<PAGE> 1
As Filed With the Securities and Exchange Commission on October 7, 1997
Registration No. 333-05342-LA
SECURITIES AND EXCHANGE COMMISSION
Washington. D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-3
TO FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEOTHERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0979187
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
157 Technology Drive, Irvine, California 92618
(714) 788-6700
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
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Alvin J. Glasky, Ph.D., President and Chief Executive Officer
157 Technology Drive
Irvine, California 92618
(206) 485-8566
(Name, address, including zip code, and telephone number,
including area code of agent for service)
Copies to:
C. Craig Carlson, Esq.
Robert E. Rich, Esq.
Matthew P. Thullen, Esq.
Stradling, Yocca, Carlson & Rauth, a Professional Corporation
660 Newport Center Drive, Suite 1600, Newport Beach, California 92660
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend 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
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 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. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of securities Amount to be maximum maximum Amount of
to be registered registered offering price aggregate registration
per share offering price fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share, issuable 2,700,000 $11.40 $30,780,000 (1)
upon exercise of Warrants
- ------------------------------------------------------------------------------------------------------
Common Stock issuable
upon exercise of
Representatives' Warrants 250,000 $9.12 $2,280,000 (1)
- ------------------------------------------------------------------------------------------------------
Common Stock Purchase
Warrants issuable upon
exercise of 250,000 $0 $0 (1)
Representatives' Warrants
- ------------------------------------------------------------------------------------------------------
Common Stock underlying
Warrants issuable upon
exercise of 250,000 $11.40 $2,850,000 (1)
Representatives' Warrants
- ------------------------------------------------------------------------------------------------------
Totals $35,910,000 (1)
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Registrant originally registered the securities set forth above
under Registration Statement No. 333-05342-LA on Form SB-2. The
Registrant has previously paid a registration fee of $13,758.62 in
connection with such registration.
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> 3
PROSPECTUS
NEOTHERAPEUTICS, INC.
2,700,000 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS
250,000 SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF REPRESENTATIVES' WARRANTS
250,000 WARRANTS ISSUABLE UPON EXERCISE OF REPRESENTATIVES' WARRANTS
250,000 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
WARRANTS INCLUDED IN REPRESENTATIVES' WARRANTS
This Prospectus relates to the issuance by NeoTherapeutics, Inc. (the
"Company" or "NeoTherapeutics") of 2,700,000 shares of its $.001 par value
common stock (the "Common Stock"). Such shares of Common Stock will be issued
if, and when, the individual holders of 2,700,000 warrants (the "Warrants") sold
by the Company to the public in connection with the Company's September 1996
public offering elect to exercise such Warrants. The Warrants may be exercised
at an exercise price of $11.40 per share of Common Stock at any time on or
before September 25, 2001.
This Prospectus also relates to the issuance of 250,000 shares of
Common Stock and 250,000 Warrants issuable upon exercise by the holders of
certain warrants currently held by them (the "Representatives' Warrants"). Each
Representatives' Warrant (which entitles the holder thereof to purchase one
share of Common Stock and one Warrant) may be exercised at any time on or before
September 25, 2001 at an exercise price of $9.12. This Prospectus also relates
to the issuance of 250,000 shares of Common Stock which may be issued upon the
exercise of the 250,000 Warrants included within the Representatives' Warrants.
The Common Stock and the Warrants are listed for quotation on the
Nasdaq National Market under the symbols "NEOT" and "NEOTW," respectively. On
October 2, 1997, the closing sales prices of the Common Stock and the Warrants
were $13.88 and $5.06, respectively.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This date of this Prospectus is _________, 1997.
<PAGE> 4
TABLE OF CONTENTS
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<TABLE>
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PAGE
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<S> <C>
Available Information...........................................................................................2
Incorporation of Certain Documents by Reference.................................................................2
The Company.....................................................................................................3
Risk Factors....................................................................................................4
Use of Proceeds.................................................................................................8
Plan of Distribution............................................................................................8
Description of Securities.......................................................................................9
Legal Matters..................................................................................................10
Experts........................................................................................................10
Limitation on Liability and Disclosure of Commission Position on Indemnification For
Securities Act Liabilities................................................................................10
</TABLE>
No person is authorized to give any information or to make any
representations, other than those contained or incorporated by reference in this
Prospectus, in connection with the offering described herein, and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company or any underwriters, brokers or agents. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, nor shall there be any sale of these securities by any person in any
jurisdiction in which it is unlawful for such person to make such offer,
solicitation or sale. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstances create an implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") as a "small
business issuer" as defined under Regulation S-B promulgated under the
Securities Act. In accordance with the Exchange Act, the Company files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information may be inspected and copied at, and copies of
such materials can be obtained at prescribed rates from, the Public Reference
Branch of the Commission located at 450 Fifth Street, N.W., Washington, D.C. and
at the Commission's Pacific Regional Office located at 5670 Wilshire Boulevard,
11th Floor, Los Angeles, California , the Commission's Northeast Regional Office
located at 7 World Trade Center Suite 1300, New York, New York and at the
Commission's Midwest Regional Office located at Citicorp Center, 500 W. Madison
Street Suite 1400, Chicago, Illinois. In addition, the Company has filed the
registration statement and other filings pursuant to the Exchange Act with the
Commission through its Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system, and such filings are publicly available through the
Commission's site on the World Wide Web on the Internet, located at
http://www.sec.gov.
