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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON December 23, 1999
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------
ENDOREX CORPORATION
(Exact Name Of Registrant As Specified In Its Charter)
----------------------
DELAWARE 41-1505029
(State Or Other Jurisdiction Of (I.R.S. Employer
Incorporation Or Organization) Identification Number)
28101 BALLARD DRIVE, SUITE F
LAKE FOREST, ILLINOIS 60045
(847) 573-8990
(Address, Including Zip Code, and Telephone Number,
Including Area Code, Of Registrant's Principal Executive Offices)
----------------------
DAVID G. FRANCKOWIAK
CHIEF FINANCIAL OFFICER
ENDOREX CORPORATION
28101 Ballard Drive, Suite F
Lake Forest, Illinois 60045
(847) 573-8990
(Name, Address, Including Zip Code, And
Telephone Number, Including Area Code,
Of Agent For Service Of Process)
----------------------
COPIES TO:
RICHARD R. PLUMRIDGE, ESQ.
BROBECK, PHLEGER & HARRISON LLP
370 Interlocken Blvd, Suite 500
Broomfield, CO 80021
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 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>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Proposed Maximum Proposed Maximum
Title Of Shares To Be Amount To Be Offering Price Per Aggregate Offering Amount Of Registration
Registered Registered Unit(1) Price(2) Fee
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value................... 2,194,184 $2.375 $5,211,187 $1,375.75
==================================================================================================================
</TABLE>
(1) Based on the average high and low trading prices of the common stock, as
reported on the American Stock Exchange, on December 21, 1999.
(2) Estimated pursuant to Rule 457(c) solely for the purpose of computing the
registration fee.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
================================================================================
<PAGE>
PROSPECTUS
2,194,184 Shares
ENDOREX CORPORATION
Common Stock
This prospectus relates to the resale of up to 2,194,184 shares of our
common stock by certain of our current stockholders. These shares are
issued semi-annually in distributions of approximately 450,000, which are
distributed among those certain current stockholders as a payment-in-kind
dividend owed to holders of our common stock pursuant to our 1997 Private
Placement. See "Description of the Payment in Kind Dividend". Once
issued, the prices at which such stockholders may sell the shares will be
determined by the prevailing market for the shares or in negotiated
transactions. We will not receive any proceeds from the sale of shares
offered under this prospectus.
Our common stock is traded on the American Stock Exchange (AMEX) under
the symbol "DOR." The closing price on December 21, 1999 was $2.4375.
_______________________
The shares of common stock of Endorex offered or sold under this
prospectus involve a high degree of risk. See "Risk Factors" beginning on
page 3.
________________________
Neither the Securities and Exchange Commission nor any state
commission has approved or disapproved of these securities or passed upon
the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this prospectus is December 23, 1999
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company................................................................ 3
Risk Factors............................................................... 3
Forward Looking Information................................................ 9
Use of Proceeds............................................................ 9
Plan of Distribution....................................................... 9
Description of The Payment-In-Kind Dividend................................ 11
Selling Stockholders....................................................... 11
Where to Find More Information............................................. 16
Legal Matters.............................................................. 17
Experts.................................................................... 17
</TABLE>
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THE COMPANY
Endorex Corporation is a development stage drug delivery and cancer products
company founded in 1985. Our principal executive office is located in the
northern Chicago suburbs at 28101 Ballard Drive, Suite F, Lake Forest, Illinois
60045 and our telephone number is (847) 573-8990. Our office is close to the
headquarters of several major pharmaceutical companies such as Abbott, Baxter
and Searle.
RISK FACTORS
If we cannot obtain additional funding, our product development and
commercialization efforts may be reduced or discontinued.
We will require additional funding to sustain our research and development
efforts, provide for future clinical trials, and continue our operations until
we are able to generate sufficient revenue from the sale and/or licensing of our
products. We cannot be certain whether we will be able to obtain required
additional funding on terms satisfactory to us, if at all. In addition, we have
expended, and will continue to expend, substantial funds on the development of
our product candidates and for clinical trials. We currently have commitments
to expend additional funds for the development of the Orasome(TM) oral delivery
system, the Medipad(R) infusion pump, clinical trials for our two cancer drugs,
license contracts, severance arrangements, employment agreements, and consulting
agreements. If we are unable to raise additional funds when necessary, we may
have to reduce or discontinue development, commercialization or clinical testing
of some or all of our product candidates or enter into financing arrangements on
terms which we would not otherwise accept.
We have had significant losses and anticipate future losses.
We are a development stage company, have experienced significant losses since
inception and have a significant accumulated deficit. We expect to incur
significant additional operating losses in the future and expect cumulative
losses to substantially increase due to expanded research and development
efforts, preclinical studies and clinical trials. All of our products are
currently in development, preclinical studies or clinical trials, and we have
not generated significant revenues from product sales. We do not expect to
generate significant product revenues in the next year. There can be no
guarantee that we will ever generate product revenues sufficient to become
profitable or to sustain profitability.
We are dependent on our joint ventures with Elan Corporation and any future
joint ventures.
Our strategy for research, development and commercialization of certain of our
products is to rely on arrangements with corporate partners. As a result, our
products are dependent upon the success of third parties in performing
preclinical studies and clinical trials, obtaining regulatory approvals,
manufacturing and marketing. In connection with our two joint ventures with
Elan, we are obligated to fund 50% of each joint venture's research and
development activities during the first year of each joint venture and in
proportion to our ownership interest in each joint venture thereafter, based on
the research and development plan and budget we mutually agree upon with Elan.
If we do not have sufficient resources to meet our funding obligations under the
two Elan joint ventures, we may have to terminate the venture prior to
commercialization or renegotiate the terms of the joint venture with Elan, or
our interest in the venture may be diluted. We intend to pursue additional
collaborations in the future, however, the terms available may not be acceptable
to us and the collaborations may not be successful. In addition, the amount and
timing of resources which our collaborators devote to these activities are not
within our control.
Problems in product development may cause our cash depletion rate to increase.
We have limited experience with clinical trials and if we encounter unexpected
difficulties with our operations or clinical trials, we may have to expend
additional funds, which would increase our cash depletion rate. Our ability to
manage expenses and our cash depletion rate are keys to the continued
development of product candidates and the completion of ongoing clinical trials.
Our cash depletion rate will vary substantially from
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quarter to quarter as we fund non-recurring items associated with clinical
trials, product development, patent legal fees and consulting fees.
Our product development and commercialization efforts may not be successful.
Our product candidates, which have not received regulatory approval, are
generally in the early stages of development. If the initial results from any of
the clinical trials are poor, those results will adversely effect our ability to
raise additional capital, which will affect our ability to continue full-scale
research and development for our oral delivery technology. In addition, product
candidates resulting from our research and development efforts, if any, are not
expected to be available commercially for several years, if at all. Our
products, if approved, may not be used by doctors who are unfamiliar with their
application in the treatment of cancer. As with any new drug, doctors may be
inclined to continue to treat patients with conventional therapies, in most
cases chemotherapy, rather than new alternative therapies. We or our marketing
partner may be required to implement an aggressive education and promotion plan
with doctors in order to gain market recognition, understanding and acceptance
of our products. Any such effort may be time consuming and might not be
successful. Accordingly, we cannot guarantee that our product development
efforts, including clinical trials, or commercialization efforts will be
successful or that any of our products, if approved, can be successfully
marketed.
