As filed with the Securities and Exchange Commission on December 30, 1997
Registration No.
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNIGENE LABORATORIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 22-2328609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
110 Little Falls Road
Fairfield, New Jersey 07004
(973) 882-0860
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive offices)
Warren P. Levy, President
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, New Jersey 07004
(973) 882-0860
(Name, address, including zip code, telephone number,
including area code, of agent for service)
Copy to:
D. Michael Lefever, Esq.
Covington & Burling
P.O. Box 7566, 1201 Pennsylvania Ave., N.W.
Washington, D.C. 20044-7566
Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
<PAGE>
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 offer. [ ]
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 on 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Amount to be Proposed maximum Proposed maximum Amount of
Title of each class of securities to registered offering price per aggregate offering registration fee
be registered share(1) price(1)
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<S> <C> <C> <C> <C>
Common Stock ($.01 par value) 490,000 $2.344 $1,148,560 $339
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee, in accordance with Rule 457(c) under the Securities
Act of 1933, on the basis of the average of the high and low prices per
share of Common Stock of the Registrant on December 24, 1997 as
reported on the Nasdaq National Market.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
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.
Prospectus Subject to Completion
December 30, 1997
UNIGENE LABORATORIES, INC.
490,000 Shares
of
Common Stock
(par value $.01 per share)
---------------
This Prospectus relates to the resale of 490,000 shares of
common stock, par value $.01 per share (the "Common Stock"), of Unigene
Laboratories, Inc., a Delaware corporation (the "Company"), issued by the
Company to certain entities identified herein (the "Selling Shareholders") in
connection with a private transaction completed by the Company in February 1997.
See "Selling Shareholders." All of the shares offered hereby will be offered and
sold by the Selling Shareholders. The Company will not receive any proceeds from
the sale of the shares of Common Stock offered hereby.
The Common Stock is listed on the Nasdaq National Market under
the symbol UGNE. On December 24, 1997, the last sale price of the Common Stock,
as reported on the Nasdaq National Market, was $2.50 per share.
The Common Stock may be offered from time to time by the
Selling Shareholders to or through brokers, dealers or other agents or directly
to other purchasers in one or more market transactions, in one or more private
transactions or in a combination of such methods of sale, at prices then
prevailing, at prices related to such prices, or at negotiated prices. In
effecting sales, brokers, dealers or other agents engaged by the Selling
Shareholders may arrange for other brokers, dealers or agents to participate.
Such brokers, dealers or agents may receive commissions, discounts or
concessions from the Selling Shareholders in amounts to be negotiated. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any such commissions, discounts or
concessions may be deemed to be underwriting discounts or commissions under the
Securities Act.
Certain costs, expenses and fees in connection with the
registration of the Common Stock will be borne by the Company. Commissions,
discounts and transfer taxes, if any, attributable to the sales of the Common
Stock will be borne by the Selling Shareholders.
<PAGE>
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 3.
---------------
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 , 1997.
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
OFFER MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING
SHAREHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
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 can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and the public reference facilities
located at the regional offices of the Commission at the following addresses:
New York Regional Office, 7 World Trade Center, Suite 1300, New York, New York
10048 and Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661-2511. Copies of such material also can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements and
other information may also be obtained from the web site the Commission
maintains at http://www.sec.gov.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 filed by the Company with the Commission under the Securities Act with
respect to the Common Stock being offered by this Prospectus. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement, and to the exhibits incorporated therein by reference or
filed as a part thereof. Any statements contained herein concerning the
provisions of any such exhibits are not necessarily complete and, in each
instance, reference is made to the copy of such exhibit filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference in this Prospectus:
1. The Annual Report of the Company on Form 10-K for the
year ended December 31, 1996.
2. The Quarterly Report of the Company on Form 10-Q for
the quarter ended March 31, 1997.
3. The Quarterly Report of the Company on Form 10-Q for
the quarter ended June 30, 1997.
4. The Quarterly Report of the Company on Form 10-Q for
the quarter ended September 30, 1997.
5. A Current Report of the Company on Form 8-K dated
June 30, 1997.
6. A Current Report of the Company on Form 8-K dated
July 15, 1997.
7. The description of the Company's Common Stock set
forth in the Company's Registration Statement on Form
8-A, filed with the Commission on August 4, 1987.
All documents filed by the Company pursuant to section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offerings to which this Prospectus relates shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded by 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 such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide, without charge, copies of all
documents incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents) to each person, including any beneficial owner, to whom a copy
of this Prospectus has been delivered upon the written or oral request of such
person made to: William Steinhauer, Controller, 110 Little Falls Road,
Fairfield, New Jersey 07004 (telephone number (973) 882-0860).
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus under the captions "Risk Factors"
and "The Company" constitute "forward- looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or activities of
the Company, or industry results, to be materially different from any future
results, performance or activities expressed or implied by such forward-looking
statements. Such factors include: general economic and business conditions, the
financial condition of the Company, competition, the Company's dependence on
other companies to commercialize, manufacture and sell products using the
<PAGE>
Company's technologies, the uncertainty of results of preclinical and clinical
testing, the risk of product liability and liability for human clinical trials,
the Company's dependence on patents and other proprietary rights, dependence on
key management officials, the availability and cost of capital, the availability
of qualified personnel, changes in, or the failure to comply with, governmental
regulations, the failure to obtain regulatory approvals of the Company's
products and other factors discussed in this Prospectus. See "Risk Factors."
RISK FACTORS
Prospective investors should consider carefully the following factors
concerning the Company and its business before purchasing securities offered by
this Prospectus. Certain statements under this caption constitute
"forward-looking statements" under the Reform Act. See "Special Note Regarding
Forward-Looking Statements."
History of Losses; Auditors' Report - Going Concern Considerations. The
Company has incurred annual operating losses since its inception and, as a
result, at September 30, 1997, had an accumulated deficit of $51.5 million. The
auditors' report for the fiscal year ended December 31, 1996 contained an
explanatory paragraph indicating there is substantial doubt about the Company's
ability to continue as a going concern.
