As filed with the Securities and Exchange Commission on April 8, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-3
Registration Statement
Under
The Securities Act of 1933
______________
EMISPHERE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3306985
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 Skyline Drive
Hawthorne, New York 10532
(914) 347-2220
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
______________
MICHAEL M. GOLDBERG, M.D.
c/o Emisphere Technologies, Inc.
15 Skyline Drive
Hawthorne, New York 10532
(914) 347-2220
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
With a copy to:
M. WARREN BROWNE, ESQ.
25 Five Ponds Drive
Waccabuc, New York 10597
(914) 763-5599
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.[x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
offering aggregate Amount of
Title of securities Amount to be price per offering registration
to be registered registered share price fee
Common Stock, $.01 1,093,500 $11.00 (2) $12,028,500 $4,147.76
par value (1) shares (1)
(1) This Registration Statement also applies to rights under the registrant's
Rights Agreement which are attached to and tradable only with the shares of
Common Stock registered hereby. No registration fees are required for such
rights as they will be issued for no additional consideration.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended,
based on the average of the high and low prices reported on the NASDAQ
National Market System on April 4, 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 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.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 8, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
1,093,500 Shares
EMISPHERE TECHNOLOGIES, INC.
Common Stock
This Prospectus relates to the offer and sale of up to 1,093,500 shares of
Common Stock, par value $.01 per share (the "Common Stock"), of Emisphere
Technologies, Inc. (the "Company"), of which 1,000,000 shares are being offered
by the Company and 93,500 shares, including 56,000 shares issuable upon the
exercise of options to purchase Common Stock, are being offered by certain
shareholders of the Company (the "Selling Shareholders").
The distribution of the shares by the Selling Shareholders may be effected
from time to time in one or more transactions for their own accounts (which may
include block transactions) in the over-the-counter market, on the National
Association of Securities Dealers Automated Quotation System, Inc. ("NASDAQ"),
or on any exchange on which the Common Stock may then be listed, in negotiated
transactions, through the writing of options on shares (whether such options
are listed on an options exchange or otherwise), 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 Shareholders may effect such
transactions by selling shares to or through broker-dealers, and such broker-
dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Selling Shareholders and any participating brokers
and dealers may be deemed to be "underwriters" as defined in the Securities Act
of 1933, as amended (the "Securities Act"). See "The Selling Shareholders" and
"Plan of Distribution".
The Common Stock is quoted on the NASDAQ National Market System ("NMS")
under the symbol "EMIS". The last sale price of the Common Stock on April 4,
1996, as reported on the NMS, was $11.00 per share.
None of the proceeds from the sale of the shares by the Selling
Shareholders will be received by the Company.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" STARTING ON
PAGE 7.
Proceeds to
Price to Public Company(1)
Per Share................. $ (2) $
Total..................... $ $
(1) Before deducting expenses payable by the Company estimated to be $50,000.
(2) The final price of the Common Stock offered hereby will be determined by
negotiations between the Company and the prospective purchasers of the Common
Stock.
The Common Stock being offered by the Company hereby is being offered for
sale directly by the Company to a limited number of institutional buyers and
affiliates thereof. The Company has not fixed a minimum number of shares of
Common Stock to be sold pursuant to this Prospectus and funds received by the
Company on the sale of less than all of the Common Stock offered hereby will
not be placed in an escrow, trust or similar account. It is expected that
delivery of certificates representing the shares of Common Stock will be made
against payment for the Common Stock in , ,
and the offering of any unsold shares hereunder will terminate not later than
30 days after the date hereof.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COM-
MISSION 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 April , 1996
AVAILABLE INFORMATION
Emisphere Technologies, Inc. (the "Company" or "Emisphere") is subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information filed
by the Company can be inspected and copied at the public reference facilities
maintained by the Commission at its office at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices located
at 7 World Trade Center, Suite 1300, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of this material can also be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Company's Common Stock is quoted on the Nasdaq
National Market. Reports, proxy statements and other information concerning
the Company can be inspected at the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is made to the Registration Statement, exhibits and
schedules.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended July 31, 1995;
(2) Current Report on Form 8-K, dated March 5, 1996
(3) Quarterly Report on Form 10-Q for the quarter ended October 31,
1995;
(4) Quarterly Report on Form 10-Q for the quarter ended January 31,
1996;
(5) The description of the Company's preferred stock purchase rights
contained in its Registration Statement on Form 8-A, dated March 5,
1996; and
(6) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, dated September 11, 1990.
All documents filed by the Company 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 Common Stock hereunder shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. The Company will provide a
copy of any or all of such documents (exclusive of exhibits unless such
exhibits are specifically incorporated by reference therein), without charge,
to each person to whom this Prospectus is delivered, including any beneficial
owner, upon written or oral request to: Emisphere Technologies, Inc., 15
Skyline Drive, Hawthorne, New York 10532, Attention: Secretary (telephone
(914) 347-2220).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in the Prospectus Summary, under the caption "Risk
Factors" and elsewhere in this Prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions;
competition; the Company's dependence on other companies to develop and
commercialize products using the Company's technologies; uncertainty of results
of pre-clinical and clinical testing; risk of technological obsolescence; the
Company's dependence on other companies to manufacture the Company's products;
risk of product liability and liability for human clinical trials; uncertainty
of health care reform and third party reimbursement; the Company's dependence
on patents and proprietary rights; changes in business strategy or development
plans; quality of management; availability, terms and deployment of capital;
business abilities and judgment of personnel; availability of qualified
personnel; changes in, or the failure to comply with, government regulations;
failure to obtain regulatory approval for the Company's products; and other
factors referenced in this Prospectus. See "Risk Factors."
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere or incorporated by reference
in this Prospectus. An investment in the shares of Common Stock being offered
hereby involves a high degree of risk. Investors should carefully consider the
information set forth under the heading "Risk Factors." Certain statements
in this Prospectus Summary constitute "forward-looking statements" under the
Reform Act. See "Special Note Regarding Forward-Looking Statements."
