<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
--------------------
[x] QUARTERLY REPORT PURSUANT SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 1995
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File No. 0-18728
INTERNEURON PHARMACEUTICALS, INC.
(exact name of registrant as specified in its charter)
Delaware 04-3047911
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
One Ledgemont Center, 99 Hayden Avenue 02173
Lexington, Massachusetts (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (617) 861-8444
(Former name, former address and former fiscal year, if changed since last
report): Not Applicable
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
Class Outstanding at August 11, 1995:
Common Stock $.001 par value 31,843,674 shares
C:\BTPM_NY_\46\0032906.02
8/14/95
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INTERNEURON PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1995
and September 30, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three and Nine Months
ended June 30, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Nine Months ended
June 30, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
BALANCE SHEETS
(unaudited)
<TABLE>
June 30, September 30,
1995 1994
ASSETS -------- --------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $10,468,260 $11,262,563
Marketable securities 12,262,826 4,356,860
Prepaid and other current assets 374,980 294,455
Accounts receivable 205,013 31,762
------------ -------------
Total current assets 23,311,079 15,945,640
Restricted cash 125,000 125,000
Property and equipment, net 1,640,514 1,894,464
Notes receivable 324,782 313,022
---------- ---------
$25,401,375 $18,278,126
LIABILITIES
Current liabilities:
Accounts payable $ 684,741 $1,116,956
Accrued expenses 7,696,234 5,897,097
Current portion of capital lease obligations 430,982 354,976
---------- -----------
Total current liabilities 8,811,957 7,369,029
Long-term portion of capital lease obligations 774,622 1,025,201
Other long-term liabilities 148,653 106,566
Minority interest 5,776,587 --
STOCKHOLDERS' EQUITY
Preferred stock; $.001 par value, authorized 5,000,000 shares:
Series B, 239,425 shares issued and outstanding at June 30, 1995 and
September 30, 1994, respectively (liquidation preference at June 30, 1995
$3,078,931); 240 240
Series C, 5,000 shares issued and outstanding at June 30, 1995 and
September 30, 1994, respectively (liquidation preference at June 30, 1995
$510,325); 5 5
Common stock, par value $.001; 60,000,000 shares authorized;
31,668,614 and 29,016,367 shares issued and outstanding at June 30,
1995 and September 30, 1994, respectively 31,669 29,016
Additional paid-in capital 83,815,134 70,559,447
Accumulated deficit (73,957,492) (60,811,378)
------------ ------------
Total stockholders' equity 9,889,556 9,777,330
-------------- --------------
$25,401,375 $18,278,126
------------ ------------
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
For the three months ended June 30, For the nine months ended June 30,
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Contract and license fees $ 2,714,633 $ 100,000 $ 2,817,966 $ 100,809
Investment income 255,840 78,291 657,153 276,182
Other income -- -- 25,849 --
----------- ------------ -------------- -------------
2,970,473 178,291 3,500,968 376,991
Costs and expenses:
Research and development 3,972,378 5,445,604 11,250,853 12,642,909
General and administrative 2,087,688 2,649,760 5,589,906 6,743,679
--------- --------- --------- ---------
Total costs and expenses 6,060,066 8,095,364 16,840,759 19,386,588
Net loss from operations (3,089,593) (7,917,073) (13,339,791) (19,009,597)
Minority Interest 107,506 -- 193,677 --
------------ ------------- -------------- -----------
Net loss ($2,982,087) ($7,917,073) ($13,146,114) ($19,009,597)
============= ============= ============== =============
Net loss per common share ($0.10) ($0.28) ($0.44) ($0.69)
============= ============= ============== =============
Weighted average common shares
outstanding 30,805,696 28,733,459 30,081,243 27,551,979
------------- ------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
<TABLE>
For the nine months ended June 30,
1995 1994
------------ --------
<S> <C> <C>
Cash used in operating activities:
Net loss ($13,146,114) ($19,009,597)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation & amortization 564,231 482,535
Gain on disposal of fixed assets (28,893) --
Amortization of bond premium -- 10,073
Minority interest in net loss of consolidated
subsidiaries (193,677) --
Noncash license fee expense -- 480,000
Noncash compensation 25,000 --
Change in assets and liabilities:
Prepaids and other assets (80,525) 753,359
Accounts and notes receivable (185,011) (188,339)
Accounts payable (432,215) 269,649
Accrued expenses and other liabilities 1,815,571 1,728,995
-------------- ------------
Net cash (used) by operating activities (11,661,633) (15,473,325)
-------------- ------------
Cash flows from investing activities:
Capital expenditures (322,601) (1,041,397)
Purchase of marketable securities (13,010,000) (52,040,109)
Proceeds from maturities and sales of
marketable securities 5,104,034 60,259,561
Proceeds from sale of fixed assets 41,214 --
------------ ------------
Net cash provided (used) by investing activities (8,187,353) 7,178,055
------------ ------------
Cash flows from financing activities:
Net proceeds from financing activities 19,229,255 14,731,435
Proceeds from sale/leaseback 140,461 636,021
Principal payments of capital lease obligations (315,033) --
------------ -----------
Net cash provided by financing activities 19,054,683 15,367,456
------------ -----------
Net change in cash and cash equivalents (794,303) 7,072,186
Cash and cash equivalents at beginning of period 11,262,563 6,225,320
------------ ------------
Cash and cash equivalents at end of period $10,468,260 $13,297,506
----------- -----------
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
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INTERNEURON PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
-----
A. BASIS OF PRESENTATION:
The consolidated financial statements included herein have been prepared by
Interneuron Pharmaceuticals, Inc. without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
the accompanying unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations and
cash flows of the Company. The consolidated financial statements included herein
should be read in conjunction with the audited consolidated financial statements
and the notes thereto included in the Company's Form 10K for the fiscal year
ended September 30, 1994.
The consolidated financial statements include the accounts of Interneuron
Pharmaceuticals, Inc. (the "Company") and its subsidiaries. All significant
intercompany activity has been eliminated.
B. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES:
The Company and its subsidiaries invest available cash in short-term bank
deposits, money market funds, commercial paper and U.S. Government securities
which are carried at the lower of cost or market. Cash and cash equivalents
includes investments with maturities of three months or less at date of
purchase. Marketable securities consists of investments purchased with
maturities greater than three months. In fiscal 1995, the Company and its
subsidiaries adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115").
SFAS 115 requires that, except for debt securities classified as
"held-to-maturity" securities, investments in debt and equity securities be
reported at fair value. Debt securities classified as "held-to-maturity"
securities are reported at amortized cost. The Company and its subsidiaries have
classified all investments as "held-to-maturity" at June 30, 1995.
C. INCOME TAXES:
At June 30, 1995, the Company and its subsidiaries had net operating loss
carryforwards, for tax reporting purposes, of approximately $74 million
available to reduce future federal income taxes. The use of these net operating
loss carryforwards may be subject to limitation under the change in stock
ownership rules of the Internal Revenue Code and may not be fully available for
use on a consolidated basis.
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INTERNEURON PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----
D. STOCKHOLDERS' EQUITY:
During the nine months ended June 30, 1995, the Company and its
subsidiaries raised approximately $19,229,000 of equity capital, net of related
issuance costs, through several financing arrangements. The Company's
subsidiaries issued convertible preferred stock through private placements which
resulted in net proceeds of approximately $7,133,000. In connection with certain
of the subsidiaries' issuance of convertible preferred stock, the Company issued
213,125 warrants to purchase shares of the Company's Common Stock exercisable at
$4.625 per share, (the "Warrants"), until June 30, 1998. Additionally, investors
in the private placements have the ability on June 30, 1998 to cause the Company
to purchase from them certain amounts of the convertible preferred stock deemed
to be illiquid (the "Put Protection Rights"), but in no circumstance for an
amount greater than that initially paid. The Company received $1,162,000 from
these proceeds as consideration for its issuance of the Warrants and the Put
Protection Rights. The Company may pay cash or issue its Common Stock to settle
any obligations arising from the Put Protection Rights and intends to choose
settlement through issuance of its Common Stock. If all Put Protection Rights
are exercised in full at a time when Interneuron's Common Stock were valued at
$2.00 per share or less, based upon the number of shares of preferred stock sold
during the nine months ended June 30, 1995, the Company could be required to
issue up to an aggregate of approximately 4,095,000 shares of Common Stock.
Investors also received registration rights relating to the shares underlying
the Warrants and Put Protection Rights. In connection with these private
placements, the Company issued to designees of the Placement Agent, which is an
affiliate of the Company, warrants to purchase approximately 22,000 shares of
Interneuron Common Stock at $4.625 per share.
The amount of Minority Interest reflected in the Consolidated Balance Sheet
at June 30, 1995 reflects the gross proceeds of the subsidiaries' private
placements net of offering costs of $958,000 and net of the $1,162,000 paid to
the Company for its issuance of the Warrants and Put Protection Rights, less a
proportionate share of the subsidiaries' net loss for the periods subsequent to
issuance. Of the $1,162,000 the Company received for its issuance of the
Warrants and Put Protection Rights, the Company loaned approximately $814,000 to
certain subsidiaries on a long-term basis pursuant to convertible debentures.
In connection with these private placements of the Company's subsidiaries,
the Company converted the indebtedness owed to the Company by the subsidiaries
into convertible preferred stock of the subsidiaries. As a result of the private
placements and the debt conversion, the Company's percentage of ownership in
Progenitor, Transcell and Intercardia changed from 77%, 80% and 100% at
September 30, 1994, respectively, to 78%, 77% and 88% at June 30, 1995,
respectively.
