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As filed with the Securities and Exchange Commission on December 28, 2000
Registration No. 333-36950
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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ENDOREX CORPORATION
(Exact Name Of Registrant As Specified In Its Charter)
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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)
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STEVE J. KOULOGEORGE
CONTROLLER
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)
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COPIES TO:
RICHARD R. PLUMRIDGE, ESQ
DARREN R. HENSLEY, ESQ
JOHN P.J. KIM, ESQ
BROBECK, PHLEGER & HARRISON LLP
370 Interlocken Blvd., Suite 500
Broomfield, CO 80021
(303) 410-2000
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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. [_]
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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.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+The information in this prospectus is not complete and may be changed. These +
+securities may not be sold until the Registration Statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 29, 2000
PROSPECTUS
8,147,018 Shares
ENDOREX CORPORATION
Common Stock
This prospectus relates to the resale of up to 8,147,018 shares of our common
stock by certain of our current stockholders. We are registering our common
stock for resale by the selling stockholders identified in this prospectus.
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 28, 2000 was $0.8125.
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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 securities
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.
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The date of this prospectus is
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TABLE OF CONTENTS
<TABLE>
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Page
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The Company................................................................ 1
Risk Factors............................................................... 1
Forward Looking Information................................................ 8
Use of Proceeds............................................................ 8
Plan of Distribution....................................................... 8
Selling Stockholders....................................................... 11
Where to Find More Information............................................. 14
Legal Matters.............................................................. 15
Experts.................................................................... 15
</TABLE>
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THE COMPANY
Endorex Corporation is a development stage drug delivery 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.
RISK FACTORS
An investment in our shares being offered in this prospectus involves a
high degree of risk and if any of the risks discussed below come to fruition
you may lose all or part of your investment. The U.S. Securities and Exchange
Commission, or SEC, allows us to "incorporate by reference" information that
we file with them, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will periodically update and supersede this
information. In deciding whether to purchase shares of our common stock, you
should carefully consider the following risk factors, in addition to other
information contained in this prospectus, in our most recent annual report on
Form 10-KSB and in any other documents incorporated by reference into this
prospectus from other SEC filings. This prospectus also contains forward-
looking statements that involve risks and uncertainties. Our actual results
could differ materially from those discussed here or incorporated by
reference. Factors that could cause or contribute to differences in our actual
results include those discussed in this section, as well as those discussed
elsewhere in this prospectus and in other documents incorporated by reference
into this prospectus.
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
oral delivery system, the MEDIPAD(R) infusion pump for iron chelation therapy,
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 that 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 (cancer
products), and we have not generated significant revenues from product sales,
or licensing. 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 plc and any
future joint ventures and corporate partnerships.
Our strategy for research, development and commercialization of certain of
our products is to rely on arrangements with corporate partners. As a result,
our ability to commercialize products is dependent upon the success of third
parties in performing preclinical studies and clinical trials, obtaining
regulatory approvals, manufacturing and successfully marketing our products.
In connection with our two joint ventures with Elan, we
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are obligated to fund research and development activities in proportion to our
ownership interest in each joint venture, currently 80.1% of each joint
venture, based on the research and development plan and budget that we
mutually agree upon with Elan. If we do not have sufficient resources to meet
our funding obligations under each of 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.
Newco, our MEDIPAD(R) iron chelator joint venture with Elan, has licensed
its first product on a worldwide basis to Schein Pharmaceutical, which has
been acquired by Watson Laboratories. Watson has agreed to develop and market
this product in the United States, and Newco and Watson will jointly seek
partners for marketing the product outside of the United States. We cannot
assure you that Watson and Newco will successfully develop, market,
commercialize or get the necessary regulatory approvals for this product in
the United States or internationally. Watson has applied to the U.S. Food and
Drug Administration, or FDA, to approve marketing of the iron chelation drug
it plans to commercialize but has indicated that the regulatory approval
process may be delayed.
