<PAGE> 1
As filed with the Securities and Exchange Commission on August , 1996
Registration No. 33-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
MAGAININ PHARMACEUTICALS INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 2834 13-3445668
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification No.)
</TABLE>
5110 CAMPUS DRIVE
PLYMOUTH MEETING, PA 19462
(610) 941-4020
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
-------------------------
JAY MOORIN
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
MAGAININ PHARMACEUTICALS INC.
5110 CAMPUS DRIVE
PLYMOUTH MEETING, PA 19462
(610) 941-4020
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------
Copies of all communications to:
DAVID R. KING
MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE
PHILADELPHIA, PA 19103-6993
(215) 963-5371
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend 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. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Title of each class of Amount to be Proposed maximum offering Proposed maximum Amount of
securities to be registered registered price per share aggregate offering price registration fee
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<S> <C> <C> <C> <C>
Common Stock, 2,568,659 shares $7.50(1) $19,264,943(1) $6,644(2)
$.002 par value
===================================================================================================================================
</TABLE>
(1) Based on the average of the reported high and low sales of the Common
Stock reported on the Nasdaq National Market on August 6, 1996,
estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) The registration fee represents one-twenty-ninth of one percent of the
proposed maximum aggregate offering price.
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> 2
SUBJECT TO COMPLETION, DATED AUGUST 9, 1996
PROSPECTUS
2,568,659 SHARES
MAGAININ PHARMACEUTICALS INC.
COMMON STOCK
--------
The shares offered hereby consist of (i) 1,556,763 shares (the
"Original Shares") of common stock, $.002 par value per share ("Common Stock"),
of Magainin Pharmaceuticals Inc., a Delaware corporation ("Magainin" or the
"Company"), which are owned by the selling stockholders listed herein under
"Selling Stockholders" (collectively, the "Selling Stockholders") and (ii)
1,011,896 shares (the "Warrant Shares" and, together with the Original Shares,
the "Shares") of Common Stock which may be acquired from time to time by the
Selling Stockholders upon exercise of warrants issued by the Company (the
"Warrants"). The Original Shares may be offered from time to time by the
Selling Stockholders and the Warrant Shares may be offered from time to time by
the Selling Stockholders following exercise of their Warrants. All expenses of
registration incurred in connection herewith are being borne by the Company,
but all selling and other expenses incurred by a Selling Stockholder will be
borne by the Selling Stockholder. The Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders.
The Selling Stockholders have not advised the Company of any specific
plans for the distribution of the Shares covered by this Prospectus, but it is
anticipated that the Shares will be sold from time to time primarily in
transactions (which may include block transactions) on the Nasdaq National
Market of the Nasdaq Stock Market at the market price then prevailing, although
sales may also be made in negotiated transactions or otherwise. The Selling
Stockholders and the brokers and dealers through whom sale of the Shares may be
made may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and their commissions or
discounts and other compensation may be regarded as underwriters' compensation.
See "Plan of Distribution."
The Company's Common Stock is quoted on the Nasdaq National Market of
The Nasdaq Stock Market under the symbol "MAGN." On August 7, 1996, the last
reported closing price of the Common Stock was $8.75 per share.
--------
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" ON PAGES 4 TO 9 OF THIS PROSPECTUS.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August __, 1996
<PAGE> 3
AVAILABLE INFORMATION
This Prospectus, which constitutes a part of a Registration Statement
on Form S-3 (the "Registration Statement") filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Securities Act,
omits certain of the information set forth in the Registration Statement.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and the securities
offered hereby. Copies of the Registration Statement and the exhibits thereto
are on file at the offices of the Commission and may be obtained upon payment
of the prescribed fee or may be examined without charge at the public reference
facilities of the Commission described below.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by references to the copy of the applicable document filed with the
Commission.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information can
be inspected and copied at the public reference facility maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices located at Seven World Trade Center, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained in
person from the Public Reference Section of the Commission at its principal
office located at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Reports and proxy statements concerning the Company also may be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company
(File No. 0-19651) with the Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 1996.
(c) The description of the Company's Common Stock which is contained
in the Company's Registration Statement on Form 8-A filed under the Exchange
Act on November 7, 1991 and as amended on January 15, 1993, including any
amendment or reports filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of the filing of such reports and documents. Any statement
contained in a document, all or a portion of which is incorporated by reference
herein, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained or incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Upon request, the Company will provide without charge to each person
to whom this Prospectus is delivered a copy of any or all of such documents
which are incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
the documents that this Prospectus incorporates). Written or oral requests for
copies should be directed to Michael R. Dougherty, Executive Vice President and
Chief Financial Officer, Magainin Pharmaceuticals Inc., 5110 Campus Drive,
Plymouth Meeting, PA 19462, (610) 941-5228.
2
<PAGE> 4
THE COMPANY
Magainin Pharmaceuticals Inc. ("Magainin" or the "Company") is a
biopharmaceutical company engaged in the development of breakthrough medicines
for serious diseases. The Company isolates and develops compounds from the
host-defense systems of animals and uses molecular techniques such as gene
identification to understand the pathogenesis of disease. The Company's
development efforts are focused on anti-infectives, oncology and, pulmonary and
allergic disorders.
The Company's most advanced class of products under development are
"magainins," which are peptides that kill certain pathogens by selectively
perturbing the membrane of the cell. The most advanced magainin under
development by the Company is MSI-78, a topical anti-infective. In August 1994,
the Company initiated the first of two planned pivotal Phase III clinical
trials of MSI-78 for the treatment of infection in diabetic foot ulcers. The
study is designed as an equivalence trial with the goal of demonstrating that
topically applied MSI-78 is as effective as orally administered ofloxacin, a
quinolone antibiotic frequently used in the treatment of infection in diabetic
foot ulcers. An interim analysis of results of this trial was conducted in June
1995 by an independent data monitoring committee. The objective of this interim
analysis was successfully met in that there were no significant differences at
this interim time point in treatment efficacy between MSI-78 and ofloxacin.
Additionally, no serious adverse reactions attributable to MSI-78 have been
observed in this trial. In view of these results, this trial continued and a
second required pivotal trial in the same indication is now also being
conducted. Both trials compare topical MSI-78 at a 1% concentration to orally
administered ofloxacin. The Company expects to announce the results of these
trials later in 1996.
The Company is engaged in pre-clinical development of an inhalation
product for the treatment of pseudomonas infections in patients with cystic
fibrosis. Another magainin has demonstrated in vitro activity against clinical
isolates of pseudomonas from cystic fibrosis patients which were resistant to
currently available, and has also demonstrated binding to lipopolysaccharide,
which is thought to be adverse to lung function. The Company has begun to
explore the feasibility of a more convenient, dry powder inhalation formulation
for this product.
The Company is also conducting research on an aminosterol class of
compounds, discovered in the dogfish shark. Certain of these compounds have
demonstrated anti-angiogenic activity in vitro and in vivo. The Company is
evaluating one such compound, squalamine, in cancer and another such compound,
MSI-1436, in viral infections.
The Company's newest research efforts are in the understanding of the
pathogenesis of disease using molecular techniques. The Company's initial
disease focus in this area is asthma.
The Company currently has no marketable products, and it may be
several years, if ever, until marketable products are developed and approved.
In November 1993, the Company changed its fiscal year end to December
31.
Magainin was incorporated in Delaware in June 1987. The Company's
executive offices and research facility are located at 5110 Campus Drive,
Plymouth Meeting, PA 19462, and its telephone number is (610) 941-4020.
-------------------------
This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in forward-looking statements. Factors that might
such a difference include, but are not limited to, those discussed in "Risk
Factors."
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<PAGE> 5
RISK FACTORS
In addition to the other information in this Prospectus, prospective
investors should consider the following factors in evaluating the Company and
its business before purchasing any Shares offered hereby.
Status of MSI-78. Results obtained to date from clinical testing of
MSI-78 in the treatment of infection in diabetic foot ulcers are of an interim
nature only. For the purpose of the interim analysis conducted in June 1995,
treatment efficacy was defined as a clinical response of infection as measured
by cure or improvement on or about the tenth day of treatment for the cohort of
190 evaluable patients. Other factors will also be evaluated at the conclusion
of the trial, and there can be no assurance that topically applied MSI-78 will
ultimately be determined to be statistically equivalent to ofloxacin. Infection
in diabetic foot ulcers has historically been treated with systemically
administered antibiotics, such as orally-administered ofloxacin.
The Company has initiated a second required pivotal trial of MSI-78
for the treatment of infection in diabetic foot ulcers. There can be no
assurance that this trial will be successful. Success in both pivotal trials
will be required for the submission of MSI-78 for review and approval by the
FDA. Failure of MSI-78 to show efficacy in human clinical trials will have a
material adverse effect on the Company. The Company expects to announce the
results of these trials later in 1996.
MSI-78 was previously tested in a pivotal trial for the treatment of
impetigo, a skin infection which usually occurs in children. In this trial,
completed in early 1994, MSI-78 did not demonstrate a statistically significant
advantage over the placebo control vehicle. Clinical responses in the range of
80% were achieved by MSI-78, however, similar responses were observed in the
placebo control vehicle.
Development Stage Company; Accumulated Deficit; Continuing Losses. The
Company is in the development stage, has been engaged to date primarily in
research and development activities and, through June 30, 1996, had generated
no revenue from product sales. At June 30, 1996, the Company had an accumulated
deficit of approximately $77 million, and losses are continuing and are
expected to increase. The Company's operations are subject to numerous risks
associated with establishing a new business, including a competitive and
regulatory environment in an industry characterized by numerous
well-established and well-capitalized companies and by exhaustive and expensive
regulatory scrutiny. The Company will be required to conduct significant
research, development and testing activities which, together with projected
general and administrative expenses, are expected to result in continued and
increasing losses for the foreseeable future, particularly due to the extended
time period before the Company expects to commercialize any products.
Technological Uncertainty and Early Stage of Product Development.
There can be no assurance that the Company's research and development
activities will be successful, that any products under development will be
approved or commercially viable and successfully marketed or that the Company
will ever achieve significant levels of revenue or profits. In addition, the
Company may encounter unanticipated problems, including development,
regulatory, manufacturing and marketing difficulties, some of which may be
beyond the Company's ability to resolve.
There has been only limited research in the area of the use of
naturally occurring host-defense compounds for the treatment of infectious and
other diseases, and results obtained in research conducted to date are not
conclusive as to whether pharmaceutical compounds being investigated by the
Company will be safe or effective. While the Company has demonstrated certain
utility of its technology in model systems in the laboratory and in animals and
has identified a number of compounds for additional testing, the Company has
submitted an Investigational New Drug ("IND") application to the FDA, to obtain
authorization for human testing, for only one compound, MSI-78. The Company's
research activities in asthma have only recently been initiated, and there can
be no assurance that any product candidates will result from these efforts.
There can be no assurance that results obtained in preclinical studies will be
indicative of results that will be obtained in human clinical testing.
The Company's proposed products are in the developmental stage,
require significant further research, development, testing and regulatory
approvals and are subject to the risks of failure inherent in the development
of all
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pharmaceutical products. These risks include the possibilities that any or all
of the proposed products are found to be ineffective or toxic, or otherwise
fail to receive necessary regulatory approvals, that the proposed products,
although effective, are uneconomical to market, that third parties hold
proprietary rights that preclude the Company from marketing them, or that third
parties market superior or equivalent products. Due to the extended testing and
regulatory review process required before marketing clearance can be obtained,
the Company does not expect to be able to commercialize any drugs for several
years, if at all.
Need for Substantial Additional Funds. The Company will require
substantial additional funds to continue its research and development programs
and to commercialize any potential products. The Company may not have
sufficient funds to complete clinical studies or manufacturing scale-up on any
of its proposed products, including MSI-78. In addition, the Company may not
have sufficient funds to prepare a New Drug Application ("NDA") with the FDA
for any proposed products or to pay the user fees associated with filing NDAs.
The Company intends to seek additional funding through a combination of future
offerings of securities and collaborative arrangements with third parties and
regularly explores alternatives in this regard. The Company does not have any
commitments or arrangements to obtain any additional funds and has no
established banking arrangements through which it can obtain debt financing,
and there can be no assurance that required funds will be available to the
Company. Furthermore, to develop and commercialize its products, it will be
necessary to seek arrangements under which the Company conveys marketing,
distribution, manufacturing, development or other rights to its proposed
products to pharmaceutical companies in order to receive financial or other
assistance. This will result in lower consideration to the Company upon
commercialization than if no arrangements were entered into or if such
arrangements were entered into at later stages in the product development
process. There can be no assurance that the Company will be able to enter into
such additional ventures on favorable terms, if at all.
If the Company does not enter into appropriate collaborations, or is
not able to raise sufficient funds from the periodic sale of securities, the
Company will be required to delay or eliminate expenditures for certain of its
potential products, including MSI-78, or to license third parties to
commercialize potential products or technologies that the Company would
otherwise seek to develop itself, or to seek other arrangements.
