As filed with the Securities and Exchange Commission on September 9, 1997
Registration No. 333-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GENTA INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 33-0326866
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3550 General Atomics Court
San Diego, California 92121
(619) 455-2700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Copies to:
DR. ROBERT E. KLEM MONICA C. LORD
Genta Incorporated Kramer, Levin, Naftalis & Frankel
3550 General Atomics Court 919 Third Avenue
San Diego, California 92121 New York, New York 10022
(619) 455-2700 (212) 715-9100
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than securities
offered only in connection with dividend or interest reinvestment plans, please
check the following box: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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 under the Securities Act, please check the following box: [ ]
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum Proposed Maximium
Class of Securities Amount to Offering Price Aggregate Registration Amount of
to be Registered be Registered(1) Per Share(1) Offering Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, 65,548,982 $1.625 $106,517,096 $32,278
$.001 par value
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</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act, based on the average of
the high and low sale prices for the Common Stock reported on the
Nasdaq SmallCap Market on September 3, 1997.
<PAGE>
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 or until the Registration Statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
Subject to Completion, Dated September 9, 1997
GENTA INCORPORATED
65,548,982 SHARES OF COMMON STOCK
This Prospectus covers the sale by certain selling stockholders (the
"Selling Stockholders") of 65,548,982 shares (the "Registered Shares") of Common
Stock, par value $.001 (the "Common Stock"), of Genta Incorporated ("Genta" or
the "Company"). The Registered Shares are issuable (i) upon the conversion of
the Company's Series D Convertible Preferred Stock, par value $.001 per share
and stated value $100 per share (the "Series D Preferred Stock"), (ii) upon the
exercise of the Company's Class D Warrants (the "Class D Warrants") to purchase
Common Stock, (iii) upon the exercise of certain other warrants to purchase
Common Stock (the "Initial Warrants" and the "Line of Credit Warrants") and (iv)
in connection with consulting agreements with certain directors of the Company
(the "Consulting Agreements"). 29,998,511 of the Registered Shares (the
"Contingent Shares") are issuable only upon a decrease in the present conversion
price of the Series D Preferred Stock which may occur under certain
circumstances. See "Capital Stock." There are (i) 174,580 shares of Series D
Preferred Stock, (ii) 807,900 Class D Warrants, (iii) 6,357,616 Initial Warrants
and (iv) 50,000 Line of Credit Warrants currently outstanding. An additional
40,395 shares of Series D Preferred Stock and 201,975 Class D Warrants are
issuable up to ten years after December 31, 1997 and 50,530 shares of Series D
Preferred Stock are issuable upon conversion of the Company's Senior Secured
Convertible Bridge Notes (the "Convertible Notes") plus interest accrued thereon
any time prior to December 31, 1997. The resale of the Registered Shares is
covered by this Prospectus.
The Company has agreed to register under the Securities Act of 1933, as
amended (the "Securities Act"), all of the Registered Shares. The Company is
obligated to keep the Registration Statement (as defined below), of which this
Prospectus is a part, effective until the Selling Stockholders have completed
the distribution described herein or until the Common Stock registered hereunder
is no longer, by reason of Rule 144(k) of the Securities Act, required to be
registered for the sale thereof by the Selling Stockholders.
Each share of Series D Preferred Stock is convertible at any time after
the original issuance, at the option of the holder, into shares of Common Stock.
The conversion price (the "Conversion Price") of the Series D Preferred Stock is
$.94375 on the date hereof, and is subject to adjustment in certain
circumstances. See "Capital Stock." Each Class D Warrant may be exercised any
time prior to June 30, 2002 (or, if redeemed prior thereto, the date immediately
preceding the redemption date) for one share of Common Stock at an exercise
price of $.94375 per share, subject to adjustment in certain circumstances. Each
Initial Warrant may be exercised any time after September 28, 1997 for one share
of Common Stock at an exercise price of $.471875 per share, subject to
adjustment in certain circumstances. Each Line of Credit Warrant may be
exercised any time after September 28, 1997 for one share of Common Stock at an
exercise price of $2.50 per share, subject to adjustment in certain
circumstances. No fractional shares will be issued upon exercise of the Class D
Warrants, the Initial Warrants and the Line of Credit Warrants, and the Company
will pay cash in lieu of fractional shares. The 29,998,511 Contingent Shares
have been calculated based on the assumption that the present conversion price
of the Series D Preferred Stock is decreased to $.3429. See "Capital Stock."
The Series D Preferred Stock, the Class D Warrants, the Initial
Warrants and the Line of Credit Warrants are not listed on any securities
exchange or quoted in any over-the-counter market. The Company's Common Stock is
traded on the Nasdaq SmallCap Market under the symbol "GNTA." On September 8,
1997, the last sales price of the Common Stock as reported on the Nasdaq
SmallCap Market was $1.625.
The Company will inform the Selling Stockholders that the
anti-manipulation provisions of Regulation M ("Regulation M") promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), may apply
to the sales of the Registered Shares. The Company also will advise the Selling
Stockholders of the requirement for delivery of this Prospectus in connection
with any sale of the Registered Shares.
<PAGE>
The Company will not receive any proceeds from the sale of the
Registered Shares. The Company is bearing the costs relating to this
registration of the Registered Shares, including, without limitation,
registration fees, qualification and filing fees, printing expenses, escrow
fees, fees and expenses of counsel for the Company, blue sky fees and expenses
and the expense of any special audits incident to or required by this
registration (but excluding fees of legal counsel for any Selling Stockholder).
All discounts or commissions will be borne by the Selling Stockholders. It is
anticipated that usual and customary brokerage fees will be paid by the Selling
Stockholders in all open market transactions. The Selling Stockholders and any
broker-dealers, agents or underwriters that participate with the Selling
Stockholders in the distribution of the Registered Shares may be determined to
be "underwriters" within the meaning of Section 2(11) of the Securities Act and
any commissions received by them and any profit on the resale of such securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
THE REGISTERED SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE
SECURITIES LAWS OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS.
BROKERS OR DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SHARES SHOULD
CONFIRM THE REGISTRATION OF THE REGISTERED SHARES UNDER THE SECURITIES LAWS OF
THE STATES IN WHICH SUCH TRANSACTIONS OCCUR, OR THE EXISTENCE OF ANY EXEMPTIONS
FROM SUCH REGISTRATION.
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 9.
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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.
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THE DATE OF THIS PROSPECTUS IS _______, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). The
Common Stock is quoted for trading on the Nasdaq SmallCap Market, and such
reports and other information concerning the Company may be inspected at the
offices of the Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the SEC a Registration Statement on Form S-3
(together with all schedules, exhibits and any amendments thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement. For further information with respect to
the Company and the Common Stock, reference is made to the Registration
Statement. Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete, and, in each instance,
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference. Copies of the Registration Statement may be
inspected without charge at the public reference facilities maintained by the
SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C., and the SEC's
Chicago Regional Office, 500 West Madison Street, Chicago, Illinois; and New
York Regional Office, 7 World Trade Center, New York, New York. Copies of such
material can be obtained from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed rates.
The Registration Statement and such reports and other information may also be
accessed electronically by means of the SEC's site on the World Wide Web at
http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC are hereby
incorporated by reference into this Prospectus:
1. Amendment No. 1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
3. Amendment No. 1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997.
4. The Company's Current Report on Form 8-K dated August 13, 1997.
5. The Company's Current Report on Form 8-K dated July 23, 1997.
6. Amendment No. 1 to the Company's Current Report on Form 8-K dated
July 7, 1997.
