<PAGE> 1
As filed with the Securities and Exchange Commission on April , 1999
Registration No. 333-73039
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DUSA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-3103129
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
181 UNIVERSITY AVENUE, SUITE 1208
TORONTO, ONTARIO M5H 3M7 CANADA
(416) 363-5059
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
NANETTE W. MANTELL, ESQ.
LANE AND MANTELL
991 ROUTE 22 WEST, PO BOX 8539
SOMERVILLE, NEW JERSEY 08876
(908) 253-9333
(Name, address, including ZIP code, and telephone
number, including area code, of agent for service)
COPIES TO:
DR. D. GEOFFREY SHULMAN, PRESIDENT
DUSA PHARMACEUTICALS, INC.
181 UNIVERSITY AVENUE, SUITE 1208
TORONTO, ONTARIO M5H 3M7 CANADA
(416) 363-5059
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Amount Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities to be Offering Price Per Aggregate Offering Registration
to be Registered Registered Share Price Fee
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<S> <C> <C> <C> <C>
Shares of common stock without par value(2) 1,500,000 $6.09375(1) $ 9,140,625.00 $ 2,541.09
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Shares of common stock without par value(3) 130,435 $6.09375(1) $ 794,838.28 $ 220.96
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Placement agent warrants (4) 163,043 $6.09375(5) $ 993,543.28 $ 276.21
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Shares of common stock without par value (6) 163,043 -- $ 0.00 $ 0.00
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Shares of common stock without par value (7) 50,000 $6.09375(1) $ 304,687.50 $ 84.70
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Underwriter's options (8) 300,000 $ 7.70(11) $ 2,310,000.00 $ 642.18
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Shares of common stock without par value (9) 300,000 -- $ 0.00 $ 0.00
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Underwriter's options (10) 37,500 $ 7.92(11) $ 297,000.00 $ 82.57
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Shares of common stock without par value (12) 37,500 -- $ 0.00 $ 0.00
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Shares of common stock without par value(13) 20,000 7.875(13) $ 157,500.00 $ 43.79
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TOTAL REGISTRATION FEE* $ 3,891.50*
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based upon
the average of the high and low price as reported on The NASDAQ National Market
on February 23, 1999.
(2) Represents shares issued to certain selling shareholders in a private
placement completed January 15, 1999 under Rule 506 of Regulation D of the
Securities Act of 1933, as amended, pursuant to subscription agreements.
(3) Represents shares issued to designees of the placement agent, a registered
broker-dealer, as commissions and non-accountable expense allowance in
connection with the private placement.
(4) Represents warrants issued to designees of the placement agent in connection
with the private placement as additional compensation.
(5) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g)(3) of the Securities Act of 1933, as amended, based upon
the average of the high and low price as reported on The NASDAQ National Market
on February 23, 1999.
(6) Represents shares issuable upon exercise of the placement agent warrants
issued in connection with the private placement transaction.
(7) Represents shares issuable upon exercise of a warrant issued to a consultant
in connection with services rendered pursuant to an investor relations agreement
dated October 14, 1993.
(8) Represents options to purchase shares issued to principals of the
underwriter in connection with the issuance and sale of common stock pursuant to
an underwriting agreement dated December 11, 1995.
(9) Represents shares issuable upon exercise of underwriter's options to
purchase shares issued in connection with an underwriting agreement dated
December 11, 1995.
(10) Represents options to purchase shares issued to principals of the
underwriter in connection with the issuance and sale of Common Stock pursuant to
an underwriting agreement dated April 15, 1996.
(11) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g)(1) of the Securities Act of 1933, as amended, based upon
the price at which the options may be exercised.
(12) Represents shares issuable upon exercise of underwriter's options to
purchase shares issued in connection with an underwriting agreement dated April
15, 1996.
(13) Represents shares issuable upon exercise of a warrant issued to a
consultant in connection with services rendered pursuant to an investor
relations services agreement dated May 1, 1995. Under Rule 457(g)(3) of the
Securities Act of 1933, the registration fee is estimated based upon the average
of the high and low price as reported on The NASDAQ National Market on April 15,
1999.
*Of which $3,847.71 has been 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.
<PAGE> 3
PROSPECTUS Subject to Completion, Dated April _____ , 1999
DUSA PHARMACEUTICALS, INC.
2,200,978 SHARES OF COMMON STOCK
This prospectus relates to the following 2,200,978 shares of common
stock being offered for sale by the selling shareholders listed on page 10:
- 1,700,435 shares of common stock;
- 163,043 shares of common stock that may be issued upon the
exercise of placement agent warrants with an exercise price of
$5.00 per share;
- 300,000 shares of common stock that may be issued upon the
exercise of underwriter's options with an exercise price of
$7.70; and
- 37,500 shares of common stock that may be issued upon the
exercise of underwriter's options with an exercise price of
$7.92.
We have prepared this prospectus to allow the selling shareholders to sell, from
time to time, on The Nasdaq National Market, in the over-the-counter market, in
ordinary brokerage transactions, in negotiated transactions, or in a combination
of these transactions, at prevailing market prices or at negotiated prices. See
"Selling Shareholders" and "Plan of Distribution."
DUSA will not receive any part of the proceeds of any sales of the shares of
common stock by the selling shareholders.
We may receive proceeds upon the exercise of warrants and/or options. The amount
we receive will depend upon the exercise price of the warrants and the options
and the extent to which they are exercised. See "Securities To Be Offered."
INVESTING IN THESE SHARES INVOLVES SIGNIFICANT RISKS. SEE RISK FACTORS BEGINNING
ON PAGE 2.
Our common stock is traded on The NASDAQ National Market under the
symbol "DUSA."
The last reported sale price of our common stock on NASDAQ on April 15,
1999 was $7.875 per share.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
ARE NOT ALLOWED TO SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION, HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is April -, 1999
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
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Page
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The Company.............................................................. 1
Risk Factors............................................................. 2
Where You Can Find More Information...................................... 8
Incorporation of Certain Documents by Reference.......................... 8
Forward-Looking Statements............................................... 9
Use of Proceeds.......................................................... 9
Selling Shareholders..................................................... 9
Plan of Distribution..................................................... 12
Securities to be Offered................................................. 13
Legal Matters............................................................ 13
Experts.................................................................. 13
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities........................................ 14
</TABLE>
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THE COMPANY
We are a development stage pharmaceutical company engaged primarily in
the research and development of a light sensitive drug, whose chemical name is
5-aminolevulinic acid, or more commonly known as ALA in combination with light
devices. The trademark for our brand of ALA is Levulan(R). We have published
trademark applications for our drug applicator, Kerastick(TM) and one of our
light devices, the BLU-U(TM). We believe that this drug and light combination
system may be used to treat numerous diseases and to help detect the presence of
other diseases.
- When we use Levulan(R)and follow it with exposure to light to
produce a therapeutic effect the technology is called
photodynamic therapy or PDT.
- When we use Levulan(R)and follow it with exposure to light to
detect medical conditions the technology is called
photodetection or PD.
At this time, our research and development program includes Levulan(R)
photodynamic therapy and photodetection for several medical uses, including:
- actinic keratoses
- bladder cancer
- acne
- hair removal
- endometrial ablation
- cancer of the cervix or dysplasia
In July, 1998, we filed an application with the FDA for marketing
approval using Levulan(R) photodynamic therapy to treat actinic keratoses
(pre-cancerous skin lesions) of the face and scalp. This application is called a
new drug of application or NDA.
We own or exclusively license certain patents and technology pertaining
to our drug from PARTEQ Research and Development Innovations under a license
agreement between DUSA and PARTEQ. We also own or license certain patents
relating to methods for using pharmaceutical formulations which contain our drug
and related processes and improvements.
In general, photodynamic therapy is a two-step medical treatment.
First, a drug that is sensitive to light, such as Levulan(R) is applied to an
area of the body. The drug collects in diseased or abnormal tissue. Second, a
controlled light is applied to the targeted tissue. Energy from the light
activates the drug which destroys or alters the cells which have collected the
drug. In photodetection, application of the light makes the drugged cells
fluoresce, or "glow". The appropriate combination of drug and light can affect
the drugged tissue with relatively minimal damage to surrounding tissue.
Levulan(R) is unique among photodynamic therapy or photodetection
agents since it is a naturally occurring substance found in virtually all human
cells. Levulan(R) is also unique in that it is not itself sensitive to light.
After delivery of Levulan(R) to the diseased or abnormal tissue, it is converted
through a cell-based process into the light sensitive molecule protoporphyrin
IX, known as PpIX. PpIX is also found in normal cells. Usually, this process is
self-regulating, so that the production of PpIX is limited in each cell and
people do not become overly sensitive to light or sun exposure. However,
when Levulan(R) is supplied either directly to the diseased or abnormal tissues
or through the blood stream, the self-regulatory step is bypassed and PpIX
accumulates. This effect is more pronounced in rapidly growing diseased tissues
such as pre-cancerous and cancerous lesions. It also occurs in conditions
characterized by inflammation (such as acne) and in certain normally
fast-growing tissues (such as hair follicles and the lining of the uterus).
Directly applied, Levulan(R) also penetrates skin affected by certain diseases,
such as actinic keratoses (pre-cancerous skin lesions), acne and psoriasis, more
than it penetrates the surrounding normal skin. These properties enable
Levulan(R) photodynamic therapy to react with the diseased or abnormal cells on
a preferential basis, as compared to surrounding cells.
