<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22, 1996
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CYPRESS BIOSCIENCE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-2389839
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
401 QUEEN ANNE AVENUE NORTH
SEATTLE, WA 98109
(206) 667-9242
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JAY D. KRANZLER
VICE CHAIRMAN OF THE BOARD OF
DIRECTORS AND CHIEF
EXECUTIVE OFFICER CYPRESS
BIOSCIENCE, INC.
401 QUEEN ANNE AVENUE NORTH
SEATTLE, WA 98109
(206) 667-9242
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
---------------
COPIES TO:
FREDERICK T. MUTO, ESQ.
CARL R. SANCHEZ, ESQ.
COOLEY GODWARD CASTRO
HUDDLESON & TATUM
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
==========================================================================================================================
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) FEE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.02 par value 1,424,516 $2.34375 $3,338,709 $1,151.28
==========================================================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of computing
the amount of the registration fee based on the average of the high and low
prices of the Registrant's Common Stock as reported on the Nasdaq SmallCap
Market on May 17 , 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED MAY 22, 1996
PROSPECTUS
1,424,516 SHARES
CYPRESS BIOSCIENCE, INC.
COMMON STOCK
This Prospectus relates to 1,424,516 shares (the "Shares") of Common
Stock, par value $.02 per share of Cypress Bioscience, Inc. (the "Company")
(formerly known as "IMRE Corporation"). The Shares being offered hereby were
acquired by certain holders of 7% Convertible Debentures of the Company (the
"Selling Stockholders") in September 1995 and March 1996 pursuant to an exchange
offer (the "Exchange Offer") made to such Selling Stockholders by the Company or
as interest on the principal amount of the 7% Convertible Debentures. Pursuant
to the Exchange Offer, each Selling Stockholder received one share of Common
Stock of the Company for each $2.25 of outstanding principal on the 7%
Convertible Debentures tendered to the Company in the Exchange Offer (and any
accrued and unpaid interest). The Shares may be offered by the Selling
Stockholders from time to time in transactions on the Nasdaq SmallCap Market, in
privately negotiated transactions or a combination of such methods of sale, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal or both (which
compensation to a particular broker-dealer might be in excess of customary
commissions). See "Selling Stockholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear
certain expenses (other than fees and expenses, if any, of counsel or other
advisors to the Selling Stockholders) in connection with the registration of the
Shares being offered by the Selling Stockholders. The Company has agreed to
indemnify the Selling Stockholders against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). See "Plan of Distribution."
The Common Stock of the Company is traded on the Nasdaq SmallCap Market
under the symbol "CYPB." The last reported sales price of the Company's Common
Stock on the Nasdaq SmallCap Market on May 17, 1996 was $2.34375 per share."
---------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
---------------
<PAGE> 3
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 22, 1996.
<PAGE> 4
No person is authorized in connection with any offering made hereby to
give any information or make any representation not contained or incorporated by
reference in this Prospectus, and any information not contained or incorporated
herein must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, by any person in any jurisdiction in which it is unlawful for such
person to make such offer or solicitation. Neither the delivery of this
Prospectus at any time nor any sale made hereunder shall, under any
circumstances, imply that the information herein is correct as of any date
subsequent to the date hereof.
Except for the historical information contained herein, the discussion
in this Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the section entitled "Risk
Factors," as well as those discussed elsewhere in this Prospectus.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Chicago Regional Office, Suite 1400, Northwest
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661; and New York
Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material also can be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act, with respect to the Shares being offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Company and the Shares, reference is made to the Registration Statement
and the exhibits and schedules thereto, which may be inspected without charge
at, and copies thereof may be obtained at prescribed rates from, the office of
the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549.
PROSORBA(R) column is a registered trademark of the Company. All other
brand names or trademarks appearing in this Prospectus are the property of their
respective holders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Proxy Statement for the 1996 Annual Meeting of
Stockholders filed on March 11, 1996 pursuant to Rule 14a-6 of the Exchange Act,
the Company's Current Report on
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<PAGE> 5
Form 8-K dated as of March 28, 1995, the Company's Current Report on Form 8-K
dated as of November 22, 1995, the Company's Current Report on Form 8-K dated as
of January 29, 1996, the Company's Current Report on Form 8-K dated as of March
8, 1996, the Company's Current report on Form 8-K dated as of April 1, 1996,
the Company's Registration Statement on Form S-3/A (Reg. No. 333-01071) dated
May 2, 1996, the Company's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1995 and the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996 filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus except as superseded or modified
herein. All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in any document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of shares of Common Stock of the Company, to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the documents that have been or may be incorporated by reference
herein (other than exhibits to such documents which are not specifically
incorporated by reference into such documents). Such requests should be directed
to the Director of Finance at the Company's principal executive offices at
401 Queen Anne Avenue North, Seattle, Washington 98109 (telephone (206)
667-9242).