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INTERNEURON PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----
In addition, during the nine months ended June 30, 1995, (i) the Company
sold 1,475,000 shares of its Common Stock and a warrant to purchase 500,000
shares of the Company's Common Stock at $10.00 per share through private
placements resulting in net proceeds of approximately $8,722,000; (ii) 154,800
of the outstanding Unit Purchase Options were exercised, along with all
underlying Class A Warrants, resulting in the issuance of 930,000 shares of the
Company's Common Stock and proceeds of approximately $2,325,000; and (iii)
196,447 Class B warrants were exercised resulting in the issuance of 196,447
shares of the Company's Common Stock and proceeds of approximately $933,000. The
proceeds from these financing transactions, along with the $1,162,000 which the
Company received for its issuance of the Warrants and Put Protection Rights, and
proceeds from other equity transactions, resulted in a $13,258,000 increase in
the Company's equity capital.
In May 1995 the Company extended the expiration date of its Class B
Warrants to March 15, 1996 from the previously extended expiration date of June
30, 1995. Each Class B Warrant entitles the registered holder to purchase one
share of Interneuron's Common Stock at a price of $4.75 through March 15, 1996,
subject to earlier redemption, at the Company's option, under certain
circumstances. The total number of outstanding Interneuron Class B Warrants is
approximately 2.46 million as of June 30, 1995.
The Company and its subsidiaries continue to seek additional financing and
collaborative arrangements.
F. SUBSEQUENT EVENTS
Subsequent to June 30, 1995, the Company issued 150,000 shares of its
Common Stock through a private placement and received net proceeds of
approximately $1,200,000 and also issued warrants to purchase 8,000 shares of
Common Stock. In addition, the private placements for certain subsidiaries
terminated on June 30, 1995 and, in connection with the final closing, the
subsidiaries issued additional shares of convertible preferred stock, received
net proceeds of approximately $82,000 subsequent to June 30, 1995 and the
Company issued warrants to purchase 5,000 shares of the Company's Common Stock
and Put Protection Rights.
E. AGREEMENTS
During the three months ended June 30, 1995, the Company's subsidiary,
Progenitor, Inc., entered into several agreements. In April 1995, Progenitor,
entered into an agreement with Chiron Corporation to collaborate in the
development and commercialization of Progenitor's proprietary gene therapy
technology. Progenitor received an initial payment of $2,500,000 and is
committed to share up to $750,000 of certain start-up manufacturing costs at
Chiron during calendar year 1995. These amounts have been reflected as contract
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<PAGE>
revenue and research and development expense, respectively, in the Statements of
Operations for the three and nine months ended June 30, 1995. Progenitor will
receive an additional $500,000 payment in January 1996, which will be recognized
as contract revenue when received.
Additionally, in June 1995, Progenitor finalized its award of a grant of
approximately $2,000,000 from the National Institute of Standards and Technology
through the Advanced Technology Program of the U.S. Department of Commerce. The
grant, to be paid over three years and subject to certain conditions, will
support research based upon Progenitor's proprietary cell-based technologies
that may lead to treatments for cardiovascular disease. Contract revenue will be
recognized commensurate with efforts expended.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
report. Unless the context indicates otherwise, all references to the Company
include Interneuron Pharmaceuticals, Inc. ("Interneuron") and its subsidiaries
Progenitor, Inc., Transcell Technologies, Inc., Intercardia, Inc.
and InterNutria, Inc. (the "Subsidiaries").
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1995, the Company had cash, cash equivalents and marketable
securities of $22,731,000. The Company funds its activities primarily from
equity financings and certain corporate collaborations. During the nine month
period ended June 30, 1995, the Company raised approximately $19,229,000 net of
related offering costs, through several financing arrangements. Of this amount,
approximately $7,133,000 was raised through private placements of convertible
preferred stock of the Subsidiaries. In connection with certain of these private
placements, Interneuron issued to the investors (i) three-year warrants to
purchase an aggregate of 213,125 shares of Common Stock (the "Warrants") and
(ii) rights to sell varying amounts of investors' convertible preferred stock in
the Subsidiaries to Interneuron (the "Put Protection Rights") in exchange for
shares of Interneuron Common Stock in the event certain conditions are not met
by June 30, 1998. Approximately $12,096,000 was received from private placements
of an aggregate of 1,475,000 shares of Interneuron's Common Stock and 500,000
warrants, the exercise of 154,800 Unit Purchase Options and the underlying Class
A Warrants, and the exercise of Class B Warrants. Interneuron will be required
to file registration statements under the Securities Act of 1933 commencing in
the first half of fiscal 1996 covering the resale of certain securities sold in
these financings.
Interneuron could be required to issue up to an aggregate of approximately
4,095,000 shares of Common Stock under certain circumstances if the Put
Protection Rights were exercised in full if Interneuron's Common Stock is valued
at $2.00 per share or less. Based upon the market price of Interneuron's Common
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<PAGE>
Stock on August 1, 1995 of $11.625 per share, a full exercise of all Put
Protection Rights would cause an issuance of approximately 705,000 shares of
Interneuron's Common Stock. The Company is continuing to seek additional funds
through equity financings and corporate collaborations, although there can be no
assurance any additional funds will be obtained. If the Company is not
successful in raising additional funds during fiscal 1996, it will become
necessary to reduce certain planned research and development efforts and certain
other expenses.
In April 1995, Progenitor, Inc. entered into an agreement with Chiron
Corporation ("Chiron") to collaborate on the development and commercialization
of certain of Progenitor's proprietary gene therapy technology and to grant
Chiron exclusive, worldwide manufacturing and marketing rights in certain areas.
Progenitor received an initial payment of $2,500,000 and is committed to share
up to $750,000 of certain start-up manufacturing costs at Chiron during calendar
year 1995. The agreement provides for Progenitor to receive an additional
$500,000 payment in January 1996, as well as later stage milestone payments and
royalties based upon sales. In June 1995, Progenitor also finalized its award of
an approximately $2,000,000 grant to be paid over three years and subject to
certain conditions, to support research based upon Progenitor's proprietary
cell-based technologies.
Consolidated cash, cash equivalents and marketable securities increased
$7,112,000 from $15,619,000 at September 30, 1994 to $22,731,000 at June 30,
1995. This increase primarily reflects net proceeds from financing activities
and the Chiron Agreement exceeding net cash used by operations for the nine
months ended June 30, 1995.
In May 1993, Interneuron submitted a New Drug Application ("NDA") to the
United States Food and Drug Administration ("FDA") for dexfenfluramine, a
prescription drug for the treatment of obesity. In February 1995, Interneuron
received an action letter from the FDA identifying technical and safety issues
that will need to be resolved before the NDA can be approved. Interneuron
responded formally to this non-approvable letter in May 1995 and submitted data
addressing these issues. Interneuron's NDA for dexfenfluramine is scheduled for
review by an FDA advisory committee on September 28, 1995. There can be no
assurance that the FDA advisory committee will recommend dexfenfluramine for
approval or, if approval is obtained, as to what marketing or post-approval
studies may be required by the FDA.
The data submitted to the FDA includes the results of an
epidemiologic study conducted in Europe which is being reviewed by several
European drug regulatory agencies and which examined risk factors for primary
pulmonary hypertension, a rare but serious disease. The study showed that among
other factors, weight reduction drugs, systemic hypertension and obesity were
associated with a higher risk of primary pulmonary hypertension. The Company is
unable to predict whether the FDA will require additional clinical or other
testing to further determine dexfenfluramine's association with the risk of
developing primary pulmonary hypertension or with other risks such as long-term
neurochemical changes in the brain. Therefore the Company is unable to predict
the extent of additional expenditures which may be required to pursue FDA
approval of dexfenfluramine.
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The FDA has twice convened an advisory committee to discuss proposed
guidances relating to the development of drugs for the treatment of obesity. The
guidances have not been finalized and the Company is unable to predict whether
any of the guidances which are issued by the FDA will apply to Interneuron's NDA
for dexfenfluramine. The Company is therefore not able to determine the impact,
if any, such guidances may have on the NDA. While the NDA is broadly compatible
with the proposed guidances in terms of structure, duration and end-points of
clinical trials, certain of such guidances, if applicable to Interneuron and in
the event they require the conduct of clinical trials that vary from those
included in the NDA or restrict product claims, may adversely affect the
approvability of the NDA or the marketability of the drug if approval is
obtained.
In November 1992 Interneuron entered into an agreement granting American
Cyanamid Company a sublicense to market dexfenfluramine in the U.S. for the
treatment of obesity. The Company had licensed U.S. rights from Les Laboratoires
Servier ("Servier"). As a result of the acquisition of American Cyanamid by
American Home Products Corp., Servier has the right to withdraw its consent to
the sublicense. An agreement relating to this consent is in the process of being
finalized. In the event such consent is not provided by Servier, Interneuron
would seek to enter into a new sublicense for marketing dexfenfluramine. There
can be no assurance that any new sublicense can be obtained on terms favorable
to Interneuron.
In March 1991, Interneuron filed a petition with the Drug Enforcement
Administration ("DEA") to remove dexfenfluramine from the schedules of the
Controlled Substances Act. Future milestone payments from Interneuron's
sublicensee and the level of royalties can be adversely impacted in the event
such a petition is not successful. The Company expects to present data on
September 29, 1995 to the Drug Abuse Advisory Committee, an advisory committee
to the FDA, for its determination as to whether dexfenfluramine should be
removed from the federal schedules.
The Company expects to incur substantial research and development expenses
for several products for the foreseeable future. In particular, it is performing
Phase II/III clinical trials in the U.S. for citicoline to treat ischemic
stroke. The costs of the current clinical trial, not including internal costs,
are expected to exceed $3,500,000 (of which approximately $1,500,000 has been
paid through June 30, 1995) including payments to the contract research
organization managing the trial and other consultants. This clinical trial is
expected to extend into fiscal 1996. Additional clinical trials, which could
commence in 1996, may be required prior to submission of an NDA. Additional
external funding may be required for these clinical trials, the preparation and
submission of a NDA and for additional testing, if needed.
