As filed with the Securities and Exchange Commission on January 29, 1997
Registration No. 333-18001
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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)
------------------------------------
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)
------------------------------------
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, as amended (the "Securities Act"), 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. [ ]
CALCULATION OF ADDITIONAL REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum
of Additional Securities Additional Amount Offering Price Aggregate Additional Amount of Additional
to be Registered to be Registered Per Unit (1) Offering Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001
par value................... 55,422(2) $27.375(3) $1,517,177 $460*
====================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the additional registration
fee pursuant to Rule 457(a) under the Securities Act.
(2) Registered for sale by the Selling Stockholders.
(3) Fee for additional Common Stock registered for sale by the Selling
Stockholders is based on the average of the high and low price of the
Common Stock as of January 24, 1997.
* $10,057 previously paid
================================================================================
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.
PROSPECTUS
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, January 29, 1997
INTERNEURON PHARMACEUTICALS, INC.
1,555,422 shares of Common Stock
This Prospectus relates to 1,555,422 shares (the "Shares") of
Common Stock, par value $.001 per share (the "Common Stock") of Interneuron
Pharmaceuticals, Inc. (the "Company"), of which 1,055,422 Shares are outstanding
and 500,000 Shares are issuable upon exercise of warrants, which Shares may be
offered and sold by certain stockholders of the Company named herein (the
"Selling Stockholders"). The Selling Stockholders may sell all or a portion of
the Shares from time to time in transactions on the Nasdaq National Market or
other exchanges or markets on which the Shares 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 Stockholders may effect such transactions by
selling the Shares to or through broker-dealers (including broker-dealers which
may be affiliated with any such Selling Stockholder) and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders or the purchasers of the Shares 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 Stockholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the
Selling Stockholders will be received by the Company, although the Company will
receive proceeds from any exercise of the warrants. The Company has agreed to
bear certain expenses in connection with the registration and sale of the Shares
being offered by the Selling Stockholders. The Company has agreed to indemnify
the Selling Stockholders against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended (the "Act").
The Common Stock trades on the Nasdaq National Market under
the symbol IPIC. On January 24, 1997, the last sale price of the Shares was
$27 7/8.
------------------------------------
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 January __ , 1997
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, 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. The Commission maintains a Web site at http://www.sec.gov that contains
reports, proxy statements and other information regarding issuers that file
electronically with the Commission.
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 for the fiscal
year ended September 30, 1996, including any documents or portions thereof
incorporated by reference therein and all amendments thereto;
2. The Company's definitive proxy statement dated January 28,
1997, 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 Report on Form 8-K dated December 19, 1996.
4. 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
5. 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.
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
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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.
Redux(TM) is a trademark of Les Laboratoires Servier, licensed
to the Company and American Home Products Corp. Melzone(TM), PMS Escape(TM) and
Boston Sports Supplement(TM) are trademarks of the Company. All other trademarks
or tradenames referred to in this Prospectus are the property of their
respective owners.
-3-
PROSPECTUS SUMMARY
Interneuron Pharmaceuticals, Inc. ("Interneuron" or the
"Company") is a diversified biopharmaceutical company engaged in the development
and commercialization of a portfolio of products and product candidates
primarily for neurological and behavioral disorders, including obesity, stroke,
anxiety and insomnia. Interneuron focuses primarily on developing products that
mimic or affect neurotransmitters, which are chemicals that carry messages
between nerve cells of the central nervous system ("CNS") and peripheral nervous
system. The Company is also developing products and technologies, generally
outside the CNS field, through four subsidiaries: Intercardia, Inc.
("Intercardia") focuses on cardiovascular disease; Progenitor, Inc.
("Progenitor") focuses on functional genomics using developmental biology;
Transcell Technologies, Inc. ("Transcell") focuses on carbohydrate-based drug
discovery; and InterNutria, Inc. ("InterNutria") focuses on dietary supplement
products.
Redux for Obesity
The Company's first pharmaceutical product, Redux
(dexfenfluramine), received FDA clearance on April 29, 1996 and was commercially
launched in June 1996 as a prescription drug for the treatment of obesity. The
approved indication is for the management of obesity, including weight loss and
maintenance, in patients on a reduced calorie diet who have an initial body mass
index ("BMI") of >= 30 kg/m2 or >= 27 kg/m2 in the presence of other risk
factors (e.g. hypertension, diabetes, or hyperlipidemia). BMI, a relationship
between height and weight, is a widely used measure of obesity. For an
individual with a height of 5'5", a BMI of 30 corresponds to a weight of
approximately 180 pounds and a BMI of 27 corresponds to a weight of
approximately 162 pounds. These amounts exceed "ideal body weight" of a person
of such height by approximately 36% and 22%, respectively. Included in the
FDA-approved labeling for Redux are references to certain risks which may be
associated with dexfenfluramine and which were highlighted during the FDA's
review of the drug.
Redux is being marketed by the Wyeth-Ayerst division of
American Home Products Corp. ("AHP"), which obtained from the Company exclusive
U.S. marketing rights, in exchange for royalties on net sales and milestone
payments payable to the Company. The Company, which retained co-promotion and
certain manufacturing rights, obtained U.S. rights to Redux to treat abnormal
carbohydrate craving and obesity from Les Laboratoires Servier ("Servier") in
exchange for royalties on net sales. To supplement AHP's marketing efforts, the
Company has developed an approximately 30-person sales force to copromote Redux
to selected diabetologists, endocrinologists, bariatricians and weight
management specialists, in return for a percentage of resulting revenues less
certain expenses. Redux capsules are being manufactured for the Company for sale
to AHP on a contract basis by Boehringer Ingelheim Pharmaceuticals, Inc.
("Boehringer") and bulk chemical is supplied by Servier.