Management believes that the Company has sufficient financial resources
to sustain its operations at the current level through the first quarter of
1998. The Company will require additional funds to ensure continued operations
beyond that time. In July 1997, the Company entered into a license agreement
with Warner-Lambert Company for oral Calcitonin pursuant to which the Company
received payments of $6 million, consisting of a $3 million initial license fee
and a $3 million equity investment by Warner-Lambert. Under the terms of the
license agreement, the Company is eligible receive up to an additional $48.5
million in milestone payments if specified milestones are achieved. If the
product is successfully commercialized, the Company also would receive revenue
from the sale of raw material to Warner-Lambert and royalties on product sales
by Warner-Lambert and its affiliates. See "The Company." Management currently
believes that the various milestones can be achieved on a timely basis, thereby
providing the necessary funds for continued operations and precluding the need
for outside financing of the Company's operations in the near term. In the event
that such milestones are not achieved or achievement is delayed, the Company
would be required to enter into additional marketing, joint venture or licensing
agreements, or obtain funds from other sources (which might include a debt or
equity financing) to provide adequate funding for continued operations. There is
no assurance that the milestones in the Warner-Lambert agreement will be
achieved, that any other revenue-generating agreements will be entered into, or
that adequate financing could be obtained on terms satisfactory to the Company.
Management believes that satisfying the Company's long-term liquidity
requirements will require the successful commercialization of the product
licensed to Warner-Lambert or one of its other Calcitonin products. However,
there can be no assurance that there will be sufficient acceptance of the
Company's products in the marketplace for successful commercialization.
Transition to Production; Possibility of Delays or Inability to
Manufacture and Market Products. The Company is currently undergoing a
transition from its historical research orientation toward a business with a
pharmaceutical production focus. Accordingly, the Company is likely to incur the
problems, delays, expenses and difficulties typically encountered by enterprises
in the Company's stage of transition, many of which may be beyond the Company's
control.
<PAGE>
No product of the Company has been commercialized for human
pharmaceutical use. The commercial manufacture and sale of any such product will
require the approval of the U.S. Food and Drug Administration ("FDA") and
comparable regulatory authorities outside of the United States. See "Risk
Factors - Government Regulation." There can be no assurance that the necessary
clinical testing will be successful or that the clinical results will be
adequate to support regulatory submissions. Furthermore, there can be no
assurance that the Company's products will be demonstrated to be safe and
effective or that they will be approved by the appropriate regulatory
authorities. Even if any such products are approved, there is no assurance that
they can be manufactured in commercial quantities at reasonable costs. Due to
the Company's limited clinical, manufacturing and regulatory experience and the
absence of a marketing organization, it likely will be necessary for the Company
to rely on sponsors or other parties to perform such tasks for the
commercialization of pharmaceutical-grade products. See "Risk Factors -
Dependence on Large Pharmaceutical Companies."
Expanded consumer acceptance of Calcitonin pharmaceutical products will
depend on the development of a consumer-accepted delivery system. The Company
and others are conducting research on new delivery systems for Calcitonin
including oral technology. There can be no assurance that the Company has
developed or will develop a suitable oral delivery system or that governmental
approval of any such delivery system will be obtained. There can also be no
assurance that others will not develop oral or other delivery systems that could
compete with or surpass any oral delivery system developed by the Company. There
are synthetic salmon Calcitonin products as well as non-Calcitonin products
currently being marketed for osteoporosis treatment or in development that will
compete with the Company's Calcitonin products. See "Risk Factors-Technological
Change and Competition."
There can be no assurance that the Company will have sufficient
financial resources to fund its operations until such time as it is able to
generate revenues that are sufficient to sustain its operations. See "Risk
Factors - History of Losses; Auditors' Report - Going Concern Considerations."
Production Facility. During 1994, the Company completed construction of
a facility for the production of pharmaceutical-grade Calcitonin and other
peptide hormones. The Company is the lessee of this facility under a 10-year
lease that began in February 1994. The Company has two 10-year renewal options
as well as an option to purchase the facility. The Company is undertaking steps
to secure approval of the facility by various regulatory agencies, including the
FDA, which would allow it to manufacture Calcitonin for human pharmaceutical
use. The facility has begun producing Calcitonin in accordance with current Good
Manufacturing Practice ("cGMP") regulations, but there is no assurance that the
facility will be approved by such agencies. See "Risk Factors - Government
Regulation." Furthermore, there can be no assurance that the facility will be
able to achieve its production goals, that production at this facility will be
profitable to the Company, that others will not develop processes and products
superior to, or otherwise precluding the Company from commercial utilization of
this facility, that there will be a market for the Company's products produced
by the facility, or that sufficient funds will be available for the Company to
produce and market its products from the facility. In addition, the successful
commercialization of a Calcitonin product will require the Company to incur
additional expenditures to expand or upgrade the Company's manufacturing
operations to satisfy its supply obligations under the Warner-Lambert license
agreement. See "Risk Factors - Dependence on Large Pharmaceutical Companies."
However, neither the cost or timing of such capital expenditures are
determinable at this time.
<PAGE>
Dependence on Large Pharmaceutical Companies. The Company has been and
expects to continue to be dependent on large pharmaceutical companies for
revenues from sales of product, research sponsorship, joint ventures and
licensing arrangements. In July 1997, the Company entered into an agreement
under which it granted to the Parke-Davis division of Warner-Lambert Company a
worldwide license to use the Company's oral Calcitonin technology. See "The
Company." The Company has retained the right to license the use of its
technologies for injectable and nasal formulations of Calcitonin on a worldwide
basis. There is no assurance that the Company will achieve the milestones under
the Warner- Lambert agreement or that the Company will be successful in its
efforts to enter into new research or licensing agreements or other revenue
producing arrangements.
In June 1995, the Company entered into a joint venture agreement,
effective as of March 1996, with the Qingdao General Pharmaceutical Company and
its Huanghai factory for the production and marketing of Calcitonin in China.
Under the agreement, the Chinese partners will finance the project, including
the construction and operation of a dedicated manufacturing facility in China
which will utilize the nonproprietary aspects of the Company's production
technology. The Company will provide the joint venture with technology and
training as well as the Company's proprietary enzyme at a discounted price. The
Company will receive a combination of fixed fees and annual royalties based upon
sales of the end product. This joint venture contributed $300,000 to 1996
revenues. It is uncertain whether any additional revenues will be recognized or
received in connection with this joint venture.