THE COMPANY
Cypress Bioscience, Inc. (the "Company") was incorporated in 1981 to
research, develop, manufacture and market medical devices for the treatment and
diagnosis of select immune- mediated diseases, transplantations and cancers. The
Company's first product, the PROSORBA(R) column, a medical device, treats a
patient's defective immune system so that it can more effectively respond to
certain diseases. The Company received marketing approval from the U.S. Food and
Drug Administration (the "FDA") in December 1987 to distribute the PROSORBA(R)
column for treatment of idiopathic thrombocytopenic purpura ("ITP"), an
immune-mediated bleeding disorder. Since 1987, the Company has had approximately
$23 million of sales of the PROSORBA(R) column.
In February 1994, the Company entered into a 10-year exclusive
distribution agreement with Baxter Healthcare Corporation ("Baxter") granting
distribution rights of its PROSORBA(R) column in the United States and Canada
for the treatment of thrombocytopenia and the first right to negotiate for new
PROSORBA(R) column indications. In March 1995, the two companies amended the
agreement whereby Baxter, among other things, gave the Company the right to
co-market with Baxter and relinquished its first right to negotiate for new
PROSORBA(R) column indications. On March 18, 1996, the Company and Baxter
entered into a termination agreement terminating the exclusive distribution
agreement. Under the termination agreement, effective May 1, 1996, the
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Company may, among other things, sell its PROSORBA(R) column directly to
customers who had previously purchased PROSORBA(R) columns through Baxter, as
well as directly to any other potential customers who wish to purchase
PROSORBA(R) columns. "See "Risk Factors -- Exclusive Agreement With Baxter."
In December 1995, Martin D. Cleary resigned as Chief Executive Officer
and a member of the Board of Directors of the Company. Mr. Cleary's resignation
was a result of the Company's determination that it would best be served by
having senior management resident on the West Coast near the Company's principal
executive offices and other operations. Because Mr. Cleary was unable to
relocate from the East Coast, he agreed to resign as Chief Executive Officer and
as a director. Also in December 1995, Harvey J. Hoyt, M.D. resigned as Executive
Vice President and as a director. Dr. Hoyt's resignation was a result of the
appointments of new members of senior management and the restructuring of the
Company, which restructuring eliminated Dr. Hoyt's position. In March 1996,
Frank R. Jones resigned as Chief Scientific Officer and as Chairman of the Board
as a result of the restructuring of the Company. Jay D. Kranzler, M.D., Ph.D.
was appointed as Chief Executive Officer and Vice Chairman of the Board of
Directors and Debby Jo Blank, M.D. was appointed as President, Chief Operating
Officer and a member of the Board of Directors.
The Company is in the process of developing a substantial restructuring
plan. The restructuring plan is intended to reduce the Company's overhead and
recurring costs by reducing the Company's work force and consolidating its two
manufacturing facilities into one central manufacturing facility located in
Redmond, Washington. By eliminating approximately 20 positions, the Company
expects to realize an annual salary savings in excess of $1.0 million. In
addition, although the Company estimates it will incur approximately $1.0
million in capital expenditures associated with the consolidation of its
manufacturing operations, the Company believes such consolidation will result in
a reduction of overhead expenses.
Furthermore, the restructuring plan includes relocating all of the
Company's operations, except manufacturing, from Seattle, Washington to San
Diego, California by the end of 1996. The Company believes that relocating its
operations to San Diego, widely recognized as the fourth largest biotechnology
center in the United States, will provide the Company with greater exposure
within the industry and better position the Company to market its products. In
addition, in the event the Company wishes to expand staffing, San Diego's highly
skilled work force will provide significant resources from which the Company may
draw upon to fill any future staffing needs. The restructuring is not yet
completed and there can be no assurance that such a restructuring will be
completed. Even if such a restructuring is completed, there can be no assurance
that it will be successfully implemented.
In December 1995, the Company completed an offering of $1,500,000 of
Senior Convertible Debentures (the "Debentures") to certain accredited
investors. In January 1996, the Company completed a private placement of
8,540,702 shares of the Company's Common Stock (the "Private Placement") with
certain accredited investors at a per share sales price of $1.50. Upon the
closing of the Private Placement, the Debentures were automatically converted
into 1,000,000 shares of Common Stock of the Company.
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Allen & Company, the Company's largest stockholder, purchased $500,000
of the Debentures. Upon the closing of the Private Placement, the Debentures
purchased by Allen & Company automatically converted into 333,333 shares of
Common Stock of the Company.
Allen & Company acted as a non-exclusive placement agent for the
Company with respect to the Debenture Offering and the Private Placement,
receiving a placement fee of 6% of the gross proceeds attributable to securities
actually placed by Allen & Company. The Company paid Allen & Company a placement
fee in the form of 20,000 shares of Common Stock of the Company in connection
with the Debenture Offering and a cash fee of $225,000 in connection with the
Private Placement.
In March 1996, the Company completed an exchange offer whereby the
Company offered to exchange one share of its Common Stock for each $2.25 of
outstanding principal amount of the Company's 7% Convertible Debentures
(including interest accrued on the 7% Convertible Debentures up to, but not
including, the date such securities were accepted for exchange) (the "Exchange
Offer"). Of the $1,245,000 outstanding principal amount of the Company's 7%
Convertible Debentures, $845,000 in outstanding principal amount was tendered
for exchange, resulting in the issuance of 399,252 shares of Common Stock (which
amount includes 23,700 shares issued with respect to accrued interest on the 7%
Convertible Debentures that were tendered for exchange).