The Company
Emisphere Technologies, Inc. is developing novel technologies for the oral
delivery of pharmaceuticals which are currently effectively administered only
by injection or other non-oral means. The Company believes that oral delivery
of drugs is the preferred modality of delivery and that it may lead to
increased safety, greater convenience and improved patient compliance and
believes it has a platform technology to achieve oral delivery of
macromolecules and polar (electrically charged) compounds. The Company has
performed testing utilizing its technology to deliver a number of compounds
including heparin, insulin, calcitonin, human parathyroid hormone, human growth
hormone, interferon alpha and sodium cromolyn. The total market for the
injectable formulation of these compounds is over $5 billion annually. On
March 25, 1996, the Company filed an Investigational New Drug ("IND")
application with the U.S. Food and Drug Administration ("FDA") for approval to
commence Phase I clinical trials for an oral formulation of heparin. The
Company has executed a letter of intent dated October 18, 1995 with Elan
Corporation plc ("Elan"), a leading drug delivery company based in the Republic
of Ireland, to enter into a strategic alliance relating to the commercial
development of an oral formulation for heparin. A definitive agreement that
will set forth the specific terms and conditions of the strategic alliance is
currently being finalized. In connection with the letter of intent, an
affiliate of Elan purchased 600,000 shares of Common Stock and warrants to
purchase 250,000 additional shares of Common Stock, at an exercise price of
$16.25 per share, from the Company for aggregate consideration of $7,500,000.
Early generations of the Company's oral delivery technology involved the use
of materials prepared by thermally condensing amino acids (proteinoids). A
proteinoid composition consisted of several specific compounds, which under the
proper conditions could form microspheres and be used to encapsulate
therapeutic agents. The Company was able to identify the active components of
the early generation proteinoid mixtures and, by applying organic synthesis
methods, the Company produced the active compounds directly, thereby
eliminating the need for the thermal condensation production process. In its
research, the Company learned, however, that the use of microspheres and
encapsulation was not a requirement to achieve oral delivery of therapeutic
agents. This finding has led to the current use of soluble systems using
synthetically produced chemical compounds to achieve oral delivery of many
classes of drugs.
The Company's oral drug delivery technologies involve the use of proprietary
compounds which act as carriers by interacting with drugs to facilitate
absorption of the drugs across the epithelial membrane in the intestines and
into the bloodstream. In pre-clinical studies, the Company observed that each
drug tested, when combined with a carrier, retained its ability to perform its
function.
The letter of intent with Elan provides that the two companies will
collaborate to apply Elan's portfolio of formulation, controlled release and
development expertise to Emisphere's technology. The technology synergies
between the two companies are expected to speed the development of products
using Emisphere's novel delivery approaches. The collaboration with Elan may
allow Emisphere to develop commercially viable oral dosage forms of
macromolecules or polar compounds. The letter of intent with Elan also
provides that Emisphere would become Elan's source for technology necessary for
improved membrane transport.
The Company's strategic goal is to enter into a series of drug development
agreements, such as that contemplated by the letter of intent with Elan, each
with a pharmaceutical company selected for its interest in a specific drug and
ability to produce and market a formulation of the drug utilizing the Company's
carrier. The Company anticipates that the development agreements may take the
form of a royalty-bearing license, a joint venture, an exclusive supply
arrangement with respect to the Company's carrier or a combination of the
foregoing. The Elan strategic alliance has a similar strategy with respect to
heparin, although Elan and the Company may decide to form a joint venture to
market an oral heparin formulation itself. To attain its strategic goal, the
Company's near term plans are (i) to complete the heparin pre-clinical
development program and begin clinical trials with respect to its oral heparin
formulation, (ii) to develop and improve carriers for specific drugs (with a
particular emphasis on heparin) to the point where they will attract the
interest of pharmaceutical companies prepared to market the drug formulation
pursuant to a license or other marketing agreement with the Company and (iii)
to establish a program for the rational selection and design of carriers so
that the Company can respond quickly to requests from drug manufacturers for an
oral delivery technology for a new drug. With respect to heparin, the Company
anticipates that, the joint venture entity with Elan, if formed, will complete
the pre-clinical development program and undertake the clinical trials.
To date, the Company has identified carriers for insulin, heparin, human
growth hormone, various fragments of the parathyroid hormone and sodium
cromolyn and, using its carriers, the Company has achieved bioavailability in
animals for these drugs at levels the Company believes demonstrate sufficient
potential to warrant formal pre-clinical and clinical testing. The Company is
currently engaged in discussions with third parties relating to a development
program for these and other drugs. Other than the strategic alliance
contemplated by the letter of intent with Elan, the Company has no other
development agreements or commitments from any third party to enter into a
development agreement or to pursue the development of products utilizing the
Company's oral drug delivery technologies. There can be no assurance that any
potential partner will agree with the Company's belief concerning the potential
of its oral drug delivery technologies, that further testing of the Company's
oral drug delivery technologies will not be required by any potential partner
or that the Company will obtain additional commitments from third parties with
respect to product development utilizing the Company's drug delivery
technologies.
The Company was incorporated in Delaware on July 21, 1986 under the name
Clinical Technologies Associates, Inc. and is the successor, by merger
effective July 31, 1986, to its parent, Clinical Technologies Associates, Inc.,
a New York corporation, organized on April 25, 1985. In January 1992, the
Company changed its name to Emisphere Technologies, Inc. The Company's
executive offices are located at 15 Skyline Drive, Hawthorne, New York 10532,
and its telephone number is (914) 347-2220.
The Offering
Common Stock offered by the Company 1,000,000 shares
Common Stock offered by the Selling Shareholders 93,500 shares
Common Stock outstanding before offering 8,333,338 shares (1)
Common Stock to be outstanding after offering 9,333,338 shares (1)
Use of proceeds from sale by the Company Research and development and
general corporate purposes
NASDAQ NMS symbol EMIS
Risk factors Investment in the Common
Stock involves a high degree
of risk and immediate and
substantial dilution. See
"Risk Factors" and
"Dilution."
