As filed with the Securities and Exchange Commission on June 16 , 1999
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
PHARMOS CORPORATION
-------------------
(Exact name of registrant as specified in its charter)
Nevada 36-3207413
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
99 Wood Avenue South, Suite 301
Iselin, New Jersey 08830
(732) 452-9556
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
GAD RIESENFELD
99 Wood Avenue South, Suite 301
Iselin, New Jersey 08830
(732) 452-9556
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
JEFFREY D. ABBEY, ESQ.
Ehrenreich Eilenberg Krause & Zivian LLP
11 East 44th Street, 17th Floor
New York, New York 10017
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of the registration statement
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |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. |_|
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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
Maximum Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Unit Price Fee
<S> <C> <C> <C> <C>
Common Stock, par value $.03 7,000,000 $1.36 (1) $9,520,000 $2,647
per share
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Proposed maximum offering price per share is estimated based upon the
closing price of Pharmos's common stock listed on the Nasdaq SmallCap
Market on June 11, 1999.
The registrant hereby amends the 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.
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The information contained in this preliminary prospectus is not complete
and may be changed. These securities may not be sold until the registration
statement filed with the securities and exchange commission is effective. This
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 16, 1999
PROSPECTUS
PHARMOS CORPORATION
7,000,000 SHARES OF COMMON STOCK
All of the shares are being offered for sale by Pharmos from time to time.
The shares will be sold at prices and on terms to be determined at the time
of a sale or sales. The shares may be sold on a negotiated or competitive bid
basis to or through underwriters or dealers designated from time to time. In
addition, the shares may be sold by Pharmos to other purchasers directly or
through agents. Certain terms of the sale of the shares will be set forth in a
Prospectus Supplement, to the extent required.
Pharmos's common stock is traded and quoted on the Nasdaq SmallCap Market
under the symbol "PARS". The closing price of the common stock on June 11, 1999
was $1.36.
See "Risk Factors" beginning on page 7 to read about certain factors
investors should consider before buying shares.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The date of this Prospectus is _________________________
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TABLE OF CONTENTS
Available Information....................................................... 3
Incorporation of Certain Documents by Reference............................. 3
Special Note Regarding Forward-Looking Information.......................... 4
Prospectus Summary.......................................................... 5
Risk Factors................................................................ 7
Use of Proceeds............................................................. 10
Business.................................................................... 11
Description of Securities................................................... 21
Plan of Distribution........................................................ 24
Commission's Policy on Indemnification For Securities Act Liabilities....... 25
Legal Matters............................................................... 26
Experts..................................................................... 26
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained or incorporated by reference in this
prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by Pharmos. This prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, nor shall
there be any sale of these securities by any person in any jurisdiction in which
such an offer, solicitation or sale would be unlawful. Neither the delivery of
this prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of Pharmos
since the date of this prospectus or that the information contained in this
prospectus is correct as of any time subsequent to the date of this prospectus.
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AVAILABLE INFORMATION
Pharmos is subject to the informational requirements of the Exchange Act
and, accordingly, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the Commission's Public Reference Room at 450 Fifth
Street, N.W., 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. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission.
Pharmos has filed with the Commission a registration statement on Form S-3
under the Securities Act with respect to the shares offered in this offering.
This prospectus does not contain all of the information set forth in the
registration statement, as permitted by the rules and regulations of the
Commission. For further information with respect to Pharmos and the shares
offered, reference is made to the registration statement. Statements contained
in this prospectus or in any document incorporated by reference regarding the
contents of any agreement or other document are not necessarily complete and are
qualified in their entirety by reference to any such agreement or document. The
registration statement may be inspected without charge at the office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies may be
obtained from the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Pharmos with the Commission are
incorporated by reference:
o The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed pursuant to Section 13 of the Exchange Act
(the "Form 10-K").
o The Company's Quarterly Report on Form 10-Q, as amended, for the
quarter ended March 31, 1999, filed pursuant to Section 13 of the
Exchange Act.
o The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated January 30, 1984, filed
pursuant to Section 12 of the Exchange Act,
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 of this
prospectus and prior to the termination of the offering of the securities
registered shall be deemed to be incorporated by reference into this prospectus
from the date of filing such documents. Any statement
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contained in a document incorporated or deemed to be incorporated by reference
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference 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.
Pharmos will furnish to each person to whom this prospectus is delivered,
upon written request, a copy of any or all of the documents referred to by
reference, other than exhibits to such documents unless such exhibits are
specifically incorporated by reference. Requests should be addressed to: Mr.
Robert Cook, Chief Financial Officer, Pharmos Corporation, 99 Wood Avenue South,
Suite 301, Iselin, New Jersey 08830.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this prospectus and any prospectus supplement, and in
the documents incorporated by reference, constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 2B of the
Exchange Act. For this purpose, any statements contained in this prospectus and
any prospectus supplement, or incorporated by reference, that are not statements
of historical fact may be deemed to be forward-looking statements. For example,
the words "believes," "plans," "expects" and similar expressions are intended to
identify forward-looking statements. There are a number of important factors
that could cause the results of Pharmos to differ materially from those
indicated by forward-looking statements. These factors include those set forth
under the heading "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Certain Factors That May Affect Future
Results" in the Form 10-K and those set forth in "Risk Factors."
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PROSPECTUS SUMMARY
This is only a summary. The entire prospectus, including the "Risk Factors"
section, should be read carefully.
The Company
Pharmos develops for commercialization enhanced molecular structures for
the ophthalmic, neurological and other key health-care markets. Pharmos's goal
is to improve target molecules in a way that limits or removes undesirable side
effects while retaining each compound's important therapeutic benefits.
In March 1998, Pharmos, together with Bausch & Lomb Pharmaceuticals,
announced the receipt of approval from the Food and Drug Administration to
manufacture and market two ophthalmic products, Lotemax(R) and Alrex(TM). Bausch
& Lomb Pharmaceuticals began marketing Lotemax and Alrex in the second quarter
of 1998. Product shipments also began in the second quarter of 1998, when
Pharmos received its initial product revenues from the sales of these products.
Lotemax is a topical, site-specific steroid that is used to treat steroid
responsive inflammatory eye conditions. The prescription eye drop is also used
for post-operative eye inflammations such as experienced following cataract
surgery. Alrex is a specially developed formula of loteprednol etabonate that is
used in the treatment of ophthalmic allergies. Alrex is indicated for the
treatment of seasonal allergic conjunctivitis, an inflammation of the eye
usually caused by pollens.
