be
no assurance that the Company will be able to maintain the marketing staff and
sales force that it has recruited, that the cost of establishing and maintaining
this marketing staff and sales force will be justifiable in light of product
revenues or that the Company's marketing and sales efforts will be successful.
Should the Company fail in its marketing and sales efforts, its business,
financial condition and operating results would be materially adversely
affected.
-7-
<PAGE> 10
UNCERTAINTY OF MARKET ACCEPTANCE OF PRODUCTS
Although many of the Company's product candidates are reformulations of
compounds marketed by other manufacturers, there can be no assurance that these
products or other current or future products of the Company will achieve market
acceptance. The commercial success of the Company's products and products under
development, when and if any required approval for marketing by the FDA or any
other regulatory agency is obtained, will depend, in significant part, on such
products' efficacy, side effect profile, taste, dosing frequency, method of
administration, patent and other proprietary position, brand name recognition
and price. Another important factor will be the timing of market introduction of
the Company's or competitive products. Earlier entrants in the market often
obtain and maintain significant market share relative to later entrants.
The commercial success of the Company's products also will depend in
significant part upon their acceptance by pediatricians, pediatric nurses and
third party payors (particularly managed care providers). Acceptance of the
Company's products by pediatricians, pediatric nurses and third party payors
will in turn be dependent upon the success of the Company's marketing and sales
activities. There can be no assurance that pediatricians, pediatric nurses and
third party payors will accept the Company's products on a timely basis or at
all. In addition, in order to stimulate demand for its products, the Company may
be required to, among other things, offer substantial price discounts. Failure
to achieve market acceptance would have a material adverse effect on the
Company's business, financial condition and operating results.
COMPETITION
Competition in the pediatric pharmaceutical market is intense. Several
large pharmaceutical companies with significant research, development, marketing
and manufacturing operations market pediatric products in addition to products
for the adult market. These competitors include Glaxo Wellcome Inc., Eli Lilly
and Company, the Ortho-McNeil Pharmaceutical Division of Johnson & Johnson Inc.,
Pfizer Inc., the Ross Products Division of Abbott Laboratories Inc.,
Schering-Plough Corporation and the Wyeth-Lederle Vaccines and Pediatrics
Division of American Home Products, Inc.
Many of the companies against which Ascent competes have substantially
greater name recognition and greater financial, technical and human resources
than Ascent. In addition, many of these competitors have significantly greater
experience than the Company in undertaking preclinical testing and human
clinical trials of pharmaceutical products and obtaining FDA and other
regulatory approvals of products for use in health care. Accordingly, the
Company's competitors may succeed in obtaining FDA or other regulatory approvals
for products more rapidly than the Company. Furthermore, Ascent competes against
these larger companies with respect to manufacturing efficiency and marketing
capabilities, areas in which Ascent has limited or no experience. These
competitors may introduce competitive pricing pressures that may adversely
affect Ascent's sales levels and margins. Moreover, many of these competitors
offer well established, broad product lines and services not offered by the
Company. Many of the products and services offered by these competitors have
well known brand names that have been promoted over many years.
The Company expects to market many of its product candidates as
alternative treatments for pediatric indications for which products with the
same active ingredient are well entrenched in the market. For example, the
Company intends to market Primsol, a trimethoprim antibiotic, for the treatment
of acute otitis media, an indication for which pediatricians often prescribe the
well-known combination therapies Bactrim and Septra, which also contain
trimethoprim. Similarly, Feverall controlled-release beads will compete against
Tylenol liquid for children. The Company's product candidates also will face
competition from other products that do not contain the same active ingredient
but are used for the same indication and are well entrenched within the
pediatric market.
-8-
<PAGE> 11
For example, Primsol solution will compete against other antibiotics, including
amoxicillin. Moreover, many of the Company's potential products that are
reformulations of existing drugs of other manufacturers may have limited patent
or other competitive protection. There can be no assurance that pediatricians,
pediatric nurses and third party payors will prefer the Company's products to
existing products.
The Company plans to apply for three year protection for certain
products under the Drug Price Competition and Patent Term Restoration Act of
1984 (the "Waxman-Hatch Act") from the approval of a potential competitor's ANDA
which is based on the Company's clinical trial results. There can be no
assurance that any of the Company's products will qualify for protection under
the Waxman-Hatch Act or, if any product does so qualify, that the statutory
protection will enhance the competitive position of such product.
UNCERTAINTY OF IDENTIFICATION OR ACQUISITION OF NEW PRODUCT CANDIDATES AND NEW
TECHNOLOGIES
The success of the Company depends in part upon its ability to identify
and develop or obtain rights to pharmaceuticals suitable for pediatric use.
There can be no assurance that the Company will be successful in identifying and
developing pharmaceuticals suitable for pediatric use or in acquiring such
rights. The Company's success also depends upon its ability to apply its drug
delivery and reformulation technologies to produce proprietary products. There
can be no assurance that the Company will be able to develop additional
technologies or obtain rights from third parties to additional technologies on
reasonable terms, or at all.
UNPROVEN SAFETY AND EFFICACY OF PRODUCTS; UNCERTAINTIES RELATED TO CLINICAL
TRIALS
In order to obtain regulatory approval for the commercial sale of many
of its products, the Company is conducting or plans to conduct clinical trials
to demonstrate that such products are safe and effective. There can be no
assurance that any of these clinical trials will be successfully completed
within any specified time period, if at all. The results from early clinical
trials may not be predictive of results that will be obtained in large-scale
clinical trials, and there can be no assurance that the Company's clinical
trials will demonstrate the safety and effectiveness of any products or will
result in marketable products.