Our technology and products may prove ineffective or harmful, or be too
expensive to market successfully.
Our future success is significantly dependent on our ability to develop and
test workable products for which we will seek approval from the United States
Food & Drug Administration to market to certain defined patient groups. The
products we are currently developing will require significant additional
laboratory and clinical testing and investment for the foreseeable future.
Although we are optimistic that we will be able to complete development of one
or more products, our proposed products may not prove to be effective in
clinical trials or they may cause harmful side effects during clinical trials.
In addition, our product candidates, if approved, may prove impracticable to
manufacture in commercial quantities at a reasonable cost and/or with acceptable
quality. Any of these factors could negatively affect our financial position and
results of operations.
Our dependence on a limited number of suppliers may negatively impact our
ability to complete clinical trials and market our products.
We currently procure, and intend in the future to procure, clinical supply of
our cancer drugs from a small number of manufacturers. Additionally, prior to
commercial distribution of any of our products, if approved, we will be required
to identify and contract with a commercial supplier. We cannot guarantee that
these suppliers will be able to qualify their facilities under regulations
imposed by the FDA or that they will be able to label and supply us with drugs
in a timely manner, if at all. Accordingly, any change in our existing or
future contractual relationships with, or an interruption in supply from, any
third-party service provider or supplier could negatively impact our ability to
complete ongoing clinical trials and to market our products, if approved.
We do not have a sales force to market our products.
If and when we receive approval from the United States Food & Drug
Administration for our initial product candidates, the marketing of these
products will be contingent upon our ability to either license these products or
enter into marketing agreements with partner companies or our ability to
recruit, develop, train and deploy our own sales force. We currently intend to
sell our products in the United States and internationally in collaboration with
one or more marketing partners. However, we presently have no agreements for
the licensing or marketing of our product candidates, and we cannot assure you
that we will be able to enter into any such agreements in a timely manner or on
commercially favorable terms, if at all. Additionally, we do not presently have
a sales force, or possess the resources or experience necessary to market any of
our product candidates, if and when they are approved. Development of an
effective sales force requires significant financial resources, time and
expertise. We cannot assure you that we will be able to obtain the financing
necessary to establish such a sales force in a timely or cost effective manner,
if at all, or that such a sales force will be capable of generating demand for
our product candidates, if and when they are approved.
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We maintain only limited product liability insurance and may be exposed to
claims if our insurance coverage is insufficient.
The manufacture and sale of our products involves an inherent risk of product
liability claims. We currently have product liability insurance with limits of
liability of $10 million. Because product liability insurance is expensive and
difficult to obtain, we cannot assure you that we will be able to maintain
existing insurance or obtain additional product liability insurance on
acceptable terms or with adequate coverage against potential liabilities. Our
inability to obtain sufficient insurance coverage on acceptable terms or to
otherwise protect against potential product liability claims in excess of our
insurance coverage, if any, could negatively impact our financial position and
results of operations.
We may not be able to compete with our competitors in the biotechnology
industry.
The biotechnology industry is intensely competitive, subject to rapid change
and sensitive to new product introductions or enhancements. Virtually all of
our existing competitors have greater financial resources, larger technical
staffs, and larger research budgets than we have, as well as greater experience
in developing products and conducting clinical trials. Our competitors in the
vaccine development field include American Home Products, the Merck Company,
SmithKline Beecham, MedImmune, Aviron and Chiron, other major pharmaceutical
companies, specialized biotechnology firms, universities and governmental
agencies. Our competitors in the liposomal formulation field include The
Liposome Company, NexStar and Sequus. Our competitors in the field of the oral
delivery of drugs include Emisphere, which has completed Phase II
trials for oral heparin and is in preclinical development with oral hormones,
and Cortecs, which has several products in clinical development. In addition,
there may be other companies which are currently developing competitive
technologies and products or which may in the future develop technologies and
products which are comparable or superior to our technologies and products.
Accordingly, we cannot assure you that we will be able to compete successfully
with our existing and future competitors or that competition will not negatively
affect our financial position or results of operations in the future.
We may not be successful if we are unable to obtain and maintain patents and
licenses to patents.
Our success depends, in large part, on our ability to obtain and maintain a
proprietary position in our products through patents, trade secrets and orphan
drug designations. We have been granted several United States patents and have
submitted several United States patent applications and numerous corresponding
foreign patent applications, and have also obtained licenses to patents or
patent applications owned by other entities. However, we cannot assure you that
any of these patent applications will be granted or that our patent licensors
will not terminate any of our patent licenses. We also cannot guarantee that any
issued patents will provide competitive advantages for our products or that any
issued patents will not be successfully challenged or circumvented by our
competitors. Further, the laws of certain countries may not protect our
proprietary rights to the same extent as U.S. law. We are dependent upon our
license of oral delivery technology from MIT, our license of Perillyl alcohol
(POH) from the Wisconsin Alumni Research Foundation and licenses from Elan in
connection with our two joint ventures with Elan. We cannot assure you that the
technology underlying such licenses will be profitable, or that we will be able
to retain licenses for such technologies or that we will obtain patent
protection outside the United States. The issues are more significant with
respect to any product based upon natural substances, such as POH, for which
available patent protection may be limited due to the prior use or reported
utility of such products (or their natural sources) to treat various disorders
or diseases. To the extent that we rely on trade secret protection and
confidentiality agreements to protect our technology, others may develop similar
technology, or otherwise obtain access to our findings or research materials
embodying those findings. The application of patent law to the field of
biotechnology is relatively new and has resulted in considerable litigation.
There is a substantial risk in the rapidly developing biotechnology industry
that patents and other intellectual property rights held by us could be
infringed by others or that products developed by us or their method of
manufacture could be covered by patents owned by other companies. Although we
believe that our patents and our licensors' patents do not infringe on any third
party's patents, we cannot be certain that we can avoid litigation involving
such patents or other proprietary rights. Patent and proprietary rights
litigation entails substantial legal and other costs, and we may not have the
necessary financial resources to defend or prosecute our rights in connection
with any litigation. Responding to, defending or
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bringing claims related to patents and other intellectual property rights may
require our management to redirect our human and monetary resources to address
these claims and may take years to resolve.
Our product development and commercialization efforts may be reduced or
discontinued due to difficulties or delays in clinical trials.
We may encounter unanticipated problems, including development, manufacturing,
distribution, financing and marketing difficulties, during the product
development, approval and commercialization process. Our product candidates may
take longer than anticipated to progress through clinical trials. In addition,
patient enrollment in the clinical trials may be delayed or prolonged
significantly, thus delaying the clinical trials and causing increased costs.