The regulatory approvals for Lotemax and Alrex are the first two of three
to be sought in the United States for Pharmos' and Bausch & Lomb
Pharmaceuticals' line of ophthalmic products containing loteprednol etabonate.
The third product, LE-T, which combines the active ingredient loteprednol
etabonate with an anti-infective agent, tobramycin, is in final development.
Dexanabinol (HU-211), Pharmos' lead central nervous system product aimed
initially at treating severe head trauma and stroke, is currently in the third
cohort of a Phase II clinical trial for severe head trauma.
Pharmos was incorporated in the State of Nevada in 1982. Pharmos'
executive offices are located at 99 Wood Avenue South, Suite 301, Iselin, New
Jersey 08830, and its telephone number is (732) 452-9556. The Company also
leases facilities used in the operation of its research, development, pilot
manufacturing and administrative activities in Rehovot, Israel.
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The Offering
Common stock offered ................................. 7,000,000 shares
Common stock to be outstanding after the offering..... 49,301,119 shares
Use of proceeds....................................... The proceeds of the
offering will be
used primarily for
research and product
development
activities;
conducting
preclinical studies
and clinical trials;
and the equipping of
facilities.
Nasdaq SmallCap symbol................................ "PARS"
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RISK FACTORS
We are at an early stage of development and may not develop additional
commercial products.
We are at an early stage of development. Apart from Lotemax and Alrex,
which are currently being marketed, most of our other potential products are
early in the research and development phase, and product revenues may not be
realized from the sale of any such products for at least the next several years,
if at all. Many of our proposed products will require significant additional
research and development efforts prior to any commercial use, including
extensive preclinical and clinical testing as well as lengthy regulatory
approval. There can be no assurance that our research and development efforts
will be successful, that our potential products will prove to be safe and
effective in clinical trials or that we will develop any additional commercial
products.
We have a history of operating losses and expect to sustain losses in the future
We have experienced significant operating losses since our inception. As of
March 31, 1999, we had an accumulated deficit of approximately $79 million. We
expect to incur operating losses over the next few years as our research and
development efforts and preclinical and clinical testing activities continue.
Our ability to achieve profitability depends in part upon our ability, alone or
with others, to successfully commercialize our approved products, to complete
development of our other proposed products, to obtain required regulatory
approvals and to manufacture and market our products.
We may be unable to operate as a going concern because we have suffered
recurring losses from operations
Our independent accountants have included an explanatory paragraph stating
that our financial statements have been prepared assuming that we will continue
as a going concern and that we have suffered recurring losses from operations
which causes substantial doubt as to our ability to do so.
We may not be able to obtain financing in the future
Our operations to date have consumed substantial amounts of cash. The
development of our technology and potential products will require a commitment
of substantial funds to conduct the costly and time-consuming research necessary
to develop and optimize our technology, and ultimately, to establish
manufacturing and marketing capabilities. Our future capital requirements will
depend on many factors, including:
o continued scientific progress in the research and development of our
technology and drug programs;
o our ability to establish and maintain collaborative arrangements with
others for drug development;
o progress with preclinical and clinical trials;
o the time and costs involved in obtaining regulatory approvals;
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o the costs involved in preparing, filing, prosecuting, maintaining and
enforcing patent claims;
o competing technological and market developments;
o changes in our existing research relationships; and
o effective product commercialization activities and arrangements.
We believe that our equity line of credit and current cash and cash
equivalents, combined with anticipated cash inflows from revenues, research and
development grants and investment income should be sufficient to fund our
operations through 2000. We are continuing to actively pursue various funding
options, including equity offerings, strategic corporate alliances, business
combinations and product-related research and development limited partnerships,
to obtain the additional financing which we require to continue developing our
products and ultimately bringing them to market. We may not be able to obtain
additional financing when needed.
We are dependent on our collaborative partner and we may need to find additional
partners
Our strategy for the development, clinical testing, manufacturing,
marketing and commercialization of our products includes entering into
collaborations with corporate partners, licensors, licensees and others. To
date, we have entered into agreements with Bausch & Lomb Pharmaceuticals to
manufacture and market Lotemax and Alrex in the United States and throughout
Europe, Canada and selected other countries. The agreements also cover the
co-development of LE-T. We may not be able to negotiate any future collaborative
agreement with Bausch & Lomb Pharmaceuticals or other companies on acceptable
terms, nor can we be sure that any present or future collaborative agreements
will be successful. To the extent we choose not to or are not able to establish
such arrangements, we would experience increased capital requirements. In
addition, we may encounter significant delays in introducing our products
currently under development into certain markets or find that the development,
manufacture, or sale of those products is adversely affected by the absence of
collaborative agreements.
Our technologies are subject to licenses, and termination of the licenses would
seriously harm our business
We have license agreements with YISSUM Research Development Company of the
Hebrew University of Jerusalem and Dr. Nicholas Bodor, a former vice president
and director, under which we have acquired exclusive and co-exclusive rights to
develop and commercialize certain research technologies. The agreements
generally require us to pay royalties on sale of products developed from the
licensed technologies, fees on revenues from sublicensees, where applicable, and
the costs of filing and prosecuting patent applications. In addition, some of
our license agreements require that we commit certain sums annually for research
and development of the licensed products. Should we default on our obligations
to any of our
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licensors, our licenses could terminate, which would have a material adverse
effect on our operations and prospects.
We lack manufacturing capability
We currently do not have manufacturing facilities to produce our products.
Our agreements with Bausch & Lomb Pharmaceuticals provide for the manufacturing
of Lotemax, Alrex and, upon receipt of approvals, LE-T. We provide loteprednol
etabonate to Bausch & Lomb Pharmaceuticals for use in the manufacturing process
through a third-party contract manufacturer. Any delay in availability of
products may result in delay in sales of such products, which would have a
material adverse effect on Pharmos.
We use hazardous materials in our research
Our research and development involves the controlled use of hazardous
materials. Although we believe that our safety procedures for handling and
disposing of hazardous materials comply in all material respects with the
standard prescribed by government regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of an accident, we could be held liable for any damages that result,
and any such liability could exceed our resources.