(1) Based on the number of shares of Common Stock outstanding on January 31,
1996, which does not include (i) 43,000 shares issuable upon exercise of
options granted under the Company's 1988 Stock Option Plan, (ii) 493,339
shares issuable upon exercise of stock options granted under the Company's
1991 Stock Option Plan, (iii) 12,671 shares issuable upon exercise of stock
options granted under the Company Employee Stock Purchase Plan and Non-
Qualified Employee Stock Purchase Plan, (iv) 280,000 shares issuable upon
exercise of stock options granted under the Company's Stock Option Plan for
Outside Directors, (v) 2,735,853 shares issuable upon exercise of other stock
options granted to officers, directors, key employees and consultants of the
Company, (vi) 250,000 shares issuable upon exercise of warrants held by an
affiliate of Elan, (vii) 76,000 shares issuable upon exercise of other
warrants and options outstanding, including 56,000 shares being offered
hereby by the Selling Shareholders, (viii) 1,616,379 additional shares
reserved for issuance under the Company's stock option and purchase plans and
(ix) 37,500 shares issued subsequent to January 31, 1996 and being offered
hereby by the Selling Shareholders.
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. In evaluating the Company and its business, prospective investors should
carefully consider the following risk factors in addition to the other
information contained herein before purchasing the Common Stock offered by this
Prospectus. Certain statements under this caption "Risk Factors" constitute
"forward-looking statements" under the Reform Act. See "Special Note Regarding
Forward-Looking Statements."
Dependence on Commitments by Pharmaceutical Companies to Develop, Market and
Commercialize Products Utilizing the Company's Drug Delivery Technologies; No
Obligation of Pharmaceutical Partners to Proceed
Revenues from the Company's drug delivery technologies will depend on the
production and sale of products utilizing the Company's technologies. The
Company does not currently possess the ability or resources necessary to
complete on its own the regulatory approval process for pharmaceutical products
utilizing its drug delivery technologies and the Company does not intend to
market independently products incorporating its drug delivery technologies. It
is the Company's strategy to seek to enter into agreements with pharmaceutical
companies who will assist the Company in obtaining government approval for, and
marketing and commercializing the various formulations of its drug delivery
technologies. Other than the letter of intent to enter into a strategic
alliance with Elan, for the commercial development of the oral formulation of
heparin, no commitments or development agreements have been entered into.
There can be no assurance that the Company will be able to finalize the terms
and conditions of the strategic alliance with Elan or enter into additional
collaborative arrangements with respect to product development utilizing the
Company's drug delivery technologies, that any existing or future collaborative
arrangements will be successful or what the terms of any development agreements
entered into will be. A number of relationships with pharmaceutical companies
which the Company entered into in the past have not progressed. If the Company
is unable to obtain development assistance and funds from pharmaceutical
companies to fund a portion of its product development costs and to
commercialize products, the Company may have to delay, scale back or curtail
one or more of its activities. In the event no other pharmaceutical company
enters into a development agreement with the Company, the Company may not have
the financial resources to undertake the commercial development of products.
In negotiating development agreements, the Company intends to seek funding
with respect to a portion of development costs necessary to commercialize the
product or products to which the agreement applies. The Company expects that
the parties to development agreements will want the legal right to abandon a
product at any time for any reason without significant penalty and there can be
no assurance that such right will not be exercised. Further, development
partners may have no obligation to deal exclusively with the Company in
developing new drug delivery methods for their drugs and may pursue parallel
development of other drug delivery technologies on their own and with other
collaborative partners which may compete with the Company's oral drug delivery
technologies.
Although the Company believes that there should be sufficient economic
incentive for development partners to devote resources to seeking to
commercialize products utilizing the Company's drug delivery technologies, the
Company will have no control over the resources and attention devoted to the
development of a product and, to the extent resources devoted are limited, the
Company may be adversely affected. Moreover, the terms of any future
development agreements, if any, with respect to a particular drug may preclude
or restrict the Company from entering into alternative arrangements with other
pharmaceutical companies for the same or competing drugs.
Government Regulation and Lack of Regulatory Approval for Products
The development and commercialization of products utilizing the Company's
drug delivery technologies are subject to regulation by the U.S. Food and Drug
Administration (the "FDA") and other governmental authorities in the United
States and foreign countries. A new dosage form developed by the Company of
any drug will be required to undergo rigorous pre-clinical and clinical testing
and an extensive approval process mandated by the FDA and equivalent foreign
authorities prior to marketing. There can be no assurance that the Company
will develop commercially viable products, that the necessary regulatory
approvals for any of the Company's products currently under development will be
obtainable or that, if such approvals are obtainable, they will be forthcoming
on a timely basis. These processes can take several years and require the
expenditure of substantial resources.
The Company has neither sought nor received regulatory approval for sale
of any products in the United States or in any foreign country. The Company
has a pending IND application with the FDA for approval to commence Phase I
clinical trials for one of its drug delivery technologies for heparin in the
United States. Delays or rejections may be encountered based upon changes in
FDA policy during the period of product development and FDA regulatory review.
Similar delays may also be encountered in other countries. There can be no
assurance that even after such time and expenditures, regulatory approval will
be obtained for any products developed by the Company. If regulatory approval
of a product is granted, such approval may entail limitations on the indicated
uses for which the product may be marketed. Further, even if regulatory
approval is obtained, a marketed product, its manufacturer, and its
manufacturing facilities are subject to continual review and periodic
inspections, and later discovery of previously unknown problems with a product,
manufacturer, or facility may result in restrictions on such product,
manufacturer, or facility including withdrawal of the product from the market.
If the Company is unable to obtain regulatory approvals for products on a
timely basis, the Company's business and prospects will be materially adversely
affected.
Early Stage of Product Development; Limited Clinical Test Data and Uncertainty
of Results of Further Pre-clinical and Clinical Testing
To date, the Company has designed a lead carrier for a limited number of
drugs and has conducted a limited number of animal studies using those
carrier/drug compounds. There can be no assurance that results of these animal
studies are indicative of results which would be achieved in larger animal
studies, studies of other animals or human clinical studies, all or some of
which will be required with respect to various of the Company's proposed
products before regulatory approval can be obtained. The Company has not yet
identified the optimum formulation of carrier for any drug nor has the Company
arrived at a final manufacturing process for a finished product. Furthermore,
while the Company has not observed any interference in a drug's ability to
perform its function for any drug tested by the Company with its technologies
to date, it is possible that effective formulation with the Company's carriers
may not be possible for certain drugs. In that event, the Company would most
likely be unable to pursue commercialization arrangements with pharmaceutical
partners with respect to those drugs.
