As filed with the Securities and Exchange Commission on March 15, 1996
Registration No. 333-1273
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
REGISTRATION STATEMENT ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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INTERNEURON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 04-3047911
(State or other jurisdiction of (I.R.S. Employer I.D.
Incorporation) number)
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INTERNEURON PHARMACEUTICALS, INC.
99 Hayden Avenue
Lexington, MA 02173
(617) 861-8444
(Address and telephone number of Registrant's principal executive offices)
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Glenn L. Cooper, M.D., President
and Chief Executive
Officer INTERNEURON
PHARMACEUTICALS, INC.
99 Hayden Avenue
Lexington, MA 02173
(617) 861-8444
(Address and telephone number of agent for service)
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Copies to:
Jill M. Cohen, Esq.
Bachner, Tally, Polevoy & Misher, LLP
380 Madison Avenue
New York, New York 10017
(212) 687-7000
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Approximate date of proposed commencement of sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
| |
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. | | ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | | _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. | |
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<TABLE>
CALCULATION OF ADDITIONAL REGISTRATION FEE
<S> <C> <C> <C> <C>
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF ADDITIONAL ADDITIONAL AMOUNT OFFERING PRICE AGGREGATE ADDITIONAL AMOUNT OF ADDITIONAL
SECURITIES TO BE REGISTERED TO BE REGISTERED PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
Common Stock, $.001 par
value....................... 14,612(2) $29.00(3) $423,748 $146.12*
Total....................... 36,200.55
* $36,054.43 previously paid.
</TABLE>
(1) Estimated solely for purposes of calculating the additional registration
fee pursuant to Rule 457(a) under the Securities Act.
(2) Additional shares to be sold by the Selling Securityholders.
(3) Fee for Common Stock to be sold by Selling Securityholders is based on
the average of the high and low price of the Common Stock as of March 12,
1996.
Pursuant to Rule 416, there are also being registered for resale such
additional shares of Common Stock as may become issuable pursuant to
"anti-dilution" provisions of the warrants.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion - Preliminary Prospectus dated March 15, 1996
PROSPECTUS
INTERNEURON PHARMACEUTICALS, INC.
3,533,078 shares of Common Stock
11,100 Class B Warrants
This Prospectus relates to (i) 3,533,078 shares (the "Shares")
of Common Stock, par value $.001 per share (the "Common Stock") of Interneuron
Pharmaceuticals, Inc. (the "Company"), of which 3,122,899 Shares are
outstanding, 11,100 Shares are issuable (and offered) by the Company upon
exercise of the Class B Warrants also offered hereby and 399,079 Shares are
issuable upon exercise of other warrants, and (ii) 11,100 Class B Warrants. Each
Class B Warrant entitles the holder to purchase one share of Common Stock at
$4.75 per share, subject to adjustment, on or prior to March 15, 1996. The
Shares and the Class B Warrants may be offered and sold by certain stockholders
of the Company named herein (the "Selling Securityholders") from time to time in
transactions on the Nasdaq National Market or other exchanges or markets on
which the Shares or Class B Warrants may be traded, in the over-the-counter
market, in negotiated transactions, through the writing of options on the Shares
or a combination of such methods of sale or through other means. Sales may be
effected at fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices.
The Selling Securityholders may effect such transactions by
selling the Shares or the Class B Warrants to or through broker-dealers
(including broker-dealers which may be affiliated with any such Selling
Securityholder) and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders or the
purchasers of the Shares or Class B Warrants for whom such broker-dealers may
act as agent or to whom they sell as principal or both (which compensation to a
particular broker-dealer might be in excess of customary commissions). See
"Selling Securityholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares or the Class B
Warrants by the Selling Securityholders will be received by the Company although
the Company will receive proceeds from any exercise of the Class B Warrants or
other warrants. The Company has agreed to bear certain expenses in connection
with the registration and sale of the Shares and Class B Warrants being offered
by the Selling Securityholders. The Company has agreed to indemnify certain of
the Selling Securityholders against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended.
The Common Stock and Class B Warrants trade on the Nasdaq
National Market under the symbols IPIC and IPICZ, respectively. On March 14,
1996, the last sale prices of the Shares and Warrants were $313/8 and $26,
respectively.
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------------
The date of this Prospectus is March __, 1996
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission"), Washington, D.C. a Registration Statement on Form
S-3 under the Act covering the securities offered by this Prospectus. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. Statements contained in this Prospectus as
to the contents of any contract or other document referred to are not
necessarily complete and in each instance such statement is qualified by
reference to each such contract or document. The Company is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports and other
information with the Commission. Reports and other information filed by the
Company with the Commission can be inspected and copies at the public reference
facilities maintained by the Commission at the following addresses: New York
Regional Office, Seven World Trade Center, New York, New York 10048; and Chicago
Regional Office, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No.
0-18728) pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K and Form 10-K/A for
the fiscal year ended September 30, 1995, including any documents or portions
thereof incorporated by reference therein and all amendments thereto;
2. The Company's definitive proxy statement dated January 26,
1996, except the Compensation Committee Report on executive compensation and the
performance graph included in the proxy statement, filed pursuant to Section 14
of the Exchange Act;.
3. The Company's Reports on Form 8-K dated January 18, 1996 and
February 7, 1996 and Form 8-K/A dated February 20, 1996;
4. The Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1995;
5. The Company's Registration Statement on Form 8-A declared
effective on March 8, 1990, as amended, registering the Common Stock under the
Exchange Act; and
6. All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of this offering, except the Compensation Committee
Report on Executive Compensation and the performance graph included in the Proxy
Statement filed pursuant to Section 14 of the Exchange Act.
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Any statement contained in any document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus. The Company will provide
without charge to each person to whom this Prospectus is delivered, upon written
or oral request of any such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents which
are not specifically incorporated by reference into such documents). Requests
for such documents should be directed to the Company, 99 Hayden Avenue,
Lexington, Massachusetts 02173, Attention: Chief Financial Officer, telephone
(617) 861-8444.
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PROSPECTUS SUMMARY
The Company
Interneuron Pharmaceuticals, Inc. ("Interneuron") is a
diversified biopharmaceutical company engaged in the development and
commercialization of a portfolio of products primarily for the treatment or
management of central nervous system disorders. Interneuron is also developing
diverse technologies and products through four subsidiaries, Intercardia, Inc.
("Intercardia") Progenitor, Inc. ("Progenitor"), Transcell Technologies, Inc.
("Transcell"), and InterNutria, Inc. ("InterNutria"). The technology or product
areas of the subsidiaries include: cardiovascular and pulmonary disease through
Intercardia; gene therapy, growth factors and stem cell production through
Progenitor; combinatorial chemistry, drug discovery and drug transport through
Transcell; and dietary supplements and related products through InterNutria.
Interneuron's strategy emphasizes the development of
pharmaceutical products with significant clinical data or international market
experience and which may provide treatments for disorders or diseases which are
not adequately addressed by available therapies. Interneuron focuses on
developing products that mimic or affect neurotransmitters, which are chemicals
carrying messages between nerve cells of the brain and within the peripheral
nervous system and which are believed to influence behavior and neurological
disturbances. A drug or other treatment that either increases or decreases the
amount of a neurotransmitter released into or taken up by a synapse, or mimics
the neurotransmitter, will thereby usually affect certain behaviors which depend
on the nerve cells that release the neurotransmitter. Many neurological and
psychiatric disorders are believed to be related to the level or functioning of
neurotransmitters. The Company believes that treatments for many of these
disorders are unavailable, ineffective or inadequate. Accordingly, the Company
has developed and is developing products tailored to treat many such disorders,
including with the aim of developing treatments which are more effective or
which have an improved side effect profile compared to available treatments.
In addition, Interneuron is pursuing a strategy of
diversification within the healthcare field by acquisition, in-licensing and
establishing and providing initial funding to its Subsidiaries to conduct
research and development in specialized areas. The Company's goal is for its
subsidiaries to establish independent operations and financing through corporate
alliances, equity or third party financings, mergers or other business
combinations, with Interneuron generally retaining an ongoing equity interest.
The nature of any such transaction is expected to vary depending on the business
and capital needs of each Subsidiary and the stage of development of their
respective technologies or products.
The Company's lead pharmaceutical product is dexfenfluramine, a
prescription drug intended for use in the treatment of obesity. In November
1995, an advisory committee of the Food and Drug Administration ("FDA") voted
6-to-5 to recommend the approval of dexfenfluramine as a prescription treatment
for obesity. The advisory committee also recommended that Phase IV, or post
marketing, studies be conducted and that certain labeling guidelines be
implemented. The Company obtained exclusive U.S. rights to dexfenfluramine for
this use from Les Laboratoires Servier, a French pharmaceutical company
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("Servier"). If FDA approval is obtained, the drug is expected to be marketed
under the tradename Redux(TM) by American Home Products Corp. (formerly American
Cyanamid Company) ("AHP"), which licensed from the Company exclusive rights to
market dexfenfluramine in the U.S. in exchange for royalties on product sales
and a series of milestone-related cash payments and equity investments. The
Company retained certain co-promotion rights. The Company also has a contract
manufacturing agreement with Boehringer Ingelheim Pharmaceuticals, Inc.
("Boehringer") relating to the manufacture of dexfenfluramine capsules.
Dexfenfluramine is currently marketed by Servier in over 40 countries outside
the U.S.
Interneuron may continue to establish collaborations with
leading pharmaceutical companies to develop and commercialize certain products,
while directly marketing other products, depending upon, among other factors,
the extent and cost of clinical development required and the nature of the
target market.
Other principal products or products under development by the
Company include:
CITICOLINE - a product under development for the treatment of
memory and motor impairment associated with ischemic stroke. This product is
currently marketed by third parties in several countries outside the U.S. and
the Company has rights for certain applications in the U.S. and Canada. A Phase
II/III clinical trial for this product with patients suffering from ischemic
stroke was recently completed, and another clinical trial has commenced. See
"Recent Developments."
BUCINDOLOL - a drug under development by Intercardia and
currently in a Phase III clinical trial (the "BEST Study") for treatment of
congestive heart failure. The BEST Study is being conducted by a division of the
National Institutes of Health ("NIH") and by the Department of Veterans Affairs
("VA"). Intercardia licensed exclusive worldwide rights to bucindolol and
entered into an agreement with Astra Merck Inc. ("Astra Merck") for the
development, commercialization and marketing of a twice-daily formulation of
bucindolol for congestive heart failure in the U.S.
LOW-DOSE MELATONIN - The Company is developing a low-dose form
of melatonin, a naturally occurring hormone regulating the body's circadian
rhythm, expected to be marketed under the name Melzone(TM). This product may be
useful as a sleeping aid. The Company expects to conduct a regional test launch
of Melzone in 1996.
PMS ESCAPE(TM) - a dietary supplement for women during their
pre-menstrual period which InterNutria is test launching on a regional basis in
1996.
PAGOCLONE - a drug under development as an anti-anxiety drug. A
Phase I trial in the United Kingdom has been completed and the Company expects
to begin a Phase II trial in the United Kingdom in 1996.
The Company was originally incorporated in New York in October
1988 and in March 1990 was reincorporated in Delaware. The Company's executive
offices are located at One Ledgemont Center, 99 Hayden Avenue, Suite 340,
Lexington, Massachusetts 02173, and its telephone number is (617) 861-8444.
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Unless the context indicates otherwise, all references to the Company include
Interneuron and its subsidiaries, Intercardia, Progenitor, Transcell, and
InterNutria (the "Subsidiaries").
Recent Developments
In February 1996, the Company announced preliminary results of
a recently completed clinical trial with citicoline. The preliminary results
indicated a statistically significant improvement in the recovery of patients
who suffered an ischemic stroke and were treated with citicoline compared to
patients who received placebo. Once the results are finalized, the Company
intends to review the findings with the FDA and to define with them the nature
and extent of any additional studies that may be required.
Effective March 15, 1996, Elizabeth Tallett resigned as
President and Chief Executive Officer of Transcell. The Company and Ms. Tallett
agreed to various severance, acceleration of stock and option vesting and
related provisions. Glenn L. Cooper, M.D., the Company's President and Chief
Executive Officer, will temporarily also act as President and Chief Executive
Officer of Transcell.