We face certain risks and are subject to certain restrictions in Israel
A significant part of our operations is conducted in Israel through our
wholly-owned subsidiary, Pharmos Limited, and we are directly affected by
economic, political and military conditions there. In addition, Pharmos Ltd. has
received certain funding from the Office of the Chief Scientist of the Israel
Ministry of Industry and Trade primarily relating to our proprietary submicron
emulsion technology and to dexanabinol. This funding prohibits the transfer or
license of know-how and the manufacture of resulting products outside of Israel
without the permission of the Chief Scientist. Although we believe that the
Chief Scientist does not unreasonably withhold this permission if the request is
based upon commercially justified circumstances and any royalty obligations to
the Chief Scientist are sufficiently assured, there can be no assurance that
such consent, if requested, would be granted upon terms satisfactory to us or
granted at all.
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USE OF PROCEEDS
Except as otherwise described in any applicable prospectus supplement, the
net proceeds from the sale of the shares offered will be used for general
corporate purposes, primarily research and product development activities, and
conducting preclinical studies and clinical trials, and for the equipping of
facilities. Pending application of the proceeds of the offering, Pharmos intends
to invest the net proceeds of the offering in short-term, investment-grade, U.S.
dollar denominated, interest bearing instruments.
The amounts actually expended by Pharmos and the purposes of such
expenditures may vary significantly depending upon numerous factors, including
the progress of research, drug discovery and development programs, the results
of preclinical studies and clinical trials, the timing of regulatory approvals,
technological advances, determinations as to the commercial potential of Pharmos
compounds and the status of competitive products. In addition, expenditures will
also depend upon the establishment of collaborative research arrangements with
other companies, the availability of other financing and other factors.
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BUSINESS
Introduction
Pharmos develops for commercialization enhanced molecular structures for
the ophthalmic, neurological and other key health-care markets. Pharmos' goal is
to improve target molecules in a way that limits or removes undesirable side
effects while retaining each compound's important therapeutic benefits. Pharmos
is developing pharmaceuticals in various fields including: site specific drugs
for ophthalmic indications, neuroprotective agents with a novel mechanism of
action for the treatment of central nervous system disorders, newly designed
molecules to treat cancer, and emulsion-based products for topical and systemic
applications.
In March 1998, Pharmos, together with Bausch & Lomb Pharmaceuticals,
announced the receipt of approval from the Food and Drug Administration to
manufacture and market two ophthalmic products, Lotemax (loteprednol etabonate
ophthalmic suspension 0.5%) and Alrex (loteprednol etabonate ophthalmic
suspension 0.2%). Bausch & Lomb Pharmaceuticals began marketing Lotemax and
Alrex in the second quarter of 1998. Product shipments also began in the second
quarter of 1998, when Pharmos received its initial product revenues from the
sales of these products.
Lotemax is a topical, site-specific steroid that is used to treat steroid
responsive inflammatory eye conditions. The prescription eye drop is also used
for post-operative eye inflammations such as experienced following cataract
surgery. The novel chemical structure of Lotemax allows it to be predictably
transformed by enzymes in the eye to an inactive metabolite, thereby increasing
its safety profile. The safety profile of Lotemax was demonstrated in clinical
trials by a low incidence of elevation in intraocular pressure, a significant
side effect of ophthalmic steroid use. In addition, Lotemax has the broadest
range of approved indications of any ophthalmic steroid on the market.
Alrex is a specially developed formula of loteprednol etabonate that is
used in the treatment of ophthalmic allergies. Alrex is indicated for the
treatment of seasonal allergic conjunctivitis, an inflammation of the eye
usually caused by pollens. Seasonal allergic conjunctivitis produces itching,
tearing, redness and swelling in the conjunctiva, the membrane that covers the
inside of the eyelid and the white part of the eye.
The regulatory approvals for Lotemax and Alrex are the first two of three
to be sought in the United States for Pharmos' and Bausch & Lomb
Pharmaceuticals' line of ophthalmic products containing loteprednol etabonate.
The third product, LE-T, which combines the active ingredient loteprednol
etabonate with an anti-infective agent, is in final development.
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Bausch & Lomb Pharmaceuticals, a subsidiary of the global eye care company,
Bausch & Lomb Incorporated, co-developed Lotemax and Alrex with Pharmos after
Pharmos granted Bausch & Lomb Pharmaceuticals the rights to process and market
the new ophthalmic pharmaceutical line in June 1995. In December 1996, Bausch &
Lomb Pharmaceuticals' rights were extended to select international markets
including Europe and Canada.
Dexanabinol (HU-211), Pharmos' lead central nervous system product aimed
initially at treating severe head trauma and stroke, is currently in the third
cohort of a Phase II clinical trial for severe head trauma. On October 7, 1998,
Pharmos announced the results of the first two of the three cohort Phase II
clinical studies. Highlights of the study included a significant reduction in
intracranial pressure, a reduction in mortality, and a higher percentage of
patients able to resume a normal life among the treated group.
Strategy
Pharmos' business is the design and development of novel drugs with
superior safety and efficacy profiles, initially targeted to ophthalmic and
neurological disorders. Pharmos seeks to enter into collaborative relationships
with established pharmaceutical companies to complete development and
commercialize its products.
Pharmos is developing pharmaceuticals that are designed to address unmet
needs in certain markets and to exhibit superior efficacy and/or safety profiles
over competing products in other markets. For example, many current
anti-inflammatory ophthalmic drugs have either significant side effects, such as
the elevation of intraocular pressure by steroids, or are drugs that are safer,
but only moderately effective at reducing inflammation, such as non-steroidal
anti-inflammatory drugs. For many neurological indications, such as head trauma,
there are no effective drug therapies available.
Pharmos is applying its experience in drug design and its novel drug
delivery technology in developing products directed at several fields including:
site specific drugs for ophthalmic indications, neuroprotective compounds
targeted at specific central nervous system biochemical pathways associated with
neurological indications, and systemic drugs for the treatment of cancer.
Products
Loteprednol Etabonate
Lotemax and Alrex are the trade names of drug products in the form of eye
drop suspensions in which the active compound is loteprednol etabonate.
Loteprednol etabonate is a
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unique steroid, designed to act in the eye and alleviate inflammatory and
allergic conditions, and is quickly hydrolyzed into a predictable inactive
metabolite before it reaches the inner eye or systemic circulation. This
pharmacological profile results in improved safety by avoiding the side effects
related to exposure to most ocular steroids. In the eye, the most unwanted side
effect of steroids is the elevation of intraocular pressure, which can be sight
threatening. While steroids, for lack of an alternative, are regularly used for
severe inflammatory conditions of the eye, milder conditions, such as allergies,
are preferentially treated with less effective non-steroidal agents.