7. The Company's Current Report on Form 8-K dated July 3, 1997.
8. The Company's Current Report on Form 8-K dated May 6, 1997.
9. The Company's Current Report on Form 8-K dated April 25, 1997.
10. The Company's Current Report on Form 8-K dated April 15, 1997.
11. The Company's Current Report on Form 8-K dated February 27, 1997.
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<PAGE>
12. The description of the Common Stock of the Company contained in
its Registration Statement under the Exchange Act on Form 8-A
filed on November 4, 1991.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering to which this Prospectus relates shall be deemed to be incorporated by
reference into this Prospectus and to be part of this Prospectus from the date
of filing thereof.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus and
the Registration Statement of which it is a part to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated herein modifies or replaces such statement. Any statement so
modified or superseded shall not be deemed, in its unmodified form, to
constitute a part of this Prospectus or such Registration Statement.
Upon written or oral request, the Company will provide without charge
to each person to whom a copy of this Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by references
therein). Requests should be submitted in writing or by telephone at (619)
455-2700 to Investor Relations Department, Genta Incorporated, at the principal
executive offices of the Company, 3550 General Atomics Court, San Diego,
California 92121.
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<PAGE>
RECENT DEVELOPMENTS
Since December 31, 1996, the Company has raised approximately $17
million (net of expenses) in various private placements, including approximately
$14 million (net of expenses) in a private placement (the "Private Placement")
on June 30, 1997. See Items 5, 7 and 11 in "Documents Incorporated by
Reference."
BUSINESS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors," appearing elsewhere in this Prospectus or
incorporated herein by reference. Except for the historical information
contained herein, the matters discussed in this Prospectus are forward-looking
statements that involve risks and uncertainties, including obtaining sufficient
financing to maintain the Company's planned operations, the timely development,
receipt of necessary regulatory approvals and acceptances of new products, the
successful application of the Company's and Genta Jago Technologies B.V.'s
("Genta Jago") technology to produce new products, the obtaining of proprietary
protection for any such technology and products, the impact of competitive
products and pricing and reimbursement policies, changing market conditions and
the other risks detailed throughout, and in the "Risk Factors" section of, this
Prospectus. Actual results may differ materially from those projected. These
forward-looking statements represent the Company's judgment as of the date of
this Prospectus. The Company disclaims, however, any intent or obligation to
update these forward-looking statements.
OVERVIEW
Genta is an emerging biopharmaceutical company engaged in the
development of a pipeline of pharmaceutical products. Genta's multi-faceted
approach incorporates a product development portfolio with balanced technical
risk and a novel drug delivery technology. The Company's primary research and
development efforts are focused on the development of proprietary Anticode(TM)
oligonucleotide ("Anticode") pharmaceuticals intended to block or regulate the
production of disease-related proteins at the genetic level. The Company's
Anticode programs are focused primarily in the area of cancer. In late 1995, a
Phase I/IIa clinical trial was initiated in the United Kingdom using Genta's
Anticode drug ("G3139") in non-Hodgkin lymphoma patients for whom prior
therapies have failed. The clinical trial was conducted in collaboration with
the Royal Marsden NHS Trust and the Institute for Cancer Research. In late 1996,
an Investigational New Drug application ("IND") for the G3139 clinical program
was filed in the United States and allowed to proceed by the United States Food
and Drug Administration ("FDA"). In addition, through the Company's 50%-owned
drug delivery joint venture with Jagotec AG ("Jagotec"), Genta Jago is
developing a number of oral controlled-release drugs. Using Jagotec's patented
GEOMATRIX(R) drug delivery technology ("GEOMATRIX"), Genta Jago is developing
generic versions of successful brand-name controlled-release drugs and
developing controlled-release formulations of drugs currently marketed in only
immediate release form. The Company also manufactures and markets specialty
biochemicals and intermediate products to the in vitro diagnostic and
pharmaceutical industries through its manufacturing subsidiary, JBL Scientific,
Inc. ("JBL"), a California corporation acquired by the Company in February 1991.
The Company's principal executive offices are located at 3550 General
Atomics Court, San Diego, California 92121. The Company's telephone number is
(619) 455-2700.
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<PAGE>
SUMMARY OF BUSINESS AND RESEARCH AND DEVELOPMENT PROGRAMS
The following table describes the major diseases to which the Company
is currently directing its research and product development efforts and the
development status of products or product candidates in each area, as well as
other aspects of the Company's business:
<TABLE>
<CAPTION>
Program Therapeutic Indications Development Status
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<S> <C> <C>
1. Anticode
G3139 o Impairs production of key cancer protein, Phase I/IIa clinical trials in the
BCL2 (non-Hodgkin lymphoma, prostate United Kingdom with respect to non-
and possibly others) Hodgkin lymphoma (U.S. IND
approved)
Anti-FAK Oligonucleotides o Impairs production of key cancer protein, Pre-clinical
Focal Adhesion Kinase (melanoma,
lymphoma and multiple myeloma)
2. Oral Controlled-Release Drugs o Various Abbreviated New Drug
Applications ("ANDAs") may be
Bioequivalent Generics filed for three products in 1998
3. Biochemical Manufacturing
Specialty Biochemicals; Intermediate $5 million in 1996 sales
Products for biotechnology and
pharmaceutical industries
</TABLE>
ANTICODE PROGRAMS
Genta's Anticode oligonucleotides, based on what has come to be known
in the biotechnology industry as "antisense" technology, represent a modern
approach to drug development based upon genetic control of disease. Many human
diseases have genetic origins that involve either the expression of a harmful
foreign gene or the aberrant expression of a normal or mutated human gene.
Anticode oligonucleotides are short strands of synthetic nucleic acids designed
to bind to ("hybridize" with) specific sequences of disease-related RNA or DNA,
thereby blocking or controlling production of disease-related proteins. The
Company believes that, because of their selective binding properties, Anticode
oligonucleotides will not interfere with the function of normal cells, and
therefore, will elicit significantly fewer side effects than traditional drugs.
Anticode drugs may attack a disease at one of two levels. One approach is to
prevent the synthesis of essential disease-related proteins. In this approach,
certain oligonucleotides are used to interrupt the processing of, or selectively
to destroy, individual messenger RNA (mRNA) sequences, which leads to the
down-regulation (lowering of levels) of specific proteins and thereby
effectively eliminates the disease. This is referred to as the "antisense"
mechanism of action. A second therapeutic opportunity is to prevent
transcription of disease-causing DNA into the mRNA copy of the gene. This is
referred to as the "triple-strand to DNA" mechanism of activity.
The Company's Anticode research and development efforts are currently
focused primarily on its cancer program as described below. Extensive additional
development will be required, and there
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<PAGE>
can be no assurance that any product will be successfully developed or will
receive the necessary regulatory approvals.
BCL2 GENE TARGET
The BCL2 gene is a proto-oncogene and a major inhibitor of apoptosis
(programmed cell death) of cancerous cells. The protein produced by this gene
has two known critical functions in the progression of cancer: it makes cancer
cells immortal, creating a survival advantage of malignant over normal cells;
and it confers resistance to radiation and chemotherapy, rendering those
treatments ineffective in the late stages of many types of cancer. Genta's lead
anti-BCL2 molecule, G3139, is designed to inactivate the RNA that produces the
BCL2 protein product, thereby preventing cellular production of the protein.
High levels of BCL2 are associated with a poor clinical prognosis in many solid
tumor and hematological malignancies such as lymphoma, leukemia, melanoma,
multiple myeloma and prostate and breast cancers. The Company believes that its
Anticode strategy against the BCL2 gene has the potential to represent a
significant therapeutic opportunity in many of these cancers.