We have also signed an exclusive research and option agreement with Novo
Nordisk to license our Orasome(TM) oral delivery system for their human growth
hormone product, Norditropin(R). We cannot assure you that Novo Nordisk will
license and develop this technology for this product.
We cannot assure you that our arrangements with our corporate partners,
including the joint ventures with Elan, will be successful or that the
development efforts carried out by them will continue. 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 that 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 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 immediately used by
doctors unfamiliar with our product applications. 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 products for which we will seek approval from the FDA and/or from similar
agencies in other countries, to market to certain defined patient
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groups. Although we are involved in developing oral versions of injectable
drugs and vaccines that have already been approved by the FDA, the oral
products we are currently developing will require significant additional
laboratory and clinical testing and investment for the foreseeable future. Our
product candidates may not show sufficient efficacy in animal models to
justify continuing research into clinical testing stages or 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 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 dependence on a limited number of suppliers may negatively impact our
ability to complete clinical trials and market our products.
Prior to commercial distribution of any of our products, if approved, we
will be required to identify and contract with a commercial supplier or
manufacturer. We cannot guarantee that these suppliers or manufacturers 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 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 FDA 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 only one agreement for the licensing or
marketing of our product candidates, and we cannot assure you that we will be
able to enter into any such additional 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.
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.
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We use hazardous chemicals and radioactive and biological materials in our
business. Any claims relating to improper handling, storage, or disposal of
these materials could be time consuming and costly.
Our research and development processes involve the controlled use of
hazardous materials, including hazardous chemicals and radioactive and
biological materials. Our operations also produce hazardous waste products. We
cannot eliminate the risk of accidental contamination or discharge and any
resultant injury from these materials. Federal, state, and local laws and
regulations govern the use, manufacture, storage, handling, and disposal of
these materials. We believe that our current operations comply in all material
respects with these laws and regulations. We could be subject to civil damages
in the event of an improper or unauthorized release of, or exposure of
individuals to, hazardous materials. In addition, we could be sued for injury
or contamination that results from our use or the use by third parties or our
collaborators of these materials, and our liability may exceed our total
assets. Compliance with environmental laws and regulations may be expensive,
and current or future environmental regulations may impair our research,
development, or commercialization efforts.
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 delivery field include Aviron, which is developing
a nasal flu vaccine that is in Phase III clinical trials, BioVector, which is
in Phase II trials with an intranasal flu vaccine and another major vaccine,
specialized biotechnology firms, universities, and governmental agencies. Our
competitors in the liposomal formulation field include The Liposome Company
(owned by Elan Corporation), NexStar (owned by Gilead Sciences, Inc.) and
Sequus (owned by ALZA Corporation). Our competitors in the field of the oral
delivery of protein and peptide-based drugs include Emisphere Technologies,
which has started Phase III trials for oral heparin and (through its
collaborator Novartis) Phase I trials with oral calcitonin; Unigene
Laboratories, which has an oral calcitonin product in PhaseI/II trials; and
Nobex Corp. (formerly known as Protein Delivery) which has an oral insulin in
Phase II trials. 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 and
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, 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. 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
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owned by other companies. Although we believe that our products and services
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
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.
We may not be able to successfully sell our cancer products business.
On March 1, 2000 we announced our decision to exit and/or divest our
oncology business and related products to focus on our drug delivery business
and products. We cannot assure you that we will be able to implement this new
business strategy or that it will be successful if implemented. Subsequently,
we granted a third party an option to purchase our Perillyl Alcohol cancer
program and it's related assets. Pursuant to its terms, the option lapsed
without being exercised by the third party. We cannot assure you that an
alternative purchaser will be found or that we will be able to divest our
oncology business and related products.
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, regulatory 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
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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 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 Michael S. Rosen, our President and
Chief Executive Officer. 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. Although we maintain and are the
beneficiary of key man insurance on Mr. Rosen, we do not believe the proceeds
would be adequate to compensate us for his loss. 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.