History of Losses; Uncertainty of Future Profitability
Since its inception in April 1985, the Company has generated significant
losses from operations and for the foreseeable future the Company anticipates
that it will continue to generate significant losses from operations. At
January 31, 1996, the Company's accumulated deficit was approximately $37.4
million.
The Company's operating revenues to date have been derived from product
development funding from a limited number of pharmaceutical companies. The
Company also derived a limited amount of revenues from clinical testing
services rendered to pharmaceutical clients prior to July 31, 1991 when the
Company's clinical testing business was sold. Revenues have been insufficient
to offset the Company's operating expenses. The Company does not expect to
achieve profitability for the foreseeable future. Profitability in the long
term will depend on the Company's ability to attract pharmaceutical companies
willing to enter into development agreements with the Company for the
commercialization of drugs utilizing the Company's drug delivery technologies.
See "Dependence on Commitments by Pharmaceutical Companies to Develop, Market
and Commercialize Products Utilizing the Company's Drug Delivery Technologies;
No Obligation of Pharmaceutical Partners to Proceed."
Dependence on Single Technology
The Company's primary focus is on the development and commercialization of
its proprietary drug delivery technologies, which has not yet resulted in a
commercial product. Should its technologies, particularly its carrier
technology, prove not to be commercially successful, the Company's prospects
will be materially adversely affected.
Highly Competitive Industry and Risk of Technological Obsolescence
Drug delivery, biotechnology and pharmaceuticals are rapidly evolving
fields in which developments are expected to continue at a rapid pace. The
Company's success depends upon maintaining a competitive position in the
development of products and technologies in its areas of focus. The Company is
in competition with other pharmaceutical and biotechnology companies, research
organizations, individual scientists and non-profit organizations engaged in
the development of alternative drug delivery technologies or new drug research
and testing, as well as with entities producing and developing injectables.
The Company is aware of a number of companies seeking to develop new products
and alternatives to injectable drug delivery, including, but not limited to,
intranasal delivery, pulmonary systems, transdermal systems and colonic
absorption systems. The Company also is aware of other companies currently
engaged in the development and commercialization of oral drug delivery
technologies and enhanced injectable systems. Many of these companies and
entities have greater research and development capabilities, experience, and
marketing, financial and managerial resources than the Company, and represent
significant competition for the Company. Acquisitions of competing
biotechnology companies by large pharmaceutical companies could enhance
competitors' financial, marketing and other resources. Accordingly, the
Company's competitors may succeed in developing competing technologies and
obtaining regulatory approval for products more rapidly than the Company.
There can be no assurance that developments by others will not render the
Company's products or technologies uncompetitive or obsolete.
Dependence on Patents and Proprietary Rights
The Company's success, competitive position and future revenues will
depend, in part, on its ability to obtain patent protection in various
jurisdictions related to its technologies, processes and products. The Company
has filed, and expects to continue to file, patent applications seeking such
protection. The Company has been granted eight patents on its delivery
technologies in the United States, of which one will expire in 2007, one will
expire in 2008, two will expire in 2009, two will expire in 2012 and two will
expire in 2013, and has corresponding patents issued or applications pending in
various countries around the world. The Company has 25 patent applications
relating to its drug delivery technologies pending in the United States and has
pending or expects to file corresponding patent applications around the world.
The Company has applied to have one of its granted U.S. patents reissued in an
attempt to obtain certain broader claims to which the Company believes it was
entitled in the original patent grant. There is no guarantee that the reissue
application will be successful or that the United States Patent and Trademark
Office will not reject all of the patent claims, including those granted in the
original patent. There can be no assurance that any patent applications
relating to the Company's potential products or processes will result in
patents being issued, or that resulting patents, if any, are valid, enforceable
or will provide protection against competitors who successfully challenge the
Company's patents, obtain patents that may have an adverse effect on the
Company's ability to conduct business, or are able to circumvent the Company's
patent position. The Company has conducted database searches to discover the
existence of previous patents and to determine the state of the art of its
inventions and, based on its analysis of the results of searches, the Company
believes that there are no issued patents claiming the same subject matter as
claimed in the Company's patents or pending patent applications. Database
searches are not conclusive, however, and it is possible that conflicting
patents have been issued and/or that other parties have conducted research or
made discoveries of compounds or processes that preceded the Company's
discoveries and which could prevent the Company from obtaining patent
protection, or could narrow the scope of any protection obtained. There could
be a material adverse effect on the Company's business and future prospects if
patents or prior art exist that were not uncovered through database searches or
there are patent applications that have priority over any of the Company's
patent applications.
The Company's strategy involves collaborative arrangements with other
pharmaceutical companies for the development of new formulations of drugs
developed by others and, ultimately, the receipt of royalties on sales of the
new formulations of the drugs. These drugs are generally the property of the
companies and may be the subject of patents or patent applications and other
forms of protection owned by such other companies. To the extent such patents
or other forms of protection expire, become invalid or otherwise ineffective or
such drugs are covered by patents or other forms of protection owned by third
parties, sales of such drugs by the collaborating pharmaceutical company may be
restricted or limited or enjoined, or may cease. Accordingly, the potential
for royalty revenues to the Company may be adversely affected.
To protect its proprietary technologies and processes, the Company also
relies in part on maintaining trade secrets protected by confidentiality
agreements with its corporate partners, employees, consultants, and certain
contractors. There can be no assurance that these agreements will not be
breached, that as a practical matter the Company will have adequate remedies
for any breach, or that the Company's trade secrets will not otherwise become
generally known or be independently discovered by competitors and thus cease
being protected.
Need for Additional Capital
While the Company believes that existing cash, cash equivalents and
marketable securities, together with the net proceeds projected from the sale
of the 1,000,000 shares of Common Stock being offered by the Company hereby,
will be sufficient to satisfy the Company's operating needs through the end of
fiscal 1998, circumstances could arise which may result in a need to raise
additional capital in the future. The Company has in the past raised
additional capital through public and private offerings of its Common Stock.