In preclinical studies conducted by Dr. Finbarr Cotter, at the
Institute for Child Health in London, an anti-BCL2 oligonucleotide was shown to
cure lymphoma-like disease induced by the injection of human B-cell lymphoma
cells in immunodeficient mice. In addition, in a variety of other animal
studies, anti-BCL2 Anticode oligonucleotides were found to inhibit the growth of
human melanoma, colon and human breast cancer tumors in immunodeficient mice.
G3139 has demonstrated efficacy in these preclinical studies when administered
as a single agent.
In late 1995, a Phase I/IIa clinical trial was initiated in the United
Kingdom using Genta's anti-BCL2 Anticode oligonucleotide, G3139, in human
non-Hodgkin lymphoma patients for whom prior therapies have failed. The clinical
trial was conducted in collaboration with the Royal Marsden NHS Trust ("Royal
Marsden") and the Institute for Cancer Research under the direction of Dr. David
Cunningham. The principal aim of this Phase I/IIa study was to define the
maximum tolerated dose of G3139. Secondary objectives include measurement of
clinical and biochemical disease parameters. To date doses have been escalated
42 fold from initial levels. The Company has completed its trial with Royal
Marsden and believes that other than mild topical skin irritation in most of the
patients, no serious drug attributable or dose-limiting adverse effects were
seen until the maximum tolerated dose was reached. The dose-limiting toxicity
for G3139 was reversible thrombocytopenia. Initial results reported in the
Lancet Article (as defined below) revealed that four of nine patients observed
had shown improvements and in one patient the tumor had completely disappeared.
These results have been accepted for journal publications (including an article
entitled "BCL2 antisense therapy in patients with non-Hodgkin lymphoma" that
appeared in the April 19, 1997 issue of The Lancet (the "Lancet Article")
describing interim results of the Phase I/IIa clinical trial) and presentation
at peer meetings, including that of the American Society of Clinical
Oncologists.
In December 1996, the FDA granted the Company an allowance to initiate
clinical trials under an IND for the use of G3139 against non-Hodgkin lymphoma.
The Company also believes that under this IND, it will investigate the use of
G3139 against other types of cancers, including melanoma, prostate and other
solid tumors. The Company has had discussions with several cancer centers
regarding Phase I/IIa clinical trials of G3139 under the Company's current IND
and such proposed INDs. The Company is currently discussing protocols and
cost-sharing arrangements with such centers and believes that clinical trials
could be commenced in the fourth quarter of 1997. In addition, the Company has
had discussions with the National Cancer Institute ("NCI") regarding additional
Phase I clinical trials. Pending the outcome of pre-clinical studies being
conducted by the
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<PAGE>
NCI on G3139, NCI intends to sponsor Phase I human trials evaluating G3139
against a number of solid tumor malignancies. Assuming the Company agrees to
move forward with such NCI sponsored trial, the Company will collaborate with
NCI on the design of such clinical studies and the selection of tumor targets.
Tumors under consideration for clinical study include malignant melanoma,
breast, prostate and colorectal cancers. NCI would cover the costs of running
both pre-clinical and clinical studies. Genta would be responsible for supplying
NCI with necessary quantities of G3139 to carry out this work.
In September 1996, the Company received a notice of an allowance from
the United States Patent and Trademark Office for patent claims covering
antisense compounds targeted against BCL2. Those claims covering compositions of
matter give Genta exclusive rights to target sequences of the BCL2 gene. The
patent claims cover the Company's proprietary Anticode molecules which target
BCL2, including its lead clinical candidate, G3139. Other related patents and
claims in the United States and Europe are still pending.
FOCAL ADHESION KINASE (FAK) GENE TARGET
FAK protein is involved in the regulation of adhesion-dependent growth
and motility of cells. In a variety of cancers - human epithelial and
mesenchymal tumors, such as those implicated in melanoma, lymphoma and multiple
myeloma - the manufacture of FAK protein ("FAK expression") is highly active.
Moreover, increased FAK expression correlates with increased invasiveness and
increased ability of cancer to metastasize (spread of cancer through body). In
collaborative pre-clinical experiments with Dr. William G. Cance, at the
University of North Carolina, Genta's Anticode oligonucleotides against FAK were
shown to inhibit the growth of a primary (the site at which the cancer is
believed to have begun) tumor and to virtually eliminate metastases in human
melanoma/immunocompromised mice xenograft models. Combined with the observation
that anti-FAK oligonucleotides appear to show few adverse effects against normal
tissues, such results indicate that the FAK target may represent a promising
therapeutic opportunity for both the treatment of primary disease and the
prevention of metastatic disease.
FUNCTIONAL GENOMICS CAPABILITIES
The Company's research has also led to the development of an expertise
in functional genomics, particularly in the area of target validation.
ORAL CONTROLLED-RELEASE DRUGS
Formulations of drugs using the GEOMATRIX technology are designed to
swell and gel when exposed to gastrointestinal fluids. This swelling and gelling
is designed to allow the active drug component to diffuse from the tablet into
the gastrointestinal fluids, gradually over a period of up to 24 hours. The
Company believes that the GEOMATRIX technology may have other benefits which,
collectively, may distinguish it from competing controlled-release technologies.
The Company believes GEOMATRIX formulations can control drug release and
potentially modulate pharmaco-kinetic profiles to produce a variety of desired
clinical effects. For example, the GEOMATRIX technology may be used to formulate
tablets with a rapid or a delayed therapeutic effect by varying the release
characteristics of the drug from the tablet. The GEOMATRIX technology may also
be used to formulate tablets that release two drugs at the same or different
rates, or tablets that release a drug in several pulses after administration.
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<PAGE>
Genta Jago is using the GEOMATRIX drug delivery technology to develop
oral controlled-release formulations for a broad range of presently marketed
drugs which have lost, or will in the near to mid-term lose, patent protection
and/or marketing exclusivity. Certain of these presently marketed drugs are
already available in a controlled-release format, while others are only
available in an immediate release format that requires dosing several times
daily. In the case of drugs already available in a controlled-release format,
Genta Jago is seeking to develop bioequivalent generic products which would be
therapeutic substitutes for the branded products. In the case of currently
marketed products that are only available in immediate release form requiring
multiple daily dosing, Genta Jago is seeking to develop once or twice-daily
controlled-release formulations. The potential benefits of Genta Jago's oral
controlled-release formulations may include improved compliance, greater
efficacy and reduced side effects as a result of a more constant drug plasma
concentration than that associated with immediate release drugs administered
several times daily.
Genta Jago's strategy is to commercialize its GEOMATRIX
controlled-release products worldwide primarily by forming alliances with major
pharmaceutical companies. Genta Jago has established three such collaborations.
Genta Jago currently has eight products in various stages of
development that are intended to be bioequivalent generic versions of
brand-name, controlled-release drugs currently marketed by others. Three of
these products, nifedipine (Procardia XL(R)), ketoprofen (Oruvail(R)), and
naproxen (Naprelan(R)) are currently undergoing manufacturing scale-up after
completion of formulation development and pilot human pharmacokinetic studies.
During the manufacturing scale-up phase of development, Genta Jago and its
collaborators are seeking to proceed from the production of small-scale research
quantities to the production of larger-scale quantities necessary for commercial
scale manufacturing. The scale-up has not yet been successfully completed for
these products. Assuming successful completion of manufacturing scale-up,
pivotal bioequivalency studies are scheduled to begin for these products in
1998. Genta Jago believes that if such bioequivalency studies are successfully
completed, ANDAs may be filed with the FDA for three of its products in 1998. In
addition, potentially bioequivalent versions of two other
products--Voltaren-XR(R) (diclofenac) and Covera-HS(R) (verapamil)--are
undergoing additional formulation development and pilot pharmacokinetic studies.