On May 15, 1996, the Company issued to various holders of 7%
Convertible Debentures 10,084 shares of Common Stock with respect to accrued
interest on the outstanding principal balance of such 7% Convertible Debentures.
The Company did not employ a placement agent to assist it in the
Exchange Offer.
The Company was incorporated under the laws of the State of Delaware in
1981. The Company's executive offices are located at 401 Queen Anne Avenue North
Seattle, Washington, 98109 and its telephone number is (206) 667-9242.
RISK FACTORS
This Prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
involve risks and uncertainties. The Company's actual results could differ
materially from those projected in the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited, to
those discussed in this section, as well as those discussed elsewhere in this
Prospectus. The following risk factors should be considered carefully in
addition to the other information contained in this Prospectus before purchasing
the Shares being offered hereby.
NEED FOR ADDITIONAL CAPITAL. The Company is actively seeking
opportunities to raise additional capital through the private equity market and
corporate partners. Such capital would be used primarily to develop new and
complete existing research and development activities, including funding
clinical trials for rheumatoid arthritis and certain platelet disorders. The
amount of capital required by the Company is primarily dependent upon the
following factors: results of clinical
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trials, results of current research and development efforts, the FDA
regulatory process, potential competitive and technological advances and levels
of product sales. Because the Company is unable to predict the outcome of the
previously noted factors, some of which are beyond the Company's control, the
Company is unable to estimate, with certainty, its mid- to long-term total
capital needs. There can be no assurance that the Company will be able to raise
additional capital through the private equity market or corporate partnering
transactions or that funds raised thereby will allow the Company to maintain its
current and planned operations as provided herein. If the Company is unable to
obtain additional financing, it may be required to delay, scale back or
eliminate some or all of its research and development activities, to license to
third parties technologies that the Company would otherwise seek to develop
itself, to seek financing through the debt market at potentially higher costs to
the Company and/or to seek additional methods of financing.
HISTORY OF OPERATING LOSSES. The Company has operated at a loss since
its formation in October 1981. In the years ended December 31, 1994 and 1995,
the Company had revenues of $4,918,126 and $4,104,224 and net losses of
$6,151,312 and $6,826,252, respectively. As of December 31, 1995, the Company
had an accumulated deficit of $44,041,634. The ability of the Company to achieve
profitability is dependent upon successful completion of anticipated clinical
trials and obtaining FDA marketing approval of the PROSORBA(R) column for the
treatment of additional diseases in a timely manner, among other factors. The
Company would have to significantly scale back its plans, curtail clinical
trials, and limit its present operations in order to become profitable or
operate on a break-even basis if it does not receive marketing approval from the
FDA for the PROSORBA(R) column for the treatment of diseases in addition to
idiopathic thrombocytopenic purpura ("ITP"). There can be no assurance that the
Company will meet applicable regulatory standards or successfully market its
products to generate sufficient revenues to render the Company profitable.
MANAGEMENT CHANGES; RESTRUCTURING PLAN; DEPENDENCE UPON KEY PERSONNEL.
The Company has recently undergone changes in senior management and new
management is in the process of developing and implementing a substantial
restructuring plan. The restructuring plan has not been completed and there can
be no assurance that it will be completed. Even if such a restructuring plan is
completed, there can be no assurance that the restructuring will be successfully
implemented. The Company's success is dependent upon certain key management and
technical personnel, including the new senior management members. The loss of
the services of any of these key employees could have a material adverse effect
on the Company. The Company does not currently maintain any key employee
insurance coverage.
FDA APPROVAL AND REGULATIONS. The Company is currently planning to
conduct a controlled clinical trial of the PROSORBA(R) column for treatment of
rheumatoid arthritis. Although the FDA has approved the commercial sale of the
PROSORBA(R) column for the treatment of ITP, there can be no assurance that
current or future clinical trials will produce data satisfactory to the FDA to
establish the effectiveness of the PROSORBA(R) column for treatment of diseases
other than ITP, such as rheumatoid arthritis, transplantations and certain
cancers, or that the FDA will approve the PROSORBA(R) column for treatment of
such diseases in a timely manner, if at all.
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The PROSORBA(R) column is commercially distributed under a premarket
approval ("PMA") application that was approved by the FDA in 1987. Changes to
the product and its manufacturing process, and certain types of labeling changes
must be approved by the FDA prior to implementation. The Company currently has
one supplement to the PMA pending with the FDA for a labeling change dealing
with the use of ancillary equipment during the use of the PROSORBA(R) column.
The FDA has indicated to the Company that the PMA supplement would be approvable
if certain additional information is provided. There can be no assurance that
the Company will receive approval of its pending PMA supplement or any future
PMA supplements will be approved by the FDA.