This Prospectus does not contain all of the information set forth in
the Registration Statement of which this Prospectus is a part and which the
Company has filed with the Commission. For further information with respect to
the Company and the securities offered hereby, reference is made to the
Registration Statement, including the exhibits filed as a part thereof, copies
of which can be inspected at, or obtained at prescribed rates from, the Public
Reference Section of the Commission at the address set forth above. Additional
updating information with respect to the Company may be provided in the future
by means of appendices or supplements to this Prospectus.
The Company's securities are quoted on the Nasdaq National Market
(symbol: NEOT, NEOTW). Reports and other information concerning the Company may
be inspected at the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission under the Exchange Act and are incorporated by reference herein:
a. The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996, filed with
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the Commission on March 31, 1997, including the amendment
thereto filed on May 6, 1997.
b. The Company's Quarterly Reports on Form 10-QSB for the quarter
ended March 31, 1997, filed with the Commission on May 15,
1997, and for the quarter ended June 30, 1997, filed with the
Commission on August 14, 1997.
c. The Company's Current Report on Form 8-K filed June 27, 1997.
d. The Company's Current Report on Form 8-K filed August 1, 1997.
e. The definitive Proxy Statement of the Company filed pursuant
to Section 14 of the Exchange Act in connection with the 1997
Annual Meeting of Shareholders of the Company.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy
of this Prospectus is delivered, upon written or oral request of such person, a
copy of any and all of the information that has been or may be incorporated by
reference herein (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to NeoTherapeutics, Inc., Attention: Chief Financial Officer,
157 Technology Drive, Irvine, California 92618, telephone number (714) 788-6700.
THE COMPANY
NeoTherapeutics is a development stage biopharmaceutical company
engaged in the discovery and development of novel therapeutic drugs intended to
treat neurodegenerative diseases and conditions, such as memory deficits
associated with Alzheimer's disease and aging, stroke, spinal cord injuries and
Parkinson's disease. The Company's initial product candidate, AIT-082, and its
other compounds under development are based on the Company's patented
technology. This technology uses small synthetic molecules to create non-toxic
compounds, intended to be administered orally or by injection, that are capable
of passing through the blood-brain barrier to rapidly act upon specific target
cells in specific locations in the central nervous system, including the brain.
Animal and laboratory tests have shown that the Company's AIT-082 compound
appears to selectively increase the production of certain neurotrophins, a type
of large protein, in the hippocampus and frontal cortex, which are the areas of
the brain implicated in memory. These neurotrophins regulate nerve cell growth
and function. The Company's technology has been developed to capitalize on the
beneficial effects of these proteins, which have been widely acknowledged to be
closely involved in the early formation and differentiation of the central
nervous system.
The Company issued the Warrants in connection with the its public
offering of "Units" in September 1996, with each Unit consisting of one share of
Common Stock and one Warrant. The terms and conditions of the Warrants are
governed by a Warrant Agreement, dated as of September 25, 1996, between the
Company and U.S. Stock Transfer Corporation, as Warrant Agent. See "Description
of Securities--Warrants." The Representatives' Warrants were issued by the
Company in connection with its September 1996 public offering as compensation to
the managing underwriters of the public offering.
The Company was incorporated in Colorado in December 1987 and
reincorporated in Delaware in June 1997. The Company's wholly-owned subsidiary,
Advanced Immunotherapeutics, Inc. ("AIT"), was incorporated as a California
corporation in June 1987. All references to the "Company" and "NeoTherapeutics"
refer to NeoTherapeutics and AIT. The Company's executive offices are located at
157 Technology Drive, Irvine, California 92618. Its telephone number is (714)
788-6700.
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RISK FACTORS
The purchase of the shares of Common Stock and Warrants offered hereby
involves a high degree of risk. In addition to the other information set forth
elsewhere in this Prospectus, the following factors relating to the Company and
this offering should be considered when evaluating an investment in the Common
Stock and Warrants offered hereby.
This Prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1993 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results may differ materially from
the results projected in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, the following:
HISTORY OF OPERATING LOSSES; FUTURE PROFITABILITY UNCERTAIN
The Company is a development stage biopharmaceutical company. From its
inception in 1987 through June 30, 1997, the Company incurred losses of
approximately $8.1 million, substantially all of which consisted of research and
development and general and administrative expenses. The Company has not
generated any revenues from product sales to date, and there can be no assurance
that revenues from product sales will ever be achieved. Moreover, even if the
Company eventually generates revenues from product sales, the Company
nevertheless expects to incur significant operating losses over the next several
years. The Company's ability to achieve profitable operations in the future will
depend in large part on completing development of its products, obtaining
regulatory approvals for such products and bringing several of these products to
market. The likelihood of the long-term success of the Company must be
considered in light of the expenses, difficulties and delays frequently
encountered in the development and commercialization of new pharmaceutical
products, competitive factors in the marketplace as well as the burdensome
regulatory environment in which the Company operates. There can be no assurance
that the Company will ever achieve significant revenues or profitable
operations.