Genta Jago intends to proceed with manufacturing scale-up on these two products
during 1998. There can be no assurance that any product will be successfully
developed or receive the necessary regulatory approvals. See "Risk Factors --
Jago Notice of Default."
MANUFACTURING/JBL
Genta obtained its manufacturing capabilities in early 1991 through the
acquisition of JBL. JBL is a manufacturer of high-quality specialty biochemicals
and intermediate products for the pharmaceutical and in vitro diagnostic
industries. A number of Fortune 500 companies utilize JBL products as raw
material in the production of a final product. JBL manufactures and markets
specialty biochemicals and intermediate products to over 100 purchasers in the
pharmaceutical and diagnostic industries. JBL may in the future be able to
manufacture commercial grade Anticode oligonucleotides, including G3139.
However, the manufacturing facilities at JBL will also need to be formally
inspected by the FDA for compliance with requirements for Good Manufacturing
Practices ("GMP"). The Company is continuing to review and develop procedures,
documentation and facilities for the production of Anticode oligonucleotides
which it believes will adequately comply with the necessary GMP requirements.
The Company is currently having G3139 made on a contract manufacturing basis by
a third party supplier. To the extent Genta is able to establish its own
manufacturing capability for G3139, the Company should be able to reduce the
cost of producing such oligonucleotides. Failure to establish compliance with
GMP to the satisfaction of the FDA can result in delays in establishing the
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<PAGE>
Company's own manufacturing capability, and there can be no assurance that the
Company will be able to establish such manufacturing capability.
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully by prospective investors before
purchasing the shares of Common Stock offered hereby:
Need for Additional Funds. Genta's operations to date have consumed
substantial amounts of cash. Substantial additional sources of financing will be
required in order for the Company to continue its planned operations. The
Company will need to raise substantial additional funds to conduct the costly
and time-consuming research, pre-clinical development and clinical trials
necessary to bring its products to market and to establish production and
marketing capabilities. The Company intends to seek additional funding through
public or private financings, including equity financings, and through
collaborative arrangements. Adequate funds for these purposes, whether obtained
through financial markets or collaborative or other arrangements with corporate
partners or from other sources, may not be available when needed or on terms
acceptable to the Company. Insufficient funds may require the Company to delay,
scale back or eliminate some or all of its research and product development
programs or to license third parties to commercialize products or technologies
that the Company would otherwise seek to develop itself. The Company's future
cash requirements will be affected by results of research and development,
results of pre-clinical studies and bioequivalence and clinical trials,
relationships with corporate collaborators, changes in the focus and direction
of the Company's research and development programs, competitive and
technological advances, resources devoted to Genta Jago, the FDA and foreign
regulatory process, potential litigation by companies seeking to prevent or
delay marketing approval of Genta Jago's products and other factors.
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Jago Notice of Default. On May 7, 1997, Jago Pharma AG ("Jago") and
Jagotec gave Genta Jago formal notices of its assertion that Genta Jago is in
breach of the Restated GEOMATRIX(R) Services Agreement dated May 12, 1995, the
Restated GEOMATRIX(R) Research and Development Agreement dated May 12, 1995, and
the Restated GEOMATRIX(R) License Agreement dated May 12, 1995, stating that
should the breach not be cured within the applicable cure period, Genta Jago
would reserve the right to terminate the agreements in accordance with their
terms. Jago, Jagotec and Jago Holding AG also gave formal notice of default
under the Restated Joint Venture and Shareholders Agreement dated May 12, 1995,
contending that due to Genta's failure to meet its funding obligations to Genta
Jago, Genta Jago was unable to fulfill its obligations to Jago. The amount
claimed by Jago to be in default is approximately $1.2 million, of which
$200,000 relates to 1997 and $1.0 million relates to development costs and
license fees for 1996. The Company recently met with Jago and is attempting to
resolve the situation without resort to litigation. While a termination of these
agreements may have a material adverse effect on the Company, the Company
intends vigorously to oppose Jago's position. Without prejudice to Genta's
position, Genta provided approximately $129,000 for the payment by Genta Jago of
all amounts claimed by Jago under the Restated GEOMATRIX(R) License Agreement
and certain other amounts owed by Genta Jago to third parties (both included in
Jago's notice of default).
Subordination of Common Stock to Senior Secured Convertible Bridge
Notes and Series A, Series C and Series D Preferred Stock; Risk of Dilution;
Anti-dilution Adjustments. In the event of the liquidation, dissolution or
winding up of the Company, the Common Stock is expressly subordinate to $2.35
million principal amount of Convertible Notes (payable on the earlier of (i)
December 31, 1997 or (ii) the date of any decision, order or other determination
adverse to the Company or any of its directors by any court or other tribunal in
any lawsuit or other proceeding against the Company and/or any of its directors
by any of the Company's preferred stockholders), the approximately $29 million
preference of the 528,100 outstanding shares of Series A Preferred Stock, the
approximately $1.2 million preference of the 1,144 shares of Series C Preferred
Stock and the approximately $37 million preference of 261,975 shares of Series D
Preferred Stock (assuming full conversion of the Convertible Notes but excluding
any Series D Preferred Stock that may be issued pursuant to conversion of any
interest on the Convertible Notes and including 40,395 shares of Series D
Preferred Stock issuable upon exercise of certain warrants exercisable after
December 31, 1997). Further, the payment of dividends on the Common Stock is
prohibited by the terms of the Convertible Notes unless approved by the
Convertible Note holders, nor may any dividends be paid on the Common Stock
unless full cumulative dividends on the Series A, Series C and Series D
Preferred Stock have been paid or funds have been set aside for such preferred
dividends by the Company.
The Convertible Notes are initially convertible into 60,000 shares (and
such additional shares issuable upon conversion of the interest on the
Convertible Notes) of Series D Preferred Stock, which are in turn convertible
into Common Stock as described below. The conversion rate of the Series A
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Preferred Stock and the exercise price of warrants issued in connection with the
Series A Preferred Stock (the "Series A Warrants") is subject to adjustment,
among other things, upon certain issuances of Common Stock or securities
convertible into Common Stock at $67.50 per share or less. Each share of Series
A Preferred Stock is presently convertible into 6.65 shares of Common Stock and
the exercise price of the Series A Warrants is presently $9.32 per share. There
are outstanding Series A Warrants to purchase an aggregate of 60,000 shares of
Common Stock. Shares of Series C Preferred Stock are convertible into Common
Stock at a conversion price equal to 75% of a moving average of market-based
prices. The conversion rate of the Series D Preferred Stock and the exercise
prices of the Class D Warrants are subject to adjustment, among other things,
upon certain issuances of Common Stock or securities convertible into Common
Stock at prices per share below certain levels. In addition, the Conversion
Price of the Series D Preferred Stock in effect on June 29, 1998 (the "Reset
Date") will be adjusted and reset effective as of the Reset Date if the average
closing bid price of the Common Stock for the 20 consecutive trading days
immediately preceding the Reset Date (the "l2 Month Trading Price") is less than
l40% of the then applicable Conversion Price (a "Reset Event"). Upon the
occurrence of a Reset Event, the then applicable Conversion Price will be
reduced to be equal to the greater of (i) the l2 Month Trading Price divided by
l.40, and (ii) 25% of the then applicable Conversion Price. Each share of Series
D Preferred Stock is presently convertible into 106 shares of Common Stock and
the exercise price of the Class D Warrants is presently $.94375 per share. There
are 807,900 Class D Warrants outstanding and another 201,975 Class D Warrants
issuable upon the exercise of certain warrants. Finally, the Company has
outstanding warrants to purchase an aggregate of 6,357,616 shares of Common
Stock at an exercise price of $.471875 per share, warrants to purchase an
aggregate of 50,000 shares of Common Stock at an exercise price of $2.50 per
share, warrants to purchase an aggregate of 95,769 shares of Common Stock at
various exercise prices between approximately $13 and $21 per share and
outstanding employee stock options.