Citicoline for Ischemic Stroke
The Company has completed a pivotal Phase 3 clinical trial of
citicoline for the treatment of ischemic stroke, suffered by an estimated
415,000 people in the U.S. each year. Results of the Phase 3 clinical trial
indicated a statistically significant improvement over placebo at certain dose
levels in the recovery of patients who suffered an ischemic stroke and were
treated with
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citicoline. In this study, patients were treated with citicoline within 24 hours
post-stroke. Based on the clinical data to date, the Company believes citicoline
may be a promising post-stroke therapy, particularly due to its potentially
broad therapeutic window. The Company has commenced additional Phase 3 trials to
confirm the efficacy and safety of citicoline and to confirm whether treatment
of stroke with citicoline limits infarct size. The Company has U.S. and Canadian
marketing rights to certain uses of citicoline, which has been approved for
marketing in over 20 countries.
Bucindolol for Congestive Heart Failure
Through Intercardia and CPEC, Inc., the Company is developing
bucindolol, which is currently undergoing a Phase 3 clinical trial known as the
Beta-blocker Evaluation of Survival Trial (the "BEST Study"). The BEST Study is
being conducted by a division of the National Institutes of Health (the "NIH")
and the Department of Veterans Affairs (the "VA"), for the treatment of
congestive heart failure. Intercardia obtained worldwide rights to bucindolol
and, in December 1995, entered into an agreement with Astra Merck, Inc. ("Astra
Merck") for the development and commercialization of bucindolol for the
treatment of congestive heart failure. CPEC is owned 80% by Intercardia and 20%
by Interneuron. See "Recent Developments."
Other Products
Other product candidates in the Company's pipeline include
pagoclone, a drug under development to treat anxiety/panic disorders for which
the Company recently commenced a Phase 2/3 clinical trial in patients with panic
disorders aimed at a longer-term safety and efficacy evaluation. In addition,
the Company recently commenced a regional test launch for Melzone, a low-dose
dietary supplement form of melatonin, a naturally occurring hormone that is
believed to regulate the body's circadian (sleep) rhythm, which may be useful to
induce restful sleep.
The Company is developing additional products and technologies
through its subsidiaries. Progenitor's research and development programs
emphasize functional genomics through developmental biology and include the
following: a novel human hematopoietin receptor, a leptin receptor, which may
play a role in obesity, blood cell growth, diabetes and fertility; the del-1
gene, which may play a role in angiogenesis, and a nonviral gene delivery
system. Transcell's leading technologies include a combinatorial carbohydrate
chemistry method for synthesis and library development of oligosaccharides and
glycoconjugates, novel non-viral compounds for transporting DNA across cell
membranes and compounds for transmembrane drug transport.
InterNutria's leading product candidates are PMS Escape, a
dietary supplement for women during the pre-menstrual period, which is
undergoing a regional test launch in New England while continuing clinical
evaluation, and Boston Sports Supplement, a choline-rich dietary supplement for
the enhancement of athletic performance and reduction of fatigue, for which the
Company anticipates a regional test launch in fiscal 1997.
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.
Unless the context indicates otherwise, all references to the
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Company include Interneuron and its subsidiaries, Intercardia, Progenitor,
Transcell, and InterNutria (the "Subsidiaries").
Recent Developments
In December 1996, Interneuron and Algos Pharmaceuticals
Corporation ("Algos") entered into a Development and Marketing Collaboration and
License Agreement. The agreement relates to the development and
commercialization of, and grants Interneuron a worldwide license, co-exclusive
with Algos, for, an intra-nasal formulation of LidoDexNS, for the treatment of
migraine headache and other potential applications.
In December 1996, Intercardia and Knoll A.G. ("Knoll"),
entered into an agreement relating to the development and commercialization of
bucindolol for the treatment of congestive heart failure outside the United
States and Japan (the "Foreign Territory"). The agreement requires Knoll to make
certain payments to CPEC, including $2 million upon execution of the agreement
and $1 million in January 1997, as well as future payments contingent upon
achieving regulatory and net sales related milestones. Knoll and Intercardia
will share the development and marketing costs of bucindolol in the Foreign
Territory and CPEC will be entitled to 40% of net profits (responsible for 40%
of net losses) of the product in the Foreign Territory. The agreement
contemplates the formation of a committee composed of representatives of Knoll
and Intercardia to review and advise as to the development of bucindolol in the
Foreign Territory. Knoll has the right to terminate this agreement at any time
prior to termination of the BEST Study and within 60 days after the BEST Study's
primary end-point results are reported in writing to Knoll.
In December 1996, Progenitor and Amgen, Inc. ("Amgen") entered
into a license agreement granting Amgen exclusive rights for the development and
commercialization of products using Progenitor's leptin receptor technology. The
license agreement requires Amgen to make certain payments to Progenitor
contingent upon achieving mostly late-stage regulatory milestones plus potential
royalties on net sales of any products developed. Amgen also agreed to purchase,
in the event of a Progenitor initial public offering, up to $5,500,000 of
Progenitor common stock.
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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, before making an
investment. Prospective investors are cautioned that the statements in this
Prospectus that are not descriptions of historical facts may be forward looking
statements that are subject to risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors,
including those identified under "Risk Factors" and elsewhere in this Prospectus
or documents incorporated by reference herein.
History of Losses; Accumulated Deficit and Potential Future
Losses; Potential Fluctuations in Revenues. Until recently, the Company has been
engaged primarily in research and development activities and, through September
30, 1996, the Company had accumulated net losses since inception of
approximately $107 million. Losses are continuing and cash continues to be used
by operating activities. The Company will be required to conduct significant
development and clinical testing activities and establish marketing, sales,
regulatory and administrative capabilities for many of its proposed products,
including products which may be acquired in the future, which are expected to
result in continued 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, royalties, or product shipments regulatory approvals, product launches and
milestone payments.
Risks Relating to Redux. The Company's future success may
depend in large part on the long-term marketing success of Redux. There can be
no assurance as to the successful commercialization of Redux, which may be
affected by various factors, including the following:
Safety Issues; Post-Marketing Study. Included in the
FDA-approved labeling for Redux are references to certain
risks that may be associated with dexfenfluramine and which
were highlighted during the FDA's review of the drug. One
issue relates to whether there is an association between
appetite suppressants, including dexfenfluramine, and the
development of primary pulmonary hypertension ("PPH"), a rare
but serious lung disorder. In the general population, the
yearly occurrence of PPH is estimated to be about one to two
cases per million. An epidemiologic study conducted in Europe
examining risk factors for PPH showed that among other
factors, weight reduction drugs including dexfenfluramine,
systemic hypertension, and obesity itself were associated with
a higher risk of PPH. Results of the final study, including a
reclassification and inclusion of certain previously excluded
cases by the authors of the study, estimated the yearly
occurrence to be between 23 and 46 cases per million for
patients taking appetite suppressants for greater than three
months duration. Issues relating to PPH may adversely affect
the market for, and the sales and marketing of, Redux as well
as the Company's business, financial condition and results of
operations.