TECHNOLOGICAL UNCERTAINTY; EARLY STAGE OF PRODUCT DEVELOPMENT; NO ASSURANCE OF
REGULATORY APPROVALS
The Company's proposed products are in the pre-clinical stage of
development and will require significant further research, development, clinical
testing and regulatory clearances. The Company has no products available for
sale and does not expect to have any products resulting from its research
efforts commercially available for at least several years. As of September 26,
1997, one of the Company's proposed products, AIT-082, has been the subject of
two clinical studies in Alzheimer's patients in Canada. The United States Food
and Drug Administration ("FDA") has approved the Company's Investigational New
Drug Application ("IND") for testing AIT-082 in the United States. The Company
has commenced one Phase I study for AIT-082 in the United States under the
auspices of the National Institute on Aging ("NIA") and the Alzheimer's Disease
Cooperative Study ("ADCS"), a consortium of approximately 35 United States
clinical centers which receives funding from the NIA. The Company's proposed
products are subject to the risks of failure inherent in the development of
products based on innovative technologies. These risks include the possibilities
that some or all of the proposed products could be found to be ineffective or
toxic, or otherwise fail to receive necessary regulatory clearances, that the
proposed products, although effective, will be uneconomical to manufacture or
market, that third parties may now or in the future hold proprietary rights that
preclude the Company from marketing them, or that third parties will market a
superior or equivalent product. Accordingly, the Company is unable to predict
whether its research and development activities will result in any commercially
viable products or applications. Furthermore, due to the extended testing and
regulatory review process required before marketing clearance can be obtained,
the Company does not expect to be able to commercialize any therapeutic drug for
at least several years, either directly or through any potential corporate
partners or licensees. There can be no assurance that the Company's proposed
products will prove to be safe or effective in humans or will receive regulatory
approvals that are required for commercial sale. The Company's primary area of
therapeutic focus, disorders of the central nervous system ("CNS"), is not
thoroughly understood and there can be no assurance that the products the
Company is seeking to develop will prove to be safe and effective in treating
CNS disorders or any other diseases.
NEED FOR ADDITIONAL FUNDING; UNCERTAINTY OF ACCESS TO CAPITAL
The Company will require substantial funds for further development of
its potential products and to commercialize any products that may be developed.
The Company's capital requirements depend on numerous factors, including the
progress of its research and development programs, the progress of pre-clinical
and clinical testing, the time and cost involved in obtaining regulatory
approvals, the cost of filing, prosecuting, defending and enforcing patent
claims and
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other intellectual property rights, competing technological and market
developments and the ability of the Company to establish collaborative
arrangements. The Company has no current anticipated sources of additional
funding. The Company believes that its existing capital resources will be
sufficient to satisfy its current and projected funding requirements for the
next 12 months. The Company anticipates that after the next 12 months, it may
require substantial additional capital. Moreover, if the Company experiences
unanticipated cash requirements during the next 12 months, the Company could
require additional capital to fund its operations, continue research and
development programs as well as to continue the pre-clinical and clinical
testing of its potential products and to commercialize any products that may be
developed. The Company may seek such additional funding through public or
private financings or collaborative or other arrangements with third parties.
There can be no assurance that additional funds will be available on acceptable
terms, if at all. The Company may receive additional funds upon the exercise
from time to time of the Warrants and other outstanding warrants and stock
options, but there can be no assurance that any such warrants or stock options
will be exercised or that the amounts received will be sufficient for the
Company's purposes. If additional funds are raised by issuing equity securities,
further substantial dilution to existing stockholders may result. If adequate
funds are not available, the Company may be required to delay, scale back or
eliminate one or more of its development programs, or to obtain funds by
entering into arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its products or
technologies that the Company would not otherwise relinquish.
DEPENDENCE ON THIRD PARTIES FOR CLINICAL TESTING, MANUFACTURING AND MARKETING
The Company does not have the resources and, except with respect to its
AIT-082 compound, does not presently intend to conduct later-stage human
clinical trials itself or to manufacture any of its proposed products for
commercial sale. The Company therefore presently intends to seek larger
pharmaceutical company partners to conduct such activities for most or all of
its proposed products. In connection with its efforts to secure corporate
partners, the Company will seek to retain certain co-marketing rights to certain
of its proposed products, so that it may promote such products to selected
medical specialists while its corporate partner promotes these products to the
general medical market. There can be no assurance that the Company will be able
to enter into any such partnering arrangements on this or any other basis. In
addition, there can be no assurance that either the Company or its prospective
corporate partners can successfully introduce its proposed products, that they
will achieve acceptance by patients, health care providers and insurance
companies, or that they can be manufactured and marketed at prices that would
permit the Company to operate profitably.