There can be no assurance that additional equity capital will be available on
acceptable terms, or without severe dilution of the existing stockholders, if
at all. If adequate funds are not available, the Company will be required to
delay, scale back or eliminate some or all of its research or development
programs or relinquish rights to certain of its technologies, product
candidates or products that the Company would not otherwise relinquish.
Dependence on Others for Manufacturing of the Company's Chemical Compounds
The Company currently has no manufacturing facilities for large-scale
clinical or commercial production of any compounds under consideration as
products. The Company is producing some material for research and pre-clinical
testing and has been supplied with larger lots of compound by contract
manufacturing companies. For the foreseeable future, the Company does not
intend to manufacture its carriers except for the foregoing limited purposes.
If the Company is unable to contract for manufacturing on acceptable terms or
if the Company cannot obtain compounds manufactured in accordance with
specifications on a timely basis, the ability to conduct pre-clinical and human
clinical testing will be adversely affected, resulting in the delay of product
development and submission of products for regulatory approval, which in turn
could have a material adverse effect on the Company.
Risks of Product Liability Claims and Current Lack of Product Liability
Insurance
The Company does not have product liability insurance. The testing,
manufacturing and marketing of products for humans utilizing the Company's drug
delivery technologies may expose the Company to potential product liability and
other claims resulting from their use. Liability may result from claims made
directly by consumers or by pharmaceutical companies or others selling
products. Because the Company seeks to structure its development programs with
the intention of developing commercially viable products for sale or license to
pharmaceutical companies which would complete the development, manufacturing
and marketing of the finished product, the Company intends to rely on indemnity
undertakings by the pharmaceutical companies with regard to liability. There
can be no assurance that the Company will be able to negotiate appropriate
indemnity undertakings with pharmaceutical partners or that indemnity
undertakings will be effective to protect the Company from liability or the
costs of product liability litigation. While the Company may obtain product
liability insurance if management determines insurance is desirable, there can
be no assurance that the Company will apply for, or be able to obtain,
insurance on acceptable terms, or that insurance, if obtained, would be
adequate to fully protect the Company against any potential liability. In the
event of a successful suit against the Company, if the Company did not have
adequate product liability insurance coverage, the Company would be materially
adversely affected.
Potential Liability for Human Clinical Trials
In addition to product liability risks associated with sales of products,
the Company may be liable to the claims of individuals who participate in human
clinical trials of its products. While the Company has obtained, and will
seek, waivers of liability from all persons who participated or may in the
future participate in human clinical trials conducted by or on behalf of the
Company, there can be no assurance that waivers will be effective to protect
the Company from liability or the costs of product liability litigation. In
the event of a successful suit against the Company, if the Company did not have
adequate product liability insurance coverage, the Company would be materially
adversely affected.
Dependence on Key Personnel
The Company's success depends upon the continued contributions of its
executive officers and scientific and technical personnel. During the
Company's limited operating history, many key responsibilities within the
Company have been assigned to a relatively small number of individuals. The
competition for qualified personnel is intense, and the loss of services of
certain key personnel could adversely affect the business of the Company. In
particular, the loss of the services of Michael M. Goldberg, M.D., the
Company's Chairman of the Board and Chief Executive Officer, or Sam J.
Milstein, Ph.D., the Company's President and Chief Scientific Officer, could
have a material adverse effect on the Company's operations. The Company has
employment agreements through July 31, 2000 with each of Drs. Goldberg and
Milstein and has obtained key man life insurance in the amount of $1 million on
the lives of each of Drs. Goldberg and Milstein.
Uncertainty Related to Health Care Reform
Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. Although Congress
has failed to pass comprehensive health care reform legislation to date, the
Company anticipates that Congress, state legislatures and the private sector
will continue to review and assess alternative health care delivery and payment
systems. Potential approaches that have been considered include mandated basic
health care benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Any such proposed or actual changes could cause the Company's
collaborative partners or potential partners to limit or eliminate spending on
collaborative drug development projects. Legislative debate is expected to
continue in the future, market forces are expected to demand reduced costs and
the Company cannot predict what impact the adoption of any federal or state
health care reform measures or future private sector reform may have on its
business.
Uncertain Availability of Third-Party Reimbursement
The Company's commercial success will depend in part on the availability
of reimbursement from third-party payors such as government health
administration authorities, private health insurers and other organizations.
Third-party payors are increasingly challenging the price and cost-
effectiveness of medical products and services. Significant uncertainty exists
as to the reimbursement status of newly approved health care products. If the
Company succeeds in bringing products to market, there can be no assurance that
the Company's products will be considered cost effective or outcome effective
or that adequate third-party reimbursement will be available to enable the
Company to maintain price levels sufficient to realize an appropriate return on
its investment in product development. Legislation and regulations affecting
the pricing of pharmaceuticals may change before the Company's proposed
products are approved for marketing and any such changes could limit
reimbursement for medical products.
Authorization of Preferred Stock; Stockholder Rights Plan; and Possible Adverse
Impact on Rights of Holders of Common Stock
The Company's Certificate of Incorporation authorizes the issuance of
"blank check" preferred stock with such designations, rights and preferences as
may be determined from time to time by the Board of Directors. Accordingly,
the Board of Directors is empowered, without stockholder approval, to issue
preferred stock and to fix dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's Common Stock. In the event of issuance, the preferred
stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company, which
could have the effect of discouraging bids for the Company and, thereby,
prevent stockholders from receiving the maximum value for their shares.
Although the Company has no present intention to issue any shares of its
preferred stock, it is possible that it may decide to do so in the future.
In addition, in February 1996, the Company authorized the adoption of a
Stockholder Rights Plan (the "Rights Plan") providing that upon the acquisition
or accumulation of 20% of the Company's outstanding Common Stock by an acquiror
(the "Acquiror") without the approval of the Board of Directors of the Company
(other than acquisition through certain qualified cash tender offers), the
holders of the Company's Common Stock (other than the 20% holder and its
affiliates) would obtain certain rights to purchase shares of the Company's
Series A Junior Participating Cumulative Preferred Stock. In the event that
the Company is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are sold after a
person or group has become an Acquiror, the rights are convertible by the
holders either into substantial additional shares of the Company's Common Stock
at below market prices, or substantial numbers of shares of Common Stock of the
Acquiror. The effect of the Rights Plan may be to discourage, delay or prevent
a change in control of the Company, and to discourage bids for the Company's
Common Stock thereby preventing stockholders from receiving the maximum value
for their shares.