Risks of International Operations. The Company's potential major
customers, partners and licensees include foreign companies or companies with
significant international business. The business operations of such companies
and their ability to pay license fees, royalties and other amounts due and
otherwise to perform their obligations to the Company under agreements with the
Company may be subject to approval or regulation by foreign governments. There
can be no assurance that required approvals will be received. The failure to
receive required approvals, governmental regulations and other risks, including
political and foreign currency risks, could affect the ability of the Company to
earn or receive payments pursuant to such agreements and, in such event, may
have a material adverse effect on the Company's future operations.
Technological Change and Competition. The Company has concentrated most
of its efforts on one product - Calcitonin for the treatment of osteoporosis.
The market for the treatment of osteoporosis is subject to rapid, unpredictable
and significant technological change. Competition from specialized biotechnology
companies, major pharmaceutical and chemical companies and universities and
research institutions is intense. Most of the competitors of the Company have
substantially greater financial and other resources than does the Company. There
can be no assurance that developments by others, including alternative
production methods and new delivery systems for Calcitonin as well as other
osteoporosis treatments, will not render the Company's technologies and products
derived therefrom obsolete or noncompetitive.
Product Liability. Product liability claims relating to the Company's
technology or products may be asserted against the Company. There can be no
assurance that the Company would have sufficient resources to defend against or
satisfy any such claims. Although the Company has product liability insurance
coverage in place, product liability or other judgments against the Company in
excess of insurance limits could have a material adverse effect upon the
Company's business and financial condition.
<PAGE>
Patents and Proprietary Technology. The Company has filed applications
for U.S. patents relating to proprietary amidation and immunization processes
and to an oral Calcitonin formulation invented in the course of its research
activities. To date, the following two patents have issued: Immunization By
Immunogenic Implant, a process patent, and Alpha-Amidation Enzyme, a process and
product patent. Other applications are pending. Filings related to the amidation
process have also been made in selected foreign countries and numerous such
foreign patents have issued. There can be no assurance that any of the Company's
pending applications will issue as patents or that the Company's issued patents
will provide the Company with significant competitive advantages. Furthermore,
there can be no assurance that competitors will not independently develop or
obtain similar or superior technologies. Although the Company believes its
patents and patent applications are valid, the invalidation of its
Alpha-Amidation Enzyme patent or the failure of certain of its pending
applications to issue as patents could have a material adverse effect upon the
Company's business. Although one patent application currently is the subject of
an interference proceeding, the Company does not believe that an adverse ruling
would have a material adverse effect on the business of the Company or its
prospects. Difficulties in detecting and proving infringement are generally
greater with process patents than with product patents. In addition, the value
of a process patent may be reduced if the products that can be produced using
such process have been patented by others. Under such circumstances, the
cooperation of these patent holders or their sublicensees would be needed for
the commercialization of the aforementioned patented products in countries where
these companies hold valid patents.
In some cases, the Company relies on trade secrets to protect its
inventions. It is the policy of the Company to include in all research
contracts, joint development agreements and consulting relationships that
provide access to the Company's trade secrets and other know-how confidentiality
obligations binding on the parties involved. However, there can be no assurance
that these secrecy obligations will not be breached to the detriment of the
Company. To the extent sponsors, consultants or other third parties apply
technological information independently developed by them or by others to
Company projects, disputes may arise as to the proprietary rights to such
information which may not be resolved in favor of the Company.
Government Regulation. The laboratory research and production
activities of the Company and its sponsors, collaborators and licensees, and the
processes and products which may be developed by them and the Company's
production facility, are subject to significant regulation by numerous federal,
state, local and foreign governmental authorities. In addition to obtaining the
approval of the production facility by the FDA and other regulatory agencies, it
is necessary to obtain the approval by such agencies of the Calcitonin to be
produced in the facility for human use . See "The Company." The regulatory
approval process for a pharmaceutical product may take a number of years and
requires substantial resources. There can be no assurance that regulatory
approval will be obtained for the production facility or for any of the
Company's products or that such approvals will be obtained in a timely manner.
The inability to obtain, or delays in obtaining, such approvals would adversely
affect the Company's ability to continue to fund its programs, produce
marketable products, or receive revenue from product sales or royalties.
Furthermore, the extent of any adverse governmental regulation that may arise
from future legislative and administrative action cannot be predicted.
<PAGE>
The Company's production facility may, from time to time, be audited by
the FDA or other regulatory agencies to ensure that it is operating in
compliance with cGMP guidelines which require that the production operation be
conducted in strict compliance with, among other things, the Company's written
protocols for reagent qualification, process execution, data recording,
instrument calibration and quality monitoring. Such agencies are empowered to
suspend production operations and/or product sales if, in their opinion,
significant and/or repeated deviations from these protocols have occurred. Such
a suspension could have a material adverse impact on the Company's future
operations.
Dependence on Key Executives. Drs. Warren and Ronald Levy have been the
principal executive officers of the Company since its inception. The Company
relies on them for their leadership and scientific direction. Neither Dr. Warren
Levy nor Dr. Ronald Levy has an employment agreement with the Company. Each of
them has entered into an agreement with the Company providing that he shall not
engage in any other employment or business for the period of his employment with
the Company. At the present time, the loss of the services of either of these
individuals could have a material adverse impact on the Company's business.
Attraction and Retention of Key Personnel. The Company's ability to
obtain required governmental approvals, produce its products, obtain research
contracts and develop new technologies will depend in part on its ability to
attract and retain highly qualified scientific personnel. Competition for such
personnel is intense. There can be no assurance that the Company will be able to
attract and retain such personnel.
Shares Eligible For Future Sale; Outstanding Convertible Securities,
Warrants And Options. In addition to the 490,000 shares of Common Stock to which
this Prospectus relates, as of November 30, 1997, there are approximately
214,000 shares of Common Stock that are issuable upon conversion of the
Company's outstanding 10% convertible debentures; approximately 449,000 shares
of Common Stock issuable upon conversion of the Company's outstanding 9.5%
convertible debentures; approximately 2,661,000 shares of Common Stock issuable
upon exercise of outstanding warrants at exercise prices ranging from $1.375 to
$3.50 per share; and approximately 1,317,000 shares of Common Stock issuable
upon exercise of options exercisable at prices ranging from $1.00 to $4.5625 per
share. The Company may issue additional convertible securities, options,
warrants and shares in the future. Transactions by the Company, or the
occurrence of certain other future events, may require adjustment of the
exercise or conversion price and other terms of the Company's convertible
securities, options and warrants including, in some circumstances, an increase
in the number of shares issuable thereunder.