The NIA and the National Institute for Mental Health ("NIMH") have
agreed to fund the production of the Company's AIT-082 compound for animal
toxicity studies and early human clinical trials. In addition, the ADCS has
agreed to fund and conduct two Phase I human clinical trials of AIT-082 and has
commenced one such Phase I study. Should any of the NIA, NIMH or the ADCS
withdraw such support, the Company would be forced to use a portion of its
capital to fund such clinical trials.
LACK OF OPERATING EXPERIENCE
To date, the Company has engaged exclusively in the development of
pharmaceutical technology and products. Although members of the Company's
management have substantial experience in pharmaceutical company operations, the
Company has no experience in manufacturing or procuring products in commercial
quantities or marketing pharmaceutical products and has only limited experience
in negotiating, setting up and maintaining strategic relationships, conducting
clinical trials and other later-stage phases of the regulatory approval process.
There can be no assurance that the Company will successfully engage in any of
these activities with respect to AIT-082 or any other products which it may
choose to distribute. In the event the Company decides to establish a
commercial-scale manufacturing facility for AIT-082, the Company will require
substantial additional funds and personnel and will be required to comply with
extensive regulations applicable to such a facility. The Company presently
intends to establish its own sales and marketing capabilities to market its
AIT-082 compound in the United States once it is certain of obtaining FDA
approval of AIT-082. There can be no assurance that the Company will be able to
develop adequate manufacturing or marketing capabilities either on its own or
through third parties.
NEED TO COMPLY WITH GOVERNMENTAL REGULATION AND TO OBTAIN PRODUCT APPROVALS
The testing, manufacturing, labeling, distribution, marketing and
advertising of products such as the Company's proposed products and its ongoing
research and development activities are subject to extensive regulation by
governmental regulatory authorities in the United States and other countries.
The FDA and comparable agencies in foreign countries impose substantial
requirements on the introduction of new pharmaceutical products through lengthy
and detailed clinical testing procedures, sampling activities and other costly
and time consuming compliance procedures. The Company's proprietary compounds
require substantial clinical trials and FDA review as new drugs. The Company
cannot predict
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with certainty when it might submit many of its proprietary products currently
under development for regulatory review. Once the Company submits its potential
products for review, there can be no assurance that FDA or other regulatory
approvals for any pharmaceutical products developed by the Company will be
granted on a timely basis or at all. A delay in obtaining or failure to obtain
such approvals would have a material adverse effect on the Company's business
and results of operations. Failure to comply with regulatory requirements could
subject the Company to regulatory or judicial enforcement actions, including,
but not limited to, product recalls or seizures, injunctions, civil penalties,
criminal prosecution, refusals to approve new products and withdrawal of
existing approvals, as well as potentially enhanced product liability exposure.
Sales of the Company's products outside the United States will be subject to
regulatory requirements governing clinical trials and marketing approval. These
requirements vary widely from country to country and could delay introduction of
the Company's products in those countries.
DEPENDENCE ON KEY PERSONNEL
The Company's success is dependent on its key management and scientific
personnel, especially Dr. Alvin Glasky, the loss of whose services could
significantly delay the achievement of the Company's planned development
objectives. Although the Company has obtained key man life insurance on Dr.
Glasky in the face amount of $2 million, there can be no assurance that the
proceeds of such policy will be sufficient to compensate the Company for any
disruptions resulting from the loss of Dr. Glasky's services. Achievement of the
Company's business objectives will require substantial additional expertise in
such areas as finance, manufacturing and marketing, among others. Competition
for qualified personnel among pharmaceutical companies is intense, and the loss
of key personnel, or the inability to attract and retain the additional, highly
skilled personnel required for the expansion of the Company's activities, could
have a material adverse effect on the Company's business and results of
operations.
UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS
The Company actively pursues a policy of seeking patent protection for
its proprietary products and technologies. The Company owns two United States
patents and currently has two United States patent applications on file. In
addition, corresponding patent applications with respect to the Company's United
States patents and pending United States applications have been filed in a
number of foreign jurisdictions. However, there can be no assurance that the
Company's patents will provide it with significant protection against
competitors. Litigation could be necessary to protect the Company's patents, and
there can be no assurance that the Company will have the financial or personnel
resources necessary to pursue such litigation or otherwise to protect its patent
rights. In addition to pursuing patent protection in appropriate cases, the
Company also relies on trade secret protection for its unpatented proprietary
technology. However, trade secrets are difficult to protect. There can be no
assurance that others will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to the Company's
trade secrets, that such trade secrets will not be disclosed or that the Company
can effectively protect its rights to unpatented trade secrets. The Company
pursues a policy of having its employees and consultants execute proprietary
information agreements upon commencement of employment or consulting
relationships with the Company, which agreements provide that all confidential
information developed or made known to the individual during the course of the
relationship shall be kept confidential except in specified circumstances. There
can be no assurance, however, that these agreements will provide meaningful
protection for the Company's trade secrets or other proprietary information.
Furthermore, there can be no assurance that claims against the Company
will not be raised in the future based on patents held by others or that, if
raised, such claims will not be successful. Such claims, if brought, could seek
damages as well as an injunction prohibiting clinical testing, manufacturing and
marketing of the affected product. If any such actions are successful, in
addition to any potential liability for damages, the Company could be required
to obtain a license in order to continue to manufacture or market the affected
product. There can be no assurance that the Company would prevail in any such
action or that any license required under any such patent would be made
available under acceptable terms, if at all. There has been, and the Company
believes that there will continue to be, significant litigation in the
pharmaceutical industry regarding patent and other intellectual property rights.