Even if FDA approval is granted to market a product for treatment of a
particular disease, subsequent discovery of previously unknown problems may
result in restrictions on the product's future use or withdrawal of the product
from the market. In addition, any other products developed in the future will
require clinical testing and FDA marketing approval before they can be
commercially exploited in the United States. Such approval process is typically
very lengthy and there is no assurance that approvals will be obtained.
The manufacture and distribution of medical devices are subject to
continuing FDA regulation. In addition to the requirement that the device be
marketed only for its approved use, applicable law requires compliance with the
FDA's good manufacturing practices ("GMP") regulations. Failure to comply with
the GMP regulations or with other applicable legal requirements can lead to
federal seizure of non-complying products, injunctive actions brought by the
federal government, and potential criminal liability on the part of the Company
and of the officers and employees of the Company who are responsible for the
activities that lead to the violations.
COMPETITIVE ENVIRONMENT; TECHNOLOGICAL CHANGE; EFFECTIVENESS OF
PRODUCTS. The field of medical devices in general and the particular areas in
which the Company will market its products are extremely competitive. In
developing and marketing medical devices to treat immune-mediated diseases and
cancers, the Company competes with other products, therapeutic techniques and
treatments which are offered by national and international healthcare and
pharmaceutical companies, many of which have greater marketing, human and
financial resources than the Company.
The immunological therapies market is characterized by rapid
technological change and potential introductions of new products or therapies.
To respond to these changes, the Company may be required to develop or purchase
new products to protect its technology from obsolescence. There can be no
assurance that the Company will be able to develop or obtain such products, or,
if developed or obtained, that such products will be commercially viable. In
addition, there can be no assurance that the Company's products will prove
effective in the treatment of diseases other than ITP.
DEPENDENCE ON THIRD PARTY ARRANGEMENTS. The Company's commercial sale
of its proposed products and its future product development may be dependent
upon entering into arrangements with corporate partners and other third parties
for the development, marketing,
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distribution and/or manufacturing of products utilizing the Company's
proprietary technology. While the Company is currently seeking collaborative
research and development arrangements and joint venture opportunities with
corporate sponsors and other partners, there can be no assurance that the
Company will be successful in entering into such arrangements or joint ventures
or that any such arrangements will prove to be successful.
EXCLUSIVE AGREEMENT WITH BAXTER. In February 1994, the Company entered
into a 10-year exclusive distribution agreement with Baxter Healthcare
Corporation ("Baxter") granting to Baxter distribution rights of its PROSORBA(R)
column in the United States and Canada for the treatment of thrombocytopenia and
the first right to negotiate for new PROSORBA(R) column indications. The
distribution agreement also contained certain "take-or-pay" and minimum purchase
commitments. Baxter, at its own expense, was to provide sales and marketing
support for the sale of the product during the term of the agreement. Baxter
assumed the Company's sales and distribution responsibilities
in April 1994. The Company was to provide significant marketing and promotional
support to Baxter for the first three years of the agreement.
On March 18, 1996, the Company and Baxter entered into a termination
agreement terminating the exclusive distribution agreement. Under the
termination agreement, effective May 1, 1996, the Company may, among other
things, sell its PROSORBA(R) column directly to customers who had previously
purchased PROSORBA(R) columns through Baxter as well as to any other potential
customers who wish to purchase PROSORBA(R) columns.
There can be no assurance that the Company will be able to develop a
sales force to sell its PROSORBA(R) column directly to customers who previously
purchased PROSORBA(R) columns from Baxter or to any other potential customers
who wish to purchase PROSORBA(R) columns. In addition, even if the Company can
establish a sales force for its PROSORBA(R) column, there can be no assurance
that the Company will be successful in selling its PROSORBA(R) columns directly
to any new customers or to any customers who previously purchased PROSORBA(R)
columns through Baxter.
SALES AND MARKETING. The Company conducts limited marketing of the
PROSORBA(R) column outside the United States through foreign distributors.
Sales to foreign distributors have not been material to the Company's results
from operations. There can be no assurance that such domestic sales efforts or
foreign sales arrangements will become material to the Company's results of
operations.
UNCERTAINTY OF PATENT PROTECTION AND CLAIMS TO TECHNOLOGY. The Company
currently holds nine United States and four foreign patents relating to its
technology and has also filed other patent applications. In addition, the
Company has an exclusive license for a U.S. patent for a genetic screening test
to predict which rheumatoid arthritis patients will develop severe disease.
Neither the protection afforded by these patents nor their enforceability can be
assured. Furthermore, there can be no assurance that additional patents will be
obtained either in the United States or in foreign jurisdictions or that, if
issued, such additional patents will provide sufficient protection to the
Company's technology or be of commercial benefit to the Company. Insofar as the
Company relies on trade secrets and unpatented proprietary know-how, there can
be no assurance that others will not independently develop similar technology or
that secrecy will not be breached. There can be no assurance that the Company
will be able to develop further technological innovations.
Others have filed applications for, or have been issued, patents and
may obtain additional patents and other proprietary rights relating to products
or processes competitive with those of the
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Company. The scope and validity of such patents is presently unknown.