If we experience any such difficulties or delays, we may have to reduce or
discontinue development, commercialization or clinical testing of some or all of
our product candidates.
Our product development and commercialization efforts may be reduced or
discontinued due to delays or failure in obtaining regulatory approvals.
We will need to do substantial additional development and clinical testing
prior to seeking any regulatory approval for commercialization of our product
candidates. Testing, manufacturing, commercialization, advertising, promotion,
export and marketing, among other things, of our proposed products are subject
to extensive regulation by governmental authorities in the United States and
other countries. The testing and approval process requires substantial time,
effort and financial resources and we cannot guarantee that any approval will be
granted on a timely basis, if at all. At least initially, we intend, to the
extent possible, to rely on licensees to obtain regulatory approval for
marketing our products. The failure by us or our licensees to adequately
demonstrate the safety and efficacy of any of our product candidates under
development could delay, limit or prevent regulatory approval of the product,
which may require us to reduce or discontinue development, commercialization or
clinical testing of some or all of our product candidates. Companies in the
pharmaceutical and biotechnology industries have suffered significant setbacks
in conducting advanced human clinical trials, even after obtaining promising
results in earlier trials. Furthermore, the United States Food & Drug
Administration may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk. Also, even if regulatory approval of a product is
granted, such approval may entail limitations on the indicated uses for which it
may be marketed. Accordingly, we may experience difficulties and delays in
obtaining necessary governmental clearances and approvals to market our
products, and we may not be able to obtain all necessary governmental clearances
and approvals to market our products.
Our products, if approved, may not be commercially viable due to health care
changes and third-party reimbursement limitations.
Recent initiatives to reduce the federal deficit and to change health care
delivery are increasing cost-containment efforts. We anticipate that Congress,
state legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, price controls on pharmaceuticals and other fundamental changes to the
health care delivery system. Any such changes could negatively impact the
commercial viability of our products, if approved. Our ability to successfully
commercialize our product candidates, if and when they are approved, will depend
in part on the extent to which appropriate reimbursement codes and authorized
cost reimbursement levels of such products and related treatment are obtained
from governmental authorities, private health insurers and other organizations,
such as health maintenance organizations. In the absence of national Medicare
coverage determination, local contractors that administer the Medicare program,
within certain guidelines, can make their own coverage decisions. Accordingly,
there can be no assurance that any of our product candidates, if approved and
when commercially available, will be included within the then current Medicare
coverage determination or the coverage determination of state Medicaid programs,
private insurance companies and other health care providers. In addition, third-
party payers are increasingly challenging the prices charged for medical
products and services. Also, the trend toward managed health care and the growth
of health maintenance organizations in the United States may all result in lower
prices for our products, if approved and when
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commercially available, than we currently expect. The cost containment measures
that health care payers and providers are instituting and the effect of any
health care changes could negatively affect our financial performance, if and
when one or more of our products are approved and available for commercial use.
Our operations and financial performance could be negatively affected if we
cannot attract and retain key personnel.
Our success is dependent, in part, upon a limited number of key executive
officers and technical personnel, including Michael S. Rosen, our President and
Chief Executive Officer, David G. Franckowiak, our Chief Financial Officer, and
Dr. Robert N. Brey, our Vice President of Research and Development. We also
believe that our future success will depend largely upon our ability to attract
and retain highly-skilled research and development and technical personnel. We
face intense competition in our recruiting activities, including competition
from larger companies with greater resources. We cannot assure you that we will
be successful in attracting or retaining skilled personnel. The loss of certain
key employees or our inability to attract and retain other qualified employees
could negatively affect our operations and financial performance.
We may be adversely affected by Year 2000 issues.
Beginning on January 1, 2000, some computer systems and software will produce
erroneous results or fail unless they have been modified or upgraded to process
date information correctly. We have evaluated substantially all of our major
hardware and software platforms in use and have modified and upgraded our
hardware, software and information technology and other systems to be year 2000
compliant. We do not presently believe that the year 2000 problem will pose
significant operational problems for our internal computer systems or have a
negative affect on our operations. However, we cannot assure you that any year
2000 compliance problems of our suppliers will not negatively affect our
operations. We have surveyed our major vendors as to Year 2000 readiness. The
results of the surveys indicate the vendors are or anticipate being Year 2000
compliant. Because uncertainty exists concerning the potential costs and
effects associated with any year 2000 compliance, we intend to continue to make
efforts to ensure that third parties with whom we have relationships are year
2000 compliant. We have not incurred significant costs to date associated with
year 2000 compliance and presently believe estimated future costs will not be
material. However, actual results could differ materially from our expectations
due to unanticipated technological difficulties or project delays. If we or any
third parties upon which we rely are unable to address the year 2000 issue in a
timely manner, it could have an adverse impact on our operations. In order to
assure that this does not occur, we have developed a contingency plan and intend
to devote all resources required to attempt to resolve any significant year 2000
problems in a timely manner.
Our stock price is highly volatile and our common stock is thinly traded.
The market price of our common stock, like that of many other development-
stage public pharmaceutical and biotechnology companies, has been highly
volatile and may continue to be so in the future. Factors such as disclosure of
results of preclinical and clinical testing, adverse reactions to products,
governmental regulation and approvals, and general market conditions may have a
significant effect on the market price of the common stock and our other equity
securities. Since it commenced trading on the American Stock Exchange on August
6, 1998, our common stock has been thinly traded. We cannot guarantee that a
more active trading market will develop in the future.
Investors may suffer substantial dilution.
In addition to the shares of common stock being offered by this Prospectus,
Endorex has a number of agreements or obligations that may result in dilution to
investors. These include:
. warrants to purchase 2,162,162 shares of common stock at $2.54375 per
share, subject to adjustment, issued in connection with the October 1997
Private Placement;
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. warrants for the purchase of 230,770 shares of common stock at $10.00
per share held by Elan;
. warrants to purchase 66,668 shares of common stock at $2.54375 per
share, subject to adjustment, held by the Aries Master Fund and the
Aries Domestic Fund, L.P.;
. conversion rights and dividend rights of preferred stock held by Elan,
consisting of 80,100 shares of Series B Convertible Preferred Stock
($8.0 million original liquidation value) bearing an 8% cumulative
payment in kind dividend and convertible at liquidation value into
common stock at $7.50 per share, subject to adjustment, and 84,105
shares of Series C Exchangeable Convertible Preferred Stock ($8.4
million original liquidation value) bearing a 7% cumulative payment in
kind dividend and which is exchangeable for part of Endorex's interest
in the second joint venture or convertible at liquidation value into
common stock at $9.00 per share;
. options to purchase approximately 1.5 million shares of common stock
outstanding to participants in our stock option plan with a weighted
average exercise price of $3.18;
. semiannual 5% payment-in-kind dividend obligations at the rate of
approximately 450,000 shares of common stock payable to holders of
approximately 8.6 million shares of common stock, payable semiannually
until October 16, 2002, unless certain conditions are met; and
. antidilution rights under the above warrants, preferred stock and
contractual rights granted in connection with the October 1997 private
placement which can permit purchase of additional shares and/or at lower
prices under certain circumstances. To the extent that the payment-in-
kind dividends are paid, antidilution rights are triggered, or warrants
or conversion rights are exercised, our stockholders will experience
substantial dilution and the Company's stock price may decrease.