In March 1998, Lotemax received product approval from the FDA for the
treatment of steroid responsive inflammatory conditions of the eye, including
uveitis and for post operative eye inflammation. Also in March 1998, Alrex
received product approval from the FDA for the treatment of seasonal allergic
conjunctivitis. A combination of loteprednol etabonate with the antibiotic
tobramycin for the treatment of inflammatory and infectious indications is in
development. The final clinical trial for LE-T reached full enrollment in
January 1999 and a new drug application filing is expected this year.
In June 1995, Pharmos entered into an agreement with Bausch & Lomb
Pharmaceuticals to market Lotemax, Alrex and LE-T in the United States. A second
agreement, covering Europe, Canada and other selected countries, was signed in
December 1996. Both agreements give Bausch & Lomb Pharmaceuticals the right to
purchase the active component loteprednol etabonate from Pharmos, to manufacture
the "drug product" and to assist Pharmos in developing the products. In 1995,
Pharmos also signed an agreement with PPG-Sipsy, a unit of PPG Industries, Inc.,
for exclusive manufacturing of loteprednol etabonate for sale to Pharmos.
Following FDA approval of Lotemax and Alrex, Bausch & Lomb Pharmaceuticals
commenced product shipments in April 1998, providing Pharmos with its initial
product revenues.
Dexanabinol (HU-211)
Dexanabinol (HU-211) appears to have a unique modality to neuroprotection,
combining three relevant mechanisms of action in a single molecule, which act at
different time points of the neurotoxic process in head trauma, stroke and
potentially other indications.
While head trauma and stroke are the highest priority indications for
dexanabinol, its spectrum of activities has potential as an anti-inflammatory
and protectant in other diseases such as glaucoma, Parkinson's and Alzheimer's
diseases, as well as various other inflammatory conditions. Development of
dexanabinol and other members of this family of compounds for these chronic
indications are being explored at the preclinical level.
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In several animal models, the drug has demonstrated significant
neuroprotective activity. In these studies, a single injection of dexanabinol
given after the injury resulted in a significant long-term functional
improvement and an increase in neuronal survival.
In early 1996, a Phase I study of rising dose tolerance in 50 healthy
volunteers showed dexanabinol to be safe and well tolerated at doses up to and
including the expected therapeutic doses. Specifically, there were no
hallucinations, sedation or blood pressure changes of the type reported with
other glutamate antagonists. In late 1996, Pharmos commenced a Phase II study of
head injured patients, which is targeted for completion in 1999. This study,
conducted at six medical centers in Israel on patients with severe head injury,
was reviewed and approved by the American Brain Injury Consortium and the
European Brain Injury Consortium.
On October 7, 1998, Pharmos announced the results of the first two cohorts
of the three cohort Phase II clinical study involving 67 patients. Clinical
endpoints established an excellent safety profile of the drug in the treated
patients. There were no unexpected adverse experiences reported for either the
drug treated or placebo group. Intracranial pressure above a threshold of 25
mmHg, an important risk factor and a predictor of poor neurological outcome, was
significantly reduced in the drug-treated patients through the third day of
treatment, without concomitant reduction in systolic blood pressure. The
mortality rate of 10% in the dexanabinol group compared favorably with a 13.5%
rate in the placebo group. The investigators concluded that dexanabinol was
shown to be safe and well tolerated in severe head trauma patients.
Neurological outcomes in the study, assessed periodically up to 6 months
after injury, established a strong trend of efficacy. The percentage of patients
able to resume a normal life, the highest score on the five level Glasgow
Outcome Scale used to assess the recovery of head trauma patients, was higher in
the drug-treated group at each measurement. Among the most severely injured
patients in the study, a better outcome was consistently observed among the drug
treated group than among the placebo treated group. Patients received an
intravenous injection of either dexanabinol or placebo within 6 hours of the
injury. Demographically, all 67 patients were fairly representative of the
characteristics describing severe head trauma.
Hormonal Enhanced Molecular Structures
Tamoxifen Enhanced Molecular Structures. Pharmos' anti-cancer program
involves the development of a family of tamoxifen analogs designed to promote
anti-cancer activities but with a significantly lower bloodbrain barrier
penetration level compared to tamoxifen, suggesting a lower incidence of central
nervous system related side effects. The compounds are being studied for the
treatment of breast and other cancers. A tamoxifen analog has demonstrated
significantly higher tumoricidal activity compared to tamoxifen in a model of
human breast cancer in mice.
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Testosterone Enhanced Molecular Structures. Pharmos is also exploring novel
antagonists and agonists of testosterone for the treatment of prostrate cancer,
hair loss, and male hypogonadism. Over 300,000 new cases of prostrate cancer are
diagnosed in the United States alone each year and an estimated 40 million
Americans suffer from some degree of hereditary hair loss. Early attention to
male hypogonadism has been directed at its role in sexual dysfunction, but new
research suggests it plays a part is such disorders as osteoporosis, depression,
glucose intolerance, and anemia, any of which would significantly widen the
number of potential patients who might benefit from new treatments.
Competition
The pharmaceutical industry is highly competitive. Pharmos competes with a
number of pharmaceutical companies that have financial, technical and marketing
resources significantly greater than those of Pharmos. Some companies with
established positions in the pharmaceutical industry may be better equipped than
Pharmos to develop and market products in the markets Pharmos is seeking to
enter. A significant amount of pharmaceutical research is also being carried out
at universities and other not-for-profit research organizations. These
institutions are becoming increasingly aware of the commercial value of their
findings and are becoming more active in seeking patent protection and licensing
arrangements to collect royalties for the use of technology they have developed.
These institutions may also market competitive commercial products on their own
or through joint ventures and will compete with Pharmos in recruiting highly
qualified scientific personnel.
Pharmos is pursuing areas of product development in which there is a
potential for extensive technological innovation. Pharmos' competitors may
succeed in developing products that are more effective than those of Pharmos.
Rapid technological change or developments by others may result in Pharmos'
potential products becoming obsolete or noncompetitive.
Collaborative Relationships
Pharmos' commercial strategy is to develop products independently and,
where appropriate, in collaboration with established pharmaceutical companies
and institutions. Collaborative partners may provide financial resources,
research and manufacturing capabilities and marketing infrastructure to aid in
the commercialization of Pharmos' products in development and potential future
products. Depending on the availability of financial, marketing and scientific
resources, among other factors, Pharmos may license its technology or products
to others and retain profit sharing, royalty, manufacturing, co-marketing, co-
promotion or similar rights. Any such arrangements could limit Pharmos'
flexibility in pursuing alternatives for the commercialization of its products.