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RISK FACTORS
An investment in the securities offered hereby is speculative
in nature and involves a high degree of risk. Each prospective investor should
carefully consider the following risk factors, as well as others described
elsewhere or incorporated by reference in this Prospectus, associated with this
offering, before making an investment.
HISTORY OF LOSSES; ACCUMULATED DEFICIT AND ANTICIPATED FUTURE
LOSSES; POTENTIAL FLUCTUATIONS IN REVENUES. The Company is engaged primarily in
research and development activities and its only revenues from operations have
been license fees or expense reimbursements. At December 31, 1995, the Company
had accumulated net losses of approximately $82 million and significant losses
and decreases in working capital are continuing. The Company will be required to
conduct significant development and pre-clinical or clinical testing activities
and establish regulatory, marketing, sales and administrative capabilities for
many of its proposed products, which are expected to result in operating losses
for the foreseeable future. The extent of future losses and time required to
achieve profitability are highly uncertain. There can be no assurance that the
Company will be able to achieve profitability on a sustained basis, if at all.
The Company has experienced, and may continue to experience, fluctuations in
revenues as a result of the timing of license fees or milestone payments.
RISK RELATING TO COMMERCIALIZATION OF DEXFENFLURAMINE. The
Company's future success may depend in large part on whether dexfenfluramine
ultimately receives FDA approval and is marketed successfully. Various factors
will affect the Company's ability to commercialize dexfenfluramine, including
the following:
REGULATORY REQUIREMENTS. FDA approval is required
before marketing of dexfenfluramine can commence in the United
States. In November 1995, an advisory committee of the FDA
voted 6-to-5 to recommend approval of dexfenfluramine as a
prescription treatment for obesity. However, there can be no
assurance that dexfenfluramine will receive FDA approval or as
to the timing of such approval, if obtained. The advisory
committee also recommended that if the drug is approved, Phase
IV, or post marketing, studies be conducted and certain
labeling guidelines be implemented. The precise nature of these
studies and labeling guidelines has not yet been determined.
However, Interneuron expects that the studies may be designed
to address two principal safety issues, i.e., whether
dexfenfluramine is associated with certain neurochemical
changes in the brain or with the development of primary
pulmonary hypertension, a rare but serious lung disease. These
safety issues and other factors may also affect the labeling
for the drug, which may limit the market for and the claims
that may be made in marketing the drug.
DEPENDENCE ON AHP FOR MARKETING. The ability to
commercialize Redux, assuming FDA approval is obtained, will
depend to a significant extent on the marketing and sales
efforts of AHP, over which the Company has minimal control. The
Company's agreements with Servier require launch of the product
within six months after an approval letter from the FDA is
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obtained. There can be no assurance that AHP will devote
resources to dexfenfluramine sufficient to achieve successful
market penetration and acceptance, that the Company will
generate significant revenues from royalties, or that such
royalties will be sufficient to offset the Company's
significant investment in research and development and other
costs associated with dexfenfluramine. AHP has the right to
terminate the Sublicense Agreements at any time prior to
commercial introduction of dexfenfluramine or at any time after
commercial introduction on 12 months notice. Any such
cancellation would materially adversely affect the Company's
ability to commercialize dexfenfluramine.
EFFECT OF CONTROLLED SUBSTANCES ACT AND SIMILAR STATE
REGULATIONS. Fenfluramine and its isomers, including
dexfenfluramine, are currently designated as Schedule IV
substances under the Controlled Substances Act. This act
imposes various registration and record keeping requirements
and restricts the number of prescription refills. In September
1995, an advisory committee of the FDA recommended the removal
of fenfluramine and its isomers from these controls. However,
there can be no assurance as to whether descheduling will occur
or as to the timing of such descheduling. Further, state
descheduling actions are required by many states even after
federal descheduling. Assuming FDA approval to market
dexfenfluramine is obtained, the continued status of
dexfenfluramine as a controlled substance would adversely
affect the marketability of the drug and would result in
reduced and/or delayed milestone payments, equity investments
and royalties to the Company under its agreements with AHP (the
"Sublicense Agreements").
DEPENDENCE ON SUPPLIERS. The Company is required to
purchase for five years from commercial introduction all
requirements of dexfenfluramine bulk chemical from an affiliate
of Servier at a fixed price, subject to annual adjustments
based on Servier's cost. The Company is also required to
purchase until December 1998 all requirements of
dexfenfluramine capsules from Boehringer. The Company is
responsible for supplying AHP with its requirements for
dexfenfluramine in bulk chemical or finished product form, as
required by AHP. Accordingly, the Company will be materially
dependent on the ability of each of Servier and Boehringer to
have manufactured and delivered, on a timely basis, sufficient
quantities of bulk chemical and capsules, respectively. In the
event the Company is unable to deliver to AHP sufficient
quantities of dexfenfluramine capsules, the Company's business
and results of operations would be materially adversely
affected.
COMPETITION. Redux may be subject to substantial
competition from established pharmaceutical companies. The
Company is aware of drugs under development for the treatment
of obesity including sibutramine, for which BASF AG has filed
an NDA to treat obesity, a drug under development by Roche
Holdings Ltd. that is in clinical trials, and a drug for which
Neurogen Corporation has filed an IND. In addition,
dexfenfluramine is an isomer of fenfluramine, which is sold
under the brand name Pondimin by AHP and which is available in
the United States for approximately the same use as
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dexfenfluramine. Although dexfenfluramine is distinguishable
from fenfluramine, there can be no assurance that
dexfenfluramine, which is expected to be higher priced then
fenfluramine, will ultimately achieve greater market
acceptance than fenfluramine or any other prescription drug
used to treat obesity. In addition, other drugs and
technologies relating to the treatment of obesity are in
earlier stages of development.
PATENT EXPIRATION. The composition of matter patent on
dexfenfluramine in the United States has expired and
competitors, including generic drug manufacturers, may market
dexfenfluramine claiming uses other than obesity related to
abnormal carbohydrate craving, assuming FDA approval can be
obtained. The use patent on dexfenfluramine for the treatment
of abnormal carbohydrate craving, which has been licensed to
the Company, expires in 2000. There can be no assurance that
this patent will afford any competitive advantage or will not
be challenged or circumvented by third parties. The Company's
minimum royalty obligations to Servier for the license of the
know-how and trademark extend beyond the patent expiration
date. This royalty payment obligation may adversely affect the
Company's ability to compete against any then available generic
drugs that are offered at lower prices.
TERMINATION OF AGREEMENTS. The Company's agreements
with Servier (the "Servier Agreements") may be terminated by
Servier under certain conditions, including an acquisition by a
new party (other than existing stockholders or their affiliates
as of the date of the Servier Agreements) of a 20% beneficial
ownership interest in the Company without Servier's consent.
The Servier Agreements also require Servier's consent to a
Company sublicense, which consent was obtained in connection
with the Sublicense Agreements. However, Servier has the right
to withdraw its consent to the Sublicense Agreements in the
event of a change in control of AHP or unless certain minimum
net sales are achieved or payments are made as if such minimum
sales were achieved. In the event of a breach of the Servier
Agreements by the Company which is not caused by AHP, or of
other specified events which result in the termination of the
Servier Agreements, AHP may succeed to the Company's position
under the Servier Agreements. AHP has the right to terminate
its sublicense at any time prior to its first commercial sale
of dexfenfluramine or, upon 12 months notice, after such first
commercial sale. The termination of either agreement would
likely have a material adverse effect on the Company.
NEED FOR SIGNIFICANT ADDITIONAL FUNDS AND COLLABORATIVE
ARRANGEMENTS. The Company has expended and will continue to expend substantial
funds to conduct research and development activities and pre-clinical and
clinical testing on products under development. In addition, the Company does
not have the resources or capability to manufacture or market by itself, on a
commercial scale, its proposed products. Accordingly, the Company will require
significant additional funds, either through additional equity or debt
financings or collaborative agreements with corporate sponsors or from other
sources to complete development or commence commercial scale manufacturing and
marketing of its proposed products. In addition, additional funds will be
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required to finance the research and development projects of certain of the
Company's subsidiaries. The Company may ultimately establish its own
manufacturing or marketing capabilities for certain of its products, in which
case it will require substantial additional funds and personnel. In particular,
the Company will seek to co-promote Redux and currently intends to market
directly citicoline, Melzone(TM) and PMS Escape(TM), assuming applicable
regulatory approvals are obtained and test launches are successful. The Company
will therefore be required to establish and maintain appropriate internal sales
forces. The Company currently does not have any commitments for additional
financing and there can be no assurance that such financing will be available on
acceptable terms, if at all. If adequate funds are not available on acceptable
terms, the Company may be required to delay, scale back or eliminate one or more
of its product development programs.
EARLY STAGE OF PRODUCT DEVELOPMENT. The Company is engaged in
investigating a variety of technologies, pharmaceutical compounds and other
products or processes for therapeutic potential. There has been only limited
research in many areas of the Company's focus and results obtained in research
and testing conducted to date are not conclusive as to whether certain products
being investigated by the Company will be safe and effective for their proposed
use. Certain of the Company's proposed products are in the early developmental
stage, require significant further research and development, as well as testing
and regulatory clearances, and are subject to the risks of failure inherent in
the development of products or therapeutic procedures based on innovative
technologies. These risks include the possibilities that any or all of these
proposed products are found to be ineffective or toxic, or otherwise fail to
receive necessary regulatory clearances; that the proposed products or
procedures are uneconomical to market or do not achieve broad market acceptance;
that third parties hold proprietary rights that preclude the Company from
marketing them; or that third parties market a superior or equivalent product.
The Company is unable to predict whether any of its products will be
successfully manufactured or marketed . Further, due to the extended testing and
regulatory review process required before marketing clearance can be obtained,
the time frames for commercialization of any products or procedures are long and
uncertain.
UNCERTAINTIES RELATED TO CLINICAL TRIALS. Before obtaining
regulatory approval for the commercial sale of any of its pharmaceutical
products under development, the Company must demonstrate that the product is
safe and efficacious for use in each target indication. The results of
preclinical studies and early clinical trials may not be predictive of results
that will be obtained in large-scale testing, and there can be no assurance that
clinical trials of the Company's products will demonstrate the safety and
efficacy of its products or will result in marketable products. A number of
companies in the pharmaceutical industry have suffered significant setbacks in
advanced clinical trials, even after promising results in earlier trials. If the
Company were unable to demonstrate the safety and efficacy of certain of its
products, the Company may be adversely affected. The Company also expects to
conduct clinical evaluation on certain dietary supplement products under
development by InterNutria, which are subject to similar risks.
RISKS RELATING TO TEST LAUNCHES OF PRODUCTS. The Company is
conducting and intends to conduct regional test launches of certain
non-pharmaceutical products during 1996, including PMS Escape, a dietary
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supplement for women with pre-menstrual syndrome which is continuing to be
clinically evaluated, and Melzone, a low-dose formulation of melatonin. Based on
the results of these test launches, the Company may determine not to market the
product, to conduct additional testing of the product or to market the product
on a broader scale. There can be no assurance either of these test launches will
be successful, or if successful, be predictive of the commercial viability of
either product if marketed more broadly.
UNCERTAINTY OF GOVERNMENT REGULATION. The Company's research,
development and pre-clinical and clinical trials and the manufacturing and
marketing of most of its products are subject to an extensive regulatory
approval process by the FDA and other regulatory agencies in the U.S. and other
countries. The process of obtaining FDA and other required regulatory approvals
for drug and biologic products, including required pre-clinical and clinical
testing, is lengthy, expensive and uncertain. There can be no assurance that,
even after such time and expenditures, the Company will be able to obtain
necessary regulatory approvals for clinical testing or for the manufacturing or
marketing of any products. Even if regulatory clearance is obtained, post-market
evaluation of the products, if required, could result in restrictions on a
product's marketing or withdrawal of the product from the market as well as
possible civil or criminal sanctions. Certain products are proposed to be
marketed by the Company as dietary supplements, such as Melzone and PMS Escape.
There can be no assurance, however, that the FDA will not attempt to regulate
the products as drugs, which would require the filing of NDAs and review and
approval by the FDA prior to marketing, or otherwise restrict the marketing of
these products. In addition, classification of these products as dietary
supplements limits the types of claims that can be made in marketing.