Dependence on Third Parties; Manufacturing Uncertainties. The Company
does not have the resources, facilities or capabilities to manufacture any of
its proposed products. The Company has no current plans to establish a
manufacturing facility. The Company expects that it will be dependent to a
significant extent on contract manufacturers for commercial scale manufacturing
of its proposed products in accordance with regulatory standards. The Company's
dependence on third parties for manufacturing may adversely affect operating
results as well as the Company's ability to develop and deliver products on a
timely and competitive basis. There can be no assurance that the Company will
be able to enter into any arrangements for the manufacturing of any of its
proposed products, or that the costs of any such arrangements would be
acceptable to the Company.
The Company is currently dependent upon a single contract
manufacturer, Abbott Laboratories ("Abbott"), for the development of a chemical
process to manufacture MSI-78 on a commercial scale, and for the actual
production of bulk MSI-78. The Company has entered into an agreement with
Abbott which provides for cash payments by the Company aggregating
approximately $11,000,000, as well as the issuance by the Company to Abbott of
up to 500,000 shares of its Common Stock and the obligation to pay a royalty on
future sales of MSI-78. Under this Agreement, Abbott will continue scale-up
activities for MSI-78, and perform other activities necessary to submit a Drug
Master File to the FDA in support of any filing for marketing approval of
MSI-78. The Company and Abbott have agreed that, upon completion of such
activities, they will negotiate in good faith a supply agreement for the
Company's worldwide supply needs of MSI-78. In the event that this agreement is
not entered into or Abbott does not otherwise continue to manufacture MSI-78,
the Company's timeline to commercialize MSI-78 would be adversely affected.
Additionally, the Company would need to spend substantial funds on building a
manufacturing infrastructure or securing alternative contract manufacturing
arrangements, and for the licensing of applicable manufacturing related
technology from its current contract manufacturer. Any such facility would
require substantial funds, and the Company would be required to hire and retain
significant additional personnel and comply with extensive regulations
applicable to such a facility and such manufacturing operations.
5
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Production of peptides (such as magainins) is expensive relative to
production of traditional antibiotics. Peptides, such as magainins, can be
synthesized chemically or produced by recombinant expression systems. The
Company's contract manufacturer is currently focused on a solution phase
chemical process. While progress has been made in reducing the cost of
chemically synthesizing peptides, further significant progress will be required
to be competitive with traditional antibiotics. The Company's manufacturing
process requires further development and must be scaled up with the resulting
products confirmed by clinical testing, which will require substantial
resources. No assurance can be given that a cost-effective manufacturing
process can be developed, or that any such process would be approved by the
FDA, or that the Company or others will be able to manufacture MSI-78 or any of
the Company's other proposed products on a commercially viable basis, or that
raw materials for synthesis in commercial quantities will be available.
The Company is currently evaluating outside contractors for the
biological extraction and chemical production of its aminosterol compounds. The
Company is currently producing limited quantities of these compounds internally
through a natural extraction process. The Company expects to expend significant
efforts in the chemical synthesis of these compounds.
Marketing Uncertainties. In order to successfully develop and market
its products, it will be necessary for the Company to enter into marketing,
distribution, development or other arrangements with third parties, granting
marketing rights, which may be exclusive, to potential products, including
MSI-78. Such arrangements may also involve delegating to the Company's partner
the responsibility for all or a significant portion of the development and
regulatory approval process. In the event that partners do not develop an
approvable or marketable product or do not market a product successfully, the
Company's business will be adversely affected. There can be no assurance that
the Company will be able to successfully enter into any such arrangements.
For certain products under development, the Company may conduct its
own marketing activities through its own sales force. The Company has no
marketing and sales staff and, although certain members of management have
experience in the marketing of pharmaceutical products, the Company has no
experience with respect to marketing its proposed products. Significant
additional expenditures, management resources and time will be required to
develop a sales force, and there can be no assurance that the Company will be
successful either in developing a sales force or penetrating the markets for
any proposed products it may develop.
Government Regulation. Products such as those proposed to be developed
or commercialized by the Company are subject to an extensive regulatory
approval process by the FDA and comparable agencies in other countries. In
order to obtain FDA approval of a new product, the Company must submit proof of
safety, purity, potency and efficacy. Such proof entails extensive and time
consuming pre-clinical and clinical testing. Detailed manufacturing
documentation is also required, and with respect to MSI-78, even if clinical
testing is successful, the submission of any application for product approval
and the review by FDA of such application, will require additional time to
complete manufacturing stability studies, which additional time may be
significant.
Although certain members of management have had experience in
conducting and supervising preclinical testing and human clinical trials for
pharmaceutical products, the Company has very limited experience designing
clinical protocols on its own behalf and has not prepared an NDA submission.
The process of obtaining required regulatory approvals from the FDA and other
regulatory authorities often takes many years and can vary substantially based
on the type, complexity and novelty of the product. As with any new drug,
additional governmental regulations may be promulgated which could impose
additional costly testing procedures necessary to obtain regulatory approval
and delay regulatory approval of the Company's products. There can be no
assurance that, even after investment of time and expenditures, regulatory
approval will be obtained for any of the Company's proposed products. Even if
regulatory approval is obtained, a marketed product is subject to continual
post-market review, and later discovery of previously unknown problems or
failure to comply with the applicable regulatory requirements may result in
restrictions on a product's marketing or withdrawal of the product from the
market as well as possible civil or criminal sanctions. Adverse governmental
regulation which might arise from future legislative or administrative action
cannot be predicted.
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<PAGE> 8
Clinical Testing. Before obtaining required regulatory approvals for
the commercial sale of products, the Company must demonstrate through
preclinical and clinical testing that such products are safe and efficacious
for use in each target indication. The results of preclinical and initial
clinical testing of products under development by the Company are not
necessarily predictive of results that will be obtained from large-scale
clinical testing. Even after any approval by the FDA and foreign regulatory
authorities, products may later exhibit adverse effects that prevent their
widespread use or necessitate their withdrawal from the market. There can be no
assurance that any products developed by the Company will be safe and
efficacious when administered to patients.
Competition. The pharmaceutical industry is characterized by intense
competition. Many companies, research institutions and universities are working
in a number of pharmaceutical or biotechnology disciplines similar to the
Company's field of interest. In addition, many companies are engaged in the
development and sale of products, such as traditional antibiotics, which may be
or are competitive with the Company's proposed products. Most of these entities
have substantially greater financial, technical, manufacturing, marketing,
distribution and other resources than the Company. The Company is aware that
research is being conducted by others in connection with anti-infective and
anti-cancer compounds from the host-defense systems of various animals, and
many companies are working in the genomics field, and in the area of asthma. In
addition, the Company's proposed products will be subject to competition from
products using techniques other than those used by the Company or based on
advances that may render the Company's products obsolete. The field of
biotechnology is subject to rapid and significant technological changes, and
the Company's future success will depend in large part on its ability to
maintain a competitive position with respect to this technology. Compounds,
products or processes developed by the Company may become obsolete before the
Company is able to recover a significant portion of its research and
development expenses. The Company will be competing with respect to its
proposed products with companies that have significantly more experience in
undertaking preclinical testing and human clinical trials of new or improved
therapeutic products and obtaining FDA and other regulatory approvals of such
products. Some of these companies may be in advanced phases of clinical testing
of various drugs that may be competitive with the Company's proposed products.
As to the Company's lead product candidate, even if MSI-78 is shown in
clinical testing to be statistically equivalent to ofloxacin, there can be no
assurance that it will be successfully marketed against oral antibiotics. There
also can be no assurance that MSI-78 can be manufactured at a cost which will
allow it to be sold at a competitive price relative to oral antibiotics.
Patents and Proprietary Rights. The Company's success will depend in
part upon its ability to obtain patent protection of compounds, combinations or
processes, as well as the drug or therapeutic use of the compound. The patent
position of biotechnology firms generally is highly uncertain and involves
complex legal and factual questions. Anti-infective and anti-cancer compounds
can be isolated from a wide variety of sources, and it is not possible for the
Company or any other entity to have proprietary rights to all such compounds.
In the genomics area, a number of companies are attempting to rapidly identify
and patent genes whose functions have not been characterized. Additional
companies are seeking to patent fully characterized genes. The current criteria
for obtaining patent protection for genes is unclear and the impact of this
uncertainty on the Company's business cannot be determined.
There can be no assurance that any patent applications now pending or
filed in the future will result in patents being issued or that any patents now
held by or licensed to the Company, or issued or licensed to the Company in the
future, will afford any competitive advantages for the Company, will not be
challenged by third parties or cannot be designed around by others. The cost of
litigation to uphold the validity and prevent infringement of patents and to
enforce licensing rights can be substantial. Furthermore, there can be no
assurance that others will not independently develop similar technologies or
duplicate the technology owned by or licensed to the Company or design around
the patented aspects of such technology. There can be no assurance that the
products and technologies the Company will seek to market will not infringe
patents or other rights owned by others, licenses to which may not be available
to the Company.
Pursuant to the terms of the Uruguay Round Agreements Act, patents
filed after June 8, 1995 will have a term of twenty years from the date of such
filing, irrespective of the period of time it may take for such patents to
ultimately issue. As compared to the prior law which established a patent term
of seventeen years from the date of issuance, this
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may shorten the period of patent protection afforded to the Company's products
as patent applications in the biopharmaceutical sector often take considerable
time to issue.
The Company also relies upon unpatented proprietary technology, and
may determine in appropriate circumstances that its interest would be better
served by reliance on trade secrets or confidentiality agreements rather than
patents. No assurance can be made that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to such proprietary technology or that the Company can meaningfully
protect its rights in such unpatented proprietary technology. If the Company is
unable to obtain strong proprietary rights protection of its products after
obtaining regulatory clearance, competitors may be able to market competing
products by obtaining regulatory clearance, through showing equivalency to the
Company's product, without being required to conduct the lengthy, clinical
tests required to be conducted by the Company.
To the extent that consultants, key employees or other third parties
apply technological information independently developed by them or by others to
the Company's proposed products, disputes may arise as to the proprietary
rights to such information, which may not be resolved in favor of the Company.
Members of the Company's Scientific Advisory Board and other consultants are
employed by or have consulting agreements with third parties, and any
inventions discovered by such individuals are not likely to become the property
of the Company.
The Company owns or has rights under licenses to several patents and
patent applications filed worldwide. The Company will owe royalties on sales of
most of its proposed products, including MSI-78, under certain of these
licenses. Certain of these agreements provide that if the Company elects not to
pursue the commercial development of any licensed technology, or does not
adhere to an acceptable schedule of commercialization, then the Company's
exclusive rights to such technology would terminate.
Dependence on Key Personnel. The Company depends to a considerable
degree on a limited number of key personnel. Due to the Company's limited
number of employees, many key responsibilities within the Company have been
assigned to a relatively small number of individuals. The Company does not
maintain "key man" insurance on any of its employees. The loss of certain
senior management could adversely affect the business of the Company. The
success of the Company will depend, among other factors, upon the successful
recruitment and retention of qualified personnel.
Reimbursement. Successful commercialization of the Company's potential
products will be dependent in part on the availability of reimbursement of the
costs of such products from third-party payors, such as government authorities,
private health insurers and other organizations, such as health maintenance
organizations. There can be no assurance that such reimbursement will be
available or, if available, will be in adequate amounts.
Risk of Product Liability. Before obtaining required regulatory
approvals for the commercial sale of products, the Company must demonstrate
through human clinical testing that such products are safe and efficacious for
use in each target indication. The administration of any product being
developed by the Company could produce undesirable side effects in humans.
Although the Company carries limited clinical trial insurance, there can be no
assurance that such coverage is adequate.
In addition, in the event the Company successfully develops any
products, the marketing of such products could expose the Company to product
liability claims. Certain of the Company's agreements require the Company to
maintain insurance coverage naming third parties as additional insureds at such
time as any related products may be marketed. There can be no assurance that
the Company will be able to obtain any product liability insurance or that such
insurance can be maintained in sufficient amounts to protect the Company
against such liabilities or at a reasonable cost.
In the event of an uninsured or inadequately insured claim, the
Company's business and financial condition could be materially adversely
affected.
Health Care Reform. Various proposals have been put forth to reform
the current health care system in the United States. Additionally, several
states have enacted modifications to the current health care system to both
improve
8
<PAGE> 10
access and control costs. Such reform measures could adversely affect the
amount of reimbursement available from governmental agencies or third party
insurers, or could affect the ability to set prices for newly approved
therapeutic products. Similar proposals are being considered by governmental
officials in other significant pharmaceutical markets, including Europe.
Governmental or private payors for health care goods and services can be
expected to continue to undertake cost reduction efforts.
The Company cannot predict if such reforms will be implemented or the
effect any such reforms might have on the Company's business, and no assurance
can be given that any such reforms will not have a material adverse effect on
the Company's business. In particular, it is possible that any such reform
could impact the manner in which drugs or therapies are marketed and could
include restrictions on the ability of pharmaceutical and biotechnology
companies to price drugs or therapies, which in turn could impact the ability
of biotechnology companies such as the Company to obtain financing for the
continued development of potential products. Furthermore, any such reform could
also impose limits on the overall growth of health care spending, as well as
limits on the growth of Medicare and Medicaid spending, all which could have a
material adverse effect on the Company.