There can be no assurance that Pharmos will establish any additional
collaborative arrangements or that, if established, any such relationships will
be successful.
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Bausch & Lomb Pharmaceuticals
In 1995, Pharmos signed a definitive agreement with Bausch & Lomb
Pharmaceuticals to complete manufacturing, package and market Lotemax and Alrex,
Pharmos' lead products, in the United States upon receipt of FDA approval. The
agreement also includes LE-T, currently being co-developed by Pharmos and Bausch
& Lomb Pharmaceuticals. A second agreement signed in 1996, extends Bausch & Lomb
Pharmaceuticals' rights to market these products in Europe, Canada and other
selected countries pending regulatory approval.
Under the agreements, Bausch & Lomb Pharmaceuticals will purchase the
active drug substance from Pharmos. Bausch & Lomb Pharmaceuticals provided
Pharmos with $5 million in cash advances against future sales of drug substance,
of which approximately $700,000 has been repaid as of March 31, 1999. Another $1
million is due subject to receiving regulatory approval for loteprednol
etabonate-tobramycin in the United States. An additional $1.6 million in
advances against future sales of Bausch & Lomb Pharmaceuticals will be payable
to Pharmos following receipt of regulatory clearance in certain markets outside
of the United States. Bausch & Lomb Pharmaceuticals collaborates in the
development of these products by making available amounts up to 50% of their
Phase III clinical trial costs. Pharmos retains certain conditional co-marketing
rights in the U.S. to all of the products covered by the marketing agreement.
In a separate agreement completed in 1996, Bausch & Lomb Pharmaceuticals
made a $2 million investment in the common stock of Pharmos.
Patents, Proprietary Rights and Licenses
Patents and Proprietary Rights
Pharmos owns or holds licenses to 24 families of issued patents and pending
applications relating to its four main technologies:
Site-Specific Drugs. There are three families of patents covering
site-specific drugs, which include the loteprednol etabonate-based products.
Pharmos has licensed two families of patents covering the compounds from Dr.
Nicholas Bodor; the third, relating to the formulation of the drugs, is owned by
Pharmos. The loteprednol etabonate compound is covered in a U.S. patent issued
in 1991. The formulation sold as Lotemax is covered in a U.S. patent issued in
1996. Related patent applications are at various stages of prosecution.
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Neuroprotective Agents. Six families of patents relating to neuroprotective
agents, which cover dexanabinol, analogs of dexanabinol and the use of these
compounds for neuroprotection, are licensed from the Hebrew University. The use
of dexanabinol and its analogs for neuroprotection is covered by several patents
issued beginning in 1994. Related patent applications are at various stages of
prosecution.
Tamoxifen Analogs. Two families of patents relating to tamoxifen analogs
are owned by Pharmos and cover the novel charged derivatives of steriods and
steriod antagonists, as well as the use of these compounds in the treatment and
prevention of cancer and as anti-angiogenic agents. A United States patent was
issued in 1997. Related patent applications are at various stages of
prosecution.
Emulsion-based Drug Delivery Systems. Thirteen families of patents relate
to submicron emulsions and nanoemulsions and cover a broad range of formulations
as drug delivery systems. The first family of patents covers submicron emulsion
technology and is licensed from the Hebrew University. The other patent families
are owned by Pharmos. The earliest issuance date, for those patents issued, is
1992. Related patent applications are at various stages of prosecution.
The patent positions of pharmaceutical firms, including Pharmos, are
uncertain and involve complex factual questions. In addition, the coverage
claimed in a patent application can be significantly reduced before or after the
patent is issued. Consequently, Pharmos does not know whether any of the pending
patent applications underlying the licensed technology will result in the
issuance of patents or, if any patents are issued, whether they will provide
significant proprietary protection or will be circumvented or invalidated. Since
patent applications in the United States are maintained in secrecy until patents
issue and since publication of discoveries in the scientific or patent
literature often lag behind actual discoveries, Pharmos cannot be certain that
it or its licensors, as the case may be, were the first creators of inventions
covered by pending and issued patents or that it or its licensors, as the case
may be, were the first to file patent applications for such inventions.
Moreover, Pharmos may have to participate in interference proceedings declared
by the United States Patent and Trademark Office to determine priority of
invention, which could result in substantial cost to Pharmos, even if the
eventual outcome is favorable to Pharmos. There can be no assurance that the
patents relating to the licensed technology, if issued, will be upheld by a
court of competent jurisdiction or that a competitor's product will be found to
infringe such patents.
Other pharmaceutical and drug delivery companies and research and academic
institutions may have filed patent applications or received patents in Pharmos'
fields. If patents are issued to other companies that contain competitive or
conflicting claims and such claims are ultimately determined to be valid, there
can be no assurance that Pharmos would be able to obtain licenses to these
patents at a reasonable cost or be able to develop or obtain alternative
technology.
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Pharmos also relies upon trade secret protection for its confidential and
proprietary information. There can be no assurance that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to Pharmos's trade secrets.
It is Pharmos's policy to require its employees, consultants, outside
scientific collaborators and sponsored researchers and other advisors to execute
confidentiality agreements upon the commencement of employment or consulting or
advisory relationships with Pharmos. These agreements generally provide that all
confidential information developed or made known to the individual during the
course of the individual's relationship with Pharmos is to be kept confidential
and not disclosed to third parties except in specific circumstances. In the case
of employees and certain consultants, the agreements provide that all inventions
conceived by the individual in the course of their employment or consulting
relationship shall be the exclusive property of Pharmos. There can be no
assurance, however, that these agreements will provide meaningful protection or
adequate remedies for Pharmos's trade secrets in the event of unauthorized use
or disclosure of such information.
Licenses
Pharmos's license agreements generally require Pharmos, as licensee, to pay
royalties on sale of products developed from the licensed technologies, and fees
on revenues Pharmos receives for sublicenses, where applicable. The royalty
rates defined in the licenses are customary and usual in the pharmaceutical
industry. The royalties will be payable for periods up to fifteen years from the
date of certain specified events, including the date of the first sale of such
products, or the date from which the first registered patent from the developed
technologies is in force, or the year following the date in which FDA approval
has been received for a developed product. Certain of the license agreements
also require annual payments.