In addition to the regulatory framework for product approvals,
the Company and its collaborative partners may be subject to regulation under
state and federal laws, including requirements regarding occupational safety,
laboratory practices, environmental protection and hazardous substance control,
and may be subject to other present and possible future local, state, federal
and foreign regulation. The impact of such regulation upon the Company cannot be
predicted and could be material and adverse.
DEPENDENCE ON OTHERS FOR CLINICAL DEVELOPMENT, REGULATORY
APPROVALS, MANUFACTURING AND MARKETING. The Company expects to rely upon
collaborative partners for the development, manufacturing and marketing of
certain of its products. The Company is therefore dependent on the efforts of
these collaborative partners and the Company may have limited control over the
manufacture and commercialization of such products. For example, with respect to
bucindolol, the Company does not control the BEST Study, which is being
conducted by the NIH and the VA, and will be substantially dependent upon Astra
Merck for the commercial success of the twice-daily formulation of bucindolol.
In the event certain of the Company's collaborative partners terminate the
related agreements or fail to manufacture or commercialize products, the Company
would be materially adversely affected. Because the Company will generally
retain a royalty interest in sales of products licensed to third parties, its
revenues may be less than if it retained commercialization rights and marketed
products directly. Although the Company believes that its collaborative partners
will have an economic motivation to commercialize the products which they may
license, the amount and timing of resources devoted to these activities
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generally will be controlled by each partner. There can be no assurance that the
Company will be successful in establishing any additional collaborative
arrangements, or that any such collaborative partners will be successful in
commercializing products or not terminate their collaborative agreements with
the Company.
RISKS RELATING TO MANAGING GROWTH. Assuming proposed product
launches occur, the Company anticipates experiencing a period of rapid growth,
which is likely to place significant demands on the Company's management,
operational, financial and accounting resources. The Company's intention to
market certain products directly will further strain these resources. The
Company's future success will depend in part on whether it can expand its
operational, financial and accounting systems and expand, train and manage its
employee base. The Company's inability to manage growth effectively could have a
material adverse effect on the Company's business, financial condition and
results of operations.
COMPETITION. Competition from other pharmaceutical companies,
biotechnology companies, dietary supplement companies and other research and
academic institutions is intense and expected to increase. The Company is aware
of products and technologies under development by its competitors that address
diseases being targeted by the Company. For example, if regulatory approval is
obtained, bucindolol is expected to compete with carvedilol, which is expected
to be marketed in the U.S. by Smithkline Beecham, for the treatment of
congestive heart failure, and the patient enrollment rate of the BEST Study will
be adversely affected if carvedilol is approved by the FDA as a treatment for
congestive heart failure. In addition, Melzone will compete with a substantial
number of available melatonin products. The Company is aware of a number of
products in clinical development pursuing an indication for stroke which could
compete with citicoline. Many companies in this industry have substantially
greater financial resources and development capabilities than the Company and
have substantially greater experience in undertaking pre-clinical and clinical
testing of products, obtaining regulatory approvals and manufacturing and
marketing products. In addition to competing with universities and other
research institutions in the development of products, technologies and
processes, the Company may compete with other companies in acquiring rights to
products or technologies from universities. Competitors of the Company have
developed or are in the process of developing products or technologies that are,
or in the future may be, the basis for competitive products. There can be no
assurance that the Company will develop products that are more effective or
achieve greater market acceptance than competitive products, or that the
Company's competitors will not succeed in developing products and technologies
that are more effective than those being developed by the Company or that would
render the Company's products and technologies less competitive or obsolete.
UNCERTAINTY OF PATENT POSITION AND PROPRIETARY RIGHTS. The
Company's success will depend to a significant extent on its ability, or the
ability of its licensors, to obtain patent protection on technologies and
products and preserve trade secrets and to operate without infringing the
proprietary rights of others. The Company and its subsidiaries have rights to a
number of patents and patent applications. Certain of these patents and patent
applications include biotechnology claims, the patentability of which generally
is highly uncertain and involves complex legal and factual questions. There can
be no assurance that any pending patent applications will result in the
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issuance of a patent or that any patents issued will afford any competitive
advantages or will not be challenged or circumvented by third parties. Because
of the extensive time required for development, testing and regulatory review of
a potential product, it is possible that before a potential product can be
commercialized, any related patent may expire, or remain in existence for only a
short period following commercialization, thus reducing any advantage of the
patent. For example, the U.S. composition of matter patent on bucindolol expires
in November 1997, before anticipated completion of clinical trials of the
product. In addition, the Company's licensed United States patent covering the
administration of citicoline to treat patients afflicted with conditions
associated with the inadequate release of brain acetylcholine expires in 2003.
As described in the licensed patent, such conditions may include the
neurological syndromes associated with brain traumas and stroke, but the claims
of the licensed patent do not specifically include the use of citicoline for the
indications for which the IND has been filed.
The Company may conduct research on pharmaceutical or chemical
compounds or technologies, the patents or other rights to which may be held by
third parties. If products based on such technologies are commercialized, they
may infringe such patents or other rights, licenses to which may not be
available to the Company. Failure to obtain needed patents, licenses or
proprietary information held by others may have a material adverse effect on the
Company's business. There can be no assurance that others will not independently
develop similar technologies or duplicate any technology developed by the
Company or, if patents are issued, design around the patented aspects of any
technology developed by the Company. Furthermore, litigation may be necessary to
enforce any patents issued to the Company or to determine the scope and validity
of the proprietary rights of others.
To the extent that consultants, key employees or other third
parties apply technological information independently developed by them or by
others to the Company's proposed projects, disputes may arise as to the
proprietary rights to such information which may not be resolved in favor of the
Company. The Company's Scientific Advisors and certain other consultants are
employed by or have consulting agreements with third parties and any inventions
discovered by such individuals generally will not become property of the
Company. There can be no assurance that Company confidentiality agreements will
not be breached or that the Company's trade secrets will not otherwise become
known or be independently discovered by competitors.
UNCERTAINTY REGARDING WAXMAN-HATCH ACT. The Drug Price
Competition and Patent Term Restoration Act of 1984 (the "Waxman-Hatch Act")
provides that a patent which claims a product, use or method of manufacture
covering certain drugs and certain other products may be extended for up to five
years to compensate the patent holder for a portion of the time required for
research and FDA review of the product. Although the Company expects to apply
for such protection for the use patent covering dexfenfluramine, there can be no
assurance that it will receive an extension. The Waxman-Hatch Act also
establishes a period of time from the date of FDA approval of certain new drug
applications during which the FDA may not accept or approve short-term
applications for generic versions of the drug from other sponsors, although it
may accept or approve long-form applications (that is, other complete NDAs) for
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such drug. There can be no assurance that any of the benefits of the
Waxman-Hatch Act or similar foreign laws will be available to the Company or
that such laws will not be amended or repealed.
DEPENDENCE UPON KEY PERSONNEL AND CONSULTANTS. The Company is
dependent on certain executive officers and scientific personnel, including
Glenn L. Cooper, M.D., the Company's President and Chief Executive Officer,
Richard Wurtman, M.D., a principal stockholder, director and Chairman of the
Scientific Advisors and Lindsay Rosenwald, M.D., the Chairman of the Board of
the Company. The Company has key person life insurance policies on the lives of
Drs. Wurtman, Rosenwald and Cooper. Drs. Wurtman and Rosenwald devote only a
portion of their time to the Company's business. In addition, the Company is
dependent upon certain executive officers or scientific personnel of the
Subsidiaries, each of which has separate management who are responsible, to a
large extent, for the day-to-day operations of the respective Subsidiary. In
addition, the Company relies on independent consultants to design and supervise
clinical trials and prepare FDA submissions.
Competition for qualified employees among pharmaceutical and
biotechnology companies is intense, and the loss of any of such persons, or an
inability to attract, retain and motivate additional highly skilled employees,
could adversely affect the Company's business and prospects. There can be no
assurance that the Company will be able to retain its existing personnel or to
attract additional qualified employees.
RISK OF PRODUCT LIABILITY. The use of the Company's products in
clinical trials and the marketing of any products may expose the Company to
substantial product liability claims. Certain of the Company's agreements
require the Company to obtain specified levels of insurance coverage, naming the
other party thereto as an additional insured. There can be no assurance that the
Company will be able to obtain such insurance coverage with respect to
dexfenfluramine or any other products, or if obtained, that such insurance can
be acquired in sufficient amounts to protect the Company or other named parties
against such liability or at a reasonable cost. The Company is required to
indemnify Servier, Boehringer and AHP against any claims, damages or liabilities
incurred by any of them in connection with the marketing of dexfenfluramine
under certain circumstances. The Company may also be required to indemnify other
licensors against product liability claims incurred by them as a result of
products developed by the Company under licenses from such entities. In the
event of an uninsured or inadequately insured product liability claim, or in the
event an indemnification claim was made against the Company, the Company's
business and financial condition could be materially adversely affected.
UNCERTAINTY REGARDING PHARMACEUTICAL PRICING AND REIMBURSEMENT.
The Company's business and financial condition will be affected by the efforts
of governmental and third-party payors to contain or reduce the cost of health
care. There have been, and the Company expects that there will continue to be, a
number of federal and state proposals to implement government control over the
pricing or profitability of prescription pharmaceuticals, as is currently the
case in many foreign markets. While the Company cannot predict whether any such
legislative or regulatory proposals will be adopted or the effect such proposals
may have on its business, the announcement or adoption of such proposals could
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have an adverse effect on the Company. Furthermore, the Company's ability to
commercialize its potential products may be adversely affected to the extent
that such proposals have a material adverse effect on the business, financial
condition and profitability of companies that are prospective collaborative
partners of the Company. Successful commercialization of many of the Company's
products may depend on the availability of reimbursement for the cost of such
products and related treatment from third-party health care payors, such as the
government, private insurance plans and managed care organizations. There can be
no assurance that such reimbursement will be available. Such third-party payors
are increasingly challenging the price of medical products and services.
Significant uncertainty exists as to the reimbursement status of certain newly
approved health care products, and there can be no assurance that adequate
third-party coverage will be available with respect to any of the Company's
products.
CONTROL BY PRESENT STOCKHOLDERS; ANTI-TAKEOVER PROVISIONS. The
officers, directors and principal stockholders of the Company (including
individuals or entities related to such stockholders) beneficially own
approximately 50% of the Company's outstanding Common Stock. Accordingly, these
officers, directors and stockholders may have the ability to exert significant
influence over the election of the Company's Board of Directors and to determine
corporate actions requiring shareholder approval.
The Board of Directors has the authority, without further
approval of the Company's stockholders, to fix the rights and preferences of and
to issue shares of preferred stock. Further, the Servier Agreements may be
terminated in the event of any acquisition by a new party (other than existing
stockholders or their affiliates as of the date of the Servier Agreements) of a
20% beneficial interest in the Company. In addition, Delaware corporate law
imposes limitations on certain business combinations. These provisions could,
under certain circumstances, have the effect of delaying or preventing a change
in control of the Company and, accordingly, could adversely affect the price of
the Company's Common Stock.
NO DIVIDENDS. The Company has not paid any cash dividends on
its Common Stock since inception and does not expect to do so in the foreseeable
future. Any dividends will be subject to the preferential cumulative dividend of
$.1253 per share and $1.00 per share payable on the outstanding Series B
Preferred Stock and Series C Preferred Stock, respectively, and dividends
payable on any other preferred stock issued by the Company.
POSSIBLE VOLATILITY OF STOCK PRICE. The market prices for
securities of emerging growth companies have historically been highly volatile.
Future announcements concerning the Company or its Subsidiaries, including
Intercardia, which is publicly-traded, or the Company's competitors, including
the results of testing and clinical trials, technological innovations or
commercial products, government regulations, developments concerning proprietary
rights, litigation or public concern as to the safety or commercial value of the
Company's products, may have a significant impact on the market price of the
Company's Common Stock or Class B Warrants.
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USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares or the Class B Warrants by the Selling Securityholders. In the event that
all of the Class B Warrants and other warrants exercisable for Shares offered
hereby are exercised, the Company would receive additional proceeds of
approximately $2,781,000. Holders of warrants are not obligated to exercise
their warrants and there can be no assurance that warrantholders will choose to
exercise all or any of the warrants.