In January, 1999, we completed a private placement of 1,500,000 shares
of our common stock in a transaction exempt from registration. We signed
subscription agreements with each of the purchasers. The shares were sold at
$5.00 per share. Upon completion of the private placement, we issued 130,435
shares of our common stock to the placement agent and certain persons designated
by the placement agent, as commissions and non-accountable expense allowance. As
additional compensation, we issued 163,043 warrants to purchase common stock at
$5.00 per share to the placement agent. We are now registering these shares and
warrants as we agreed in the subscription agreements and in the commitment
letter between DUSA and the placement agent. The subscription agreements require
that we have this prospectus available for use on or prior to May 27, 1999, or
we will have to issue more shares of common stock to the original purchasers as
a penalty. We are registering the remaining warrants, options and underlying
shares of common stock since the owners of these securities have requested that
we register them. All of the holders except one (1) have the right to demand
that we register the securities under agreements with DUSA.
1
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We were incorporated under the laws of the State of New Jersey on
February 21, 1991. Our principal executive offices are located at 181 University
Avenue, Suite 1208, Toronto, Ontario M5H 3M7 CANADA and our telephone number is
(416) 363-5059.
RISK FACTORS
Investing in our common stock is very speculative and involves a high
degree of risk. The risk factors described below may cause actual results,
events or performance to differ materially from those predicted in any
forward-looking statements we make in this prospectus. You should carefully
consider these risk factors, in addition to the other information included or
incorporated by reference in this prospectus before you make an investment
decision.
DEVELOPMENT OF OUR POTENTIAL PRODUCTS INVOLVES A LENGTHY, COSTLY
PROCESS WHICH MAY NEVER RESULT IN ANY MARKETABLE PRODUCTS.
We are at an early stage of development and our products may not be
successfully developed or commercialized. To date, we have had no revenues from
sales of any product. Our drug and light system, Levulan(R) photodynamic therapy
is a novel product based on new technology, so the FDA may take longer than
average to consider our products for approval. To the best of our knowledge,
only two similar PDT applications have received marketing approval from the FDA.
We cannot guarantee that the FDA will approve the use of Levulan(R) PDT for
actinic keratoses, known in the field of dermatology as AKs, or any of our other
potential products so we may never ultimately develop commercially successful
products.
Our proposed products are at various stages of development but most
will require significant further research, development and testing. You must
evaluate us in light of the uncertainties, delays, difficulties and expenses
commonly experienced by companies in an early stage of research and development,
which generally include unanticipated problems and additional costs relating to:
- the development and testing of products in animals and humans,
- product approval or clearance,
- regulatory compliance,
- commencement of production,
- product introduction, and
- marketing and competition.
Many of these factors may be beyond our control, including but not
limited to, unanticipated results of clinical tests, market acceptance of our
products and development of competing products by others. In addition, our
future performance will also be subject to other factors beyond our control,
including general economic conditions and conditions in healthcare industry or
targeted commercial markets. These problems could cause our costs and expenses
to exceed our estimates and our financial resources.
WE HAVE SIGNIFICANT LOSSES AND MAY NEVER BE PROFITABLE.
We have experienced significant operating losses since our inception.
If our losses continue and we are unable to successfully develop, commercialize,
manufacture and market our products, we may never achieve product revenue or
profitability. Because of the nature of the pharmaceutical business and the high
cost of the drug development, our expenses have exceeded our income since DUSA
was founded in 1991. As of December 31, 1998, our accumulated deficit was
approximately $30,417,967. We expect to continue to have operating losses until
such time, if ever, as we may have significant revenues from the sale of our
products to offset our continuing research and development activities. We cannot
guarantee that any of our potential products will achieve market acceptance to
generate sufficient revenues to become profitable. There is no way to predict
the timing or amount of revenues from the marketing of any of our potential
products or whether any revenues will be realized.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING ON ACCEPTABLE TERMS
IN THE FUTURE SO WE MAY HAVE TO DELAY DEVELOPMENT EFFORTS.
To date, our operations have consumed substantial amounts of cash. We
will require substantial additional funds which may not be available to develop
our potential products and to manufacture, market and sell our products. We
believe that we have sufficient capital to finance our operations through 2000.
We cannot give you any assurance that additional financing will not be needed at
an earlier date, particularly if we do not complete a suitable marketing
alliance for the use of Levulan(R) PDT to treat the pre-cancerous skin
condition, actinic keratoses. Our future capital requirements will depend upon
our ability to obtain approval from
2
<PAGE> 7
the FDA for our first product, Levulan(R) PDT for AKs and our ability to
generate sufficient sales, along with the timing of required expenditures. In
the event that we do not receive timely regulatory approval, or if our product
sales goals are not met, we may need to seek additional capital through public
or private financing, including equity financing, and/or through collaborative
arrangements. We cannot give you any assurance that if we need additional
financing in the future, such financing will be available on acceptable terms,
if at all.
If additional funds are raised by issuing equity securities, dilution
to existing shareholders may result. If funding is insufficient, we may have to
delay, reduce in scope or eliminate some or all of our research and development
programs. We may also license rights to third-parties to commercialize products
or technologies that we would otherwise have attempted to develop and
commercialize ourself. At the current time, we are developing only one drug
compound for several different medical uses. Our ability to raise future cash
requirements will be affected by many factors, the importance of which cannot be
currently predicted, including:
- the results of research and development;
- progress of pre-clinical and clinical trials;
- acquisitions of products or technology, if any;
- relationships with collaborators, if any;
- the direction of our research and development programs;
- competing technological and market developments;
- the time and costs involved in obtaining regulatory approvals
and in obtaining, maintaining and enforcing patents; and
- the costs of manufacturing scale-up and marketing activities.
WE MAY NOT OBTAIN GOVERNMENT REGULATORY APPROVAL FOR OUR PRODUCT
CANDIDATES PRIOR TO MARKETING.
All of our potential products will require the approval of the FDA
before they can be marketed in the United States. We cannot give you any
assurance that any of our products will obtain required FDA approvals on a
timely basis, or at all, or that regulatory problems will not arise that could
delay or prevent the commercialization of our first product the use of
Levulan(R) PDT to treat actinic keratoses. Discovery of problems with a product,
manufacturer or facility can result in delay of approval, product labeling
restrictions or withdrawal of the product from the market. These consequences
could adversely affect our financial condition and operations.
Our products are subject to continued and pervasive regulation by the
FDA and by state and local regulations. These laws require, among other things,
- approval of manufacturing facilities, including adherence to
"good manufacturing and laboratory practices" during
production and storage;
- controlled research and testing of products; and
- control of marketing activities, including advertising and
labelling.
Before a new drug application (an application to the FDA seeking
approval to market a new drug) can be filed with the FDA, a product must
undergo, among other things, extensive animal testing and human clinical trials.
Other than the NDA for Levulan(R) PDT to treat actinic keratoses, we have not
filed NDAs for any of our other potential uses of Levulan(R) photodynamic
therapy or photodetection. Following the acceptance of an NDA, the time required
for regulatory approval can vary and is usually one to three years or more. DUSA
has been asked to appear before an FDA advisory meeting in June, 1999. The FDA
may require additional animal studies and/or human clinical trials before
granting approval particularly since our products are part of a relatively new
type of therapy which uses a drug and a light device in combination.
Although, we expect to seek foreign regulatory approvals at some time
in the future, we cannot give you any assurances that any of our products will
receive approvals on a timely basis, or at all, or that problems will not arise
that could delay or prevent the commercialization of our products in foreign
countries. The introduction of our products in foreign markets will subject us
to foreign regulatory clearances, which may be unpredictable and uncertain, and
which may impose substantial additional costs and burdens which we may not be
not able to afford. At present, applications for foreign marketing
authorizations are made at the
3
<PAGE> 8
national level, although certain registration procedures are available within
the European Union to companies wishing to market a product in more than one
member country. A regulatory authority must be satisfied that adequate evidence
of safety, quality, and efficacy of the product has been presented before
marketing authorization is granted. The foreign regulatory approval process
includes all of the risks associated with obtaining FDA marketing approval set
forth above. Approval by the FDA does not ensure approval by other countries.
THE LOSS OF KEY MEMBERS OF OUR MANAGEMENT COULD DELAY AND MAY PREVENT
THE ACHIEVEMENT OF OUR BUSINESS AND RESEARCH OBJECTIVES.
We are highly dependent on several key employees, including: D.
Geoffrey Shulman, MD, FRCPC, Chairman of the Board, President, Chief Executive
Officer and Chief Financial Officer of the Company; Ronald L. Carroll, Executive
Vice President and Chief Operating Officer; and Stuart L. Marcus, MD, PhD,
Senior Vice President, Scientific Affairs. While we have entered employment
agreements with our three executive officers, they may not remain with us. Our
growth and future success will depend, in large part, on the continued
contributions of these key individuals and other key senior management
personnel, as well as our ability generally to attract, motivate and retain
highly qualified personnel in our specialty drug and light device areas. The
loss of Dr. Shulman, Mr. Carroll, Dr. Marcus or other key senior management
personnel, or the inability to hire or retain qualified personnel, could have a
material adverse effect on our business, financial condition and results of
operations.
WE ARE DEPENDENT UPON AN INDEPENDENT CONSULTING FIRM FOR OUR REGULATORY
AFFAIRS EXPERTISE AND IF THE FIRM STOPPED PROVIDING SERVICES IT COULD BE
COSTLY AND TIME-CONSUMING FOR US TO REPLACE THEM.
Our clinical development program is being implemented by our senior
management, with the assistance of consultants, primarily Guidelines, Inc., a
Florida-based company, specializing in drug development and regulatory affairs.
The loss of Guidelines' services could force us to seek alternative arrangements
or we might have to develop our regulatory affairs capacity. These alternatives
may prove to be costly and time-consuming which could delay any FDA approval and
cause a material adverse effect on our business, financial condition and results
of operations.
WE DO NOT HAVE OUR OWN MANUFACTURING AND MARKETING CAPABILITIES SO WE
DO NOT HAVE CONTROL OF KEY PARTS OF OUR BUSINESS.