The rate of completion of the Company's clinical trials is dependent
upon, among other things, the rate of patient enrollment. Patient enrollment is
a function of many factors, including the size of the patient population, the
nature of the protocol, the proximity of patients to clinical sites and the
eligibility criteria for the study. Historically, recruiting children to
participate in clinical trials has been difficult, as parents are reluctant to
permit their children to take experimental medications. Delays in planned
patient enrollment may result in increased costs, program delays, or both, which
could have a material adverse effect on the Company.
The Company has contracted with clinical research organizations for the
conduct of all of its clinical trials and expects to continue to do so for the
foreseeable future. There can be no assurance that such entities will conduct
the clinical trials successfully. The Company relies on scientific, technical
and clinical data supplied by its academic and industry collaborators and
licensors in the design, development and evaluation of product candidates. There
can be no assurance that there are no errors or omissions in such data that
would materially adversely affect the development of these products.
-9-
<PAGE> 12
NO ASSURANCE OF REGULATORY APPROVAL; EXTENSIVE GOVERNMENT REGULATION
The production and the marketing of the Company's products and the
Company's ongoing product development activities are and will be subject to
extensive regulation by numerous federal, state and local governmental
authorities in the United States and abroad. The Company has had only limited
experience in filing or pursuing applications necessary to gain regulatory
approvals. Preclinical testing of the Company's product candidates is subject to
Good Laboratory Practice ("GLP") requirements and the manufacture of products is
subject to Good Manufacturing Practice ("GMP") requirements prescribed by the
FDA.
Many of the products that the Company is developing are subject to the
NDA regulatory process. This process generally includes preclinical studies,
clinical trials and ongoing post-approval testing of each compound to establish
or monitor its safety and effectiveness for the intended indications, typically
takes many years and requires the expenditure of substantial resources. The
Company has limited experience in filing or pursuing applications necessary to
gain regulatory approval. There can be no assurance that, even after the
performance of clinical studies and the expenditure of resources, regulatory
approval will be obtained for any products developed by the Company on a timely
basis, if at all. The Company's analysis of data obtained from preclinical and
clinical activities is subject to confirmation and interpretation by regulatory
authorities which could delay, limit or prevent FDA regulatory approval. The
Company or the FDA may suspend clinical trials at any time if the participants
in such trials are being exposed to unanticipated or unacceptable health risks.
Moreover, if regulatory approval to market a product is granted, such approval
may entail limitations on the indicated uses for which it may be marketed.
Failure to comply with applicable regulatory requirements can, among
other things, result in fines, suspension or withdrawal of regulatory approvals,
product recalls, seizure of products, operating restrictions and criminal
prosecutions. FDA policy may change and additional government regulations may be
established that could prevent or delay regulatory approval of the Company's
product candidates. In addition, a marketed product, its manufacturer and its
manufacturing facilities are subject to continual review and periodic
inspections, and subsequent discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions on such product or
manufacturer, including withdrawal of the product from the market. There can be
no assurance that additional statutes or regulations applicable to the Company's
business will not be adopted, impose substantial additional costs upon or
otherwise adversely affect the Company's operations.
The Company is also subject to numerous and varying foreign regulatory
requirements governing the design and conduct of clinical trials and the
manufacturing and marketing of its products. The approval procedure varies among
countries and can involve additional testing, and the time required to obtain
approval may differ from that required to obtain FDA approval. The foreign
regulatory approval process may include all of the risks associated with
obtaining FDA approval set forth above. There can be no assurance that foreign
regulatory approvals will be obtained on a timely basis, if at all.
DEPENDENCE ON THIRD PARTY MANUFACTURING; RISKS RELATED TO SOLE SOURCE OF SUPPLY
The Company has no manufacturing facilities and has to date relied, and
plans in the future to rely, upon third parties to manufacture the Company's
products in accordance with GMP for preclinical testing, clinical trial and
commercial purposes. In addition, the Company has not arranged for the
production of certain of its product candidates in commercial quantities, and it
is possible that the Company will encounter difficulties in scaling up the
production of these product candidates. Although there are a number of
manufacturers that operate under GMP regulations capable of manufacturing
certain of the Company's products, in the event that the Company is unable to
obtain
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<PAGE> 13
contract manufacturing, or obtain such manufacturing on commercially reasonable
terms, it may not be able to develop and commercialize its products as planned.
Where third-party arrangements are established, the Company will depend upon
such third parties to perform their obligations in a timely manner. There can be
no assurance that third parties depended upon by the Company will perform and
any failures by third parties may delay clinical trial development or the
submission of products for regulatory approval, impair the Company's ability to
commercialize its products as planned and deliver products on a timely basis, or
otherwise impair the Company's competitive position, which could have a material
adverse effect on the Company's business, financial condition and operating
results.
Certain of the Company's supply arrangements require that Ascent buy
all of the Company's requirements of a particular product exclusively from the
other party to the contract. Moreover, for many of its products, Ascent has
qualified only one supplier, even though the contractual arrangement with the
supplier may permit Ascent to qualify an alternative manufacturer. Any
interruption in supply from any of the Company's manufacturers or the inability
of these manufacturers to manufacture the Company's products in accordance with
GMP could have a material adverse effect on the Company's business, financial
condition and operating results.