The Company will use proceeds received upon exercise of
warrants, if any, for working capital. The Company may also use proceeds to
acquire rights to new products and technologies.
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SELLING SECURITYHOLDERS
The following table sets forth the names of each Selling Securityholder
and for each, the number of Shares and/or Class B Warrants beneficially owned at
the commencement of the offering, and the number of Shares and/or Class B
Warrants offered for sale, based on information provided to the Company by such
Selling Securityholders. The Shares and Class B Warrants are being registered to
permit public secondary trading of the Shares and/or Class B Warrants, and the
Selling Securityholders may offer the Shares and Class B Warrants for resale
from time to time. See "Plan of Distribution."
The Company has filed with the Commission under the Act a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares and/or Class B Warrants. The Company has agreed, among
other things, to bear certain expenses in connection with the registration and
sale of the Shares and Class B Warrants being offered by the Selling
Securityholders. See "Plan of Distribution."
Certain of the Selling Securityholders hold warrants (other than the Class
B Warrants) issued by the Company which, upon exercise, allow such Selling
Securityholder to purchase shares of Common Stock. Such Selling Securityholders
are expected to exercise their warrants and pay for their shares of Common Stock
immediately prior to offering such Shares pursuant to this Prospectus.
None of the Selling Securityholders are officers or directors of the
Company except that Alexander M. Haig, Jr. is a director of the Company. Each of
the Selling Securityholders listed below with a reference to footnote (9) is
employed by either Paramount Capital, Inc. ("Paramount"), an investment banking
firm which acted as placement agent for private placements of securities by
Company subsidiaries in fiscal 1995 or D.H. Blair & Co., Inc. ("Blair"), which
was a selected dealer in these private placements. Lindsay Rosenwald, M.D., the
Company's Chairman of the Board and a principal stockholder of the Company, is
the Chairman and sole stockholder of Paramount. Certain stockholders of Blair
(and individuals related to such stockholders) are principal stockholders of the
Company.
During fiscal 1995 Paramount and Blair received cash commissions
aggregating $657,433 and $112,586 respectively, from these private placements.
In addition, designees of Paramount received warrants to purchase an aggregate
of (i) 22,201 shares of preferred stock of Progenitor, (ii) 22,201 shares of
preferred stock of Transcell, (iii) 46,767 shares of preferred stock of
Intercardia and (iv) 13,875 Shares (and a designee of Paramount, Peter Kash,
received warrants to purchase an additional 25,000 Shares). Of these warrants,
12,274, 12,274, 30,092 and 7,671, respectively, were received by Dr. Rosenwald.
Designees of Blair received warrants to purchase an aggregate of (i) 12,700
shares of preferred stock of Progenitor, (ii) 12,700 shares of preferred stock
of Transcell, (iii) 4,266 shares of preferred stock of Intercardia and (iv)
7,938 Shares. Certain of the Shares listed under "Placement Agent and other
Warrant Shares" are issuable upon exercise of the warrants to purchase Shares
issued in one of these private placements, as noted. Blair was the underwriter
of the Company's initial public offering in March 1990 and all of the
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individuals listed under "Unit Purchase Option Securities" received the
securities listed under "Amount Being Offered" in connection with such initial
public offering.
During fiscal 1995, the Company entered into a consulting agreement with
Paramount pursuant to which it paid a fee to Paramount of $5,000 a month until
February 1995, for an aggregate of $15,000, and granted to Timothy McInerny, a
designee and officer of Paramount, warrants to purchase 25,000 Shares. The
Shares issuable upon exercise of these warrants are being offered hereby.
During fiscal 1995, in connection with a private placement of the
Company's securities to Reliance Insurance Company for which Paramount acted as
placement agent, the Company paid Paramount cash compensation of $300,000 and
granted to Peter Kash, a designee and officer of Paramount warrants to purchase
an additional 50,000 Shares. All of the Shares issuable upon exercise of
warrants held by Mr. Kash are being offered hereby.
Elan Corporation, plc, an affiliate of Elan International Services Ltd.,
is a licensee of the Company and, during the fiscal years ended September 30,
1993 and 1995, paid the Company $5.4 million and $31,366, respectively, in
license fees and royalties.
Certain of the stockholders listed under "Former CPEC Stockholders" are
also stockholders of Myocor, Inc. which, pursuant to consulting and research
agreements with subsidiaries of the Company, received fees of $10,417 and
$157,600 in fiscal 1994 and 1995, respectively, and is entitled to fees of
approximately $141,000 and $75,000 in fiscal 1996 and 1997, respectively. In
addition, one of such stockholders, Robert Ginsburg, through an affiliate, has a
consulting agreement with Intercardia.
In connection with several private placements of Company securities in
fiscal 1995, Capello Capital Corp. received placement agent fees aggregating
approximately $507,000 and designees of Capello Capital Corp. (Linda S. Capello,
Gerard K. Capello and Lawrence K. Fleischman, each of whom are Selling
Securityholders) received warrants to purchase an aggregate of 16,000 Shares,
all of which Shares are being offered hereby.
M&G Equities, a Selling Securityholder, is owned by two executive officers
and controlling stockholders of American Stock Transfer & Trust Company, the
transfer agent and warrant agent for the Company's Common Stock and Class B
Warrants.
Except as noted below, each Selling Securityholder beneficially owns less
than one percent of the outstanding Common Stock.
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Amount
Beneficially Owned Amount
SELLING SECURITYHOLDERS Prior to Offering Being Offered
Class B Class B
IPI PRIVATE PLACEMENTS Shares Warrants Shares Warrants
-------------------------------------
BT Holdings (New York), Inc. 312,500(1) 312,500(1)
DFA Group Trust Small Company
Subtrust(2) 257,368 257,368
DFA Group Trust-6-10 Subtrust(2) 223,806 218,406
DFA Group Trust-6-7-8 Subtrust(2) 57,898 49,898
U.S. 9-10 Small Company Portfolio(2) 134,948 134,948
U.S. 6-10 Small Company Series(2) 19,666(4) 17,166
GFL Advantage Fund Limited 579,221(3) 579,221(3)
Paresco, Inc. 200,000(4) 200,000(4)
Silverton International Fund Ltd. 400,000(5) 400,000(5)
FORMER CPEC STOCKHOLDERS
W. Bruce Bercovich 22,554 22,554
Arthur M. Feldman 31,576 31,576
Robert Ginsburg 226,773(6) 225,543(6)
Phillip Goodman 22,554 22,554
Michael Juliano 25,627 25,627
Milton Levin 112,772 112,772
Wayne Minobe 4,510 4,510
Maje Benjamin Perryman 9,020 9,020
Jonathan David Port 4,510 4,510
David Profitt 4,510 4,510
Randy P. Rasmussen 4,510 4,510
Mary V. Reynolds 9,020 9,020
Cornelis Van Breemen 15,788 15,788
Maud Van Breemen 15,788 15,788
Pauline Zera 4,510 4,510
SUBSIDIARY PRIVATE PLACEMENT WARRANT
SHARES(7)
Delbert Allen Jr. & Pat Allen,
JTWROS 5,000 5,000
Jerome V. Ansel 62,800 25,000
Bershad Investment Group, L.P. 5,000 5,000
Benjamin Bollag 5,000 5,000
Michael Cantor 5,000 5,000
Jose F. Colon 1,250 1,250
Robert J. Conrads 2,500 2,500
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Amount
Beneficially Owned Amount
SELLING SECURITYHOLDERS Prior to Offering Being Offered
Class B Class B
Shares Warrants Shares Warrants
------------------------------------------
F&T Planning Centers, Inc. 5,000 5,000
Robert A. Foisie 7,500 7,500
Sandy Frank 2,500 2,500
Marc Gelman 21,500 10,000
Mildred Goldberger 1,250 1,250
Robert P. Gordon 2,500 2,500
Jeffrey S. Gutfreund 3,750 3,750
Andrew Holder 1,250 1,250
James Katz, M.D. 625 625
Donald R. Kendall, Jr. &
Diane S. Kendall JTWROS 1,250 1,250
Keys Foundation 25,000 25,000
Momentum Enterprises Inc.
Money Purchase Trust 2,500 2,500
M&G Equities 10,000 10,000
David H. Meyrowitz 1,250 1,250
Palmetto Partners, Ltd. 5,000 5,000
Thomas L. Parks &
Easter C. Parks, JTWROS 1,250 1,250
Gordon Rausser 2,500 2,500
Marc Roberts &
Ron Cantor, Esq.,
Tenants in Common 1,250 1,250
Elaine Rubin 12,500 12,500
M.D. Sabbah 25,000 25,000
Roslyn Seftel 1,250 1,250
E. Donald Shapiro 9,250 1,250
J.F. Shea Co., Inc. as
Nominee 1995-3 7,500 7,500
Eugene Silverman 1,250 1,250
Celia Sirotkin 1,250 1,250
Martin Sirotkin 1,250 1,250
Gary J. Strauss 1,250 1,250
Sidney Todres 5,000 5,000
Melvyn I. Weiss 12,500 12,500
Frederick Winston 2,500 2,500
James D. Wolfensohn 5,000 5,000
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Amount
Beneficially Owned Amount
SELLING SECURITYHOLDERS Prior to Offering Being Offered
Class B Class B
Shares Warrants Shares Warrants
------------------------------------------
Gary Wood 1,250 1,250
Wayne T. Young &
Karen J. Young, JTWROS 1,250 1,250
Zapco Holdings, Inc. Deferred 5,000 5,000
Compensation Plan Trust;
Nancy Heinrich, Trustee
UNIT PURCHASE OPTION
SECURITIES(7)(8)
Allison Brown(9) 2,300 600 1,800 600
Sylvia Coakley(9) 5,000 1,500 4,500 1,500
Stevens R. Monte 1,800 1,800
David Nachamie(9) 7,000 1,500 4,500 1,500
Michael Siciliano(9) 6,000 1,500 4,500 1,500
Kenton Wood(9) 19,500 6,000 18,000 6,000
PLACEMENT AGENT AND OTHER WARRANT
SHARES (7)
Mark Abeshouse(9) 125 125
Axion Research Foundation 20,000 20,000
Linda N. Capello 6,480 6,480
Gerard K. Capello 4,320 4,320
Lawrence K. Fleischman 5,200 5,200
Scott Katzmann(9) 1,906 1,906
Peter Kash(9) 109,594(10) 76,344
Martin Kratchmann(9) 375 375
Richard Maio(9) 1,750 1,250
Timothy McInerny(9) 25,000 25,000
Wayne L. Rubin(9) 818 818
Michael S. Weiss(9) 1,636 1,636
OTHER STOCKHOLDERS
Elan International Services
Ltd. 100,000 100,000
Alexander M. Haig, Jr. 202,750(11) 202,500
Leon Finley 22,500 22,500
Yuichi Iwaki 50,000 50,000
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Amount
Beneficially Owned Amount
SELLING SECURITYHOLDERS Prior to Offering Being Offered
Class B Class B
Shares Warrants Shares Warrants
-------------------------------------------
Peter Kash(9) 109,594(10) 52,000
Donna Lozito(9) 3,000 3,000
Francine Tarnowsky(9) 3,000 3,000
Egon Zehnder International,
Inc. 20,000 10,000
- ---------------
(1) Includes 62,500 Shares underlying warrants but excludes an aggregate of
97,900 Shares owned by affiliated entities as of February 6, 1996. The
Shares owned directly and by affiliated entities represent an aggregate
of approximately 1.2% of the outstanding Common Stock.
(2) Each stockholder is a fund managed by Dimensional Fund Advisors, Inc.
("DFA"). DFA also has the power to vote and dispose of 8,100 shares
held by another fund and the power to dispose of, but not vote, an
aggregate of 12,000 shares owned by two investors (none of which shares
are offered hereby). The aggregate percentage of outstanding shares of
Common Stock which may be beneficially owned by DFA is approximately
2%.
(3) Includes shares of Common Stock issuable if the registration statement
relating to this offering is declared effective on March 14, 1996.
Represents approximately 1.6% of the outstanding Common Stock.
(4) Such stockholder has agreed not to sell any Shares prior to May 23,
1996.
(5) Represents approximately 1.2% of the outstanding Common Stock.
Such stockholder has agreed not to sell any Shares prior to March 31,
1996.