Government Regulation
Pharmos's activities and products are significantly regulated by a number
of governmental entities, especially the FDA, in the United States and by
comparable authorities in other countries. These entities regulate, among other
things, research and development activities and the testing, manufacture,
safety, effectiveness, labeling, storage, record keeping, approval, advertising,
promotion, distribution and sale of Pharmos's potential products. Product
development and approval within this regulatory framework take a number of years
and involve the expenditure of substantial resources. Many products that appear
promising initially ultimately do not reach the market because they are found to
be unsafe or to lack effectiveness, as demonstrated by testing required by
government regulation during the development process. In addition, there can be
no assurance that this regulatory framework
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will not change or that additional regulation will not arise at any stage of
Pharmos's product development that may preclude or otherwise adversely affect
approval, delay an application or require additional expenditures by Pharmos.
Moreover, even if approval is obtained, failure to comply with present or future
regulatory requirements, or new information adversely reflecting on the safety
or effectiveness of the approved drug, can lead to FDA withdrawal of approval to
market the product.
To develop and market its potential products abroad, Pharmos is also
subject to numerous and varying foreign regulatory requirements, implemented by
foreign health authorities, governing, among other things, the design and
conduct of human clinical trials, pricing and marketing. 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. At
present, foreign marketing authorizations are applied for at a national level,
although within the European Union certain registration procedures are available
to companies wishing to market a product in more than one European Union member
country. If a regulatory authority is satisfied that adequate evidence of
safety, quality and efficacy has been presented, marketing authorization is
almost always granted. The foreign regulatory approval process includes all of
the risks associated with obtaining FDA approval set forth above. Approval by
the FDA does not ensure approval by other countries.
Human Resources
As of May 31, 1999, Pharmos had 41 full time employees, 7 in the U.S. and
34 in Israel, of whom 14 hold doctorate or medical degrees.
Pharmos's employees are not covered by a collective bargaining agreement.
Pharmos has never experienced employment-related work stoppages and considers
its employee relations to be excellent.
Public Funding and Grants
Pharmos's subsidiary, Pharmos Ltd., has received certain funding from the
Chief Scientist of the Israel Ministry of Industry and Trade primarily for
research and development of dexanabinol as a neuroprotective drug for head
trauma and stroke. Additional grants were received in the past for research and
development of technology for injection and nutrition, as well as for research
relating to a variety of ophthalmic formulations. Each of the projects sponsored
by the Chief Scientist has been suspended, with the exception of the dexanabinol
project. Pharmos has received a total of $3,813,565 under such agreements
through March 31, 1999, of which $2,249,555 was received for the dexanabinol
project. Pharmos is required to pay royalties to the Chief Scientist of 2% to 5%
of product sales, if any, as a result of the research activities conducted with
such funds. Aggregate royalty payments are limited to the
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amount of funding received. In 1997, Pharmos joined a five year program under
the Chief Scientist, the "MAGNET" program, pursuant to which Pharmos has
received a total of $638,230 through March 31, 1999. Funds received under the
MAGNET program are not subject to the royalty requirement. Funding by the Chief
Scientist places certain legal restrictions on the transfer of know-how and the
manufacture of resulting products outside of Israel.
Properties
Pharmos is headquartered in Iselin, New Jersey where it leases its general
administrative facilities. Pharmos also leases facilities used in the operation
of its research, development, pilot manufacturing and administrative activities
in Rehovot, Israel. These facilities have been improved to meet the special
requirements necessary for the operation of Pharmos's research and development
activities. In the opinion of the management these facilities are sufficient to
meet the current and anticipated future requirements of Pharmos. In addition
management believes that it has sufficient ability to renew its present leases
related to these facilities or obtain suitable replacement facilities.
Legal Proceedings and Disputes
There are currently no material legal proceedings pending against or
involving Pharmos.
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DESCRIPTION OF SECURITIES
Common Stock
The common stock being offered hereby is fully described in Pharmos'
Registration Statement on Form 8-A dated January 30, 1984, filed pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended.
Pharmos' restated articles of incorporation currently authorize the
issuance of up to 60,000,000 shares of common stock. As of June 11, 1999, there
were 42,301,119 shares outstanding.
Preferred Stock
Pharmos' restated articles of incorporation currently authorize the
issuance of up to 1,250,000 shares of preferred stock. Of the authorized
preferred stock, no shares, designated as Series A or Series B preferred stock,
are currently outstanding. 200 shares, designated as Series C preferred stock,
are currently issued and outstanding. The Series C preferred stock was issued in
connection with a private placement transaction in February 1998. Holders of
Series C preferred stock have the right to convert their shares at the lower of
(i) 90% of the average of the lowest sale price of the common stock for the five
consecutive trading days ending on the trading day immediately preceding the
conversion date or (ii) $2.891. For a complete description of the rights of
holders of Series C preferred stock, see Pharmos' Current Report on Form 8-K,
including the exhibits thereto, dated February 4, 1998.
The Board of Directors may, without the necessity of further action or
authorization by the stockholders, authorize the issuance of preferred stock
from time to time in one or more series and to fix the relative rights,
preferences and limitations of each such series. The issuance of preferred stock
could adversely affect the voting power of holders of common stock and the
likelihood that such holders will receive dividend payments and payments upon
liquidation and could have the effect of delaying, deferring or preventing a
change in control of Pharmos. Pharmos has no present plan to issue any
additional shares of preferred stock.
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Other Securities--Options and Warrants
As of June 11, 1999, Pharmos had outstanding incentive stock options to
purchase an aggregate of 1,322,336 shares of common stock at an average exercise
price of $2.19 per share and non-qualified stock options to purchase an
aggregate of 613,432 shares of common stock at an average exercise price of
$2.32 per share issued to employees, directors and consultants pursuant to stock
option plans and individual agreements with management and directors of Pharmos
and warrants to purchase 4,449,284 shares of common stock at an average price of
$1.98 per share. The following table summarizes all outstanding warrants.