The Company cannot predict the effect that market sales of the Common
Stock issuable upon the conversion of such convertible securities or the
exercise of such options or warrants will have on the market price of the Common
Stock prevailing from time to time, although it is possible that sales of a
large number of securities would depress the market price. The Company also
cannot predict the adverse effect, if any, that the existence of such
convertible securities, options and warrants would have on the ability of the
Company to obtain additional capital or the terms and conditions thereof.
Possible Volatility of Securities Prices. The market prices of the
Company's securities may be highly volatile. Factors such as announcements by
the Company or others of technological innovations, regulatory matters, new or
existing products or procedures, proposed government regulations, developments
<PAGE>
or disputes relating to agreements, patents or proprietary rights, and public
concern over the safety of activities or products may have a significant impact
on the market price of the Company's securities. In addition, future sales of
shares of Common Stock by shareholders and by the holders of convertible
securities, warrants and options could have an adverse effect on the prices of
the Company's securities. See "Risk Factors - Shares Eligible for Future Sale;
Outstanding Convertible Securities, Warrants and Options."
Voting Control. Warren P. Levy, Ronald S. Levy and Jay Levy, founders
of the Company, beneficially own approximately 11% of the outstanding Common
Stock (assuming that outstanding convertible securities, warrants and options
held by others are not converted or exercised) and, thus, effectively they may
have the ability to elect the entire Board of Directors and control the affairs
of the Company.
Dividends. The Company has not paid any cash dividends on its Common
Stock since its inception and anticipates that, for the foreseeable future, it
will not pay any cash dividends.
Limitation of Marketability of Company Securities. The Common Stock
currently is traded on the Nasdaq National Market. In order for the Common Stock
to continue to qualify for inclusion on the Nasdaq National Market, among other
requirements, the Company must have net tangible assets of at least $4.0
million. As of October 31, 1997 the amount of the Company's net tangible assets
was approximately $11.3 million. However, if the Company in the future is unable
to maintain compliance with the Nasdaq National Market listing requirements, the
Common Stock could be removed from trading on the Nasdaq National Market. If the
Company fails to meet the requirements for trading on the Nasdaq National Market
and does not otherwise qualify for inclusion in the Nasdaq Small-Cap Market, the
holders of Common Stock may find it difficult to obtain accurate quotations as
to the market value of the Common Stock and may experience greater difficulties
in attempting to sell the Common Stock than if it were listed on a stock
exchange or quoted on the Nasdaq National Market or the Nasdaq Small-Cap Market.
If the Common Stock is not traded on the Nasdaq National Market or the
Nasdaq Small-Cap Market, and the market price of the Common Stock is less than
$5.00 per share, the Common Stock would be classified as a "penny stock." As
such the Common Stock would be subject to Rule 15g-9 under the Exchange Act,
which imposes additional sales practice requirements on broker-dealers that
recommend the purchase or sale of such securities to persons other than a person
who qualifies as an "established customer" or an "accredited investor." Among
these requirements is that a broker-dealer must make a determination that
investments in penny stocks are suitable for the customer and must make certain
special disclosures to the customer concerning the risks of penny stocks.
Application of the penny stock rules to the Common Stock could adversely affect
the market liquidity of such securities, which in turn may affect the ability of
the holders of the Common Stock to resell the securities.
THE COMPANY
Unigene Laboratories, Inc. is a health-care oriented biopharmaceutical
company that is engaged in research and production of cGMP Calcitonin and is
planning to engage in the production and marketing in bulk of pharmaceutical
grade Calcitonin. Certain statements under this caption constitute
"forward-looking statements" under the Reform Act. See "Special Note Regarding
Forward-Looking Statements." The Company's current business focus has shifted
toward pharmaceutical production from its prior emphasis on pharmaceutical
research. The Company has succeeded in combining its proprietary amidation
<PAGE>
process with bacterial recombinant DNA technology to develop a peptide hormone
production process. The Company believes that its proprietary amidation process
will be a key step in the more efficient and economical commercial production of
certain peptide hormones with diverse therapeutic applications. Many of these
hormones cannot be produced at a reasonable cost in sufficient quantities for
clinical testing or commercial use by currently available production processes.
Using its proprietary process, the Company has produced laboratory-scale
quantities of seven such peptide hormones: human Calcitonin, salmon Calcitonin,
human Growth Hormone Releasing Factor, human Calcitonin Gene-Related Peptide,
human Corticotropin Releasing Factor, human Amylin and a human Magainin. During
1991, a study commissioned by the Company was prepared by a professor of
chemical engineering at the Massachusetts Institute of Technology. The study
evaluated the economics for producing Calcitonin and indicated that the
Company's process for producing Calcitonin should reduce both the cost and time
required for commercial production of multi-kilogram quantities by up to 95%.
The Company's strategy is to develop proprietary products and processes
with applications in human health-care, independently or in conjunction with
pharmaceutical and chemical companies, in order to generate revenues from
license fees, royalties and product sales in bulk. Generally, the Company seeks
sponsors and licensees to provide research funding and assume responsibility for
obtaining appropriate regulatory approvals, clinical testing, production and
marketing of products derived from the Company's research activities. However,
the Company may retain responsibility for clinical testing and applying for
regulatory approval of certain products. To date, the Company has focused its
efforts primarily on the manufacture and therapeutic delivery of salmon
Calcitonin, a product that is used in the treatment of osteoporosis.
The Company has developed a proprietary oral delivery technology which
has successfully delivered Calcitonin into the blood stream of human subjects.