Possible Volatility of Stock Price. The market prices for securities
of emerging and biotechnology companies, including the Company, have
historically been highly volatile. Future announcements concerning the Company
or its competitors, including the results of testing, technological innovations
or new commercial products, government regulations, developments concerning
proprietary rights, litigation or public concern as to safety of products
developed by the Company or others, may have a significant impact on the market
price of the Common Stock.
Effect of Exercise of Options and Warrants, and Other Issuance of
Shares. The Company grants stock options to employees, directors and
consultants. As of June 30, 1996, the Company had 2,407,384 outstanding options
at prices ranging from $.002 per share to $16.75 per share, of which
approximately 1,070,783 were exercisable as of such date. Warrants to purchase
229,739 shares of the Company's Common Stock exercisable at $8 per share, and a
warrant to purchase 300,000 shares exercisable at $7.50, were also outstanding
as of June 30, 1996. In addition, the Warrants, to purchase an aggregate of
1,011,896 shares of Common Stock, were issued to the Selling Stockholders on
August 6, 1996. Exercise of options and warrants at prices below the market
price of the Company's Common Stock could adversely affect the price of the
Company's Common Stock. Additional dilution may result from the issuance of
shares in connection with collaborations or manufacturing arrangements, or in
connection with other financings. See "-Need for Substantial Additional Funds."
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Stockholders.
9
<PAGE> 11
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of each Selling Stockholder and as
adjusted to give effect to the sale of the Shares offered hereby. The Shares
are being registered to permit public secondary trading of the Shares, and the
Selling Stockholders may offer the Shares for resale from time to time. See
"Plan of Distribution."
The Original Shares being offered hereby by the Selling Stockholders
were acquired by them from the Company in private placement transactions
pursuant to purchase agreements, dated as of August 6, 1996 (the "Purchase
Agreements"), pursuant to which the Selling Stockholders acquired an aggregate
of 1,556,763 Units, at a purchase price of $7.7083 per Unit, consisting of (i)
an aggregate of 1,556,763 Original Shares and (ii) the Warrants to purchase
1,011,896 Warrant Shares, at an exercise price, subject to adjustment, of
$8.4791 per Warrant Share (the "Exercise Price"). The Warrant Shares being
offered hereby may be acquired, from time to time, by the Selling Stockholders
upon exercise of the Warrants.
Subject to certain exceptions, the Exercise Price per Warrant Share is
subject to adjustment, on a weighted average basis, upon the following events:
(i) the issuance or sale of shares of Common Stock for a consideration per
share of Common Stock less than the then current Exercise Price, (ii) the grant
or sale by the Company of options for which the exercise price per share of
Common Stock is less than the then current Exercise Price, (iii) the issuance
or sale by the Company of any securities convertible into shares of Common
Stock for which the conversion price per share of Common Stock is less than the
then current Exercise Price, (iv) a change in any exercise price or conversion
price for options or convertible securities to a price below the then current
Exercise Price and (v) the subdivision or combination of shares of Common
Stock. In such events, the number of Warrant Shares issuable upon exercise of
the Warrants is subject to a corresponding adjustment. In addition, the
Exercise Price per Warrant is subject to a one-time adjustment per Warrant, at
the option of the holder of such Warrant, in the event that the average of the
closing prices for the Common Stock on the Nasdaq National Market in any
calendar month prior to August 1999 is less than $7.7083. In that event, the
holder of each Warrant shall have the option to reset the Exercise Price to
equal 110% of the average of the closing prices for such month.
In recognition of the fact that investors may wish to be legally
permitted to sell their Shares when they deem appropriate, the Company has
filed with the Commission, under the Securities Act, a Registration Statement
on Form S-3, of which this Prospectus forms a part, with respect to the resale
of the Shares from time to time on the Nasdaq National Market of The Nasdaq
Stock Market or in privately-negotiated transactions and has agreed to prepare
and file such amendments and supplements to the Registration Statement as may
be necessary to keep the Registration Statement effective until the Shares are
no longer required to be registered for the sale thereof by the Selling
Stockholders.
<TABLE>
<CAPTION> Beneficial Ownership
Number of After Offering
Number of Shares Shares -------------------------
Name of Beneficially Owned Being Number of
Selling Stockholder Prior to Offering Offered Shares Percent
- --------------------------------------- ------------------ --------- --------- -------
<S> <C> <C> <C> <C>
T. Rowe Price New Horizons Fund, Inc. 856,220 856,220 0 -
Vector Later-Stage Equity Fund, L.P. 642,165 642,165 0 -
Goodland International Investments Ltd. 599,354 599,354 0 -
Weyburn Overseas Ltd. 256,865 256,865 0 -
T. Rowe Price Health Sciences, Inc. 214,055 214,055 0 -
</TABLE>
10
<PAGE> 12
PLAN OF DISTRIBUTION
The Shares offered hereby by the Selling Stockholders may be sold from
time to time by the Selling Stockholder, or by pledgees, donees, transferees or
other successors in interest. Such sales may be made on one or more exchanges
or in the over-the-counter market (including the Nasdaq National Market of The
Nasdaq Stock Market), or otherwise at prices and at terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
The Shares may be sold by one or more of the following methods, including,
without limitation: (a) a block trade in which the broker-dealer so engaged
will attempt to sell the Shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between the Selling Stockholder and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the Selling
Stockholder may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from the Selling
Stockholder in amounts to be negotiated immediately prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act, in connection
with such sales. In addition, any securities covered by this Prospectus that
qualify for sale pursuant to Rule 144 might be sold under Rule 144 rather than
pursuant to this Prospectus.
Upon the Company being notified by a Selling Stockholder that any
material arrangement has been entered into with a broker or dealer for the sale
of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplemented
Prospectus will be filed, if required, pursuant to Rule 424(c) under the
Securities Act, disclosing (a) the name of each such broker-dealer, (b) the
number of shares involved, (c) the price at which such shares were sold, (d)
the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (e) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, as supplemented, and (f) other facts material to
the transaction.
The Company is bearing all costs relating to the registration of the
Shares (other than fees and expenses, if any, of counsel or other advisers to
the Selling Stockholders). Any commissions, discounts or other fees payable to
broker-dealers in connection with any sale of the Shares will be borne by the
Selling Stockholder selling such Shares.
The Company has agreed to indemnify the Selling Stockholders in
certain circumstances, against certain liabilities, including liabilities
arising under the Securities Act. Each Selling Stockholder has agreed to
indemnify the Company and its directors, and its officers who sign the
registration statement against certain liabilities, including liabilities
arising under the Securities Act.
LEGAL OPINION
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Morgan, Lewis & Bockius LLP, Philadelphia,
Pennsylvania.
EXPERTS
The financial statements contained in the Company's Annual Report on
Form 10-K, incorporated by reference in this Prospectus, have been audited by
Richard A. Eisner & Company, LLP, independent auditors, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and auditing.
11
<PAGE> 13
================================================================================
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Selling
Stockholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy to any person in any jurisdiction in which such
offer or solicitation would be unlawful or to any person to whom it is
unlawful. Neither the delivery of this Prospectus nor any offer or sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company or that information contained
herein is correct as of any time subsequent to the date hereof.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information ..................................................... 2
Incorporation of Certain Documents
by Reference ........................................................... 2
The Company ............................................................... 3
Risk Factors .............................................................. 4
Use of Proceeds ........................................................... 9
Selling Stockholders ...................................................... 10
Plan of Distribution ...................................................... 11
Legal Opinion ............................................................. 11
Experts ................................................................... 11
</TABLE>
================================================================================
================================================================================
2,568,659 Shares
MAGAININ PHARMACEUTICALS INC.
Common Stock
---------------
PROSPECTUS
---------------
August __, 1996
================================================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows the estimated expenses of the issuance and
distribution of the securities offered hereby.
<TABLE>
<S> <C>
SEC registration fee ...................................... $ 6,644
Nasdaq listing fee ........................................ 17,500
Legal fees and expenses ................................... 25,000
Miscellaneous ............................................. 5,000
Total ............................................ $54,144
</TABLE>
All of the amounts shown are estimates except for the fees payable to
the Securities and Exchange Commission and the National Association of
Securities Dealers.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
Article 9 of the Company's By-laws provides for the indemnification of
directors, officers, employees and agents of the Company to the maximum extent
permitted by the Delaware General Corporation Law. Section 145 empowers a
corporation to 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, by reason
of the fact that he is or was a director, officer or agent of the corporation
or another enterprise if serving at the request of the corporation. Depending
on the character of the proceeding, a corporation may indemnify against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action,
suit or proceeding if the person indemnified 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, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In the case of an action
by or in the right of the corporation, no indemnification may be made with
respect to 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
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to above or in the 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.
The Company's By-laws permit it to purchase insurance on behalf of any
such person against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Company would have the power to indemnify him against such liability under the
foregoing provision of the By-laws.
II-1
<PAGE> 15
ITEM 16. LIST OF EXHIBITS
The exhibits filed as part of this registration statement are as
follows:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------
<S> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality of securities
being registered.
10.1 Form of Purchase Agreement, dated as of August 6, 1996, between the
Company and the purchasers thereto, relating to the issuance by the
Company of units consisting of shares of the Company's Common Stock and
Warrants to purchase shares of the Company's Common Stock.
10.2 Form of Warrant, dated as of August 6, 1996, to purchase shares of the
Company's Common Stock.
23.1 Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed
as Exhibit 5.1).
23.2 Consent of Richard A. Eisner & Company, LLP.
24.1 Powers of Attorney (included on the signature page).
</TABLE>
ITEM 17. UNDERTAKINGS
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 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to its Restated Certificate of
Incorporation, its By-laws, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against a public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
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 prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
II-2
<PAGE> 16
(iii) 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;
Provided, however, that paragraph (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference 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.
II-3
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Plymouth Meeting, Pennsylvania, on August 9, 1996.
MAGAININ PHARMACEUTICALS INC.
By: /s/JAY MOORIN
---------------------------
Jay Moorin
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by or on behalf of the following
persons in the capacities and on the dates indicated.
Each person, in so signing, also makes, constitutes and appoints Jay
Moorin, Chairman, President and Chief Executive Officer, and Michael R.
Dougherty, Executive Vice President and Chief Financial Officer, and each such
officer acting singly, his true and lawful attorney-in-fact, in his name, place
and stead to execute and cause to be filed with the Securities and Exchange
Commission any or all amendments to this registration statement, with all
exhibits and any and all documents required to be filed with respect thereto,
and to do and perform each and every act and thing necessary to effectuate the
same.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAY MOORIN Chairman, President, Chief Executive August 9, 1996
- ----------------------------------- Officer and Director (Principal
Jay Moorin Executive Officer)
/s/ MICHAEL R. DOUGHERTY Executive Vice President and Chief August 9, 1996
- ----------------------------------- Financial Officer (Principal
Michael R. Dougherty Financial and Accounting Officer)
/s/ MICHAEL A. ZASLOFF, M.D., PH.D. Vice Chairman, Executive Vice President August 9, 1996
- ----------------------------------- and Director
Michael A. Zasloff, M.D., Ph.D.
/s/ BERNARD A. CANAVAN, M.D. Director August 9, 1996
- -----------------------------------
Bernard A. Canavan, M.D.
/s/ JAMES H. CAVANAUGH, PH.D. Director August 9, 1996
- -----------------------------------
James H. Cavanaugh, Ph.D.
/s/ ZOLA HOROVITZ, PH.D. Director August 9, 1996
- -----------------------------------
Zola Horovitz, Ph.D.
</TABLE>
II-4
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT PAGE NUMBER
- ------- --------------------------------------------------------- -----------
<S> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality
of securities being registered.
10.1 Form of Purchase Agreement, dated as of August 6, 1996, between
the Company and the purchasers thereto, relating to the issuance by
the Company of units consisting of shares of the Company's
Common Stock and Warrants to purchase shares of the Company's
Common Stock.
10.2 Form of Warrant, dated as of August 6, 1996, to purchase shares
of the Company's Common Stock.
23.1 Consent of Morgan, Lewis & Bockius LLP (included in its opinion
filed as Exhibit 5.1).
23.2 Consent of Richard A. Eisner & Company, LLP.
24.1 Powers of Attorney (included on the signature page).
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5
Morgan, Lewis & Bockius LLP
Counselors at Law
2000 One Logan Square
Philadelphia, Pennsylvania 19103-6993
Telephone: (215) 963-5000
Fax: (215) 963-5299
August 9, 1996
Magainin Pharmaceuticals Inc.
5110 Campus Drive
Plymouth Meeting, PA 19462
Re: Magainin Pharmaceuticals Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Magainin Pharmaceuticals Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), relating to the public offering of an aggregate of 2,568,659 shares
(the "Shares") of the common stock, par value $.002 per share, of the Company
(the "Common Stock"), to be sold by the Selling Stockholders named in the
Registration Statement. Of the Shares, 1,556,763 Shares (the "Original Shares")
were issued to the Selling Stockholders pursuant to Purchase Agreements, each
dated as of August 6, 1996, between the Company and the Selling Stockholders
(the "Purchase Agreements") and 1,011,896 Shares (the "Warrant Shares") will be
issued from time to time upon exercise of warrants, each dated August 6, 1996
(the "Warrants"), by the Selling Stockholders.