No Dividends
The Company has not paid any cash dividends, nor does it anticipate paying
any cash dividends on its Common Stock in the foreseeable future. There can be
no assurance that the Company will ever be in the position to pay cash
dividends or that, if it is in the position to do so, that it will pay cash
dividends on its Common Stock.
Potential Volatility of Stock Price
The market prices for securities of biopharmaceutical companies, including
the Company's Common Stock, have historically been highly volatile and the
market has from time to time experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Factors such as fluctuations in the Company's operating results,
announcements of technological collaborations, innovations or new products by
the Company or its competitors, governmental regulation, developments in patent
or other proprietary rights, public concern as to the safety of drugs developed
by the Company or others and general market conditions may have a significant
effect on the market price of the Common Stock. The Company's securities are
subject to a high degree of risk and volatility. Investors should be aware
that other investment opportunities, such as interest-bearing obligations, may
result in a higher yield on investment and be less subject to fluctuation and
risk of loss than an investment in the Company's Common Stock.
Dilution
The price to the public in this offering is substantially higher than the
book value per share of Common Stock. Investors purchasing shares of Common
Stock in this offering will therefore incur immediate, substantial dilution.
See "Dilution."
Shares Eligible for Future Sale; Effect of Outstanding Options and Warrants
Upon issuance of the 1,000,000 shares of Common Stock offered by the
Company hereby, based on the number of shares outstanding as of January 31,
1996, the Company will have 9,333,338 shares of Common Stock outstanding. Of
these shares, approximately 8,733,338 shares are freely transferable without
restriction under the Securities Act of 1933, as amended, unless held by an
"affiliate" of the Company, as such term is defined under regulations
promulgated under said Act. The Company is required, pursuant to a
registration rights agreement with an affiliate of Elan, dated as of October
18, 1995, to file with the Securities and Exchange Commission a shelf
registration statement relating to the remaining 600,000 shares of Common Stock
held by such affiliate of Elan and to use its best efforts to have such
registration statement declared effective on or prior to October 18, 1996. The
Company is further required to use its best efforts to keep the registration
statement continuously effective for a period of 30 months.
The Company had, as of January 31, 1996, outstanding options and warrants
to purchase up to 3,890,863 shares of Common Stock which are exercisable over
the next several years at prices ranging from $1.50 to $23.25, giving the
holders of such options and warrants an opportunity to profit from a rise in
the market price of the Company's Common Stock with a resulting dilution in the
interests of the other stockholders. The terms on which the Company may obtain
additional financing during the period when such options and warrants are
exercisable may be adversely affected by the existence of such options and
warrants. The holders of the options and warrants are likely to exercise them
at a time when the Company would otherwise be able to obtain additional capital
through an equity financing on terms more favorable than those provided by the
options and warrants.
CAPITALIZATION
The following table sets forth (i) the historic capitalization of the
Company at January 31, 1996 and (ii) the capitalization of the Company as
adjusted to reflect the sale by the Company of 1,000,000 shares of Common Stock
offered hereby (at an assumed offering price of $11.00 per share) and the
application of the net proceeds therefrom, which are estimated to be
$10,950,000 (after deducting the estimated offering expenses).
January 31, 1996
Actual As Adjusted
Long-term debt $ - $ -
Stockholders' equity:
Preferred Stock, par value $.01
per share, 1,000,000 shares
authorized; 200,000 shares
designated as Series A Junior
Participating Cumulative
Preferred Stock; no shares
issued and outstanding - -
Common Stock, par value $.01
per share, 20,000,000 shares
authorized; 8,376,838 issued
(8,333,338 outstanding)-
Actual; 9,376,838 issued
(9,333,338 outstanding)-As
adjusted (1) 83,768 93,768
Additional paid-in capital 51,309,930 62,249,930
Accumulated deficit (37,410,870) (37,410,870)
Net unrealized gain on
investments 7,317 7,317
13,990,145 24,940,145
Less 43,500 shares of common
stock held in treasury, at
cost (192,813) (192,813)
Total stockholders' equity 13,797,332 24,747,332
Total capitalization $ 13,797,332 $ 24,747,332
_______________________
(1) Excludes (i) 43,000 shares issuable at an exercise price of $13.75 upon
exercise of options granted under the Company's 1988 Stock Option Plan, (ii)
493,339 shares issuable at a weighted average exercise price of $8.13 upon
exercise of stock options granted under the Company's 1991 Stock Option Plan,
(iii) 12,671 shares issuable at an exercise price of $7.38 upon exercise of
certain rights to purchase common stock granted under the Company Employee
Stock Purchase Plan and Non-Qualified Employee Stock Purchase Plan, (iv)
280,000 shares issuable at a weighted average exercise price of $11.91 upon
exercise of stock options granted under the Company's Stock Option Plan for
Outside Directors, (v) 2,735,853 shares issuable, at a weighted average
exercise price of $10.07 upon exercise of other stock options granted to
officers, directors, key employees and consultants of the Company, (vi)
250,000 shares issuable at an exercise price of $16.25 upon the exercise of
warrants held by an affiliate of Elan, (vii) 76,000 shares issuable upon the
exercise of other warrants and options outstanding at a weighted average
exercise price of $8.48, including 56,000 shares being offered hereby by the
Selling Shareholders, (viii) a total of 1,616,379 additional shares reserved
for issuance under the Company's stock option and purchase plans and (ix)
37,500 shares issued subsequent to January 31, 1996 and being offered hereby
by the Selling Shareholders.
USE OF PROCEEDS
Special Note: Certain statements under this caption "Use of Proceeds,"
constitute "forward-looking statements" under the Reform Act. See "Special
Note Regarding Forward-Looking Statements."
The net proceeds to be received by the Company from the sale of 1,000,000
shares of Common Stock being offered hereby (at an assumed offering price of
$11.00 per share) are estimated to be $10,950,000 after deducting the estimated
offering expenses.