If existing or future patents are challenged in litigation or interference
proceedings, the Company may become subject to significant liabilities to third
parties or be required to seek licenses from third parties. There can be no
assurance that such licenses would be available or, if available, obtainable on
acceptable terms.
In addition, various scientific personnel of the Company were
previously associated with non-profit research or education institutions that
typically require researchers to execute agreements giving such institutions
broad rights to inventions created or developed during the period that the
scientist is associated with such institution. Dr. Frank R. Jones, former
Chairman of the Board and Chief Scientific Officer of the Company, has been a
party to such agreements in the past. While no such institution has to date
asserted rights to the Company's technology, such assertions may be made in the
future, and if made, there can be no assurances that the Company will be
successful in any such litigation.
CONCENTRATION OF OWNERSHIP. As of January 22, 1996, Allen & Company
Incorporated beneficially owned approximately 18.1% of the outstanding Common
Stock of the Company and is the largest stockholder of the Company.
RECOVERABILITY OF ENDING INVENTORIES. As of December 31, 1995, the
Company's ending inventory balances consisted of $513,883 of raw materials,
$557,222 of work in progress and $77,401 of finished goods. In order to recover
such ending inventory balances, the Company would have to sell approximately 20%
more PROSORBA(R) column units to customers than that amount sold to customers by
Baxter during 1995. Such increase represents approximately 60% of the total
sales made by the Company's sales force in fiscal year 1993 prior to entering
into the Baxter Agreement. See "-- Exclusive Agreement with Baxter." As a result
of the termination of the Baxter Agreement, the Company is actively seeking to
establish a sales force to sell the PROSORBA(R) column directly to customers who
previously purchased PROSORBA(R) columns from Baxter and to other potential
customers who wish to purchase PROSORBA(R) columns directly from the Company.
Although there can be no assurances that the Company's sales force, when and if
established, will be successful in selling the Company's product, the Company
believes, based upon historical sales figures, that it can generate sufficient
sales to recover the ending inventory balances described above with a sales
force of between 5 and 7 salespersons dedicated solely to selling the Company's
PROSORBA(R) column. In addition, on May 1, 1996, the Company increased the sales
price of the PROSORBA(R) columns to be sold directly to customers by
approximately 9%. This is the first such price increase implemented by the
Company since January 1, 1994. The Company believes that such price increase
reflects a nominal price increase for a medical device for the period covered by
such increase. However, there can be no assurance that the Company will be
successful in selling the PROSORBA(R) column at the increased price, if at all.
11
<PAGE> 12
INSURANCE REIMBURSEMENT. Successful commercialization of a new medical
product, such as the PROSORBA(R) column depends, in part, on reimbursement by
public and private health insurers to health care providers for use of such
product. The availability of such reimbursement is subject to a variety of
factors, many of which could affect the Company as it commercializes use of the
PROSORBA(R) column. Although the Company has been generally successful in
assisting health care providers in arranging reimbursement for the use of the
PROSORBA(R) column in the treatment of ITP, there can no assurance that public
and private insurers will continue to reimburse for the use of the PROSORBA(R)
column.
UNCERTAINTY OF HEALTH CARE REFORM. There are widespread efforts to
control health care costs in the U.S. and worldwide. Various federal and state
legislative initiatives regarding health care reform and similar issues continue
to be at the forefront of social and political discussion. These trends may lead
third-party payors to decline or limit reimbursement for the Company's product,
which could negatively impact the pricing and profitability of, or demand for,
the Company's product. The Company believes that government and private efforts
to contain or reduce health care costs are likely to continue. There can be no
assurance concerning the likelihood that any such legislative or regulatory
initiative will be enacted, or market reform initiated, or that, if enacted such
reform or initiative will not result in a material adverse impact on the
business, financial condition or results of operations of the Company.
PRODUCT LIABILITY. The use of the PROSORBA(R) column involves the
possibility of adverse effects occurring to end-users that could expose the
Company to product liability claims. The Company believes that its product
liability insurance coverage is adequate in light of the Company's business.
However, although the Company currently maintains product liability insurance
coverage, there can be no assurance that such coverage or any increased amount
of coverage will be adequate to protect the Company and there can be no
assurance that the Company will have sufficient resources to pay any liability
resulting from such a claim.
POSSIBLE VOLATILITY OF STOCK PRICE; ABSENCE OF DIVIDENDS. There has
been a history of significant volatility in the market prices of securities of
biotechnology companies, including the Company's Common Stock. Factors such as
announcements by the Company or others of technological innovations, results of
clinical trials, new commercial products, regulatory approvals or proprietary
rights developments, coverage decisions by third-party payers for therapies and
public concerns regarding the safety and other implications of biotechnology all
may have a significant impact on the Company's business and market price of the
Company's Common Stock. No dividends have been paid on the Common Stock to date,
and the Company does not anticipate paying cash dividends on the Common Stock in
the foreseeable future.
HAZARDOUS MATERIAL. The Company's research and development programs
involve the controlled use of biohazard materials such as viruses, including the
HIV virus that causes AIDS. Although the Company believes that its safety
procedures for handling such materials comply with the standards prescribed by
state and federal regulations, the risk of accidental contamination or injury
from these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damages that result, and any
such liability could exceed the resources of the Company.