Early Stage of Development; Technological Uncertainty. Genta is at an
early stage of development. All of the Company's potential therapeutic products
are in research or development, and no revenues have been generated from
therapeutic product sales. To date, a portion of the Company's resources have
been dedicated to applying molecular biology and medicinal chemistry to the
research and development of potential pharmaceutical products based upon
Anticode technology. While the Company has demonstrated the activity of Anticode
technology in model systems in vitro and the activity of antisense technology in
animals and has identified a number of compounds which the Company believes are
worthy of additional testing, only one of these potential Anticode products has
begun to be tested in humans, with such testing in its early stages. There can
be no assurance that the novel approach of Anticode technology to develop
therapeutic products will result in products which receive necessary regulatory
approvals or that will be successful commercially. Further, results obtained in
pre-clinical studies or pilot bioequivalence trials are not necessarily
indicative of results that will be obtained in human clinical testing or pivotal
bioequivalence trials, respectively. The Company is also developing products for
certain diseases where no animal models exist. There can be no assurance that
any of the Company's or Genta Jago's potential products can be successfully
developed. Furthermore, the Company's products in research or development may
prove to have undesirable and unintended side effects or other characteristics
that may prevent or limit their commercial use. There can be no assurance that
the Company will be permitted to undertake human clinical testing of the
Company's products currently in pre-clinical development, or, if permitted, that
such products will be demonstrated to be safe and efficacious. The Company is
pursuing research and development, through Genta Jago, of a range of oral
controlled-release formulations of currently available pharmaceuticals. Many of
the products to be developed through Genta Jago have not yet been successfully
formulated using GEOMATRIX technology. In addition, none of the products being
developed through Genta Jago has had its manufacturing process successfully
scaled-up for commercial production or has started pivotal bioequivalence
trials. In addition, there can be no
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assurance that any of the Company's or Genta Jago's products will obtain FDA or
foreign regulatory approval for any indication or that an approved compound
would be capable of being produced in commercial quantities at reasonable costs
and successfully marketed. Products, if any, resulting from Genta's or Genta
Jago's research and development programs are not expected to be commercially
available for a number of years.
Loss History; Uncertainty of Future Profitability. Genta has been
unprofitable to date, incurring substantial operating losses associated with
ongoing research and development activities, pre-clinical testing, clinical
trials, manufacturing activities and development activities undertaken by Genta
Jago. From the period since its inception to June 30, 1997, the Company has
incurred a cumulative net loss of $114.2 million. The Company has experienced
significant quarterly fluctuations in operating results and expects that these
fluctuations in revenues, expenses and losses will continue. The Company has
historically experienced significant quarterly fluctuations in its level of
product sales, generally reflecting the timing and degree of customer demand for
various products. The Company's independent auditors have included an
explanatory paragraph in their report to the Company's financial statements at
December 31, 1996, which paragraph expresses substantial doubt as to the
Company's ability to continue as a going concern. However, in 1997, the Company
has raised net proceeds of approximately $17 million (net of expenses) in
various private placements. See "Recent Developments."
Limited Availability of Net Operating Loss Carry Forwards. For Federal
income tax purposes, net operating loss and tax credit carryforwards as of
December 31, 1996 are approximately $61,731,000 and $9,585,000, respectively.
These carryforwards will expire beginning in 2003. The Tax Reform Act of 1986
provided for a limitation on the use of net operating loss and tax credit
carryforwards following certain ownership changes. The Company believes that the
Private Placement, together with certain prior issuances of securities, may
restrict the Company's ability to utilize its net operating losses and tax
credits. Additionally, because U.S. tax laws limit the time during which net
operating loss and tax credit carryforwards may be applied against future
taxable income and tax liabilities, respectively, the Company may not be fully
able to use its net operating loss and tax credits for federal income tax
purposes.
Dividends. The Company has never paid cash dividends on its Common
Stock and does not anticipate paying any such dividends in the foreseeable
future. In addition, the Company is restricted from paying cash dividends on its
Common Stock until such time as all cumulative dividends have been paid on
outstanding shares of its Series A, Series C and Series D Preferred Stock. The
Company currently intends to retain its earnings, if any, after payment of
dividends on outstanding shares of Series A, Series C and Series D Preferred
Stock, for the development of its business.
No Assurance of Regulatory Approval; Government Regulation. The FDA and
comparable agencies in foreign countries impose substantial premarket approval
requirements upon the introduction of pharmaceutical products through lengthy
and detailed pre-clinical and clinical testing procedures and other costly and
time-consuming procedures. Satisfaction of these requirements, which includes
demonstrating to the satisfaction of the FDA and foreign regulatory agencies
that the product is both safe and effective, typically takes several years or
more depending upon the type, complexity and novelty of the product. There can
be no assurance that such testing will show any product to be safe or
efficacious or, in the case of certain of Genta Jago's products, to be
bioequivalent to a currently marketed pharmaceutical. Government regulation also
affects the manufacture and marketing of pharmaceutical products. The effect of
government regulation may be to delay marketing of any new products for a
considerable or indefinite period of time, to impose costly procedures upon the
Company's or Genta Jago's activities and to diminish any competitive
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advantage that the Company or Genta Jago may attain. It may take years before
marketing approvals are obtained for the Company's or Genta Jago's products, if
at all. There can be no assurance that FDA or other regulatory approval for any
products developed by the Company or Genta Jago will be granted on a timely
basis, if at all, or, if granted, that such approval will cover all the clinical
indications for which the Company or Genta Jago is seeking approval or will not
sustain significant limitations in the form of warnings, precautions or
contraindications with respect to conditions of use. Further, with respect to
the reformulated versions of currently available pharmaceuticals being developed
through Genta Jago, there is a substantial risk that the manufacturers or
marketers of such currently available pharmaceuticals will seek to delay or
block regulatory approval of any reformulated versions of such pharmaceuticals
through litigation or other means. Any significant delay in obtaining, or
failure to obtain, such approvals would materially adversely affect the
Company's and Genta Jago's revenue. Moreover, additional government regulation
from future legislation or administrative action may be established which could
prevent or delay regulatory approval of the Company's or Genta Jago's products
or further regulate the prices at which the Company's or Genta Jago's proposed
products may be sold.
The Company is also subject to various foreign, federal, state and
local laws, regulations and recommendations (collectively "Governmental
Regulations") relating to safe working conditions, laboratory and manufacturing
practices, the experimental use of animals and the use, manufacture, storage,
handling and disposal of hazardous or potentially hazardous substances,
including radioactive compounds and infectious disease agents, used in
connection with the Company's research and development work and manufacturing
processes. In October 1996, JBL retained a chemical consulting firm to advise it
with respect to environmental compliance regarding an incident of soil and
groundwater contamination (the "Spill") by small quantities of certain
chemicals. The Company believes, based upon information known to date, that the
Spill is relatively minor and will not have a material adverse effect on the
business of the Company, although there can be no assurance thereof. Although
the Company believes it is in compliance with Governmental Regulations in all
material respects (except with respect to the Spill), there can be no assurance
that the Company will not be required to incur significant costs to comply with
Governmental Regulations in the future.