In the future, the Company may establish its own manufacturing
facilities if it becomes economically attractive to do so. In order for the
Company to establish a manufacturing facility, the Company would require
substantial additional funds and be required to hire and retain significant
additional personnel and comply with the extensive GMP regulations of the FDA.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS
The Company's success depends in part on its ability to develop
patentable products and obtain patent or other proprietary rights protection for
its products, both in the United States and in other countries. The Company
intends to file applications as appropriate for patents and other protection
covering both its products and processes. However, the patent positions of
pharmaceutical firms, including Ascent, are generally uncertain and involve
complex legal and factual questions. Moreover, because the Company's product
candidates are reformulations of existing off-patent drugs, any patent
protection afforded will be significantly narrower than a patent on the active
ingredient itself. In particular, the Company does not expect that
composition-of-matter patent protection will be available for the active
ingredients in its products. No assurance can be given that patents will issue
from any patent applications owned by or licensed to the Company or that, if
patents do issue, the claims allowed will be sufficiently broad to protect the
Company's products or technology. In addition, no assurance can be given that
any issued patents owned by or licensed to the Company will not be challenged,
invalidated or circumvented, or that the rights granted thereunder will provide
competitive advantages to the Company.
The commercial success of the Company will also depend in part on its
neither infringing patents or other proprietary rights granted to competitors or
others nor breaching the technology licenses upon which the Company's products
are based. The Company's licenses of third party patents and patent applications
impose various commercialization, sublicensing, royalty and other payment,
insurance and other obligations on the Company. Failure of the Company to comply
with these requirements could result in termination of the licenses. Competitors
of the Company and other third parties hold issued patents and pending patent
applications which may result in claims of infringement against the Company or
other patent-related litigation. There can be no assurance that the Company will
be able to successfully obtain a license to any technology that it may require
or that, if obtainable, such technology can be licensed at a reasonable cost or
on an exclusive basis. Failure by the Company to obtain a license to any
technology that it may require to commercialize its products could have a
material adverse effect on the Company.
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<PAGE> 14
The pharmaceutical industry has been characterized by extensive
litigation regarding patents and other intellectual property rights. Litigation,
which could result in substantial cost to the Company, may be necessary to
enforce any patents issued or licensed to the Company and/or to determine the
scope and validity of others' proprietary rights. Competitors of the Company and
other third parties hold issued patents and pending patent applications relating
to aspects of the Company's technology, and it is uncertain whether these
patents and patent applications will require the Company to alter its products
or processes, pay licensing fees or cease activities. The Company also may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office to determine the priority of inventions, which could result
in substantial cost to the Company. Furthermore, the Company may have to
participate at substantial cost in International Trade Commission proceedings to
abate importation of products which would compete unfairly with products of the
Company.
The Company relies on trade secret and proprietary know-how which it
seeks to protect, in part, by confidentiality agreements with its collaborators,
employees, advisors and consultants. There can be no assurance that these
agreements will not be breached, that the Company would have adequate remedies
for any breach or that the Company's trade secrets will not otherwise become
known or be independently developed by competitors. Failure to obtain or
maintain patent and trade secret protection, for any reason, could have a
material adverse effect on the Company's business, financial condition and
operating results.
UNCERTAINTY OF PHARMACEUTICAL PRICING AND ADEQUATE REIMBURSEMENT; NEED FOR
INCLUSION ON FORMULARIES
The Company's ability to commercialize its products successfully
depends in part on the extent to which appropriate reimbursement levels for the
cost of such products are obtained from government authorities, private health
insurers and other organizations, such as health maintenance organizations
("HMOs"). Third-party payors are increasingly challenging the prices charged for
medical products and services. Also, the trend towards managed health care in
the United States and the concurrent growth of organizations such as HMOs, which
control or significantly influence the purchase of health care services and
products, as well as legislative proposals to reduce government insurance
programs, may all result in lower prices for the Company's products. The cost
containment measures that health care providers are instituting could affect the
Company's ability to sell its products and may have a material adverse effect on
the Company.
Thus, there can be no assurance that reimbursement in the United States
or foreign countries will be available for any of the Company's products, or if
available, will not be decreased in the future, or that reimbursement amounts
will not reduce the demand for, or the price of, the Company's products. The
unavailability or inadequacy of third-party reimbursement for the Company's
products would have a material adverse effect on the Company's business,
financial condition and operating results.
Managed care providers generally maintain formularies, or lists of
products, that such providers have approved for use and reimbursement. The
Company plans to seek to have its products included on such formularies. There
can be no assurance that the Company's products will be included on the
formularies of managed care providers on a timely basis, or at all. The
Company's success in obtaining inclusion of its products on managed care
formularies will materially affect the Company's business, financial condition
and operating results.
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<PAGE> 15
POTENTIAL PRODUCT LIABILITY EXPOSURE AND INSURANCE
The use of the Company's products in human clinical trials and the
commercial sale of such products may expose the Company to potential product
liability risks which are inherent in the testing, manufacturing, marketing and
sale of human therapeutic pharmaceuticals. Product liability claims might be
made directly by consumers, health care providers or by licensees, distributors
or others selling such products. There can be no assurance that product
liability claims, if made, would not result in a recall of the Company's
products or a change in the indications for which they may be used. Ascent has
limited product liability insurance coverage, and such coverage is subject to
various deductibles. Such coverage is expensive, and no assurance can be given
that the Company will be able to maintain or obtain such insurance at reasonable
cost or in sufficient amounts to protect the Company against losses due to
liability claims that could have a material adverse effect on the Company.