Intercardia, Inc. is contractually committed to provide certain support to
a Phase II/III clinical trial for bucindolol, a drug for congestive heart
failure, which commenced in April 1995 and which is sponsored by the National
Institutes of Health and The Department of Veterans Affairs. In connection with
its obligation to the trial, Intercardia is expected to expend approximately
$1,500,000 in fiscal 1995, of which approximately $600,000 has been paid through
June 30, 1995. These expenditures are related to Intercardia's $2,000,000
contractual commitment to the trial, its requirement to supply bucindolol for
the trial and other support services.
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<PAGE>
In May 1995, Interneuron extended the expiration date of its Class B
Warrants to the close of business on March 15, 1996 from the previously extended
expiration date of June 30, 1995. Each Class B Warrant entitles the registered
holder to purchase one share of Interneuron's Common Stock at a price of $4.75
through March 15, 1996, subject to earlier redemption at Interneuron's option,
under certain circumstances. The total number of outstanding Interneuron Class B
Warrants was approximately 2.46 million as of June 30, 1995. Exercise of all
outstanding Class B Warrants would result in proceeds to the Company of
approximately $11,700,000.
In the third quarter of fiscal 1995, Interneuron established a
wholly-owned subsidiary, InterNutria, Inc., to license or acquire and
commercialize a variety of products, which may include Company products,
primarily in the nutritional or food related fields.
The Company has operating and capital lease commitments of approximately
$350,000 pertaining to the balance of fiscal 1995. As of August 1, 1995, the
Company was a party to various consulting agreements and employment agreements
with officers containing minimum aggregate annual payments of approximately
$1,850,000. Certain employment agreements are subject to additional bonuses and
annual increases as may be determined by the Company's Board of Directors.
RESULTS OF OPERATIONS
For the three and nine month periods ended June 30, 1995, revenues
increased $2,792,000 and $3,124,000, respectively, to $2,970,000 and $3,501,000,
respectively. These increases were primarily due to the receipt of $2,500,000 by
Progenitor under its license agreement with Chiron. The Company had minimal
contract and license fee income in the three and nine month periods ended June
30, 1994. Also contributing to the increases in the 1995 periods were
substantial increases in investment income resulting primarily from higher
invested balances as well as higher prevailing interest rates. The Company may
continue to experience significant fluctuations in revenues from the timing of
license fees, contract income and milestone payments.
Total costs and expenses decreased $2,035,000, or 25%, to $6,060,000 for
the three month period ended June 30, 1995 and $2,546,000, or 13%, to
$16,841,000 for the nine month period ended June 30, 1995. These decreases are
the result of a general reduction in spending and prioritizing resources.
Research and development expenses decreased $ 1,474,000, or 27%, to $
3,972,000 for the three month period ended June 30, 1995 from $5,446,000 for the
three month period ended June 30, 1994 and decreased $ 1,392,000, or 11%, to $
11,251,000 for the nine month period ended June 30, 1995 from $12,643,000 for
the nine month period ended June 30, 1994. Substantial initial expenses for the
Phase III clinical trial for citicoline incurred in the third quarter of fiscal
1994 caused a relative reduction in such costs in the third quarter of fiscal
1995. Also ontributing to these reductions were reduced spending on certain
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product development by the Company and decreased research and development
spending by Transcell and Progenitor. Partially offsetting these decreases was a
$750,000 charge for Progenitor's obligation to fund certain manufacturing costs
at Chiron and increased funding by Intercardia of a Phase II/III clinical trial
for bucindolol. Additionally, the nine month period ended June 30, 1994 included
an initial license payment by Interneuron to Rhone-Poulanc Rorer for the
acquisition of pagaclone, a drug for anxiety, and a non-recurring charge
pertaining to the issuance of warrants to a licensor of the Company. The level
of future research and development expenses will be dependent upon the ability
to obtain required funding and the results of the Company's development
activities and regulatory actions.
General and administrative expenses decreased $562,000, or 21%, to
$2,088,000 for the three month period ended June 30, 1995 from $2,650,000 for
the three month period ended June 30, 1994 and decreased $1,154,000, or 17%, to
$5,590,000 for the nine month period ended June 30, 1995 from $6,744,000 for the
nine month period ended June 30, 1994. The fiscal 1994 periods included business
development and prospective financing costs that did not recur in the fiscal
1995 periods. Although the nine month period ended June 30, 1995 reflected lower
recruiting, hiring and severance costs than those incurred in the nine months
ended June 30, 1994, these decreases were partially offset by wage and benefit
costs related to management additions at Intercardia and InterNutria and other
expenses.
As a result of the foregoing, the Company incurred net losses of ($
2,982,000) and ($13,146,000), or ($.10) and ($.44) per share for the three and
nine month periods ended June 30, 1995, respectively, compared to net losses of
($7,917,000) and ($19,010,000), or ($.28) and ($.69) per share for the three and
nine month periods ended June 30, 1994, respectively. Weighted average common
shares increased in the fiscal 1995 periods reflecting additional equity
issuances.
Activities of the Subsidiaries continue to represent a significant
percentage of the Company's consolidated expenses and represented 53% and 38% of
the consolidated expenses in the nine month periods ended June 30, 1995 and
1994, respectively. While the rate of spending by Progenitor and Transcell is
not expected to increase significantly in fiscal 1995, increased spending at
Intercardia and the addition of new subsidiaries are expected to increase the
total amount of expenses pertaining to the subsidiaries.
Consistent with the Company's strategy of establishing separate
subsidiaries and licensing in new products and technology, the Company from time
to time explores various technology or product acquisition and/or financing
opportunities and is currently engaged in discussions relating to such
opportunities. Any such initiatives may involve the issuance of shares of
Interneuron's Common Stock and/or financial commitments to fund product
development, either of which may adversely affect the Company's consolidated
financial condition or results of operations. Interneuron, in certain
circumstances, may be the primary source of fundings for the Subsidiaries.
-13-
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.4 - Restated Certificate of Incorporation of Registrant (17)
3.5 - By-Laws of Registrant (1)
4.1 - Form of Unit Purchase Option (1)
4.2 - Form of Warrant Agreement (1)
4.4 - Certificate of Designation establishing Series C Preferred Stock (17)
4.5 - Warrant issued to Elan Corporation, plc (19)
4.6 - Form of Registrant Warrant issued in subsidiary private placement (25)
4.7 - Form of Registrant Warrant to be issued to Paramount Capital, Inc.,
D.H. Blair & Co., Inc. or designees (25)
10.5 - Consulting and Non-competition Agreement between the Registrant,
Richard Wurtman, M.D. and Judith Wurtman, Ph.D. (1)
10.6 - Assignment of Invention and Agreement between Richard Wurtman,
M.D., Judith Wurtman and the Registrant (1)
10.7 - Management Agreement between the Registrant
and Lindsay Rosenwald, M.D. (1)
10.9(a)- Restated and Amended 1989 Stock Option Plan (7)
10.10 - Form of Indemnification Agreement (1)
10.11 - Restated Amendment to MIT Option Agreement (1)
Patent and Know-How License Agreement between the
Registrant and Les Laboratoires Servier dated February 7
1990 ("License Agreement") (1)
10.12(b)- Revised Appendix A to License Agreement (1)
10.12(c)- Amendment Agreement between Registrant and Les Laboratoires
Servier, Orsem and Oril, Produits Chimiques dated November
19,1992(3)(12)
10.12(d)- Amendment Agreement dated April 28, 1993 between Registrant and
Les Laboratoires Servier (16)
10.13 - Trademark License Agreement between the Registrant and Orsem
dated February 7, 1990 (1)
10.14 - Supply Agreement between the Registrant and Oril Products
Chimiques dated February 7, 1990 (1)(3)
10.15(a)- Form of Indemnification Agreement between the Registrant and
Alexander M. Haig, Jr. (1)
10.16 - Assignment of Invention by Richard Wurtman, M.D. (1)
10.18 - Option Agreement between the Registrant and Alexander M. Haig, Jr.(1)
10.19 - Option Agreement between the Registrant and Fountainhead Holdings
(Bermuda) Ltd. (1)
10.22(a)- License Agreement dated January 15, 1993, as amended, between the
Registrant and Grupo Ferrer (3)(16)
-14-
<PAGE>
10.25 - License Agreement between the Registrant and the Massachusetts
Institute of Technology (4)
10.27 - License Agreement dated July 1, 1991 between Whitby Research,
Inc. and the Registrant (6)
10.28 - Letter Agreement between the Registrant and Bobby W. Sandage,
Jr., Ph.D. (7)
10.29 - Amended Lease dated December 12, 1991 for Registrant's offices
in Lexington, Massachusetts (7)
10.29(a) - First Amendment to Lease dated as of October 14, 1994 between
Registrant and Ledgemont Realty Trust (25)
10.30 - License Agreement dated January 1, 1992 between the Trustees of
Princeton University and the Registrant (3)(8)
10.31 - Research Agreement dated as of July 1, 1991 between the Registrant
and the Trustees of Princeton University (3)(8)
10.32 - Consulting Agreement dated as of July 1, 1991 between the
Registrant and Daniel Kahne, Ph.D. (3)(8)
10.33 - License Agreement dated January 28, 1992 between Ohio University,
The Castle Group, Inc. and Scimark Corporation (assigned to
Progenitor, Inc.) (3)(8)
10.34 - Sponsored Research Agreement between Scimark Corporation
(assigned to Progenitor, Inc.) and Ohio University (3)(8)
10.34(a) - Letter Amendment between Progenitor, Inc. and Ohio University
(18)
10.35 - Technology License Contract dated December 18, 1991 between the
Registrant and the Mayo Foundation for Medical Education and
Research (3) (8)
10.36 - Exclusive License Agreement dated February 24, 1992 between the
Registrant and Purdue Research Foundation (9)
10.37 - License Agreement dated as of February 15, 1992 between the
Registrant and Massachusetts Institute of Technology (9)
10.38 - Employment Agreement between Progenitor,Inc. and Glenn Cooper,
M.D. dated September 3, 1992 (13)
10.39 - Employment Agreement between Transcell Technologies, Inc. and
Elizabeth Tallet dated November 11, 1992 and Guarantee by
Registrant (13)
10.40 - Patent and Know-How Sublicense and Supply Agreement between
Registrant and American Cyanamid Company dated November 19,
992 (3)(12)
10.41 - Equity Investment Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.42 - Trademark License Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.43 - Consent Agreement between Registrant and Les Laboratoires Servier
dated November 19,1992 (12)
10.44 - Patent and Know-How License Agreement between Registrant and
Veryfine Products, Inc. dated October 29, 1992 (3) (14)
10.45 - Agreement between Registrant and Parexel International Corporation
dated October 22, 1992 (as of July 21, 1992) (3) (14)
-15-
<PAGE>
10.46 - License Agreement dated February 9, 1993 between the Registrant
and Massachusetts Institute of Technology (3)(15)
10.47 - Sublease between Enichem America and Transcell Technologies, Inc.