Future sales of common stock by our existing stockholders could adversely affect
out stock price.
The market price of our common stock could decline as a result of sales by our
existing stockholders of shares of common stock in the market after this
offering, or the perception that these sales could occur. These sales also
might make it more difficult for us to sell equity securities in the future at a
time and at a price that we deem appropriate.
We have not paid cash dividends.
We have never paid cash dividends on our common stock and we do not anticipate
paying any dividends in the foreseeable future. We currently intend to retain
earnings, if any, for the development of our business.
We have certain interlocking relationships which may present potential conflicts
of interest.
Lindsay A. Rosenwald, M.D., is the Chairman and sole stockholder of Paramount
Capital Asset Management, Inc. ("PCAM"), Paramount Capital, Inc. ("Paramount"),
and Paramount Capital Investment LLC ("PCI"), a merchant banking and venture
capital firm specializing in biotechnology companies. PCAM is the investment
manager of The Aries Master Fund, a Cayman Island exempted company, and the
general partner of each of the Aries Domestic Fund, L.P. and the Aries Domestic
Fund II, L.P. each of which is a significant stockholder of Endorex. In
addition, certain officers, employees and/or associates of Paramount and/or its
affiliates own securities in subsidiaries of Endorex. In the regular course of
its business, PCI identifies, evaluates and pursues investment opportunities in
biomedical and pharmaceutical products, technologies and companies. Generally,
Delaware corporate law requires that any transactions between Endorex and any of
its affiliates be on terms that, when taken as a whole, are substantially as
favorable to us as those then reasonably obtainable from a person who is not an
affiliate in an arms-length transaction. Nevertheless, neither such affiliates
nor PCI is obligated pursuant to any agreement or understanding with us to make
any additional products or technologies available to us. We do not expect and
you should not expect, that any biomedical or pharmaceutical product or
technology identified by such affiliates or PCI in the future will be made
available to us. In addition, certain of the current officers and directors of
Endorex or any officers or directors of the company hereafter appointed may from
time to time serve as officers, directors or consultants of other
biopharmaceutical or biotechnology companies. There can be no assurance that
such other companies will not have interests in conflict with us.
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Certain directors and stockholders have significant influence.
Our directors, executive officers and principal stockholders and certain of
their affiliates have the ability to influence the election of directors and
most other stockholder actions. In particular, pursuant to a placement agency
agreement, so long as 50% of the shares sold in our October 1997 private
placement remain outstanding and subject to contractual rights described in the
subscription agreement, we may not do any of the following without the placement
agent's prior approval:
. issue or increase the authorized amount or alter the terms of any
securities of the Company senior to, or on parity with, the private
placement shares with respect to voting, liquidation or dividends,
. alter the Company's charter documents in any manner that would adversely
affect the relative rights, preferences, qualifications, limitations or
restrictions of the private placement shares or of certain contractual
rights described in the subscription agreements,
. incur indebtedness in excess of $1.0 million,
. incorporate or acquire any subsidiaries, and
. enter any transactions with affiliates of the Company.
In addition, our Board of Directors cannot exceed seven persons without the
prior written consent of the placement agent. These arrangements may discourage
or prevent any proposed takeover of Endorex, including transactions in which
stockholders might otherwise receive a premium for their shares over the then
current market prices. Such stockholders may influence corporate actions,
including influencing elections of directors and significant corporate events.
FORWARD-LOOKING INFORMATION
This prospectus includes "forward-looking statements" regarding future events
or our future performance within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements other than statements
of historical facts included in this prospectus or incorporated by reference
regarding our financial position and business strategy may constitute forward-
looking statements. Although we believe that the expectations reflected in
these forward-looking statements are reasonable, we can not guarantee that these
expectations will prove to be correct. Important factors that could cause
actual results to differ materially from our expectations are listed in this
prospectus, and they include the forward-looking statements under "risk
factors." All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by these statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares. All proceeds
will be received by the selling stockholders. See "Selling Stockholders".
PLAN OF DISTRIBUTION
Endorex is registering all 2,194,184 shares on behalf of the selling
stockholders. These shares are issued semi-annually in distributions of
approximately 450,000 shares, which are distributed among the selling
stockholders as a payment-in-kind dividend owed to holders of our common stock
pursuant to our 1997 Private Placement. See "Description of the Payment in Kind
Dividend".
Endorex will receive no proceeds from this offering. The selling stockholders
named in the table below or pledgees, donees, transferees or other successors-
in-interest selling shares received from the selling stockholders as a gift,
partnership distribution or other non-sale related transfer after the date of
this prospectus may sell the shares from time to time. The selling stockholders
will act independently of Endorex in making decisions with respect to the
timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current
9
<PAGE>
market price, or in negotiated transactions. The selling stockholders may effect
these transactions by selling the shares to or through broker-dealers.
The shares may be sold by one or more of, or a combination of, the following:
. a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
. purchases by a broker-dealer as principal and resale by this broker-
dealer for its account through this prospectus;
. an exchange distribution that complies with the rules of the exchange;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
. in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other broker-
dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In these
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the selling stockholder. The
selling stockholders also may sell shares short and redeliver the shares to
close out these short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer these shares through this prospectus. The selling stockholders each may
also loan or pledge the shares to a broker-dealer. The broker-dealer may sell
the shares so loaned, or upon a default the broker-dealer may sell the pledged
shares by use of this prospectus.
Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from the selling stockholder. Broker-dealers or agents
may also receive compensation from the purchasers of the shares for whom they
act as agents or to whom they sell as principals, or both. Compensation as to a
particular broker-dealer might be in excess of customary commissions and will be
in amounts to be negotiated in connection with the sale. Broker-dealers or
agents and any other participating broker-dealers or the selling stockholders
may be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act in connection with sales of the shares. Accordingly, any
commission, discount or concession received by them and any profit on the resale
of the shares purchased by them may be deemed to be underwriting discounts or
commissions under the Securities Act. Because the selling stockholders may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, the selling stockholders will be subject to the prospectus
delivery requirements of the Securities Act. In addition, any securities
covered by this prospectus which qualify for sale through Rule 144 promulgated
under the Securities Act may be sold under Rule 144 rather than through this
prospectus. The selling stockholders have advised Endorex that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of the securities. There is no
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling stockholder.