We do not currently have the capacity to manufacture, market or sell
our Levulan(R) PDT products on our own. We have only one source for our drug
supply, one source for our Kerasticks(TM) brand of drug applicators, and one for
our BLU-U(TM) brand of light device. Our drug supplier has been notified that
its facilities are not GMP compliant at this time but it is actively working to
resolve the deficiencies. If this supplier, or our other sole sources fail to
meet and maintain regulatory requirements, approval of our first product could
be delayed and it would be time-consuming and costly for DUSA to obtain these
products from other FDA-approved manufacturers. A delay would cause a material
adverse effect on our business, financial condition and results of operation.
See "Risk Factors -- Regulatory Marketing Approvals."
Our manufacturers have not yet produced our products in commercial
quantities. Manufacturers often encounter difficulties in scaling-up
manufacturing of new products, including problems involving product yields,
quality control, component and service availability, adequacy of control
procedures and policies, compliance with FDA regulations and the need for
further FDA approval of new manufacturing processes and facilities. We cannot
give you any assurance that production yields, costs or quality will not be
adversely affected as our appointed manufacturers seek to increase production.
Any such adverse effect could delay or prevent commercialization of our products
which would have a material adverse effect on our business, financial condition
and results of operations.
Although we are developing various plans for marketing our first
product upon receipt of regulatory marketing approval, we do not at this time
have a marketing partner or our own personnel to market our products. We are
negotiating potential collaborative licensing arrangements with pharmaceutical
companies with manufacturing and/or sales and distribution capability to market
our products. We are also developing plans to market the products through
distribution or co-promotion arrangements. We cannot give you any assurance that
any of our products will be successfully manufactured or marketed.
4
<PAGE> 9
WE HAVE LIMITED PATENT PROTECTION AND MAY NOT BE ABLE TO PROTECT OUR
PATENTS AND PROPRIETARY RIGHTS.
Our ability to compete successfully depends, in part, on our ability to
defend patents that have issued, obtain new patents, protect trade secrets and
operate without infringing the proprietary rights of others. We have no product
patent protection for the compound ALA itself, as our basic patents are
so-called "method of treatment" or "use" patents, or their equivalents. Even
where we have patent protection, there is no guarantee that we will be able to
enforce our patents. Patent litigation is expensive, and we may not be able to
afford the costs. We own or exclusively license patents and patent applications
related to the following:
- unique physical forms of 5-aminolevulinic acid;
- methods of using ALA and its unique physical forms; and
- compositions and apparatus for those methods.
In addition, a number of third parties are seeking patents for
additional uses of ALA. Such patents could limit the scope of our future
operations. If third parties are able to avoid our use patents by using ALA
with a different method, improper product substitution may result.
We have limited patent protection outside the United States which may
make it easier for third-parties to compete there. Our basic method of treatment
patents and applications have counter-parts in only four foreign countries.
Absent patent protection, third-parties may freely market ALA, subject to
appropriate regulatory approval. There are reports of several third-parties
conducting clinical studies using ALA in countries where DUSA lacks patent
protection. These studies could provide the clinical data necessary to gain
regulatory approval, resulting in competition.
A third party has patents that may affect our ability to commercialize
the use of ALA for hair removal. DUSA is aware that the third party has seven
issued United States patents which claim methods for removing or inhibiting the
growth of hair. If this third party's patents cover use of ALA, prior to
commercializing Levulan(R) for hair removal, DUSA would have to obtain a license
of the relevant patents which may not be available to us. If we need a license
and we are unable to obtain it, we may be prohibited from marketing Levulan PDT
for hair removal.
The Japanese Patent Office Board of Appeals, acting upon its review of
an opposition to a patent we have licensed from PARTEQ Research and Development
Innovation, issued a document titled "Notice of Reasons for Cancellation" which
DUSA received on February 12, 1999. We are preparing our response to this action
which we must file by July 8, 1999. Japan is a major pharmaceutical market and
loss of this patent could potentially have an adverse effect on our future
financial condition and results of operations.
While we attempt to protect our proprietary information as trade
secrets through agreements with each employee, licensing partner, consultant,
university, pharmaceutical company and agent, we cannot give you any assurance
that these agreements will provide effective protection for our proprietary
information in the event of unauthorized use or disclosure of such information.
COMPETING PRODUCTS AND TECHNOLOGIES MAY MAKE SOME OR ALL OF OUR
PROGRAMS OR POTENTIAL PRODUCTS NONCOMPETITIVE OR OBSOLETE.
Many pharmaceutical companies have substantially greater financial,
technical, manufacturing, marketing and distribution resources than we have
which gives them an advantage over us in the marketplace. This industry is
subject to rapid, unpredictable and significant technological change.
Competition is intense. Well-known pharmaceutical, biotechnology and chemical
companies, are marketing well-established therapies, and/or seeking to develop
new products and technologies, for the treatment of various dermatological
conditions including AKs. For example, the current preferred methods of treating
AKs are with the drug 5-fluorouracil for multiple lesions, and cryotherapy using
liquid nitrogen for limited numbers of lesions. Although both methods are
effective, 5-FU can be irritating and often requires administration for a number
of consecutive weeks, while cryotherapy is non-selective, is usually painful at
the site of freezing and may cause blistering.
In addition, several companies are developing photodynamic therapies
and photodetection products, including products for markets that we intend to
pursue. Commercial development of PDT agents are currently being pursued by a
number of companies, including: QLT Photo Therapeutics Inc. (Canada); Miravant,
Inc. (U.S.); Pharmacyclics, Inc. (U.S.); Nippon Petrochemicals (Japan); Scotia
Pharmaceuticals (United Kingdom); medac GmBh (Germany)
("Medac"); and Photocure (Norway). Photocure may be working at Phase I/II
equivalent trials using ALA PDT for dermatological uses, including for certain
indications being pursued by DUSA. We are aware that Medac is developing ALA PDT
for bladder cancer detection in Germany
5
<PAGE> 10
and may receive regulatory approval in Germany prior to DUSA receiving approval
from the FDA. We expect that our principal methods of competition with other PDT
companies will be based upon such factors as:
- the ease of administration of our photodynamic therapy,
- the degree of generalized skin sensitivity to light,
- the number of required doses,
- the selectivity of our drug for the target lesion or tissue of
interest, and
- the type and cost of our light systems.
We cannot give you any assurance that new drugs or future developments
in PDT or in other drug technologies will not have a material adverse effect on
our business. Increased competition could result in:
- price reductions,
- lower levels of third-party reimbursements,
- failure to achieve market acceptance, and
- loss of market share
any of which could have an adverse effect on our business. Further, we cannot
give you any assurance that developments by our competitors or future
competitors will not render our technology obsolete.
EFFORTS TO REDUCE THE COST OF HEALTHCARE BY THE GOVERNMENT AND
INSURANCE COMPANIES COULD HURT OUR REVENUES AND PROFITS.
We expect that our ability to successfully commercialize our products
will depend significantly on the availability of reimbursement for our products
from third-party payors such as governmental programs, private insurance and
private health plans. We cannot give you any assurance that levels of
reimbursement for our drug and light combination therapy, if any, will be
sufficient to allow us to charge a reasonable profit margin. Even with FDA
approval, third-party payors may deny reimbursement if the payor determines that
our particular new therapy is unnecessary, inappropriate or not cost effective.
If patients are not entitled to receive reimbursements similar to reimbursements
for competing therapies, they will have to pay for the unreimbursed amounts.
These reimbursement factors could limit our revenues, and our profits if
physicians or patients choose therapies with higher reimbursements. The
reimbursement status of newly-approved health care products is highly uncertain.
We cannot give you any assurance that third-party coverage will be available or,
if available, such third-party coverage will enable us to maintain sufficient
price levels to be profitable. Further, we cannot give you any assurance that
levels of reimbursement, if any, will not be decreased in the future or
reimbursement policies of third-party payors will not otherwise adversely effect
the demand for our products or our ability to sell our products on a profitable
basis.
OUR ROYALTY OBLIGATIONS COULD ADVERSELY AFFECT OUR PROFITABILITY
Under certain license agreements, we are obligated to pay royalties
based upon the commercial use of our drug and light device products which could
exceed our profits. These royalties include payments to PARTEQ Research and
Development Innovations, the licensor of patents and technology relating to our
drug. Royalties to PARTEQ could aggregate up to six percent of our net sales in
certain countries, including the United States. In addition to our royalty
obligations on sales of our products, we may owe PARTEQ minimum lump sum
royalties which may adversely affect our financial condition and results of
operations if, and when, we commercialize our products particularly in early
years of sales when we may not yet be profitable.
IF WE BECOME SUBJECT TO A PRODUCT LIABILITY CLAIM FOR COMMERCIAL USE OF
OUR PRODUCTS, WE MAY NOT HAVE ADEQUATE INSURANCE COVERAGE AND THE CLAIM COULD
ADVERSELY AFFECT OUR BUSINESS.
The development, manufacture and sale of medical products exposes us to
the risk of significant damages from product liability claims. We maintain
product liability insurance for coverage of our clinical trial activities. We
intend to obtain coverage for commercial supplies when products are expected to
enter the marketplace. We cannot give you any assurance that such
6
<PAGE> 11
insurance will be available at acceptable costs. Further, while we have not
experienced any product liability claims to date, a successful claim in excess
of our clinical trial insurance coverage or any coverage that we obtain for
commercial use of our products could have a materially adverse effect on our
business, financial condition and results of operations.
IF OUTSTANDING OPTIONS AND WARRANTS ARE CONVERTED, THE VALUE OF THOSE
SHARES OF COMMON STOCK OUTSTANDING JUST PRIOR TO THE CONVERSION MAY BE DILUTED.