including guarantee by the Registrant (15)
10.48 - Employment Agreement dated May 21, 1993 between the Registrant
and Glenn L. Cooper, M.D., as amended (17)
10.49 - License Agreement between Registrant and Elan Corporation, plc
dated September 9, 1993 (3)(18)
10.50 - License Agreement between Transcell Technologies, Inc. and
Princeton University dated October 14, 1993 (3)(18)
10.51 - Letter Agreement between the Registrant and Mark S. Butler (18)
10.52 - License Agreement dated February 18, 1994 between Registrant and
Rhone-Poulenc Rorer, S.A. (20)
10.54 - Form of Purchase Agreement dated as of February 24, 1994 (20)
10.54(a) - Form of Amendment to Purchase Agreement (20)
10.55 - Patent License Agreement between Registrant and Massachusetts
Institute of Technology dated March 1, 1994 (20)
10.56 - License Agreement between Progenitor, Inc.and Albert Einstein
College of Medicine of Yeshiva University dated as of February
1,1994 (20)
10.57 - Employment Letter dated February 28, 1994 between the Registrant
and Thomas F. Farb (21)
10.58 - Master Equipment Lease including Schedules and Exhibits between
Phoenix Leasing and Registrant (agreements for Transcell and
Progenitor are substantially identical), with form of continuing
guarantee for each of Transcell and Progenitor (22)
10.59 - Exhibit D to Agreement between Registrant and Parexel International
Corporation dated as of March 15, 1994. (3)(22)
10.60(a) - Acquisition Agreement dated as of May 13, 1994 among the
Registrant, Intercardia, Inc., Cardiovascular Pharmacology
Engineering Consultants, Inc. (CPEC), Myocor, Inc. and the sellers
named therein (23)
10.60(b) - Amendment dated June 15, 1994 to the Acquisition Agreement (23)
10.60(c) - Form of Consulting Agreement between Intercardia, Inc., CPEC and
Myocor, Inc.(23)
10.61 - License Agreement dated December 6, 1991 between Bristol-Myers
Squibb and CPEC, as amended (3)(23)
10.61(a) - Letter Agreement dated November 18, 1994 between CPEC and
Bristol-Myers Squibb (25)
10.62 - Lease Agreement between Thomas R. Eggers and Progenitor, Inc.
dated as of November 1994 with Registrant guaranty (25)
10.63 - Form of Stock Purchase Agreement dated December 15, 1994 (25)
10.64 - Form of Investor Rights Agreement among Progenitor, Transcell,
Registrant and each investor in the subsidiary
private placement (25) 10.64(a) - Form of Investor Rights
Agreement among Intercardia, the Registrant
and each investor in the Intercardia private placement (25)
10.65 - 1994 Long-Term Incentive Plan (25)
10.66 - Guarantee by Lindsay A. Rosenwald, M.D. to Registrant (25)
-16-
<PAGE>
10.67 - Employment Agreement between Intercardia and Clayton I. Duncan
with Registrant guarantee (25)
10.67(a) - Amendment to Employment Agreement between Intercardia, Inc.
and Clayton I. Duncan (27)
10.68 - Interneuron Pharmaceuticals, Inc. 1995 Employee Stock Purchase
Plan as amended. (27)
10.69 - Office Lease, dated April 24, 1995 between Intercardia, Inc. and
Highwoods/Forsyth Limited Partnership, with Registrant Guaranty (27)
10.70 - Letter Agreement, dated March 31, 1995 between Progenitor, Inc. and
Chiron Corporation (3) (28)
10.70(a) - License and Collaboration Agreement by and between Progenitor, Inc.,
and Chrion, Corporation dated March 31, 1995 (3) (30)
10.71 - Securities Purchase Agreement dated June 2, 1995 between the
Registrant and Reliance Insurance Company, including Warrant and
exhibits (29)
10.72 - Sponsored Research and License Agreement dated as of May 1, 1995
between Progenitor and Novo Nordisk (3) (30)
10.73 - Form of Stock Purchase Agreement dated as of June 28, 1995
19 - Letter to Stockholders dated May 18, 1994 (24).
20 - News Release dated August 10, 1994 including Rule 135(c) notice (21)
21 - Subsidiaries of the Registrant (25)
23.1 - Amended Consent of Coopers & Lybrand L.L.P. (25)
23.2 - Consent of Coopers & Lybrand L.L.P. (26)
27 - Financial Data Schedule
- ---------------------------
(1) Incorporated by reference to the Registrant's registration statement on
Form S-1 (File No.33-32408) declared effective on March 8, 1990.
(3) Confidential Treatment requested for a portion of this Exhibit.
(4) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1990.
(6) Incorporated by reference to the Registrant's Quarterly report on Form
10-Q for the nine months ended June 30, 1991.
(7) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's registration statement on Form S-1 (File No. 33-32408)
filed December 18, 1991.
(8) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1991.
(9) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended March 31, 1992.
(10) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registrant's registration statement on Form S-1 (File No. 33-32408)
filed July 12, 1992.
(11) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended June 30, 1992.
(12) Incorporated by reference to the Registrant's Form 8-K dated November
30, 1992.
-17-
<PAGE>
(13) Incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form S-1 (File No. 33-32408)
filed on December 21, 1992.
(14) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1992.
(15) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1992
(16) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1993
(17) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1993
(18) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1994
(19) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1993.
(20) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 or Amendment No. 1 (File no. 33-75826)
(21) Incorporated by reference to the Registrant's Form 8-K dated March 31,
1994
(22) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1994
(23) Incorporated by reference to the Registrant's Form 8-K dated June 20,
1994
(24) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1994
(25) Incorporated by reference to the Registrant's Annual Report on Form
10-K/A2 for the fiscal year ended September 30, 1994
(26) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the three months ended December 31, 1994
(27) Incorporated by reference to the Registrant's Quarterly Report on From
10-Q for the six months ended March 31, 1995
(28) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q/A for the six months ended March 31, 1995
(29) Incorporated by reference to the Registrant's Quarterly Report on Form
8-K dated June 2, 1995
(30) Incorporated by reference to the Registrant's Quarterly Report on Form
8-K dated May 16, 1995 Exhibit 10.70 (a) supersedes Exhibit 10.70.
(b) Reports on Form 8-K
The Company filed reports on Form 8-K dated May 16, 1995 and June 2,
1995, each reporting information under Item 5.
-18-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNEURON PHARMACEUTICALS, INC.