A second issue discussed in the FDA-approved labeling
for Redux is whether dexfenfluramine is associated with
certain neurochemical changes in the brain.
-7-
Certain studies related to this issue, conducted by third
parties, purport to show that very high doses of
dexfenfluramine cause prolonged serotonin depletion in certain
animals, which some researchers believe is an indication of
neurotoxicity. The Company presented data relating to the lack
of neurocognitive effects in patients taking Redux and
believes that, as demonstrated in human trials, these animal
studies are clinically irrelevant to humans because of
pharmacokinetic differences between animals and humans
(resulting in much higher brain concentrations of
dexfenfluramine and its active metabolite in certain animals
than in humans) and because of the high dosages used in animal
studies. The Company has agreed with the FDA to conduct a
Phase 4, or post-marketing, study of Redux, that is expected
to be a double-blind, placebo-controlled trial to further
evaluate long-term neurocognitive function in patients taking
Redux. Adverse results, if any, of this study or the perceived
likelihood of the occurrence of the labeled risks in patients
taking Redux may materially adversely affect the labeling,
market, and/or marketing, of the drug as well as the Company's
business, financial condition and results of operations.
Recent FDA Approval and Launch; Costs Associated with
Sales Force; Potential Fluctuations in Revenues and Related
Costs. Redux was launched commercially by AHP in June 1996.
Accordingly, the Company has only limited experience in sale
and manufacturing of Redux in commercial quantities and cannot
predict the extent of fluctuations in revenues and costs and
inventory levels. The Company has incurred substantial costs
in connection with the launch of Redux, including costs
associated with developing a sales force and implementation of
co- promotion activities. Substantial working capital is
required to fund inventories and receivables associated with
the commercialization of Redux.
Dependence on AHP for Marketing. The success of Redux
depends to a significant extent on the marketing and sales
efforts of AHP, over which the Company has minimal control.
There can be no assurance 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, manufacturing, sales
force and other costs associated with Redux.
Dependence on Suppliers; Risks Related to
Manufacturing. The Company is required to purchase all
dexfenfluramine bulk chemical from Servier at a fixed cost,
subject to annual adjustments. The Company is responsible for
supplying AHP with Redux finished product requirements and has
contracted to purchase all Redux finished product until
December 1998 from Boehringer, which is the sole manufacturer
of the finished product identified in the Redux new drug
application ("NDA"). The Company will be required to obtain a
replacement GMP manufacturing facility for Redux prior to
expiration of the Boehringer agreement. There can be no
assurance a replacement supplier will be approved by the FDA
in sufficient time to avoid an interruption in supply. The
Company is 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
finished product, respectively, in accordance with applicable
specifications. In the event Servier or Boehringer are unable
to satisfy production requirements on a timely basis
-8-
or are prevented for any reason from manufacturing bulk
chemical or finished product, respectively, the Company would
likely be unable to secure any alternate supplier or
manufacturer without materially adverse disruption and
substantially increased costs, if at all, which would
materially adversely affect the Company's business and results
of operations.
Inventory levels depend to a large extent on
forecasts provided by AHP and production capabilities of
Boehringer. There can be no assurance that AHP's forecasts and
the Company's resulting production planning will be accurate,
or that Boehringer (or its suppliers) will be able to
manufacture product according to specifications on a timely
basis, which may result in higher product costs to the Company
or inadequate or excessive supplies of the product, any of
which could materially adversely affect the Company's business
and results of operations. In addition, there can be no
assurance that the manufacture and sale of Redux capsules will
be profitable to the Company.
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, including dexfenfluramine,
from these controls. There can be no assurance as to whether
descheduling will occur or as to the timing of such
descheduling. In connection with the committee's
recommendation, the Company and AHP have agreed to develop and
administer a program to monitor for potential abuse or misuse
of dexfenfluramine. Further, state descheduling actions are
required by many states even after federal descheduling. The
continued status of dexfenfluramine as a controlled substance
would adversely affect the marketability of the drug and is
resulting in delayed milestone payments and equity investments
in the Company. The Company will receive such payments and
investment only if dexfenfluramine is descheduled prior to
April 1997. In addition, because dexfenfluramine is scheduled,
royalties payable to the Company by AHP are lower than if the
drug were descheduled.
Termination of Agreements. 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 AHP Agreements.
However, Servier has the right to withdraw its consent to the
AHP 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, 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 agreements with the Company (the "AHP Agreements") at any
time on 12 months notice. Wyeth- Ayerst may also terminate the
co-promotion agreement in the event annual sales
-9-
generated by the Interneuron sales force do not exceed
specified levels. The Company anticipates that for the
foreseeable future, royalties from AHP on Redux sales will
constitute a substantial portion of the Company's revenues.
Accordingly, the termination of the Servier Agreements or the
AHP Agreements would have a material adverse effect on the
Company.
Other Risks. The successful commercialization of
Redux is also subject to other risks including those set forth
under "Risks Factors -- Competition" and "- Uncertainty of
Patent Protection and Proprietary Rights," "- Risks Relating
to Managing Growth," "-Competition," "- Risk of Product
Liability" and "- Uncertainty Regarding Pharmaceutical Pricing
and Reimbursement."
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 or use, and there can be no
assurance that clinical trials of the products under development by the Company
will demonstrate the safety and efficacy of such products or that, regardless of
clinical trial results, FDA approval will be obtained. A number of companies in
the pharmaceutical industry have suffered significant setbacks in advanced
clinical trials or have not received FDA approval, even after promising results
in earlier trials. If clinical trials do not demonstrate the safety and efficacy
of certain products under development, the Company may be adversely affected.