As of April 10, 1999 there were outstanding options and warrants to
purchase 2,120,300 shares of common stock, with exercise prices ranging from
U.S. $3.25 to $13.375 per share, respectively, and ranging from CDN. $4.69 to
CDN. $12.875 per share, respectively. In addition, there are 480,000 outstanding
underwriter's purchase options and 163,043 outstanding placement agent warrants.
The exercise of a significant number of these securities at any one time could
have an adverse effect on the market price of the common stock, and will have a
dilutive impact on other shareholders. For the life of such securities the
holders are given the opportunity to profit if the market price for the common
stock exceeds the exercise price of their respective securities, without
assuming the risk of ownership. If the market price of the common stock does not
rise above the exercise price of these securities, then they will expire without
exercise. The exercise of the securities is likely to be undertaken at a time
when we would, in all probability, obtain any needed capital from the public on
terms more favorable than those provided in such securities.
RESULTS OF OUR OPERATIONS AND GENERAL MARKET CONDITIONS FOR
BIOTECHNOLOGY STOCK COULD RESULT IN THE SUDDEN CHANGE IN THE MARKET VALUE OF OUR
STOCK.
From time to time and in particular during the last several months, the
price of our common stock has been highly volatile. These fluctuations create a
greater risk of capital losses for our shareholders as compared to less volatile
stocks. Over the past twelve months our stock price has ranged from a high of
$16.063 to a low of $2.250. From January 1, 1999 to March 31, 1999, our stock
price has ranged from a high of $9.063 to a low of $5.375. We believe that
factors such as announcements of technological or product developments related
to our business or announcements of technological innovations or new products by
us or our competitors, governmental regulation, or patent or proprietary rights
developments, could cause the price of the common stock to fluctuate
substantially. Our operating results and various factors affecting the
pharmaceutical industry generally may also significantly impact the market price
of our common stock.
OUR OPERATIONS AND BUSINESS COULD BE DISRUPTED IF OUR COMPUTER SYSTEM
OR IF OUR KEY SUPPLIERS' SYSTEMS FAIL WHEN THE YEAR CHANGES TO 2000.
Any of our computers, computer programs, and administrative equipment
that have date-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. We cannot give you any assurance that our
systems or the systems of third-parties with whom we do business do not contain
undetected errors or defects associated with the year 2000 date functions that
may have a material adverse effect on our business, results of operation or
financial condition. If any of our systems that have date-sensitive software use
only two digits, system failures or miscalculations may result causing
disruptions to our operations, including among other things:
- a temporary inability to process transactions,
- sending and receiving electronic data with our third-party
suppliers, and
- engaging in similar normal business activities.
Our management information systems, have been certified as year 2000
compliant. However, because most computer systems are, by their very nature,
interdependent, it is possible that non-compliant third-party computers could
have an adverse effect on our computer systems.
We have not completed the process of obtaining certifications from
unrelated third-parties but expect to be complete by June, 1999. In the event
such certifications are not available, we are developing plans to evaluate the
potential impact on our operations if such third-parties are unable to perform
their obligations. To the extent that such third-parties are materially
adversely affected by the year 2000 issue, we could experience disruptions and
delays in our operations and in receipt of supplies of our drug or light
devices. These events could negatively impact our research and development
activities and our revenues of any products which may have been commercialized
by that date.
7
<PAGE> 12
EFFECTING A CHANGE OF CONTROL OF DUSA WOULD BE DIFFICULT, WHICH MAY
DISCOURAGE OFFERS FOR SHARES OF OUR COMMON STOCK.
Our certificate of incorporation authorizes the board of directors to
issue up to 100,000,000 shares of stock, 40 million of which are common stock.
The board of directors has the authority to determine the price, rights,
preferences and privileges, including voting rights, of the remaining 60 million
shares without any further vote or action by the shareholders. The rights of the
holders of our common stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock that may be issued in the
future.
We also have a shareholder rights plan. The plan may have the effect of
delaying, deterring, or preventing changes in control or management of DUSA,
which may discourage potential acquirors who otherwise might wish to acquire
DUSA without the consent of the board of directors. Under the plan, if a person
or group acquires 15% or more of our common stock, all holders of rights (other
than the acquiring shareholder) may, upon payment of the purchase price then in
effect, purchase common stock having a value of twice the purchase price. In the
event that DUSA is involved in a merger or other similar transaction where it is
not the surviving corporation, all holders of rights (other than the acquiring
shareholder) shall be entitled, upon payment of the then in effect purchase
price, to purchase common stock of the surviving corporation having a value of
twice the purchase price. The rights will expire on September 26, 2007, unless
previously redeemed.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission in Washington,
D.C. You may read and copy any document we file at the SEC's public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, NW, Washington,
D.C., 20549. The SEC has prescribed rates for copying. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our SEC
filings are also available to the public at the SEC's website at
http://www.sec.gov.
Our reports and other information can also be inspected at the offices
of the National Association of Securities Dealers at 1735 K Street, NW,
Washington, DC 20006-1506.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus
information we file with the SEC in other documents. This means that we can
disclose important information to you by referring you to those documents. The
information incorporated may include documents filed after the date of this
prospectus which will update and supercede the information you read in this
prospectus. We incorporate by reference the documents listed below, except to
the extent information contained in those documents is different from the
information contained in this prospectus.
- Annual report on Form 10-K for the year ended December 31,
1998.
- Two current reports on Form 8-K, including the exhibits: one
dated January 7, 1999 which was, filed on January 11, 1999;
and the other dated January 14, 1999 which was filed January
14, 1999.
- The description of DUSA's common stock contained in its
registration statement on Form 8-A which was filed on January
3, 1992 and amended on October 24, 1997 and in DUSA's report
on Form 10-Q which was filed on November 12, 1997.
We also incorporate by reference all other documents which we file in
the future with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended, prior to the termination of this
offering.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
181 UNIVERSITY AVENUE, SUITE 1208
TORONTO, ONTARIO M5H 3M7 CANADA
ATTENTION: MS. SHARI LOVELL
(416) 363-5059
E-MAIL TO: [email protected]
8
<PAGE> 13
This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC. You should rely only on the information and representations
provided in this prospectus or on the information incorporated by reference in
this prospectus. Neither we nor the selling shareholders have authorized anyone
to provide you with different information. Neither we nor the selling
shareholders are making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other that the date on the front of this
document.
FORWARD-LOOKING STATEMENTS
We have made "forward-looking statements," in this prospectus and the
documents incorporated by reference as described in Section 27A of the
Securities Act of 1993 and in Section 21E of the Securities Exchange Act of
1934. Forward-looking statements are statements that include information based
upon beliefs of our management, as well as assumptions made by and information
available to our management. The words "believes," "expects," "anticipates,"
"intends" or similar terms are intended to identify forward-looking statements.
These forward-looking statements have been compiled by our management based upon
factors they consider reasonable. Such statements reflect our current views of
future events. These statements are subject to risks and uncertainties that
could cause actual results to differ materially from those anticipated in the
forward-looking statements. Many of these risks are discussed above under the
"Risk Factors" section of this prospectus and in the documents incorporated by
reference, including documents which may be filed in the future. We may not
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date of this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock by the selling shareholders. We will receive the exercise price for
the shares of common stock that underlie the warrants and/or underwriter's
options if those securities are converted with cash payments into shares by
their holders. Potential proceeds to DUSA if all holders of warrants or options
convert their securities into shares of common stock total $3,802,215.00, as
follows:
- $815,215.00 upon the conversion of 163,043 placement agent
warrants with an exercise price of $5.00 per share;
- $300,000.00 upon the conversion of a warrant for 50,000 shares
of common stock with an exercise price of $6.00 per share;
- $2,310,000.00 upon the conversion of 300,000 underwriter's
options with an exercise price of $7.70 per share;
- $297,000.00 upon the conversion of 37,500 underwriter's
options with an exercise price of $7.92 per share; and
- $80,000.00 upon the conversion of a warrant for 20,000 shares
of common stock with an exercise price of $4.00 per share.
Any proceeds that we may receive upon any exercise of warrants and/or
options will be used for working capital, primarily to advance research and
product development activities of its drug, Levulan(R), including conducting
pre-clinical studies and clinical trials. If sufficient funds are available,
DUSA may also use its resources to acquire by license, purchase or other
arrangements, businesses, technologies, or products that enhance or expand
DUSA's business such as other light-sensitive drugs or light devices.
SELLING SHAREHOLDERS
The following table sets forth the names of the selling shareholders,
the number of shares of common stock beneficially owned by each selling
shareholder as of February 23, 1999, the number of shares of common stock that
each may offer from time to time and the number of shares of common stock
beneficially owned by each selling shareholder upon completion of the offering,
assuming all of the shares offered are sold. The number of shares sold by each
selling shareholder may depend on a number of factors, including, among other
things, the market price of the common stock.
9
<PAGE> 14
The table is based upon information obtained from the selling shareholders and
upon information in our possession regarding the issuance and sale of securities
offered by this prospectus and the registration rights granted to the selling
shareholders. The selling shareholders listed in the table as numbers 1 through
30 acquired their shares in a private placement on January 15, 1999.