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.
Endorex has a number of agreements or obligations that may result in
dilution to investors. These include:
. warrants to purchase 2,012,622 shares of common stock at $2.54375 per
share, subject to adjustment, issued in connection with the October 1997
private placement of our common stock;
. warrants to purchase 230,770 shares of common stock at $10.00 per share,
subject to adjustment, held by Elan;
. warrants to purchase 43,334 shares of common stock at $2.3125 per share,
subject to adjustment, held by the Aries Master Fund II and warrants to
purchase 23,334 shares of common stock at $2.3125 per
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share, subject to adjustment, held by the Aries Domestic Fund, L.P.,
both issued on May 19, 1997 pursuant to a senior line of credit that has
been subsequently retired;
. warrants to purchase 452,383 shares of common stock at $5.91, subject to
adjustment, held by certain investors pursuant to the April 2000 private
placement of our common stock;
. warrants to purchase 226,190 shares of common stock at $5.25, subject to
adjustment, issued to the finder in connection with the April 2000
private placement of our common stock;
. conversion rights and dividend rights of preferred stock held by Elan,
consisting of 92,973, subject to adjustment, 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 $7.38 per share, subject to
adjustment, and 91,218, subject to adjustment, 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 one of the joint
ventures with Elan or convertible at liquidation value into common stock
at $8.86 per share;
. options to purchase approximately 1.6 million shares of common stock
issued to participants in our stock option plan with a weighted average
exercise price of approximately $2.78; and
. anti-dilution rights under the above warrants and preferred stock, which
can permit purchase of additional shares and/or lower
exercise/conversion prices under certain circumstances. To the extent
that anti-dilution rights are triggered, or warrants, options 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 our 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, 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 that may present potential
conflicts of interest.
Lindsay A. Rosenwald, M.D., is the Chairman and sole stockholder of
Paramount Capital Asset Management, Inc., or PCAM, Paramount Capital, Inc., or
Paramount, and Paramount Capital Investment LLC, or PCI, a merchant banking
and venture capital firm specializing in biotechnology companies. PCAM is the
investment manager of The Aries Master Fund II, 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 a subsidiary 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, Paramount could propose up to three persons for nomination as
directors until October, 2000. Such directors remain on our board. This
arrangement 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, or incorporated by reference 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 or incorporated by
reference 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 8,147,018 shares on behalf of the selling
stockholders. 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 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.
8
<PAGE>
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 Securities 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
Securities Exchange Act and the associated rules and regulations under the
Securities 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.
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;
9
<PAGE>
. 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.
10
<PAGE>
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. Except as indicated
below, 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. This information is based upon information provided by each
respective selling stockholder, schedules 13D and other public documents filed
with the SEC. The number of shares of common stock beneficially owned and used
to calculate the percentage beneficial ownership of each listed person
includes the shares of common stock underlying warrants or preferred stock
held by such persons that are exercisable or convertible within 60 days of
December 7, 2000. The term "selling stockholders" includes the stockholders
listed below and their transferees, assignees, pledgees, donees or other
successors. The percent of beneficial ownership for each stockholder is based
on 12,741,866 shares of common stock outstanding as of December 7, 2000.