ATTRACTION AND RETENTION OF KEY EMPLOYEES
The Company is highly dependent on the principal members of its
management and scientific staff, particularly Dr. Clemente, the Company's
Chairman, the loss of whose services could have a material adverse effect on the
Company. Also, recruiting and retaining qualified scientific personnel to
perform product development work in the future will be critical to the Company's
success. There can be no assurance that the Company will be able to attract and
retain such highly skilled personnel on acceptable terms given the competition
among numerous pharmaceutical and health care companies, universities and
non-profit research institutions for experienced scientists. The Company does
not carry key-man insurance with respect to any of its executive officers other
than Dr. Clemente.
The Company's anticipated growth and expansion into areas and
activities requiring additional expertise are expected to require the addition
of new management personnel and the development of additional expertise by
existing management personnel. The failure to acquire such services or to
develop such expertise could have a material adverse effect on the Company's
business, financial condition and operating results.
RISKS RELATED TO POSSIBLE ACQUISITIONS
The Company may expand its operations or product offerings through the
acquisition of businesses, products or technologies. There can be no assurance
that the Company will be able to identify, acquire or profitably manage
additional businesses or successfully integrate any acquired businesses,
products or technologies into the Company without substantial expense, delays or
other operational or financial problems. Further, acquisitions may involve a
number of special risks, including diversion of management's attention, failure
to retain key acquired personnel, unanticipated events or circumstances and
legal liabilities, some or all of which could have a material adverse effect on
the Company's business, financial condition and operating results. In addition,
there can be no assurance that acquired businesses, products or technologies, if
any, will achieve anticipated revenues and earnings.
DEPENDENCE ON COLLABORATORS; COPROMOTION ARRANGEMENTS
In addition to the manufacturing of product candidates and products,
the Company is dependent upon third parties with respect to significant other
aspects of its operations, including product design and formulation work,
conduct of clinical trials, marketing to managed care organizations and product
distribution. There can be no assurance that the Company will be able to enter
into future collaborative arrangements with respect to these matters or as to
whether any of the Company's existing or future relationships will be
successful. The success of any such arrangement is
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<PAGE> 16
dependent on, among other things, the skills, experience and efforts of the
third party, 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.
The Company plans to enter into arrangements to copromote certain
pharmaceutical products of third parties to pediatricians in the United States.
To date, the Company has entered into a four-year copromotion agreement with
Bristol-Myers Squibb to market Bristol-Myers Squibb's Duricef oral suspension
product. There can be no assurance that the Company will be able to enter into
future arrangements or as to whether any of the Company's existing or any future
copromotion arrangements will be successful. The success of any such arrangement
is dependent on, among other things, the third party's commitment to the
arrangement, the financial condition of the third party and market acceptance of
the third party's products.
RELIANCE ON THIRD PARTIES FOR CERTAIN SALES AND MARKETING AND DISTRIBUTION
ACTIVITIES
The Company plans to sell its pediatric products in international
markets through distribution, licensing and similar arrangements and to sell its
products for adult indications in the United States and in international markets
through similar arrangements. To date, the Company has not entered into any
material arrangements of this nature. To the extent the Company enters into such
arrangements with third parties, any revenues the Company receives will depend
upon the efforts of such parties. There can be no assurance that any third party
will market the Company's products successfully or that any arrangements with
third parties will be on terms favorable to the Company. If a third party does
not market the Company's products successfully, the Company's business,
financial condition and operating results would be adversely affected, possibly
materially. If Ascent's plan to rely on third parties for certain aspects of
marketing and selling the Company's products is unsuccessful for any reason,
Ascent may need to forgo international and adult market opportunities or recruit
and train a larger marketing staff and sales force and establish a larger
distribution capability than it currently anticipates doing, which would entail
the incurrence of significant additional costs.
Ascent distributes its products through a third party distribution
warehouse. The Company has no experience with the distribution of products and
relies on the third party distributor to perform various functions on behalf of
the Company, including order entry, customer service and collection of accounts
receivable. The success of this arrangement is dependent on, among other things,
the skills, experience and efforts of the third party distributor, all of which
are beyond the control of the Company.
UNCERTAINTY OF HEALTH CARE REFORM MEASURES
Federal, state and local officials and legislators (and certain foreign
government officials and legislators) periodically propose or consider proposing
a variety of reforms to the health care systems in the United States and abroad.
The Company cannot predict what health care reform legislation, if any, will be
enacted in the United States or elsewhere or when such legislation will be
enacted. Significant changes in the health care system in the United States or
elsewhere are likely to have a substantial impact over time on the manner in
which the Company conducts its business and could have a material adverse effect
on the Company. The existence of pending health care reform proposals could have
a material adverse effect on the Company's ability to raise capital. Further, to
the extent that proposals have a material adverse effect on other pharmaceutical
companies that are prospective collaborators with the Company, the Company's
ability to establish collaborative commercial relationships may be adversely
affected.
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<PAGE> 17
CONCENTRATION OF OWNERSHIP
As of June 1, 1998, the Company's officers and directors and their
affiliates (including James Luikart (who became a director on June 1, 1998) and
his affiliates and excluding Thomas W. Janes (who resigned as a director on June
1, 1998) and his affiliates) beneficially owned approximately 55.7% of the
outstanding shares of the capital stock of the Company, including shares which
such officer, director or affiliate had the right to acquire within 60 days of
June 1, 1998. As a result, these stockholders, if acting together, will have the
ability to control the outcome of most corporate actions requiring stockholder
approval, including actions concerning the election of directors and the
approval of certain mergers and other significant corporate transactions,
including a sale of substantially all of the Company's assets, irrespective of
how other stockholders of the Company may vote. This concentration of ownership
may have the effect of delaying or preventing a change in control of the
Company.