The formulation, which is the subject of international patent applications, has
been shown by clinical studies to reproducibly deliver significant measurable
quantities of the hormone into the bloodstream. The Company believes that such a
formulation may expedite the regulatory approval process for a Calcitonin pill
because it should be easier to establish its performance efficacy as compared to
a formulation that does not produce measurable Calcitonin blood levels. The
Company has licensed its oral Calcitonin technology exclusively to the
Parke-Davis division of Warner-Lambert Company. The Company believes that the
components of the proprietary oral formulation will enable the delivery of
peptides in addition to Calcitonin and it has initiated studies to investigate
such possibilities.
Since 1992, the Company has been producing and, from time to time,
selling small quantities of research-grade salmon Calcitonin. During 1993, the
Company began construction of a cGMP facility for the production of
pharmaceutical-grade Calcitonin in leased premises located in Boonton, New
Jersey which was mechanically completed during the fourth quarter of 1994. The
facility will also produce the Company's proprietary amidating enzyme for use in
producing Calcitonin. The current production capacity of the facility is between
0.5-1.0 kilogram of bulk Calcitonin per year. The Company is following
conventional procedures to secure the approval of the facility by regulatory
agencies that will allow the Company to manufacture its Calcitonin for human
use. Although the facility was inspected by an independent consultant in early
1997 and found to be in compliance with cGMP guidelines, there can be no
assurance that approval by such agencies will be obtained. In addition, there is
no assurance that the facility production goals will be achieved, that there
will be a market for the Company's products, that such production will be
<PAGE>
profitable to the Company, that others will not develop processes and products
superior to, or otherwise precluding the commercial utilization of, the
processes or products developed by the Company. Although the facility will
initially be exclusively devoted to Calcitonin production, it would be suitable
for producing other peptide hormone products in the future. The design of the
facility is intended to allow for substantial increases in Calcitonin production
utilizing the existing equipment and in March 1997, the Company announced that
an improvement to its proprietary production process had been developed that can
boost the Company's annual production of Calcitonin by at least fourfold.
However, the successful commercialization of a Calcitonin product will require
the Company to incur additional expenditures to expand or upgrade the Company's
manufacturing operations to satisfy its supply obligations under the
Warner-Lambert license agreement. There can be no assurance that there will be
sufficient acceptance of the Company's products in the marketplace for
successful commercialization. See "Risk Factors - Production Facility."
In addition to obtaining approval of the facility by regulatory
agencies, it is necessary to obtain regulatory approval in each country for
human use of the Calcitonin to be produced in the facility. This requires
various human and animal studies. The Company or its licensees then must apply
to the appropriate regulatory agencies in the applicable jurisdiction for
approval of the Company's Calcitonin for human use. The regulatory approval
process for a pharmaceutical product may take a number of years and requires
substantial resources. During 1996, the Company received authorization to
proceed with pivotal clinical trials in the United States and the United Kingdom
for its injectable form of Calcitonin under the name FORTICAL(R). These trials
were completed in early 1997 and demonstrated that the Company's injectable
FORTICAL product was bioequivalent to an injectable salmon Calcitonin product
currently on the market.
In September 1997, the Company's registration dossier for its FORTICAL
Injection product was formally submitted to the European Union health
authorities for approval. It was the Company's first product registration
filing. The 14,000 page document was officially accepted for review by the
Committee for Proprietary Medicinal Products and the review process has now
commenced. The European dossier was filed under the recently-established
centralized procedure, by which the product's approval would be obtained
simultaneously in all of the 15 member nations of the European Union. In
addition, an approved European dossier can be readily cited by regulatory
authorities in many non-European nations, which could significantly reduce the
registration requirements for FORTICAL, thereby accelerating product launch, in
such countries. The Company has completed all clinical trials necessary to file
a New Drug Application ("NDA") for injectable FORTICAL with the FDA and
currently plans to file this application at a later date. Because the injectable
Calcitonin market in Europe is larger than that in the U.S., the European
dossier filing was a higher priority.
The Company believes that the abbreviated clinical program it has been
authorized to undertake will be sufficient to satisfy approval requirements in
the United States and the European Union. The Company believes that the review
process for the European dossier, and possibly other filings for its injectable
Calcitonin product, may be shorter than that typically associated with a new
drug submission because (i) the active ingredient is structurally identical to
and biologically indistinguishable from the active ingredient in products
already approved by many regulatory agencies, (ii) the formulation is
essentially similar to the formulations used in similar, already approved
products and (iii) the clinical trial program that was authorized was relatively
brief and involved small numbers of subjects, so the amount of information that
must be reviewed is far less than would have been compiled for a typical new
drug submission. However, there can be no assurance that the necessary
governmental approvals will be obtained or that they will be obtained on an
expedited basis. See "Risk Factors - Government Regulation."
<PAGE>
Expanded consumer acceptance of Calcitonin pharmaceutical products will
depend on the development of a consumer-accepted delivery system. A major
pharmaceutical company received FDA approval during 1995 for the marketing of a
nasal spray delivery system for Calcitonin, which could enlarge the United
States market for Calcitonin. The Company, its licensees and others are
conducting research on oral delivery systems for Calcitonin. There can be no
assurance that suitable delivery systems will be developed or that governmental
approval of such delivery systems will be obtained.
In December 1995 and January 1996, the Company successfully tested a
proprietary Calcitonin oral formulation in Phase I clinical trials in the United
Kingdom. These studies indicated that the majority of those who received the
oral Calcitonin showed levels of the hormone in blood samples taken during the
trial which were greater than the minimum levels generally regarded as being
required for maximum therapeutic benefit. The Company believes that these were
the first studies to demonstrate that significant blood levels of Calcitonin
could be observed in humans following oral administration of the hormone. In
April 1996, the Company successfully conducted a third Phase I clinical trial in
the United Kingdom which utilized lower Calcitonin dosages than in the prior two
clinical trials. The results of this trial indicated that every test subject
showed levels of the hormone in blood samples taken during the trial in excess
of the minimum levels generally regarded as required for maximum therapeutic
benefit. However, there can be no assurance that these results will be
replicated in further studies. The Company has filed patent applications for its
oral formulation with the U.S. Patent and Trademark Office. Under the terms of
the agreement with Warner-Lambert Company, which has licensed the use of the
Company's oral Calcitonin technology, Warner-Lambert has assumed responsibility
for obtaining regulatory approval from the FDA and other regulatory agencies of
an oral Calcitonin product using the Company's proprietary oral delivery
technology. There can be no assurance that any of these patent applications will
be approved, that Warner-Lambert will be successful in obtaining regulatory
approval of an oral Calcitonin product or that Warner-Lambert and the Company
will be successful in developing, producing or marketing an oral Calcitonin
product.