<TABLE>
<CAPTION>
Beneficial
Number of Shares of Common Stock Ownership
Registered for Sale Hereby(1) After Offering(2)
--------------------------------- -----------------
Shares of
Common
Stock
Shares of Underlying
Number of Shares Common Series B
Beneficially Shares of Stock and Series C
Owned Prior Common Underlying Preferred Number of
Selling Stockholder to Offering(2)(3) Stock Warrants Stock Shares Percent
------------------- ----------------- --------- ---------- ------------ --------- -------
<S> <C> <C> <C> <C> <C> <C>
AFAX Group Ltd.......... 66,138 52,910 13,228 -- -- --
Aries Domestic Fund,
LP(4).................. 1,076,081 565,332 56,533 -- 454,216 3.54%
The Aries Master Fund
II(5).................. 2,369,986 1,121,587 112,159 -- 1,136,240 8.81%
Banque SCS Alliances
S.A.................... 132,275 105,820 26,455 -- -- --
Beacon Global Advisors.. 132,275 105,820 26,455 -- -- --
Credito Privato
Commericale............ 132,275 105,820 26,455 -- -- --
Crescent International
Ltd.................... 132,275 105,820 26,455 -- -- --
Deephaven Private
Placement.............. 132,275 105,820 26,455 -- -- --
DG Lux Lacuna APO
Biotech................ 317,460 253,968 63,492 -- -- --
Drax Holdings Group
L.P.................... 502,930 211,640 52,910 -- 238,380 1.87%
Elan Pharmaceutical
Investments, Ltd.(6)... 2,827,768 -- -- 2,289,306 538,462 3.53%
Robert I. Falk.......... 113,815 52,910 13,228 -- 47,677 *
Financiere Tuileries.... 39,683 31,746 7,937 -- -- --
Heritage Finance and
Trust Co............... 127,552 84,656 21,164 -- 21,732 *
Peter Kash(7)........... 78,865 78,865 -- -- -- --
Peter Kash and Donna
Kash JTWROS............ 1,109 1,109 -- -- -- --
Keys Foundation,
Curacao................ 105,820 84,656 21,164 -- -- --
Nomura Bank
(Switzerland) Ltd...... 264,550 211,640 52,910 -- -- --
Paramount Capital,
Inc.(8)................ 235,190 -- 226,190 -- 9,000 --
PKB Privatbank AG....... 219,672 169,312 42,328 -- 8,032 *
Tis Prager.............. 13,228 10,582 2,646 -- -- --
Lindsay A. Rosenwald,
M.D.(9)................ 4,900,384 -- 1,434,032 -- 3,466,352 24.45%
St. John's Trust........ 132,275 105,820 26,455 -- -- --
Bruno Widmer............ 15,445 10,582 2,646 -- 2,217 *
</TABLE>
--------
*Less than 1%.
(1) This prospectus includes 3,369,577 shares of common stock that were
previously registered on a registration statement on Form S-2,
Registration No. 333-44583, filed by the Company with the SEC on January
21, 1998, but which were not sold while such registration statement was
effective.
11
<PAGE>
(2) The calculations for the beneficial ownership of each selling stockholder
assumes (i) that any shares subject to warrants or conversion privileges
within 60 days of December 7, 2000 shall be deemed owned and outstanding
for the purpose of determining beneficial ownership and the percentage of
outstanding shares beneficially owned by such person, but shall not be
deemed to be outstanding for the purpose of computing the percentage
beneficially owned by any other person, and (ii) that such selling
stockholder has sold all of its shares registered hereunder. Some of the
selling stockholders may also sell shares of common stock registered under
prior registration statements or pursuant to Rule 144. 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."
(3) On April 12, 2000, the Company, pursuant to a private placement to certain
investors, issued 1,809,522 shares of common stock and warrants
exercisable for 452,383 shares of common stock issuable upon exercise of
the warrants until April 12, 2005 at a price of $5.91 per share. The
number of shares of common stock beneficially owned by each such selling
stockholder includes the shares of common stock underlying warrants issued
pursuant to the April 2000 private placement if such selling stockholder
was an investor in the April 2000 private placement. The registration
statement of which this prospectus is a part was filed pursuant to
registration rights granted to the investors in the April 2000 private
placement.
(4) Number of shares beneficially owned includes 23,334 shares of common stock
issuable upon exercise of warrants exercisable until May 19, 2002 at a
price of $2.3125 per share, and 56,533 shares issuable upon exercise of
warrants exercisable until April 16, 2003 at a price of $2.54375 per
share. Does not include warrants to purchase 1,434,032 shares of common
stock held by Lindsay A. Rosenwald, M.D., the Chairman of PCAM, which is
the general partner of the Aries Domestic Fund, L.P., in his individual
capacity. Dr. Rosenwald and PCAM 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.