If the Company becomes involved in any litigation, it could consume a
substantial portion of the Company's financial and personnel resources
regardless of the outcome of such litigation.
COMPETITION
Competition in the area of pharmaceutical products is intense. There
are many companies, both public and private, including well-known pharmaceutical
companies, that are engaged in the development of products for certain of the
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applications being pursued by the Company. The Company's probable larger
competitors include Amgen, Inc., Chiron Corp., Bristol-Myers Squibb Company,
Glaxo Wellcome PLC, Regeneron Pharmaceuticals, Inc., Cephalon, Inc., Hoechst
Marion Roussel Ltd. and Pfizer, Inc., among others. In addition, Warner-Lambert
Co. is currently marketing a drug, tacrine, which has been approved by the FDA
for treatment of Alzheimer's disease, under the name Cognex(R). Another drug,
which has recently been approved by the FDA for treatment of Alzheimer's
disease, is being marketed by Pfizer, Inc. under the name of Aricept(R). Most of
these companies have substantially greater financial, research and development,
manufacturing and marketing experience and resources than the Company and
represent substantial long-term competition for the Company. In addition, there
are numerous other companies that are also in the process of developing products
for the treatment of diseases and disorders for which the Company is developing
products. Such companies may succeed in developing pharmaceutical products that
are more effective or less costly than any products that may be developed by the
Company.
Factors affecting competition in the pharmaceutical industry vary
depending on the extent to which the competitor is able to achieve a competitive
advantage based on proprietary technology. If the Company is able to establish
and maintain a significant proprietary position with respect to its products,
competition will likely depend primarily on the effectiveness of the product and
the number, gravity and severity of its unwanted side effects as compared to
alternative products.
The industry in which the Company competes is characterized by
extensive research and development efforts and rapid technological progress.
Although the Company believes that its proprietary position may give it a
competitive advantage with respect to its proposed drugs, new developments are
expected to continue and there can be no assurance that discoveries by others
will not render the Company's potential products noncompetitive. The Company's
competitive position also depends on its ability to attract and retain qualified
scientific and other personnel, develop effective proprietary products,
implement development and marketing plans, obtain patent protection and secure
adequate capital resources. There can be no assurance that the Company will be
able to successfully attract or retain such personnel.
RISK OF PRODUCT LIABILITY
Although the Company currently carries product liability insurance,
there can be no assurance that the amounts of such coverage will be sufficient
to protect the Company, nor can there be any assurance that the Company will be
able to obtain or maintain additional insurance on acceptable terms for its
clinical and commercial activities or that such additional insurance would be
sufficient to cover any potential product liability claim or recall. Failure to
maintain sufficient coverage could have a material adverse effect on the
Company's business and results of operations.
USE OF HAZARDOUS MATERIALS
The Company's research and development efforts involve the use of
hazardous materials. The Company is subject to federal, state and local laws and
regulations governing the storage, use and disposal of such materials and
certain waste products. Although the Company believes that its safety procedures
for handling and disposing of such materials comply with the standards
prescribed by federal, state and local regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of an accident, the Company could be held liable for any damages that
result and any such liability could exceed the resources of the Company. The
Company may incur substantial costs to comply with environmental regulations if
the Company develops its own commercial manufacturing facility.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market from time to time experiences significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may adversely affect the
market price of the Company's Common Stock and/or Warrants. In addition, the
market price of the Common Stock and/or Warrants is likely to be highly
volatile. Factors such as fluctuations in the Company's results of operations,
timing and announcements of technological innovations or new products by the
Company or its competitors, FDA and foreign regulatory actions, developments
with respect to patents and proprietary rights, public concern as to the safety
of products developed by the Company or others, changes in health care policy in
the United States and in foreign countries, changes in stock market analyst
recommendations regarding the Company, the pharmaceutical industry generally and
general market conditions each may have a significant adverse effect on the
market price of the Common Stock and/or Warrants. In addition, it is likely that
during at least some future quarterly periods, the Company's results of
operations will fail to meet the expectations of stock market analysts and
investors and, in such event, the market price of the Company's Common Stock
and/or Warrants could be materially and adversely affected.
7
<PAGE> 10
CONTROL BY DIRECTORS AND EXECUTIVE OFFICERS
The Company's directors and executive officers beneficially own in the
aggregate approximately 27.5% of the Company's outstanding Common Stock. These
stockholders, if acting together, would be able to control substantially all
matters requiring approval by the stockholders of the Company, including the
election of directors and the approval of mergers or other business combination
transactions. Such concentration of ownership could discourage or prevent a
change of control of the Company.