(6) Includes 117,282 Shares owned and being offered by Savacor Trust, of
which Mr. Ginsburg is Trustee.
(7) The amount owned prior to the offering includes Shares outstanding and
Shares issuable upon exercise of warrants; the amount being offered
represents only Shares issuable upon exercise of warrants.
(8) For each person listed under "Unit Purchase Option Securities" other
than Mr. Monte, the number of Shares owned prior to the Offering and
the number of Shares being offered includes the Shares issuable upon
exercise of the Class B Warrants owned by such individual. Each
individual other than Mr. Monte is registering for resale their Class B
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Warrants and the Shares issuable upon exercise of their Class B
Warrants. Accordingly, they may either sell the Class B Warrants or
exercise the Class B Warrants and sell the Shares issued upon such
exercise, or a combination of these methods.
(9) Each individual is an employee of Paramount or Blair.
(10) Excludes 18,750 Shares issuable upon exercise of warrants not
exercisable within 60 days.
(11) Includes 250 Shares issuable upon exercise of options exercisable
within 60 days but excludes 1,750 Shares issuable upon exercise of
options not exercisable within 60 days.
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PLAN OF DISTRIBUTION
The Company has been advised that the Selling Securityholders may sell
Shares or the Class B Warrants from time to time in transactions on the Nasdaq
National Market or on other exchanges on which the Shares and/or Class B
Warrants may be traded, in the over-the-counter market, in negotiated
transactions, through the writing of options on the Shares or a combination of
such methods of sale, or through other means. Sales may be effected at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.
The Selling Securityholders may effect such transactions by selling the
Shares or Class B Warrants to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Securityholders or the purchasers of the Shares or Class B
Warrants for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commissions). The Selling Securityholders and any
broker-dealers or agents who participate in the distribution of Shares or Class
B Warrants hereunder may be deemed to be "underwriters" as that term is defined
in the Act, and any commissions received by them and profit on any resale of the
Shares as principal might be deemed to be underwriting discounts and commissions
under the Act.
The Company has agreed to pay the expenses of registration in
connection with this Offering and to indemnify certain of the Selling
Securityholders against certain liabilities, including certain liabilities under
the Act.
At the time a particular offer of Shares or Class B Warrants is made,
to the extent required, a supplement to this Prospectus will be distributed
which will identify and set forth the aggregate amount of Shares or Class B
Warrants being offered and the terms of the offering.
The Selling Securityholders are not restricted as to the price or
prices at which they may sell their Shares or Class B Warrants. Sales of Shares
or Class B Warrants may depress the market price of the Company's Common Stock
or Class B Warrants. The Selling Securityholders are subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation rules 10b-6 and 10b-7, which provisions may limit
the timing of purchases and sales of the Shares or Class B Warrants by the
Selling Securityholders.
In order to comply with certain states' securities laws, if applicable,
the Shares or Class B Warrants may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states the Shares or Class
B Warrants may not be sold unless the Shares or Class B Warrants have been
registered or qualified for sale in such state, or unless an exemption from
registration or qualification is available and is obtained.
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DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue up to 60,000,000 shares of Common
Stock, $.001 par value. At March 14, 1996, there were 35,389,961 shares of
Common Stock outstanding. Holders of Common Stock are entitled to one vote at
all meetings of shareholders for each share held by them. Common Stock have no
preemptive rights and have no other rights to subscribe for additional shares or
any conversion right or right of redemption. Holders of Common Stock are
entitled to receive such dividends as may be declared by the Board of Directors
out of funds legally available therefor. Subject to the rights of holders of
Preferred Stock, if any, upon liquidation, all such holders are entitled to
participate pro rata in the assets of the Company available for distribution.
All of the outstanding shares of Common Stock are, and the shares to be issued
hereby will be, when issued, fully paid and nonassessable.
CLASS B WARRANTS
The Class B Warrants were issued pursuant to a warrant agreement (the
"Warrant Agreement") among the Company, Blair and American Stock Transfer &
Trust Company, the warrant agent and, with respect to the Class B Warrants
offered hereby, Unit Purchase Options issued to Blair's designees in connection
with the Company's initial public offering.
At March 14, 1996, the Company had 1,855,557 Class B Warrants
outstanding including the Class B Warrants offered hereby. Each Class B Warrant
entitles the registered holder thereof to purchase one share of Common Stock at
a price of $4.75 subject to adjustment, at any time after the date of issuance
until the close of business on March 15, 1996, subject to earlier redemption as
follows: If the average of the closing prices of the Common Stock exceeds $5.50
for any period of 20 consecutive business days, then upon at least 30 days'
prior written notice, given within 15 days, the Company will be able to call all
(but not less than all) of the Class B Warrants for redemption at a price of
$.05 per Class B Warrant. The Class B Warrants underlying the Unit Purchase
Options (including the Class A Warrants) are not subject to redemption.
The exercise prices of the Class B Warrants were determined by
negotiation between the Company and Blair. The exercise price of the Class B
Warrants and the number and kind of shares of Common Stock or other securities
and property to be obtained upon exercise of the Class B Warrants are subject to
adjustment in certain circumstances.
The Class B Warrants do not confer upon the holder any voting or any
other rights of a shareholder of the Company. Upon notice to the Class B
Warrantholders, the Company has the right to reduce the exercise price or extend
the expiration date of the Class B Warrants. Although this right is intended to
benefit Class B Warrantholders to the extent the Company exercises this right
when the Class B Warrants would otherwise be exercisable at a price higher than
the prevailing market price of the Common Stock, the likelihood of exercise, and
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resultant increase in the number of shares outstanding, may result in making
more costly or impeding a change in control in the Company.
The Class B Warrants may be exercised upon surrender of the Class B
Warrant certificate on or prior to the respective expiration date (or earlier
redemption date) of such Class B Warrants at the offices of American Stock
Transfer & Trust Company (the "Warrant Agent"), with the form of "Election to
Purchase" on the reverse side of the Class B Warrant certificate completed and
executed as indicated, accompanied by payment of the full exercise price (by
certified check payable to the order of the Class B Warrant Agent) for the
number of Class B Warrants being exercised.
TRANSFER AGENT AND WARRANT AGENT
American Stock Transfer & Trust Company, 40 Wall Street, New York, New
York, 10005 serves as transfer and warrant agent for the Common Stock and Class
B Warrants.
PREFERRED STOCK
The Certificate of Incorporation of the Company authorizes the issuance
of 5,000,000 shares of Preferred Stock. The Board of Directors, within the
limitations and restrictions contained in the Certificate of Incorporation and
without further action by the Company's stockholders, has the authority to issue
Preferred Stock from time to time in one or more series and to fix the number of
shares and the relative rights, conversion rights, voting rights, rights and
terms of redemption, liquidation preferences and any other preferences, special
rights and qualifications of any such series. To the extent shares of Preferred
Stock with voting rights are issued, such issuance affects the voting rights of
the holders of the Company's Common Stock by increasing the number of
outstanding shares entitled to vote and, if applicable, by the creation of class
or series voting rights. In addition, while the issuance of Preferred Stock can
provide flexibility in connection with acquisitions and other corporate
purposes, any issuance of Preferred Stock could, under certain circumstances,
have the effect of delaying or preventing a change in control of the Company and
may adversely affect the rights of holders of Common Stock. Other than the
Series B and Series C Preferred Stock issued and additional shares of preferred
stock which may be issued to AHP, the Company has no agreements or arrangements
to issue any shares of Preferred Stock or to establish or designate any series
of Preferred Stock.
In November 1992, the Company sold 239,425 shares of Series B Preferred
Stock to AHP pursuant to the Sublicense Agreements for an aggregate purchase
price of $3,000,000. In June 1993, the Company sold 5,000 shares of Series C
Preferred Stock to AHP for an aggregate purchase price of $500,000. Holders of
the Series B and Series C Preferred Stock are entitled to vote on all matters
submitted to a vote of stockholders generally, other than the election of
directors, holding the number of votes equal to the number of shares of Common
Stock into which the Preferred Stock is then convertible. The shares of Series B
Preferred Stock and the Series C Preferred Stock are convertible into an
aggregate of 622,221 shares of Common Stock, subject to further adjustment.
Holders of the Series B and Series C Preferred Stock are entitled to receive out
of funds legally available therefor, mandatory dividends of $.1253 and $1.00 per
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share, respectively, payable at the election of the Company in cash or Common
Stock. Such dividends are payable annually on April 1 of each year, accrue on a
daily basis and are cumulative. In the event of any liquidation, distribution or
sale of all or substantially all of the assets, dissolution or winding up of the
Company, the holders of Series B and Series C Preferred Stock shall be entitled
to receive a preference of $12.53 and $100 per share, respectively, plus
cumulated and unpaid dividends, over the holders of Common Shares and any other
shares, other than any other series of Preferred Stock which may be issued to
AHP under the Agreement which rank on a parity with the Series B and C Preferred
Stock.
The Equity Agreement provides for the potential sale to AHP of up to
$3,500,000 (35,000 shares) of Series D or E Preferred Stock ( the "Additional
Series"), depending upon whether and when specified milestones are achieved.
Each of the Additional Series will contain terms substantially similar to those
of the Series C Preferred Stock except that each share of any Additional Series
will be convertible into the number of shares of Common Stock obtained by
dividing $100 by the then conversion price. The initial conversion price for the
Series D and Series E Preferred Stock will be 150% of the market price of the
Common Stock for 10 days preceding the effectiveness of the NDA or descheduling
of dexfenfluramine, respectively, subject to the antidilution adjustments.
Holders of the Additional Series are entitled to dividends of $1.00 per share
and a liquidation preference of $100 per share on the terms described above.
Until the date AHP ceases to be the registered holder of all of the
outstanding Preferred Stock of at least one series, the Company will not,
without the approval of the majority of the outstanding shares of all series of
Preferred Stock issued to AHP, (i) issue shares of stock having a preference or,
except shares issued to AHP, ranking pari passu with the outstanding series;
(ii) reclassify any shares of stock to shares having a preference over any such
series; (iii) make any amendment to its Certificate of Incorporation or by-laws
adversely affecting the rights of holders of such series; (iv) merge or
consolidate with any entity or sell or otherwise dispose of all or substantially
all of its assets or liquidate, dissolve, recapitalize or reorganize; (v)
repurchase or redeem any shares of its Common Stock; (vi) pay dividends or make
any other distribution on any Common Stock, except a distribution payable
entirely in Common Stock, unless at the same time, a payment is made to the
holder of such series equal to the amount the holder would have been entitled to
had such holder converted its Series B and Series C Preferred Stock into Common
Stock; or (vii) guarantee any indebtedness of any third party, except a
subsidiary.
BUSINESS COMBINATION PROVISIONS
The Business Combination provision contained in Section 203 of
Delaware's General Corporation Law ("Section 203") defines an interested
shareholder as any person that (i) owns, directly or indirectly 15% or more of
the outstanding voting stock of the corporation or (ii) is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock at any time within the three-year period immediately prior to the
date on which it is sought to be determined whether such person is an interested
shareholder; and the affiliates and the associates of such person. Under Section
203, a resident domestic corporation may not engage in any business combination
with any interested shareholder for a period of three years following the date
such shareholder became an interested shareholder, unless (i) prior to such date
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the board of directors of the corporation approved either the business
combination or the transaction which resulted in the shareholder becoming an
interested shareholder or (ii) upon consummation of the transaction which
resulted in the shareholder becoming an interested shareholder, the interested
shareholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding for determining the
number of shares outstanding (a) shares owned by persons who are directors and
officers and (b) employee stock plans, in certain instances, or (iii) on or
subsequent to such date the business combination is approved by the board of
directors and authorized at an annual or special meeting of shareholders by at
least 66% of the affirmative voting stock which is not owned by the interested
shareholder. The Company did not "elect-out" of the statute and, therefore, the
restrictions imposed by Section 203 apply to the Company.