ANTI-TAKEOVER PROVISIONS
The Company's Second Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation") requires that any action required or
permitted to be taken by stockholders of the Company must be effected at a duly
called annual or special meeting of stockholders and may not be effected by any
consent in writing, and requires reasonable advance notice by a stockholder of a
proposal or director nomination which such stockholder desires to present at any
annual or special meeting of stockholders. Special meetings of stockholders may
be called only by the President of the Company or by the Board of Directors. The
Certificate of Incorporation provides for a classified Board of Directors, and
members of the Board of Directors may be removed only for cause upon the
affirmative vote of holders of at least two-thirds of the shares of capital
stock of the Company entitled to vote. In addition, the Board of Directors has
the authority, without further action by the stockholders, to fix the rights and
preferences of, and issue shares of, preferred stock. These provisions, other
provisions of the Certificate of Incorporation and the beneficial ownership of a
significant portion of the Company's outstanding Common Stock by the Company's
directors and executive officers and their affiliates, may have the effect of
deterring hostile takeovers or delaying or preventing changes in control or
management of the Company, including transactions in which stockholders might
otherwise receive a premium for their shares over then current market prices. In
addition, these provisions may limit the ability of stockholders to approve
transactions that they may deem to be in their best interests.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in the Company's operating
results, announcements of technological innovations, progress in the development
of the Company's operating results, announcements of technological innovations,
progress in the development of the Company's product candidates or new products
by the Company, its collaborative partners or its competitors, governmental
regulation, developments in patent or other proprietary rights and public
concern regarding the safety, effectiveness or other implications of the
products being developed by the Company. In addition, the stock market has
experienced extreme price and volume fluctuations. This volatility has
significantly affected the market prices of securities of many pharmaceutical
companies for reasons frequently unrelated to or disproportionate to the
operating performance of the specific companies. These broad market fluctuations
may adversely affect the market price of the Company's Common Stock.
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<PAGE> 18
NO DIVIDENDS ANTICIPATED IN FUTURE
The Company has not paid any cash dividends on the Common Stock since
its inception and does not anticipate paying any cash dividends on its Common
Stock in the future. Declaration of dividends on the Common Stock will depend
upon, among other things, future earnings, the operating and financial condition
of the Company, its capital requirements and general business conditions.
However, the Securities Purchase Agreement dated as of May 13, 1998 among the
Company and the 1998 Investors limits the Company's ability to pay dividends or
make other distributions on its Common Stock.
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<PAGE> 19
USE OF PROCEEDS
All of the Shares are being sold by the Selling Stockholders or by
their pledgees, donees, transferees or other successors in interest, and the
Company will not receive any proceeds from the sale of such Shares.
THE SELLING STOCKHOLDERS
The following table sets forth, to the knowledge of the Company, the
name and the number of shares of Common Stock beneficially owned by the Selling
Stockholders as of June 1, 1998, the number of the Shares to be offered by the
Selling Stockholders or by their pledgees, donees, transferees or other
successors in interest pursuant to this Prospectus, and the number of shares of
Common Stock to be owned beneficially by the Selling Stockholders assuming that
all of the Shares offered hereby by the Selling Stockholders or by their
pledgees, donees, transferees or other successors in interest are sold as
described herein. Assuming that all of the Shares offered hereby are sold as
described herein, no Selling Stockholder will beneficially own more than one
percent of the Company's Common Stock.
The Selling Stockholders may acquire the Shares upon exercise of the
Triumph Warrants, which were issued to the Selling Stockholders in connection
with the issuance and sale of the Triumph Notes to the Selling Stockholders on
January 31, 1997 and June 4, 1997. The Triumph Warrants are exercisable for the
purchase of up to an aggregate of 218,195 and 561,073 shares of Common Stock at
a price of $5.29 and $0.01 per share, respectively, at any time prior to January
31, 2004. On December 2, 1997, March 3, 1998 and June 1, 1998, the Company paid
the Selling Stockholders an aggregate of $7,457,918.14, representing the
outstanding aggregate principal amount of the Triumph Notes and accrued interest
thereon, and on June 1, 1998 the Triumph Notes were cancelled. The Selling
Stockholders include Triumph-Connecticut Limited Partnership ("Triumph"), a
former affiliate of the Company, and a retirement plan for the benefit of Thomas
W. Janes, a former director of the Company and the Managing Director of Triumph.
As of June 1, 1998, each of Thomas W. Janes and Jeffrey F. Lick was employed by
Triumph. Since June 1, 1995, no other Selling Stockholder has held any position
or office with the Company or otherwise had any material relationship with the
Company.
<TABLE>
<CAPTION>
Number of Shares of Number of Shares
Common Stock Number of Shares of Common Stock
Name of Beneficially Owned of Common Stock Beneficially Owned
Selling Stockholder Prior to Offering(1) Offered Hereby After Offering(1)(2)
- ------------------- -------------------- ---------------- --------------------
<S> <C> <C> <C>
Triumph-Connecticut Limited 654,591(4) 654,591 0
Partnership(3)
John D. Howard and Lauren 111,324(4) 111,324 0
R. Howard
Thomas W. Janes 23,347(5) 8,347 15,000
Duane E. Thurman 2,781(4) 2,781 0
Jeffrey F. Lick 2,225(4) 2,225 0
</TABLE>
- -----------
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<PAGE> 20
(1) The number of shares beneficially owned is determined under rules
promulgated by the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for
any other purpose. Under such rules, beneficial ownership includes any
shares as to which the individual has sole or shared voting power or
investment power and also any shares which the stockholder has the
right to acquire within 60 days after June 1, 1998 through the exercise
of any stock option, warrant or other right. The inclusion herein of
such shares, however, does not constitute an admission that a Selling
Stockholder is a direct or indirect beneficial owner of such shares.