Citicoline and bucindolol are currently in Phase 3 clinical trials and a Phase
2/3 clinical trial on pagoclone has recently commenced. There can be no
assurance that these trials will confirm or demonstrate the safety and efficacy
of the respective drug. Ferrer may terminate the Ferrer Agreement in the event
FDA approval of citicoline is not obtained by January 1999. The Company also
expects to conduct clinical evaluation on certain dietary supplement products
under development to substantiate the claims that are expected to be made for
the products. There can be no assurance that these clinical evaluations will be
successful.
Funding Requirements. The Company has expended and will
continue to expend substantial funds to conduct research and development
activities and preclinical and clinical testing on products under development,
including products which may be acquired in the future. In addition, the Company
is establishing sales and marketing capabilities for certain of its products.
The Company is co-promoting Redux and intends to market directly or co-promote
citicoline, Melzone and PMS Escape, 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 and
functions and will require additional funds for manufacturing and marketing
activities. The Company may seek additional funds through corporate
collaborations or future equity or debt financings to provide funding for new
business opportunities and future growth.
Interneuron is also currently funding the activities of
Progenitor, Transcell and InterNutria, each of which is seeking to enter into
collaborations, business combinations or private or public equity or debt
financings to pursue development and commercialization of their technologies or
products. Although Interneuron may acquire additional equity in a subsidiary
through participation in any such financing or conversion of intercompany debt,
equity financings by a subsidiary will likely reduce Interneuron's percentage
ownership of that subsidiary and funds raised by the Subsidiaries will generally
not be available to Interneuron. Although certain of the
-10-
subsidiaries are engaged in discussions relating to potential business
combinations or private or public equity financings, except as set forth or
incorporated by reference herein, none of the Subsidiaries has any commitments
for additional financing and there can be no assurance that any such financing
will be available on acceptable terms, if at all. In particular, Progenitor had
filed a registration statement with the Commission relating to an initial public
offering of its securities. Such offering has been postponed indefinitely and
there can be no assurance that such offering will be completed or as to the
timing or amount of any offering.(*) If adequate funds are not available to
these subsidiaries on acceptable terms, such subsidiaries may be required to
delay, scale back or eliminate some or all of their respective research and
product development programs or product launches.
Risks Relating to Test Launches of Non-Pharmaceutical
Products. During 1996, the Company commenced a regional test launch of PMS
Escape, a dietary supplement for women with pre-menstrual syndrome which is
continuing to be clinically evaluated. The Company also recently commenced a
regional test launch of Melzone, a low-dose dietary supplement formulation of
melatonin and may commence a test launch of Boston Sports Supplement. Based on
the results of the test launches, ongoing clinical evaluation and the
availability of sufficient funds, the Company may determine not to market any of
these products, to conduct additional testing of any of these products or to
market any of these products on a broader scale. There can be no assurance any
of these test launches will be successful, or if successful, be predictive of
the commercial viability of any 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 preclinical 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. In addition, the Company will be dependent
upon the manufacturers of its products to maintain compliance with current Good
Manufacturing Practices ("GMP") and on laboratories and medical institutions
conducting preclinical studies and clinical trials to maintain both good
laboratory and good clinical practices. There can be no assurance that GMP
manufacturers capable of producing product according to forecasts can be
obtained on a timely basis, or at all, for products under development, including
citicoline and pagoclone, which would materially adversely affect the Company's
ability to commercialize these products. Certain products are or are proposed to
be marketed by the Company
- ------------------------------
(*) A registration statement relating to those securities has been
filed with the Commission but has not yet become effective.
Those securities may not be sold nor 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 sales of those 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.
-11-
as dietary supplements, such as Melzone, PMS Escape and the Boston Sports
Supplement. There can be no assurance 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.
Uncertainty of Patent Position and Proprietary Rights. The
Company's success will depend to a significant extent on its ability to obtain
and enforce patent protection on its products and technologies, to maintain
trade secrets and to operate without infringing on the proprietary rights of
others. There can be no assurance that any Company patents will afford any
competitive advantages or will not be challenged or circumvented by third
parties or that any pending patent applications will result in patents being
issued. Certain of the Company's patents and patent applications include
biotechnology claims, the patentability of which generally is highly uncertain
and involves complex legal and factual questions. 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.
The composition of matter patent on dexfenfluramine in the
U.S. has expired. The use patent on dexfenfluramine for the treatment of
abnormal carbohydrate craving, which has been licensed to the Company, expires
in 2000. Competitors, including generic drug manufacturers, may market
dexfenfluramine in the U.S. claiming uses for obesity, assuming FDA approval can
be obtained. Thus there can be no assurance that this use patent will afford any
competitive advantage or will not be challenged or circumvented by third
parties, although the Company believes Redux will likely be entitled to market
exclusivity under the Drug Price Competition and Patent Term Restoration Act of
1984 (the "Waxman-Hatch Act") until April 1999. The Company's royalty
obligations to Servier for the license of the know-how and trademark extend
beyond the patent expiration date. Subsequent to the expiration of market
exclusivity or patent extension the Company's revenues from Redux may be
materially reduced. This royalty obligation may adversely affect the Company's
ability to compete against any then available generic drugs that are offered at
lower prices. In addition, the Company's royalties from AHP are subject to 50%
reduction if generic drug competition achieves a market share of 10% or greater
of total new Redux prescriptions in two consecutive quarters.