EFFECT OF CERTAIN CHARTER AND BYLAWS PROVISIONS
Certain provisions of the Company's Certificate of Incorporation and
Bylaws may have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of
the Company. Such provisions could limit the price that certain investors might
be willing to pay in the future for shares of Common Stock. These provisions may
make it more difficult for stockholders to take certain corporate actions and
could have the effect of delaying or preventing a change in control of the
Company
USE OF PROCEEDS
If all of the Warrants and the Representatives' Warrants are exercised
(including the exercise of the Warrants issuable upon the exercise of the
Representatives' Warrants), the Company will realize total proceeds of
$35,910,000. The proceeds, if any, will be used for general corporate purposes.
It is anticipated that the Warrants and the Representatives' Warrants will be
exercised, if at all, from time to time based upon decisions of the individuals
who hold Warrants and Representatives' Warrants and that the Company will
receive the proceeds gradually through September 25, 2001, unless the Warrants
are redeemed by the Company at an earlier time.
PLAN OF DISTRIBUTION
The 2,700,000 shares of Common Stock offered hereby upon the exercise
of the Warrants will be issuable upon the payment to the Company of the Warrant
exercise price of $11.40. In accordance with the provisions of the Warrants and
the Warrant Agreement governing the Warrants, upon the surrender of the Warrant
Certificate and with the Form of Election to Purchase duly filled in and
executed, along with payment in full of the exercise price to the Warrant Agent
(or its successor) at its corporate office set forth in the Warrant Agreement,
the Company will issue to the registered holder of such Warrant or Warrants the
applicable number of shares of Common Stock, registered in such name or names as
may be directed by such holder. See "Description of Securities--Warrants."
The 250,000 shares of Common Stock and 250,000 Warrants offered hereby
upon exercise of the Representatives' Warrants will be issuable upon payment to
the Company of the exercise price of $9.12. In accordance with the provisions of
the Representatives' Warrants, upon the surrender of the warrant certificate
representing one or more Representatives' Warrants, together with payment in
full of the exercise price to the Company, the Company will issue to the
registered holder of such Representatives' Warrant the applicable number of
shares of Common Stock and Warrants, registered in such name or names as may be
directed by such holder. Thereafter, the 250,000 shares of Common Stock issuable
upon exercise of the Warrants included in the Representatives' Warrants will be
issuable when, and if, such Warrants are exercised, in accordance with the
provisions for the exercise of the Warrants set forth above.
8
<PAGE> 11
DESCRIPTION OF SECURITIES
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 25 million shares of Common Stock, par value $.001 per
share, and 5 million shares of Preferred Stock, par value $.001 per share.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Stockholders do not have rights to
cumulate their votes in the election of directors under the Company's
Certificate of Incorporation, or the provisions of the Delaware General
Corporation Law and the Company's management does not presently intend to extend
cumulative voting rights to stockholders. However, under Section 2115 of the
California Corporations Code, specific provisions of the California General
Corporation Law, including mandatory cumulative voting rights of stockholders,
are made applicable to "pseudo-California" corporations incorporated under laws
of other states which meet certain tests. The tests are (i) that the average of
specified property, payroll and sales factors (generally relating to the extent
of activities in California) exceed 50% on a consolidated basis during the
corporation's latest full income year, and (ii) that more than one-half of the
corporation's outstanding voting securities are held of record by persons having
addresses in California. The Company will likely meet such tests as of the end
of its current fiscal year.
Subject to preferences that may be applicable to the holders of
outstanding shares of Preferred Stock, if any, the holders of Common Stock are
entitled to receive such lawful dividends as may be declared by the Board of
Directors. In the event of liquidation, dissolution or winding up of the
Company, and subject to the rights of the holders of outstanding shares of
Preferred Stock, if any, the holders of shares of Common Stock shall be entitled
to receive pro rata all of the remaining assets of the Company available for
distribution to its stockholders. There are no redemption or sinking fund
provisions applicable to the Common Stock. All outstanding shares of Common
Stock are fully paid and nonassessable, and shares of Common Stock to be issued
pursuant to this offering shall be fully paid and nonassessable.
WARRANTS
Each Warrant will entitle the holder to purchase one share of Common
Stock at a price of $11.40 per share. The Warrants will, subject to certain
conditions, be exercisable at any time on or before September 25, 2001, unless
earlier redeemed. The outstanding Warrants are redeemable by the Company, at a
price of $0.25 per Warrant, upon 30 days' written notice, if the closing bid
price (as defined in the Warrant Agreement described below) per share of the
Common Stock for the 20 consecutive trading days immediately preceding the date
notice of redemption is given equals or exceeds $22.80. If the Company gives
notice of its intention to redeem, a holder would be forced either to exercise
his or her Warrant before the date specified in the redemption notice or accept
the redemption price.
The terms and conditions of the Warrants are governed by the provisions
of the Warrant Agreement between the Company and U.S. Stock Transfer
Corporation, as Warrant Agent (the "Warrant Agent"). The shares of Common Stock
underlying the Warrants, when issued upon exercise of a Warrant, will be fully
paid and nonassessable, and the Company will pay any transfer tax incurred as a
result of the issuance of Common Stock to the holder upon its exercise.