Each Selling Stockholder has sole voting power and investment power
with respect to all shares of capital stock listed as owned by such
Selling Stockholder.
(2) It is unknown if, when or in what amounts the Selling Stockholders may
offer Shares for sale and there can be no assurance that the Selling
Stockholders will sell any or all of the Shares offered hereby. Because
the Selling Stockholders may offer all or some of the Shares pursuant
to this offering, and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of the
Shares that will be held by the Selling Stockholders after completion
of the offering, no estimate can be given as to the amount of the
Shares that will be held by the Selling Stockholders after completion
of the offering. However, for purposes of this table, the Company has
assumed that, after completion of the Offering, no Shares will be held
by the Selling Stockholders.
(3) Subsequent to the date of this Prospectus, the Shares held by Triumph
may be distributed to the limited and general partners of Triumph
either pursuant to this Prospectus or in a private unregistered
transaction.
(4) All of such shares are issuable upon the exercise of Triumph Warrants
within 60 days of June 1, 1998.
(5) Includes 8,347 shares issuable upon the exercise of Triumph Warrants
held by Frederick S. Moseley IV and E. Mark Noonan, as trustees of the
Triumph Capital Group, Inc. 401(k) Plan and Trust for the account of
Thomas W. Janes, and an additional 15,000 shares issuable upon the
exercise of options held by Mr. Janes, each of which is exercisable
within 60 days of June 1, 1998.
PLAN OF DISTRIBUTION
The Selling Stockholders have advised the Company that the sale or
distribution of the Shares covered hereby may be effected directly to purchasers
by the Selling Stockholders, or by their pledgees, donees, transferees or other
successors in interest, from time to time in private or public transactions, in
transactions involving principals, in transactions involving brokers, or by any
other lawful methods (which may involve crosses or block transactions) (i) or on
any exchange or in the over-the-counter market, (ii) in transactions otherwise
than in the over-the-counter market, (iii) through the writing of options
(whether such options are listed on an options exchange or otherwise) on, or
settlement of short sales of, the Shares or (iv) through the distribution of the
Shares by any Selling Stockholder to its partners, members or shareholders.
Sales through brokers may be made by any method of trading authorized by any
stock exchange on which the Shares may be listed, including block trading in
negotiated transactions. Without limiting the foregoing, such brokers may act as
dealers by purchasing any or all of the Shares covered by this Prospectus,
either as agents for others or as principals for their own accounts, and
reselling such Shares pursuant to this Prospectus. Sales of Shares are, in
general, expected to be made at the market price prevailing at the time of each
such
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<PAGE> 21
sale; however, prices in negotiated transactions may differ considerably. The
Selling Stockholders have advised the Company that they do not anticipate paying
any consideration other than usual and customary broker's commissions in
connection with sales of the Shares. The Selling Stockholders and their
pledgees, donees, transferees and successors in interest are acting
independently of the Company in making decisions with respect to the timing,
manner and size of each sale.
In offering the Shares covered by this Prospectus, the Selling
Stockholders and their pledgees, donees, transferees and successors in interest
and any broker-dealers who execute sales for such Selling Stockholders or their
pledgees, donees, transferees and successors in interest may be considered to be
"underwriters" within the meaning of the Securities Act, and any profits
realized by the Selling Stockholders or their pledgees, donees, transferees and
successors in interest and the compensation of such broker-dealers may be deemed
to be underwriting discounts and commissions.
Under the securities laws of certain states, the Shares may be sold in
such states only through registered or licensed brokers or dealers. In addition,
in certain states the Shares may not be sold unless the Shares have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.
The Company has agreed to indemnify in certain circumstances the
Selling Stockholders and any underwriter and certain control and other persons
related to the foregoing persons against certain liabilities, including
liabilities under the Securities Act. The Selling Stockholders have agreed to
indemnify in certain circumstances the Company and certain related persons
against certain liabilities, including liabilities under the Securities Act.
The Company has agreed with the Selling Stockholders to keep the
Registration Statement of which this Prospectus constitutes a part effective
until the earlier of (i) the date on which all of the Shares have been sold, or
(ii) three years following the effective date of the Registration Statement of
which this Prospectus is a part. The Company intends to de-register any of the
Shares not sold by the Selling Stockholders at the end of such period.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the
Company by Hale and Dorr LLP, a limited liability partnership including
professional corporations, 60 State Street, Boston, Massachusetts 02109.
EXPERTS
The balance sheets of Ascent Pediatrics, Inc. as of December 31, 1997
and 1996 and the statements of operations, stockholders' equity (deficit) and
cash flows for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report (which includes an explanatory paragraph about the
Company's ability to continue as a going concern) of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
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<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred in
connection with the sale and distribution of the securities being registered
hereby, all of which will be borne by the Company. All amounts shown are
estimates except the Securities and Exchange Commission registration fee.