The U.S. composition of matter patent on bucindolol expires in
November 1997, prior to the anticipated launch of the product. As a result,
assuming FDA approval can be obtained, competitors, including generic drug
manufacturers, may market bucindolol, subject to potential market exclusivity
under the Waxman-Hatch Act. The Company's licensed U.S. 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, the inadequate release of acetylcholine may
be associated with several disorders, including the behavioral and
-12-
neurological syndromes seen after brain traumas and peripheral neuro-muscular
disorders including myasthenia gravis and post-stroke rehabilitation. The claim
of the licensed patent, while being broadly directed to the treatment of
inadequate release of brain acetylcholine, does not specifically recite the
indications for which the investigational new drug application ("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. Others have filed and in the future may file patent applications
covering certain products or technologies that are similar to those of the
Company. If products based on such technologies are commercialized by the
Company, 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, successfully 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, to determine the
scope and validity of the patent rights of others or in response to legal action
against the Company claiming damages for infringement of patent rights or other
proprietary rights or seeking to enjoin commercial activities relating to the
affected product or process. Not only is the outcome of any such litigation
highly uncertain, but such litigation may also result in significant use of
management and financial resources. The Company believes there may be
significant litigation in the industry regarding patent and other intellectual
property rights relating to leptin and leptin receptors; patent applications
relating to leptin receptors have been filed by Progenitor. The Company is aware
that Millennium Pharmaceuticals, Inc. ("Millennium") has filed a patent
application relating to a receptor for leptin and its use in obesity
applications, and has licensed to Hoffman-LaRoche Inc. rights to develop certain
therapeutics for obesity using Millennium's discovery of a leptin receptor.
Millennium has filed a "Protest" in the United States Patent
and Trademark Office in connection with certain Progenitor applications relating
to leptin receptors. A Protest is an available procedure sometimes used by a
third party to provide the patent examiner who is reviewing the involved
application or applications with what the third party believes to be relevant
information. The Protest procedure does not afford any right to the third party
to participate in the patent prosecution process beyond the filing of its
written Protest. Millennium's Protest primarily argues that any claims allowed
to Progenitor should not be so broad as to cover Millennium's own leptin
receptor.
There can be no assurance that Millennium's patent
application, or additional patent applications filed by Millennium or others,
will not result in issued patents covering a leptin receptor, the leptin protein
or other ligands, or any of their respective uses, including obesity. There can
be no assurance that the invention by Millennium will be accorded an invention
date later than Progenitor's invention date, that any patent will issue to
Progenitor or that any such patent issued to Progenitor would be broad enough to
cover leptin receptors of Millennium or 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 products, disputes may arise as to the
proprietary rights to such information which may not be resolved in favor of the
Company. Most of the Company's consultants are employed by or have consulting
agreements with third parties and any inventions discovered by such individuals
generally
-13-
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. Certain provisions of
the Waxman- Hatch Act grant market exclusivity for certain new drugs and dosage
forms. 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 has applied for such protection for the use patent relating to
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-form 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 such drug. Although the Company will likely be entitled
to three years of market exclusivity for Redux, there can be no assurance it
will receive marketing exclusivity for any other product, such as bucindolol,
for which the composition of matter patent expires in November 1997. 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.
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 continue to be able to obtain such insurance coverage, that such
insurance can be acquired in sufficient amounts to protect the Company or other
named parties against such liability, at a reasonable cost, or at all or that
any insurance obtained will cover any particular liability claim. The Company is
required to indemnify Servier, Boehringer Ingelheim and AHP against 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.
Early Stage of Products Under Development by the Company. The
Company is investigating for therapeutic potential a variety of pharmaceutical
compounds, technologies and other products at various stages of development. In
particular, Progenitor and Transcell each are conducting very early stage
research and all of their proposed products 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. The products under development by
the Company are subject to the risk that any or all of these proposed products
are found to be ineffective or unsafe, or otherwise fail to receive necessary
regulatory clearances. 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.
-14-
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, including products which may be required in the future.
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,
neither the Company nor Intercardia controls the BEST Study, which is being
conducted by the NIH and the VA, and the Company will be substantially dependent
upon Astra Merck for the commercial success of the twice-daily formulation of
bucindolol in the U.S., assuming FDA approval is obtained. 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 that they may license, the amount and
timing of resources devoted to these activities 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. As a result of the Redux
launch and, assuming additional 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. In particular, the Company is
co-promoting Redux, which requires the Company to maintain a sales force and
related management systems. 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 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 and competitors 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. Redux may be subject to substantial
competition. Dexfenfluramine is an isomer of fenfluramine, which is sold under
the brand name Pondimin by AHP for approximately the same use as
dexfenfluramine, although indicated only for "short-term (a few weeks) use."
Although dexfenfluramine is distinguishable from fenfluramine, there can be no
assurance that Redux, which is higher priced than Pondimin, will achieve greater
market acceptance than Pondimin or any other prescription drug used to treat
obesity. The Company is aware of drugs under development for the treatment of
obesity including sibutramine, for which an affiliate of BASF AG has filed an
NDA to treat obesity. Although an FDA advisory committee has recommended against
its approval, it has been reported that the FDA has issued an approvable letter
relating to the drug. In addition, the Company is aware of anti-obesity drugs
under development by an affiliate of Roche Holdings Ltd. and Neurogen
Corporation. In addition, other drugs and technologies relating to the treatment
of obesity are in earlier stages of development and, due to the
-15-
limited period of marketing exclusivity, Redux may eventually be subject to
competition from generic versions of dexfenfluramine. Activase has recently
received FDA approval as a treatment for stroke and the Company is aware of a
number of products in clinical development pursuing an indication for stroke
which could also compete with citicoline. In addition, if regulatory approval is
obtained, bucindolol may compete with carvedilol, which is under development in
the U.S. by SmithKline Beecham, for the treatment of congestive heart failure.
An advisory committee of the FDA recommended against the approval of carvedilol
to treat congestive heart failure, although the Company believes SmithKline
Beecham is continuing to seek to gain FDA approval for the drug. In addition,
Melzone will compete with a substantial number of available melatonin dietary
supplement products and PMS Escape will compete with a number of products for
use by women during the pre-menstrual period.
Many companies in the pharmaceutical and dietary supplement
industries have substantially greater financial resources and development
capabilities than the Company and have substantially greater experience in
undertaking preclinical 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. 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 safer or more effective or less expensive than those being developed by
the Company or that would render the Company's products and technologies less
competitive or obsolete.
Dependence Upon Key Personnel and Consultants. The Company is
dependent on certain executive officers and scientific personnel. The Company
has key person life insurance policies on the lives of Glenn L. Cooper, M.D.,
Richard Wurtman, M.D. and Lindsay A. Rosenwald, M.D. 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 and the strategic direction of the
respective subsidiary. In addition, the Company relies on independent
consultants to design and supervise clinical trials and assist in preparation of
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.