The Company is dependent on large pharmaceutical companies, having much
greater resources than the Company, for revenues from sales of product, research
sponsorship, joint ventures and licensing arrangements. In July 1997, the
Company entered into an agreement under which it granted to the Parke-Davis
division of Warner-Lambert Company a worldwide license to use the Company's oral
Calcitonin technology. Upon execution of the agreement, the Company received $6
million in payments from Warner-Lambert, consisting of a $3 million licensing
fee and a $3 million equity investment by Warner-Lambert (695,066 shares of
Common Stock were purchased at a price of approximately $4.32 per share). In
addition, the Company is eligible to receive up to an additional $48.5 million
in milestone payments during the course of the development program if specified
milestones are achieved, of which $15.5 million would be received prior to the
commencement of Phase I clinical studies in the U.S. If the product is
successfully commercialized, the Company also would receive revenue from the
sale of raw material to Warner-Lambert and royalties on product sales by
Warner-Lambert and its affiliates. The Company has retained the right to license
the use of its technologies for injectable and nasal formulations of Calcitonin
on a worldwide basis. Management is actively seeking other licensing and/or
supply agreements with pharmaceutical companies for injectable and nasal forms
of Calcitonin. However, there is no assurance that any additional
revenue-generating agreements will be signed. See "Risk Factors - History of
Losses; Auditors' Report - Going Concern Considerations; - Dependence on Large
Pharmaceutical Companies; - Risks of International Operations."
The Company is currently engaged in two collaborative research
programs. One, with Rutgers University College of Pharmacy, continues to
investigate oral drug delivery technology for Calcitonin and other peptides. The
second collaboration, performed in conjunction with Yale University, is
<PAGE>
investigating novel applications for certain amidated peptide hormones,
including Calcitonin gene-related peptide ("CGRP"). In 1996, the Company
reported that CGRP accelerated bone growth and prevented bone loss in an animal
model system. However, there can be no assurance that CGRP will have the same
effect in humans.
The Company has established a multi-disciplinary team to adapt
proprietary amidation, biological production and oral delivery technologies to
the development of proprietary products and processes. The Company, at November
30, 1997, had 69 full-time employees, including 26 research and development
personnel and 32 production personnel. Ten employees have Ph.D. degrees in the
fields of molecular biology, microbiology, biochemistry, pharmacology or organic
chemistry. The Company's employees have expertise in molecular biology,
including DNA cloning, synthesis, sequencing and expression; protein chemistry,
including purification, amino acid analysis, synthesis and sequencing proteins;
immunology, including tissue culture, monoclonal and polyclonal antibody
production and immunoassay development; chemical engineering; pharmaceutical
production; quality assurance; and quality control. None of the Company's
employees is covered by a collective bargaining agreement.
The Company was incorporated under the laws of the State of Delaware in
November 1980. Its executive offices and laboratory facilities are located at
110 Little Falls Road, Fairfield, New Jersey, 07004, and its telephone number is
(973) 882-0860.
SELLING SHAREHOLDERS
The 490,000 shares of Common Stock offered hereby were issued to the
Selling Shareholders in February 1997 in exchange for the surrender of certain
contractual rights held by the Selling Shareholders under the terms of an
agreement pursuant to which the Company issued its 9.5% Senior Secured
Convertible Debentures (the "Debentures") to the Selling Shareholders.
Specifically, the shares offered hereby were issued in consideration for the
cancellation of an obligation of the Company under the agreement to pay the
Selling Shareholders a fee equal to 2% of the sum of the market value as of
December 31, 1998 of all of the Company's outstanding shares of Common Stock,
plus the principal amount of all outstanding debt of the Company, less its cash
on deposit, up to a maximum fee of $3 million. In connection with the
transaction, the Company agreed to register the shares for resale under the
Securities Act and to keep the registration statement effective for a period of
three years from the date of issuance of the shares.
In addition to the shares of Common Stock offered hereby, the Selling
Shareholders own, or may immediately acquire upon conversion of the Debentures
or the exercise of certain outstanding warrants (the "March Warrants"), an
aggregate of 674,148 shares of Common Stock (collectively, the "March Shares").
The Debentures and the March Warrants were issued to the Selling Shareholders in
a private transaction completed in March 1996. All of the March Shares are
registered for resale by the Selling Shareholders under the Securities Act
(Registration Statement No. 333-04557).
The Selling Shareholders also own, or may immediately acquire upon the
exercise of certain outstanding Class C and Class D warrants, an aggregate of
136,902 shares of Common Stock (collectively, the "October Shares"). The Selling
Shareholders purchased such warrants and a portion of such shares from the
Company in a private placement of detachable units (the "Units") completed in
<PAGE>
October 1996. Each Unit consisted of (i) one share of Common Stock, (ii) one
quarter of a Class C warrant, each whole Class C warrant exercisable immediately
to purchase one share of Common Stock, and (iii) one quarter of a Class D
warrant, each whole Class D warrant exercisable immediately to purchase one
share of Common Stock. All of the October Shares are registered for resale by
the Selling Shareholders under the Securities Act (Registration Statement No.
333-18079).
Other than as described above, neither of the Selling Shareholders has
had any position, office or other material relationship with the Company or any
of its predecessors or affiliates within the past three years. The following
table sets forth as of November 30, 1997, with respect to each Selling
Shareholder: name, number of shares of Common Stock beneficially owned
(including shares issuable upon the exercise of outstanding warrants and
Debentures), number of shares of Common Stock being offered and number of shares
of Common Stock to be held following the offering, assuming the sale of all of
the shares of Common Stock offered hereby. The Company may amend or supplement
this Prospectus from time to time to update the disclosure set forth herein or
to disclose the names and relationships to the Company of additional Selling
Shareholders who are transferees of Common Stock from the Selling Shareholders
named below and the holdings of Common Stock of such additional Selling
Shareholders.