Filing Fee - Securities and Exchange Commission $ 640
Legal fees and expenses 15,000
Accounting fees and expenses 5,000
Miscellaneous expenses 4,360
-------
Total Expenses $25,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article EIGHTH of the Registrant's Second Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") provides that
no director of the Registrant shall be personally liable for any monetary
damages for any breach of fiduciary duty as a director, except to the extent
that the Delaware General Corporation Law prohibits the elimination or
limitation of liability of directors for breach of fiduciary duty.
Article NINTH of the Registrant's Certificate of Incorporation provides
that a director or officer of the Registrant (a) shall be indemnified by the
Registrant against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement incurred in connection with any litigation or
other legal proceeding (other than an action by or in the right of the
Registrant) brought against him by virtue of his position as a director or
officer of the Registrant 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
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by the Registrant against all expenses (including attorneys' fees)
and amounts paid in settlement incurred in connection with any action by or in
the right of the Registrant brought against him by virtue of his position as a
director or officer of the Registrant 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
Registrant, except that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged to be liable to the
Registrant, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. Notwithstanding the foregoing, to the extent that a director or
officer has been successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is required to be
indemnified by the Registrant against all expenses (including attorneys' fees)
incurred in connection therewith. Expenses shall be advanced to a director or
officer at his request, provided that he undertakes to repay the amount advanced
if it is ultimately determined that he is not entitled to indemnification for
such expenses.
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<PAGE> 23
Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for
indemnification, or if the Registrant fails to make an indemnification payment
within 60 days after such payment is claimed by such person, such person is
permitted to petition the court to make an independent determination as to
whether such person is entitled to indemnification. As a condition precedent to
the right of indemnification, the director or officer must give the Registrant
notice of the action for which indemnity is sought and the Registrant has the
right to participate in such action or assume the defense thereof.
Article NINTH of the Registrant's Certificate of Incorporation further
provides that the indemnification provided therein is not exclusive, and
provides that in the event that the Delaware General Corporation Law is amended
to expand the indemnification permitted to directors or officers the Registrant
must indemnify those persons to the fullest extent permitted by such law as so
amended.
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation has the power to indemnify a director, officer,
employee or agent of the corporation and certain other persons serving at the
request of the corporation in related capacities against amounts paid and
expenses incurred in connection with an action or proceeding to which he is or
is threatened to be made a party by reason of such position, if such person
shall have 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, in any criminal
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful; provided that, in the case of actions brought by or in the right of
the corporation, no indemnification shall be made with respect to any matter as
to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
The Company maintains a general liability insurance policy which covers
certain liabilities of directors and officers of the Company arising out of
claims based on acts or omissions in their capacities as directors or officers.
ITEM 16. LIST OF EXHIBITS.
3.1(1) Second Amended and Restated Certificate of Incorporation
3.2(2) Certificate of Designation, Voting Powers, Preferences and Rights of
Series G Convertible Exchangeable Preferred Stock of the Registrant
3.3(1) Amended and Restated By-Laws of the Registrant
5 Opinion of Hale and Dorr LLP
10.1(1) Securities Purchase Agreement dated as of January 31, 1997 among the
Registrant, Triumph-Connecticut Limited Partnership and the other
purchasers identified therein (the "Triumph Agreement"), including the
Forms of Series A Warrant and Series B Warrant of the Registrant
attached thereto as Exhibits B-1 and B-2, respectively
10.2(1) Waiver and Amendment to the Triumph Agreement dated as of March 13,
1997
10.3(2) Second Waiver and Amendment to the Triumph Agreement dated as of
May 13, 1998
II-2
<PAGE> 24
23.1 Consent of Hale and Dorr LLP, included in Exhibit 5 filed herewith
23.2 Consent of Coopers & Lybrand L.L.P., independent accountants
24 Power of Attorney (See page II-5 of this Registration Statement)
- ------------------
(1) Incorporated by reference to the exhibits to the Registrant's
Registration Statement on Form S-1 (File No. 333-23319).
(2) Incorporated by reference to the Registrant's Current Report on Form
8-K dated June 1, 1998, filed with the Securities and Exchange
Commission on June 2, 1998.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(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 of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this 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 this Registration Statement. Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any derivation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the Registration Statement;
and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the registration
statement is on Form S-3, Form S-8 or Form F-3, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 and 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(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.
II-3
<PAGE> 25
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 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
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 indemnification provisions described herein, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange 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 or paid 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 or 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 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-4
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Wilmington, Commonwealth of Massachusetts, on this
10th day of June, 1998.
ASCENT PEDIATRICS, INC.
By: /s/ Alan R. Fox
-------------------------------------
Alan R. Fox
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Ascent Pediatrics, Inc.,
hereby severally constitute Alan R. Fox and John G. Bernardi, and each of them
singly, our true and lawful attorneys with full power to any of them, and to
each of them singly, to sign for us and in our names in the capacities indicated
below the Registration Statement on Form S-3 filed herewith and any and all
pre-effective and post-effective amendments to said Registration Statement and
generally to do all such things in our name and behalf in our capacities as
officers and directors to enable Ascent Pediatrics, Inc., to comply with the
provisions of the Securities Act and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Alan R. Fox President, Chief Executive Officer and June 10, 1998
- ------------------------------- Director (Principal Executive Officer)
Alan R. Fox
/s/ John G. Bernardi Vice President, Finance and Treasurer June 10, 1998
- ------------------------------- (Principal Financial and Accounting
John G. Bernardi Officer)
</TABLE>
II-5
<PAGE> 27
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Emmett Clemente, Ph.D. Chairman of the Board of Directors June 9, 1998
- -------------------------------
Emmett Clemente, Ph.D.