12
<PAGE> 13
LIMITATION OF NET OPERATING LOSS CARRYFORWARDS. The Company's sale of
Common Stock in November 1990, September 1991, April 1993, and January 1996 when
taken together with prior issuances, caused the limitation of Section 382 of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), to be
applicable. This limitation will allow the Company to use only a portion of the
net operating loss carryforwards to offset future taxable income, if any, for
federal income tax purposes. Based on the limitations of Section 382 and before
consideration of the effect of the sale of securities offered hereby, the
Company may be allowed to use no more than approximately $3,700,000 of such
losses each year to reduce taxable income, if any. To the extent not utilized by
the Company, unused losses will carry forward subject to the limitations to
offset future taxable income, if any, until such unused losses expire. All
unused net operating losses will expire 15 years after any year in which they
were generated. The years in which such expiration will take place range from
1998- 2010.
SELLING STOCKHOLDERS
The Selling Stockholders represented in their exchange agreements that
they were acquiring the Shares for investment and with no present intention of
distributing the Shares. In recognition of the fact that the Selling
Stockholders, even though purchasing the Shares without a view to distribute,
may wish to be legally permitted to sell the Shares when each deems appropriate,
the Company has filed with the Commission a Registration Statement on Form S-3,
which this Prospectus forms a part, with respect to, among other things, the
resale of the Shares from time to time at prevailing prices in the
over-the-counter market or in privately-negotiated transactions and has agreed
to prepare and file such amendments and supplements to the Registration
Statement as may be necessary to keep the Registration Statement effective until
all Shares offered hereby have been sold pursuant thereto or until such Shares
are no longer, by reason of Rule 144 under the Securities Act or any other rule
of similar effect, required to be registered for the sale thereof by the Selling
Stockholders.
The following table sets forth the name of the Selling Stockholders,
the number of Shares beneficially owned by each Selling Stockholder as of March
29, 1996 and the number of Shares which may be offered pursuant to this
Prospectus. This information is based upon information provided to the Company
by the Selling Stockholders. Because the Selling Stockholders may offer all,
some or none of their shares of Common Stock, no definitive estimate as to the
number of shares thereof that will be held by the Selling Stockholders after
such offering can be provided.
<TABLE>
<CAPTION>
Shares Beneficially Number of Shares Beneficially
Owned Prior to Shares Being Owned After
Offering(1) Offered Offering(1)(3)
-------------------------- ------------ -------------------------
Name of Selling Stockholders Number Percent(2) Number Number Percent(2)
---------------------------- ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Allen & Company Incorporated 5,322,462(4) 18.54% 464,289 4,858,173 17.00%
Allen, Bruce 649,245(5) 2.26% 45,637 603,608 2.10%
Allen, Susan K 630,119(6) 2.19% 114,094 516,025 1.80%
Antolini, Robert D 745,805 2.59% 151,197 594,608 2.07%
Bulman, James P 716 * 716 0 0%
Clarion Capital Corporation 116,510 .41% 116,510 0 0%
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
Shares Beneficially Number of Shares Beneficially
Owned Prior to Shares Being Owned After
Offering(1) Offered Offering(1)(3)
-------------------------- ------------ -------------------------
Name of Selling Stockholders Number Percent(2) Number Number Percent(2)
---------------------------- ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C>
Crooks, Oscher & Co. 47,249 .16% 47,249 0 0%
Crooks, Richard M 432,401(7) 1.51% 22,818 409,583 1.43%
Crooks-McCarthy, Susan 23,624 .08% 23,624 0 0%
HAGC Partners, LP 98,121 .34% 98,121 0 0%
Hayes, Andrea K 15,973 .05% 15,973 0 0%
International Film Services, Ltd. 22,818 .08% 22,818 0 0%
Keough, Donald R 104,956 .37% 68,456 36,500 .13%
Kerrigone, Benedict 130,315 .45% 47,249 83,066 .29%
Kimberly, William E 24,191 .08% 24,191 0 0%
Kimsey, James V 23,624 .08% 23,624 0 0%
Kornreich, Joseph 11,409 .04% 11,409 0 0%
Llano, Eduardo R 716 * 716 0 0%
Lynch, Richard 88,536 .31% 35,436 53,100 .18%
McMillan, John G 22,818 .08% 22,818 0 0%
Marital Trust Under Marjorie G
Weinberg 4,296 .01% 4,296 0 0%
Metropolitan Capital Corporation 2,864 * 2,864 0 0%
Murphy, Michael J 2,864 * 2,864 0 0%
Terry Allen Kramer Family Trusts 45,637(8) .16% 45,637 0 0%
Zipper, Lance 11,409 .04% 11,409 0 0%
Yerkovich, Steven 34,782 .12% 1,921 32,861 .11%
</TABLE>
* Less than .01% of total shares outstanding as of March 29, 1996.
(1) Unless otherwise indicated below, the persons named in the table have
sole voting and investment power with respect to all shares
beneficially owned by them, subject to community property laws where
applicable.