<TABLE>
<CAPTION>
Beneficial Ownership of Shares of Common Beneficial Ownership of
Common Stock Prior to Stock Being Common Stock After
Offering Offered Offering
------------------------ --------------- -------------------------
Name Number Percent(1) Number Number Percent
- ---- ------ ---------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Nelson Partners(4) 996,907 2.5 378,638(2) 618,269 1.6
Olympus Securities, Ltd.(4) 304,143 * 111,362(3) 192,781 *
</TABLE>
- --------------------
* Less than one percent.
(1) Calculated on the basis of 38,510,222 shares of Common Stock outstanding on
November 30, 1997.
(2) Does not include 618,269 shares offered for resale by Nelson Partners under
the Company's Registration Statement No. 333-04557 or Registration
Statement No. 333-18079.
(3) Does not include 192,781 shares offered for resale by Olympus Securities,
Ltd. under the Company's Registration Statement No. 333-04557 or
Registration Statement No. 333-18079.
(4) Citadel Limited Partnership is the managing general partner of Nelson
Partners ("Nelson") and the trading manager of Olympus Securities, Ltd.
("Olympus") and as such has voting and investment discretion with respect
to all shares owned by Nelson and Olympus. Shares shown as owned by Nelson
do not include any shares owned by Olympus. Shares shown as owned by
Olympus do not include any shares owned by Nelson.
PLAN OF DISTRIBUTION
The purpose of this Prospectus is to permit the Selling Shareholders,
if they desire, to dispose of some or all of the Common Stock covered by this
Prospectus at such times and at such prices as they choose. Whether sales of
shares will be made, and the timing and amount of any sale made, is within the
sole discretion of the Selling Shareholders.
<PAGE>
The Common Stock covered by this Prospectus may be offered for sale
from time to time by the Selling Shareholders to or through underwriters or
directly to other purchasers or through agents in one or more market
transactions, in one or more private transactions or in a combination of such
methods of sale, at prices then prevailing, at prices related to such prices or
at negotiated prices. Such methods of distribution may include, without
limitation: (a) a block trade in which the broker-dealer so engaged will attempt
to sell the Common Stock as agent, but may position and resell a portion of the
block as a principal to facilitate the transaction; (b) purchases by a
broker-dealer as a principal and resale by such broker-dealer for its own
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker or dealer. This
Prospectus may be amended or supplemented from time to time to describe a
specific plan of distribution.
In connection with distributions of the Common Stock or otherwise, the
Selling Shareholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of
Common Stock in the course of hedging the positions they assume with Selling
Shareholders. The Selling Shareholders may also sell Common Stock short and
redeliver the shares to close out such short positions. The Selling Shareholders
may also enter into options or other transactions with broker-dealers or other
financial institutions which require the delivery to such broker-dealer or
financial institution of the Common Stock offered hereby, which Common Stock
such broker-dealer or other financial institutions may resell pursuant to this
Prospectus (as amended or supplemented to reflect such transaction). The Selling
Shareholders also may pledge the shares registered hereunder to a broker-dealer
or other financial institution and, upon a default, such broker-dealer or other
financial institution may effect sales of the pledged Common Stock pursuant to
this Prospectus (as supplemented or amended to reflect such transaction). In
addition, any Common Stock covered by this Prospectus that qualifies for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Shareholders in amounts to be
negotiated in connection with sales pursuant hereto. Such brokers or dealers and
any other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act, in connection with such sales and any
such commission, discount or concession may be deemed to be underwriting
discounts or commissions under the Securities Act.
Certain costs, expenses and fees in connection with the registration of
the Common Stock will be borne by the Company. Commissions, discounts and
transfer taxes, if any, attributable to the sales of the Common Stock will be
borne by the Selling Shareholders. The Selling Shareholders have agreed to
indemnify the Company or any underwriter, as the case may be, and any of their
respective affiliates, directors, officers, employees, agents and controlling
persons, against certain liabilities in connection with the offering of the
Common Stock pursuant to this Prospectus, including liabilities arising under
the Securities Act. In addition, the Company has agreed to indemnify the Selling
Shareholders or any underwriter, as the case may be, and any of their respective
affiliates, directors, officers, employees, agents and controlling persons,
against certain liabilities in connection with the offering of the Common Stock
pursuant to this Prospectus, including liabilities arising under the Securities
Act.
<PAGE>
The Company has agreed to supply the Selling Shareholders with such
number of copies of this Prospectus as they may reasonably request. The Selling
Shareholders will in all cases be responsible for complying with the prospectus
delivery requirements of Section 5(b)(2) of the Securities Act in connection
with the offering and sale of the Common Stock.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock
offered hereby are being passed upon for the Company by Covington & Burling,
Washington, D.C.
EXPERTS
The audited financial statements of the Company as of December 31, 1996
and 1995, and for each of the years in the three-year period ended December 31,
1996, incorporated by reference in this Prospectus have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution*
The expenses payable by the Registrant in connection with the issuance
and distribution of the securities being registered hereby (other than
underwriting discounts and commissions) are set forth below:
Securities and Exchange Commission Registration Fee........ $ 339
Nasdaq Listing Fee......................................... 9,800
Accounting Fees and Expenses............................... 2,500
Legal Fees and Expenses.................................... 5,000
Registrar and Transfer Agent's Fees and Expenses........... 500
Miscellaneous Expenses..................................... 500
Printing Costs............................................. 250
-------
Total $18,889
- ---------------
* Except for the Securities and Exchange Commission registration fee and the
Nasdaq listing fee, all expenses are estimated.
Item 15. Indemnification of Directors and Officers
Article VI of the Company's By-Laws requires the Company to indemnify
each of its directors and officers to the extent permitted by the Delaware
General Corporation Law (the "DGCL"). Section 145 of the DGCL provides that a
corporation may indemnify any person, including any officer or director, who was
or is a party or who is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (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 expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person, 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. Section 145 also provides that a corporation
may indemnify any person, including any officer or director, who was or is a
party or who is threatened to be made a party to any threatened, pending or
completed 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 expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of the
<PAGE>
action, 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, except that no
indemnification may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that a court of competent jurisdiction shall
determine that such indemnity is proper. To the extent that a director or
officer is successful on the merits or otherwise in the defense of any action
referred to above, the corporation is required under the DGCL to indemnify such
person against expenses (including attorneys' fees) actually and reasonably
incurred in connection therewith.