By: \S\ GLENN L. COOPER
Glenn L. Cooper, M.D., President
and Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 1995
By: \S\ THOMAS F.FARB
Thomas F. Farb, Senior Vice
President, Finance, Chief
Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
-19-
<PAGE>
EXHIBIT INDEX
3.4 - Restated Certificate of Incorporation of Registrant (17)
3.5 - By-Laws of Registrant (1)
4.1 - Form of Unit Purchase Option (1)
4.2 - Form of Warrant Agreement (1)
4.4 - Certificate of Designation establishing Series C Preferred Stock (17)
4.5 - Warrant issued to Elan Corporation, plc (19)
4.6 - Form of Registrant Warrant issued in subsidiary private placement (25)
4.7 - Form of Registrant Warrant to be issued to Paramount Capital, Inc.,
D.H. Blair & Co., Inc. or designees (25)
10.5 - Consulting and Non-competition Agreement between the Registrant,
Richard Wurtman, M.D. and Judith Wurtman, Ph.D. (1)
10.6 - Assignment of Invention and Agreement between Richard Wurtman,
M.D., Judith Wurtman and the Registrant (1)
10.7 - Management Agreement between the Registrant
and Lindsay Rosenwald, M.D. (1)
10.9(a)- Restated and Amended 1989 Stock Option Plan (7)
10.10 - Form of Indemnification Agreement (1)
10.11 - Restated Amendment to MIT Option Agreement (1)
Patent and Know-How License Agreement between the
Registrant and Les Laboratoires Servier dated February 7
1990 ("License Agreement") (1)
10.12(b)- Revised Appendix A to License Agreement (1)
10.12(c)- Amendment Agreement between Registrant and Les Laboratoires
Servier, Orsem and Oril, Produits Chimiques dated November
19,1992(3)(12)
10.12(d)- Amendment Agreement dated April 28, 1993 between Registrant and
Les Laboratoires Servier (16)
10.13 - Trademark License Agreement between the Registrant and Orsem
dated February 7, 1990 (1)
10.14 - Supply Agreement between the Registrant and Oril Products
Chimiques dated February 7, 1990 (1)(3)
10.15(a)- Form of Indemnification Agreement between the Registrant and
Alexander M. Haig, Jr. (1)
10.16 - Assignment of Invention by Richard Wurtman, M.D. (1)
10.18 - Option Agreement between the Registrant and Alexander M. Haig, Jr.(1)
10.19 - Option Agreement between the Registrant and Fountainhead Holdings
(Bermuda) Ltd. (1)
10.22(a)- License Agreement dated January 15, 1993, as amended, between the
Registrant and Grupo Ferrer (3)(16)
<PAGE>
10.25 - License Agreement between the Registrant and the Massachusetts
Institute of Technology (4)
10.27 - License Agreement dated July 1, 1991 between Whitby Research,
Inc. and the Registrant (6)
10.28 - Letter Agreement between the Registrant and Bobby W. Sandage,
Jr., Ph.D. (7)
10.29 - Amended Lease dated December 12, 1991 for Registrant's offices
in Lexington, Massachusetts (7)
10.29(a) - First Amendment to Lease dated as of October 14, 1994 between
Registrant and Ledgemont Realty Trust (25)
10.30 - License Agreement dated January 1, 1992 between the Trustees of
Princeton University and the Registrant (3)(8)
10.31 - Research Agreement dated as of July 1, 1991 between the Registrant
and the Trustees of Princeton University (3)(8)
10.32 - Consulting Agreement dated as of July 1, 1991 between the
Registrant and Daniel Kahne, Ph.D. (3)(8)
10.33 - License Agreement dated January 28, 1992 between Ohio University,
The Castle Group, Inc. and Scimark Corporation (assigned to
Progenitor, Inc.) (3)(8)
10.34 - Sponsored Research Agreement between Scimark Corporation
(assigned to Progenitor, Inc.) and Ohio University (3)(8)
10.34(a) - Letter Amendment between Progenitor, Inc. and Ohio University
(18)
10.35 - Technology License Contract dated December 18, 1991 between the
Registrant and the Mayo Foundation for Medical Education and
Research (3) (8)
10.36 - Exclusive License Agreement dated February 24, 1992 between the
Registrant and Purdue Research Foundation (9)
10.37 - License Agreement dated as of February 15, 1992 between the
Registrant and Massachusetts Institute of Technology (9)
10.38 - Employment Agreement between Progenitor,Inc. and Glenn Cooper,
M.D. dated September 3, 1992 (13)
10.39 - Employment Agreement between Transcell Technologies, Inc. and
Elizabeth Tallet dated November 11, 1992 and Guarantee by
Registrant (13)
10.40 - Patent and Know-How Sublicense and Supply Agreement between
Registrant and American Cyanamid Company dated November 19,
992 (3)(12)
10.41 - Equity Investment Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.42 - Trademark License Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.43 - Consent Agreement between Registrant and Les Laboratoires Servier
dated November 19,1992 (12)
10.44 - Patent and Know-How License Agreement between Registrant and
Veryfine Products, Inc. dated October 29, 1992 (3) (14)
10.45 - Agreement between Registrant and Parexel International Corporation
dated October 22, 1992 (as of July 21, 1992) (3) (14)
<PAGE>
10.46 - License Agreement dated February 9, 1993 between the Registrant
and Massachusetts Institute of Technology (3)(15)
10.47 - Sublease between Enichem America and Transcell Technologies, Inc.
including guarantee by the Registrant (15)
10.48 - Employment Agreement dated May 21, 1993 between the Registrant
and Glenn L. Cooper, M.D., as amended (17)
10.49 - License Agreement between Registrant and Elan Corporation, plc
dated September 9, 1993 (3)(18)
10.50 - License Agreement between Transcell Technologies, Inc. and
Princeton University dated October 14, 1993 (3)(18)
10.51 - Letter Agreement between the Registrant and Mark S. Butler (18)
10.52 - License Agreement dated February 18, 1994 between Registrant and
Rhone-Poulenc Rorer, S.A. (20)
10.54 - Form of Purchase Agreement dated as of February 24, 1994 (20)
10.54(a) - Form of Amendment to Purchase Agreement (20)
10.55 - Patent License Agreement between Registrant and Massachusetts
Institute of Technology dated March 1, 1994 (20)
10.56 - License Agreement between Progenitor, Inc.and Albert Einstein
College of Medicine of Yeshiva University dated as of February
1,1994 (20)
10.57 - Employment Letter dated February 28, 1994 between the Registrant
and Thomas F. Farb (21)
10.58 - Master Equipment Lease including Schedules and Exhibits between
Phoenix Leasing and Registrant (agreements for Transcell and
Progenitor are substantially identical), with form of continuing
guarantee for each of Transcell and Progenitor (22)
10.59 - Exhibit D to Agreement between Registrant and Parexel International
Corporation dated as of March 15, 1994. (3)(22)
10.60(a) - Acquisition Agreement dated as of May 13, 1994 among the
Registrant, Intercardia, Inc., Cardiovascular Pharmacology
Engineering Consultants, Inc. (CPEC), Myocor, Inc. and the sellers
named therein (23)
10.60(b) - Amendment dated June 15, 1994 to the Acquisition Agreement (23)
10.60(c) - Form of Consulting Agreement between Intercardia, Inc., CPEC and
Myocor, Inc.(23)
10.61 - License Agreement dated December 6, 1991 between Bristol-Myers
Squibb and CPEC, as amended (3)(23)
10.61(a) - Letter Agreement dated November 18, 1994 between CPEC and
Bristol-Myers Squibb (25)
10.62 - Lease Agreement between Thomas R. Eggers and Progenitor, Inc.
dated as of November 1994 with Registrant guaranty (25)
10.63 - Form of Stock Purchase Agreement dated December 15, 1994 (25)
10.64 - Form of Investor Rights Agreement among Progenitor, Transcell,
Registrant and each investor in the subsidiary
private placement (25) 10.64(a) - Form of Investor Rights
Agreement among Intercardia, the Registrant
and each investor in the Intercardia private placement (25)
10.65 - 1994 Long-Term Incentive Plan (25)
10.66 - Guarantee by Lindsay A. Rosenwald, M.D. to Registrant (25)
<PAGE>
10.67 - Employment Agreement between Intercardia and Clayton I. Duncan
with Registrant guarantee (25)
10.67(a) - Amendment to Employment Agreement between Intercardia, Inc.
and Clayton I. Duncan (27)
10.68 - Interneuron Pharmaceuticals, Inc. 1995 Employee Stock Purchase
Plan as amended. (27)
10.69 - Office Lease, dated April 24, 1995 between Intercardia, Inc. and
Highwoods/Forsyth Limited Partnership, with Registrant Guaranty (27)
10.70 - Letter Agreement, dated March 31, 1995 between Progenitor, Inc. and
Chiron Corporation (3) (28)
10.70(a) - License and Collaboration Agreement by and between Progenitor, Inc.,
and Chrion, Corporation dated March 31, 1995 (3) (30)
10.71 - Securities Purchase Agreement dated June 2, 1995 between the
Registrant and Reliance Insurance Company, including Warrant and
exhibits (29)
10.72 - Sponsored Research and License Agreement dated as of May 1, 1995
between Progenitor and Novo Nordisk (3) (30)
10.73 - Form of Stock Purchase Agreement dated as of June 28, 1995
19 - Letter to Stockholders dated May 18, 1994 (24).
20 - News Release dated August 10, 1994 including Rule 135(c) notice (21)
21 - Subsidiaries of the Registrant (25)
23.1 - Amended Consent of Coopers & Lybrand L.L.P. (25)
23.2 - Consent of Coopers & Lybrand L.L.P. (26)
27 - Financial Data Schedule
- ---------------------------
(1) Incorporated by reference to the Registrant's registration statement on
Form S-1 (File No.33-32408) declared effective on March 8, 1990.
(3) Confidential Treatment requested for a portion of this Exhibit.
(4) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1990.
(6) Incorporated by reference to the Registrant's Quarterly report on Form
10-Q for the nine months ended June 30, 1991.
(7) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's registration statement on Form S-1 (File No. 33-32408)
filed December 18, 1991.
(8) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1991.
(9) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended March 31, 1992.
(10) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registrant's registration statement on Form S-1 (File No. 33-32408)
filed July 12, 1992.
(11) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended June 30, 1992.
(12) Incorporated by reference to the Registrant's Form 8-K dated November
30, 1992.
<PAGE>
(13) Incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form S-1 (File No. 33-32408)
filed on December 21, 1992.
(14) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1992.
(15) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1992
(16) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1993
(17) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1993
(18) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1994
(19) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1993.
(20) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 or Amendment No. 1 (File no. 33-75826)
(21) Incorporated by reference to the Registrant's Form 8-K dated March 31,
1994
(22) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1994
(23) Incorporated by reference to the Registrant's Form 8-K dated June 20,
1994
(24) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1994
(25) Incorporated by reference to the Registrant's Annual Report on Form
10-K/A2 for the fiscal year ended September 30, 1994
(26) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the three months ended December 31, 1994
(27) Incorporated by reference to the Registrant's Quarterly Report on From
10-Q for the six months ended March 31, 1995
(28) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q/A for the six months ended March 31, 1995
(29) Incorporated by reference to the Registrant's Quarterly Report on Form
8-K dated June 2, 1995
(30) Incorporated by reference to the Registrant's Quarterly Report on Form
8-K dated May 16, 1995 Exhibit 10.70 (a) supersedes Exhibit 10.70.
<PAGE>
Exhibit 10.73
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of June 28,
1995, between Interneuron Pharmaceuticals, Inc. a Delaware corporation, (the
"Corporation"), and an entity advised by Dimensional Fund Advisors Inc. whose
name is set forth at the foot of this Agreement (the "Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
AUTHORIZATION, PURCHASE AND SALE OF THE STOCK
1.1 AUTHORIZATION OF THE STOCK. The Corporation has authorized issuance
and sale of 99,100 shares of its common stock (the "Stock") to Purchaser as
herein provided.
