As filed with the Securities and Exchange Commission on September __ , 2000
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)
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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)
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Copies to:
ADAM D. EILENBERG, ESQ.
Ehrenreich Eilenberg & Krause 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. |__|
<PAGE>
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 Share Offering Price Fee
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.03 821,515 $3.25(1) $2,669,924 $705
per share
Common Stock, par value $.03 379,856 $6.08 $2,309,525 $610
per share, issuable upon
exercise of warrants
Common Stock, par value $.03 227,914(2) $3.25(1) $740,721 $196
per share, issuable upon
exercise of adjustment
warrants
Common Stock, par value $.03 2,086,390 $3.83 $7,990,874 $2,110
per share, issuable upon
conversion of principal
amount of debentures
Common Stock, par value $.03 1,251,834(3) $3.25(1) $4,068,461 $1,075
per share, issuable upon
conversion of accrued
interest on debentures
Common Stock, par value $.03 547,945(4) $3.65(4) $2,000,000 $528
per share, issuable upon
exercise of call warrants
Common Stock, par value $.03 328,767(5) $3.25(1) $1,068,493 $283
per share, issuable upon
exercise of call adjustment
warrants
Common Stock, par value $.03 95,843 $4.56 $437,045 $116
per share, issuable upon
exercise of placement agent
warrants (6)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Common Stock, par value $.03 92,086 $4.34 $399,654 $106
per share, issuable upon
exercise of placement agent
warrants (7)
Common Stock, par value $.03 40,000 $3.25(1) $130,000 $35
per share, issuable upon
exercise of consulting
warrants (7)
Total $5,764
</TABLE>
(1) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the securities Act based upon the average of
the high and low sales prices of the company's common stock on September
25, 2000, as reported by the Nasdaq SmallCap Market.
(2) Calculated based upon the requirement set forth in a registration rights
agreement between the company and the selling security holders that the
company register 160% of the number of shares issuable upon exercise of the
warrants.
(3) Calculated based upon the requirement set forth in a registration rights
agreement between the company and the selling security holders that the
company register 160% of the number of shares issuable upon conversion of
the principal amount of the debentures.
(4) Calculated based upon the minimum exercise price for the call warrants,
which are exercisable for an aggregate of $2 million of shares of common
stock at fluctuating prices based on the market price of the company's
common stock on the five trading days preceding each exercise.
(5) Calculated based upon the requirement set forth in a registration rights
agreement between the company and the selling security holders that the
company register 160% of the number of shares issuable upon exercise of the
call warrants.
(6) Issued to Ladenburg Thalmann & Co. Inc.
(7) Issued to SmallCaps OnLine LLC.
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.
<PAGE>
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 SEPTEMBER 27, 2000
PROSPECTUS
PHARMOS CORPORATION
5,872,150 SHARES OF COMMON STOCK
Certain of our security holders may offer, from time to time, up to
5,872,150 shares of our common stock which are covered by this prospectus,
including 821,515 shares that are currently outstanding. The remainder of the
shares covered by this prospectus may be acquired by the selling security
holders in the future, including up to 1,712,411 shares that may be acquired
upon exercise of certain warrants and up to 3,338,224 shares that may be
acquired upon conversion of certain convertible debentures. Because the terms of
certain of the warrants and the debentures allow for adjustments in the numbers
of shares issuable upon their exercise or conversion, we do not know the actual
number of shares that will be acquired and offered by the selling security
holders. The number of shares covered by this prospectus includes a good faith
estimate of the number of shares that will be acquired by the selling security
holders upon exercise of the warrants and conversion of the debentures. The
number of shares covered by this prospectus may, however, differ from the actual
number of shares ultimately acquired and offered by the selling security
holders, in which case we may file an amendment or supplement to this
prospectus. Pharmos Corporation itself is not offering any shares.
The selling security holders may, from time to time, sell shares:
o through the Nasdaq SmallCap Market, in the over-the-counter market, in
privately-negotiated transactions or otherwise;
o directly to purchasers or through agents, brokers, dealers or underwriters;
and
o at market prices prevailing at the time of sale, at prices related to the
prevailing market prices, or at negotiated prices.
Our common stock is traded and quoted on the Nasdaq SmallCap Market under
the symbol "PARS" The closing price of the common stock on September 26, 2000
was $3.125.
<PAGE>
You should read this prospectus and any supplements carefully before you
invest. See the section entitled "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 September 27, 2000.
<PAGE>
TABLE OF CONTENTS
Available Information 4
Incorporation of Certain Documents by Reference 5
Special Note Regarding Forward-Looking Information 5
The Company 6
Risk Factors 7
Use of Proceeds 10
Business 10
Description of Securities 24
Selling Security Holders 27
Plan of Distribution . 28
Commission's Policy on Indemnification For Securities Act Liabilities 28
Legal Matters 29
Experts 29
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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 that 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.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Pharmos with the Commission are
incorporated in this prospectus by reference:
o our Annual Report on Form 10-K for the fiscal year ended December 31, 1999;
o our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000
and June 30, 2000;
o our Current Report on Form 8-K filed on September 11, 2000; and
o the description of the common stock contained in the Registration Statement
on Form 8-A dated January 30, 1984 of our predecessor, Pharmatec, Inc.