The Company's Certificate of Incorporation provides that no director
shall be liable to the Company or its stockholders for monetary damages for
breach of his fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) acts or omissions not in good faith or involving intentional misconduct or
knowing violation of law, (iii) any transaction from which the director derived
an improper personal benefit, or (iv) payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law.
<PAGE>
Item 16. Exhibits
4.1 Certificate of Incorporation and Amendments to Certificate of Incorporation
(incorporated by reference to Exhibits 3.1 and 3.1.1 to Company's
Registration Statement No. 33-6877 on Form S-1).
4.2 Amendment to Certificate of Incorporation (incorporated by reference to
Exhibit 3.1.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997).
4.3 By-Laws (incorporated by reference to Exhibit 4.2 to Company's Registration
Statement No. 33-04557 on Form S-3).
4.4 Letter Agreement, dated February 7, 1997, among the Company, Nelson
Partners and Olympus Securities, Ltd. (incorporated by reference to Exhibit
to the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997).
4.5 Registration Rights Agreement, dated October 11, 1996, among the Company,
BT Securities Corporation and the purchasers named therein (incorporated by
reference to Exhibit 1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996).
5.1 Opinion of Covington & Burling as to the legality of the shares being
registered.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Covington & Burling (included in opinion filed as Exhibit 5.1).
24.1 Powers of Attorney of Directors of Unigene Laboratories, Inc. (included on
page II-4).
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;
(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.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end 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 a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement.
(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;
<PAGE>
Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of
this section do not apply if 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 or section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such 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 that 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Act") may be permitted to directors, officers or controlling
persons of the Registrant by charter, by-law, contract, statute 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 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 Act and will
be governed by the final adjudication of such issue.
<PAGE>
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 the Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in Fairfield, New Jersey, on the 30th day of
December, 1997.
UNIGENE LABORATORIES, INC.
By /s/ WARREN P. LEVY
------------------
Warren P. Levy, President
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers
and directors of the Registrant hereby constitutes and appoints Warren P. Levy
and Ronald S. Levy or either of them (with full power to each of them to act
alone), his true and lawful attorneys-in-fact and agents, with full power of
substitution, for him and on his behalf and in his name, place and stead, in any
and all capacities, to execute and file any or all amendments to this
Registration Statement (including, without limitation, post-effective amendments
and any amendment or amendments increasing the amount of securities for which
registration is being sought) with all exhibits and any and all documents
required to be filed with respect thereto, with the Securities and Exchange
Commission or any regulatory authority, granting unto such attorneys-in-fact and
agents, and each of them, 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
in order to effectuate the same as fully to all intents and purposes as he
himself might or could do if personally present, hereby ratifying and confirming
all that such attorneys-in-fact and agents, or either of them, or their
substitute or substitutes, may lawfully do or cause to be done.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ WARREN P. LEVY Director, President (principal December 30, 1997
- ----------------- executive officer)
Warren P. Levy
/s/ RONALD S. LEVY Director, Vice President December 30, 1997
- ------------------
Ronald S. Levy
/s/ JAY LEVY Chairman of the Board of December 30, 1997
- ------------ Directors, Treasurer (principal
Jay Levy financial and principal accounting
officer)
/s/ ROBERT RUARK Director December 30, 1997
- ----------------
Robert Ruark
/s/ GEORGE M. WEIMER Director December 30, 1997
- --------------------
George M. Weimer
/s/ ROBERT F. HENDRICKSON Director December 30, 1997
- -------------------------
Robert F. Hendrickson
</TABLE>
EXHIBIT 5.1
COVINGTON & BURLING
1201 PENNSYLVANIA AVENUE, N.W.
P.O. BOX 7566
WASHINGTON, D.C. 20044-7566
(202) 662-6000
December 30, 1997
Unigene Laboratories, Inc.
110 Little Falls Road
Fairfield, New Jersey 07004
Gentlemen:
This opinion is being furnished to you in connection with a
Registration Statement on Form S-3 (the "Registration Statement") being filed
today by Unigene Laboratories, Inc., a Delaware corporation (the "Company"),
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended, for the registration for resale of 490,000
shares (the "Shares") of the Company's common stock, par value $.01 per share
(the "Common Stock"). The Shares offered by the Registration Statement were
issued by the Company in a February 1997 private transaction to the holders (the
"Holders") of the Company's 9.5% Senior Secured Convertible Debentures in
exchange for the surrender of certain contractual rights.
For purposes of this opinion, we have examined the
Registration Statement and the exhibits thereto and a copy the Letter Agreement,
dated February 7, 1997, among the Company and the Holders. We also have examined
and relied upon a copy of the Company's Certificate of Incorporation, certified
by the Secretary of State of the State of Delaware, and copies of the Company's
By-Laws and certain resolutions adopted by the Board of Directors of the
Company, certified by the Corporate Secretary of the Company. We further have
examined such other documents and made such other investigations as we have
deemed necessary to form a basis for the opinion hereinafter expressed.
In examining the foregoing documents, we have assumed the
authenticity of documents submitted to us as originals, the genuineness of all
signatures, the conformity to original documents of documents submitted to us as
copies, and the accuracy of the representations and statements included therein.
Based on the foregoing, we are of the opinion that the Shares
have been duly authorized and validly issued, and are fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Prospectus
forming a part thereof under the heading "Legal Matters."
Very truly yours,
/s/ Covington & Burling
-----------------------
COVINGTON & BURLING
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Unigene Laboratories, Inc.:
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of Unigene Laboratories, Inc. of our report dated March 13, 1997,
relating to the balance sheets of Unigene Laboratories, Inc. as of December 31,
1996 and 1995 and the related statements of operations, stockholders' equity,
and cash flows for each of the years in the three-year period ended December 31,
1996, which report appears in the December 31, 1996 annual report on Form 10-K
of Unigene Laboratories, Inc. which is incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
Our report dated March 13, 1997 contains an explanatory paragraph that states
that the Company has suffered recurring losses from operations which raises
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
New York, New York
December 30, 1997