The Company intends to use the net proceeds of this offering as follows:
(i) approximately $4,000,000 for continued research and development, including
hiring additional personnel to engage in research and development, (ii)
approximately $2,000,000 for a development program leading to clinical trials
of an oral formulation of a second drug (in addition to heparin) and (iii) the
remainder for general corporate purposes. Numerous factors, including the
progress of the Company's research and development programs, the results of
pre-clinical and clinical studies, the timing of regulatory approvals,
technological advances, determinations as to the commercial potential of the
Company's products and the status of competitive products may affect the
amounts the Company expends on each proposed use. The letter of intent with
Elan relating to heparin contemplates that, if the results of Phase I clinical
trials warrant further testing and development, such testing and development
will be funded half by Elan and half by the Company. The amount and timing of
such expenditures cannot currently be determined. Expenditures will also
depend upon the establishment of collaborative research arrangements with other
companies, the availability of other financing and other factors.
Based upon its current operating plan, the Company believes that existing
cash, cash equivalents and marketable securities, together with the estimated
proceeds of this offering and interest earned thereon, will be adequate to
satisfy its capital needs through the end of fiscal 1998. Pending application
of the proceeds as described above, the Company intends to invest the net
proceeds of this offering in short-term, investment-grade, interest-bearing
instruments. The Company intends to invest the net proceeds of this offering
so as to avoid being subject to the registration requirements of the Investment
Company Act of 1940, as amended, unless an exemption from such registration is
available, because such registration would subject the Company to substantial
regulations that could have a material adverse effect on its business.
DILUTION
The Company's net tangible book value at January 31, 1996, was
$13,797,332, or $1.66 per share of Common Stock. Net tangible book value per
share represents the amount of total tangible assets less total liabilities
divided by the number of shares of Common Stock outstanding. Without taking
into account any changes in pro forma net tangible book value after January 31,
1996, other than to give effect to the sale by the Company of the 1,000,000
shares of Common Stock offered hereby at an assumed public offering price of
$11.00 per share, after deducting the estimated offering expenses, the
Company's pro forma net tangible book value at January 31, 1996 would have been
$24,747,332, or $2.65 per share. This represents an immediate dilution in net
tangible book value of $8.35 per share to new investors purchasing shares in
this offering and an immediate increase in pro forma net tangible book value of
$.99 per share to existing stockholders. The following table illustrates the
per share dilution:
Assumed public offering price per share to be paid by
a new investor.............................. $11.00
Net tangible book value per
share before offering................... $1.66
Increase in net tangible book value per
share attributable to new investors..... .99
Pro forma net tangible book value per
share after offering(1)..................... 2.65
Dilution of net tangible book value per share to
new investors (2)(3)........................ $ 8.35
_____________________
(1)Determined by dividing the Company's pro forma net tangible book value after
the offering by the pro forma number of shares outstanding after the
offering.
(2)Determined by subtracting the pro forma net tangible book value per share
after the offering from the price per share paid by a new investor.
(3)If all options and warrants outstanding on January 31, 1996 and having an
exercise price of less than $2.65 per share were exercised in full, the
adjusted pro forma net tangible book value per share would be $2.64,
resulting in immediate additional dilution to new investors of $.01.
THE SELLING SHAREHOLDERS
The table below sets forth information regarding the Selling Shareholders
as of the date of this Prospectus: (i) the name of each Selling Shareholder
(none of which have had positions, offices or other material relationships with
the Company during the past three years), (ii) the number of shares of Common
Stock owned beneficially or of record by such Selling Shareholder, (iii) the
number of shares of Common Stock offered by such Selling Shareholder and (iv)
the number of shares of Common Stock to be owned by such Selling Shareholder
after completion of the offering, assuming all the Shares being offered hereby
are sold.
Number Number Ownership
of Shares of Shares After Offering
Name of Owned Prior Being Number Percent
Selling Shareholder to Offering Offered of Shares of Class
The Sage Group 50,000 (1) 50,000 (1) 0
Garo Armen 33,750 33,750 0
Jay Goldman 3,750 3,750 0
Nicholas A. Gravante, Jr. 6,000 (1) 6,000 (1) 0
___________________________
(1) Represents the respective number of shares with respect to which each
Selling Shareholder has a currently exercisable right to acquire beneficial
ownership upon exercise of options granted by the Company.
PLAN OF DISTRIBUTION
The Common Stock being offered by the Company hereby is being offered for
sale directly by the Company to a limited number of institutional buyers and
affiliates thereof. The Company does not anticipate offering the Common Stock
through underwriters, dealers or agents. If the Company were to offer the
Common Stock through any of the foregoing, however, the net proceeds to the
Company would be reduced by any discounts or commissions which would be
required to be paid by the Company to any such underwriter, dealer or agent.
The price of the Common Stock offered hereby will be determined through
negotiations between the Company and prospective purchasers of the Common
Stock.
There can be no assurance that the Company will be successful in selling
any or all of the Common Stock offered hereby. The Company has not fixed a
minimum number of shares of Common Stock to be sold pursuant to this
Prospectus. The Company may therefore sell less than all of the Common Stock
offered hereby, which may significantly reduce the amount of proceeds to be
received by the Company. Funds received by the Company on the sale of less
than all of the Common Stock offered hereby will not be placed in an escrow,
trust or similar account. It is expected that delivery of certificates
representing the shares of Common Stock will be made against payment for the
Common Stock in , , and the offering of
any unsold shares hereunder will terminate not later than 30 days after the
date hereof.
The Chairman and Chief Executive Officer of the Company, with the
assistance of other officers as needed, will participate in the sale of the
Common Stock to the purchasers. These participants, who will not receive any
compensation for these activities, will not be deemed brokers pursuant to Rule
3a4-1 under the Securities Exchange Act of 1934, as amended.
The distribution of the Common Stock by the Selling Shareholders may be
effected from time to time in one or more transactions for their own accounts
(which may include block transactions) in the over-the-counter market, on
NASDAQ or on any exchange on which the Common Stock may then be listed, in
negotiated transactions, through the writing of options on shares (whether such
options are listed on an options exchange or otherwise) 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 Shareholders may effect such
transactions by selling shares to or through broker-dealers, and such broker-
dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Selling Shareholders may also pledge shares as
collateral for margin accounts and such shares could be resold pursuant to the
terms of such accounts. The Selling Shareholders and any participating brokers
and dealers may be deemed to be "underwriters" as defined in the Securities
Act.