All documents filed by us 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 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
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<PAGE>
Operations -- Certain Factors That May Affect Future Results" in our 1999 10-K
and those set forth in the section entitled "Risk Factors."
THE COMPANY
Pharmos develops and commercializes products with 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's and Bausch & Lomb
Pharmaceuticals's line of ophthalmic products containing loteprednol etabonate.
The third product, which combines the active ingredient loteprednol etabonate
with an anti-infective agent, is in final development.
Dexanabinol, Pharmos's lead central nervous system product aimed initially
at treating severe head trauma and stroke, has completed the third cohort of a
Phase II clinical trial for severe head trauma. Pharmos expects to commence an
international pivotal trial of several hundred patients before the end of this
year.
Pharmos was incorporated in the State of Nevada in 1982. Pharmos's
executive offices are located at 99 Wood Avenue South, Suite 301, Iselin, New
Jersey 08830, and its telephone number is (732) 452-9556. Pharmos also leases
facilities used in the operation of its research, development, pilot
manufacturing and administrative activities in Rehovot, Israel.
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<PAGE>
RISK FACTORS
We are at an early stage of development
We are at an early stage of development. Apart from Lotemax, Alrex and a
third opthalmic product in final development, 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 commercially
successful 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
June 30, 2000, we had an accumulated deficit of approximately $85 million. We
expect to incur operating losses over the next several 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 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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<PAGE>
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 our 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 continuing operations for at least the
next three years. 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 that may be required to continue developing our products
and ultimately bringing them to market. We may not be able to obtain additional
financing when needed, if at all.
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 a combination of loteprednol etabonate and the anti-infective
tobramycin. We cannot 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. In addition, if our collaborative partner is unable or
unwilling to meet its payment obligations to us under the agreements, it could
negatively affect our cash position.
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 with 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 the 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
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obligations to any of our 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, loteprednol etabonate -
tobramycin. 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.
Although we have insurance coverage for third-party liabilities of $5 million
per incident, any such liability beyond this insuranve coverage 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 Ltd., 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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<PAGE>
USE OF PROCEEDS
We received an aggregate of $3 million from the sale of 821,515 shares of
common stock and $8 million from the sale of convertible debentures in two
private placement transactions concluded on September 1, 2000. We are using the
net proceeds from the sales of those securities for working capital purposes,
and specifically to fund the late-stage development of Dexanabinol, our lead
central nervous system product, for the treatment of severe head trauma, as well
as for our ongoing research and development activities relating to drug
discovery and drug development. To the extent that this prospectus covers the
sale by our security holders of the shares of common stock issued on September
1, 2000 and shares issuable upon the conversion of the convertible debentures,
upon the exercise of certain adjustment warrants or as a result of other
required adjustments, Pharmos will not receive any proceeds from the sales of
those shares.
This prospectus also covers the sale by certain of our security holders of
shares of common stock issuable upon the exercise of other warrants issued in
the September 1, 2000 private placement transactions. Although Pharmos will not
receive any proceeds from the sale of those shares of common stock, we will
receive an aggregate of $ 4,309,525 upon the exercise of the warrants underlying
those shares. Pharmos similarly intends to use the proceeds from the exercise of
those warrants for working capital purposes, and specifically for our ongoing
drug discovery and drug development research and development activities.
BUSINESS
Introduction
Pharmos Corporation (the "Company") is a bio-pharmaceutical company that
develops and commercializes products for the ophthalmic, central nervous system,
neurological and other key healthcare markets. Pharmos has a diverse product
pipeline that includes marketed products with superior therapeutic indices and
drug candidates with enhanced molecular structures that display improved safety
and/or efficacy compared to the parent molecules or to competing products.
Pharmos, together with Bausch & Lomb Pharmaceuticals, Inc. ("BLP"),
received approval from the Food and Drug Administration ("FDA") to manufacture
and market two ophthalmic products, Lotemax(R) (loteprednol etabonate ophthalmic
suspension 0.5%) and Alrex(R) (loteprednol etabonate ophthalmic suspension 0.2%)
in March 1998. BLP 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. In
December 1999, the Company announced that a filing to market loteprednol
etabonate 0.5% ophthalmic suspension for ophthalmic inflammatory indications in
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the United Kingdom has been submitted to the Medicines Control Agency, the drug
regulatory agency in the U.K. Upon approval, the product will be submitted by
BLP and Pharmos for approval in other European countries through a Mutual
Recognition procedure. When launched, the product will be marketed under the
Loterox(TM) tradename in the U.K.
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 ("IOP"),
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 our and BLP's line of ophthalmic products
containing loteprednol etabonate. The third product, which combines the active
ingredient loteprednol etabonate with an anti-infective agent, is in final
development.
BLP, a subsidiary of the global eye care company, Bausch & Lomb
Incorporated, co-developed Lotemax and Alrex with us after we granted BLP the
rights to process and market the new ophthalmic pharmaceutical line in June
1995. In December 1996, BLP's rights were extended to select international
markets including Europe and Canada.