Uncertainty Regarding Pharmaceutical Pricing and
Reimbursement. The Company's business 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 anticipates that there will continue to
be, a number of proposals to implement government control over the pricing or
profitability of prescription pharmaceuticals, as is currently the case in many
foreign markets. The announcement or adoption of such proposals could have an
adverse effect on the Company. Furthermore, the Company's ability to
commercialize its products may be adversely affected to the extent that such
-16-
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,
including Redux, 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.
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 45% 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 stockholder 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, Ferrer may terminate the
Ferrer Agreements in the event an unaffiliated third party acquires 50% of
Interneuron's Common Stock. The preferred stock held by AHP provides that AHP's
consent is required prior to the merger of the Company, the sale of
substantially all of the Company's assets or certain other transactions. In
addition, outstanding options under the Option Plans become immediately
exercisable upon certain changes in control of 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
$0.1253 per share and $1.00 per share payable on the outstanding Series B
Preferred Stock and Series C Preferred Stock, respectively, held by AHP 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
competitive products, government regulations, developments concerning
proprietary rights, litigation, the Company's results of operations 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.
Shares Eligible for Future Sale; Registration Rights. As of
January 23, 1997, approximately 41,073,297 shares of Common Stock were
outstanding. Of these shares, approximately 19,000,000 are owned by affiliates
(or individuals or entities who may be deemed affiliates) of the Company or are
"restricted securities" within the meaning of Rule 144.
-17-
Substantially all of these shares are 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 or other requirements.
One stockholder of the Company has demand and piggy-back
registration rights which have been waived in connection with this offering,
relating to 622,222 shares of Common Stock issuable upon conversion of preferred
stock. Two other stockholders of the Company have piggy-back registration rights
until March 1997 relating to an aggregate of approximately 1,330,000 shares of
Common Stock, which rights have been waived in connection with this offering.
Certain Selling Stockholders entitled to receive additional shares of Common
Stock in December 1997 with a market value of $1,200,000 at the time of issuance
have registration rights in January 1998 relating to the resale of those shares.
In the event up to a maximum of 2,181,250 shares of Common Stock are issued in
June 1998 pursuant to certain put protection rights, holders of such shares will
have registration rights at that time.
In addition to the registration statement of which this
Prospectus forms a part, the Company has outstanding registration statements on
Form S-3 relating to the resale of shares of Common Stock and on Form S-8
relating to its 1989 Stock Option Plan, 1994 Long-Term Incentive Plan and its
1995 Stock Purchase Plan (the "Plans").
Outstanding Options and Warrants. As of December 31, 1996,
approximately 5,700,000 shares of Common Stock were issuable upon exercise of
outstanding options and warrants. In addition, the Company is required to issue
additional shares of Common Stock in connection with technology acquisitions and
may issue additional shares if certain put protection rights are exercised. To
the extent such shares are issued, the interest of holders of Common Stock will
be diluted.
-18-
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares by the Selling Stockholders. In the event that all of the warrants
exercisable for Shares offered hereby are exercised, the Company would receive
proceeds of approximately $5,000,000. Holders of the warrants are not obligated
to exercise their warrants and there can be no assurance that holders of
warrants 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.
SELLING STOCKHOLDERS
The following table sets forth the names of each Selling Stockholder
and for each, the number of Shares beneficially owned at the commencement of the
offering, and the number of Shares offered for sale, based on information
provided to the Company by such Selling Stockholders. The Shares are being
registered to permit public secondary trading of the Shares, and the Selling
Stockholders may offer all or any portion of the Shares 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. The Company has agreed, among other things, to bear
certain expenses in connection with the registration and sale of the Shares
being offered by the Selling Stockholders. See "Plan of Distribution."
None of the Selling Stockholders are officers or directors of the
Company. Reliance Insurance Company ("Reliance") acquired 1,000,000 Shares and
500,000 warrants in June 1995 directly from the Company in a private placement
pursuant to a Securities Purchase Agreement. See "Description of Securities -
Reliance Warrants." Of the Shares purchased by Reliance, 300,000 Shares were
transferred to Deutsche Bank A.G., a Selling Stockholder. In connection with the
private placement to Reliance, Paramount Capital, Inc., an investment banking
firm controlled by Lindsay Rosenwald, M.D. the Chairman of the Board and a
principal stockholder of the Company, acted as placement agent. The Company paid
Paramount cash compensation of $300,000 and granted to a designee and officer of
Paramount warrants to purchase 50,000 shares of Common Stock. Reliance, through
its Reliance National division, has in the past issued a directors and officers
insurance policy for the Company.
With the exception of Reliance and Deutsche Bank A.G., the other
Selling Stockholders are stockholders of AVAX Technologies, Inc. (formerly
Walden Laboratories, Inc.) ("AVAX") who received an aggregate of 55,422 Shares
upon the distribution of the first installment of the purchase price, pursuant
to an Asset Purchase Agreement entered into in November 1995 relating to the
purchase by InterNutria from AVAX of technology underlying PMS Escape. The
aggregate purchase price was $2,400,000, payable in shares of Interneuron Common
Stock having an aggregate market value of $1,200,000 in each of December 1996
and December 1997. Dr. Rosenwald and certain other directors of Interneuron or
its subsidiaries are or were stockholders of AVAX, but did not and will not
receive any Shares in connection with this acquisition. With the
-19-
exception of Reliance, which beneficially owns 2.9% of the Common Stock before
this Offering, all of the Selling Stockholders beneficially own less than 1% of
the Common Stock.