(2) Applicable percentage of ownership is based on 28,715,252 shares of
Common Stock of the Company outstanding on March 29, 1996, adjusted as
required by rules promulgated by the Commission.
(3) Assumes the sale of all shares offered hereby.
(4) Information with respect to Shares Beneficially Owned prior to Offering
was derived, in part, from Schedule 13D dated January 22, 1996 filed
with the Commission by Allen & Company Incorporated. Includes 68,300
Units and 992,290 Common Stock Purchase Warrants. Each Unit consists of
three shares of Common Stock and one Common Stock Purchase Warrant.
(5) Information with respect to Shares Beneficially Owned prior to Offering
was derived, in part, from Schedule 13D dated January 22, 1996 filed
with the Commission by Allen & Company Incorporated.
(6) Information with respect to Shares Beneficially Owned prior to Offering
was derived, in part, from Schedule 13D dated January 22, 1996 filed
with the Commission by Allen & Company Incorporated.
(7) Information with respect to Shares Beneficially Owned prior to Offering
was derived, in part, from Schedule 13D dated January 22, 1996 filed
with the Commission by Allen & Company Incorporated.
14
<PAGE> 15
Includes 10,000 Units and options to purchase 20,000 shares of Common
Stock. Each Unit consists of three shares of Common Stock and one
Common Stock Purchase Warrant.
(8) Information with respect to Shares Beneficially Owned prior to Offering
was derived, in part, from Schedule 13D dated January 22, 1996 filed
with the Commission by Allen & Company Incorporated.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Stockholders or pledgees,
donees, tranferees of or other successors in interest to the Selling
Stockholders may sell Shares from time to time in transactions on the Nasdaq
SmallCap Market, in privately negotiated transactions or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concession or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation to a particular broker-dealer might be in excess of
customary commission).
At any time a particular offer of Shares is made, to the extent
required, a supplemental Prospectus will be distributed which will set forth the
number of Shares offered and the terms of the offering including the name or
names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from the Selling Stockholders, any
discounts, commission and other items constituting compensation from the Selling
Stockholders and any discounts, concessions or commissions allowed or reallowed
or paid to dealers.
The Selling Stockholders and any broker-dealers who act in connection
with the sale of Shares hereunder may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
Any or all of the sales or other transactions involving the Shares
described above, whether effected by the Selling Stockholders, any broker-dealer
or others, may be made pursuant to this Prospectus. In addition, any Shares that
qualify for sale pursuant to Rule 144 under the Act may be sold under rule 144
rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the Shares may
not be sold unless they have been registered or qualified for sale or an
exemption from registration or qualification requirements is available and is
complied with.
Pursuant to applicable rules and regulations under the Exchange Act,
any person engaged in the distribution of the Shares may not simultaneously
engage in market making activities with respect to the Company's Common Stock
for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and
15
<PAGE> 16
regulations thereunder, including without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of the Shares by
the Selling Stockholders.
All costs associated with the shares being offered hereunder will be
paid by the Company.
The Company and the Selling Stockholders may agree to indemnify certain
persons including broker-dealers or others, against certain liabilities in
connection with any offering of the Shares, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the issuance of the Shares will be passed upon for the
Company by Cooley Godward Castro Huddleson & Tatum, San Diego, California
("Cooley Godward").
EXPERTS
The consolidated financial statements of the Company incorporated by
reference from the Company's 1995 Annual Report on Form 10-K as of December 31,
1995 and 1994 and for the years then ended, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated statements of operations, cash flows and stockholders'
equity of the Company for the year ended December 31, 1993, incorporated by
reference from the Company's 1995 Annual Report on Form 10-K in this
Registration Statement, have been incorporated herein in reliance on the report
of Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
16
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by the Registrant in
connection with the sale of the Common Stock being registered. All the amounts
shown are estimates except for the SEC registration fee and the Nasdaq listing
fee.
<TABLE>
<S> <C>
SEC Registration fee................................................... $ 1,151
-------
Nasdaq SmallCap Market Listing Fee..................................... -0-
-------
Legal fees and expenses................................................ 7,500
-------
Blue sky qualification fees and expenses 2,500
-------
Accounting fees and expenses........................................... 5,000
-------
Printing and engraving expenses........................................ 5,000
-------
Miscellaneous.......................................................... 5,000
-------
Total............................................................. $26,151
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law (the "DGCL"), the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
The Registrant's Certificate of Incorporation and By-laws include provisions
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by
Section 102(b)(7) of the DGCL and (ii) require the Registrant to indemnify its
directors and officers to the fullest extent permitted by applicable law,
including circumstances in which indemnification is otherwise discretionary.
Pursuant to Section 145 of the DGCL, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in or not opposed to, the best interests of the corporation and
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as directors and officers.