Uncertainty Regarding Patents and Proprietary Technology. The Company's
and Genta Jago's success will depend, in part, on their respective abilities to
obtain patents, maintain trade secrets and operate without infringing the
proprietary rights of others. No assurance can be given that patents issued to
or licensed by the Company or Genta Jago will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company or Genta Jago. There can be no assurance that the
Company's or Genta Jago's patent applications will be approved, that the Company
or Genta Jago will develop additional products that are patentable, that any
issued patent will provide the Company or Genta Jago with any competitive
advantage or adequate protection for its inventions or will not be challenged by
others, or that the patents of others will not have an adverse effect on the
ability of the Company or Genta Jago to do business. Competitors may have filed
applications, may have been issued patents or may obtain additional patents and
proprietary rights relating to products or processes competitive with those of
the Company or Genta Jago. Furthermore, there can be no assurance that others
will not independently develop similar products, duplicate any of the Company's
or Genta Jago's products or design around any patented products developed by the
Company or Genta Jago. The Company and Genta Jago rely on secrecy to protect
technology in addition to patent protection, especially where patent protection
is not believed to be appropriate or obtainable. No assurance can be given that
others will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to the Company's or Genta
Jago's trade secrets, or that the Company or Genta Jago can effectively protect
its rights to its unpatented trade secrets.
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Genta and Genta Jago have obtained licenses or other rights to patents
and other proprietary rights of third parties, and may be required to obtain
licenses to additional patents or other proprietary rights of third parties. No
assurance can be given that any existing licenses and other rights will remain
in effect or that any licenses required under any such additional patents or
proprietary rights would be made available on terms acceptable to the Company or
Genta Jago, if at all. If Genta's or Genta Jago's licenses and other rights are
terminated or if Genta or Genta Jago cannot obtain such additional licenses,
Genta or Genta Jago could encounter delays in product market introductions while
it attempts to design around such patents or could find that the development,
manufacture or sale of products requiring such licenses could be foreclosed. In
addition, the Company or Genta Jago could incur substantial costs, including
costs caused by delays in obtaining regulatory approval and bringing products to
market, in defending itself in any suits brought against the Company or Genta
Jago claiming infringement of the patent rights of third parties or in asserting
the Company's or Genta Jago's patent rights, including those granted by third
parties, in a suit against another party. The Company or Genta Jago may also
become involved in interference proceedings declared by the United States Patent
and Trademark Office in connection with one or more of its patents or patent
applications, which could result in substantial cost to the Company or Genta
Jago, as well as an adverse decision as to priority of invention of the patent
or patent application involved. There can be no assurance that the Company or
Genta Jago will have sufficient funds to obtain, maintain or enforce patents on
their respective products or technology, to obtain or maintain licenses that may
be required in order to develop and commercialize their respective products, to
contest patents obtained by third parties, or to defend against suits brought by
third parties.
Dependence on Others. The Company's and Genta Jago's strategy for the
research, development and commercialization of their products requires
negotiating, entering into and maintaining various arrangements with corporate
collaborators, licensors, licensees and others, and is dependent upon the
subsequent success of these outside parties in performing their
responsibilities. No assurance can be given that they will obtain such
collaborative arrangements on acceptable terms, if at all, nor can any assurance
be given that any current collaborative arrangements will be maintained.
Technology Licensed From Third Parties. The Company has entered into
certain agreements with, and licensed certain technology and compounds from,
third parties. The Company has relied on scientific, technical, clinical,
commercial and other data supplied and disclosed by others in entering into
these agreements, including the Genta Jago agreements, and will rely on such
data in support of development of certain products. Although the Company has no
reason to believe that this information contains errors of omission or fact,
there can be no assurance that there are no errors of omission or fact that
would materially affect the future approvability or commercial viability of
these products.
Potential Adverse Effect of Technological Change and Competition. The
biotechnology industry is subject to intense competition and rapid and
significant technological change. The Company and Genta Jago have numerous
competitors in the United States and other countries for their respective
technologies and products under development, including among others, major
pharmaceutical and chemical companies, specialized biotechnology firms,
universities and other research institutions. There can be no assurance that the
Company's or Genta Jago's competitors will not succeed in developing products or
other novel technologies that are more effective than any which have been or are
being developed by the Company or Genta Jago or which would render the Company's
or Genta Jago's technology and products non-competitive. Many of the Company's
and Genta Jago's competitors have substantially greater financial, technical,
marketing and human resources than the Company or Genta Jago. In addition, many
of those competitors have significantly
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greater experience than the Company or Genta Jago in undertaking pre-clinical
testing and human clinical trials of new pharmaceutical products and obtaining
FDA and other regulatory approvals of products for use in healthcare.
Accordingly, the Company's or Genta Jago's competitors may succeed in obtaining
regulatory approval for products more rapidly than the Company or Genta Jago and
such competitors may succeed in delaying or blocking regulatory approvals of the
Company's or Genta Jago's products. Furthermore, if the Company or Genta Jago is
permitted to commence commercial sales of products, it will also be competing
with respect to marketing capabilities, an area in which it has limited or no
experience, and manufacturing efficiency. There are many public and private
companies that are conducting research and development activities based on drug
delivery and antisense technologies. The Company believes that the industry-wide
interest in such technologies will accelerate and competition will intensify as
the techniques which permit drug design and development based on such
technologies are more widely understood.
Uncertainty of Clinical Trials and Results. The results of clinical
trial and pre-clinical testing are subject to varying interpretations. Even if
the development of the Company's products advances to the clinical stage, there
can be no assurance that they will prove to be safe and effective. The products
that are successfully developed, if any, will be subject to requisite regulatory
approval prior to their commercial sale, and the approval, if obtainable, may
take several years. Generally, only a very small percentage of the number of new
pharmaceutical products initially developed is approved for sale. Even if
products are approved for sale, there can be no assurance that they will be
commercially successful. The Company may encounter unanticipated problems
relating to development, manufacturing, distribution and marketing, some of
which may be beyond the Company's financial and technical capacity to solve. The
failure to address such problems adequately could have a material adverse effect
on the Company's business, financial condition, prospects and results of
operations. No assurance can be given that the Company will succeed in the
development and marketing of any new drug products, or that they will not be
rendered obsolete by products of competitors.
Difficult Manufacturing Process. The manufacture of Anticode
oligonucleotides is a time-consuming and complex process. Management believes
that the Company has the ability to acquire or produce quantities of
oligonucleotides sufficient to support its present needs for research and its
projected needs for its initial clinical development programs. However, Genta
believes that it will need to obtain an agreement with a third party supplier
(including, potentially, agreements with competitors of Genta) or make
improvements in its manufacturing technology to enable the Company to meet the
volume and cost requirements needed for certain commercial applications of
Anticode products. Products based on chemically modified oligonucleotides have
never been manufactured on a commercial scale. The manufacture of all of the
Company's and Genta Jago's products will be subject to current GMP requirements
prescribed by the FDA or other standards prescribed by the appropriate
regulatory agency in the country of use. There can be no assurance that the
Company or Genta Jago will be able to manufacture products, or have products
manufactured for it, in a timely fashion at acceptable quality and prices, that
they or third party manufacturers can comply with GMP or that they or third
party manufacturers will be able to manufacture an adequate supply of product.
Limited Sales, Marketing and Distribution Experience. The Company and
Genta Jago have very limited experience in pharmaceutical sales, marketing and
distribution. In order to market and sell certain products directly, the Company
or Genta Jago would have to develop or subcontract a sales force and a marketing
group with technical expertise. There can be no assurance that any direct sales
or marketing efforts would be successful.