Number of Shares
Beneficially Owned Number of Shares
Selling Stockholders Prior to Offering(1) Being Offered
- -------------------- -------------------- -------------
Reliance Insurance Company 1,200,000(2) 1,200,000(2)
Deutsche Bank A.G. 300,000 300,000
C.R. Alexander TTEE U/A
9-4-79 12,063 2,063
William T. Anderson 3,615 515
Richard A. Armstrong 515 515
Jan Arnett, M.D. 77,764 5,164
Jack T. Badgett 515 515
Arthur J. Benvenuto TTEE
Under Revocable Trust
dated 1-25-82 515 515
John A. Cleary 1,031 1,031
Craig M. Cole 25,515 515
Robert C. Della Rocca, M.D. TTEE
F/B/O Profit Sharing for New
York Eye Plastic and
Reconstructive Surgery P.C. 4,465(3) 515
Edgewater Private
Equity Fund, L.P. 5,164 5,164
Joseph A. Fabiani 2,731 1,031
Henry A. Fish 515 515
Michael J. Garnick 45,063 2,063
William A. Gooch 515 515
Mark Goodman 515 515
John I. Gulick, Trustee
FBO Gulick Family Trust
Dated 7/6/94 515 515
James D. Judd, M.D. 13,015 515
Daniel Kessel, M.D. 515 515
Ida Kessel 25,515 515
Lawrence J. Kessel 515 515
Shirley Keys 15,515 515
Gerard A. LaFlamme 515 515
Harbans Lal 12,015 515
J. Allen Lamb 1,031 1,031
Roger S. Lash 4,031 1,031
Shirley K. Lavine 15,515 515
Gregory S. Lenchner 1,031 1,031
-20-
Number of Shares
Beneficially Owned Number of Shares
Selling Stockholders Prior to Offering Being Offered
- -------------------- ----------------- -------------
Richard M. Mandell 12,515 515
Dayne Myers 2,302 2,302
NF Nordiska Fondkimmission AB 5,164 5,164
Henry Platt 36,515 515
Richard H. Pollak 8,031 1,031
Jerry L. Ruyan 1,031 1,031
Ravi Sapra 1,031 1,031
Richard Scheffel 515 515
A. Robert Schell, M.D. 5,815 515
Joseph Schrodt 5,164 5,164
Scott Sherman and Monique
Sherman, JTROS 515 515
J. Edward Shrawder 7,015 515
Martin Sirotkin 515 515
Carol T. Smith 515 515
Win C. Smith Oldsmobile-
Cadillac GMC, Inc. 24,481 1,031
Maynard Sundman 2,031 1,031
Rick Sundman 1,031 1,031
Herman Tauber 1,031 1,031
Unique Warranties/c/o Brad T. Smith,
General Partner 1,515 515
Paul J. Weir 10,831 1,031
Lester O. Wuerfl Jr. Trust,
Barbara W. Wuerfl,
Patricia O'Brien, Co-TTEES 5,515 515
C. Barry Zolot 515 515
------------
TOTAL: 1,555,422
- -------------------------
(1) Based on information provided by the Selling Stockholders.
(2) Includes 500,000 Shares issuable upon exercise of warrants.
(3) Includes 3,950 Shares owned by affiliates of Dr. Della Rocca.
-21-
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Stockholders may sell
Shares from time to time in transactions on the Nasdaq National Market or on
other exchanges on which the Shares 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 Stockholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the Shares 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 Stockholders and any broker-dealers or
agents who participate in the distribution of Shares 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 been advised that (i) Deutsche Bank, A.G., one of the
Selling Stockholders, is affiliated with several NASD member firms including
Deutsche Morgan Grenfell Inc. ("DMG"); (ii) DMG has engaged in market-making
activities with respect to the Company's securities; and (iii) Deutsche Bank,
A.G. and its subsidiaries or affiliates have, from time to time, made and may in
the future make, purchases and sales of the Company's securities, including with
NASD member firms.
The Company has agreed to pay the expenses of registration in
connection with this Offering and to indemnify the Selling Stockholders against
certain liabilities, including certain liabilities under the Act.
At the time a particular offer of Shares 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 being offered and the
terms of the offering.
The Selling Stockholders are not restricted as to the price or prices
at which they may sell their Shares. Sales of Shares may depress the market
price of the Company's Common Stock. The Selling Stockholders are subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation rules 10b-6 and 10b-7 or, upon its
effectiveness, Regulation M, which provisions may limit the timing of purchases
and sales of the Shares by the Selling Stockholders.
In order to comply with certain states' securities laws, if applicable,
the Shares may be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states the Shares may not be sold unless the
Shares have been registered or qualified for sale in such state, or unless an
exemption from registration or qualification is available and is obtained.
-22-
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue up to 60,000,000 shares of Common
Stock, $.001 par value. At January 23, 1997, there were 41,073,297 shares of
Common Stock outstanding. Holders of Common Stock are entitled to one vote at
all meetings of stockholders for each share held by them. Holders of 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.
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 AHP 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 622,222 shares
of Common Stock, subject to adjustment. Holders of the Series B and Series C
Preferred Stock are entitled to receive out of funds legally available therefor,
mandatory dividends of $0.1253 and $1.00 per 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
-23-
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 AHP Agreements which rank on a parity
with the Series B and C Preferred Stock.
The AHP Agreements provide for the potential sale to AHP of $3,500,000
(35,000 shares) of Series E Preferred Stock ( the "Additional Series"), if
dexfenfluramine is descheduled by April 29, 1997. 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 conversion
price as then determined. The initial conversion price for the Series E
Preferred Stock will be 150% of the market price of the Common Stock for 10 days
preceding the descheduling of dexfenfluramine, 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.
Reliance Warrants
The warrants held by Reliance were issued under a Securities Purchase
Agreement between the Company and Reliance dated June 2, 1995. The Warrants are
exercisable until 5:00 p.m. on June 1, 2002 at an exercise price of $10.00 per
share, subject to adjustment. Under the Securities Purchase Agreement, Reliance
has demand and "piggy-back" registration rights relating to the Shares
underlying the warrants. See "Shares Eligible for Future Sale."
Subsidiary Financing Warrants and Put Protection Rights
In connection with certain private placements by the Subsidiaries,
Interneuron issued to the investors (i) three-year warrants to purchase an
aggregate of 218,125 shares of Common Stock and (ii) rights to sell varying
amounts of investors' convertible preferred stock in the Subsidiaries to
Interneuron (the "Put Protection Rights") in exchange for shares of Interneuron
Common Stock in the event certain conditions (including a public offering by the
applicable subsidiary) are not met by June 30, 1998. The shares underlying
certain of these warrants were registered for resale in March 1996 and, at
December 31, 1996, 41,250 of such warrants remained outstanding. At December 31,
1996, a maximum of 2,181,250 shares may be issued upon exercise of the Put
Protection Rights (if Interneuron's Common Stock is $2.00 or less at the time of
exercise).