<TABLE>
<CAPTION>
Number of
DUSA Shares Shares that Maybe DUSA Shares
Beneficially Owned Number of Offered Upon Beneficially Owned
Prior to Offering Shares Conversion of After Offering
Name Shares Percent Offered Warrants/Options Shares Percent
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Amy Newmark ..................... 30,000 * 30,000 0 0 0
2. Robert L. Swisher, Jr ........... 100,000 * 100,000 0 0 0
3. Rainbow Trading
Venture Partners, L.P. ......... 20,000 * 20,000 0 0 0
4. David Kalatsky .................. 3,000 * 3,000 0 0 0
5. Jeff Kone and Cezanne Kone ...... 10,000 * 10,000 0 0 0
6. Larry Miller .................... 20,000 * 20,000 0 0 0
7. Balmore Funds S.A ............... 25,000 * 25,000 0 0 0
8. Austost Anstalt Schaan .......... 25,000 * 25,000 0 0 0
9. Ohr Somayach International ...... 8,000 * 8,000 0 0 0
10. Lighthouse Genesis
Partners USA, LP. ............. 15,000 * 15,000 0 0 0
11. Pharos Genesis Fund Limited ..... 135,000 1.22 135,000 0 0 0
12. Bulldog Capital Partners LP. .... 881,200 8.0 100,000 0 781,200 7.1
13. Jack Lief ....................... 5,000 * 5,000 0 0 0
14. Lisa Low ........................ 593,437(1) 5.21 141,000 0 452,437 3.97
15. Craddock Asset Management ....... 20,000 * 20,000 0 0 0
16. EDJ Limited ..................... 41,322 * 40,000 0 1,322 *
17. Matador Microcap Fund, LP ....... 475,000 4.31 25,000 0 450,000 4.09
18. Porter Partners, LP ............. 158,048 1.43 40,000 0 118,048 1.07
19. Special Situations .............. 180,000 1.63 180,000 0 23,600 *
21. Talkot Crossover Fund ........... 71,500 * 60,000 0 11,500 *
22. Valor Capital Management LP ..... 261,100 2.37 160,000 0 101,100 *
23. Prism Partners I ................ 115,100 1.04 10,800 0 104,300 *
24. Prism Partners II Offshore Fund . 32,800 * 32,800 0 0 0
25. Prism Partners Offshore Fund .... 16,400 * 16,400 0 0 0
26. JIBS Equities ................... 100,000 * 100,000 0 0 0
27. Michael G. Jesselson ............ 100,000 * 100,000 0 0 0
29. Mid Ocean Investments ........... 70,000 * 20,000 20,000 30,000 *
30. Yad Avraham Institute ........... 20,000 * 20,000 0 0 0
31. Derek L. Caldwell** ............. 60,905(2) * 21,174 14,731 25,000 *
32. John Gallagher** ................ 7,500 * 0 5,500 2,000 *
33. Alan Swerdloff** ................ 3,130 * 0 3,130 0 0
34. Nathan Low** .................... 593,437(3) 5.21 66,282 336,155 191,000 1.67
35. Dwight Miller** ................. 10,892 * 4,696 6,196 0 0
36. Paul Scharfer** ................. 116,248 1.04 28,174 88,074 0 0
37. Marc Seelenfreund** ............. 5,731 * 0 5,731 0 0
38. Richard B. Stone** .............. 44,531 * 8,627 35,904 0 0
39. Sunrise Financial Group ......... 50,000 * 0 50,000 0 0
40. Preston Tsao** .................. 6,622 * 0 6,622 0 0
</TABLE>
* Less than 1%
** Designee of Sunrise Securities Corp, a registered broker-dealer. Sunrise
Securities Corp. acted as underwriter in December, 1995, March 1996 and May 1996
and acted as placement agent in connection with a recent private placement under
Rule 506 of Regulation D. Sunrise Securities Corp. is affiliated with Sunrise
Financial Group, selling shareholder number 39.
10
<PAGE> 15
(1) Under Rule 13d-3 of the Securities and Exchange Act of 1934, as amended,
Lisa Low may be deemed to be the beneficial owner of 141,000 shares held in
three (3) custodial accounts and an additional 452,437 securities which may be
deemed to be beneficially owned by her spouse, Nathan Low. (See footnote 3,
below).
(2) Under Rule 13d-3 of the Securities and Exchange Act of 1934, as amended,
Derek Caldwell may be deemed to be the beneficial owner of 25,000 shares that
may be issued upon the exercise of a warrant held by Sunrise Financial Group.
(See footnote 3, below).
(3) Under Rule 13d-3 of the Securities and Exchange Act of 1934, as amended,
Nathan Low may be deemed to be the beneficial owner of 141,000 shares that are
held by Lisa Low as custodian for three (3) children and 50,000 shares that may
be issued upon the exercise of a warrant held by Sunrise Financial Group. Mr.
Low disclaims the beneficial ownership of:
- 141,000 shares held by Lisa Low as custodian;
- 25,000 of the shares underlying the Sunrise Financial Group
warrant which have been committed to Mr. Derek Caldwell; and
- 1,000 shares that may be issued upon the exercise of
underwriter's options which options are currently in Mr. Low's
name and are committed to other employees of Sunrise Financial
Group and Sunrise Securities Corp.
We are registering 1,630,435 shares of common stock for resale by the
selling shareholders in accordance with registration rights granted to the
selling shareholders. We have agreed to file with the SEC, under the Securities
Act of 1933, as amended, a registration statement of which this prospectus forms
a part for the resale of:
- 1,500,000 shares which were issued to them in a private
placement completed on January 15, 1999 under Rule 506 of
Regulation D and are being registered as we agreed in the
subscription agreement; and
- 130,435 shares which were issued to the placement agent or its
designees as commissions and non-accountable expense allowance
for services they rendered to us as part of the private
placement and are being registered as we agreed in our
commitment letter, dated December 17, 1998, as amended January
8, 1999.
The remaining 570,543 shares of common stock being registered may be
issued upon the exercise of warrants and/or underwriter's options as follows:
- 163,043 of the shares may be issued upon the exercise of
placement agent warrants issued as additional compensation to
the placement agent and its designees in connection with the
Regulation D private placement and are being registered in
accordance with registration rights contained in the warrants.
- 300,000 of the shares may be issued upon the exercise of
underwriter's options issued in connection with an
underwriting agreement dated December 11, 1995 and being
registered pursuant to registration rights set forth in the
option to purchase shares.
- 50,000 of the shares may be issued upon the exercise of a
warrant issued in connection with an investor relations
retainer agreement dated October 14, 1993 and are being
registered in accordance with registration rights set forth in
the agreement.
- 37,500 of the shares may be issued upon the exercise of
underwriter's options issued in connection with an
underwriting agreement dated April 15, 1996 and are being
registered in accordance with registration rights set forth in
the option to purchase shares.
- 20,000 of the shares may be issued upon the exercise of a
warrant issued in connection with an investor relations
services agreement dated May 1, 1995 and are being registered
in accordance with registration rights set forth in the
agreement.
PLAN OF DISTRIBUTION
The selling shareholders are offering shares of common stock which they
acquired from us in a private placement or which are issuable to them upon
conversion of options or warrants that we issued to them. The shares may be sold
from time to time in public transactions, on or off The NASDAQ National Market,
or in private transactions, at prevailing market prices or at privately
negotiated prices or through a combination of such methods of sale, at fixed
prices which may be changed, at prices related to
11
<PAGE> 16
prevailing market prices or at negotiated prices. In addition, any shares of the
common stock maybe sold according to Rule 144 rather than as part of this
prospectus.
The shares may be sold directly by the selling shareholders or through
underwriters , broker-dealers or agents. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling shareholders and/or the purchaser of the shares for whom such
broker-dealer may act as agent, or to whom they sell as principals, or both
(which compensation might be in excess of commission that brokers usually
receive). In addition, the selling shareholders may enter into hedging
transactions with broker-dealers who may engage in short sales of common stock
in the course of hedging the positions they assume with a selling shareholder.
There can be no assurance that all or any of the common stock offered by this
prospectus will be issued to, or sold by, the selling shareholders. The selling
shareholders and any brokers, dealers or agents, who sell any of the common
stock offered by this prospectus, may be deemed "underwriters" as that term is
defined under the Securities Act or the Exchange Act, or the rules and
regulations which pertain to these laws. Any commissions which these persons or
firms receive and any profits on the resale of the shares purchased by them may
be deemed to be underwriting commissions or discounts under such acts. As of the
date of this prospectus, the selling shareholders have advised us that there are
no special selling arrangements between any broker-dealer or other person and
any of the selling shareholders.
Under the Securities Exchange Act of 1934, any person taking part in
the distribution of the shares may not simultaneously engage in market-making
activities with respect to the common stock for five business days prior to the
start of the distribution. In addition, each selling shareholder and any other
person taking part in the distribution will be subject to the Exchange Act which
may limit the timing of purchases and sales of common stock by them. These rules
may affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
At the time a particular offer of shares is made, a supplemental
prospectus will be distributed, if required, which will set forth the number of
shares being offered and the terms of the offering, including the name or names
of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the shares purchased from the selling shareholders, any
discounts, commissions or other items constituting compensation from the selling
shareholders in any discount, commission or concession allowed or reallowed or
paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and complied with.
The selling shareholders may be entitled under agreements entered into
with us to indemnification from us against liabilities under the Securities Act.
SECURITIES TO BE OFFERED
A total of 1,630,435 of the 2,200,978 securities being offered in this
prospectus are shares of common stock, no par value. 1,500,000 of these shares
are being offered by the participants of a private placement under Rule 506 of
Regulation D and 130,435 of these shares are being offered by the placement
agent, and/or its designees, which shares were issued as commissions and
non-accountable expense allowance in connection with the private placement.
The remaining 570,543 securities being offered in this prospectus are
offered pursuant to warrants and/or options to purchase shares of common stock
as follows:
- 163,043 of the securities are offered pursuant to placement
agent warrants which were issued and remain outstanding in
connection with a private placement transaction that closed on
January 15, 1999. The placement agent warrants can be
exercised for a period of five (5) years, until 5:00 p.m. New
York time on January 14, 2004 at an exercise price of $5.00
per share. The placement agent warrants contain no provisions
regarding changes or adjustments in the exercise price, but do
contain provisions for the issuance of an additional number of
shares in the event of a stock split, stock dividend or
similar transaction involving the underlying common stock.