1.2 SALE AND PURCHASE OF THE STOCK. At the Closing, subject to the
terms and conditions hereof and in reliance upon the representations, warranties
and agreements contained herein, the Purchaser will purchase the Stock from the
Corporation at a purchase price of $ 8.921 per share, $884,071.10 in total.
SECTION 2
CLOSING PAYMENT AND DELIVERY
2.1 CLOSING DATE AND PLACE OF CLOSING. The closing shall be held as
soon as practicable, and in no event later than July 7, 1995, on such date as
the Corporation and the Purchaser may agree to (the "Closing Date") subject to
there having been no material change in the market price of the Corporation's
stock and subject to approval by the Corporation's Board of Directors, and shall
be held at the offices of Dimensional Fund Advisors Inc., 1299 Ocean Avenue,
Santa Monica, CA 90401.
2.2 PAYMENT AND DELIVERY. At the Closing, the Purchaser will pay or
cause to be paid to the Corporation by wire funds transfer the entire purchase
price. The Corporation will deliver in advance of the Closing to an
institutional custodian designated by the Purchaser a certificate or
certificates, registered in such name or names as Purchaser may designate,
representing all of the Stock, with instructions that such certificates are to
be held for the account of Purchaser upon payment of the purchase price.
2.3 COVENANT OF BEST EFFORTS AND GOOD FAITH. The Corporation and
the Purchaser agree to use their respective best efforts and to act in good
faith to cause to occur all conditions to Closing which are in their respective
control.
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SECTION 3
PURCHASE PRICE ADJUSTMENT
3.1. SUBSEQUENT SALE AT LOWER PRICE. If during the twelve month period
following the Closing Date, the Corporation sells any shares of its common stock
for a selling price lower than the purchase price per share set forth in Section
1.2 hereof, the purchase price per share of the Stock sold to Purchaser
hereunder shall be adjusted downward to equal such lower selling price. The
Corporation shall give to the Purchaser prompt written notice of any such sale.
3.2. ADJUSTMENT MECHANISM. If an adjustment of the purchase price is
required pursuant to this Section the Corporation shall immediately deliver to
Purchaser such number of additional shares of common stock as will cause (i) the
total number of shares of common stock delivered to Purchaser hereunder,
multiplied by (ii) the adjusted purchase price per share, to equal (iii) the
total purchase price set forth in Section 1.2 hereof; Provided however, that the
number of additional shares delivered in respect of such adjustment shall be
limited to a maximum of 54,036 shares of common stock as presently constituted;
and PROVIDED FURTHER, that the Corporation shall effect such adjustment in cash,
in whole or in part, to the extent required by the following subsection.
3.3. LIMITATION ON NUMBER OF SHARES. Purchaser and other entities
advised by Dimensional Fund Advisors Inc. shall not be required to accept, by
way of any such adjustment, a number of shares of the Corporation such that the
total number of such shares held by Purchaser and such other entities, which
were held by them on the date of this Agreement or acquired by them pursuant to
this Agreement or agreements of like tenor with such other entities, would
exceed 4.99% of the total outstanding stock of the Corporation. The Corporation
shall effect the adjustment required by this Section by cash refund to the
extent necessary to avoid causing the aforesaid limitation to be exceeded.
3.4 CAPITAL ADJUSTMENTS. In case of any stock split or reverse stock
split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the common stock
of the Corporation, the provisions of this Section shall be applied as if such
capital adjustment event had occurred immediately prior to the Closing Date and
the original purchase price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof.
3.5. EXCLUSIONS. Section 3.1 shall not apply to (i) conversion or
exercise of any convertible securities, options or warrants outstanding on the
date hereof, (ii) sales pursuant to any shareholder-approved employee benefit or
incentive plan heretofore or hereafter adopted by the Corporation, or (iii) the
existing obligations and agreements listed in Exhibit B hereto.
3.6. DEFINITIONS. For purposes of Section 3.1 hereof, a sale of shares
shall mean and include the sale or issuance of rights, options, warrants or
convertible securities under which the Corporation is or may become obligated
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to issue shares of common stock, and the "selling price" of the common stock
covered thereby shall be the exercise or conversion price thereof plus the
consideration (if any) received by the Corporation upon such sale or issuance.
If shares are issued for a consideration other than cash, the "selling price"
shall be the fair value of such consideration as determined in good faith by the
Board of Directors of the Corporation. The term "Stock" as used in this
Agreement shall include shares issued pursuant to this Section.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Purchaser that:
4.1 Corporate Power Qualification and Standing. The Corporation and its
subsidiaries are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each of them is qualified to
transact business in each jurisdiction in which its ownership of property or
conduct of activities requires such qualification. The Corporation has all
requisite corporate power and authority to enter into this Agreement, to sell
the Stock and to carry out and perform its other obligations under this
Agreement.
4.2 S.E.C. REPORTS; FINANCIAL STATEMENTS. The common stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934 and the Corporation is in full compliance with its reporting and
filing obligations under said Act. The Corporation has delivered to Purchaser
its Annual Reports to shareholders and its reports on Form 10K for its last
three fiscal years, and all its quarterly reports to shareholders, quarterly
reports on Form 10Q, and each other report, registration statement, definitive
proxy statement or other document filed with the S.E.C. since the beginning of
said three fiscal years (collectively, the "SEC Reports"). The SEC Reports do
not (as of their respective dates) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited and unaudited financial statements of the
Corporation included in the SEC Reports (the "Financial Statements") have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as stated in such Financial Statements or the notes
thereto) and fairly present the financial position of the Corporation and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended. Except
as publicly disclosed by the Corporation in the SEC Reports or otherwise, since
the end of the most recent of said fiscal years there has been no material
adverse change in the business, financial condition, or results of operations of
the Corporation and its subsidiaries taken together, and there is no existing
condition, event or series of events which can reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of the Corporation and its subsidiaries taken together, or its
ability to perform its obligations under this Agreement, except that the
Corporation has continued to incur substantial losses from operations and
decreases in working capital.
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4.3 AUTHORIZATION; NO CONFLICT. Execution and delivery of this
Agreement and issuance and sale of the Stock have been duly authorized by all
necessary corporate action of the Corporation, and the Stock when issued will be
validly issued, fully paid and non-assessable. Performance by the Corporation of
its obligations under this Agreement will not conflict with or violate (i) the
charter documents or bylaws of the Corporation, (ii) any indenture, loan
agreement, lease, mortgage or other material agreement binding on the
Corporation, (iii) any order of a court or administrative agency binding on the
Corporation, or (iv) any applicable law or governmental regulation; and such
performance does not and will not require the permission or approval of any
governmental agency, and will not result in the imposition or creation of any
lien or charge against any assets of the Corporation. Except as disclosed in the
Financial Statements, (i) the Corporation has no obligation to redeem or
repurchase any of its equity securities, (ii) no shareholder or other person has
pre-emptive or other rights to acquire equity securities of the Corporation, and
(iii) the Corporation has no obligation to register any of its securities
otherwise than pursuant to Section 8 of this Agreement or as disclosed on
Exhibit A hereto.
4.4 MATERIAL AGREEMENTS; NO DEFAULTS. All material indentures, loan
agreements, leases, mortgages and other agreements binding on the Corporation or
its subsidiaries are identified in the lists of exhibits contained in the
Corporation's most recent 10K and 10Q reports ("Other Agreements"). No material
default on the part of the Corporation or any of its subsidiaries (including any
event which, with notice or the passage of time, would constitute a default)
exists under any of the Other Agreements.
4.5 MATERIAL LIABILITIES. Except for liabilities disclosed in the
Financial Statements or the SEC Reports, and obligations under the Other
Agreements, the Corporation and its subsidiaries have no material liabilities or
obligations, absolute or contingent, other than liabilities arising in the
ordinary course of business subsequent to the date of the most recent of the
Financial Statements.
4.6 PROPERTIES. The Corporation and its subsidiaries (i) have good
title to the properties and assets reflected in the Financial Statements as
owned by them, (ii) have valid leasehold interests in the properties leased by
them, and (iii) own or have the right to use under valid license agreements all
trademarks, trade names, copyrights, patents and other intellectual property
rights regularly utilized by them; subject in each case to no material liens,
security interests or adverse claims except as disclosed in the Financial
Statements.
4.7 LITIGATION. There are no material legal actions, arbitrations, or
administrative proceedings pending against the Corporation or its subsidiaries,
except for the matters disclosed in the SEC Reports.
4.8 TAX MATTERS. The Corporation and its subsidiaries have filed on a
timely basis all tax returns required to be filed by them and have paid their
taxes prior to delinquency, and have made adequate accruals for tax liabilities
on the Financial Statements in accordance with generally accepted accounting
principles.
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4.9 ERISA COMPLIANCE. Neither the Corporation nor any of its
subsidiaries has incurred any material funding deficiency within the meaning of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or any
material liability to the Pension Benefit Guarantee Corporation in connection
with any employee benefit plan. The Corporation and its subsidiaries are in
compliance in all material respects with all applicable provisions of ERISA, and
have no obligations with respect to any multi-employer plan. No "reportable
event" as such term is defined in ERISA, which may result in any material
liability, has occurred with respect to any employee benefit or other plan
maintained for employees of the Corporation or any subsidiary.