In order to comply with certain state securities laws, if applicable, the
Common Stock will not be sold in a particular state unless such securities have
been registered or qualified for sale in such state or any exemption from
registration or qualification is available and complied with.
All of the costs and expenses of this offering will be borne by the
Company except that discounts, concessions or commissions relating to the sale
of shares by the Selling Shareholders will be borne by the Selling
Shareholders.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by M. Warren Browne, Esq.
EXPERTS
The financial statements and financial statement schedule of Emisphere
Technologies, Inc., as of July 31, 1995 and 1994 and for each of the three
years in the period ended July 31, 1995, included in the Company's Annual
Report on Form 10-K for the year ended July 31, 1995, incorporated by reference
in this Prospectus, 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.
No person is authorized in
connection with the offering
made hereby to give any
information or to make any 1,093,500 shares
representation not contained
or incorporated by reference
in this Prospectus, and any
information or representation
not contained or incorporated
herein must not be relied upon
as having been authorized by EMISPHERE TECHNOLOGIES, INC.
the Company or the Selling
Shareholders. This Prospectus
does not constitute an offer
to sell or a solicitation of
an offer to buy by any person Common Stock
in any jurisdiction in which par value $.01 per share
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
circumstance imply that the
information contained herein
is correct as of any date _____________
subsequent to the date hereof.
PROSPECTUS
_____________
TABLE OF CONTENTS
Page
Prospectus Summary......... 7 April , 1996
Risk Factors............... 10
Capitalization............. 18
Use of Proceeds............ 20
Dilution................... 22
The Selling Shareholders... 23
Plan of Distribution....... 23
Legal Matters.............. 24
Experts.................... 24
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with this offering are:
SEC registration fee.................... $ 4,148
Nasdaq National Market listing fee...... 17,500
Transfer Agent and Registrar fees....... 1,000
Accounting fees and expenses............ 10,000
Legal fees and expenses................. 15,000
Blue Sky fees and expenses.............. 2,000
Miscellaneous........................... 352
Total................................ $50,000
The Company has agreed to pay all of the costs and expenses of this
offering.
Item 15. Indemnification of Directors and Officers
Pursuant to Section 145 of the General Corporation Law of the State of
Delaware, Article Twelfth of the Certificate of Incorporation of the Company
and Article V of the By-laws of the Company, the Company is authorized to
indemnify, subject to certain conditions, its directors and officers against
certain liabilities and expenses arising from claims against them because of
being such a director or officer. In addition, the Company has obtained
directors' and officers' liability insurance insuring, subject to certain
conditions, its directors and officers against similar such liabilities and
expenses.
Item 16. Exhibits
A list of Exhibits to this registration statement is set forth in the
Exhibit Index starting on page II-27 hereof.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3, Form S-
8 or Form F-3, and the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of the
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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.
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 New York, State of New York on April 4, 1996.
EMISPHERE TECHNOLOGIES, INC.
by /s/ Michael M. Goldberg
Michael M. Goldberg, M.D.
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael M. Goldberg, M.D. and Sam J. Milstein,
Ph.D., his or her true and lawful attorneys-in-fact and agents, each acting
alone, with full power of substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments to this Registration Statement, including post-effective
amendments, and to file the same, with all exhibits thereto, and all 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 do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
he or she might or could do in person, and hereby ratifies and confirms all
that said attorneys-in-fact and agents, each acting alone, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ Michael M. Goldberg Chairman of the Board and April 4, 1996
Michael M. Goldberg, M.D. Chief Executive Officer
/s/ Sam J. Milstein Director and President April 4, 1996
Sam J. Milstein, Ph.D
/s/ Howard M. Pack Director April 4, 1996
Howard M. Pack
/s/ Peter Barton Hutt Director April 4, 1996
Peter Barton Hutt
/s/ Jere E. Goyan Director April 4, 1996
Jere E. Goyan, Ph.D.
/s/ Mark I. Greene Director April 4, 1996
Mark I. Greene, M.D., Ph.D.
/s/ Joseph D. Poveromo Controller (Principal April 4, 1996
Joseph D. Poveromo Financial and Accounting
Officer)
EXHIBIT INDEX
Exhibit
Number Description
5 Opinion of M. Warren Browne
23(a) Consent of Coopers & Lybrand L.L.P.
23(b) Consent of M. Warren Browne (included in Exhibit 5)
24 Power of Attorney (included in signature page)
April 5, 1996
Emisphere Technologies, Inc.
15 Skyline Drive
Hawthorne, New York 10532
Dear Sirs:
Reference is made to the Registration Statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), on behalf
of Emisphere Technologies, Inc. (the "Company"), relating to an aggregate of
1,093,500 shares of the Company's Common Stock, par value $.01 per share (the
"Shares"), of which (i) 1,000,000 shares are being offered by the Company and
(ii) 93,500 shares are to be offered from time to time by the selling
shareholders designated in the Registration Statement.
As counsel to the Company, I have examined such corporate records and
other documents and have considered such questions of law as I have deemed
necessary or appropriate for the purposes of this opinion and, upon the basis
of such examination, advise you that, in my opinion, the Shares will when sold
be legally issued, fully paid and non-assessable.
I hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. This consent is not to be construed as an admission
that I am a person whose consent is required to be filed with the Registration
Statement under the provisions of the Act.
Very truly yours,
M. Warren Browne
Consent of Independent Accountants
________________________
We consent to the incorporation by reference in this registration statement of
Emisphere Technologies, Inc. (the "Company") on Form S-3 of our report dated
September 19, 1995, except for the second paragraph of Note 5(c), Note 14 and
Note 15 as to which the date is October 26, 1995, on our audits of the
financial statements and financial statement schedule of the Company as of July
31, 1995 and 1994, and for each of the three years in the period ended July 31,
1995, which report is included in the Company's Annual Report on Form 10-K for
the year ended July 31, 1995. We also consent to the reference to our Firm
under the caption "Experts".
Coopers & Lybrand L.L.P.
New York, New York
April 3, 1996