- 50,000 of the securities are offered pursuant to a warrant
which was issued and remains outstanding in connection with an
investor relations agreement. The warrant had an original
expiration date of October 14, 1998 which was extended for
three (3) years until 5:00 p.m. New York time on October 14,
2001. The exercise price of the warrant
12
<PAGE> 17
is $6.00 per share. The warrant contains no provisions
regarding changes or adjustments in the exercise price but
does contain provisions for the issuance of an additional
number of shares in the event of a stock split, stock dividend
or similar transaction involving the underlying common stock.
- 300,000 of the securities are offered pursuant to
underwriter's options which were issued and remain outstanding
in connection with an underwriting agreement dated December
11, 1995. The underwriter's options have a five (5) year term
and can be exercised until 5:00 p.m. New York time on December
7, 2000 at an exercise price of $7.70 per share. These
underwriter's options contain no provisions regarding changes
or adjustments in the exercise price, but do contain
provisions for the issuance of an additional number of shares
in the event of a stock split, stock dividend or similar
transaction involving the underlying common stock.
- 37,500 of the securities are offered pursuant to underwriter's
options which were issued and remain outstanding in connection
with an underwriting agreement dated April 15, 1996. These
underwriter's options have a five (5) year term and can be
exercised until 5:00 p.m. New York time on April 14, 2001 at
an exercise price of $7.92 per share. These underwriter's
options contain no provisions regarding changes or adjustments
in the exercise price, but do contain provisions for the
issuance of an additional number of shares in the event of a
stock split, stock dividend or similar transaction involving
the underlying common stock.
- 20,000 of the securities are offered pursuant to a warrant
which was issued and remains outstanding in connection with an
investor relations services agreement. The warrant expires at
5:00 p.m. New York time on March 21, 2000. The exercise price
of the warrant is $4.00 per share. The warrant contains no
provisions regarding changes or adjustments in the exercise
price but does contain provisions for the issuance of an
additional number of shares in the event of a stock split,
stock dividend or similar transaction involving the underlying
common stock.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by
Lane and Mantell, a professional corporation, Somerville, New Jersey. As of
April 15, 1999, shareholders and associates of Lane and Mantell beneficially
own, directly or indirectly, less than 1% of the common stock of DUSA.
EXPERTS
The financial statements and related financial statement schedules
incorporated in this prospectus by reference from DUSA's annual report on Form
10-K for the year ended December 31, 1998 have been audited by Deloitte &
Touche, LLP independent auditors, as stated in their report (which contains an
emphasis paragraph indicating that DUSA is in the development stage), which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers or persons
controlling DUSA pursuant to the foregoing provisions, DUSA has been informed
that in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable.
13
<PAGE> 18
UNTIL ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES
WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A
PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
DUSA
PHARMACEUTICALS, INC.
2,200,978 Shares of Common Stock
14
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the expenses in connection with the offering
described in the registration statement, all of which will be borne by DUSA.
<TABLE>
<S> <C>
SEC Registration Fee*** $ 3,891.50
NASD Filing Fee** 17,500.00
Printing and Engraving* 5,000.00
Accounting Fees and Expenses* 50,000.00
Legal Fees and Expenses* 40,000.00
Miscellaneous Expenses* 1,500.00
------------
TOTAL $ 117,891.50
============
</TABLE>
*Estimated.
**Previously paid.
***Of which 3,847.71 was previously paid.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 5 of the Company's Certificate of Incorporation, as amended,
and New Jersey Business Corporation Act, N.J.S.A. 14A:2-7 provide as follows:
Any director and officer of the Corporation shall not be personally
liable to the Corporation or its shareholders for damages for breach of
any duty owed to the Corporation or its shareholders, except that this
provision shall not relieve a director or officer from liability for
any breach of duty based upon an act or omission (a) in breach of such
person's duty of loyalty to the Corporation or its shareholders; (b)
not in good faith or involving a knowing violation of law; or (c)
resulting in receipt by such person of an improper personal benefit.
The Company's By-laws, as amended, pursuant to the New Jersey Business
Corporation Act, N.J.S.A. 14A:3-5, provide as follows:
ARTICLE IV
INDEMNIFICATION
Section 1. Actions by Others. The Corporation (1) shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer or trustee of the Corporation or of any constituent corporation absorbed
by the Corporation in a consolidation or merger and (2) except as otherwise
required by Section 3 of this Article, may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he (a) is or was an employee or agent or the legal
representative of a director, officer, trustee, employee or agent of the
Corporation or of any absorbed constituent corporation, or (b) is or was serving
at the request of the Corporation or of any absorbed constituent corporation as
a director, officer, employee, agent of or participant in another corporation,
partnership, joint venture, trust or other enterprise, or the legal
representative of such a person against expenses, costs, disbursements
(including attorneys' fees), judgments, fines and amounts actually and
reasonably incurred by him in good faith and in connection with such action,
suit or proceeding if he acted in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, he had no reasonable cause to believe that his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a pleas of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not meet the applicable standard of conduct.
II-1
<PAGE> 20
Section 2. Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, trustee, employee or agent of the
Corporation or of any constituent corporation absorbed by the Corporation by
consolidation or merger, or the legal representative of any such person, or is
or was serving at the request of the Corporation or of any absorbed constituent
corporation, as a director, officer, trustee, employee, agent of or participant,
or the legal representative of any such person in another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the New Jersey Superior Court or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the New
Jersey Superior Court or such other court shall deem proper.
Section 3. Successful Defense. To the extent that a person who is or
was a director, officer, trustee, employee or agent of the Corporation or of any
constituent corporation absorbed by the Corporation by consolidation or merger,
or the legal representative of any such person, has been successful on the
merits or otherwise in defense of any action, suit proceeding referred to in
Section 1 or Section 2 of this Article, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
Section 4. Specific Authorization. Any indemnification under Section 1
or Section 2 of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, trustee, employee, agent, or the legal
representative thereof, is proper in the circumstances because he has met the
applicable standard of conduct set forth in said Sections 1 and 2. Such
determination shall be made (1) by the Board of Directors by a majority vote of
quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, a quorum of disinterested
directors so directs, by independent legal counsel for a written opinion, (3) by
the shareholders.
Section 5. Advance of Expenses. Expenses incurred by any person who may
have a right of indemnification under this Article in defending civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final distribution of such action, suit or proceeding as authorized by the
board of directors upon receipt of an undertaking by or on behalf of the
director, officer, trustee, employee, or the legal representative thereof, to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the Corporation pursuant to this Article.
Section 6. Right of Indemnity not Exclusive. The indemnification and
advancement of expenses provided by this Article shall not exclude any other
rights to which those seeking indemnification may be entitled under the
certificate of incorporation of the Corporation or any By-Law agreement, vote of
shareholders or otherwise; provided that no indemnification shall be made to or
on behalf of a Director, officer, trustee, employee, agent, or legal
representative if a judgment or other final adjudication adverse to such persons
establishes that his acts or omissions (a) were in breach of his duty of loyalty
to the corporation or its shareholders, (b) were not in good faith or involved a
knowing violation of law or (c) resulted in receipt by such person of an
improper personal benefit.
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, trustee,
employee or agent of the Corporation or of any constituent corporation absorbed
by the Corporation by consolidation or merger of the legal representative of
such person or is or was serving at the request of the Corporation or of any
absorbed constituent corporation as a director, officer, trustee, employee or
agent of or participant in another corporation, partnership, joint venture,
trust or other enterprise, or the legal representative of any such person
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such or by reason of his being or having
been such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article, the New Jersey
Business Corporation Act, or otherwise.
Section 8. Invalidity of any Provision of this Article. The invalidity
or unenforceability of any provision of this Article shall not affect the
validity or enforceability of the remaining provisions of this Article.
II-2
<PAGE> 21
Item 16. EXHIBITS
(a) Exhibits:
<TABLE>
<S> <C>
(1) None
(2) None
(3) Inapplicable
(4) Instruments defining the rights of security holders,
including indentures
(4.1) Common Stock specimen, filed as Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997 filed November
12, 1997, and is incorporated herein by reference.
(4.2) Form of Placement Agent Warrant, dated January 15, 1999*
(4.3) Form of Underwriter's Option, dated December 21, 1995*
(4.4) Form of Underwriter's Option, dated May 1, 1996*
(4.5) Sunrise Financial Corp. Warrant, dated October 14, 1993*
(4.6) Extension of Warrant Certificate for Purchase of Common
Stock, dated July 30, 1998*
(4.7) Mid-Ocean Investments Ltd. Warrant, dated as of
March 22, 1995
(5) Opinion re: legality
(5.1) Opinion of Lane and Mantell, a professional
corporation
(6) Inapplicable
(7) Inapplicable
(8) None
(9) Inapplicable
(10) Inapplicable
(11) Inapplicable
(12) None
(13) Inapplicable
(14) Inapplicable
(15) None
(16) Inapplicable
(17) Inapplicable
(18) Inapplicable
(19) Inapplicable
(20) Inapplicable
(21) Inapplicable
(22) Inapplicable
(23) Consents of experts and counsel
(23.1) Consent of Deloitte & Touche LLP
(23.2) Consent of Lane and Mantell, a professional corporation*
(24) Powers of Attorney
(24.1) Power of Attorney appointing D. Geoffrey Shulman, MD,
FRCPC on original signature page*
(25) None
(26) None
(27) None
(28) None
(99.1) Form of Subscription Agreement*
(99.2) Underwriting Agreement, dated December 11, 1995, filed as
Exhibit 1.1 to Registrant's Registration Statement on Form
S-2, No. 33-98030, and is incorporated herein by reference.