Dexanabinol, Pharmos's lead CNS product aimed initially at treating severe
head trauma and stroke, has completed a Phase II escalating-dose clinical trial
for severe head trauma. On March 7, 2000 Pharmos announced the results of the
third cohort of the Phase II Clinical Study. The study concluded that the Phase
II goals of establishing the safety of dexanabinol in TBI and the dosing
parameters for a pivotal study were met, allowing for the commencement of an
international pivotal trial of several hundred patients later this year. In
October 1998, Pharmos announced the results of the first two of the three cohort
Phase II Clinical Study. Highlights of this study included a significant
reduction in intracranial pressure, a 26% reduction in mortality, and a higher
percentage of patients able to resume a normal life ("Good Neurological
Outcome") among the treated group.
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Strategy
Pharmos's business is the design and development of novel drugs with
superior safety and efficacy profiles, initially targeted to ophthalmic and
neurological disorders. The Company 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 IOP by steroids, or are drugs that are safer, but only
moderately effective at reducing inflammation, such as non-steroidal
anti-inflammatory drugs ("NSAIDs"). For many neurological indications, such as
head trauma, there are no effective drug therapies available.
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 ("LE").
LE is a 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 IOP, 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.
LE-T, a third loteprednol etabonate-based eye drug combined with the
antibiotic tobramycin, has been evaluated in a human eye model. Pharmos and BLP
are undertaking another clinical trial before submitting the NDA for FDA
approval in order to add considerable support to the companies' intent to
receive a broad labeling for the product upon approval, a feature that will
assist its commercialization. The additional clinical trial will be completed in
2000 after which an NDA is expected to be filed with the FDA.
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<PAGE>
In June 1995, Pharmos entered into an agreement with BLP to market Lotemax,
Alrex and LE-T in the U.S. A second agreement, covering Europe, Canada and other
selected countries, was signed in December 1996. Both agreements give BLP the
right to purchase the active component LE 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 LE for sale to Pharmos.
Following FDA approval of Lotemax and Alrex, BLP commenced product
shipments in April 1998, providing Pharmos with its initial product revenues.
In December 1999, a filing to market loteprednol etabonate 0.5% ophthalmic
suspension for ophthalmic inflammatory indications in the United Kingdom was
submitted to the Medicines Control Agency, the drug regulatory agency in the
U.K. Upon approval, the product will be submitted by BLP and Pharmos for
approval in other European countries through a Mutual Recognition procedure.
Sold in the U.S. under the trademark Lotemax, the product will be marketed under
the Loterox tradename in the U.K. The European filing of Alrex, the second
ophthalmic product covered under Pharmos's agreement with BLP, is anticipated to
occur within the next several months.
Dexanabinol
Dexanabinol is Pharmos's lead synthetic cannabinoid compound in a family of
non psychotic cannabinoid molecules originally designed to avoid the
psychotropic and sedative spectrum of cannabinometic agents, while retaining
their beneficial properties as anti-emetics, analgesics and anti-glaucoma
agents.
It is now well established that the psychotropic effects of cannabinoids
are mediated via stereo selective (-) preferring receptors. Dexanabinol is a (+)
optical isomer and does not interact with cannabinoid receptors. It is a stereo
selective, non-competitive antagonist of the NMDA receptor channel, has free
radical scavenging properties, and anti-inflammatory properties (involving
inhibition of TNF-[alpha] production). All of these mechanisms may be important
for neuroprotection. Therefore, dexanabinol 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 multiple sclerosis, 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 is proceeding at the preclinical level.
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In several animal models (including closed head injury, focal and global
forebrain ischemia and optic nerve crush), 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 healthy
volunteers (50 subjects) 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. 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 (ABIC) and the European Brain Injury Consortium
(EBIC).
In October 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% (3/30) in the dexanabinol group compared favorably with a
13.5% rate in the placebo group (5/37). 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 achieving Good Neurological Outcome, 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.
On March 7, 2000 Pharmos announced the results of the third cohort of the
Phase II Clinical Study. The study concluded that the Phase II goals of
establishing the safety of dexanabinol in TBI and the dosing parameters for a
pivotal study were met, allowing for the commencement of an international
pivotal trial of several hundred patients later this year. An aggregate of 101
patients were enrolled in the multi-center, double-blind, randomized Phase II
study, which was carried out in six trauma centers in Israel affiliated with the
American Brain Injury Consortium. Fifty-two of the patients were treated with
dexanabinol at three separate doses and forty-nine received a placebo. In the
third cohort, thirty-three patients received an intravenous injection of either
200mg of dexanabinol (N=21) or placebo (N=12) within six hours of injury.
Demographically, these patients were fairly representative of the TBI
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population, comprising mostly young men injured in motor vehicle accidents.
However, the dexanabinol and placebo groups differed with respect to several
important baseline entry parameters affecting the patients' prognosis; for
example, injury severity as determined by the Glasgow Coma Scale was
significantly worse in the treated group than in the placebo group. In addition,
the patients' CT classifications indicating the extent of the brain injury were
worse in the drug-treated group compared to placebo. Predictably, the strong
trend for better neurological outcome in comparison with placebo that was
observed in the first two cohorts was not repeated in this cohort. Nevertheless,
ICP above a threshold of 25mmHg, a major risk factor affecting the prognosis of
TBI, was lower 40-70% of the time during the first days after injury in the
treated group vs. the placebo group. This result was similar to those of the
previous two cohorts (48mg and 150mg doses) reported in October 1998.