In this connection, we have reviewed (a) the Registration Statement; (b) the
Company's Restated Certificate of Incorporation and Bylaws; (c) the Purchase
Agreements; (d) the Warrants; and (e) certain records of the Company's corporate
proceedings as reflected in its minute books. 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.
Our opinion set forth below is limited to the General Corporation Law of the
State of Delaware.
In our opinion, the Original Shares are legally issued, fully paid and
non-assessable and the Warrant Shares, when issued pursuant to the terms of the
Warrants, will be legally issued, fully paid and non-assessable.
<PAGE> 2
Magainin Pharmaceuticals Inc.
August 9, 1996
Page 2
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement and to all references to our firm in the Registration Statement. In
giving such consent, we do not thereby admit that we are acting within the
category of persons whose consent is required under Section 7 of the Act and the
rules and regulations of the Securities and Exchange Commission thereunder.
The opinion expressed herein is solely for your benefit and may be relied upon
only by you.
Very truly yours,
/s/ MORGAN, LEWIS & BOCKIUS LLP
<PAGE> 1
EXHIBIT 10.1
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 6th day of August, 1996, between
Magainin Pharmaceuticals Inc. (the "Company"), a corporation organized under the
laws of the State of Delaware, with its principal offices at 5110 Campus Drive,
Plymouth Meeting, Pennsylvania 19462 and the purchaser whose name and address is
set forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the Company and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of Units. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of up to
1,556,763 units (the "Units"), consisting of one share of common stock ("Common
Stock"), par value $.002 per share (a "Share"), of the Company and one warrant
to purchase 0.65 Shares (a "Warrant").
SECTION 2. Agreement to Sell and Purchase the Units. At the Closing (as
defined in Section 4), the Company will sell to the Purchaser, and the Purchaser
will buy from the Company, upon the terms and conditions hereinafter set forth,
the number of Units (at the purchase price) shown below:
<TABLE>
<CAPTION>
Number to Be Price Per Unit Aggregate
Purchased In Dollars Price
- ------------ -------------- ---------
<S> <C> <C>
$7.7083
</TABLE>
Such Shares and Warrants constituting the Units shall become immediately
separable and transferable, subject to the provisions of Section 7(b), upon
Closing.
The Company is simultaneously entering into this same form of purchase
agreement with certain other investors (the "Other Purchasers") and expects to
complete sales of the Units to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements."
SECTION 3. Warrant. The terms of the Warrant shall be as set forth in
the form of Warrant attached hereto as Exhibit A and incorporated by reference
herein.
<PAGE> 2
SECTION 4. The Closing.
(a) The completion of the purchase and sale of the Units (the
"Closing") shall occur on the date hereof or such other time as may be agreed
upon in writing by the Company and the Purchasers (the "Closing Date").
(b) At the Closing, the Company shall deliver to the Purchaser:
(i) certified copies of the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and
performance of this Agreement and each of the other agreements
contemplated hereby, the issuance and sale of the Shares, the issuance
of the Warrants, the reservation of shares of Common Stock upon
exercise of the Warrants (the "Warrant Shares") and the consummation of
all other transactions contemplated by this Agreement;
(ii) certified copies of the Certificate of Incorporation and
the Bylaws, each as in effect at the Closing;
(iii) copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of
the transactions contemplated hereby (including, without limitation,
all blue sky filings and waivers of preemptive rights and rights of
first refusal);
(iv) stock certificate(s) for the Shares registered in the
name specified in the Stock Certificate Questionnaire attached hereto
as part of Appendix I, representing the number of Units set forth in
Section 2 above; and
(v) the Warrants registered in the name the name specified in
the Stock Certificate Questionnaire attached hereto as part of Appendix
I, representing the number of Units set forth in Section 2 above.
SECTION 5. Conditions to Closing.
(a) The obligation of the Purchaser to purchase and pay for the Units
at the Closing is subject to the satisfaction as of the Closing of the following
conditions:
(i) the Company shall have delivered to the Purchaser the
items specified in Section 4(b);
(ii) the purchase of the Units by the Purchaser hereunder
shall not be prohibited by any applicable law or governmental rule or
regulation and shall not subject the Purchaser to any penalty,
liability or, in the Purchaser's sole judgment, other onerous condition
under or pursuant to any applicable law or governmental rule or
regulation, and the purchase of the
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Units by the Purchaser hereunder shall be permitted by the laws, rules
and regulations of the jurisdictions and governmental authorities and
agencies to which the Purchaser is subject; and
(iii) Morgan, Lewis & Bockius LLP, counsel to the Company,
shall deliver its legal opinion substantially in the form set forth in
Exhibit B;
provided that, any condition specified in this Section 5(a) may be waived if
consented to by each Purchaser; provided further that no such waiver shall be
effective against any Purchaser unless it is set forth in a writing executed by
such Purchaser.
(b) The Company's obligation to complete the purchase and sale of the
Units and deliver such stock certificate(s) and Warrants to the Purchaser at the
Closing shall be subject to the following conditions, any one or more of which
may be waived by the Company:
(i) receipt by the Company of federal funds in the full amount of the
purchase price for the Units being purchased hereunder;
(ii) completion of the purchases and sales under the Agreements with
Other Purchasers; and
(iii) the accuracy of the representations and warranties made by the
Purchasers and the fulfillment of those undertakings of the
Purchasers to be fulfilled prior to the Closing,
provided that in the event that condition (ii) or, with respect to Other
Purchasers, condition (iii) is not met, the Purchaser shall have the right, but
not the obligation, to purchase the Units which such Other Purchaser (the
"Defaulting Purchaser") should have purchased on the same terms, and if Other
Purchasers want to exercise this right, on a pro rata basis (based on the number
of Units purchased hereunder and under the other purchase agreements) with any
Other Purchasers exercising the right, and if the Purchaser and/or Other
Purchasers exercise this right, the condition shall be deemed to have been met.
SECTION 6. Representations, Warranties and Covenants. The Company
hereby represents and warrants to,as of the date hereof, and covenants with, the
Purchaser as follows:
6.1. Organization, Corporate Power and Licenses. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is qualified to do business in every jurisdiction
in which its ownership of property or conduct of business requires it to
qualify. The Company possesses all requisite corporate power and authority and
all material licenses, permits and authorizations necessary to own and operate
its properties, to carry on its businesses as now conducted and presently
proposed to be conducted and to carry out the transactions contemplated by this
Agreement. The copies of the charter documents, the Certificate of Incorporation
and the Bylaws and any subsidiary's bylaws which have been furnished
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to each Purchaser's counsel reflect all amendments made thereto at any time
prior to the date of this Agreement and are correct and complete.
6.2. Capital Stock and Related Matters.
(a) As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of (a) 9,211,031 shares of preferred
stock, par value $.001 per share, none of which are issued and outstanding, and
(b) 45,000,000 shares of Common Stock, 1,011,896 of which shall be reserved for
issuance upon exercise of Warrants. As of the Closing, except as set forth on
the attached "Capitalization Schedule," neither the Company nor any subsidiary
shall have outstanding any stock or securities convertible or exchangeable for
any shares of its capital stock or containing any profit participation features,
nor shall it have outstanding any rights or options to subscribe for or to
purchase its capital stock or any stock or securities convertible into or
exchangeable for its capital stock or any stock appreciation rights or phantom
stock plans, except for the Warrants. As of the Closing, neither the Company nor
any subsidiary shall be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock or any
warrants, options or other rights to acquire its capital stock, except as set
forth on the Capitalization Schedule and except pursuant to the Certificate of
Incorporation. As of the Closing, all of outstanding shares of the Company's
capital stock shall be validly issued, fully paid and nonassessable.
(b) There are no statutory or contractual stockholders preemptive
rights or rights of refusal with respect to the issuance of the Shares or
Warrants hereunder or the issuance of the Warrant Shares. The Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its capital stock. Assuming the accuracy of
the representations of the Purchasers set forth in Section 7(a) hereof, the
offer, sale and issuance of the Common Stock or Warrants hereunder do not
require registration under the Securities Act or any applicable state securities
laws.
6.3. Authorization; No Breach. The execution, delivery and performance
of this Agreement, and each Warrant have been duly authorized by the Company.
This Agreement, each Warrant and all other agreements contemplated hereby to
which the Company is a party each constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms. The execution and
delivery by the Company of this Agreement and all other agreements contemplated
herein, the offering, sale and issuance of the Shares and Warrants hereunder,
the issuance of the Warrant Shares, and the fulfillment of and compliance with
the respective terms hereof and thereof by the Company, do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the creation of any lien,
security interest, charge or any other encumbrance upon the Company's or any
subsidiary's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) other than consents which have been obtained as of the
date hereof, require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any court or
administrative or governmental body
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or agency pursuant to, the Certificate of Incorporation or the Bylaws or any
subsidiary's charter or bylaws, or any law, statute, rule or regulation to which
the Company or any subsidiary is subject, or any agreement, instrument, order,
judgment or decree to which the Company or any subsidiary is subject.
6.4. Financial Statements.
(a) Attached hereto as the "Financial Statements Schedule" are the
following documents:
(i) the Form 10-K (the "10-K Report") filed by the Company
with the SEC pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), for the fiscal year ended December 31,
1995; and
(ii) the report on Form 10-Q filed by the Company with the SEC
pursuant to the Exchange Act for the fiscal quarter ended March 31,
1996 (the "March 1996 10-Q Report"); and
(iii) the report on Form 10-Q filed by the Company with the
SEC pursuant to the Exchange Act with respect to for the fiscal quarter
ended June 30, 1996 (the "June 1996 10- Q Report").
(b) Each of the Form 10-K, the March 1996 10-Q Report and the June 1996
10-Q Report (including in all cases the notes thereto, if any) is accurate and
complete in all material respects as of the respective dates thereof, is
consistent with the books and records of the Company (which, in turn, are
accurate and complete in all material respects) and the financial statements
contained therein have been prepared in accordance with generally accepted
accounting principles, consistently applied, subject in the case of the
unaudited financial statements to the absence of footnote disclosure and changes
resulting from normal year-end adjustments.
6.5. Absence of Undisclosed Liabilities. The Company and its
subsidiaries do not have any material obligation or liability (whether accrued,
absolute, contingent, unliquidated or otherwise, whether or not known to the
Company or any subsidiary, whether due or to become due and regardless of when
asserted) arising out of transactions entered into at or prior to the Closing,
or any action or inaction at or prior to the Closing, or any state of facts
existing at or prior to the Closing other than: (i) liabilities disclosed in the
10-K Report or the June 1996 10-Q Report and (ii) liabilities and obligations
which have arisen after the date of the 10-K Report or the June 1996 10-Q Report
in the ordinary course of business (none of which is a liability resulting from
breach of contract, breach of warranty, tort, infringement, claim or lawsuit).
6.6. Tax Matters.
(a) Neither the Company nor any of its subsidiaries has made an
election under Section 341(f) of the Internal Revenue Code of 1986, as amended
("IRC"). To the Company's best knowledge after
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due inquiry, neither the Company nor any subsidiary is liable for the Taxes of
another Person that is not a subsidiary in a material amount under (a) Treas.
Reg. Section 1.1502-6 (or comparable provisions of state, local or foreign law),
(b) as a transferee or successor, (c) by contract or indemnity or (d) otherwise.
Neither the Company nor any subsidiary is a party to any tax sharing agreement.
The Company and each subsidiary have disclosed on their federal income Tax
Returns any position taken for which substantial authority (within the meaning
of IRC Section 6662(d)(2)(B)(i)) did not exist at the time the return was filed.
Neither the Company nor any subsidiary has made any payments, is obligated to
make payments or is a party to an agreement that could obligate it to make any
payments that would not be deductible under IRC Section 280G.
(b) As used herein, "Tax" or "Taxes" means federal, state, county,
local, foreign or other income, gross receipts, ad valorem, franchise, profits,
sales or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license, payroll, wage
or other withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind whatsoever
(including, without limitation, deficiencies, penalties, additions to tax, and
interest attributable thereto) whether disputed or not. "Tax Return" means any
return, information report or filing with respect to Taxes, including any
schedules attached thereto and including any amendment thereof.
(c) Litigation, etc. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the best of the Company's knowledge,
threatened against or affecting the Company or any subsidiary (or to the best of
the Company's knowledge, pending or threatened against or affecting any of the
officers, directors or employees of the Company and its subsidiaries with
respect to their businesses or proposed business activities) at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality (including, without limitation, any actions, suit,
proceedings or investigations with respect to the transactions contemplated by
this Agreement); neither the Company nor any subsidiary is subject to any
arbitration proceedings under collective bargaining agreements or otherwise or,
to the best of the Company's knowledge, any governmental investigations or
inquiries (including, without limitation, inquiries as to the qualification to
hold or receive any license or permit); and, to the best of the Company's
knowledge, there is no basis for any of the foregoing. Neither the Company nor
any subsidiary is subject to any judgment, order or decree of any court or other
governmental agency, and neither the Company nor any subsidiary has received any
opinion or memorandum or legal advice from legal counsel to the effect that it
is exposed, from a legal standpoint, to any liability or disadvantage which may
be material to its business, except as to product liability claims, none of
which have been asserted to date against the Company.