(99.3) Underwriting Agreement, dated February 28, 1996, filed as
Exhibit 1.1 to Registrant's Registration Statement on Form
S-3, No. 33-31362, and is incorporated herein by reference.
(99.4) Underwriting Agreement, dated April 15, 1996, filed as Exhibit
1.1 to Registrant's Registration Statement on Form S-2, No.
33-32376, and is incorporated herein by reference.
(99.5) Investor Relations Retainer Agreement, dated October 14, 1993*
(99.6) Investor Relations Services Agreement dated May 1, 1995
</TABLE>
* Previously filed.
II-3
<PAGE> 22
Item 17. UNDERTAKINGS
(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:
(i) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering 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.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
section 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 the initial bona fide offering thereof.
II-4
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to the registration statement on Form
S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Toronto, Province of Ontario, Canada, on April 19, 1999.
DUSA Pharmaceuticals, Inc.
--------------------------------------
(Registrant)
By: /s/ D. Geoffrey Shulman
----------------------------------
D. Geoffrey Shulman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
/s/ D. Geoffrey Shulman Director, Chairman of the April 19, 1999
- ---------------------------------- Board, President, Chief --------------
D. Geoffrey Shulman, MD, FRCPC Executive Officer and Chief Date
Financial Officer
/s/ Ronald L. Carroll* Executive Vice President, April 19, 1999
- ---------------------------------- Chief Operating Officer --------------
Ronald L. Carroll Date
/s/ Stuart L. Marcus* Senior Vice President April 19, 1999
- ---------------------------------- Scientific Affairs --------------
Stuart L. Marcus, MD, PhD Date
/s/ Nanette W. Mantell* Secretary April 19, 1999
- ---------------------------------- --------------
Nanette W. Mantell, Esq. Date
/s/ John H. Abeles* Director April 19, 1999
- ---------------------------------- --------------
John H. Abeles, MD Date
/s/ James P. Doherty* Director April 19, 1999
- ---------------------------------- --------------
James P. Doherty, BSc Date
/s/ Jay M. Haft* Director April 19, 1999
- ---------------------------------- --------------
Jay M. Haft, Esq. Date
/s/ Richard C. Lufkin* Director April 19, 1999
- ---------------------------------- --------------
Richard C. Lufkin Date
</TABLE>
*By /s/ D. Geoffrey Shulman
- ----------------------------------
D. Geoffrey Shulman, Attorney-in-Fact
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<S> <C>
(1) None
(2) None
(3) Inapplicable
(4) Instruments defining the rights of security holders,
including indentures
(4.1) Common Stock specimen, filed as Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997 filed November
12, 1997, and is incorporated herein by reference.
(4.2) Form of Placement Agent Warrant, dated January 15, 1999*
(4.3) Form of Underwriter's Option, dated December 21, 1995*
(4.4) Form of Underwriter's Option, dated May 1, 1996*
(4.5) Sunrise Financial Corp. Warrant, dated October 14, 1993*
(4.6) Extension of Warrant Certificate for Purchase of Common
Stock, dated July 30, 1998*
(4.7) Mid-Ocean Investments Ltd. Warrant, dated as of March
22, 1995
(5) Opinion re: legality
(5.1) Opinion of Lane and Mantell, a professional
corporation
(6) Inapplicable
(7) Inapplicable
(8) None
(9) Inapplicable
(10) Inapplicable
(11) Inapplicable
(12) None
(13) Inapplicable
(14) Inapplicable
(15) None
(16) Inapplicable
(17) Inapplicable
(18) Inapplicable
(19) Inapplicable
(20) Inapplicable
(21) Inapplicable
(22) Inapplicable
(23) Consents of experts and counsel
(23.1) Consent of Deloitte & Touche LLP
(23.2) Consent of Lane and Mantell, a professional
corporation*
(24) Powers of Attorney
(24.1) Power of Attorney appointing D. Geoffrey Shulman, MD,
FRCPC on original signature page*
(25) None
(26) None
(27) None
(28) None
(99.1) Form of Subscription Agreement*
(99.2) Underwriting Agreement, dated December 11, 1995, filed as
Exhibit 1.1 to Registrant's Registration Statement on Form
S-2, No. 33-98030, and is incorporated herein by reference.
(99.3) Underwriting Agreement, dated February 28, 1996, filed as
Exhibit 1.1 to Registrant's Registration Statement on Form
S-3, No. 33-31362, and is incorporated herein by reference.
(99.4) Underwriting Agreement, dated April 15, 1996, filed as Exhibit
1.1 to Registrant's Registration Statement on Form S-2, No.
33-32376, and is incorporated herein by reference.
(99.5) Investor Relations Retainer Agreement, dated October 14, 1993*
(99.6) Investor Relations Services Agreement dated May 1, 1995
</TABLE>
* Previously filed.
<PAGE> 1
EXHIBIT 4.7
DUSA PHARMACEUTICALS, INC.
A NEW JERSEY CORPORATION
WARRANT CERTIFICATE
FOR PURCHASE OF COMMON STOCK
THIS CERTIFIES THAT,
MID OCEAN INVESTMENTS LTD.
(the "Registered Holder") is the owner of a Warrant (the "Mid Ocean Warrant").
The Mid Ocean Warrant entitles the Registered Holder to purchase, subject to the
terms and conditions set forth in this certificate and the Investor Relations
Services Agreement (as hereinafter defined), up to 20,000 fully paid and
non-assessable shares of Common Stock, no par value (the "Shares"), of DUSA
Pharmaceuticals, Inc., a New Jersey corporation (the "Company"), at any time
prior to the Expiration Date (as hereinafter defined) upon the presentation and
surrender of the Warrant Certificate with the Subscription Form attached hereto,
duly executed, accompanied by payment of U.S. $4.00 per Share if the Mid Ocean
Warrant is exercised on or before 5:00 p.m. (New York time) March 21, 2000, (the
"Purchase Price") in lawful money of the United States of America in cash or by
official bank or certified check made payable to the Company.
The Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of the Mid Ocean Warrant represented hereby are
subject to modification or adjustment in connection with any stock split,
subdivision, business combination or the like.
The Mid Ocean Warrant represented hereby is exercisable at the option
of the Registered Holder, but no fractional shares of Common Stock will be
issued in the case of the exercise of less than the Mid Ocean Warrant
represented hereby. The Company shall cancel this Warrant Certificate upon the
surrender hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificate of like tenor for the balance of such Warrant.
The Registered Holder understands that it is subject to certain
restrictions on transfer under the Securities Act of 1933 of the United States,
as amended, (the "1933 Act") of the Shares issued pursuant to any exercise of
the Mid Ocean Warrant; such restrictions provide that the Shares may not be sold
without registration or exemption from registration under the 1933 Act; and, for
purposes of the Securities Act (Ontario) (the "Ontario Act"), such Shares may
not be sold in Ontario or Canada without an exemption from prospectus and
registration requirements. The Mid Ocean Warrant and the Shares underlying the
Mid Ocean Warrant are exempt from registration under the 1933 Act pursuant to
Regulation S and may not be resold in the United States or Canada without
registration or exemption from registration provided by the 1933
<PAGE> 2
Act. The Shares issued upon exercise of any and all of the Mid
Ocean Warrant shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR AN OPINION OF THE COMPANY'S
COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT".
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on
March 21, 2000, or such earlier date as the Mid Ocean Warrants shall expire. If
such date shall in the State of New York be a holiday or a day on which the
banks are authorized to close, then the Expiration Date shall mean 5:00 p.m.
(New York time) the next following day which, in the State of New York, is not a
holiday or a day on which the banks are authorized to close. The Company may at
its election extend the expiration date. This Warrant shall not be exercisable
by the Registered Holder in any state where such exercise would be unlawful.
Prior to the exercise of the Mid Ocean Warrant represented hereby, the
Registered Holder shall not be entitled to any rights as a shareholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions and shall not be entitled to receive any notice
of any proceedings of the Company.
Prior to due presentment for registration or transfer, pursuant to the
Investor Relations Services Agreement, the Company may deem and treat the
Registered Holder as the absolute owner hereof and of the warrant represented
hereby, (notwithstanding any notations of ownership or writing thereon made by
anyone other than a duly authorized officer of the Company) for all purposes and
shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed.
DUSA Pharmaceuticals, Inc.
By: /s/ D. Geoffrey Shulman
------------------------
D. Geoffrey Shulman, MD FRCPC
President and CEO
<PAGE> 3
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrant
The undersigned Registered Holder hereby irrevocably elects to exercise
the Warrant represented by this Warrant Certificate and to purchase the
securities issuable upon the exercise of such Warrant, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
and be delivered to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
and if such number shall not be all shares to which this Warrant relates, as
evidenced by this Warrant Certificate, then a new Warrant Certificate for the
issuance of such remaining shares shall be registered in the name of, and
delivered to, the Registered Holder at the address stated below.
Dated: X
--------------------- ------------------------------------
-------------------------------------
-------------------------------------
Address
-------------------------------------
Taxpayer Identification Number
-------------------------------------
Signature Guaranteed
-------------------------------------
<PAGE> 4
ASSIGNMENT
To Be Executed by the Registered Holder
in order to Assign Warrant
FOR VALUE RECEIVED, hereby
-----------------------------------
sells, assigns, and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(please print or type name and address)
of the Mid Ocean Warrant represented by this
- ------------------------------
Warrant Certificate, and hereby irrevocably constitutes and appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.
Dated: X
--------------------- ------------------------------------
Signature Guaranteed
-------------------------------------
THE SIGNATURE TO THIS ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACT OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE,
MIDWEST STOCK EXCHANGE, OR THE TORONTO STOCK EXCHANGE.