On June 13, 2000 Pharmos announced the appointment of Quintiles (UK)
Limited, a subsidiary of Quintiles Transnational Corporation, a global contract
research organization, to monitor and manage the data for Pharmos's European
Phase III trial of dexanabinol in patients with severe traumatic brain injury.
Quintiles will coordinate and implement most of the study-related activities.
This multi-center, multinational pivotal trial, scheduled to commence by the end
of this year, will enroll several hundred patients in approximately fifty
centers situated in seven European countries and Israel.
Tamoxifen Analogs
Tamoxifen analogs, some with poor CNS uptake, have been synthesized and
tested in several animal models. Tamoxifen methiodide, a permanently charged
tamoxifen derivative, was tested in animals (nude mice) innoculated with human
breast cancer cells. Treatment resulted in rapid arrest of growth followed by
tumor regression. Growth arrest was also observed in estrogen-independent
tumors. The rate and magnitude of response was higher than that seen with
tamoxifen itself. The compound may retain the anti-osteoporotic effects of
tamoxifen in bone but is considerably less active than tamoxifen as a utero
trophic agent, demonstrating an improved therapeutic profile as compared to the
parent compound. Tamoxifen analogs synthesized by Pharmos may have various
clinical applications.
Further synthesis and screening of tamoxifen analogs are ongoing to
identify drug candidates for the treatment of osteoporosis, cardiovascular
diseases and other clinical applications.
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
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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.
The Company is pursuing areas of product development in which there is a
potential for extensive technological innovation. Pharmos's 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's
potential products becoming obsolete or non-competitive.
Collaborative Relationships
Pharmos's 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's products in development and potential future
products. Depending on the availability of financial, marketing and scientific
resources, among other factors, the Company 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's 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.
Bausch & Lomb Pharmaceuticals
On June 30, 1995, the Company signed a definitive agreement with BLP to
manufacture and market Lotemax and Alrex, Pharmos's lead products, in the United
States upon receipt of FDA approval. The agreement includes one other
loteprednol etabonate-based product, LE-T, currently being co-developed by
Pharmos and BLP. A second agreement signed December 12, 1996, extends BLP's
rights to market these products in Europe, Canada and other selected countries
pending regulatory approval.
Under the agreements, BLP will purchase the active drug substance from
Pharmos. As of September 2000, BLP has provided the Company with a total of $5
million in cash advances and is entitled to recoup the advances by way of
credits from sales of Lotemax, Alrex and line extension products. Another $1
million is due subject to receiving regulatory approval for LE-T in the United
States. An additional $1.6 million in advances against future sales by BLP will
be payable to Pharmos following receipt of regulatory clearance in certain
markets outside of the United States. BLP collaborates in the development of
these products
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by making available amounts equal 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. As of June 30, 2000,
Pharmos had repaid $2.4 million of the cash advances from BLP by way of credits
from sales of Lotemax and Alrex during 1999 and 1998.
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
Proprietary protection generally has been important in the pharmaceutical
industry, and the commercial success of products incorporating Pharmos's
technologies may depend, in part, upon the ability to obtain strong patent
protection.
Some of the technologies underlying the Company's potential products were
invented or are owned by various third parties, including the University of
Florida, Dr. Nicholas Bodor, and the Hebrew University of Jerusalem ("Hebrew
University"). Pharmos is the licensee of these technologies under patents held
by the applicable owner through licenses that generally remain in effect for the
life of the applicable patent. Pharmos generally maintains, at its expense, U.S.
and foreign patent rights with respect to both the licensed and its own
technology and files and/or prosecutes the relevant patent applications in the
U.S. and foreign countries. Pharmos also relies upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to develop its
competitive position. The Company's policy is to protect its technology by,
among other things, filing, or requiring the applicable licensor to file, patent
applications for technology that it considers important to the development of
its business. Pharmos intends to file additional patent applications, when
appropriate, relating to its technology, improvements to its technology and to
specific products it develops. There can be no assurance that any additional
patents will be issued, or if issued, that they will be of commercial benefit to
Pharmos. In addition, it is impossible to anticipate the breadth or degree of
protection that any such patents will afford.
The patent positions of pharmaceutical firms, including the Company, 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 applicationsin the U.S. 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
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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, the Company may have to participate in interference proceedings
declared by the U.S. 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 a court
of competent jurisdiction, if issued, will uphold the patents relating to the
licensed technology, 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's
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.
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 the Company'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 the Company 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. Pharmos's patents
and licenses underlying its potential products described herein are summarized
below.
Site-Specific Drugs. In the general category of site-specific drugs that
are active mainly in the eye and have limited systemic side effects, Pharmos has
licensed several patents from Dr. Nicholas Bodor. The earliest patents date from
1984 and the most recent from 1996. Some of these patents cover loteprednol
etabonate-based products and its formulations.
Neuroprotective Agents. Pharmos has licensed from the Hebrew University,
which is the academic affiliation of the inventor, Dr. Raphael Mechoulam,
patents covering novel compounds that have demonstrated certain beneficial
neuropharmacological activity while appearing to be devoid of most of the
deleterious effects usually associated with this class of compounds. This group
of patents has been designed to protect this family of compounds and
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their uses devised by Pharmos and the inventors. The earliest patent
applications resulted in patents issued in 1989, and the most recent patents
date from 1999. These patents cover dexanabinol, which is under development for
the treatment of head trauma, stroke and other indications.