The Warrants contain provisions that protect the holders against
dilution by adjustment of the exercise price. Such adjustments will occur in the
event, among others, of a merger, stock split or reverse stock split, stock
dividend or recapitalization. The Company is not required to issue fractional
shares upon the exercise of a Warrant. The holder of a Warrant will not possess
any rights as a shareholder of the Company until such holder exercises the
Warrant.
A Warrant may be exercised upon surrender of the Warrant Certificate on
or before the expiration date of the Warrant at the offices of the Warrant
Agent, with the form of "Election To Purchase" on the reverse side of the
Warrant Certificate completed and executed as indicated, accompanied by payment
of the exercise price (by certified or bank check payable to the order of the
Company) for the number of shares with respect to which the Warrant is being
exercised.
For a holder to exercise the Warrants, there must be a current
registration statement in effect with the Securities and Exchange Commission and
qualification in effect under applicable state securities laws (or applicable
exemptions from state qualification requirements) with respect to the issuance
of Common Stock (or other securities) underlying the Warrants. The Company has
agreed to use all commercially reasonable efforts to cause a registration
statement with respect to such securities under the Securities Act to be filed
and to become and remain effective in anticipation of and prior to the exercise
of the Warrants and to take such other actions under the laws of various states
as may be required to cause the sale of Common Stock (or other securities) upon
exercise of Warrants to be lawful. If a current registration
9
<PAGE> 12
statement is not in effect at the time a Warrant is exercised, the Company may
at its option redeem the Warrant by paying to the holder cash equal to the
difference between the market price of the Common Stock on the exercise date and
the exercise price of the Warrant. The Company will not be required to honor the
exercise of Warrants if, in the opinion of the Company's Board of Directors upon
advice of counsel, the sale of securities upon exercise would be unlawful.
For the life of the Warrants, the holders thereof have the opportunity
to profit from a rise in the market price of the Common Stock without assuming
the risk of ownership of the shares of Common Stock issuable upon the exercise
of the Warrants. The Warrant holders may be expected to exercise their Warrants
at a time when the Company would, in all likelihood, be able to obtain any
needed capital by an offering of Common Stock on terms more favorable than those
provided for by the Warrants. Furthermore, the terms on which the Company could
obtain additional capital during the life of the Warrants may be adversely
affected.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock and Warrants
offered hereby will be passed upon for the Company by Stradling, Yocca, Carlson
& Rauth, a Professional Corporation, Newport Beach, California.
EXPERTS
The audited consolidated financial statements of the Company
incorporated by reference in this registration statement have been audited by
Arthur Andersen LLP, independent public accounts, as indicated in their report
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports. Reference is made to said report
which states that the Company is in the development stage, as described in Note
1 to the consolidated financial statements.
LIMITATION ON LIABILITY AND DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The by-laws of the Company provide for indemnification of the Company's
directors and officers to the fullest extent permitted by law. Insofar as
indemnification for liabilities under the Securities Act may be permitted to
directors, officers or controlling persons of the Company pursuant to the
Company's Certificate of Incorporation, as amended, by-laws and the Delaware
General Corporation Law (the "DGCL"), the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in such Act and is therefore unenforceable.
10
<PAGE> 13
================================================================================
2,700,000 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF WARRANTS
250,000 SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF REPRESENTATIVES' WARRANTS
250,000 WARRANTS ISSUABLE UPON EXERCISE OF REPRESENTATIVES' WARRANTS
250,000 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF WARRANTS INCLUDED IN REPRESENTATIVES' WARRANTS
NEOTHERAPEUTICS, INC.
----------
PROSPECTUS
----------
_____________, 1997
================================================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
- -----------------------------------------------------
The following sets forth the costs and expenses, all of which shall be
borne by the Registrant, in connection with the offering of the securities
pursuant to this Registration Statement:
<TABLE>
<S> <C>
Registration Fee.......................................... $ *
Accounting Fees and Expenses.............................. $ 5,000**
Legal Fees and Expenses................................... $ 6,000**
Total............................................ $ 11,000**
</TABLE>
- --------------
* Previously paid
** Estimated
Item 15. Indemnification of Directors and Officers.
- ----------------------------------------------------
The by-laws of the Registrant provide for indemnification of the
Registrant's directors and officers to the fullest extent permitted by law.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers or controlling persons of the Registrant
pursuant to the Registrant's Certificate of Incorporation, by-laws and the
Delaware General Corporation Law (the "DGCL"), the Registrant has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in such Act and is therefore unenforceable.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may include a provision which eliminates or limits the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
relating to prohibited dividends or distributions or the repurchase or
redemption of stock or (iv) for any transaction from which the director derives
an improper personal benefit. The Registrant's Certificate of Incorporation
includes such a provision. As a result of this provision, the Registrant and its
stockholders may be unable to obtain monetary damages from a director for breach
of his or her duty of care.
Item 16. Exhibits.
- -------------------
4.1 Warrant Agreement entered into between the Registrant and U.S.
Stock Transfer Corporation dated as of September 25, 1996.
Filed as Exhibit 4.6 to the Registration Statement on Form
SB-2 as amended (No. 333-05342-LA), and incorporated herein by
reference.