Issue Date Expiration Date No. Warrants Exercise Price
---------- --------------- ------------ --------------
Aug-93 Aug-99 482,235 $ 2.51
Oct-93 Sep-99 65,044 $ 2.26
Jun-94 Oct-99 150,000 $ 0.84
Apr-95 Apr-05 500,000 $ 2.75
Apr-95 Apr-05 10,000 $ 0.78
May-95 Apr-00 7,119 $ 0.75
May-95 Apr-00 17,119 $ 1.00
May-95 Apr-00 17,119 $ 1.50
Sep-95 Sep-00 821,489 $ 1.80
Oct-95 Oct-01 10,000 $ 1.88
Mar-96 Mar-02 15,000 $ 2.31
Sep-96 Sep-07 50,000 $ 1.75
Sep-96 Sep-07 65,000 $ 1.34
Nov-96 Nov-02 10,000 $ 1.39
Feb-97 Feb-03 90,000 $ 1.59
Feb-97 Feb-07 845,750 $ 1.59
Mar-97 Mar-01 159,000 $ 1.75
Mar-97 Mar-08 239,473 $ 1.38
Apr-97 Apr-03 15,000 $ 1.22
Feb-97 Sep-99 20,000 $ 1.59
Mar-97 Mar-07 10,000 $ 1.66
Jan-98 Oct-05 22,000 $ 2.22
Feb-98 Jan-03 511,838 $ 2.61
Feb-98 Jan-03 152,974 $ 2.24
Dec-98 Dec-01 18,824 $ 1.95
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Dec-98 Dec-01 18,113 $ 2.11
Jan-99 Feb-02 18,462 $ 1.99
Feb-99 Feb-02 20,862 $ 1.72
Mar-99 Mar-02 46,838 $ 1.41
Apr-99 Apr-02 20,509 $ 1.56
May-99 May-02 19,516 $ 1.60
Nevada Anti-Takeover Laws
Pharmos is subject to the provisions of Sections 78.411 through 78.444 of
the Nevada Law, an anti-takeover statute. In general, the statute prohibits a
publicly-held Nevada corporation from engaging in a "combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless such
combination is approved in a prescribed manner or satisfies certain fair value
requirements. For the purposes of the statute, "combination" includes a merger,
an asset sale, the issuance or transfer by the corporation of its shares in one
transaction or a series of transactions, having an aggregate fair market value
equal to five percent or more of the aggregate market value of the corporation's
outstanding shares, to the interested stockholder or to an associate of the
interested stockholder, and certain other types of transactions resulting in a
financial benefit the interested stockholder. An "interested stockholder" is a
person who is the beneficial owner, directly or indirectly, of ten percent or
more of the corporation's voting stock or an affiliate or associate of the
corporation that at any time within the three years immediately preceding the
date in question was the beneficial owner, directly or indirectly, of ten
percent or more of the corporation's voting stock.
By an amendment to its by-laws, Pharmos has exempted itself from the
provisions of Sections 78.378 through 78.3793 of the Nevada Law, a "control
share" statute which otherwise prohibits an acquiring person, under certain
circumstances, from voting certain shares of a target corporation's stock after
such acquiring person's percentage of ownership of such corporation's stock
crosses certain thresholds, unless the target corporation's disinterested
stockholders approve the granting of voting rights to such shares.
Transfer Agent and Registrar
The transfer agent and registrar for Pharmos' common stock is American
Stock Transfer and Trust Company, New York, New York.
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PLAN OF DISTRIBUTION
The shares offered hereby may be sold by Pharmos on a negotiated or
competitive bid basis through underwriting syndicates represented by managing
underwriters or by underwriters without a syndicate, dealers or agents
designated from time to time, or directly to other purchasers. The distribution
of the shares offered hereby may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. To the extent required, any Prospectus
Supplement with respect to the shares will set forth the terms of the offering
and the proceeds to Pharmos from the sale thereof, any underwriting discounts
and other items of price, and any discounts or concessions allowed or reallowed
or paid to dealers. Any public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
If underwriters are utilized, the shares being sold to them will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price, or at varying prices determined at the time of
sale. The shares may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. To the extent required, the underwriter or
underwriters with respect to the shares being offered by Pharmos will be named
in the Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover page of such Prospectus Supplement. Any underwriting agreement will
provide that the obligations of the underwriters are subject to certain
conditions precedent.
If a dealer is utilized in the sale of the shares, Pharmos will sell the
common stock to the dealer as principal. The dealer may then resell the common
stock to the public at varying prices to be determined by the dealer at the time
of sale. To the extent required, any dealer involved in the offer or sale of the
shares in respect of which this Prospectus is delivered will be set forth in the
Prospectus Supplement.
The shares may be sold directly by Pharmos or through agents designated by
Pharmos from time to time. To the extent required, any agent involved in the
offer or sale of the shares in respect of which this Prospectus is delivered
will be set forth in the Prospectus Supplement. Unless otherwise indicated in
the Prospectus Supplement, any such agent will be acting on a best efforts basis
for the period of its appointment.
Any underwriters, dealers and agents that participate in the distribution
of the common stock may be deemed to be underwriters as the term is defined in
the Securities Act of 1933, as amended, and any discounts or commissions
received by them from Pharmos and any
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profits on the resale of the common stock by them may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements that may be entered into
with Pharmos to indemnification against or to contribution toward certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments that the underwriters, dealers or agents may be
required to make in respect of such liabilities.
Underwriters, dealers and agents may engage in other transactions with or
perform other services for Pharmos. To the extent required, any such
relationships will be set forth in a Prospectus Supplement.
COMMISSION'S POLICY ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Article 12 of Pharmos's restated articles of incorporation directs Pharmos
to provide in its bylaws for provisions relating to the indemnification of
directors and officers to the full extent permitted by law, including the
federal securities law. Section 78.751 of the Nevada Revised Statutes, as
amended, authorizes Pharmos to indemnify any director or officer under certain
prescribed circumstances and subject to certain limitations against certain
costs and expenses, including attorneys' fees actually and reasonably incurred
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which such person is a party by reason of
being a director or officer of Pharmos if it is determined that such person
acted in accordance with the applicable standard of conduct set forth in such
statutory provisions. Pharmos may also purchase and maintain insurance for the
benefit of any director or officer which may cover claims for which Pharmos
could not indemnify such person.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of Pharmos, or
to underwriters (or controlling persons thereof) of which an officer, partner,
or controlling person thereof is one of the foregoing pursuant to the foregoing
provisions or otherwise, Pharmos 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 Pharmos of expenses incurred or paid by any such persons, in the
successful defense of any action, suit or proceeding) is asserted by any such
persons in connection with the securities being registered, Pharmos will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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LEGAL OPINIONS
Legal matters in connection with the securities being offered hereby will
be passed upon for Pharmos by Ehrenreich Eilenberg Krause & Zivian LLP, 11 East
44th Street, 17th Floor, New York, NY 10017.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of Pharmos Corporation for the year ended
December 31, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
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PHARMOS CORPORATION
Available Information 3
Incorporation of Certain Documents by Reference 3
Special Note Regarding Forward-Looking Information 4
Prospectus Summary 5
Risk Factors 7
Use of Proceeds 10
Business 11
Description of Securities 21
Plan of Distribution . 24
Commission's Policy on Indemnification For Securities Act Liabilities 25
Legal Matters 26
Experts 26
____________, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated expenses in connection
with the offering described in the Registration Statement (all of which will be
borne by Pharmos).