Tamoxifen Analogs. The Company has filed patent applications in the U.S.,
Israel, Australia, Canada, Japan and the European Patent Office to protect
pharmaceutical compositions of tamoxifen analogs and tamoxifen methiodide. In
July 1997, a patent was issued by the U.S. Patent and Trademark Office with
claims covering the use of permanently ionic derivatives of steroid hormones and
their antagonists known as tamoxifen analogs. The patent also claims novel
analogs of tamoxifen and other steroid hormones and their antagonists. A second
patent is due to issue shortly, claiming anti-angiogenic uses of these same
compounds. Pharmos believes that these charged derivatives are superior to the
parent compounds in that they are devoid of CNS side effects and show an overall
improved pharmacological profile.
Emulsion-based Drug Delivery Systems. In the general category of SubMicron
Emulsion (SME) technology, the Company licensed two patents from Hebrew
University and has separately filed ten patent applications that are at
different stages of prosecution. These patents and patent applications have been
devised to protect a group of formulation technologies devised by Pharmos and
the inventors as they relate to pharmaceutical and medicinal products. The
earliest patent filings for SME technology date from 1986 and the most recent
from 1996. These patents cover a broad range of hydrophobic drugs, in improved
formulations to treat various diseases and disorders.
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 U.S. 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
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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 (perhaps too toxic) 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 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.
The regulatory process required to be completed by the FDA before a new
drug delivery system may be marketed in the U.S. depends significantly on
whether the drug (which will be delivered by the drug delivery system in
question) has existing approval for use and in what dosage form. If the drug is
a new chemical entity that has not been approved, the process includes (i)
preclinical laboratory and animal tests, (ii) an IND application which has
become effective, (iii) adequate and well-controlled human clinical trials to
establish the safety and effectiveness of the drug for its intended indication
and (iv) FDA approval of a pertinent NDA. If the drug has been previously
approved, the approval process is similar, except that certain toxicity tests
normally required for the IND application may not be necessary. Even with
previously approved drugs, additional toxicity testing may be required when the
delivery form is substantially changed, or when a company does not have access
to the raw data from the prior preclinical studies.
The activities required before a pharmaceutical product may be marketed in
the U.S. begin with preclinical testing. Preclinical tests include laboratory
evaluation of product chemistry and other end points and animal studies to
assess the potential safety and efficacy of the product as formulated. The FDA,
under a series of regulations called the Good Laboratory Practice regulations,
regulates the conduct of preclinical studies. Violations of these regulations
can, in some cases, lead to invalidation of the data from these studies,
requiring such studies to be replicated.
The entire body of preclinical development work necessary to administer
investigational drugs to volunteers or patients is summarized in an
Investigative New Drug ("IND") application to the FDA. FDA regulations provide
that human clinical trials may begin thirty days following the submission and
receipt of an IND application, unless the FDA advises otherwise or requests
additional information, clarification or additional time to review the IND
application; it is generally considered good practice to obtain affirmative FDA
response before commencing trials. There is no assurance that the submission of
an IND application will eventually allow a company to commence clinical trials.
Once trials have commenced, the FDA may stop the trials, or particular types or
parts of trials, by placing a "clinical hold" on such trials because of concerns
about, for example, safety of the product being tested or the adequacy of the
trial design. Such holds can cause substantial delay and in some cases may
require abandonment of a product.
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Clinical testing involves the administration of the drug to healthy
volunteers or to patients under the supervision of a qualified principal
investigator, usually a physician pursuant to an FDA-reviewed protocol. Each
clinical study is conducted under the auspices of independent Institutional
Review Boards ("IRBs") at the institutions at which the study will be conducted.
An IRB will consider, among other things, ethical factors, the safety of human
subjects and the possible liability of the institution.
Phase I clinical studies are commonly performed in 20 to 40 healthy human
subjects or, more rarely, in selected patients with the targeted disease or
disorder. Their goal is to establish initial data about tolerance and safety of
the drug in humans. Also, the first data regarding the absorption, distribution,
metabolism, and excretion of the drug in humans are established.
In Phase II human clinical studies, preliminary evidence is sought
regarding the pharmacological effects of the drug and the desired therapeutic
efficacy in limited studies with small numbers of selected patients (50 to 200).
Efforts are made to evaluate the effects of various dosages and to establish an
optimal dosage level schedule and validate clinical efficacy endpoints to be
used in Phase III trials. Additional safety data are also gathered from these
studies.
Phase III clinical studies consist of expanded, large scale studies of
patients (200 to several thousand) with the target disease or disorder, to
obtain definitive statistical evidence of the effectiveness and safety of the
proposed product and dosing regimen. These studies may also include separate
investigations of the effects in subpopulations of patients, such as the
elderly.
At the same time that the human clinical program is being performed,
additional non-clinical (i.e., animal) studies are also being conducted.
Expensive, long duration (12-18 months) toxicity and carcinogenicity studies are
done to demonstrate the safety of drug administration for the extended period of
time required for effective therapy. Also, a variety of laboratory, animal, and
initial human studies may be performed to establish manufacturing methods for
the drug, as well as stable, effective dosage forms.