REGISTRATION RIGHTS
Substantially all of the Shares offered hereby had certain demand and
piggy-back registration rights. In addition to these registration rights, one
stockholder of the Company has demand and piggy-back registration rights
relating to a minimum of 1,000,000 shares of Common Stock commencing in June
1996, one stockholder of the Company has demand and piggy-back registration
rights, which have been waived in connection with this offering, relating to
622,221 shares of Common Stock, holders of shares of Common Stock to be issued
in each of November 1996 and 1997 with a market value of $1,200,000 at the time
of each issuance have registration rights in January 1997 and 1998 relating to
the resale of those shares and, in the event up to a maximum of 2,181,638 shares
of Common Stock are issued in June 1998 pursuant to Put Protection Rights issued
in connection with certain financings of Subsidiaries, holders of such shares
will have registration rights at that time.
SHARES ELIGIBLE FOR FUTURE SALE
At March 14, 1996, the Company had 35,362,961 shares of Common Stock
outstanding. Of these shares, and excluding the shares offered hereby,
approximately 17,000,000 are owned by affiliates of the Company or are
"restricted securities" within the meaning of Rule and are or will be eligible
for sale under Rule 144.
In general under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including persons who may be deemed to be
"affiliates" of the Company as that term is defined under the Act, is entitled
to sell within any three-month period a number of restricted shares beneficially
owned for at least two years that does not exceed the greater of (i) one percent
of the then outstanding shares of Common Stock, or (ii) the average weekly
trading volume in the Common Stock during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain requirements as to the
manner of sale, notice and the availability of current public information about
the Company. However, a person who is not an affiliate and has beneficially
owned such shares for at least three years is entitled to sell such shares
without regard to the volume of other resale requirements.
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<PAGE>
The Company also has registration statements on Form S-8 relating to
its Stock Option Plans and Stock Purchase Plan in order to permit holders of
options issued pursuant to the Plans, other than affiliates of the Company, to
sell, without restriction, shares of Common Stock issued upon exercise of
options.
LEGAL MATTERS
The validity of the securities offered hereby have been passed upon for
the Company by Bachner, Tally, Polevoy & Misher LLP, New York, New York. Certain
members of Bachner, Tally, Polevoy & Misher LLP, including the secretary of the
Company, own approximately 19,000 shares of Common Stock of the Company.
EXPERTS
The consolidated balance sheets as of September 30, 1995 and 1994 and
the consolidated statements of operations, cash flows and stockholders' equity
for each of the three years in the period ended September 30, 1995, incorporated
by reference in this registration statement, have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P. independent accountants,
given on the authority of that firm as experts in accounting and auditing.
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<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the Offering herein contained, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company or any underwriter. This Prospectus does not constitute an offer
to sell or a solicitation of any offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such an
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale hereunder shall under any circumstances create any
implication that there has been no change in the affairs of the Company since
any of the dates as of which information is furnished herein or since the date
hereof.
TABLE OF CONTENTS
PAGE
Available Information................................................2
Incorporation of Certain Documents by Reference......................2
Prospectus Summary...................................................4
Risk Factors.........................................................7
Use of Proceeds.....................................................16
Selling Securityholders.............................................17
Plan of Distribution................................................24
Description of Securities...........................................25
Legal Matters.......................................................29
Experts.............................................................29
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PART II
Information Not Required in Prospectus
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Registrant in connection
with the issuance and distribution of the securities being registered are as
follows:
SEC Registration Fee.................................. $36,095.21
Accounting Fees and Expenses.......................... 5,000.00
Legal Fees and Expenses............................... 45,000.00
Miscellaneous Expenses................................ 5,000.00
Total............................................ $91,095.21
=========
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation and By-Laws of the Company
provide that the Company shall indemnify any person to the full extent permitted
by the Delaware General Corporation Law.
Reference is hereby made to Section 145 of the Delaware
General Corporation Law relating to the indemnification of officers and
directors which Section is hereby incorporated herein by reference.
The Registrant also has Indemnification Agreements with each
of its directors.
Item 16. EXHIBITS.
(a) EXHIBITS
4.2 - Form of Warrant Agreement (1)
4.4 - Certificate of Designation establishing Series C
Preferred Stock (17)
4.6 - Form of Registrant Warrant issued in subsidiary
private placement (25)
4.7 - Form of Registrant Warrant issued to designees
of Paramount Capital, Inc.
and D.H. Blair & Co., Inc. (25)
5.1 - Opinion of Bachner, Tally, Polevoy & Misher LLP
as to legality
10.68(a) - 1995 Employee Stock Purchase Plan, as amended
23.1 - Consent of Coopers & Lybrand L.L.P. - Included
on II - 6*
23.2 - Consent of Bachner, Tally, Polevoy & Misher LLP
- Included in Exhibit 5.1
24 - Power of Attorney - Included on II - 4*
- --------
* Previously filed
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(1) Incorporated by reference to the Registrant's registration statement
on Form S-1 (File No.
33-32408) declared effective on March 8, 1990.
(17) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the nine
months ended June 30, 1993
(25) Incorporated by reference to the Registrant's Annual Report
on Form 10-K for the fiscal year ended September 30, 1994
Item 17. UNDERTAKINGS
Undertaking Required by Regulation S-K, Item 512(a).
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
Undertaking Required by Regulation S-K, Item 512(b).
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be initial bona fide
offering thereof.
Undertaking required by Regulation S-K, Item 512(h).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling
persons pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
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successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Undertakings required by Regulation S-K, Item 512(i).
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing Form S-3 and has duly caused this Amendment
to this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Lexington, County of Middlesex on the
15th day of March, 1996.
INTERNEURON PHARMACEUTICALS, INC.
By:/S/ GLENN L. COOPER, M.D.
-------------------------------
Glenn L. Cooper, M.D.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement or amendment thereto has been signed by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ GLENN L. COOPER, M.D. President, Chief Executive
-------------------------- Officer and Director
Glenn L. Cooper, M.D. (Principal Executive Officer) March 15, 1996
*
- --------------------------
Lindsay Rosenwald, M.D. Chairman of the Board of
Directors March 15, 1996
- ---------------------------
Harry J. Gray Director March __, 1996
- ---------------------------
Alexander M. Haig, Jr. Director March __, 1996
*
- --------------------------
Peter Barton Hutt Director March 15, 1996
*
- --------------------------
Malcolm Morville, Ph.D. Director March 15, 1996
*
- --------------------------
Robert K. Mueller Director March 15, 1996
*
- --------------------------
Lee J. Schroeder Director March 15, 1996
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*
- --------------------------
David Sharrock Director March 15, 1996
*
- --------------------------
Richard Wurtman, M.D. Director March 15, 1996
*
- --------------------------
Thomas F. Farb Executive Vice President,
Finance, Treasurer and
Chief Financial Officer
(Principal Financial and
Accounting Officer) March 15, 1996
*/S/ GLENN L. COOPER, M.D.
By: Glenn L. Cooper, M.D.,
As attorney in fact March 15, 1996
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<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this
registration statement on Form S-3 of our report dated November 13, 1995, on our
audits of the consolidated financial statements of Interneuron Pharmaceuticals,
Inc. as of September 30, 1994 and 1995, and for each of the three years in the
period ended September 30, 1995, which report is included in the Annual Report
on Form 10-K of Interneuron Pharmaceuticals, Inc. for the fiscal year ended
September 30, 1995. We also consent to the references to our firm under the
caption "Experts".
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 28, 1996
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<PAGE>
EXHIBIT INDEX
4.2 - Form of Warrant Agreement (1)
4.4 - Certificate of Designation establishing Series C
Preferred Stock (17)
4.6 - Form of Registrant Warrant issued in subsidiary
private placement (25)
4.7 - Form of Registrant Warrant issued to designees
of Paramount Capital, Inc. and D.H. Blair &
Co., Inc. (25)
5.1 - Opinion of Bachner, Tally, Polevoy & Misher LLP
as to legality
10.68(a) - 1995 Employee Stock Purchase Plan, as amended
23.1 - Consent of Coopers & Lybrand L.L.P.
- Included on II - 6*
23.2 - Consent of Bachner, Tally, Polevoy & Misher LLP
- Included in Exhibit 5.1
24 - Power of Attorney - Included on II - 4*
- ---------------------------
(1) Incorporated by reference to the Registrant's registration statement
on Form S-1 (File No. 33-32408) declared effective on March 8, 1990.
(17) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the nine months ended June 30, 1993
(25) Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 30, 1994
- ----------------
* Previously filed
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<PAGE>
EXHIBIT 5.1
March 15, 1996
Interneuron Pharmaceuticals, Inc.
1 Ledgemont Center
99 Hayden Avenue
Suite 340
Lexington, MA 02173
Gentlemen:
You have requested our opinion with respect to the offering and sale by
certain stockholders of the Company (the "Selling Stockholders") of an aggregate
of 3,533,078 shares, including 410,179 shares issuable upon exercise of warrants
(the "Shares") of Common Stock, par value $.001 per share (the "Common Stock"),
of Interneuron Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
pursuant to a Registration Statement on Form S-3 (No. 333-1273) (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act").
We have examined originals, or copies certified or otherwise identified
to our satisfaction, of such documents ad corporate and public records as we
deem necessary as a basis for the opinion hereinafter expressed. With respect to
such, we have assumed the genuineness of all signatures appearing on all
documents presented to us as originals, and the conformity to the originals of
all documents presented to us as conformed or reproduced copies. Where factual
matters relevant to such opinion were not independently established, we have
relied upon certificates of officers and responsible employees and agents of the
Company.
Based upon the foregoing, it is our opinion that the Shares have been
duly and validly authorized and when sold, paid for and issued as contemplated
by the Registration Statement will be duly and validly issued and fully paid an
nonassessable.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement, and to the use of our name as counsel to the Company in
connection with the Registration Statement and in the Prospectus forming a part
thereof. In giving this consent, we do not thereby concede that we come within
the categories of persons whose consent is required by the Act or the General
Rules and Regulations promulgated thereunder.
Very truly yours,
BACHNER, TALLY, POLEVOY & MISHER LLP
JMC:brf
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INTERNEURON PHARMACEUTICALS, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
1. PURPOSE. The Interneuron Pharmaceuticals, Inc. 1995 Employee
Stock Purchase Plan (the "Plan") is established to provide eligible employees of
Interneuron Pharmaceuticals Inc., a Delaware corporation, and any successor
corporation thereto (collectively, "Interneuron"), and any current or future
parent corporation or subsidiary corporations of Interneuron as the Board of
Directors of Interneuron (the "Board") shall from time to time designate
(collectively referred to as the "Company" and individually referred to as a
"Participating Company"), with an opportunity to acquire a proprietary interest
in the Company by the purchase of common stock of Interneuron. For purposes of
the Plan, a parent corporation and a subsidiary corporation shall be as defined
in sections 424(e) and 424(f), respectively, of the Internal Revenue Code of
1986, as amended (the "Code").
Interneuron intends that the Plan shall qualify as an "employee
stock purchase plan" under section 423 of the Code (including any amendments or
replacements of such section), and the Plan shall be so construed. Any term not
expressly defined in the Plan but defined for purposes of section 423 of the
Code shall have the same definition herein.
An employee participating in the Plan (a "Participant") may
withdraw such Participant's accumulated payroll deductions (if any) and
terminate participation in the Plan or any Offering (as defined below) therein
at any time during a Purchase Period (as defined below). Accordingly, each
Participant is, in effect, granted an option pursuant to the Plan (a "Purchase
Right") which may or may not be exercised at the end of a Purchase Period.
2. ADMINISTRATION. The Plan shall be administered by the Board
and/or by a duly appointed committee of the Board having such powers as shall be
specified by the Board. Any subsequent references to the Board shall also mean
the committee if a committee has been appointed. All questions of interpretation
of the Plan or of any Purchase Right shall be determined by the Board and shall
be final and binding upon all persons having an interest in the Plan and/or any
Purchase Right. Subject to the provisions of the Plan, the Board shall determine
all of the relevant terms and conditions of Purchase Rights granted pursuant to
the Plan; provided, however, that all Participants granted Purchase Rights
pursuant to the Plan shall have the same rights and privileges within the
meaning of section 423(b)(5) of the Code. All expenses incurred in connection
with the administration of the Plan shall be paid by the Company.
3. SHARE RESERVE. The maximum number of shares which may be
issued under the Plan shall be One Hundred Thousand (100,000) shares of
Interneuron's authorized but unissued common stock, $.001 par value (the
"Shares"). In the event that any Purchase Right for
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any reason expires or is canceled or terminated, the Shares allocable to the
unexercised portion of such Purchase Right may again be subjected to a Purchase
Right.