6.7. Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement binding upon the Company or
any subsidiary. The Company shall pay, and hold each Purchaser harmless against,
any liability, loss or expense (including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses) arising in connection with any such
claim.
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<PAGE> 7
6.8. Governmental Consent, etc. Except for the Company's registration
obligations under Section 9 hereof, no permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or any other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby.
6.9. Employees. The Company is not aware that any executive or key
employee of the Company or any subsidiary or any group of employees of the
Company or any subsidiary has any plans to terminate employment with the Company
or any subsidiary.
6.10. Compliance with Laws. The Company and each subsidiary have
obtained all permits, licenses and authorizations required under, and have
complied in all material respects with, all federal, state, local or foreign
law, rule or regulation (including the common law) relating to or regulating
health, safety, pollution or the protection of the environment ("Environmental
Laws"). No notice has been received by the Company or any subsidiary regarding
any violation of, or any claim, liability or corrective or remedial obligation
under, any Environmental Laws. No facts or circumstances exist with respect to
the past or present operations or facilities of the Company or any subsidiary
which would give rise to a material liability or corrective or remedial
obligation under any Environmental Laws.
6.11. Intellectual Property. The Company and each of its subsidiaries
owns or possesses adequate rights to use, all patents, patent rights,
inventions, trade secrets, licenses, know-how, trademarks, service marks,
tradenames and copyrights which are used by or material to the condition
(financial or otherwise), business or operations of the Company and each of its
subsidiaries.
6.12. Affiliated Transactions. Except as set forth in reports and
materials filed by the Company with the SEC pursuant to the periodic reporting
requirements of the Exchange Act, no officer, director, employee, or Affiliate
of the Company or any subsidiary or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such Person or
individual owns any beneficial interest, is a party to any material agreement,
contract, commitment or transaction with the Company or any subsidiary or has
any material interest in any material property used by the Company or any
subsidiary.
6.13. Disclosure. Neither this Agreement nor any of the exhibits,
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to any Purchaser by or on behalf of the Company with
respect to the transactions contemplated hereby contain any untrue statement of
a material fact or omit a material fact necessary to make each statement
contained herein or therein not misleading. There is no fact which the Company
has not disclosed to the Purchasers in writing and of which any of its officers,
directors or executive employees is aware (other than general economic
conditions) and which has had or would reasonably be expected to have a material
adverse effect upon the business operations, properties, assets or condition
(financial or otherwise) of the Company and its subsidiaries taken as a whole.
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<PAGE> 8
6.14. Reports with the SEC. The 10-K Report furnished by the Company to
the Purchasers is a complete and accurate copy of its annual report on Form 10-K
for its most recent fiscal year. The Company has furnished the Purchaser with
all other reports or documents required to be filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since the filing of the most recent
annual report on Form 10-K and its most recent annual report to its
stockholders. Neither the 10-K Report nor any such other reports and filings
contains any material false statements or any misstatement of any material fact
and the 10-K Report and such reports and filings do not omit to state any fact
necessary to make the statements set forth therein not misleading as of the
respective dates thereof. The Company has made all filings with the SEC which it
is required to make, and the Company has not received any request from the SEC
to file any amendment or supplement to any of the reports described in this
Section 6.14.
SECTION 7. Representations, Warranties and Covenants of the Purchaser.
(a) The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser, taking into account the personnel and resources
it can practically bring to bear on the purchase of the Units contemplated
hereby, is knowledgeable, sophisticated and experienced in making, and is
qualified to make, decisions with respect to investments in equity securities
presenting an investment decision like that involved in the purchase of the
Units, including investments in equity securities issued by the Company; (ii)
the Purchaser or its counsel, accountants or other investment advisers have
requested, received, reviewed and considered all information deemed relevant by
them in making an informed decision to purchase the Units; (iii) the Purchaser
or its counsel, accountants or other investment advisers have received and
reviewed a draft of the Registration Statement (as defined in Section 9.1
hereof); (iv) the Purchaser is acquiring the number of Units set forth in
Section 2 above in the ordinary course of its business and for its own account
for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the regulations thereunder) only and with no present
intention of distributing any of the Shares, the Warrants or the Warrant Shares
in violation of the Securities Act of 1933, as amended (the "Securities Act"),
or any arrangement or understanding with any other persons regarding the
distribution of such Shares, Warrants or Warrant Shares in violation of the
Securities Act (this representation and warranty not limiting the Purchaser's
right to sell Shares or Warrant Shares pursuant to the Registration Statement or
pursuant to an exemption from the Securities Act or, other than with respect to
any claims arising out of a breach of this representation and warranty, the
Purchaser's right to indemnification under Section 9.3 hereof); (v) the
Purchaser has completed or caused to be completed the Registration Statement
Questionnaire and the Stock Certificate Questionnaire, both attached hereto as
Appendix I, for use in preparation of the Registration Statement and the answers
thereto are true, correct and complete in all material respects as of the date
hereof and will be true, correct and complete in all material respects as of the
effective date of the Registration Statement; (vi) the Purchaser has, in
connection with its decision to purchase the number of Units set forth in
Section 2 above, relied solely upon the draft Registration Statement, the Form
10-K, the March 31 10-Q Report and the June 30 10-Q Report and the
representations and warranties of the Company contained herein, as well as any
investigation of the Company completed by the Purchaser or its counsel,
accountants or other investment advisers; and (vii) the Purchaser is
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an "accredited investor" within the meaning of Rule 501 of Regulation D
promulgated under the Securities Act.
(b) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares, the Warrants or the
Warrant Shares except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder. The Purchaser hereby acknowledges that the
Warrants will not be registered under the Securities Act or any state securities
law and may not be offered, sold, pledged or otherwise transferred in the
absence of such registration or unless the Company receives an opinion of
counsel acceptable to it that such offer, sale, transfer or assignment is exempt
from any registration and prospectus delivery requirements of the Securities Act
and any applicable state securities laws. The Purchaser hereby covenants not to
make any sale of the Shares or the Warrant Shares under the Registration
Statement without effectively causing the prospectus delivery requirement under
the Securities Act to be satisfied, and the Purchaser acknowledges and agrees
that such Shares or Warrant Shares are not transferable on the books of the
Company unless the certificate submitted to the transfer agent evidencing the
Shares or Warrant Shares is accompanied by a separate officer's certificate: (i)
in the form of Appendix II hereto, (ii) executed by an officer of, or other
authorized person designated by, the Purchaser, and (iii) to the effect that (A)
the Shares or Warrant Shares, as the case may be, have been sold pursuant to and
in accordance with the Registration Statement and (B) the requirement of
delivering a current prospectus has been satisfied. The Purchaser acknowledges
that there may occasionally be times when the Company must suspend the use of
the prospectus forming a part of the Registration Statement until such time as
an amendment to the Registration Statement has been filed by the Company and
declared effective by the Securities and Exchange Commission (the "Commission"),
or until such time as the Company has filed an appropriate report with the
Commission pursuant to the Exchange Act. The Purchaser hereby covenants that it
will not sell any Shares or Warrant Shares pursuant to said prospectus during
the period commencing at the time at which the Company gives the Purchaser
notice of the suspension of the use of said prospectus and ending at the time
the Company gives the Purchaser notice that the Purchaser may thereafter effect
sales pursuant to said prospectus. The Company shall only be able to suspend the
use of said prospectus for two periods aggregating no more than thirty business
days in any twelve month period. The Purchaser further covenants to notify
promptly the Company of the sale of all of its Shares, Warrants and Warrant
Shares.
(c) The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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(d) There are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Purchaser. The
Purchaser shall pay, and hold the Company harmless against, any liability, loss
or expense (including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
SECTION 8. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the Shares and the Warrants
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Units being purchased and the payment therefor.
SECTION 9. Registration of Shares and Warrant Shares
9.1. Registration Procedures and Expenses.
(a) The Company shall as soon as practicable, but in no event later
than August 15, 1996, prepare and file with the Commission a
Registration Statement on Form S-3 (the "Registration Statement")
to effect the registration under the Securities Act of the Shares
and the Warrant Shares in connection with the disposition of (i)
the Shares and the Warrant Shares by the Purchasers, from time to
time in the open market, in one or more transactions (which may
involve block transactions), in negotiated, underwritten, or
other transactions or through a combination of such methods of
sale, at market prices prevailing at the time of such sale, at
prices relating to such prevailing market prices or at negotiated
prices and (ii) the Shares and Warrant Shares by persons or
entities that receive Shares or Warrants upon transfer thereof
pursuant to the terms of such securities and this Agreement (the
"Record Transferees"), and shall use its best efforts to cause
the Registration Statement to become effective as soon as
practicable thereafter; provided that the Company shall be
obligated to include in the Registration Statement the
disposition of Shares and/or Warrant Shares held by a Record
Transferee only if the Purchaser transferring any Common Stock or
Warrants to a Record Transferee gives notice of such transfer to
the Company and any such Record Transferee agrees in writing to
be bound by the provisions of Section 7(b) hereof and this
Section 9;
(b) In the event that the Registration Statement is not declared
effective by the Commission on or before December 3, 1996, the
Company shall issue to the Purchaser an additional Warrant (the
"Additional Warrant") to purchase an additional ______ shares of
Common Stock, such Additional Warrant, if any, to be in the form
attached hereto as Exhibit A. In the event that any Additional
Warrant is issued to the Purchaser, the Company shall promptly
prepare and file with the Commission one or more amendments to
the Registration Statement and the prospectus used in connection
therewith, or file one or more additional registration
statements, to
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register for resale by the Purchasers and the Record Transferees,
if any, any additional Warrant Shares issuable as a result of the
issuance of such Additional Warrant, and any such additional
registration statement(s) that are filed pursuant to this Section
9.1(b) shall be included in the term "Registration Statement" as
used herein. Following the issuance of any Additional Warrant,
such Additional Warrant shall be included in the term "Warrant"
as used herein and any shares of Common Stock issuable upon such
Additional Warrant shall be included in the term "Warrant Shares"
as used herein.
(c) The Company shall promptly prepare and file with the Commission
one or more amendments to the Registration Statement and the
prospectus used in connection therewith, or file one or more
additional registration statements, to register for resale by the
Purchasers and the Record Transferees, if any, any additional
Warrant Shares that may be issuable as a result of adjustments
made pursuant to Section I of the Warrants, and any such
additional registration statement(s) that are filed pursuant to
this Section 9.1(c) shall be included in the term "Registration
Statement" as used herein.
(d) The Company shall promptly prepare and file with the Commission
such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary
to keep the Registration Statement effective until all of the
Shares and Warrant Shares have been sold pursuant thereto or
until the earlier of (a) such time as all of such Common Stock
and Warrant Shares have been disposed of in accordance with the
intended methods of disposition by the Purchasers or the Record
Transferees (as the case may be) set forth in such Registration
Statement, and (b) such date on which each Purchaser or any
Record Transferees (as the case may be) may dispose of all of the
Common Stock and Warrant Stock held by it in one transaction in
the open market pursuant to Rule 144(k) under the Securities Act.
(e) The Company shall promptly furnish to the Purchaser with respect
to the Shares and Warrant Shares registered under the
Registration Statement such number of copies of prospectuses and
preliminary prospectuses in conformity with the requirements of
the Securities Act and such other documents as the Purchaser may
reasonably request, in order to facilitate the public sale or
other disposition of all or any of the Shares or the Warrant
Shares by the Purchaser.
(f) The Company shall promptly file documents required of the Company
for normal blue sky clearance for the disposition by the
Purchasers and any Record Transferees of the Shares and the
Warrant Shares in each state of the United States, provided,
however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented.
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(g) The Company shall promptly inform the Purchaser when any stop
order has been issued with respect to the Registration Statement
and use its best efforts to promptly cause such stop order to be
withdrawn.
(h) The Company shall bear all expenses in connection with the
procedures in paragraphs (a) through (g) of this Section 9.1 and
the registration of the Shares and the Warrant Shares pursuant to
the Registration Statement, other than fees and expenses, if any,
of counsel or other advisers to the Purchaser or the Other
Purchasers and any expenses relating to the sale of the Shares or
the Warrant Shares by the Purchasers (including without
limitation, broker's commissions, discounts or fees of any nature
and transfer taxes or charges of any nature).
The Company understands that the Purchaser disclaims being an
underwriter, but the Purchaser being deemed an underwriter shall not relieve the
Company of any obligations it has hereunder. A draft of the proposed form of the
Registration Statement has been provided to the Purchaser and the Other
Purchasers and a questionnaire related thereto to be completed by the Purchaser
is attached as Appendix I to this Agreement.
9.2. Transfer of Shares After Registration. The Purchaser agrees that
it will not effect any disposition of the Shares or the Warrant Shares that
would constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement or as otherwise in compliance with
applicable securities laws and that it will promptly notify the Company of any
material changes in the information set forth in the Registration Statement
regarding the Purchaser or its plan of distribution.