The shares will be sold only through registered or licensed brokers or dealers
if required under applicable state securities laws. In addition, in certain
states the shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not engage in market making
activities with respect to our common stock for a period of one business day
before the commencement of this distribution. In addition, the selling
stockholders will be subject to applicable provisions of the Exchange Act and
the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholder. Endorex will make copies
of this prospectus available to the selling stockholders and has informed each
of them of the need for delivery of copies of this prospectus to purchasers at
or before the time of any sale of the shares.
10
<PAGE>
Endorex will file a supplement to this prospectus, if required, under Rule
424(b) under the Securities Act upon being notified by the selling stockholders
that any material arrangement has been entered into with a broker-dealer for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. This supplement will
disclose:
. the name of the selling stockholders and of the participating broker-
dealer(s);
. the number of shares involved;
. the price at which these shares were sold;
. the commissions paid or discounts or concessions allowed to the broker-
dealer(s), where applicable;
. that the broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
. other facts material to the transaction.
In addition, upon being notified by any selling stockholder that a donee or
pledgee intends to sell more than 500 shares, Endorex will file a supplement to
this prospectus.
Endorex will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all commissions
and discounts, if any, attributable to their respective sales of the shares. The
selling stockholders may agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the shares against some
liabilities, including liabilities arising under the Securities Act. Endorex
and the selling stockholders have agreed to indemnify each other against some
liabilities in connection with the offering of the shares, including liabilities
arising under the Securities Act.
DESCRIPTION OF THE PAYMENT-IN-KIND DIVIDEND
Pursuant to a private placement of common stock, we sold 8,648,716 shares of
common stock to certain accredited investors in October 1997, in consideration
of an aggregate amount of $20.0 million. The net proceeds after deducting
commissions and expenses of Paramount Capital, Inc., which acted as the
placement agent for the private placement, were $17.2 million.
As part of the private placement, we granted the purchasers certain rights
defined in the subscription agreement as "Article VI Rights". These rights
include the right to receive semi-annual issuances of a 5% dividend paid in the
form of additional shares of our common stock, dilution issuances and the right
to exercise the liquidation put. The liquidation put means that in the event
the company is sold or liquidated, the purchasers may require the company to
repurchase their shares at a premium to the purchaser's book value. The first
semi-annual dividend was paid on June 1, 1999 to private placement stockholders
of record on April 16, 1999 and totaled 416,632 shares. The second dividend was
paid on November 16, 1999 to private placement stockholders of record on October
16, 1999 and totaled 402,687, which are being registered for sale hereby.
Dividends in the amount of 5% of the private placement shares (including
previous dividends) held by such stockholders of record on April 16 and October
16, 2000 and April 16 and October 16, 2001 are also being registered for sale
hereby.
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders and the
number of shares being registered for sale as of the date of the prospectus and
sets forth the number of shares of common stock known by us to be beneficially
owned by each of the selling stockholders as of November 30, 1999. Except as
indicated, none of the selling stockholders has had a material relationship with
the Company within the past three years other than as a result of the ownership
of the shares or other securities of the Company. The shares offered by this
prospectus may be offered from time to time by the selling stockholders. The
percent of beneficial ownership for each stockholder is based on 10,755,319
shares of common stock outstanding as of November 30, 1999.
11
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership
After Offering(3)
Number of Shares Number of Shares --------------------
Beneficially Owned Registered Number of
Name of Selling Shareholder Prior to Offering(1) for Sale Hereby(2) Shares Percent
- --------------------------- -------------------- ------------------ ------ -------
<S> <C> <C> <C> <C>
A. Daniel Jesselson 12/18/80 Trust 47,677 12,546 0 *
Ain, Ross D. 1,277 336 0 *
Alexander Black Trust 11,920 3,137 0 *
Alexander Enterprise Holdings Corp 7,749 4,730 0 *
Andrade Enterprises, LLC 23,839 6,273 0 *
Arias, Mauricio 23,839 6,273 0 *
Aries Domestic Fund, L.P. (4) 1,008,449 164,011 180,566 1.68%
Aristizabal, Mario 23,839 6,273 0 *
Arneson, Harriet E. 11,920 3,137 0 *
Asahi Iron Foundry Co. Ltd. 47,667 12,546 0 *
Austray Limited 95,352 25,090 0 *
Bacon, Louis M. 71,514 18,818 0 *
Baruch, Ronald J. 518 378 0 *
Benjamin Black Trust 11,920 3,137 0 *
Benjamin J. Jesselson 12/18/80 Trust 95,352 25,090 0 *
Berry, Richard & Beverly 5,967 1,571 0 *
Bershad, David J. 47,677 12,546 0 *
Biren-Fetz Family Rev. Trust 11,920 3,137 0 *
Braver, David 11,920 3,137 0 *
Broidy, Elliott 5,689 1,510 0 *
BRT Partnership Solomon A. Weisgal
Trustee/Partner 47,677 12,546 0 *
Burgess, Helene 23,839 6,273 0 *
Cambrian Investments Limited Partnership 11,920 3,137 0 *
Cass & Co.-Magnum Capital Growth Fund 47,667 12,546 0 *
CHI Trust 11,920 3,137 0 *
Conrads, Robert J. 23,839 6,273 0 *
Cox, Jr., Archibald 71,514 18,818 0 *
Crescent International 138,618 36,474 0 *
Curran, John P. 11,920 3,137 0 *
David Wilstein & Susan Wilstein, Ttee of
The Century Trust dated 12/18/94 47,677 12,546 0 *
Donald E. & Virginia V. Vinson Trust 11,920 3,137 0 *
Doyle, J. William 18,839 5,196 0 *
Drax Holdings, LP 238,380 62,724 0 *
Elkon, Sheila J. 8,433 2,219 0 *
Evans, T. Cartter 19,072 5,019 0 *
Evans, Todd 27,283 7,180 0 *
Everett III, Willis M. 19,072 5,019 0 *
Falk, Robert I. 47,677 12,546 0 *
Frese Family Trust dated 4/1/96 11,920 3,137 0 *
Fried, Jr., Albert 68,237 17,955 0 *
Frolich, Craig S. 568 690 0 *
Frolich, David J. & Terri A. 10,818 2,847 0 *
The Frolich Trust UA DTD 10/9/95 11,920 3,137 0 *
Giant Trading, Inc. 47,677 12,546 0 *
Gittis, Howard 59,596 15,681 0 *
Greenberg, Alan Neil Greenberg & Joy M.