(5) Number of shares beneficially owned includes 43,334 shares of common stock
issuable upon exercise of warrants exercisable until May 19, 2002 at a
price of $2.3125 per share, and 112,159 shares of common stock issuable
upon exercise of warrants exercisable until April 16, 2003 at a price of
$2.54375 per share. Does not include warrants to purchase 1,434,032 shares
of common stock held by Lindsay A. Rosenwald, M.D., the Chairman of PCAM,
which is the investment manager of The Aries Master Fund II, in his
individual capacity. Dr. Rosenwald and PCAM share the power to vote and/or
dispose of the shares of common stock held by The Aries Master Fund II,
but disclaim beneficial ownership thereof except to the extent of their
pecuniary interest therein, if any.
(6) Number of shares beneficially owned includes 1,259,757 shares of common
stock issuable upon conversion of Series B Preferred Stock, 1,029,549
shares of common stock issuable upon conversion of Series C Preferred
Stock and 230,770 shares issuable upon exercise of warrants exercisable
until January 21, 2004 at a price of $10.00 per share.
(7) Does not include 1,109 shares over which Peter Kash and Donna Kash have
beneficial ownership as joint tenants with rights of survivorship. Mr.
Kash is a Senior Managing Director of Paramount.
(8) As compensation for services as financial advisor and finder for the April
2000 private placement, the Company issued warrants for 226,190 shares of
common stock exercisable until October 11, 2007, at a price of $5.25 to
Paramount. Paramount has indicated that it will transfer all or a portion
of such warrants to its employees, officers and its affiliates. The
securities beneficially owned by Paramount include 9,000 shares of common
stock issuable upon exercise of options exercisable until October 23, 2009
at a price of $2.54 per share.
(9) Lindsay A. Rosenwald, M.D., is the Chairman and sole stockholder of PCAM,
which is the Investment Manager and General Partner of the Aries Master
Fund II and Aries Domestic Fund, L.P., respectively. Paramount's chairman
and sole stockholder is Lindsay A. Rosenwald, M.D. The securities
beneficially owned by Lindsay A. Rosenwald include 1,434,032 shares of
common stock issuable upon exercise of warrants exercisable until April
16, 2003 at a price of $2.54375 per share, 1,076,081 shares beneficially
12
<PAGE>
owned by Aries Domestic Fund, L.P., 2,369,986 shares beneficially owned by
Aries Master Fund II and 20,284 shares beneficially owned by Aries Domestic
Fund II, L.P. Dr. Rosenwald disclaims beneficial ownership of the shares
owned by the Aries Master Fund II, Aries Domestic Fund II, L.P. and Aries
Domestic Fund, L.P., except to the extent of any pecuniary interest
therein.
Relationships with Selling Stockholders
In addition to the relationships set forth in the table above and the
footnotes thereto, we have the following relationships with the selling
stockholders.
On June 13, 1996, Dominion Resources, Inc., or Dominion, entered into an
agreement with The Aries Fund and the Aries Domestic Fund, L.P., or
collectively, the Aries Funds, with us as a party to the agreement, whereby
the Aries Funds purchased an aggregate of 266,667 shares of common stock from
Dominion at $1.50 per share. As part of the transaction, Dominion transferred
to the Aries Funds certain of its rights under an existing agreement with us,
including the right to designate one of our directors and the right to have
the shares registered under the Securities Act. Upon completion of the sale of
the 266,667 shares, Steven H. Kanzer was elected to our Board of Directors as
a designee of the Aries Funds. On June 26, 1996, the Aries Funds purchased
from us an additional 333,334 shares of common stock at a price of $3.00 per
share. The purchase agreements relating to such shares contains various
representations and warranties concerning us and our activities and also
various affirmations and negative covenants, and grant to the Aries Funds the
right to have the shares registered under the Securities Act and restricts us
from entering into mergers, acquisitions, or sales of our assets without the
prior approval of the Aries Funds.