4. ELIGIBILITY. Any employee of a Participating Company is
eligible to participate in the Plan except employees who:
(a) customarily work less than 20 hours per week;
(b) customarily work not more than five months in any calendar
year; or
(c) as of the start of an Offering, own stock of Interneuron (or
any parent or subsidiary corporations) and/or own or hold options to purchase or
who, as a result of participation in the Plan, would own or hold options to
purchase, stock of Interneuron (or any parent or subsidiary corporations),
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of Interneuron (or any parent or subsidiary
corporations) within the meaning of section 423(b)(3) of the Code.
Notwithstanding anything herein contained to the contrary, any
individual performing services for a Participating Company solely through a
leasing agency or employment agency shall not be deemed an "employee" of such
Participating Company.
5. OFFERING DATES.
(a) OFFERING PERIODS. Except as otherwise set forth below, the
Plan shall be implemented by offerings (individually, an "offering") of
approximately twelve (12) months duration (an "Offering Period"). The "Initial
Offering Date" is April 1, 1995. The Initial Offering shall be of twelve (12)
months duration, shall commence on the Initial Offering Date and shall end on
March 31, 1996 (the "Initial Offering Period"). Subsequent Offerings shall
commence on April 1 of each year and end on the March 31 occurring thereafter.
Notwithstanding the foregoing, the Board may establish a different term for one
or more Offerings and/or different commencing and/or ending dates for such
Offerings. An employee who becomes eligible to participate in the Plan after an
Offering Period has commenced shall not be eligible to participate in such
Offering but may participate in any subsequent Offering provided such employee
is still eligible to participate in the Plan as of the commencement of any such
subsequent Offering. Eligible employees may not participate in more than one
Offering at a time. The first day of an Offering Period shall be the "Offering
Date" for such Offering Period. In the event the first and/or last day of an
Offering Period is not a business day, Interneuron shall specify the business
day that will be deemed the first or last day, as the case may be, of the
Offering Period.
(b) PURCHASE PERIODS. Each Offering Period, shall consist of two
(2) consecutive purchase periods of six (6) months duration (individually, a
"Purchase Period").
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The last day of each Purchase Period shall be the "Purchase Date" for such
Purchase Period. The Purchase Period commencing on the Initial Offering Date of
April 1, 1995 shall end on September 30, 1995. Each Purchase Period commencing
on October 1 shall end on the next March 31 and each Purchase Period commencing
on April 1 shall end on the next September 30. Notwithstanding the foregoing,
the Board may establish a different term for one or more Purchase Periods and/or
different commencing dates and/or Purchase Dates for such Purchase Periods. In
the event the first and/or last day of a Purchase Period is not a business day,
Interneuron shall specify the business day that will be deemed the first or last
day, as the case may be, of the Purchase Period.
(c) GOVERNMENTAL APPROVAL; STOCKHOLDER APPROVAL. Notwithstanding
any other provision of the Plan to the contrary, any Purchase Right granted
pursuant to the Plan shall be subject to (i) obtaining all necessary
governmental approvals and/or qualifications of the sale and/or issuance of the
Purchase Rights and/or the Shares, and (ii) obtaining stockholder approval of
the Plan. Notwithstanding the foregoing, stockholder approval shall not be
necessary in order to grant any Purchase Right granted in the Plan's Initial
Offering Period; provided, however, that the exercise of any such Purchase Right
shall be subject to obtaining stockholder approval of the Plan.
6. PARTICIPATION IN THE PLAN.
(a) INITIAL PARTICIPATION. An eligible employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements and delivering to the Company's payroll office not later than the
close of business for such payroll office on the last business day before such
Offering Date (the "Subscription Date") a subscription agreement indicating the
employee's election to participate in the Plan and authorizing payroll
deductions. An eligible employee who does not deliver a subscription agreement
to the Company's payroll office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period unless such employee subsequently enrolls in the Plan by filing a
subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Company may, from time to time, change the
Subscription Date as deemed advisable by the Company in its sole discretion for
proper administration of the Plan.
(b) CONTINUED PARTICIPATION. A Participant shall automatically
participate in the Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
until such time as such Participant (i) ceases to be eligible as provided in
paragraph 4, (ii) withdraws from the Plan pursuant to paragraph 11(b) or (iii)
terminates employment as provided in paragraph 12. If a Participant is
automatically withdrawn from an Offering at the end of a Purchase Period of such
Offering pursuant to paragraph 11(d), then the Participant shall automatically
participate in the next Offering Period. If a Participant automatically may
participate in a subsequent Offering Period pursuant to this paragraph 6(b),
then the Participant is not required to file any additional subscription
agreement for such subsequent Offering Period in order to continue participation
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in the Plan. However, a Participant may file a subscription agreement with
respect to a subsequent Offering Period if the Participant desires to change any
of the Participant's elections contained in the Participant's then effective
subscription agreement.
7. RIGHT TO PURCHASE SHARES. Except as set forth below, during an
Offering Period each Participant in such Offering Period shall have a Purchase
Right consisting of the right to purchase the lesser of:
(a) that number of whole Shares arrived at by dividing Fifty
Thousand Dollars ($50,000.00) by the fair market value of a share of the common
stock of Interneuron on the Offering Date of such Offering Period; and
(b) 3,000 Shares.
The fair market value of Shares shall be determined in accordance
with paragraph 8 below. Shares may only be purchased through a Participant's
payroll withholding pursuant to paragraph 9 below. In no event shall a
Participant's Purchase Right permit such Participant to acquire more shares in
any calendar year than is permitted under Section 10(a) hereof.
8. PURCHASE PRICE. The purchase price at which Shares may be
acquired in a given Purchase Period pursuant to the exercise of all or any
portion of a Purchase Right granted under the Plan (the "Offering Exercise
Price") shall be set by the Board; provided, however, that the Offering Exercise
Price shall not be less than eighty-five percent (85%) of the lesser of (i) the
fair market value of the Shares on the Offering Date of the Offering Period of
which the Purchase Period is a part, or (ii) the fair market value of the Shares
on the Purchase Date for such Purchase Period. Unless otherwise provided by the
Board prior to the commencement of an Offering Period, the Offering Exercise
Price for each Purchase Period in that Offering Period shall be eighty-five
percent (85%) of the lesser of (i) the fair market value of the Shares on the
Offering Date of such Offering Period or (ii) the fair market value of the
Shares on the given Purchase Date. The fair market value of the Shares on the
applicable dates shall be the closing sales price on the Nasdaq National Market
(or the average of the closing bid and asked prices if the Shares are so quoted
instead) or as reported on such other national or regional securities exchange
or market system if the Shares are traded on such other exchange or system
instead, or as determined by the Board if the Shares are not so reported. If the
relevant date does not fall on a day on which the common stock of Interneuron is
quoted on the Nasdaq National Market or such other national or regional
securities exchange or market, the date on which the fair market value per Share
shall be established shall be the last day on which the common stock of
Interneuron was so quoted to such relevant date.
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9. PAYMENT OF PURCHASE PRICE. Shares which are acquired pursuant
to the exercise of all or any portion of a Purchase Right may be paid for only
by means of payroll deductions from the Participant's Compensation during the
Offering Period. For purposes of the Plan, a Participant's "Compensation" with
respect to an Offering (i) shall include the Participant's base salary before
deduction for any contributions to any plan maintained by a Participating
Company and described in section 401(k) or section 125 of the Code, commissions,
overtime and bonuses and (ii) shall not include annual awards, other incentive
payments, shift premiums, long-term disability, worker's compensation or any
other payments not specifically referenced in (i). Except as set forth below,
the amount of Compensation to be withheld from a Participant's Compensation
during each pay period shall be determined by the Participant's subscription
agreement.
(a) ELECTION TO DECREASE,INCREASE OR STOP WITHHOLDING. During an
Offering Period, a Participant may elect to decrease the amount withheld, or
stop withholding, from his or her Compensation by filing as amended subscription
agreement with the Company on or before the "Change Notice Date." The "Change
Notice Date" shall initially be the seventh (7th) day prior to the end of the
first pay period for which such election is to be effective; however, the
Company may change such Change Notice Date from time to time. A Participant
mayelect to increase the amount withheld from the Participant's Compensation
once during a Purchase Period.
(b) LIMITATIONS ON PAYROLL WITHHOLDING. The amount of payroll
withholding with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments not to exceed ten percent (10%) of the
Participant's Compensation for such pay period. Notwithstanding the foregoing,
the Board may change the limits on payroll withholding effective as of a future
Offering Date, as determined by the Board. Amounts withheld shall be reduced by
any amounts contributed by the Participant and applied to the purchase of
Company stock pursuant to any other employee stock purchase plan qualifying
under section 423 of the Code.
(c) PAYROLL WITHHOLDING. Payroll deductions shall commence on the
first payday following the Offering Date and shall continue to the end of the
Offering Period unless sooner altered or terminated as provided in the Plan.
(d) PARTICIPANT ACCOUNTS. Individual accounts shall be maintained
for each Participant. All payroll deductions from a Participant's Compensation
shall be credited to such account and shall be deposited with the general funds
of the Company. All payroll deductions received or held by the Company may be
used by the Company for any corporate purpose.
(e) NO INTEREST PAID. Interest shall not be paid on sums withheld
from a Participant's Compensation, unless the Board elects to make such payments
to all Participants on a non-discriminatory basis.
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(f) EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an
Offering Period, each Participant who has not withdrawn from the Offering or
whose participation in the Offering has not terminated on or before such
Purchase Date shall automatically acquire pursuant to the exercise of the
Participant's Purchase Right the number of whole Shares arrived at by dividing
the total amount of the Participant's accumulated payroll deductions for the
Purchase Period by the Offering Exercise Price; provided, however, in no event
shall the number of Shares purchased by the Participant exceed the number of
Shares subject to the Participant's Purchase Right or the limitations imposed by
Section 10(a) hereof. No Shares shall be purchased on a Purchase Date on behalf
of a Participant whose participation in the Offering or the Plan has terminated
on or before such Purchase Date.
(g) RETURN OF CASH BALANCE. Any cash balance remaining in the
Participant's account shall be refunded to the Participant as soon as
practicable after the Purchase Date. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole Share, the Company may establish procedures
whereby such cash is maintained in the Participant's account and applied toward
the purchase of Shares in the subsequent Purchase Period or Offering Period.
(h) TAX WITHHOLDING. At the time the Purchase Right is exercised,
in whole or in part, or at the time some or all of the Shares are disposed of,
the Participant shall make adequate provision for the foreign, federal and state
tax withholding obligations of the Company, if any, which arise upon exercise of
the Purchase Right and/or upon disposition of Shares, respectively. The Company
may, but shall not be obligated to, withhold from the Participant's Compensation
the amount necessary to meet such withholding obligations.
(i) COMPANY ESTABLISHED PROCEDURES. The Company may, from time to
time, establish or change (i) a minimum required withholding amount for
participation in an Offering, (ii) limitations on the frequency and/or number of
changes in the amount withheld during an Offering, (iii) an exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, (iv)
payroll withholding in excess of or less than the amount designated by a
Participant in order to adjust for delays or mistakes in the Company's
processing of subscription agreements, (v) the date(s) and manner by which the
fair market value of the Shares is determined for purposes of administration of
the Plan and/or (vi) such other limitations or procedures as deemed advisable by
the Company in the Company's sole discretion which are consistent with the Plan
and in accordance with the requirements of section 423 of the Code.
(j) EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which such Purchase Right relates shall expire immediately upon the end of such
Offering Period.
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10. LIMITATIONS ON PURCHASE OF SHARES; RIGHTS AS A STOCKHOLDER.
(a) FAIR MARKET VALUE LIMITATION. Notwithstanding any other
provision of the Plan, no Participant shall be entitled to purchase Shares under
the Plan (and under all other employee stock purchase plans which are intended
to meet the requirements of section 423 of the Code sponsored by the Company or
a parent or subsidiary corporation of the Company) at a rate which exceeds
$25,000 in fair market value, which fair market value is determined for Shares
purchased during a given Offering Period as of the Offering Date for such
Offering Period (or such other limit as may be imposed by the Code), for each
calendar year in which such Participant's Purchase Right with respect to such
Offering Period remains outstanding under the Plan (and under all other employee
stock purchase plans described in this sentence).