Greenberg, JT 20,736 5,552 0 *
Grody, Rachel K. 14,304 3,765 0 *
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership
After Offering(3)
Number of Shares Number of Shares --------------------
Beneficially Owned Registered Number of
Name of Selling Shareholder Prior to Offering(1) for Sale Hereby(2) Shares Percent
- --------------------------- -------------------- ------------------ ------ -------
<S> <C> <C> <C> <C>
Harold Grossman, Ttee, The Grossman
Family Trust 11,920 3,137 0 *
Harrigan Family Trust 11,920 3,137 0 *
Henry, Steven T. & Frances M. 11,920 3,137 0 *
Heritage Finance & Trust Co. 233,749 61,505 0 *
Hikari Power 47,677 12,546 0 *
HJK, LLC 95,532 25,090 0 *
Hyman Lezell Rev. Trust 18,839 5,196 0 *
IMS Global Investments X Ltd. 378,649 99,632 0 *
Ivan Kaufman Grantor Retained Annuity
Trust 89,299 23,497 0 *
J.F. Shea Co., Inc. as Nominee 1997-50 238,380 62,724 0 *
Jackson Hole Investments Acquisitions LP 23,839 6,273 0 *
John S. Osterweis, Ttee, The Osterweis
Revocable Trust UA dated 9/13/93 11,920 3,137 0 *
Joshua Black Trust 11,920 3,137 0 *
Kapito, Robert S. 23,839 6,273 0 *
Katsof, Irwin 569 151 0 *
Katz, Margorie Gittis 19,866 5,227 0 *
Karen Cook IRA 9,536 2,510 0 *
Kash, Peter & Donna, JTWROS 11,920 3,137 0 *
Keesee, Thomas W. Keesee III & Angela
O.B. de Mello 11,920 3,137 0 *
First Union FBO Ery W Kehaya 1,136 300 0 *
Keio University 476,758 125,447 0 *
Kendall, Jr., Donald R. 23,839 6,273 0 *
Kessel, Shirley S. 11,920 3,137 0 *
Keys Foundation Curacao, Netherland
Antilles 6,491 7,890 0 *
Kimtar Investments LLC 190,704 50,180 0 *
Kohut, Richard 11,920 3,137 0 *
L & D Partnership 11,920 3,137 0 *
Lebovitz, Stephen H. 6,920 2,059 0 *
Lenz Family Trust 11,920 3,137 0 *
Leo A. Small & Shelle D. Small 1,109 568 0 *
Oshima, Kenshin 47,677 12,546 0 *
Lisenby, S. Alan 1,920 982 0 *
Loeb, Jr., John L. 11,920 3,137 0 *
Lydecker, Richard A. & Gay C. 2,385 628 0 *
Maeda, Susumu 42,164 11,095 0 *
Maidenhair NV 47,677 12,546 0 *
MDBC Capital Corp. 23,839 6,273 0 *
Mega International Corp. 23,839 6,273 0 *
Metzger, William Metzger/Katharine 11,920 3,137 0 *
Meyer III, Maurice 11,920 3,137 0 *
MHR Capital Partners L.P. 476,758 125,447 0 *
Michael L. & Sherry R. Andrade, Co-Ttees
of M&S Andrade Rev. TR. For Comm. & Sep.
Property UA dtd 10-14-74, as amended 11,920 3,137 0 *
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership
After Offering(3)
Number of Shares Number of Shares --------------------
Beneficially Owned Registered Number of
Name of Selling Shareholder Prior to Offering(1) for Sale Hereby(2) Shares Percent
- --------------------------- -------------------- ------------------ ------ -------
<S> <C> <C> <C> <C>
Michael G. Jesselson 12/18/80 Trust 95,352 25,090 0 *
Michael L. Metter, SEP-IRA 23,839 6,273 0 *
Moonlight International, Ltd. 23,839 6,273 0 *
Moscati, Leonard F. 95,352 25,090 0 *
Mullen, Michael A. 717 190 0 *
Nagle, Arthur J. 11,920 3,137 0 *
Negrin, Renato 5,292 1,392 0 *
Nomura Bank (Switzerland) Ltd. 267,028 73,775 0 *
Oct 1983 Trust FBO Jesselson
Grandchildren 238,380 62,724 0 *
Oretexga Ltd. Partnership 15,034 3,956 0 *
Ostrovsky, Paul D. & Rebecca L. 7,152 1,882 0 *
Ostrovsky, Steven N. 11,920 3,137 0 *
Oxcal Venture Fund LP 47,677 12,546 0 *
Palmetto Partners, Ltd. 95,352 25,090 0 *
Pellizzon, Gregory P. & Christine K.
Pellizzon, JTWROS 11,920 3,137 0 *
Pellizzon, Peter & Pamela 11,920 3,137 0 *
Pequot Scout Fund, L.P. 1,050 276 0 *
Prager, Tis 23,839 6,273 0 *
Privat Kredit Bank 8,032 9,763 0 *
Richard B. Chanin, IRA 19,072 5,019 0 *
Rick Steiner Productions, Inc. 1,331 969 0 *
Robert & Evelyn Elliott Trust 11,920 3,137 0 *
Robert L. Spint, Ttee, Robert L. Spint TR
UD dated 10/19/89 11,920 3,137 0 *
Robert, Stephen 2,271 2,760 0 *
Ruttenberg, David W. 11,920 3,137 0 *
Sagres Group Ltd. 143,028 37,634 0 *
Sanger Investments 7,152 1,882 0 *
Sheft, Hope Gittis 19,866 5,227 0 *
Schlotterbeck Family Trust UA Dtd
12/22/89, The 11,920 3,137 0 *
Schonzeit, Andrew 12,814 3,372 0 *
Schwinger, Scott E. 2,385 628 0 *
Silverman, Jeffrey S. 35,758 9,409 0 *
Slovin, Bruce 47,677 12,546 0 *
Spear, Leeds & Kellogg 5,676 1,494 0 *
Steinhardt, Michael H. 47,677 12,546 0 *
Stern Joint Venture, L.P. 47,677 12,546 0 *
Stern, James D. 569 151 0 *
Stern, Richard J. 47,677 12,546 0 *
Subbah, M.D. 47,677 12,546 0 *
Suppa, Enrico 28 34 0 *
Taub, Hindy 12,814 3,372 0 *
Tauber, Herman 23,839 6,273 0 *
Teitelbaum, M.D., Myron M. 11,920 3,137 0 *
The 1992 Houston Partnership, L.P. 47,677 12,546 0 *
The Aries Master Fund (5) 2,220,102 325,368 509,234 4.73%
Thomas L. Cassidy 23,839 6,273 0 *
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership
After Offering(3)
Number of Shares Number of Shares --------------------
Beneficially Owned Registered Number of
Name of Selling Shareholder Prior to Offering(1) for Sale Hereby(2) Shares Percent
- --------------------------- -------------------- ------------------ ------ -------
<S> <C> <C> <C> <C>
Tokenhouse Trading Company Limited 47,677 12,546 0 *
Valori Associates, Inc. 568 690 0 *
Victoria Black Trust 11,920 3,137 0 *
Polly & Co c/o Bank of New York 11,920 3,137 0 *
Vitols, Juris 47,677 12,546 0 *
Warwick Investments Ltd. 47,677 12,546 0 *
Weiss, Melvyn I. 47,677 12,546 0 *
Werther, Caroline Gittis 19,866 5,227 0 *
Whetten, Robert J. 34,089 8,970 0 *
Widmer, Bruno 23,839 6,273 0 *
Wise, Alan &/or Terri 11,920 3,137 0 *
Wolf, David A. 568 690 0 *
Wolford, Robert B. 11,920 3,137 0 *
Yoshimasa Yamazaki 47,677 12,546 0 *
</TABLE>
* Less than 1%.