The results of product development, preclinical studies and clinical
studies and other information are submitted to the FDA in an NDA to seek
approval for the marketing and interstate commercial shipment of the drug. With
the NDA, a company must pay the FDA a user fee of $285,000 (for Fiscal Year
2000). Companies with less than 500 employees and no revenues from products may
be eligible for an exception. This exception was granted to Pharmos in
connection with the NDA for Lotemax and Alrex and reduced the fee by 50%, which
is payable 12 months after the NDA is filed by the FDA. The FDA may refuse to
file or deny an NDA if applicable regulatory requirements, such as compliance
with Current Good Clinical Practice ("cGCP") requirements, are not satisfied or
may require additional clinical testing. Even if such data are submitted, the
FDA may ultimately decide that the NDA does not satisfy the requirements for
approval. If the FDA does ultimately approve the product, it may require, among
other things, post-marketing testing, including potentially expensive Phase IV
studies, and surveillance to monitor the safety and effectiveness of the drug.
In addition, the FDA may in
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some circumstances impose restrictions on the use of the drug that may be
difficult and expensive to administer, and almost always seeks to require prior
approval of promotional materials. Product approvals may be withdrawn if
compliance with regulatory requirements is not maintained or if problems occur
after the product reaches the market. After a product is filed for a given
indication in an NDA, subsequent new indications or dosages for the same product
are reviewed by the FDA via the filing and upon receipt of a Supplemental NDA
("sNDA") submission as well as payment of a separate user fee. The sNDA is more
focused than the NDA and deals primarily with safety and effectiveness data
related to the new indication or dosage, and labeling information for the sNDA
indication or dosage. Finally, the FDA requires reporting of certain
information, e.g., adverse experience reports, that becomes known to a
manufacturer of an approved drug.
Each domestic drug product manufacturing establishment must be registered
with, and approved by, the FDA and must pay the FDA a registration fee and
annual maintenance fee. In addition, each such establishment must inform the FDA
of every drug product it has in commercial distribution and keep such list
updated. Establishments handling controlled substances must be licensed and are
inspected by the U.S. Drug Enforcement Agency ("DEA"). Domestic establishments
are also subject to inspection by the FDA for compliance with cGMP regulations
after an NDA has been filed and thereafter, at least biennially. The labeling,
advertising and promotion of drug products also must be in compliance with
pertinent FDA regulatory requirements. Failure to comply with applicable
requirements relating to production, distribution or promotion of a drug product
can lead to FDA demands that production and shipment cease, and, in some cases,
that product be recalled, or to enforcement actions that can include seizures,
injunctions and criminal prosecution.
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 ("EU") certain registration procedures are
available to companies wishing to market a product in more than one EU 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.
Various aspects of Pharmos's business and operations are also regulated by
a number of other governmental agencies including the DEA, U.S. Department of
Agriculture, Environmental Protection Agency and Occupational Safety and Health
Administration as well as by other federal, state and local authorities. In
addition, numerous foreign authorities would regulate any future international
sales.
There continue to be a number of legislative and regulatory proposals aimed
at changing
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the health care system. It is uncertain what, if any, legislative proposals will
be adopted or what actions federal or state agencies, or third party payers may
take in response to any health care reform proposals or legislation. Although
Pharmos cannot predict whether any such legislative or regulatory proposals will
be adopted or the effect such proposals may have on its business, the
uncertainty surrounding such proposals could have a material adverse effect on
Pharmos. Furthermore, Pharmos's ability to commercialize its potential product
portfolio may be adversely affected to the extent that such proposals have a
material adverse effect on the business, financial condition and profitability
of other companies that are prospective collaborators for certain of Pharmos's
potential products.
Pharmos's ability to commercialize its products successfully may depend in
part on the extent to which reimbursement for the cost of such products and
related treatments will be available from government health administration
authorities, private health insurers and other organizations. There can be no
assurance that adequate third-party coverage will be available to enable Pharmos
or any of its future licensees to maintain price levels sufficient to realize an
appropriate return on its investment in product development.
Human Resources
As of September 21, 2000, Pharmos had 50 full time employees, 7 in the U.S.
and 43 in Israel, of whom 19 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 $4,059,886 under such agreements
through September 21, 2000, of which $2,495,876 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 amount of funding
received. In 1997, Pharmos joined a five-year program under the Chief Scientist,
the "MAGNET" program, under which Pharmos has received a total of $1,384,935
through September 21, 2000. Funds received under the MAGNET program are not
subject to the royalty requirement. Funding by the Chief Scientist
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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 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.
DESCRIPTION OF SECURITIES
The shares of our common stock that are covered by this prospectus were (or
will be) acquired by the selling security holders under the terms of two private
placement transactions that occurred on September 1, 2000. In connection with
these transactions, we issued 821,515 shares of common stock, warrants
exercisable for shares of common stock and convertible debentures which may be
converted into shares of common stock. All of the documents from these
transactions, including the forms of the warrants and convertible debentures,
have been incorporated by reference as exhibits to this prospectus.
Common Stock
Our common stock is fully described in the Registration Statement on Form
8-A dated January 30, 1984 of Pharmos's predecessor, Pharmatec, Inc., and the
description has been incorporated in this prospectus by reference.