4.10 ENVIRONMENTAL MATTERS. Except as disclosed in the SEC Reports,
neither the Corporation nor any of its subsidiaries (i) has been notified by any
governmental authority that it is, or may be, a Responsible Party with respect
to cleanup or remediation of any environmental condition or hazardous waste
site, (ii) has violated any law, regulation, order or requirement of
governmental authority with respect to Hazardous Substances, or (iii) has
incurred any material liability for violation or noncompliance with applicable
Environmental Regulations. The term "Environmental Regulations" means any law,
regulation, order or requirement relating to protection of the environment,
including without limitation, the Clean Air Act, the Clean Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Hazardous Materials Transportation
Act and the Toxic Substances Control Act. The term "Hazardous Substance" means
any substance defined or listed as such in any Environmental Regulation.
4.11 OTHER MATTERS. The Corporation is not now and will not be after
giving effect to the receipt of the proceeds from the sale of the Stock an
"Investment Company" within the meaning of the Investment Company Act of 1940,
nor will it be controlled by or acting on behalf of any person which is such an
investment company. The Corporation is not selling the Stock "for the purpose of
purchasing or carrying any margin stock" within the meaning of Regulation G of
the Board of Governors of the Federal Reserve System. The Corporation has not
offered the Stock to any person other than the Purchaser or other accredited
investors.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Corporation that:
5.1 CORPORATE POWER AND AUTHORITY. It is validly existing and in good
standing with all requisite power and authority to enter into this Agreement and
carry out its obligations hereunder and has taken all actions necessary to
authorize it to enter into this Agreement and carry out such obligations.
5.2 INVESTMENT. It is acquiring the Stock for investment and not with
the view to, or for resale in connection with, any distribution thereof. It is
an "accredited investor" within the meaning of the Securities Act of 1933 and
the rules thereunder. It understands that the Stock has not been registered
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under the Securities Act of 1933 nor qualified under any State blue sky law by
reason of specified exemptions therefrom which depend upon, among other things,
the bona fide nature of its investment intent as expressed herein.
5.3 RULE 144. It acknowledges that the Stock must be held indefinitely
unless it is subsequently registered under the Securities Act of 1933 or an
exemption from such registration is available. It has been advised or is aware
of the provisions of Rule 144 promulgated under the Securities Act.
SECTION 6
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to purchase the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Corporation shall be true and correct in all material respects on the
Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation on or prior
to the Closing Date shall have been performed or complied with in all material
respects.
(c) OPINION OF CORPORATION'S COUNSEL. The Purchaser shall have received
from counsel to the Corporation an opinion confirming the representations set
forth in the first sentence of Section 4.3 hereof, and on the basis of such
counsel's review of the Other Agreements and certificates of officers of the
Corporation as to factual matters, confirming the representations set forth in
the second and third sentences of Section 4.3 hereof.
(d) LEGAL ISSUANCE. At the time of the Closing, the issuance and
purchase of the Stock shall be legally permitted by all laws and regulations to
which the Purchaser and the Corporation are subject.
(e) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the Purchaser and its counsel.
(f) SATISFACTION OF OBLIGATIONS TO BROKER. The Corporation shall have
furnished the Purchaser with assurances satisfactory to the Purchaser that the
Corporation has satisfied its obligations to any broker entitled to compensation
in connection with the sale of the Stock.
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SECTION 7
CONDITIONS TO OBLIGATIONS OF THE CORPORATION
The Corporation's obligation to sell the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Purchaser shall be true and correct in all material respects on the
Closing Date.
(b) LEGAL ISSUANCE. At the time of the Closing, the issuance and
purchase of the Stock shall be legally permitted by all laws and regulations to
which the Purchaser and the Corporation are subject.
(c) PAYMENT. The Corporation shall concurrently receive payment for
the Stock as provided in Section 2 hereof.
SECTION 8
COVENANT TO REGISTER
(a) For purposes of this Section 8, the following definitions
shall apply:
(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as
amended (the "Act") effected by preparing and filing a
registration statement or similar document in compliance with
the Act or an amendment thereto, and the declaration or
ordering of effectiveness of such registration statement,
document or amendment thereto.
(ii) The term "Registrable Securities" means the Stock and any
securities of the Corporation or securities of any successor
corporation issued as, or issuable upon the conversion or
exercise of any warrant, right or other security that is
issued as, a dividend or other distribution with respect to,
or in exchange for or in replacement of, the Stock.
(b) (i) The Corporation shall file a registration statement
on Form S-3 prior to January 15, 1996 covering all the
Registrable Securities. If such registration statement is not
filed by January 15, 1996, the Corporation shall issue 2,643
shares of additional common stock to Purchaser for each 60
day period after January 15, 1996 that the registration
statement remains unfiled. From time to time after January
15, 1996, Purchaser shall have the right to require by notice
in writing that the Corporation register all or any part of
the Registrable Securities held by Purchaser (a "Demand
Registration") and the Corporation shall thereupon effect
such registration in accordance herewith.
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(ii) The Corporation shall not be obligated to effect Demand
Registration (i) if all of the Registrable Securities held by
Purchaser which are intended to be covered by the Demand
Registration are, at the time of the request of a Demand
Registration, included in an effective registration statement
and the Corporation is in compliance with its obligations
under Subsection (d)(ii) through (v) hereof with respect to
such registration statement, or (ii) within 120 days after the
effective date of any other registration as to which Purchaser
was given piggy-back rights pursuant to subsection (c) hereof
and in which Purchaser was able to register and sell at least
eighty percent (80%) of the Registrable Securities requested
by Purchaser to be included in such registration.
(c) If the Corporation proposes to register at any time after January
15, 1996 (including for this purpose a registration effected by the Corporation
for shareholders other than the Purchaser) any of its stock or other securities
under the Act in connection with a public offering of such securities (other
than a registration on Form S-4, Form S-8 or other limited purpose form) and the
Registrable Securities have not heretofore been included in a registration
statement under Subsection (b), which remains effective, the Corporation shall,
at such time, promptly give the Purchaser written notice of such registration.
Upon the written request of the Purchaser given within twenty (20) days after
receipt of such notice by the Purchaser, the Corporation shall cause to be
registered under the Act all of the Registrable Securities that the Purchaser
has requested to be registered. However, the Corporation shall have no
obligation under this Subsection (c) to the extent that, with respect to a
public offering registration, any underwriter of such public offering reasonably
requests that the Registrable Securities or a portion thereof be excluded
therefrom.
(d) Whenever required under this Section 8 to effect the registration
of any Registrable Securities, the Corporation shall, as expeditiously as
reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best
efforts to cause such registration to become effective and,
upon the request of the Purchaser, keep such registration
statement effective for so long as Purchaser desires to
dispose of the securities covered by such registration
statement (but not after Purchaser in the reasonable opinion
of its counsel is free to sell such securities under the
provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such
registration statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity
with the requirements of the 1933 Act, and such other
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documents as the Purchaser may reasonably request in order to
facilitate the disposition of Registrable Securities owned by
Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by Purchaser, provided that the
Corporation shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a
general consent to service and process in any such states or
jurisdictions.
(v) Notify Purchaser of the happening of any event as a result
of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date of the
registration statement, as to the due authorization and
issuance of the securities being registered and compliance
with securities laws by the Corporation in connection with the
authorization and issuance thereof.
(e) The Purchaser will furnish to the Corporation in connection with
any registration under this Section 8 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless each
holder of Registrable Securities which are included in a registration statement
pursuant to the provisions of Subsections (b) or (c), any underwriter (as
defined in the Act) for such holder, and the directors, officers and controlling
persons of such holder or underwriter from and against, and shall reimburse all
of them with respect to, any and all claims, suits, demands, causes of action,
losses, damages, liabilities, costs or expenses ("Liabilities") to which any of
them may become subject under the Act or otherwise, arising from or relating to
(A) any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or (B) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading; PROVIDED, HOWEVER, that the Corporation shall not be liable in
any such case to the extent that any such Liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by such person in
writing specifically for use in the preparation thereof.
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(ii) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or
(c) shall indemnify, defend, and hold harmless the
Corporation, its directors, officers and controlling persons,
and shall reimburse the Corporation, its directors, officers
and controlling persons with respect to, any and all
Liabilities to which any of them may become subject under the
Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or
(B) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was
so made in reliance upon and in strict conformity with written
information furnished by or on behalf of such holder
specifically for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f) (i) or (f) (ii) of notice
of the commencement of any action involving the subject matter
of the foregoing indemnity provisions, such indemnified party
shall, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of Subsection
(f)(i) or (f)(ii), promptly notify the indemnifying party of
the commencement thereof; PROVIDED, HOWEVER, that the failure
to so notify the indemnifying party shall not relieve it from
its indemnification obligations hereunder except to the extent
that the indemnifying party is materially prejudiced by such
failure. If such action is brought against any indemnified
party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the
right to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to
such indemnified party; PROVIDED, HOWEVER, if the defendants
in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses
different from or in addition to those available to the
indemnifying party, or if there is conflict of interest which
would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party
shall have the right to select separate counsel to participate
in the defense of such action on behalf of such indemnified
party. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party pursuant to Subsection (f) (i) or (f) (ii)
for any expense of counsel subsequently incurred by such
indemnified party in connection with the defense thereof other
than reasonable costs of investigation, unless (A) the
indemnified party shall have employed counsel in accordance
with the provisions of the preceding sentence, or (B) the
indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the
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indemnified party within a reasonable time after the notice
of the commencement of the action. An indemnifying party
shall not be responsible for amounts paid in settlement
without its consent, provided that its consent may not be
unreasonably withheld.
(g) (i) With respect to the inclusion of Registrable Securities in
a registration statement pursuant to subsections (b) or (c),
all fees, costs and expenses of and incidental to such
registration, inclusion and public offering shall be borne by
the Corporation; PROVIDED, HOWEVER, that any securityholders
participating in such registration shall bear their pro rata
share of the underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall
include, without limitation, all registration, filing and NASD
fees, printing expenses, fees and disbursements of counsel and
accountants for the Corporation, and all legal fees and
disbursements and other expenses of complying with state
securities or Blue Sky laws of any jurisdiction or
jurisdictions in which securities to be offered are to be
registered and qualified. Fees and disbursements of counsel
and accountants for the selling securityholders shall,
however, be borne by the respective selling securityholder.