These provisions do not eliminate the directors' or officers' duty of care, and,
in appropriate circumstances, equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under the DGCL. In addition,
each director will continue to be subject to
II-1
<PAGE> 18
liability pursuant to Section 174 of the DGCL, for breach of the
director's duty of loyalty to the Registrant, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
acts or omissions that the director believes to be contrary to the best
interests of the Registrant or its stockholders, for any transaction from which
the director derived an improper personal benefit, for acts or omissions
involving a reckless disregard for the director's duty to the Registrant or its
stockholders when the director was aware or should have been aware of a risk of
serious injury to the Registrant or its stockholders, for acts or omission that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the Registrant or its stockholders, for improper
transactions between the director and the Registrant and for improper loans to
directors and officers. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities law or
state or federal environmental laws.
The Registrant has entered into a letter agreement with a certain former
executive officer whereby the Registrant has agreed to pay for expenses
(including attorney's fees) incurred by such executive officer in connection
with an ongoing SEC inquiry in advance of any final disposition of such inquiry.
In the event it is ultimately determined that such executive officer is not
entitled to indemnification under the terms of the Registrant's Bylaws or other
applicable laws or regulations such executive officer is obligated to repay all
amounts advanced by the Registrant on such executive officer's behalf.
The Registrant has an insurance policy covering the officers and directors of
the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------
<C> <C>
5.1 Opinion of Cooley Godward Castro Huddleson & Tatum
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Coopers & Lybrand L.L.P., Independent
Accountants
23.3 Consent of Cooley Godward Castro Huddleson & Tatum
Reference is made to Exhibit 5.1
24.1 Power of Attorney. Reference is made to page II-5
</TABLE>
II-2
<PAGE> 19
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to provisions described in Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred 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.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act 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.
(2) To deliver or cause to be delivered with the Prospectus, to each
person to whom the Prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the Prospectus, to
deliver or caused to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
(3) That, for the purposes of determining liability under the Act, each
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(4) 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.
(5) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to include any
additional or changed material information on the plan of distribution.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Seattle, State of Washington, on May 21, 1996.
CYPRESS BIOSCIENCE, INC.
By: /s/ Jay D. Kranzler
-----------------------------------
Jay D. Kranzler, M.D., Ph.D.
Chief Executive Officer
II-4
<PAGE> 21
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jay D. Kranzler, M.D., Ph.D. and Susan E. Feiner,
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming that all said attorneys-in-fact and agents, or any of
them or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Jay D. Kranzler
----------------------------------
Jay D. Kranzler, M.D. Ph.D. Vice Chairman of the Board of May 21, 1996
Directors and Chief Executive
Officer
(Principal Executive Officer)
/s/ Susan E. Feiner
----------------------------------
Susan E. Feiner Director of Finance/Controller May 21, 1996
(Principal Financial Officer)
/s/ Debby Jo Blank
----------------------------------
Debby Jo Blank, M.D. Director, President and Chief May 21, 1996
Operating Officer
/s/ Richard M. Crooks, Jr.
----------------------------------
Richard M. Crooks, Jr. Director and Chairman of the May 21, 1996
Board of Directors
/s/ Philip J. O'Reilly
----------------------------------
Philip J. O'Reilly Director May 21, 1996
/s/ Jack H. Vaughn
----------------------------------
Jack H. Vaughn Director May 21, 1996
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD CASTRO HUDDLESON & TATUM LETTERHEAD]
May 21, 1996
Cypress Bioscience, Inc.
401 Queen Anne Avenue North
Seattle, WA 98109
Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Cypress Bioscience, Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission, including a related prospectus filed with the Registration
Statement (the "Prospectus"), covering the public offering of up to 1,424,516
shares of the Company's Common Stock, par value $.02 (the "Shares"), to be sold
by certain stockholders, as described in the Registration Statement.
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Company's Certificate of
Incorporation and Bylaws, both as amended, and the originals or copies certified
to our satisfaction of such records, documents, certificates, memoranda and
other instruments as in our judgment are necessary or appropriate to enable us
to render the opinion expressed below.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement and related Prospectus, will be validly issued, fully paid, and
nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD CASTRO
HUDDLESON & TATUM
By: /s/ FREDERICK T. MUTO
----------------------
Frederick T. Muto
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference of our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related prospectus of Cypress Bioscience,
Inc., formerly IMRI Corporation, for the registration of 1,424,516 shares of its
common stock and to the incorporation by reference therein of our report dated
January 23, 1996, with respect to the consolidated financial statements of
Cypress Bioscience, Inc. at December 31, 1995 and 1994 and for each year then
ended, included in its Annual Report (Form 10-K/A) for the year ended December
31, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Seattle, Washington
May 20, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement on
Form S-3 dated May 21, 1996 pertaining to the registration of 1,424,516 shares
of common stock of Cypress Bioscience, Inc. (formerly IMRI Corporation) of our
report dated March 15, 1994, on our audit of the consolidated statements of
operations, cash flows and stockholders' equity of Cypress Bioscience, Inc. for
the year ended December 31, 1993, which report is included in Cypress
Bioscience, Inc.'s Annual Report on Form 10-K, as amended, for the year ended
December 31, 1995. We also consent to the reference to our firm under the
caption "Experts."
COOPERS & LYBRAND L.L.P.
Seattle, Washington
May 20, 1996