Pharmos's Restated Articles of Incorporation currently authorize the
issuance of up to 80,000,000 shares of Common Stock. As of September 21, 2000,
there were 53,861,007 shares outstanding.
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Preferred Stock
Pharmos's 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, Series B or Series C
Preferred Stock, are currently outstanding. There are an additional 3,000 shares
designated as Series C Preferred Stock which may be issued at the discretion of
Pharmos. Pharmos, however, has no intention of issuing such shares.
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.
Outstanding Securities--Options and Warrants
As of September 21, 2000, Pharmos had outstanding incentive stock options
to purchase an aggregate of 1,589,296 shares of Pharmos common stock at an
average exercise price of $2.75 per share, and non-qualified stock options to
purchase an aggregate of 432,930 shares at an average exercise price of $2.85
per share issued to employees, directors and consultants pursuant to stock
option plans and individual agreements with management and directors of Pharmos.
There were also outstanding as of such date warrants to purchase 2,981,163
shares at an average price of $3.05 per share. The following table summarizes
all outstanding warrants that are exercisable for shares of common stock.
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Issue Date Expiration Date No. Warrants Exercise Price
---------- --------------- ------------ --------------
Apr-95 Apr-05 341,600 $2.75
Apr-95 Apr-05 10,000 $0.78
Feb-97 Feb-07 45,000 $1.59
Feb-97 Feb-07 434,000 $1.59
Mar-97 Mar-01 106,000 $1.75
Mar-97 Mar-08 171,052 $1.38
Mar-97 Mar-07 10,000 $1.66
Jan-98 Oct-05 7,000 $2.22
Feb-98 Jan-03 531,035 $2.51
Feb-98 Jan-03 157,172 $2.18
Nov-99 Nov-04 4,000 $1.19
Dec-99 Dec-04 4,000 $1.19
Jan-00 Jan-05 4,000 $1.19
Feb-00 Feb-05 4,000 $1.19
Mar-00 Mar-05 4,000 $1.19
Apr-00 Apr-05 4,000 $1.19
May-00 May-05 4,000 $1.19
Jun-00 Jun-05 4,000 $1.19
Jun-00 Jun-03 12,574 $5.00
Jul-00 Jul-05 4,000 $1.19
Aug-00 Aug-05 4,000 $1.19
Sep-00 Sep-01 547,945 $3.65
Sep-00 Sep-05 379,856 $6.08
Sep-00 Sep-05 95,843 $4.56
Sep-00 Sep-05 92,086 $4.34
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 (the "Business Combination Statute").
In general, the Business Combination 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
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<PAGE>
of the Business Combination 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's Common Stock is American
Stock Transfer and Trust Company, New York, New York.
SELLING SECURITY HOLDERS
The selling security holders may, from time to time, offer and sell shares
of our common stock pursuant to this prospectus. In addition to the selling
security holders identified in the table below, any of their proper transferees,
donees, pledgees or other successors or any persons who acquire any of the
offered shares in a transaction exempt from the registration requirements of the
Securities Act of 1933 and who are identified in a supplement to this prospectus
may also sell shares under this prospectus. The numbers of shares listed below
as being offered prior to adjustments include shares of common stock, shares
issuable upon exercise of certain warrants and shares issuable upon conversion
of the principal amount of debentures, all of which were acquired by the selling
security holders in two private placement transactions with Pharmos on September
1, 2000. Because the terms of certain of the warrants and the debentures allow
for adjustments in the numbers of shares issuable upon their exercise or
conversion, we do not know the actual number of shares that will be acquired and
offered by the selling security holders. The number of shares covered by this
prospectus includes a good faith estimate of the number of shares that will be
acquired by the selling security holders upon exercise of the warrants and
conversion of the debentures, assuming all adjustments. The number of shares
covered by this prospectus may, however, differ from the actual number of
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<PAGE>
shares ultimately acquired and offered by the selling security holders, in which
case we may file an amendment or supplement to this prospectus.
No. of Shares No. of Shares
Offered Prior Offered Assuming No. of Shares
Selling Security Holder to Adjustments All Adjustments After Offering
----------------------- -------------- --------------- --------------
Ladenburg Thalmann & Co. Inc. 95,843 95,843 0
Laterman & Co. LP 308,370 329,089 0
Millennium Partners LP 2,024,601 3,239,362 0
SmallCaps OnLine LLC 132,086 132,086 0
St. Albans Partners, Ltd. 295,330 472,528 0
Strong River Investments, Inc. 1,207,405 1,603,242 77,000
PLAN OF DISTRIBUTION
The selling security holders may, from time to time, sell shares:
o through the Nasdaq SmallCap Market, in the over-the-counter market, in
privately-negotiated transactions or otherwise;
o directly to purchasers or through agents, brokers, dealers or
underwriters; and
o at market prices prevailing at the time of sale, at prices related to
the prevailing market prices, or at negotiated prices.
Pharmos Corporation itself is not offering any shares.
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
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<PAGE>
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 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 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 Act and will
be governed by the final adjudication of such issue.