(b) PRO RATA ALLOCATION. In the event the number of Shares which
might be purchased by all Participants in the Plan exceeds the number of Shares
available in the Plan, the Company shall make a pro rata allocation of the
remaining Shares in as uniform a manner as shall be practicable and as the
Company shall determine to be equitable.
(c) RIGHTS AS A STOCKHOLDER AND EMPLOYEE. A Participant shall
have no rights as a stockholder by virtue of the Participant's participation in
the Plan until the date of the issuance of a stock certificate(s) for the Shares
being purchased pursuant to the exercise of the Participant's Purchase Right. No
adjustment shall be made for cash dividends or distributions or other rights for
which the record date is prior to the date such stock certificate(s) are issued.
Nothing herein shall confer upon a Participant any right to continue in the
employ of the Company or interfere in any way with any right of the Company to
terminate the Participant's employment at any time.
11. WITHDRAWAL.
(a) WITHDRAWAL FROM AN OFFERING. A Participant may withdraw from
an Offering by signing and delivering to the Company's payroll office, a written
notice of withdrawal on form provide by the Company for such purpose. Such
withdrawal may be elected at any time prior to the end of an Offering Period;
provided, however, if a Participant withdraws after the Purchase Date for a
Purchase Period of an Offering, the withdrawal shall not affect Shares acquired
by the Participant in such Purchase Period. Unless otherwise indicated,
withdrawal from an Offering shall not result in a withdrawal from the Plan or
any succeeding Offering therein. By withdrawing from an Offering effective as of
the close of a given Purchase Date, a Participant may have Shares purchased on
such Purchase Date and immediately commence participation in the next Offering
commencing after such Purchase Date. A Participant is prohibited from again
participating in an Offering at any time upon withdrawal from such Offering. The
Company may impose, from time to time, a requirement that the notice of
withdrawal be on file with the Company's payroll office for a reasonable period
prior to the effectiveness of the Participant's withdrawal from an Offering.
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(b) WITHDRAWAL FROM THE PLAN. A Participant may withdraw from the
Plan by signing a written notice of withdrawal on a form provided by the Company
for such purpose and delivering such notice to the Company's payroll office.
Withdrawals made after a Purchase Date for a Purchase Period shall not affect
Shares acquired by the Participant on such Purchase Date. In the event a
Participant voluntarily elects to withdraw from the Plan, the Participant may
not resume participation in the Plan during the same Offering Period, but may
participate in any subsequent Offering under the Plan by again satisfying the
requirements of paragraphs 4 and 6(a) above. The Company may impose, from time
to time, a requirement that the notice of withdrawal be on file with the
Company's payroll office for a reasonable period prior to the effectiveness of
the Participant's withdrawal from the Plan.
(c) RETURN OF PAYROLL DEDUCTIONS. Upon withdrawal from an
Offering or the Plan pursuant to paragraphs 11(a) or 11(b), respectively, the
withdrawn Participant's accumulated payroll deductions which have not been
applied toward the purchase of Shares shall be returned as soon as practicable
after the withdrawal, without the payment of any interest (unless the Board
decides otherwise pursuant to paragraph 9(e) above), to the Participant, and the
Participant's interest in the Offering and/or the Plan, as applicable, shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.
(d) AUTOMATIC WITHDRAWAL FROM AN OFFERING. If the fair market
value of the Shares on a Purchase Date of an Offering (other than the final
Purchase Date of such Offering) is less than the fair market value of the Shares
on the Offering Date for such Offering, then every Participant shall
automatically (i) be withdrawn from such Offering at the close of such Purchase
Date and after the acquisition of Shares for such Purchase Period and (ii) be
enrolled in the next Offering commencing subsequent to such Purchase Period. A
Participant may elect not to be automatically withdrawn from an Offering Period
pursuant to this paragraph 11(d) by delivering to the Company not later than the
close of business on the last day before the Purchase Date a written notice
indicating such election.
(e) PARTICIPATION FOLLOWING WITHDRAWAL. An employee who is also
an officer or director of the Company subject to section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and who is deemed to
"cease participation" in the Plan within the meaning of Rule 16b-3 promulgated
under the Exchange Act as amended from time to time or any successor rule or
regulation ("Rule 16b-3") as a consequence of his or her withdrawal from an
Offering pursuant to paragraph 11(a) above or withdrawal from the Plan pursuant
to paragraph 11(b) above shall not again participate in the Plan for at least
six months after the date of such withdrawal.
(f) WAIVER OF WITHDRAWAL RIGHT. The Company may, from time to
time, establish a procedure pursuant to which a Participant may elect (an
"Irrevocable Election"), at least six (6) months prior to a Purchase Date, to
have all payroll deductions accumulated in his or her Plan account as of such
Purchase Date applied to purchase Shares under the Plan, and (i) to waive his or
her right to withdraw from the Offering or the Plan and (ii) to waive his or her
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right to increase, decrease, or cease payroll deductions under the Plan from his
or her Compensation during the Purchase Period ending on such Purchase Date.
Such election shall be made in writing on a form provided by the Company for
such purpose and must be delivered to the Company not later than the close of
business on the day preceding the date which is six (6) months before the
Purchase Date for which such election is to first be effective.
12. TERMINATION OF EMPLOYMENT. Termination of a Participant's
employment with the Company for any reason, including retirement, disability or
death or the failure of a Participant to remain an employee eligible to
participate in the Plan, shall terminate the Participant's participation in the
Plan immediately. In such event, the payroll deductions credited to the
Participant's account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of the Participant's
death, to the Participant's legal representative, and all of the Participant's
right under the Plan shall terminate. Interest shall not be paid on sums
returned to a Participant pursuant to this paragraph 12 unless the Board elects
otherwise pursuant to paragraph 9(e) above. A Participant whose participation
has been so terminated may again become eligible to participate in the Plan by
again satisfying the requirements of paragraphs 4 and 6(a) above.
13. TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed
to have occurred in the event any of the following occurs with respect to
Interneuron.
(a) a merger or consolidation in which Interneuron is not the
surviving corporation;
(b) a merger or consolidation in which Interneuron is the
surviving corporation where the stockholders of Interneuron before such merger
or consolidation do not retain, directly or indirectly, at least a majority of
the beneficial interest in the voting stock of Interneuron;
(c) the sale, exchange, or transfer of all or substantially all
of Interneuron's assets other than a sale, exchange, or transfer to one (1) or
more subsidiary corporations (as defined in section 1, above) of Interneuron;
(d) the direct or indirect sale or exchange by the stockholders
of Interneuron of all or substantially all of the stock of Interneuron where the
stockholders of Interneuron before such sale or exchange do not retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock of Interneuron after such sale or exchange; or
(e) the liquidation or dissolution of Interneuron;
In the event of a Transfer of Control, the Board, in its sole
discretion, may arrange with the surviving, continuing, successor, or purchasing
corporation, as the case may be (the "Acquiring Corporation"), for the Acquiring
Corporation to assume Interneuron's rights and obligations under the Plan.
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All Purchase Rights shall terminate effective as of the date of the Transfer of
Control to the extent that the Purchase Right is neither exercised as of the
date of the Transfer of Control nor assumed by the Acquiring Corporation.
14. CAPITAL CHANGES. In the event of changes in the common stock
of Interneuron due to a stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification, or like change in Interneuron's
capitalization, or in the event of any merger (including a merger effected for
the purpose of changing Interneuron's domicile), sale or other reorganization,
appropriate adjustments shall be made by Interneuron in the securities subject
to purchase under a Purchase Right, the Plan's share reserve, the number of
Shares subject to a Purchase Right, and in the purchase price per Share.
15. TRANSFERABILITY. A Purchase Right may not be transferred in
any manner otherwise than by will or the laws of descent and distribution and
shall be exercisable during the lifetime of the Participant only by the
Participant. Interneuron, in its absolute discretion, may impose such
restrictions on the transferability of the Shares purchasable upon the exercise
of a Purchase Right as it deems appropriate, and any such restriction shall be
set forth in the respective subscription agreement and may be referred to on the
certificates evidencing such Shares.
16. REPORTS. Each Participant who exercised all or part of his or
her Purchase Right for a Purchase Period shall receive, as soon as practicable
after the Purchase Date of such Purchase Period, a report of such Participant's
account setting forth the total payroll deductions accumulated, the number of
Shares purchased, the fair market value of such Shares, the date of purchase and
the remaining cash balance to be refunded or retained in the Participant's
account pursuant to paragraph 9(g) above, if any. In addition, each Participant
shall be provided information concerning Interneuron equivalent to that
information generally made available to Interneuron's common stockholders.
17. PLAN TERM. This Plan shall continue until terminated by the
Board or until all of the Shares reserved for issuance under the Plan have been
issued.
18. RESTRICTION ON ISSUANCE OF SHARES. The issuance of Shares
under the Plan shall be subject to compliance with all applicable requirements
of foreign, federal or state law with respect to such securities. A Purchase
Right may not be exercised if the issuance of Shares upon such exercise would
constitute a violation of any applicable foreign, federal or state securities
laws or other law or regulations. In addition, no Purchase Right may be
exercised unless (i) a registration statement under the Securities Act of 1933,
as amended, shall at the time of exercise of the Purchase Right be in effect
with respect to the Shares issuable upon exercise of the Purchase Right, or (ii)
in the opinion of legal counsel to Interneuron, the Shares issuable upon
exercise of the Purchase Right may be issued in accordance with the terms of an
applicable exemption from the registration requirements of said Act. As a
condition to the exercise of a Purchase Right, Interneuron may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
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to evidence compliance with any applicable law or regulation, and to make any
representation or warranty with respect thereto as may be requested by the
Company.
19. LEGENDS. The Company may at any time place legends or other
identifying symbols referencing any applicable foreign, federal and/or state
securities restrictions or any provision convenient in the administration of the
Plan on some or all of the certificates representing Shares issued under the
Plan. The Participant shall, at the request of Interneuron, promptly present to
Interneuron any and all certificates representing Shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this subparagraph. Unless otherwise specified by Interneuron,
legends placed on such certificates may include but shall not be limited to the
following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER THE
EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE
REGISTERED HOLDER HEREOF MADE ON OR BEFORE ______________. THE REGISTERED HOLDER
SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER'S NAME
(AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE."
20. NOTIFICATION OF SALE OF SHARES. Interneuron may require the
Participant to give Interneuron prompt notice of any disposition of Shares
acquired by exercise of a Purchase Right within two years from the date of
granting such Purchase Right or one year from the date of exercise of such
Purchase Right. Interneuron may require that until such time as a Participant
disposes of Shares acquired upon exercise of a Purchase Right, the Participant
shall hold all such Shares in the Participant's name (and not in the name of any
nominee) until the lapse of the time periods with respect to such Purchase Right
referred to in the preceding sentence. Interneuron may direct that the
certificates evidencing Shares acquired by exercise of a Purchase Right refer to
such requirement to give prompt notice of disposition.
21. AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any
time amend or terminate the Plan, except that such termination shall not affect
Purchase Rights previously granted under the Plan, nor may any amendment make
any change in a Purchase Right previously granted under the Plan which would
adversely affect the right of any Participant (except to the extent permitted by
the Plan or as may be necessary to qualify the Plan as an employee stock
purchase plan pursuant to section 423 of the Code or to obtain qualification or
registration of the Shares under applicable foreign, federal or state securities
laws). In addition, an amendment to the Plan must be approved by the
stockholders of the Company within twelve (12) months of the adoption of such
amendment if such amendment would change the number of Shares authorized for
issuance under the Plan or would change the definition of the employees (or
class of employees) eligible to participate in the Plan, including the
corporations that may be designated by the Board as Participating Companies.
Furthermore, the approval of the Company's stockholders shall be sought for any
amendment to the Plan for which the Board deems stockholder approval necessary
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in order to comply with Rule 16b-3 promulgated under section 16 of the Exchange
Act.
The foregoing Interneuron Pharmaceuticals, Inc. 1995 Employee
Stock Purchase Plan was duly adopted by the Board of Directors of the Company on
the 3rd day of February, 1995,and most recently amended on February 21,1996.
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