Securities and Exchange Commission Fee $ 2,647
Printing and Engraving Expenses* 5,000
Accountants' Fees and Expenses* 7,500
Legal Fees and Expenses* 10,000
Blue Sky Filing Fees* 3,000
Miscellaneous* 1,853
-------
TOTAL* $30,000
=======
*estimated
Item 15. Indemnification of Directors and Officers.
Article 12 of the Registrant's Certificate of Incorporation directs the
Registrant to provide in its bylaws for provisions relating to the
indemnification of directors and officers to the full extent permitted by law.
Section 78.751 of the Nevada Revised Statutes, as amended, authorizes the
Registrant to indemnify any director or officer under certain prescribed
circumstances and subject to certain limitations against certain costs and
expenses, including attorneys' fees actually and reasonably incurred in
connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which such person is a party by reason of
being a director or officer of the Registrant if it is determined that such
person acted in accordance with the applicable standard of conduct set forth in
such statutory provisions.
The Registrant may also purchase and maintain insurance for the benefit of
any director or officer which may cover claims for which the Registrant could
not indemnify such person.
Item 16. Exhibits
4(a) Specimen of Common Stock Certificate (incorporated by reference
to Form S-3 Registration Statement of Pharmos dated November 25,
1994 [No. 33-86720])
4(b) Restated Articles of Incorporation (incorporated by reference to
Appendix E to the Joint Proxy Statement/ Prospectus included in
the Form S-4 Registration Statement of the Registrant dated
September 28, 1992 [No. 33-52398])
4(c) Certificate of Amendment of Restated Articles of Incorporation
(incorporated by reference to Pharmos's Annual Report on Form
10- K for the year ended December 31, 1994 [No. 0-11550])
4(d) Certificate of Amendment of Restated Articles of Incorporation
dated January 16, 1998 (incorporated by reference to Form S-3
Registration Statement of Pharmos dated March 5, 1998
[333-47359])
4(e) Certificate of Designation, Rights, Preferences and Privileges
of Series A Preferred Stock of Pharmos (incorporated by
reference to Form S-3 Registration Statement of Pharmos dated
December 20, 1996 [No. 333-15165])
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4(f) Certificate of Designation, Rights, Preferences and Privileges
of Series B Preferred Stock of Pharmos (incorporated by
reference to Form S-3 Registration Statement of Pharmos dated
April 30, 1997 [No. 333- 26155])
4(g) Certificate of Designation, Rights, Preferences and Privileges
of Series C Convertible Preferred Stock of Pharmos (incorporated
by reference to Pharmos's Current Report on Form 8-K filed on
February 4, 1998)
4(h) Amended and Restated By-Laws (incorporated by reference to Form
S-1 Registration Statement of Pharmos dated June 30, 1994 [No.
33- 80916])
**5 Opinion re: legality
23(a) Consent of Ehrenreich Eilenberg Krause & Zivian LLP (included in
the Opinion filed as Exhibit 5)
**23(b) Consent of PricewaterhouseCoopers LLP
- ----------
** Filed herewith.
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;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that Paragraphs (i) and (ii) above do not apply if the
Registration Statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed 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.
(4) That, for the purpose of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to 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 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has
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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.
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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 City of Iselin and State of New Jersey on the 15th day of
June, 1999.
PHARMOS CORPORATION
By: /s/ Dr. Haim Aviv
------------------------------------
Dr. Haim Aviv, Chairman, Chief
Scientist, Chief Executive Officer
and Director (Principal Executive
Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement or amendment has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Robert W. Cook Chief Financial Officer June 15, 1999
- ---------------------------- (Principal Financial
Robert W. Cook and Accounting Officer)
/s/ Dr. Gad Riesenfeld President, Chief Operating June 15, 1999
- ---------------------------- Officer and Acting Secretary
Dr. Gad Riesenfeld
/s/ Marvin P. Loeb Director June 15, 1999
- ----------------------------
Marvin P. Loeb
/s/ E. Andrews Grinstead III Director June 15, 1999
- ----------------------------
E. Andrews Grinstead III
/s/ Stephen C. Knight Director June 15, 1999
- ----------------------------
Stephen C. Knight
/s/ David Schlachet Director June 15, 1999
- ----------------------------
David Schlachet
/s/ Anthony Georges Marcel Director June 15, 1999
- ----------------------------
Anthony Georges Marcel
/s/ Mony Ben Dor Director June 15, 1999
- ----------------------------
Mony Ben Dor
/s/ Stephan Guttman Director June 15, 1999
- ----------------------------
Stephan Guttman
II-4
<PAGE>
Exhibit 5
EHRENREICH EILENBERG KRAUSE & ZIVIAN LLP
June 15, 1999
Pharmos Corporation
99 Wood Avenue South, Suite 301
Iselin, New Jersey 08830
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 (the "Registration
Statement") to be filed by you with the Securities and Exchange Commission in
connection with the offer by Pharmos Corporation ("Pharmos") to sell up to
7,000,000 shares (the "Shares") of the Common Stock, par value $.03 per share
(the "Offering"). As your counsel in connection with the Offering and sale of
the Shares, we have examined the originals, or photostatic or certified copies,
of such records of Pharmos, certificates of Pharmos and of public officials and
such other matters and documents as we have deemed necessary or relevant as a
basis for this opinion.
Based on these examinations, it is our opinion that the Shares, when issued upon
payment therefor, will be validly issued, fully paid and non-assessable shares
of Common Stock of Pharmos.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to this firm under the caption
"Legal Opinions" in the Prospectus forming a part of the Registration Statement.
Very truly yours,
EHRENREICH EILENBERG KRAUSE & ZIVIAN LLP
/s/ Ehrenreich Eilenberg Krause & Zivian LLP
--------------------------------------------
<PAGE>
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Pharmos Corporation
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 1, 1999 relating to the
financial statements which appear in Pharmos Corporation's Annual Report on Form
10-K for the year ended December 31, 1998. We also consent to the reference to
us under the heading "Experts" in such Registration Statement.
/S/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
New York, New York
June 15, 1999