LEGAL MATTERS
Legal matters in connection with the securities being offered hereby will
be passed upon for Pharmos by Ehrenreich Eilenberg & Krause 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, 1999, 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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<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 $ 5,764
Printing and Engraving Expenses* 1,000
Accountants' Fees and Expenses* 7,500
Legal Fees and Expenses* 15,000
Blue Sky Filing Fees* 3,000
Miscellaneous* 2,736
-------
TOTAL* $35,000
*estimated
Item 15. Indemnification of Directors and Officers.
Article 12 of the Registrant's Restated Articles 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 [No.
333-47359])
4(e)* Certificate of Amendment of Restated Articles of Incorporation
dated October 21, 1999
4(f) 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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<PAGE>
4(g) 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(h) 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(i)* Amended and Restated By-Laws
5* Opinion re: legality
10(a) Purchase Agreement between the Registrant, Millennium Partners
LP, Strong River Investments Inc. and St. Albans Partners Ltd.,
dated as of September 1, 2000 (incorporated by reference to
Exhibit 4.1 to Pharmos's Current Report on Form 8-K filed on
September 11, 2000).
10(b Form of 6% convertible debenture due February 28, 2002
(incorporated by reference to Exhibit 4.2 to Pharmos's Current
Report on Form 8-K filed on September 11, 2000).
10(c) Registration Rights Agreement between the Registrant, Millennium
Partners LP, Strong River Investments Inc. and St. Albans
Partners Ltd., dated as of September 1, 2000 (incorporated by
reference to Exhibit 4.3 to Pharmos's Current Report on Form 8-K
filed on September 11, 2000).
10(d) Form of Common Stock Purchase Warrant exercisable until September
1, 2005 (incorporated by reference to Exhibit 4.4 to Pharmos's
Current Report on Form 8-K filed on September 11, 2000).
10(e) Escrow Agreement between the Registrant, Millennium Partners LP,
Strong River Investments Inc., St. Albans Partners Ltd. and
Kleinberg Kaplan Wolff & Cohen PC, dated as of September 1, 2000
(incorporated by reference to Exhibit 4.5 to Pharmos's Current
Report on Form 8-K filed on September 11, 2000).
10(f) Common Stock Investment Agreement between the Registrant,
Millennium Partners LP, Strong River Investments Inc. and
Laterman & Co. LP, dated as of September 1, 2000 (incorporated by
reference to Exhibit 4.6 to Pharmos's Current Report on Form 8-K
filed on September 11, 2000).
10(g) Registration Rights Agreement between the Registrant, Millennium
Partners LP, Strong River Investments Inc. and Laterman & Co. LP,
dated as of September 1, 2000 (incorporated by reference to
Exhibit 4.7 to Pharmos's Current Report on Form 8-K filed on
September 11, 2000).
10(h) Form of Common Stock Adjustment Warrant exercisable until
November 1, 2001 (incorporated by reference to Exhibit 4.8 to
Pharmos's Current Report on Form 8-K filed on September 11,
2000).
10(i) Form of Call Warrant exercisable until September 1, 2001
(incorporated by reference to Exhibit 4.9 to Pharmos's Current
Report on Form 8-K filed on September 11, 2000).
10(j) Form of Optional Adjustment Warrant exercisable until February
28, 2002 (incorporated by reference to Exhibit 4.10 to Pharmos's
Current Report on Form 8-K filed on September 11, 2000).
10(k)* Form of placement agent warrant with Ladenburg Thalmann & Co.
Inc.
10(l)* Form of placement agent warrant with SmallCaps OnLine LLC.
10(m)* Form of consulting warrant with SmallCaps OnLine LLC.
23(a) Consent of Ehrenreich Eilenberg & Krause 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;
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<PAGE>
(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 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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<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 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 27th day of
September, 2000.
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 has been signed by the following persons in their
respective capacities and on the respective dates indicated. Each person whose
signature appears below hereby authorizes Robert Cook and Gad Riesenfeld and
each with full power of substitution, to execute in the name and on behalf of
such person any amendment or any post-effective amendment to this Registration
Statement and to file the same, with exhibits thereto, and other documents in
connection therewith, making such changes in this Registration Statement as the
Registrant deems appropriate, and appoints each of Robert Cook and Gad
Riesenfeld, each with full power of substitution, attorney-in-fact to sign any
amendment and any post-effective amendment to this Registration Statement and to
file the same, with exhibits thereto, and other documents in connection
therewith.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert Cook Chief Financial Officer (Principal Financial September 27, 2000
------------------------------ and Accounting Officer)
Robert Cook
/s/ Dr. Gad Riesenfeld President, Chief Operating Officer and September 27, 2000
------------------------------ Acting Secretary
Dr. Gad Riesenfeld
------------------------------ Director
E. Andrews Grinstead III
/s/ Dr. Elkan R. Gamzu Director September 27, 2000
------------------------------
Dr. Elkan R. Gamzu
/s/ David Schlachet Director September 27, 2000
------------------------------
David Schlachet
/s/ Dr. Georges Anthony Marcel Director September 27, 2000
------------------------------
Dr. Georges Anthony Marcel
/s/ Mony Ben Dor Director September 27, 2000
------------------------------
Mony Ben Dor
/s/ Dr. Samuel D. Waksal Director September 27, 2000
------------------------------
Dr. Samuel D. Waksal
</TABLE>
II-4