(1) In each case, does not include approximately 80% of the shares registered
hereby on behalf of the stockholder, which are yet to be issued, and will be
issued semi-annually, in accordance with the Subscription Agreement of the 1997
Private Placement. See "Description of the Payment in Kind Dividend".
(2) In each case, the actual number of shares to be issued may be less than
these amounts, should the individual stockholder dispose of shares acquired in
our 1997 Private Placement or previous payment-in-kind dividends prior to the
occurrence of any of the next four issuances of the semi-annual 5% dividend. See
"Description of the Payment in Kind Dividend".
(3) The figures for the number of shares and the percentage of shares
beneficially owned by the selling stockholders after the offering are based on
the assumption that all of the selling stockholders will sell all of the shares
registered for sale hereby and all of the shares that are salable under prior
registration statements or pursuant to Rule 144 or Rule 144(k). Because the
selling stockholders may offer all, some or none of the shares pursuant to this
prospectus, and because there are currently no agreements, arrangements or
understandings with respect to the sale of any of the shares, no estimate can be
given as to the number of shares that will be held by the selling stockholders
after completion of the sale of shares hereunder. See "Plan of Distribution."
(4) Number of Shares Beneficially Owned includes 79,866 shares issuable upon
exercise of warrants exercisable until May 19, 2002 at a price of $2.54375 each
held by such entity. Does not include warrants to purchase 1,434,033 shares of
common stock owned by Lindsay A. Rosenwald, M.D., the Chairman of Paramount
Capital Asset Management, Inc., the general partner of the selling stockholder,
in his individual capacity. Dr. Rosenwald and Paramount share the power to vote
and/or dispose of the shares of common stock held by the Aries Domestic Fund,
L.P., but disclaim beneficial ownership thereof except to the extent of their
pecuniary interest therein, if any.
15
<PAGE>
(5) Number of shares Beneficially Owned includes 155,493 shares issuable upon
exercise of warrants exercisable until May 19, 2002 at a price of $2.54375 each
held by such entity. Does not include warrants to purchase 1,434,033 shares of
common stock owned by Lindsay A. Rosenwald, M.D., the Chairman of Paramount
Capital Asset Management, Inc., the investment manager of the Selling
Stockholder, in his individual capacity. Dr. Rosenwald and Paramount share the
power to vote and/or dispose of the shares of common stock held by The Aries
Master Fund, but disclaim beneficial ownership thereof except to the extent of
their pecuniary interest therein, if any.
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0300 for further
information on the public reference rooms. Our SEC filings are also available
to the public from the SEC's web site at http://www.sec.gov.
We have filed with the SEC Commission a registration statement on Form S-3
under the Securities Act with respect to the common stock offered hereby. This
prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and the schedules thereto. For further information
with respect to the Company and such common stock, reference is made to the
registration statement and exhibits and schedules thereto. Statements contained
in this prospectus as to the contents of any contract or other document referred
to are not necessarily complete, and, with respect to any contract or other
document filed as an exhibit to the registration statement, each such statement
is qualified in all respects by reference to the applicable exhibit. Copies of
the registration statement and the exhibits are on file at the offices of the
SEC and may be obtained upon payment of the prescribed fee or may be examined
without charge at the public reference facilities of the SEC described above.
The SEC allows us to "incorporate by reference" into this prospectus the
documents we file with them, which means that we can disclose important
information to you by referring you to these documents. The information that we
incorporate by reference into this prospectus is considered to be part of this
prospectus. We incorporate by reference into this prospectus the documents
listed below:
. Annual Report on Form 10-KSB for the year ended December 31, 1998, as
filed with the SEC on March 30, 1999, pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act");
. Quarterly Reports on Form 10-QSB for the quarter ended March 31, 1999,
as filed with the SEC on May 17, 1999, for the quarter ended June 30,
1999, as filed with the SEC on August 13, 1999 and for the quarter ended
September 30, 1999, as filed with the SEC on November 12, 1999;
. Definitive Proxy Statement with respect to the Annual Meeting of
Stockholders held on May 12, 1999, as filed with the SEC on April 16,
1999;
. The description of our common stock contained in our Registration
Statement on Form 8-A as filed with the SEC on August 4, 1998; and
. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the Company's fiscal year
ended December 31, 1998.
We will also incorporate by reference each of the following documents that we
will file with the SEC after the date of this prospectus until this offering is
completed or after the date of this initial registration statement before the
effectiveness of the registration statement:
. Reports filed under Sections 13 (a) and (c) of the Exchange Act;
. Definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting;
and
16
<PAGE>
. Any reports filed under Section 15 (d) of the Exchange Act.
We will provide, without charge, upon written or oral request of any person to
whom a copy of this prospectus is delivered, a copy of any or all of the
foregoing documents and information that has been or may be incorporated by
reference herein (other than exhibits to such documents). Requests for such
documents and information should be directed to the following address:
Endorex Corporation
Attention: David G. Franckowiak
Chief Financial Officer
28101 Ballard Drive, Suite F
Lake Forest, Illinois 60045
Telephone number (847) 573-8990
You should rely only on the information incorporated by reference or provided
in this prospectus or the prospectus supplement. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus is accurate as of any date other than on
the front of this document.
Our common stock is traded on the American Stock Exchange. Reports, proxy
statements and other information concerning Endorex may be inspected at the
Nasdaq-Amex Market Group at 80 Merritt Blvd., Trumbull, CT 06611.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the Company
by Brobeck, Phleger & Harrison LLP, Broomfield, Colorado.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-KSB for the year ended December 31,
1998 have been so incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
17
<PAGE>
2,194,184 Shares
Endorex Corporation
Common Stock
PROSPECTUS
December 23, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an estimate of the expenses to be incurred
by the Company in connection with the issuance and distribution of the
securities being registered:
<TABLE>
<CAPTION>
Amount to
Be Paid
---------
<S> <C>
Registration Fee -- SEC............................................ $ 1,376
Legal Fees and Expenses............................................ 5,000
Accounting Fees and Expenses....................................... 2,500
Miscellaneous...................................................... 624
-------
Total.............................................................. $ 9,500
=======
</TABLE>
Item 15. Indemnification of Directors and Officers
Article Thirteenth of the Company's Certificate of Incorporation, as
amended, and Article VII of the Company's By-Laws provide that the Company may
indemnify each current and former director, officer, and any employee or agent
of the corporation, his or her heirs, executors, and administrators, against
expenses reasonably incurred or any amounts paid by him or her in connection
with any action, suit, or proceeding to which he or she may be made a party by
reason of being or having been a director, officer, employee or agent of the
corporation to the fullest extent permitted by the Delaware General Corporation
Law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company 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.