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Uncertainty of Product Pricing, Reimbursement and Related Matters. The
Company's and Genta Jago's business may be materially adversely affected by the
continuing efforts of governmental and third party payers to contain or reduce
the costs of healthcare through various means. For example, in certain foreign
markets the pricing or profitability of healthcare products is subject to
government control. In the United States, there have been, and the Company
expects that there will continue to be, a number of federal and state proposals
to implement similar governmental control. While the Company cannot predict
whether any such legislative or regulatory proposals or reforms will be adopted,
the adoption of any such proposal or reform could adversely affect the
commercial viability of the Company's and Genta Jago's potential products. In
addition, in both the United States and elsewhere, sales of healthcare products
are dependent in part on the availability of reimbursement to the consumer from
third party payers, such as government and private insurance plans. Third party
payers are increasingly challenging the prices charged for medical products and
services and therefore, significant uncertainty exists as to the reimbursement
of existing and newly approved healthcare products. If the Company or Genta Jago
succeeds in bringing one or more products to the market, there can be no
assurance that these products will be considered cost effective and that
reimbursement to the consumer will be available or will be sufficient to allow
the Company or Genta Jago to sell its products on a competitive basis.
Dependence on Qualified Personnel; No Full Time Chief Executive
Officer. The Company does not currently have a Chief Executive Officer. The
Company's success is highly dependent on the hiring and retention of key
personnel and scientific staff. The loss of key personnel or the failure to
recruit necessary additional personnel does and will further impede the
achievement of development objectives. There is intense competition for
qualified personnel in the areas of the Company's activities, and there can be
no assurance that Genta will be able to continue to attract and retain the
qualified personnel necessary for the development of its business. The Company
is actively engaged in the search for a new Chief Executive Officer.
Product Liability Exposure; Limited Insurance Coverage. The Company's,
JBL's and Genta Jago's businesses expose them to potential product liability
risks which are inherent in the testing, manufacturing, marketing and sale of
human therapeutic products. If available, product liability insurance for the
pharmaceutical industry generally is expensive. The Company has obtained a level
of liability insurance coverage which it deems appropriate for its current stage
of development. However, there can be no assurance that the Company's present
insurance coverage is adequate. Such existing coverage may not be adequate as
the Company further develops products, and no assurance can be given that in the
future adequate insurance coverage will be available in sufficient amounts or at
a reasonable cost, or that a product liability claim would not have a material
adverse effect on the business or financial condition of the Company.
Fundamental Change. The Company's Restated Certificate of Incorporation
currently provides that upon the occurrence of a "Fundamental Change," the
holders of Series A Preferred Stock have the option of requiring the Company to
repurchase all of each such holder's shares of Series A Preferred Stock at the
Redemption Price, an event that could result in the Company being required to
pay to the holders of Series A Preferred Stock cash in the aggregate amount of
approximately $29 million. "Fundamental Change" is defined as: (i) a "person" or
"Group" (as defined), together with any affiliates thereof, becoming the
beneficial owner (as defined) of Voting Shares (as defined) of the Company
entitled to exercise more than 60% of the total voting power of all outstanding
Voting Shares of the Company (including any Voting Shares that are not then
outstanding of which such person or Group is deemed the beneficial
owner)(subject to certain exceptions); (ii) any consolidation of the Company
with, or merger of the Company into, any other person, any merger of another
person into the Company, or any sale, lease or transfer of all or
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substantially all of the assets of the Company to another person (subject to
certain exceptions); (iii) the sale, transfer or other disposition (or the entry
into a commitment to sell, transfer or otherwise dispose) of all of any portion
of the shares of Genta Jago held at any time by the Company (or the imposition
of any material lien on such shares which lien is not removed within 30 days of
imposition) and the sale (or functional equivalent of a sale) of all or
substantially all of the assets of Genta Jago or (iv) the substantial reduction
or elimination of a public market for the Common Stock as the result of
repurchases, delisting or deregistration of the Common Stock or corporate
reorganization or recapitalization undertaken by the Company.
Hazardous Materials; Environmental Matters. The Company's research and
development and manufacturing processes involve the controlled storage, use and
disposal of hazardous materials, biological hazardous materials and radioactive
compounds. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and certain waste products. Although the Company believes that
its safety procedures for handling and disposing of such materials comply with
the standards prescribed by such laws and regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company may be held liable for any damages
that result, and any such liability could exceed the resources of the Company.
There can be no assurance that the Company will not be required to incur
significant costs to comply with environmental laws and regulations in the
future, nor that the operations, business or assets of the Company will not be
materially adversely affected by current or future environmental laws of
regulations. See "Risk Factors - No Assurance of Regulatory Approval; Government
Regulation" for a discussion of the Spill.
Volatility of Stock Price; Market Overhang from Outstanding Convertible
Securities and Warrants. The market price of the Company's Common Stock, like
that of the common stock of many other biopharmaceutical companies, has been
highly volatile and may be so in the future. Factors such as, among other
things, the results of pre-clinical studies and clinical trials by Genta, Genta
Jago or their competitors, other evidence of the safety or efficacy of products
of Genta, Genta Jago or their competitors, announcements of technological
innovations or new therapeutic products by the Company, Genta Jago or their
competitors, governmental regulation, developments in patent or other
proprietary rights of the Company or its competitors, including litigation,
fluctuations in the Company's operating results, and market conditions for
biopharmaceutical stocks in general could have a significant impact on the
future price of the Common Stock. At the Company's Annual Meeting of
Stockholders held on April 4, 1997, the stockholders approved an amendment to
the Company's Restated Certificate of Incorporation effecting a one-for-ten
reverse stock split of its Common Stock. The stockholders also approved a
reduction of the Company's authorized shares of Common Stock from 150,000,000 to
70,000,000. The Company commenced trading on a post reverse split basis at the
commencement of trading on April 7, 1997. As of July 31, 1997, the Company had
4,451,018 shares of Common Stock outstanding. Future sales of shares of Common
Stock by existing stockholders and option holders also could adversely affect
the market price of the Common Stock.
No predictions can be made of the effect that future market sales of
the shares of Common Stock underlying the convertible securities and warrants
referred to under the caption "Risk Factors Subordination of Common Stock to
Senior Secured Convertible Bridge Notes and Series A, Series C and Series D
Preferred Stock; Risk of Dilution; Anti-dilution Adjustments," or the
availability of such securities for sale, will have on the market price of the
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock, or the perception that such sales might occur, could adversely
affect prevailing market prices.
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Certain Interlocking Relationships; Potential Conflicts of Interest.
The Aries Trust, a Cayman Islands trust, and the Aries Domestic Fund, L.P., a
Delaware limited partnership (collectively, the "Aries Funds"), have the
contractual right to appoint a majority of the members of the Board of Directors
of the Company. The Aries Funds have appointed Michael S. Weiss to the Board of
Directors. David R. Walner, the Secretary of the Company, is an Associate
Director and Secretary of Paramount Capital Asset Management, Inc. ("PCAM").
PCAM is the investment manager and general partner of The Aries Trust and the
Aries Domestic Fund, L.P., respectively. The Aries Funds currently do not hold a
controlling block of voting stock, although the Aries Funds have the present
right to appoint a majority of the Board of Directors, and to convert and
exercise their securities into a significant portion of the outstanding Common
Stock. See "Risk Factors Concentration of Ownership and Control" below. Dr.