4.2 Form of Representatives' Warrant Agreement dated as of
September 25, 1996, entered into in connection with the public
offering of the Registrant's securities on September 26, 1996.
Filed as Exhibit 4.3 to the Registration Statement on Form
SB-2 (No. 333-05342-LA), and incorporated herein by reference.
5 Opinion of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation.
23.1 Consent of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included on the signature page to the
Registration Statement - see page II-3).
<PAGE> 15
Item 17. Undertakings.
- -----------------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(iii) Include any additional or changed information
on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement
of the securities offered, and the offering of the securities
at that time to be deemed the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the
end of the offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer 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 small business issuer 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.
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Irvine,
State of California, on the 3rd day of October, 1997.
NEOTHERAPEUTICS, INC.
By: /s/ Alvin J. Glasky, Ph.D.
-------------------------------------
Alvin J. Glasky, Ph.D.
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of NeoTherapeutics, Inc., do
hereby constitute and appoint Alvin J. Glasky, Ph.D. and Samuel Gulko or either
of them, our true and lawful attorneys-in-fact and agents, each with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite are necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorney-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Alvin J. Glasky, Ph.D. Chief Executive Officer, October 3, 1997
- ------------------------------- President and Director
Alvin J. Glasky, Ph.D. (principal executive officer)
/s/ Samuel Gulko Chief Financial Officer October 3, 1997
- ------------------------------- (principal financial and
Samuel Gulko accounting officer)
/s/ Mark J. Glasky Director October 3, 1997
- -------------------------------
Mark J. Glasky
/s/ Frank M. Meeks Director October 3, 1997
- -------------------------------
Frank M. Meeks
/s/ Paul H. Silverman, Ph.D., D.Sc. Director October 3, 1997
- -------------------------------
Paul H. Silverman, Ph.D., D.Sc.
/s/ Carol O'Cleireacain, Ph.D. Director October 3, 1997
- -------------------------------
Carol O'Cleireacain, Ph.D.
</TABLE>
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
4.1 Warrant Agreement entered into between the Registrant and U.S.
Stock Transfer Corporation dated as of September 25, 1996.
Filed as Exhibit 4.6 to the Registration Statement on Form
SB-2 as amended (No. 333-05342-LA), and incorporated herein by
reference.
4.2 Form of Representatives' Warrant Agreement dated as of
September 25, 1996, entered into in connection with the public
offering of the Registrant's securities on September 26, 1996.
Filed as Exhibit 4.3 to the Registration Statement on Form
SB-2 (No. 333-05342-LA), and incorporated herein by reference.
5 Opinion of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation.
23.1 Consent of Stradling, Yocca, Carlson & Rauth, a Professional
Corporation (Included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24 Power of Attorney (included on the signature page to the
Registration Statement - see page II-3).
</TABLE>
<PAGE> 1
STRADLING, YOCCA, CARLSON & RAUTH
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660
TELEPHONE (714) 725-4000
FAX (714) 725-4100
October 6, 1997 FILE NO. 18579-0014
NeoTherapeutics, Inc.
157 Technology Drive
Irvine, California 92618
Re: Post-Effective Amendment No. 1 on Form S-3 to Registration
Statement on Form SB-2
Ladies and Gentlemen:
At your request, we have examined Post Effective Amendment on Form S-3
to Registration Statement on Form SB-2, File No. 333-05342-LA (the "Registration
Statement") being filed by NeoTherapeutics, Inc., a Delaware corporation (the
"Company"), with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
(i) 2,700,000 shares of the Company's common stock, $0.001 par value ("Common
Stock"), issuable pursuant to the exercise of warrants to purchase Common Stock
("Warrants"), (ii) 250,000 shares of Common Stock issuable upon exercise of
certain warrants to purchase Common Stock and Warrants (the "Representatives'
Warrants"); (iii) 250,000 Warrants issuable upon exercise of the
Representatives' Warrants and (iv) 250,000 shares of Common Stock issuable upon
exercise of Warrants included in the Representatives' Warrants.
We have examined the proceedings heretofore taken and are familiar with
the additional proceedings proposed to be taken by the Company in connection
with the authorization, issuance and sale of the securities referred to above.
Based on the foregoing, it is our opinion that the 2,700,000 shares of
Common Stock to be issued upon exercise of the Warrants, the 250,000 shares of
Common Stock and the 250,000 Warrants included within the Representatives'
Warrants and the 250,000 shares of Common Stock to be issued upon exercise of
the Warrants included within the Representatives' Warrants, when issued and paid
for in the manner described in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
EXHIBIT 5
<PAGE> 2
NeoTherapeutics, Inc.
October 5, 1997
Page Two
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Prospectus which is a part of the Registration Statement.
Very truly yours,
STRADLING, YOCCA, CARLSON & RAUTH
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this Post-Effective Amendment No. 1 registration statement on Form
S-3 (No. 333-05342-LA) to Form SB-2 registration statement of our report dated
February 14, 1997 included in NeoTherapeutics, Inc.'s Form 10-KSB for the year
ended December 31, 1996 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Orange County, California
October 3, 1997