<PAGE> 1
EXHIBIT 5.1
LANE AND MANTELL
a professional corporation
ATTORNEYS AT LAW
991 Route 22 West, Post Office Box 8539, Suite 102
Somerville, New Jersey 08876
Nanette Weitman Mantell Telephone (908) 253-9333
Steven R. Lane Facsimile (908) 253-9339
Rosemary Farr Howard Freeman
Of Counsel
April 19, 1999
DUSA Pharmaceuticals, Inc.
181 University Avenue, Suite 1208
Toronto, Ontario M5H 3M7
CANADA
Re: DUSA Pharmaceuticals, Inc. (the "Company")
Registration No. 333-73039
Registration Statement - Form S-3
Gentlemen:
We have examined the Company's Registration Statement No. 333-73039 on
Form S-3 as filed on February 26, 1999 and Amendment No. 1 thereto, in
connection with the registration under the Securities Act of 1933, as amended,
of up to 2,200,978 shares of common stock, without par value ("Common Stock").
We have also reviewed (i) the Certificate of Incorporation of the
Company and all amendments to the Certificate of Incorporation filed by the
Company in the Office of the Secretary of State of the State of New Jersey, (ii)
the By-laws of the Company, (iii) the form of subscription or other agreement
between the Company and the selling shareholders, respectively, with respect to
Common Stock being offered pursuant to the Registration Statement and (iv) such
records of corporate proceedings and other documents as we have deemed necessary
in order to enable us to express the opinion set forth below. In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity with the
original of all documents submitted to us as copies thereof. 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. Our opinion set forth below is limited to the Business Corporation Law
of the State of New Jersey.
<PAGE> 2
DUSA Pharmaceuticals, Inc.
April 19, 1999
Page 2
Based on the foregoing examination, it is our opinion that
A. the 1,500,000 shares of Common Stock when originally issued and sold
by the Company to the purchasers in the private placement transaction on January
15, 1999 pursuant to Regulation D of the Securities Act of 1933, were validly
issued and outstanding, fully paid and non-assessable and remain validly issued
and outstanding, fully paid and non-assessable;
B. the 130,435 shares of Common Stock when originally issued by the
Company to the placement agent, or its designees, as commissions and
non-accountable expense allowance for services related to the private placement
mentioned above, were validly issued and outstanding, fully paid and
non-assessable and remain validly issued and outstanding, fully paid and
non-assessable;
C. the 163,043 shares of Common Stock underlying the placement agent
warrants, the 50,000 shares of Common Stock underlying the warrant issued to
Sunrise Financial Group, and the 20,000 shares of Common Stock underlying the
warrant issued to Mid-Ocean Investments Ltd., respectively, if duly converted in
accordance with the terms and conditions of such warrants against payment to the
Company, will be validly issued and outstanding, fully paid and non-assessable;
and
D. the 337,500 shares of Common Stock underlying the underwriter's
options issued pursuant to underwriter's agreements dated December 11, 1995 and
April 15, 1996, respectively, if duly converted in accordance with the terms and
conditions of such options against payment to the Company, will be validly
issued and outstanding, fully paid and non-assessable.
Very truly yours,
LANE AND MANTELL
a professional corporation
/s/Nanette W. Mantell
By: Nanette W. Mantell
NWM:rdl
<PAGE> 1
EXHIBIT 23.1
DELOITTE & TOUCHE LLP
BCE PLACE
181 BAY STREET
SUITE 1400
TORONTO, ONTARIO M5J 2V1
CANADA
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement 333-73039 of Dusa Pharmaceuticals, Inc. on Form S-3 of
our report dated February 4, 1999 (which expresses an unqualified opinion and
includes an emphasis paragraph indicating that the Company is in the development
stage), appearing in the Annual Report on Form 10-K of Dusa Pharmaceuticals,
Inc. for the year ended December 31, 1998 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/Deloitte & Touche LLP
Chartered Accountants
Toronto, Ontario
April 16, 1999
<PAGE> 1
EXHIBIT 99.6
May 1, 1995
VIA FEDERAL EXPRESS
Mr. Tor Boswick
Mid Ocean Investments Ltd.
73 Front Street - 4th Floor
Hamilton
BERMUDA
Re: DUSA Pharmaceuticals, Inc.
Investor Relations Services Agreement
-------------------------------------
Dear Tor:
As we discussed, DUSA Pharmaceuticals, Inc. (the "Company") wishes to
memorialize the terms of the Investor Relations Services Agreement with Mid
Ocean Investments Ltd. ("Mid Ocean") for international investor relations and
corporate business advice.
Services
The services Mid Ocean will provide include the following: performance
of international investor relations and corporate communications projects as are
mutually agreed upon; planning meetings with international institutional
investors; updating international institutional investors regularly on new
developments concerning the Company; seeking additional international investors
for Company securities; handling international media relations; and providing
corporate business advice. Mid Ocean shall provide a quarterly report to the
Company outlining its progress and plans for the succeeding quarter.
As compensation for Mid Ocean's services, the Company will pay Mid
Ocean the following fees:
1. A per diem consulting fee of U.S. $1,000.00 payable quarterly
within thirty (30) days of invoice for services rendered;
provided that services for fees in excess of U.S. $15,000.00
in any quarter shall be subject to prior written request by
the Company; and
<PAGE> 2
Mr. Tor Boswick
Mid Ocean Investments Ltd.
May 1, 1995
Page 2 Re: DUSA Pharmaceuticals, Inc.
2. The Company will issue to Mid Ocean a warrant to purchase up
to 20,000 shares of the authorized stock of the Company at
U.S. $4.00 per share (the "Warrant"). The Warrant shall vest
immediately and is non-cancelable. The Warrant shall be
exercisable for five (5) years from March 22, 1995, the date
of the grant.
Warrant
The number of shares and exercise price per share subject to the
warrant shall be adjusted in the case of any dividend, stock split or other
recapitalization or reorganization so that the Warrant shall not be diminished
or diluted. The Warrant is non-assignable.
Mid Ocean understands that neither the Warrant nor the underlying
shares of common stock are qualified for sale in Ontario or Canada or registered
in the United States or any of the states thereof. Mid Ocean undertakes not to
offer or sell such securities directly or indirectly in Ontario or Canada or
anywhere in the United States without registration under the Securities Act of
1933, as amended, or exemption from such registration.
Mid Ocean understands that the Company does not have an obligation to
register the common stock underlying the Warrant. Such Warrant is exempted from
registration under the Securities Act of 1933, as amended (the "Act"), pursuant
to Regulation S, and may not be resold in the United States or Canada without
registration or exemption from registration provided by the Act.
Expense Reimbursement
In addition to the fees payable hereunder, the Company shall reimburse
Mid Ocean upon request from time to time, for all reasonable out-of-pocket
expenses incurred by Mid Ocean (including but not limited to printing and
graphic design, travel, postage, copying, secretarial, legal, and phone
expenses) in connection with Mid Ocean's services pursuant to this agreement.
Individual out-of-pocket expenses will not exceed U.S. $250.00 without the
consent of the Company.
<PAGE> 3
Mr. Tor Boswick
Mid Ocean Investments Ltd.
May 1, 1995
Page 3 Re: DUSA Pharmaceuticals, Inc.
Term
This agreement shall be for a term of one (1) year. Thereafter, either
party may terminate this agreement at any time upon thirty (30) days' prior
written notice, without liability or continuing obligation to the other party,
except that termination shall not affect the reimbursement and indemnification
provisions contained in this agreement.
Confidentiality
Each of the Company and Mid Ocean possesses confidential information
with respect to its business and affairs which it has acquired through the
expenditure of time and money. Each of the Company and Mid Ocean shall use all
reasonable efforts to protect the confidential information of the other and keep
such information confidential, using a standard of care that the Company or Mid
Ocean, as the case may be, would reasonable expect to employ for its own similar
confidential information.
Indemnification
Each party agrees it will indemnify and hold harmless the other party,
its officers, directors, employees, agents and controlling persons from and
against any and all losses, claims, damages, liabilities and expenses, joint or
several (including all reasonable fees and expenses of counsel) arising out of
this agreement. However, neither party will be liable under this paragraph to
the other party to the extent that any loss, claim, damage, liability or expense
is found in a final judgment by a court of competent jurisdiction to have
resulted from the other party's gross negligence or willful misconduct, or
violation of United States laws. Each party agrees to notify the other promptly
of the assertion against it or any other person of any claim or the commencement
of any action or proceeding relating to any matter which involves such party.
Miscellaneous
The benefits of this agreement shall inure to the respective successors
and assigns of the parties, and the obligations and liabilities assumed in this
agreement by the parties shall be binding upon their respective successors and
assigns.
<PAGE> 4
Mr. Tor Boswick
Mid Ocean Investments Ltd.
May 1, 1995
Page 4 Re: DUSA Pharmaceuticals, Inc.
The validity and interpretation of this agreement shall be governed by
the laws of the State of New Jersey as applied to agreements made and to be
fully performed therein.
Mid Ocean undertakes to refer any inquiries or requests with respect to
the Company from international residents or firms to the Company or as it may
direct.
Mid Ocean acknowledges and agrees that it is authorized to disclose
only to potential investors, information which is contained in press releases,
securities filings, and in the public domain.
If the foregoing correctly sets forth our agreement, please sign, date,
and return to us the enclosed copy of this letter, whereupon this letter shall
constitute a binding agreement between us.
Very truly yours,
DUSA Pharmaceuticals, Inc.
By: /s/ D. Geoffrey Shulman
------------------------------
Dr. D. Geoffrey Shulman
Chairman
Confirmed and agreed to this 18 day of July, 1995.
Mid Ocean Investments, Ltd.
By:
Tor Boswick
President