9.3. Indemnification. For the purpose of this Section 9.3:
(a) the term "Selling Stockholder" shall include the Purchaser or any
Record Transferee, its officers, directors, and/or trustees and
any affiliate or controlling person of such Purchaser or Record
Transferee, as the case may be;
(b) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or
relating to the Registration Statement referred to in Section
9.1; and
(c) the term "untrue statement" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any losses, claims, damages or liabilities to which
such Selling Stockholder may become
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subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon, any breach of the representations set forth in Section 6
hereof by the Company, or any untrue statement of a material fact contained in
the Registration Statement, or arise out of any failure by the Company to
fulfill any undertaking included in the Registration Statement, and the Company
will reimburse such Selling Stockholder for any reasonable legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim, provided, however, that the Company shall
not be liable in any such case to the extent that such loss, claim, damage or
liability arises out of, or is based upon, an untrue statement made in the
Registration Statement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling Stockholder
specifically for use in preparation of the Registration Statement, or the
failure of such Selling Stockholder to comply with the covenants and agreements
contained in Sections 7 or 9.2 hereof respecting sale of the Shares or Warrant
Shares, as the case may be, or any statement or omission in any Prospectus that
is corrected in any subsequent Prospectus that was delivered to the Purchaser
prior to the pertinent sale or sales by the Purchaser.
The Purchaser agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any breach of
the representations set forth in Section 7 hereof by the Purchaser, or any
failure by the Purchaser to comply with the covenants and agreements contained
in Sections 7 or 9.2 hereof respecting sale of the Shares or Warrant Shares, as
the case may be, or any untrue statement of a material fact contained in the
Registration Statement if such untrue statement was made in reliance upon and in
conformity with written information furnished by or on behalf of the Purchaser
specifically for use in the Registration Statement. The Purchaser will reimburse
the Company (or such officer, director or controlling person), as the case may
be, for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim. In no
event shall the liability of the Purchaser hereunder be greater in an amount
than the dollar amount of the proceeds received by such holder upon the sale of
the Shares or Warrant Shares, as the case may be, giving rise to such
indemnification obligation.
Promptly after receipt by any indemnified person of a notice of a claim
or the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action; provided, however, that any failure by an
indemnified person to notify an indemnifying person shall not relieve the
indemnifying person from its obligations hereunder except to the extent that the
indemnifying person is prejudiced thereby. Subject to the provisions hereinafter
stated, in case any such action shall be brought against an indemnified person
and such indemnifying person shall have been notified thereof, such indemnifying
person shall be entitled to participate therein, and, to the extent it shall
wish, to assume
-13-
<PAGE> 14
the defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified person of
its election to assume the defense thereof, such indemnifying person shall not
be liable to such indemnified person for any legal expenses subsequently
incurred by such indemnified person in connection with the defense thereof,
provided, however, that if there exists or shall exist a conflict of interest
that would make it inappropriate, in the opinion of counsel to the indemnifying
person, for the same counsel to represent both the indemnified person and such
indemnifying person or any affiliate or associate thereof, the indemnified
person shall be entitled to retain its own counsel at the expense of such
indemnifying person; provided, however, that no indemnifying person shall be
responsible for the fees and expenses of more than one separate counsel for all
indemnified parties hereunder and under the other Agreements.
If the indemnification provided for in this Section 9.3 from the
indemnifying person would be applicable but is otherwise unavailable, as
determined by a court of applicable jurisdiction, to an indemnified person
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying person, in lieu of indemnifying such
indemnified person, shall contribute to the amount paid or payable by such
indemnified person as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying person and indemnified persons in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying person and indemnified persons shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact, has been made by, or relates to
information supplied by, such indemnifying person or indemnified persons, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in this
Section 9.3, any reasonable legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.3 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9.3, no Purchaser shall be
required to contribute any amount in excess of the dollar amount of the proceeds
received by such Purchaser upon the sale of the Shares or Warrant Shares, as the
case may be, giving rise to such contribution obligation. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9.4. Termination of Conditions and Obligations. The conditions
precedent imposed by Section 7 or this Section 9 upon the transferability of the
Shares and Warrant Shares shall cease and terminate as to any particular number
of the Shares and Warrant Shares when such Shares and/or
-14-
<PAGE> 15
Warrant Shares shall have been effectively registered under the Securities Act
and sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement or at such time as an
opinion of counsel satisfactory to the Company shall have been rendered to the
effect that such conditions are not necessary in order to comply with the
Securities Act.
SECTION 10. Financial Statements and Other Information.
(a) The Company shall deliver to each Purchaser (so long as such
Purchaser holds any Shares or Warrants) and each Record Transferee who holds at
least 10% of the Shares or Warrants:
(i) as soon as available but in any event within 30 days after
the end of each monthly accounting period in each fiscal year,
unaudited consolidating and consolidated statements of income and cash
flows of the Company and its subsidiaries for such monthly period and
for the period from the beginning of the fiscal year to the end of such
month, and unaudited consolidating and consolidated balance sheets of
the Company and its subsidiaries as of the end of such monthly period,
setting forth in each case comparisons to the Com pany's annual budget
and to the corresponding period in the preceding fiscal year, and all
such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied, subject to the absence of
footnote disclosures and to normal year-end adjustments;
(ii) accompanying the financial statements referred to above
in Section 10(a)(i) (i), an Officer's Certificate stating that neither
the Company nor any of its subsidiaries is in default under any of its
other material agreements or, if any such default exists, specifying
the nature and period of existence thereof and what actions the Company
and its subsidiaries have taken and propose to take with respect
thereto;
(iii) within 90 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of
the Company and its subsidiaries for such fiscal year, and
consolidating and consolidated balance sheets of the Company and its
subsidiaries as of the end of such fiscal year, setting forth in each
case comparisons to the Company's annual budget and to the preceding
fiscal year, all prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by (a)
with respect to the consolidated portions of such statements, an
opinion of an independent accounting firm of recognized national
standing (acceptable to the holders of a majority of the Common Stock)
that is unqualified with respect to the scope of such firm's
examination and the Company's status as a going concern, (b) a
certificate from such accounting firm, addressed to the Company's board
of directors, stating that in the course of its examination nothing
came to its attention that caused it to believe that there was any
default by the Company or any subsidiary in the fulfillment of or
compliance with any of the terms, covenants, provisions or conditions
of any other material agreement to which the Company or any subsidiary
is a party or, if such accountants have reason to believe any such
default
-15-
<PAGE> 16
by the Company or any subsidiary exists, a certificate specifying the
nature and period of existence thereof, and (c) a copy of such firm's
annual management letter to the board of directors;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained in
other materials provided hereunder);
(v) at least 30 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget prepared on a monthly
basis for the Company and its subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows and balance
sheets), and promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such annual or
other budgets, and within 30 days after any monthly period in which
there is a material adverse deviation from the annual budget, an
Officer's Certificate explaining the deviation and what actions the
Company has taken and proposes to take with respect thereto;
(vi) promptly (but in any event within five business days)
after the discovery or receipt of notice of any default under any
material agreement to which it or any of its subsidiaries is a party,
any condition or event which is reasonably likely to result in any
material liability under any federal, state or local statute or
regulation relating to public health and safety, worker health and
safety or pollution or protection of the environment or any other
material adverse change, event or circumstance affecting the Company or
any subsidiary (including, without limitation, the filing of any
material litigation against the Company or any subsidiary or the
existence of any dispute with any Person which involves a reasonable
likelihood of such litigation being commenced), an Officer's
Certificate specifying the nature and period of existence thereof and
what actions the Company and its subsidiaries have taken and propose to
take with respect thereto;
(vii) within ten days after transmission thereof, copies of
all financial statements, proxy statements, reports and any other
general written communications which the Company sends to its
stockholders and copies of all registration statements and all regular,
special or periodic reports which it files, or any of its officers or
directors file with respect to the Company, with the Commission or with
any securities exchange on which any of its securities are then listed,
and copies of all press releases and other statements made available
generally by the Company to the public concerning material developments
in the Company's and its subsidiaries' businesses; and
(viii) with reasonable promptness, such other information and
financial data concerning the Company and its subsidiaries as any
Person entitled to receive information under this Section 10(a) may
reasonably request.
-16-
<PAGE> 17
(b) Each of the financial statements referred to in Section 10(a) shall
be true and correct as of the dates and for the periods stated therein, subject
in the case of the unaudited financial statements to changes resulting from
normal year-end adjustments.
(c) Notwithstanding the foregoing, the provisions of this Section 10
shall cease to be effective so long as the Company (a) is subject to the
periodic reporting requirements of the Exchange Act and continues to comply with
such requirements and (b) promptly provides to each person otherwise entitled to
receive information pursuant to this Section 10 all reports and other materials
filed by the Company with the Commission pursuant to the periodic reporting
requirements of the Exchange Act; provided that so long as any Shares or Warrant
Shares remain outstanding, the Company shall continue to deliver to each
Purchaser (so long as such Purchaser holds any Common Stock or Warrant Stock)
and to each holder of at least 5% of the Shares and Warrant Shares, the
information specified in Section 10(a)(vii) hereof.
(d) For purposes of this Section 10, the term "Purchaser" shall include
any partner of a Purchaser who received Shares or Warrant Shares pursuant to a
distribution from or a liquidation of such Purchaser.
(e) The Company, upon the reasonable request of the Purchaser, will
meet with the Purchaser or a representative thereof at the Company's
headquarters to discuss all information relevant for disclosure in the
Registration Statement and will otherwise cooperate with any Purchaser
conducting an investigation for the purpose of reducing or eliminating such
Purchaser's exposure to liability under the Securities Act, including the
reasonable production of non-confidential information at the Company's
headquarters.
SECTION 11. Board of Directors. Upon written request to the Company
from Purchasers beneficially owning in excess of 50% of the Shares sold
hereunder and under the other Agreements, and only for so long as the Purchasers
shall beneficially own in excess of 50% of the Shares sold hereunder and under
the other Agreements, the Company shall use its best efforts to nominate as a
member of the Company's board of directors (the "Board") a person who is (i)
designated in writing by such Purchasers and (ii) reasonably acceptable to a
majority of the Board as constituted prior to such nomination (the "Purchaser
Designee"). For purposes of this Section 11 only, the term "Purchasers" shall
mean solely the original purchasers of the Shares which are parties to this
Agreement and the other Agreements. In the event that the Purchaser Designee
shall cease to be a member of the Board for any reason during the two year
period commencing on the Closing Date, the Purchasers, following the procedures
described above in this Section 11, shall have the right to designate a person
to fill the resulting vacancy on the Board. Notwithstanding the foregoing, the
right of the Purchasers to designate a representative to the Board, and the
Company's obligation to so nominate such a representative, shall cease upon the
earlier to occur of (i) August 6, 1998 and (ii) any merger, consolidation or
capital reorganization involving the Company pursuant to which the holders of
the Company's Common Stock prior to such transaction are beneficial owners of
less than 50% of the capital stock of the surviving corporation.
-17-
<PAGE> 18
SECTION 12. Expenses. At the Closing, the Company shall pay the
reasonable costs and expenses of Kirkland & Ellis, counsel to the Purchasers, in
connection with the preparation of the Agreements and the issuance of the Units,
up to an aggregate maximum of $35,000 for all Purchasers.
SECTION 13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by a nationally
recognized overnight express courier postage prepaid, and shall be deemed given
one day after being so sent and shall be delivered as addressed as follows:
(a) if to the Company, to:
Magainin Pharmaceuticals Inc.
5110 Campus Drive
Plymouth Meeting, Pennsylvania 19462
Attention: Michael R. Dougherty
Executive Vice President and
Chief Financial Officer
with a copy so mailed to:
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, Pennsylvania 19103-6993
Attention: David R. King, Esq.
or to such other person at such other place as the Company
shall designate to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end of
this Agreement, or at such other address or addresses as may
have been furnished to the Company in writing.
SECTION 14. Changes. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Purchaser.
SECTION 15. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 16. Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
-18-
<PAGE> 19
SECTION 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania and
the federal law of the United States of America.
SECTION 18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
-19-
<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
MAGAININ PHARMACEUTICALS INC.
By_________________________________
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<PAGE> 21
PRINT OR TYPE:
Name of Purchaser
(Individual or Institution):
--------------------------------
Name of Individual
representing Purchaser
(if an Institution):
---------------------------------
Title of Individual
representing Purchaser
(if an Institution):
---------------------------------
Principal Place of Business
---------------------------------
SIGNATURE BY:
Individual Purchaser or Individual
representing Purchaser:
---------------------------------
Address:
---------------------------
Telephone:
-------------------------
Telecopier:
------------------------
-21-
<PAGE> 22
SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Page 13 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an
Institution)
(iii) Title of Individual representing Purchaser (if an
Institution)
(iv) Signature of Individual Purchaser or Individual
representing Purchaser
2. Appendix I - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
Appendix I - Registration Statement Questionnaire:
Provide the information requested by the Registration
Statement Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
B. Instructions regarding the transfer of funds for the purchase of Units
will be sent by facsimile to the Purchaser at a later date.