-24-
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
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.
Transfer Agent and Registrar
American Stock Transfer & Trust Company, New York, New York, serves as
transfer agent and registrar for the Company's Common Stock.
Shares Eligible for Future Sale
At January 23, 1997, the Company had 41,073,297 shares of Common Stock
outstanding. Of these shares, approximately 19,000,000 are owned by affiliates
(or individuals or entities that may be deemed affiliates) of the Company or are
"restricted securities" within the meaning of Rule 144. Substantially all of
these shares are 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 or
other requirements.
The Selling Stockholders have demand and piggy-back
registration rights relating to their Shares, including the shares issuable upon
exercise of the Warrants. Another stockholder of the Company has demand and
piggy-back registration rights, which have been waived in connection with this
offering, relating to 622,222 shares of Common Stock issuable upon conversion of
preferred stock. Certain Selling Stockholders entitled to receive additional
shares of Common
-25-
Stock to be issued in December 1997 with a market value of $1,200,000 at the
time of issuance have registration rights in January 1998 relating to the resale
of those shares. In the event up to a maximum of 2,181,250 shares of Common
Stock are issued in June 1998 pursuant to Put Protection Rights, holders of such
shares will have registration rights at that time. Two other stockholders of the
Company have piggy-back registration rights until March 1997 relating to an
aggregate of approximately 1,330,000 shares of Common Stock, which rights have
been waived in connection with this offering.
In addition to the registration statement of which this
Prospectus forms a part, the Company has outstanding registration statements on
Form S-3 relating to the resale by other stockholders of the Company of shares
of Common Stock and on Form S-8 relating to its Plans in order to permit holders
of options and shares issued pursuant to the Plans, other than affiliates of the
Company, to sell, without restriction, shares of Common Stock issued pursuant to
the Plans.
-26-
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. A
member of Bachner, Tally, Polevoy & Misher LLP, who is the secretary of the
Company, owns approximately 17,000 shares and warrants to purchase 25,000 shares
of Common Stock.
EXPERTS
The consolidated balance sheets as of September 30, 1996 and 1995 and
the consolidated statements of operations, cash flows and stockholders' equity
for each of the three years in the period ended September 30, 1996, 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.
-27-
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............................................................19
Selling Stockholders.......................................................19
Plan of Distribution.......................................................22
Description of Securities..................................................23
Legal Matters..............................................................27
Experts....................................................................27
-28-
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.............................$ 10,517.00
Accounting Fees and Expenses..................... 50,000.00
Legal Fees and Expenses.......................... 45,000.00
Miscellaneous Expenses........................... 4,483.00
-----------
Total....................................... $ 110,000.00
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) - Reliance Warrant*
5.1 - Opinion of Bachner, Tally, Polevoy & Misher LLP as to
legality
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**
- ------------------
* Filed as part of Exhibit 10.71 to the Registrant's Report on Form 8-K
dated June 2, 1995 and incorporated herein by reference thereto
** Previously filed
II-1
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, as amended (the "Act"), 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 Act, 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 Act 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 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 Act, as
amended, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance
II-2
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 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 Act, 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.
II-3
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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Lexington, County of Middlesex on the 28th day
of January, 1997.
INTERNEURON PHARMACEUTICALS, INC.
By: /s/ Glenn L. Cooper, M.D.
-------------------------------------
Glenn L. Cooper, M.D.
President and Chief Executive Officer
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Glenn L. Cooper, M.D. President, Chief Executive January 28, 1997
- ----------------------------- Officer and Director
Glenn L. Cooper, M.D. (Principal Executive Officer)
/s/ *
- -----------------------------
Lindsay Rosenwald, M.D. Chairman of the Board of January 28, 1997
Directors
- -----------------------------
Harry J. Gray Director
/s/ *
- -----------------------------
Alexander M. Haig, Jr. Director January 28, 1997
/s/ *
- -----------------------------
Peter Barton Hutt Director January 28, 1997
/s/ *
- -----------------------------
Malcolm Morville, Ph.D. Director January 28, 1997
/s/ *
- -----------------------------
Robert K. Mueller Director January 28, 1997
/s/ *
- -----------------------------
Lee J. Schroeder Director January 28, 1997
II-4
January __, 1997
- -----------------------------
David Sharrock Director
/s/ *
- -----------------------------
Richard Wurtman, M.D. Director January 28, 1997
/s/ Thomas F. Farb
- -----------------------------
Thomas F. Farb Executive Vice President, January 28, 1997
Finance, Treasurer and Chief
Financial Officer (Principal
Financial and Accounting Officer)
/s/ Glenn L. Cooper, M.D. January 28, 1997
- -----------------------------
*By: Glenn L. Cooper, M.D.,
As attorney in fact
</TABLE>
II-5
Exhibit Index
-------------
(4) - Reliance Warrant(1)
5.1 - Opinion of Bachner, Tally, Polevoy & Misher LLP as to
legality
23.1 - Consent of Coopers & Lybrand L.L.P. - Included on II - 6(2)
23.2 - Consent of Bachner, Tally, Polevoy & Misher LLP - Included
in Exhibit 5.1
24 - Power of Attorney - Included on II - 4(2)
- --------------
(1) Filed as part of Exhibit 10.71 to the Registrant's Report on Form 8-K
dated June 2, 1995 and incorporated herein by reference thereto
(2) Previously filed
II-6
EXHIBIT 5.1
January 29, 1997
Interneuron Pharmaceuticals, Inc.
One 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 1,555,422 shares (the "Shares") including 500,000 shares issuable upon
exercise of warrants (the "Warrants") 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. 333-18001) (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 and 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 that the outstanding Shares have been, and the
Shares issuable upon exercise of the Warrants will be, when sold, paid for and
issued as contemplated by the terms of the Warrants, duly and validly issued and
fully paid and 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