/s/ Robert E. Baldini Vice Chairman of the Board of June 10, 1998
- ------------------------------- Directors
Robert E. Baldini
/s/ Raymond F. Baddour, Ph.D. Director June 8, 1998
- -------------------------------
Raymond F. Baddour, Ph.D.
/s/ Michael J.F. DuCros Director June 10, 1998
- -------------------------------
Michael J.F. DuCros
/s/ Andre Lamotte, Sc.D. Director June 9, 1998
- -------------------------------
Andre Lamotte, Sc. D.
/s/ Terrance McGuire Director June 10, 1998
- -------------------------------
Terrance McGuire
/s/ Lee J. Schroeder Director June 9, 1998
- -------------------------------
Lee J. Schroeder
/s/ James Luikart Director June 10, 1998
- -------------------------------
Janes Luikart
</TABLE>
II-6
<PAGE> 28
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------- -----------
3.1(1) Second Amended and Restated Certificate of Incorporation
3.2(2) Certificate of Designation, Voting Powers, Preferences and
Rights of Series G Convertible Exchangeable Preferred Stock of
the Registrant
3.3(1) Amended and Restated By-Laws of the Registrant
5 Opinion of Hale and Dorr LLP
10.1(1) Securities Purchase Agreement dated as of January 31, 1997
among the Registrant, Triumph-Connecticut Limited Partnership
and the other purchasers identified therein (the "Triumph
Agreement"), including the Forms of Series A Warrant and
Series B Warrant of the Registrant attached thereto as
Exhibits B-1 and B-2, respectively
10.2(1) Waiver and Amendment to the Triumph Agreement dated as of
March 13, 1997
10.3(2) Second Waiver and Amendment to the Triumph Agreement dated as
of May 13, 1998
23.1 Consent of Hale and Dorr LLP, included in Exhibit 5 filed
herewith
23.2 Consent of Coopers & Lybrand L.L.P., independent accountants
24 Power of Attorney (See page II-5 of this Registration
Statement)
- -----------------------
(1) Incorporated by reference to the exhibits to the Registrant's
Registration Statement on Form S-1 (File No. 333-23319).
(2) Incorporated by reference to the Registrant's Current Report on Form
8-K dated June 1, 1998, filed with the Securities and Exchange
Commission on June 2, 1998.
<PAGE> 1
HALE AND DORR LLP
Counsellors at Law
60 State Street, Boston, Massachusetts 02109
617-526-6000 - fax 617-526-5000
EXHIBIT 5
---------
June 11, 1998
Ascent Pediatrics, Inc.
187 Ballardvale Street, Suite B-125
Wilmington, MA 01887
Ladies and Gentlemen:
We have assisted in the preparation of the Registration Statement on
Form S-3 (the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the registration for resale by certain selling
stockholders of the Company of 779,268 shares of common stock, $.00004 par value
per share (the "Warrant Shares"), issuable upon exercise of warrants (the
"Warrants"), of Ascent Pediatrics, Inc., a Delaware corporation (the "Company").
We have examined the Second Amended and Restated Certificate of
Incorporation and the Amended and Restated By-Laws of the Company and all
amendments thereto and have examined and relied on the originals, or copies
certified to our satisfaction, of such records of meetings, written actions in
lieu of meetings, or resolutions adopted at meetings, of the directors and
stockholders of the Company, all as provided to us by the Company, and such
other documents and instruments as in our judgment are necessary or appropriate
to enable us to render the opinions expressed below.
In our examination of the foregoing documents, we have assumed (i) the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, (ii) the conformity to the originals of all documents submitted
to us as certified or photostatic copies, (iii) the authenticity of the
originals of the latter document, and (iv) the legal competence of all
signatures to such documents.
We express no opinion herein as to the laws of any stock or
jurisdiction other than the state laws of the Commonwealth of Massachusetts, the
Delaware General Corporation Law statute and the federal laws of the United
States of America.
Based upon and subject to the foregoing, we are of the opinion that the
Warrant Shares, when issued and paid for upon exercise of the Warrants in
accordance with the terms thereof, will be duly authorized and validly issued,
fully paid and non-assessable.
It is our understanding that this opinion is to be used only in
connection with the offer and sale of the Warrant Shares while the Registration
Statement is in effect.
Washington, DC Boston, MA London, UK*
- --------------------------------------------------------------------------------
HALE AND DORR LLP INCLUDES PROFESSIONAL CORPORATIONS
*BROBECK HALE AND DORR INTERNATIONAL (AN INDEPENDENT JOINT VENTURE LAW FIRM)
<PAGE> 2
Ascent Pediatrics, Inc.
June 11, 1998
Page 2
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act and to the use of our
name therein and in the related Prospectus under the caption "Legal Matters." In
giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Hale and Dorr LLP
HALE AND DORR LLP
<PAGE> 1
Exhibit 23.2
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Ascent Pediatrics, Inc. (the "Company") on Form S-3 to register
779,268 shares of Common Stock of the Company of our report, which includes an
explanatory paragraph about the Company's ability to continue as a going
concern, dated March 23, 1998, on our audits of the financial statements of
Ascent Pediatrics, Inc. as of December 31, 1997 and 1996, and for each of the
three years in the period ended December 31, 1997, which report is included in
the Annual Report on Form 10-K. We also consent to the reference to our firm
under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 11, 1998