(h) The rights to cause the Corporation to register all or any portion
of Registrable Securities pursuant to this Section 8 may be assigned by
Purchaser to a transferee or assignee of 20% or more of the Stock. Within a
reasonable time after such transfer the Purchaser shall notify the Corporation
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. Such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Act. Any transferee asserting registration rights hereunder shall be bound
by the provisions of this Section 8.
(i) From and after the date of this Agreement, the Corporation shall
not agree to allow the holders of any securities of the Corporation to include
any of their securities in any registration statement filed by the Corporation
pursuant to Subsection (b) unless the inclusion of such securities will not
reduce the amount of the Registrable Securities included therein.
SECTION 9
AFFIRMATIVE COVENANTS OF THE CORPORATION
The Corporation hereby covenants that, during such time as the
Purchaser (or one of its affiliates) owns any Stock, or for four years,
whichever period is shorter:
9.1 REPORTS AND FINANCIAL STATEMENTS.
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(a) The Corporation will cause its common stock to continue to
be registered under Sections 12(b) or 12(g) of the Securities
Exchange Act of 1934, will comply in all material respects
with its reporting and filing obligations under said Act, and
will not take any action or file any document (whether or not
permitted by said Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its
reporting and filing obligations under said Act. The
Corporation will take all action necessary to continue the
listing or trading of its common stock on any national
securities exchange or the Automated Quotation System of the
National Association of Securities Dealers on which such
common stock is listed or traded, and will comply in all
respects with its reporting, filing and other obligations
under the bylaws or rules of said exchange or Association.
(b) The Corporation will furnish to the Purchaser,
concurrently with the distribution or filing thereof, each
annual and quarterly report to its shareholders, its reports
on Form 10K and 10Q, and each other report, registration
statement, definitive proxy statement or other document filed
with the S.E.C., and each press release or other public
announcement issued by the Corporation.
9.2 MAINTENANCE OF OFFICE. The Corporation will maintain an office or
agency in the United States at such address as may be designated in writing from
time to time to the registered holders of the Stock, where notices,
presentations and demands to or upon the Corporation in respect of the Stock may
be given or made. Unless or until another office or agency is designated by the
Corporation, such office shall be at the address set forth adjacent to the name
of the Corporation at the foot of this Agreement.
9.3 MAINTENANCE AND COMPLIANCE. The Corporation will (i) maintain its
corporate existence, rights, powers and privileges in good standing, (ii) comply
in all material respects with all laws and governmental regulations and
restrictions applicable to its business or properties, (iii) keep records and
books of account and maintain a system of internal accounting controls in
accordance with generally accepted accounting principles and in compliance with
Section 13(b)(2) of the Securities Exchange Act of 1934, and (iv) retain
independent public accountants of recognized national standing as auditors of
the Corporation's annual financial statements.
9.4 ASSIGNMENT OF RIGHTS. The rights of the Purchaser hereunder may be
assigned by the Purchaser in connection with the transfer or assignment to a
single transferee of not less than 20% of the Stock originally purchased by the
Purchaser hereunder, and such rights may be further reassigned by such
transferee to another such single transferee. Any transferee asserting rights
under this Agreement shall be bound by its provisions.
9.5 EFFECT OF COVENANTS. The covenants in Sections 9.1 and 9.3 shall
not be deemed to prohibit a merger, sale of all assets or other corporate
reorganization if (i) the entity surviving or succeeding to the Corporation is
bound by this Agreement with respect to its securities issued in exchange for
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<PAGE>
or replacement of the Stock, or (ii) the consideration received in exchange for
or replacement of the Stock is cash.
SECTION 10
LEGEND ON STOCK
Each certificate representing the Stock shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under any applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
Upon request of a holder of Stock the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of counsel
or a "no-action" letter of the S.E.C., in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend is
no longer required.
SECTION 11
MISCELLANEOUS
11.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California. Any action or proceeding
relating to this Agreement may be brought in the courts of California sitting in
Los Angeles County, or in the United States courts located in Los Angeles
County, California, and each of the parties irrevocably consents to the
jurisdiction of such courts in any such action or proceeding.
11.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
11.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including any
Exhibits hereto) and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated except by a written instrument
signed by the Corporation and the Purchaser.
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<PAGE>
11.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be mailed by first-class mail, postage prepaid, or
delivered either by hand or by messenger, addressed (a) if to the Purchaser, as
indicated-below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Stock, at the address of such holder as shown on the records
of the Corporation, or (c) if to the Corporation, at its address set forth below
or at such other address as the Corporation shall have furnished to the
Purchaser and each such other holder in writing. All such notices or
communications shall be deemed given when actually delivered by hand, messenger,
facsimile or mailgram or, if mailed, three days after deposit in the U.S. mail.
11.5 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement (including any holder of
Stock), upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
11.6 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
11.7 TITLES AND SUBTITLES. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.
Interneuron Pharmaceuticals, Inc.
By:_______________________________
Thomas Farb
Senior Vice President-Finance
Address: One-Ledgemont Center
99 Hayden Avenue
Lexington, MA 02173
Purchaser:
DFG Group Trust - 6-10 Subtrust
Account #340120312263
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<PAGE>
By:_____________________________
Address: % Dimensional Fund Advisors
1299 Ocean Avenue, 12th Floor
Santa Monica, C A 90401
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<PAGE>
EXHIBIT A
<TABLE>
COMMON STOCK REGISTRATION RIGHTS NUMBER OF SHARES
<S> <C>
D.H. Blair Investment Banking Corp. and designees 930,000
(Shares issued upon exercise of Unit Purchase Options)
Dimensional Fund Advisors (1) 475,000
Papajohn Warrant 1,000,000
Shares issuable upon conversion of Series B&C Preferred 622,220
Elan Warrant 100,000
Axion Warrant 20,000
Shares issued in "PIPE" private placement in March 1994(2) 1,707,000
Class B Warrants (3) 2,596,267
"Paramount Warrants" (4) 247,500
Shares Issuable upon exercise of Put Protection Rights (5) 4,164,000
Reliance Insurance 1,000,000
---------
Total 12,861,987
- -------------
<FN>
(1) Shares issued in December 1994 Private Placement to four funds managed by DFA.
(2) Included in a registration statement on Form S-3; some of these shares may have been sold.
(3) Included in a registration statement on Form S-3; that shares underlying 465,000 of the
Class B Warrants (issued upon exercise of Unit Purchase Options) have
additional registrations rights.
(4) Issued to investors in private placement of subsidiaries and to placement agent - governed
by Investor Rights Agreements.
(5) Based on the maximum number of shares that could be issued based on
subsidiary private placement to date.
</FN>
</TABLE>
<TABLE>
WARRANTS*
<S> <C>
Papajohn Warrant 1,000,000
Elan Warrant 100,000
Axion Warrant 20,000
Class B Warrants (3) 2,596,267
"Paramount Warrants"(4) 247,500
Reliance Warrants 500,000
---------
Total 3,473,767
- --------
* excluded options granted under and outside the Company's Stock Option
Plans to employees, consultants, directors etc.
</TABLE>
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<PAGE>
EXHIBIT B
OTHER EXISTING OBLIGATIONS AND AGREEMENTS TO ISSUE SECURITIES WITHIN 12 MONTHS
(i) an indeterminate number of shares are issuable upon conversion of $3.5
million of additional series of preferred stock which may be issued to American
Home Produces (formerly American Cyanamid Company), with such number of shares
to be based upon the market price of IPI Common Stock on the dates of issuance
of such additional series of preferred stock.
(ii) a maximum of 259,000 shares are issuable pursuant to anti-dilution
rights funds held by funds managed by Dimensional Fund Advisors, Inc.
(iii) 150,000 shares are issuable in connection with the acquisition of
Cardiovascular Pharmacology Engineering & Consultant, Inc.
(iv) up to $2.4 million of common stock proposed to be issued in connection
with the acquisition of certain assets of Walden Laboratories Inc.
(v) up to 15,000 shares and 75,000 warrants with an exercise price of
$7.00 to be issued to an investment banking firm for services previously
rendered.
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<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1 Authorization, Purchase and Sale of the Stock..................1
SECTION 2 Closing Payment and Delivery...................................1
SECTION 3 Purchase Price Adjustment......................................2
SECTION 4 Representations and Warranties of the Corporation..............3
SECTION 5 Representations and Warranties of the Purchaser................5
SECTION 6 Conditions to Obligations of the Purchaser.....................6
SECTION 7 Conditions to Obligations of the Corporation...................7
SECTION 8 Covenant to Register...........................................7
SECTION 9 Affirmative Covenants of the Corporation......................11
SECTION 10 Legend on Stock...............................................12
SECTION 11 Miscellaneous.................................................13
EXHIBIT A..........................................................15
EXHIBIT B..........................................................16
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 10,468,260
<SECURITIES> 12,262,826
<RECEIVABLES> 205,013
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,311,079
<PP&E> 2,975,657
<DEPRECIATION> (1,335,143)
<TOTAL-ASSETS> 25,401,375
<CURRENT-LIABILITIES> 8,811,957
<BONDS> 0
<COMMON> 31,669
0
245
<OTHER-SE> 9,857,642
<TOTAL-LIABILITY-AND-EQUITY> 25,401,375
<SALES> 0
<TOTAL-REVENUES> 3,500,968
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,840,759
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114,710
<INCOME-PRETAX> (13,146,114)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,146,114)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,146,114)
<EPS-PRIMARY> (0.44)
<EPS-DILUTED> 0
</TABLE>