C. Upon the resale of the Shares or Warrant Shares by the Purchaser after
the Registration Statement covering the Shares and Warrant Shares is
effective, as described in the Purchase Agreement, the Purchaser:
(i) must deliver a current prospectus of the Company to the
buyer (prospectuses must be obtained from the Company at
the Purchaser's request); and
(ii) must send a letter in the form of Appendix II to the
Company so that the Shares or Warrant Shares, as the
case may be, may be properly transferred.
<PAGE> 23
Appendix I
(one of two)
MAGAININ PHARMACEUTICALS INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 4 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be
registered in (this is the name that will appear
on your stock certificate(s)). You may use a
nominee name if
appropriate: _______________________
2. The relationship between the Purchaser of the
Shares and the Registered Holder listed
in response to item 1 above: ______________________
3. The mailing address of the Registered Holder
listed in response to item 1 above: ______________________
______________________
______________________
______________________
4. The Social Security Number or
Tax Identification Number of
the Registered Holder listed
in response to item 1 above: ______________________
<PAGE> 24
Appendix I
(two of two)
MAGAININ PHARMACEUTICALS INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration
Statement, please provide us with the following information (a draft of the
Registration Statement has been previously provided to you):
1. Pursuant to the "Selling Stockholder" section of the
Registration Statement, please state your or your organization's name exactly as
it should appear in the Registration Statement:
2. Please provide the number of shares that you or your
organization will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Purchase Agreement and
those shares purchased by you or your organization through other transactions:
3. Have you or your organization had any position, office or
other material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Prospectuses included in the
Registration Statement?
Yes No
----- -----
If yes, please indicate the nature of any such relationships
below:
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
<PAGE> 25
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly author-
ized by] _____________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she [said institution] is the Purchaser of
the shares evidenced by the attached certificate, and as such,
sold such shares on ____________________ pursuant to and in accordance with
[date]
registration statement number ___________________________________
[fill in the number of or otherwise
________________________________ and the requirement of delivering a
identify registration statement]
current prospectus by the Company has been complied with in connection with such
sale.
Print or Type:
Name of Purchaser
(Individual or
Institution): ______________________
Name of Individual
representing
Purchaser (if an
Institution) ______________________
Title of Individual
representing
Purchaser (if an
<PAGE> 26
Institution): ______________________
Signature by:
Individual Purchaser
or Individual repre-
senting Purchaser: ______________________
<PAGE> 1
EXHIBIT 10.2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS MAGAININ PHARMACEUTICALS INC.
RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO IT THAT SUCH OFFER, SALE,
PLEDGE OR TRANSFER IS EXEMPT FROM ANY REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
____________________
MAGAININ PHARMACEUTICALS INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
No. __________ Shares
IN CONSIDERATION OF the covenants contained in the Purchase Agreement,
dated August 6, 1996, between Magainin Pharmaceuticals Inc., a Delaware
corporation (the "Company"), and _________________ (the "Initial Holder") (the
"Purchase Agreement"), and for value received, the Company hereby certifies that
the Initial Holder or any registered assign of the Initial Holder (each of the
Initial Holder and any such registered assign being hereinafter referred to as
the "Holder") is entitled, subject to the provisions of this Warrant, to
purchase from the Company, at any time or from time to time on or after August
6, 1996 (the "Issue Date"), and before 5:00 p.m., Philadelphia time, on the date
five years after such date (the "Exercise Period"), the number of fully paid and
nonassessable shares of common stock of the Company, par value $.002 per share,
set forth above. The term "Common Stock" shall mean the aforementioned common
stock of the Company together with any other equity securities that may be
issued by the Company in connection therewith or in substitution therefor, as
provided herein. During the Exercise Period, the Holder may purchase such number
of shares of Common Stock at a purchase price per share equal to $8.4791 (the
"Original Exercise Price"), as appropriately reset or adjusted pursuant to
Sections H and/or I hereof. As used herein, the term "Exercise Price" shall mean
the Original Exercise Price or, if the Original Exercise Price shall be adjusted
pursuant to Sections H and/or I hereof, the purchase price per share of Common
Stock as determined by such Sections H and/or I.
The number of shares of Common Stock to be received upon the exercise
of this Warrant and the price to be paid for a share of Common Stock are subject
to adjustment from time to time as
<PAGE> 2
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, as adjusted from time to time, are hereinafter sometimes referred to
as "Warrant Shares."
Section A. Exercise of Warrant. This Warrant may be exercised in whole
or in part, at any time or from time to time, during the Exercise Period by
presentation and surrender hereof to the Company at its principal office at 5110
Campus Drive, Plymouth Meeting, Pennsylvania 19462 (or at such other address as
the Company or its agent may hereafter designate in writing to the Holder), or
at the office of its warrant agent, with the Purchase Form contained herein duly
executed and accompanied by cash or a certified or official bank check drawn to
the order of "Magainin Pharmaceuticals Inc." in the amount of the Exercise Price
multiplied by the number of Warrant Shares specified in such form. Prior to the
deliveries specified in the preceding sentence, the Holder may, if the Holder is
required (by any laws, statutes, rules or regulations applicable to the Holder)
to receive evidence of the Warrant Shares prior to payment therefor, provide the
Company with written notice of its intent to exercise this Warrant (the "Notice
of Intent"), which notice shall specify the number of Warrant Shares to be
purchased upon such exercise. Upon receipt of the Notice of Intent, the Company
shall direct the warrant agent or the transfer agent of its Common Stock to
prepare a share certificate for the Warrant Shares to be issued upon exercise of
the Warrant and shall provide a copy of such share certificate to the Holder. If
this Warrant should be exercised in part only, the Company shall, upon surrender
of this Warrant, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of the Warrant Shares purchasable
hereunder. Upon receipt by the Company during the Exercise Period of this
Warrant and the Purchase Form, in proper form for exercise, together with proper
payment of the Exercise Price, at such office, or by the warrant agent of the
Company at its office, the Holder shall be deemed to be the holder of record of
the number of Warrant Shares specified in such form; provided, however, that if
the date of such receipt by the Company or its agent is a date on which the
stock transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding business day on which the stock transfer books of the
Company are open. The Company shall pay any and all documentary, stamp or
similar issue or transfer taxes payable in respect of the issue or delivery of
such Warrant Shares. Any new or substitute Warrant issued under this Section A
shall be dated as of the date of this Warrant. Upon exercise of this Warrant,
the Company or its warrant agent shall promptly cause to be issued and shall
promptly deliver upon written order of the Holder of this Warrant, and in such
name or names as such Holder may designate, a certificate or certificates for
the Warrant Shares.
Section B. Warrant Register. This Warrant will be registered in a
register (the "Warrant Register") to be maintained by the Company or its agent
at its principal office in the name of the recordholder to whom it has been
distributed. The Company may deem and treat the registered holder of this
Warrant as the absolute owner thereof (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise thereof
or any distribution to the holder thereof and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
2
<PAGE> 3
Section C. Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant all shares of its Common Stock or other shares of capital stock of the
Company from time to time issuable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise, shall be
validly issued, fully paid and nonassessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights.
Before taking any action that would cause an adjustment pursuant to the
provisions hereof reducing the Exercise Price, below the then par value (if any)
of the Warrant Shares issuable upon exercise of this Warrant, the Company will
take any corporate action that may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
Section D. Exchange, Transfer or Assignment.
1. This Warrant has not been registered under the Securities
Act or any state securities law and may not be offered, sold, pledged, assigned
or otherwise transferred in the absence of such registration or unless the
Company receives an opinion of counsel acceptable to it that such offer, sale,
pledge, assignment or transfer is exempt from any registration and prospectus
delivery requirements of the Securities Act and any applicable state securities
laws.
2. No Warrant Share may be offered for sale or sold, or
otherwise transferred or sold in any transaction that would constitute a sale
thereof within the meaning of the Securities Act, unless (i) such security has
been registered for sale under the Securities Act and registered or qualified
under applicable state securities laws relating to the offer and sale of
securities, or (ii) an exemption from the registration requirements of the
Securities Act and the registration or qualifications requirements of all such
state securities laws are available and the Company shall have received an
opinion of counsel (which may be an opinion that covers multiple or all
subsequent sales) satisfactory to the Company that the proposed sale or other
disposition of such securities may be effected without registration under the
Securities Act, such counsel and such opinion to be satisfactory to the Company.
3. Except as otherwise permitted by this Section D, this
Warrant and any Warrant issued upon direct or indirect transfer of or in
substitution for this Warrant or any part thereof shall be stamped or otherwise
imprinted with a legend substantially in the form of the legend with respect to
transfer limitation and securities acts at the head of this Warrant.
4. Except as otherwise permitted by this Section D, each
certificate for a Warrant Share issued upon exercise of this Warrant or any
Warrant issued upon direct or indirect transfer of or in substitution for this
Warrant or any part thereof shall be stamped or otherwise imprinted with a
legend in substantially the following form:
3
<PAGE> 4
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act, except under circumstances where neither such
registration nor such an exemption is required by law.
; and, subject to Section D.5. below, each certificate issued upon direct or
indirect transfer of any such Warrant Share shall be stamped or otherwise
imprinted with a legend in substantially the following form:
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
transferred in the absence of such registration or an exemption
therefrom under such Act, except under circumstances where neither such
registration nor such an exemption is required by law.
5. The Company shall, at the request of any registered holder
of a Warrant Share, exchange the certificate representing such security for a
certificate representing the same security not bearing the restrictive legend
required by Section D.4. if the Warrant Shares may be sold or transferred
pursuant to the provisions of Rule 144(k) and, in the opinion of counsel to the
Company, such restrictive legend is no longer necessary.
6. Subject to the provisions of Section D.1., this Warrant may
be assigned, at the option of the Holder, upon surrender of this Warrant to the
Company or at the office of its warrant agent, with the Warrant Assignment Form
contained herein duly executed and accompanied by funds sufficient to pay any
transfer tax. The Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees named in such instrument of assignment
and, if the Holder's entire interest in this Warrant is not being transferred or
assigned, in the name of the Holder, and this Warrant shall promptly be
cancelled.
7. Apart from the payment of any transfer tax pursuant to
Section D.6 hereof, any transfer or exchange of this Warrant shall be without
charge to the Holder. The term "Warrant" as used herein includes any Warrants
into which this Warrant may be divided or for which it may be exchanged or any
new Warrant issued pursuant to Section A hereof.
Section E. Redemption
1. Redemption. This Warrant may be redeemed at the option of the
Company, at any time after February 6, 1999 and prior to its expiration, by
paying in cash, or certified or bank check, therefor $1.00, upon the notice
referred to in Section E.2, if the average Closing Price for the ten consecutive
trading days prior to the date on which the notice of redemption is given has
been at least 250% of the then effective Exercise Price.
2. Date Fixed for, and Notice of, Redemption. In the event the Company
shall elect to redeem this Warrant, the Company shall fix a date for the
redemption. Notice of redemption shall
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be mailed by first class mail, postage prepaid, by the Company not less than 30
days from the date fixed for redemption to the registered Holder of this Warrant
at its last address as it shall appear on the registration books. Any notice
mailed in the manner herein provided shall be conclusively presumed to have been
duly given whether or not the registered holder received such notice.
3. Exercise After Notice of Redemption. This Warrant may be exercised
in accordance with Section A hereof at any time after notice of redemption shall
have been given by the Company pursuant to Section E.1 hereof and prior to the
date fixed for redemption.
Section F. Lost, Mutilated or Missing Warrant. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
Section G. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant.
Section H. Reset of Exercise Price. In the event that the average of
the daily Closing Prices for each trading day in any calendar month following
issuance of this Warrant shall be less than ten-elevenths of the Original
Exercise Price, the Holder shall have the right (the "Adjustment Right") to
reset the Original Exercise Price to equal 110% of the average of the daily
Closing Prices for such month (as so adjusted, the "Adjusted Exercise Price").
Following the end of each calendar month, the Company shall notify the Holder in
writing of the average daily Closing Price for such month (the "Average Price
Notice"). The Adjustment Right must be exercised by the Holder, in the form of a
written notice to the Company, no later than 5:00 PM on the fifth business day
after receipt by the Holder of the Average Price Notice for the month with
respect to which adjustment is requested. The Adjustment Right may be exercised
only once in respect of this Warrant and shall not be exercisable at any time
after the close of business on August 6, 1999. Following exercise of the
Adjustment Right, the term "Exercise Price" as used in this Warrant shall be
deemed to mean the "Adjusted Exercise Price". The number of Warrant Shares
purchaseable upon exercise of this Warrant shall not be adjusted pursuant to
this Adjustment Right.
Section I. Adjustment of Exercise Price and Number of Shares. In order
to prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section I,
and the number of Warrant Shares obtainable upon exercise of this Warrant shall
be subject to adjustment from time to time as provided in this Section I.
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1. Adjustment of Exercise Price and Number of Shares upon Issuance of
Common Stock.