In connection with a credit agreement entered into by us and the Aries
Funds, on May 19, 1997, we issued to the Aries Funds warrants to purchase an
aggregate of 66,668 shares of common stock. Such warrants are exercisable
until May 19, 2002, at an exercise price of $2.31250 per share, subject to
adjustment under certain circumstances. PCAM is the investment manager of the
Aries Fund and the general partner of the Aries Domestic Fund, L.P. Lindsay
Rosenwald, M.D., is the president and sole stockholder of PCAM and of
Paramount.
Pursuant to a placement agreement dated as of July 1, 1997 between
Paramount and us, until October 2000 Paramount could propose up to three
persons for nomination as our directors and our Board of Directors could not
exceed six persons without the prior written consent of Paramount.
We issued and sold an aggregate of 8,648,718 shares of common stock to
certain accredited investors in a private placement on July 16, and October
10, and on October 16, 1997, in consideration of an aggregate amount of
$20,000,000. The net proceeds to us after deducting commissions and expenses
of Paramount, which acted as the placement agent for the private placement,
were $17,400,000.
In connection with the private placement, we issued and sold to Paramount
and/or its designees warrants, or Placement Warrants, to purchase up to an
aggregate of 864,865 shares of common stock. Also in connection with the
execution of a financial advisory agreement, dated October 16, 1997, between
us and Paramount, we issued and sold to Paramount warrants, or the Advisory
Warrants, to purchase up to an aggregate of 1,297,297 shares of common stock.
The Placement Warrants and the Advisory Warrants are exercisable until April
16, 2003, at an exercise price of $2.54375 per share, subject to adjustment
under certain circumstances.
On January 21, 1998, we established a joint venture, Innovaccines, with
Elan for the exclusive research, development and commercialization of oral and
mucosal prophylactic and therapeutic vaccines. As part of the transaction,
Elan International Services, Ltd., or EIS, a wholly owned subsidiary of Elan,
made a $2.0 million initial investment by purchasing 307,692 shares of common
stock and warrants to acquire 230,770 shares of common stock. The warrants are
excercisable until January 21, 2004 at an exercise price of $10.00 per share,
subject to adjustment under certain circumstances. In addition, in connection
with the joint venture and the execution of a license agreement, we issued
$8.0 million of Series B Convertible Preferred Stock to EIS. We are in the
process of negotiating and documenting an approximately $2,500,000 line of
credit with Elan that will be
13
<PAGE>
used solely to pay our funding obligations for Innovaccines; as of December
20, 2000, Elan has paid approximately $1,500,000 of our funding obligations
for Innovaccines.
On October 21, 1998, we established a second joint venture, Endorex Newco,
Ltd., with Elan for the exclusive research, development and commercialization
of the Medipad(R) disposable drug delivery system with two undisclosed drugs.
In connection with the joint venture and the execution of a license agreement,
we issued $8.4 million of Series C Convertible Preferred Stock to EIS. We have
committed credit availability of approximately $4,800,000 from Elan for the
purposes of funding Newco.
Pursuant to a Financial Advisory Agreement dated as of October 25, 1999
between Paramount and us, Paramount will provide to us financial advisory
services for a period of twelve months from the date of the agreement.
Paramount will receive as compensation for its services $5,000 per month for
the term of the Financial Advisory Agreement and received options for 46,000
shares of common stock at an exercise price of $2.54 per share. Of these
options, options for 10,000 shares of common stock were immediately
exercisable upon the issuance of such options and expired on October 25, 2000;
options for 9,000 shares of common stock became exercisable after October 25,
2000 and expire on October 25, 2009; options for 9,000 shares of common stock
become exercisable after April 25, 2001 and expire on October 25, 2009; and
options for 18,000 shares of common stock become exercisable after October 25,
2002 and expire on October 25, 2009.