Reference is made to Section 145 of the Delaware General Corporation Law as
such Sections pertain to indemnification matters.
Item 16. Exhibits
The following is a list of Exhibits filed as part of the Registration
Statement:
3.1 Certificate of Incorporation of Company.(1)
3.2 Certificate of Ownership and Merger filed March 30, 1987.(1)
3.3 Certificate of Amendment to Certificate of Incorporation filed
September 7, 1989.(2)
3.4 Certificate of Amendment to Certificate of Incorporation filed
November 13, 1990.(3)
3.5 Certificate of Amendment to Certificate of Incorporation filed May
29, 1991.(3)
3.6 Certificate of Amendment to Certificate of Incorporation filed
February 27, 1992.(3)
3.7 Certificate of Amendment to Certificate of Incorporation filed
February 27, 1992.(3)
<PAGE>
3.8 Certificate of Amendment to Certificate of Incorporation filed June
29, 1993.(5)
3.9 Certificate of Amendment to Certificate of Incorporation filed April
15, 1996.(5)
3.10 Certificate of Amendment to Certificate of Incorporation filed June
10, 1997.(7)
3.11 Certificate of Amendment to Certificate of Incorporation filed
December 9, 1998.(9)
3.12 Series B Preferred Certificate of Designations, Preferences and
Rights filed January 21, 1998.(7)
3.13 Series C Preferred Certificate of Designations, Preferences and
Rights filed October 21, 1998.(8)
3.14 By-laws of Company.(1)
4.1 Specimen Common Stock Certificate.(1)
4.2 Warrant for the Purchase of 864,865 shares of Common Stock.(6)
4.3 Warrant for the Purchase of 1,297,297 shares of Common Stock.(6)
4.4 Warrant for the Purchase of 230,770 shares of Common Stock.(7)
5.1 Opinion from Brobeck, Phleger & Harrison LLP regarding legality of
shares being registered.
16 Letter on change in certifying accountants.(4)
21.1 List of all subsidiaries of Endorex, state or other jurisdiction of
incorporation or organization, and names under which such
subsidiaries do business.
23.1 Consent of PricewaterhouseCoopers LLP, independent certified public
accountants.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5.1)
24.1 Power of Attorney
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1 (File No. 33-13492).
(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1989.
(3) Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1992.
(4) Incorporated by reference to the Company's Report on Form 8-K/A dated
February 10, 1997.
(5) Incorporated by reference to the Company's Annual Report on Form 10-KSB, as
amended, for the transition period ended December 31, 1996.
(6) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB,
as amended, for the fiscal quarter ended September 30, 1997.
(7) Incorporated by reference to the Company's Annual Report on Form 10-KSB, as
amended, for the transition period ended December 31, 1997.
(8) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB,
for the fiscal quarter ended September 30, 1998.
(9) Incorporated by reference to the Company's Annual Report on Form 10-KSB,
for the year ended December 31, 1998.
Item 17. Undertakings
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
<PAGE>
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 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) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(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 the 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 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.
<PAGE>
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 Lake Forest, State of Illinois, on December 23, 1999.
ENDOREX CORPORATION
By: *
-----------------------------------------------
Michael S. Rosen
President and Chief Executive Officer, and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this the registration statement has been signed by the following persons in the
capacities indicated on December 23, 1999.
<TABLE>
<CAPTION>
<S> <C>
By: *
------------------------
Michael S. Rosen President, Chief Executive Officer, and Director
By: /s/ David G. Franckowiak
------------------------
David G. Franckowiak Chief Financial Officer
(Principal Financial and Accounting Officer)
By: *
------------------------
Richard Dunning Director
By:
------------------------
Steve H. Kanzer Director
By: *
------------------------
Paul D. Rubin Director
By: *
------------------------
H. Laurence Shaw Director
By: *
------------------------
Kenneth Tempero Director
By: *
------------------------
Steven Thornton Director
*By: /s/ David G. Franckowiak
------------------------
David G. Franckowiak
Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT 5.1
December 23, 1999
Endorex Corporation
28101 Ballard Drive, Suite F
Lake Forest, Illinois 60045
Ladies and Gentlemen:
We have assisted in the preparation and filing by Endorex Corp. (the
"Company") of a Registration Statement on Form S-3 (the "Registration
Statement"), with the Securities and Exchange Commission, relating to the sale
of up to 2,194,184 shares (the "Shares") of Common Stock, $.001 par value (the
"Common Stock"), of the Company.
This opinion is being furnished in accordance with the requirements of
Item 16 of Form S-3 and Item 601(b)(S)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the issuance and sale of the
Shares. Based on such review, we are of the opinion that of the
2,194,184 Shares, 402,687 Shares issued on November 16, 1999 have been
duly authorized and are legally issued, fully paid and nonassessable, and
the balance of the 2,194,184 Shares, when issued in accordance with
Section 6.4 of the October 1997 Subscription Agreement between the Company
and various stockholders and upon declaration of dividends by the Company's
board of directors in accordance with the Delaware General Corporation Law,
will be duly authorized, legally issued, fully paid and nonassessable.
We hereby consent to the use of our name in the Registration Statement
under the caption "Legal Matters" in the related Prospectus and consent to the
filing of this opinion as an exhibit thereto. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act, the rule and regulations of the Securities
and Exchange Commission promulgated thereunder, or Item 509 of Regulation S-K.
This option letter is rendered as of the date first written above and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company or the
Shares.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
1) Orasomal Technologies, Inc.
Incorporated in the State of Delaware
Does business as Orasomal Technologies, Inc.
2) Wisconsin Genetics, Inc.
Incorporated in the State of Delaware
Does business as Wisconsin Genetics, Inc.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 11, 1999 relating to the
financial statements, which appears in Endorex Corporation's (formerly Endorex
Corp.) Annual Report on Form 10-KSB for the year ended December 31, 1998. We
also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
December 23, 1999
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
We the undersigned directors and/or officers of Endorex Corporation (the
"Company"), hereby severally constitute and appoint Michael S. Rosen, President
and Chief Executive Officer, and David G. Franckowiak, Chief Financial Officer,
and each of them individually, with full powers of substitution and
resubstitution, our true and lawful attorneys, with full power to them and each
of them to sign for us, in our names and in the capacities indicated below, the
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission, and any and all amendments to said Registration Statement (including
post-effective amendments), in connection with the registration under the
Securities Act of 1933, as amended, of equity securities of the Company, and to
file or cause to be filed the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys, 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 each of them might
or could do in person, and hereby ratifying and confirming all that said
attorneys, and each of them, or their substitute or substitutes, shall do or
cause to be done by virtue of this Power of Attorney.
WITNESS our hands on this ____ day of ___________, 1999.
____________________________ ________________________________
Michael S. Rosen David G. Franckowiak
____________________________ ________________________________
Richard Dunning Steve H. Kanzer
____________________________ ________________________________
Paul D. Rubin H. Laurence Shaw
____________________________ ________________________________
Kenneth Tempero Steven Thornton