(a) If and whenever on or after the Issue Date the Company
issues or sells, or in accordance with Section I.2 is deemed to have issued or
sold, any shares of Common Stock for a consideration per share less than the
Exercise Price in effect immediately prior to such time, then immediately upon
such issue or sale the Exercise Price shall be reduced to the amount determined
by dividing the sum of (x) the product derived by multiplying the Exercise Price
in effect immediately prior to such issue or sale times the number of shares of
Common Stock Deemed Outstanding immediately prior to such issue or sale, plus
(y) the consideration, if any, received by the Company upon such issue or sale,
by the number of shares of Common Stock Deemed Outstanding immediately after
such issue or sale.
(b) Upon each such adjustment of the Exercise Price pursuant
to this Section I, the number of shares of Common Stock acquirable upon exercise
of this Warrant shall be adjusted to the number of shares determined by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock acquirable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
2. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section I.1, the following shall
be applicable:
(a) Issuance of Rights or Options. If the Company on or after
the Issue Date in any manner grants or sells any Options and the price per share
for which Common Stock is issuable upon the exercise of such Options, or upon
conversion or exchange of any Convertible Securities issuable upon exercise of
such Options, is less than the Exercise Price in effect immediately prior to the
time of the granting or sale of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options, or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options, shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Options for such price per share. For purposes of this
paragraph, the "price per share for which Common Stock is issuable upon exercise
of such Options or upon conversion or exchange of such Convertible Securities"
is determined by dividing (A) the total amount, if any, received or receivable
by the Company as consideration for the granting or sale of such Options, plus
the minimum aggregate amount of additional consideration payable to the Company
upon the exercise of all such Options, plus in the case of such Options which
relate to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon exercise of such Options
or upon the conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options. No further adjustment of the Exercise Price
shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the
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exercise of such Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(b) Issuance of Convertible Securities. If the Company on or
after the Issue Date in any manner issues or sells any Convertible Securities
and the price per share for which Common Stock is issuable upon conversion or
exchange thereof is less than the Exercise Price in effect immediately prior to
the time of such issue or sale, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible Securities shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the issue or sale of such Convertible Securities for such price per
share. For the purposes of this paragraph, the "price per share for which Common
Stock is issuable upon conversion or exchange thereof" is determined by dividing
(A) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Exercise Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Exercise Price had been or are to be made pursuant to other provisions of this
Section I.2, no further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
(c) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Common Stock changes at any time, the Exercise Price in effect at the time
of such change shall be adjusted immediately to the Exercise Price which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of Common Stock
issuable hereunder shall be correspondingly adjusted; provided that if such
adjustment would result in an increase of the Exercise Price then in effect,
such adjustment shall not be effective until 30 days after written notice
thereof has been given by the Company to all holders of the Warrants. For
purposes of this Section I.2, if the terms of any Option or Convertible Security
which was outstanding as of the date of issuance of this Warrant are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change; provided that no such change shall at any time cause the
Exercise Price hereunder to be increased.
(d) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect and the
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<PAGE> 8
number of shares of Common Stock acquirable hereunder shall be adjusted
immediately to the Exercise Price and the number of shares which would have been
in effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued; provided that if such expiration
or termination would result in an increase in the Exercise Price then in effect,
such increase shall not be effective until 30 days after written notice thereof
has been given to all holders of the Warrants. For purposes of this Section I.2,
the expiration or termination of any Option or Convertible Security which was
outstanding as of the date of issuance of this Warrant shall not cause the
Exercise Price hereunder to be adjusted unless, and only to the extent that, a
change in the terms of such Option or Convertible Security caused it to be
deemed to have been issued after the date of issuance of this Warrant.
(e) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the amount of cash consideration received by the Company therefor.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of securities, in which case the amount
of consideration received by the Company shall be the Market Price thereof as of
the date of receipt. In case any Common Stock, Options or Convertible Securities
are issued to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity the amount of consideration
therefor shall be deemed to be fair value as determined by the Board of
Directors of the Company. The fair value of any consideration other than cash or
securities shall be determined by the Board of Directors of the Company.
(f) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Options shall be deemed to
have been issued without consideration (except for the consideration, if any,
payable to the Company upon the exercise, conversion or exchange thereof).
(g) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(h) Record Date. If the Company takes a record of the holders
of Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities or
(B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such
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dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
3. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be proportionately increased.
If the Company at any time combines (by reverse stock split or otherwise) one or
more classes of its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be proportionately decreased.
4. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets or other transaction, in
each case which is effected in such a way that the holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as "Corporate Change." Prior to the consummation of any Corporate
Change, the Company shall make appropriate provision to insure that each of the
Registered Holders of the Warrants shall thereafter have the right to acquire
and receive, in lieu of or addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the exercise of
such holder's Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
such holder's Warrant had such Warrant been exercised immediately prior to such
Corporate Change.
5. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section I but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
board of directors shall make an appropriate adjustment in the Exercise Price
and the number of shares of Common Stock issuable upon exercise of this Warrant
so as to protect the rights of the holders of the Warrants; provided that no
such adjustment shall increase the Exercise Price or decrease the number of
shares of Common Stock obtainable as otherwise determined pursuant to this
Section I.
6. Exclusions. Anything in this Section I to the contrary
notwithstanding, there shall be no adjustment to the Exercise Price or the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to (i) stock options or stock bonuses issued to employees, directors,
and consultants of the Company and its Subsidiaries or the exercise thereof,
(ii) Common Stock issued upon the exercise of options outstanding granted to
employees, directors, and consultants of the Company which were outstanding on
the Issue Date or are granted pursuant to clause (i) of this Section,(iii)
Common Stock issued upon the exercise of warrants outstanding on
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the Issue Date and (iv) the issuance of an aggregate of up to 375,000 shares of
Common Stock to Abbott Laboratories ("Abbott"), pursuant to the Stock Issuance
Agreement, dated October 4, 1995, between Abbott and the Company.
7. All calculations under this Section I shall be made to the nearest
one-tenth of a cent ($.001), or to the nearest one-tenth of a share, as the case
may be.
8. Notices. The Company shall give written notice to the Registered
Holder:
(a) immediately upon any adjustment of the Exercise Price,
setting forth in reasonable detail and certifying the calculation of such
adjustment;
(b) at least 20 days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights to
vote with respect to any Corporate Change, dissolution or liquidation;
(c) at least 20 days prior to the date on which any Corporate
Change, dissolution or liquidation shall take place;
(d) at least 20 days prior to the declaration or payment of a
dividend by the Company upon the Common Stock payable otherwise than in cash out
of earnings or earned surplus (determined in accordance with generally accepted
accounting principles, consistently applied) except for a stock dividend payable
in shares of Common Stock (a "Liquidating Dividend"); and
(e) at least 20 days prior to the grant, issuance or sale by
the Company of any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property ("Purchase Rights") pro rata to the
record holders of any class of Common Stock.
Section J. Liquidating Dividends. If the Company declares or pays a
Liquidating Dividend upon the Common Stock, then the Company shall pay to the
Registered Holder of this Warrant at the time of payment thereof the Liquidating
Dividend which would have been paid to such Registered Holder on the Common
Stock had this Warrant been fully exercised immediately prior to the date on
which a record is taken for such Liquidating Dividend, or, if no record is
taken, the date as of which the record holders of Common Stock entitled to such
dividends are to be determined.
Section K. Purchase Rights. If at any time the Company grants, issues
or sells any Purchase Rights to the record holders of any class of Common Stock,
then the Registered holder of this Warrant shall be entitled, upon exercise of
this Warrant, to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale
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of such Purchase Rights, or, if no such record is taken, the date as of which
the record holders of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights.
Section L. Fractional Shares. No fractional shares of Common Stock or
scrip shall be issued to any Holder in connection with the exercise of this
Warrant. Instead of any fractional shares of Common Stock that would otherwise
be issuable to such Holder, the Company shall make a cash refund therefor equal
in amount to the product of the applicable fraction multiplied by the Exercise
Price paid by the Holder for one Warrant Share upon such exercise.
Section M. Listing on Securities Exchanges. The Company will list on
each national securities exchange, and the Nasdaq National Market, on which any
Common Stock may at any time be listed, all shares of Common Stock from time to
time issuable upon the exercise of this Warrant, subject to official notice of
issuance upon the exercise of this Warrant, and will maintain such listing so
long as any other shares of its Common Stock are so listed; and the Company
shall so list on each national securities exchange, and the Nasdaq National
Market, and shall maintain such listing of, any other shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any
shares of capital stock of the same class are listed on such national securities
exchange, and the Nasdaq National Market, by the Company. Any such listing will
be at the Company's expense.
Section N. Successors. All the provisions of this Warrant by or for the
benefit of the Company or the Holder shall bind and inure to the benefit of
their respective successors, assigns, heirs and personal representatives.
Section O. Headings. The headings of sections of this Warrant have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
Section P. Amendments. This Warrant may be amended by the written
consent of the Company and the affirmative vote or the written consent of
Holders holding not less than two-thirds in interest of the then outstanding
Warrants; provided that, except as expressly provided herein, without the
consent of the Holder of this Warrant, this Warrant may not be amended to change
(i) any price at which this Warrant may be exercised, (ii) the period during
which this Warrant may be exercised, (iii) the number or type of securities to
be issued upon the exercise hereof (including the anti-dilution provisions) or
(iv) the provisions of this Section.
Section Q. Notices. Unless otherwise provided in this Warrant, all
notices, requests, consents and other communications hereunder shall be in
writing, shall be sent by a nationally recognized overnight express courier
postage prepaid, and shall be deemed given one day after being so sent, or if
delivered by hand shall be deemed given on the date of such delivery to such
party or, if mailed, shall be deemed given on the fifth day after the date of
mailing, or if sent to such party by certified or registered mail or air mail,
postage prepaid, shall be deemed to be delivered upon receipt by the addressee,
addressed to it (in the case of a Holder) at its address in the Warrant Register
that
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will be maintained by the Company or its agent in accordance with Section B
hereof or (in the case of the Company) at its address set forth above,
Attention: Executive Vice President and Chief Financial Officer, or to such
other address as is designated by written notice, similarly given to each other
party hereto.
Section R. Governing Law. This Warrant shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
construed in accordance with the laws of said State as applied to contracts made
and to be performed in Delaware between Delaware residents.
Section Q. Definitions. The following terms have meanings set forth
below:
"Closing Price" shall mean the daily closing price per share
of the Common Stock as reported on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if not listed or
traded on any such exchange, on the Nasdaq National Market (the "Nasdaq National
Market") of the National Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq"), or if not listed or traded on any such exchange or
system, the average of the bid and offer price per share on Nasdaq.
"Common Stock Deemed Outstanding" means, at any given time,
(i) the number of shares of Common Stock actually outstanding at such time, (ii)
the number of shares of Common Stock issuable upon exercise of Options and
Convertible Securities outstanding as of the Issue Date, and (iii) the number of
shares of Common Stock deemed to be outstanding pursuant to paragraphs I(2)(a)
and I(2)(b) hereof regardless of whether the Options or Convertible Securities
are actually exercisable at such time, but excluding any shares of Common Stock
issuable upon exercise of the Warrants.
"Convertible Securities" means any stock or securities
(directly or indirectly) convertible into or exchangeable for Common Stock.
"Market Price" means, as to any security on any trading day,
the average of the closing prices of such security's sales on all domestic
securities exchanges on which such security may at the time be listed, or, if
there have been no sales on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted on the Nasdaq National Market as of
4:00 P.M., New York time, on such day, or, if on any day such security is not
quoted on the Nasdaq National Market, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which "Market Price" is being determined and the 20 consecutive
business days prior to such day; provided that if such security is listed on any
domestic securities exchange the term "business days" as used in this sentence
means business days on which such exchange is open for trading. If at any time
such security is not listed on any
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domestic securities exchange or quoted on the Nasdaq National Market or the
domestic over-the-counter market, the "Market Price" shall be the fair market
value thereof reasonably determined by the board of directors of the Company or
any committee of such board.
"Options" means any rights or options to subscribe for or
purchase Common Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
Other capitalized terms used in this Warrant but not defined
herein shall have the meanings set forth in the Purchase Agreement.
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IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed and attested by its duly authorized officers and to be dated as of August
6, 1996.
MAGAININ PHARMACEUTICALS INC.
By____________________________________
Title:
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PURCHASE FORM
Dated __________________, 19__
The undersigned hereby irrevocably elects to exercise this Warrant to
purchase ____________ shares of Common Stock and hereby makes payment of
$_________ in payment of the exercise price thereof.
Signature_______________________________
_______________________________________________________________________________
_______________________________________________________________________________
WARRANT ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________ hereby sells, assigns and
transfers to
Name ________________________________________ (the "Assignee")
(please type or print in block letters)
Address_________________________________________________________________
its rights to purchase up to ____________ shares of Common Stock represented by
this Warrant and does hereby irrevocably constitute and appoint
_______________________, Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
Dated:_____________, 19__
Signature_______________________________
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 of our report dated January 26, 1996 on the financial
statements included in the annual report of Magainin Pharmaceuticals Inc. as at
and for the year ended December 31, 1995. We also consent to the reference to
our firm under the caption "Experts" in the Prospectus.
Richard A. Eisner & Company, LLP
New York, New York
August 7, 1996