Pursuant to a Finder Agreement dated as of February 29, 2000, as amended on
April 6, 2000, between Paramount and us, Paramount agreed to act as a finder
in connection with our April 2000 private placement of common stock and
warrants. In return for its services under the Finder Agreement, Paramount
received a cash payment of $598,500 and warrants exercisable for 226,190
shares of common stock at an exercise price of $5.25 per share, subject to
adjustment under certain circumstances. The warrants became exercisable on
October 12, 2000 and expire on October 11, 2007.
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 at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 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 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 or documents incorporated herein by reference, each such statement
is qualified in all respects by reference to the applicable exhibit, or
documents incorporated by reference therein. 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, 1999, as
filed with the SEC on March 30, 2000 and as amended by Form 10-KSB/A as
filed with the SEC on November 27, 2000;
14
<PAGE>
. Quarterly Reports on Form 10-QSB, as filed with the SEC on May 15, 2000,
August 14, 2000 and November 13, 2000;
. Current Reports on Form 8-K, as filed with the SEC on March 20, 2000 and
November 9, 2000;
. Definitive Proxy Statement with respect to the Annual Meeting of
Stockholders as filed with the SEC on April 13, 2000;
. 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, 1999; and
. The description of our common stock contained in our registration
statement on Form 8A/A as filed with the SEC on August 4, 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:
. 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
. 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: Steve J. Koulogeorge
Controller
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 under the symbol
"DOR". 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,
1999, as amended by Form 10-KSB/A, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
15
<PAGE>
8,147,018 Shares
ENDOREX CORPORATION
Common Stock
PROSPECTUS
December 29, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The selling stockholders will not pay any of the expenses of this offering.
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........................................... $ 7,000
Legal Fees and Expenses......................................... 40,000
Accounting Fees and Expenses.................................... 10,000
Printing Fees and Expenses...................................... 10,000
Miscellaneous................................................... 3,000
-------
Total....................................................... $70,000
=======
</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 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 Securities
Act and is, therefore, unenforceable. Reference is made to Section 145 of the
Delaware General Corporation Law as such Section pertains to indemnification
matters.
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ----------- ---
<C> <S> <C>
3.1 Series B Preferred Certificate of Designation, Preferences
and Rights filed as of January 21, 1998 (1).
3.2 Series C Preferred Certificate of Designation, Preferences
and Rights filed as of October 21, 1998 (1).
4.1 Form of Subscription Agreement by and between the Registrant
and each investor dated as of April 11, 2000. *
4.2 Form of Amendment and Supplement to Subscription Agreement
entered into by each investor as of April 11, 2000. *
4.3 Form of Second Amendment and Supplement to Subscription
Agreement entered into by each investor as of April 11,
2000. *
4.4 Form of Investor Warrant issued to each investor dated as of
April 12, 2000. *
4.5 Form of Finder Warrant issued to Paramount Capital, Inc.
dated as of April 12, 2000. *
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- ----------- ---
<C> <S> <C>
4.6 Warrant issued to Aries Fund dated as of May 19, 1997. *
4.7 Warrant issued to Aries Domestic Fund, L.P. dated as of
May 19, 1997. *
4.8 Warrant issued to Paramount Capital, Inc. dated as of
October 16, 1997. (2)
4.9 Warrant issued to Paramount Capital, Inc. dated as of
October 16, 1997. (2)
5.1 Opinion of Brobeck, Phleger & Harrison, LLP. *
10.1 Finder Agreement between the Registrant and Paramount
Capital, Inc. dated as of February 29, 2000 *
10.2 Amendment and Supplement to Finder Agreement dated as of
April 6, 2000. *
10.3 Financial Advisory Agreement between the Registrant and
Paramount Capital, Inc. dated as of October 25, 1999. *
10.4 Purchase Agreement among Dominion Resources, Inc., The Aries
Fund, a Cayman Island Trust, The Aries Domestic Fund, L.P.,
and the Registrant dated as of June 13, 1996.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison, LLP. Reference is
made to Exhibit 5.1. *
24.1 Power of Attorney. *
</TABLE>
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*Previously filed.
(1) Incorporated by reference to our Quarterly Report on Form 10-QSB, for the
period ended on September 30, 1998.
(2) Incorporated by reference to our Quarterly Report on Form 10-QSB, as
amended, for the period ended on September 30, 1997.
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
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 to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) 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.
II-2
<PAGE>
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of 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; and
(iii) include any additional or changed material information on the
plan of distribution;
PROVIDED, HOWEVER, that paragraphs (1) (i) and (1) (ii) do not apply if 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 15(d) of the
Securities Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining liability under the Securities
Act, 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 5(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.
II-3
<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
Amendment No. 1 to the 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 29, 2000.
Endorex Corporation
/s/ Michael S. Rosen
By: ____________________________
Michael S. Rosen
President, Chief Executive
Officer, and Director
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated on December 29, 2000.
<TABLE>
<S> <C>
/s/ Michael S. Rosen President, Chief Executive Officer, and
___________________________________________ Director (Principal Executive Officer)
Michael S. Rosen
/s/ Steve J. Koulogeorge Controller
___________________________________________ (Principal Financial and Accounting
Steve J. Koulogeorge Officer)
* Director
___________________________________________
Richard Dunning
* Director
___________________________________________
Steve H. Kanzer
* Director
___________________________________________
Paul D. Rubin
* Director
___________________________________________
H. Laurence Shaw
* Director
___________________________________________
Kenneth Tempero
* Director
___________________________________________
Steven Thornton
</TABLE>
/s/ Michael S. Rosen
*By:____________________________
Michael S. Rosen
Attorney-in-fact
II-4
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
3.1 Series B Preferred Certificate of Designation, Preferences and
Rights filed as of January 21, 1998(1).
3.2 Series C Preferred Certificate of Designation, Preferences and
Rights filed as of October 21, 1998(1).
4.1 Form of Subscription Agreement by and between the Registrant and
each investor dated as of April 11, 2000. *
4.2 Form of Amendment and Supplement to Subscription Agreement entered
into by each investor as of April 11, 2000. *
4.3 Form of Second Amendment and Supplement to Subscription Agreement
entered into by each investor as of April 11, 2000. *
4.4 Form of Investor Warrant issued to each investor dated as of April
12, 2000. *
4.5 Form of Finder Warrant issued to Paramount Capital, Inc. dated as of
April 12, 2000. *
4.6 Warrant issued to Aries Fund dated as of May 19, 1997. *
4.7 Warrant issued to Aries Domestic Fund, L.P. dated as of May 19,
1997. *
4.8 Warrant issued to Paramount Capital, Inc. dated as of October 16,
1997(2).
4.9 Warrant issued to Paramount Capital, Inc. dated as of October 16,
1997(2).
5.1 Opinion of Brobeck, Phleger & Harrison, LLP. *
10.1 Finder Agreement between the Registrant and Paramount Capital, Inc.
dated as of February 29, 2000. *
10.2 Amendment and Supplement to Finder Agreement dated as of April 6,
2000. *
10.3 Financial Advisory Agreement between the Registrant and Paramount
Capital, Inc. dated as of October 25, 1999. *
10.4 Purchase Agreement among Dominion Resources, Inc., The Aries Fund, a
Cayman Island Trust, The Aries Domestic Fund, L.P., and the
Registrant dated as of June 13, 1996.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Auditors.
23.2 Consent of Brobeck, Phlegar & Harrison, LLP. Reference is made to
Exhibit 5.1. *
24.1 Power of Attorney. *
</TABLE>
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* Previously Filed.
(1) Incorporated by reference to our Quarterly Report on Form 10-QSB, for the
period ended on September 30, 1998.
(2) Incorporated by reference to our Quarterly Report on Form 10-QSB, as
amended, for the period ended on September 30, 1997.