Lindsay A. Rosenwald, the President and sole stockholder of PCAM, is also the
President of Paramount Capital Investments LLC, a New York-based merchant
banking and venture capital firm specializing in biotechnology companies
("PCI"). In the regular course of its business, PCI identifies, evaluates and
pursues investment opportunities in biomedical and pharmaceutical products,
technologies and companies. Generally, Delaware corporate law requires that any
transactions between the Company and any of its affiliates be on terms that,
when taken as a whole, are substantially as favorable to the Company as those
then reasonably obtainable from a person who is not an affiliate in an
arms-length transaction. Nevertheless, neither such affiliates nor PCI is
obligated pursuant to any agreement or understanding with the Company to make
any additional products or technologies available to the Company, nor can there
be any assurance, and the Company does not expect and purchasers of the
securities offered hereby should not expect, that any biomedical or
pharmaceutical product or technology identified by such affiliates or PCI in the
future will be made available to the Company. In addition, certain of the
current officers and directors of the Company or certain of any officers or
directors of the Company hereafter appointed may from time to time serve as
officers or directors of other biopharmaceutical or biotechnology companies.
There can be no assurance that such other companies will not have interests in
conflict with those of the Company.
Concentration of Ownership and Control. The Company's directors,
executive officers and principal stockholders and certain of their affiliates
have the ability to influence the election of the Company's directors and most
other stockholder actions. See "Risk Factors - Certain Interlocking
Relationships; Potential Conflicts of Interest." Accordingly, the Aries Funds
have the ability to exert significant influence over the election of the
Company's Board of Directors and other matters submitted to the Company's
stockholders for approval. These arrangements may discourage or prevent any
proposed takeover of the Company, including transactions in which stockholders
might otherwise receive a premium for their shares over the then current market
prices. Such stockholders may influence corporate actions, including influencing
elections of directors and significant corporate events. See also, "Risk Factors
- - Effect of Certain Anti-Takeover Provisions" below.
Effect of Certain Anti-Takeover Provisions. The Company's Restated
Certificate of Incorporation and By-laws include provisions that could
discourage potential takeover attempts and make attempts by stockholders to
change management more difficult. The approval of 66-2/3% of the Company's
voting stock is required to approve certain transactions and to take certain
stockholder actions, including the calling of a special meeting of stockholders
and the amendment of any of the anti-takeover provisions contained in the
Company's Restated Certificate of Incorporation. Additionally, the Company has
contractual obligations to certain of its security holders which may impair
potential takeovers. Further, pursuant to the terms of its stockholder rights
plan adopted in December 1993, the Company has distributed a dividend of one
right for each outstanding share of Common Stock. These rights will cause a
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors and may have the effect of
-18-
<PAGE>
deterring hostile takeover attempts. The stockholder rights plan was amended to
permit the consummation of the $3 million private placement in February 1997 and
the Private Placement in June 1997.
Risks of Low-Priced Stock; Possible Effect of "Penny Stock" Rules on
Liquidity for the Company's Securities. If the Company's securities were not
listed on a national securities exchange nor listed on a qualified automated
quotation system, they may become subject to Rule 15g-9 under the Exchange Act,
which imposes additional sales practice requirements on broker-dealers that sell
such securities to persons other than established customers and "accredited
investors" (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000 or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. Consequently, such Rule may
affect the ability of broker-dealers to sell the Company's securities and may
affect the ability of purchasers to sell any of the Company's securities in the
secondary market.
The SEC has adopted regulations that define a "penny stock" to be any
equity security that has a market price (as therein defined) of less than $5.00
per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the SEC relating to the penny stock market.
Disclosure is also required to be made about sales commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.
The foregoing required penny stock restrictions will not apply to the
Company's securities if the Company meets certain minimum net tangible assets or
average revenue criteria. There can be no assurance that the Company's
securities will qualify for exemption from the penny stock restrictions. In any
event, even if the Company's securities were exempt from such restrictions, the
Company would remain subject to Section 15(b)(6) of the Exchange Act, which
gives the SEC the authority to restrict any person from participating in a
distribution of penny stock, if the SEC finds that such a restriction would be
in the public interest.
If the Company's securities were subject to the rules on penny stocks,
the market liquidity for the Company's securities could be materially adversely
affected.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Registered Shares.
CAPITAL STOCK
The authorized capital stock of Genta consists of 70,000,000 shares of
Common Stock, $.001 par value, and 5,000,000 shares of preferred stock, $.001
par value.
As of July 31, 1997, there were 4,451,018 shares of Common Stock,
528,100 shares of Series A Preferred Stock, 1,144 shares of Series C Preferred
Stock and 174,580 shares of Series D Preferred Stock outstanding. The holders of
Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the stockholders. Genta's Restated Certificate of
Incorporation does not provide for cumulative voting. Subject to preferences
that may be applicable to any then outstanding preferred stock, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor. The Company
does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future. In the event of a liquidation, dissolution or winding up of
Genta, holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
then outstanding preferred stock. Holders of Common Stock have no preemptive
rights and no right to convert their Common Stock into any other securities.
There are no redemption or sinking fund provisions applicable to the Common
Stock. All outstanding shares of Common Stock are fully paid and nonassessable.
The shares of Series D Preferred Stock are convertible into shares of
Common Stock at a Conversion Price of $.94375 on the date hereof. The Conversion
Price is subject to adjustment upon the occurrence of certain events, such as
below market or Conversion Price issuances or stock dividends or stock splits of
the Common Stock. In addition, the Conversion Price in effect on June 29, 1998
(the "Reset Date") will be adjusted and reset effective as of the Reset Date if
the average closing bid price of the Common Stock for the 20 consecutive trading
days immediately preceding the Reset Date (the "l2 Month Trading Price") is less
than l40% of the then applicable Conversion Price (a "Reset Event"). Upon the
occurrence of a Reset Event, the then applicable Conversion Price will be
reduced to be equal to the greater of (i) the l2 Month Trading Price divided by
l.40, and (ii) 25% of the then applicable Conversion Price. The 29,998,511
Contingent Shares included in the Registered Shares assumes the Conversion Price
is reduced to $.3429.
-19-
<PAGE>
INCOME TAX CONSIDERATIONS
Each prospective purchaser should consult his or her own tax advisor
with respect to the income tax issues and consequences of holding and disposing
of the Common Stock.
SELLING STOCKHOLDERS
The Registered Shares are being registered pursuant to registration
rights granted to the Selling Stockholders. As of September 9, 1997, there were
172 Selling Stockholders. Common Stock ownership information is based solely
upon either information furnished to the Company or reports furnished to the
Company by the respective individuals or entities, as the case may be, pursuant
to the rules of the SEC.
The following table sets forth as of September 9, 1997 (i) the name of
each Selling Stockholder, (ii) the number of shares of Common Stock owned by or
issuable to such holder upon conversion or exercise of outstanding securities
(excluding the Contingent Shares), (iii) the number of Contingent Shares
issuable under certain circumstances after June 29, 1998 (see "Capital Stock"),
(iv) the number of shares of Common Stock eligible to be sold by each Selling
Stockholder and (v) the number and percentage of shares of Common Stock to be
owned by each such holder following the completion of this offering. The number
of shares of Common Stock set forth in (iv) above, and under the caption
"Registered Shares Eligible to be Sold as of September 9, 1997" below represents
the aggregate number of shares of (A) Common Stock issuable upon conversion of
the Series D Preferred Stock owned by each Selling Stockholder, (B) Common Stock
issuable upon exercise of the Class D Warrants, the Initial Warrants and the
Line of Credit Warrants and (C) Common Stock issuable in connection with the
Consulting Agreements (assuming for (A) and (B) the present conversion/exercise
rates under the terms of the Series D Preferred Stock, the Class D Warrants, the
Initial Warrants and the Line of Credit Warrants, respectively), in each case as
of September 9, 1997. Except as noted below, none of the Selling Stockholders
named in the following table has had any position, office or other material
relationship with the Company or any of its affiliates within the past three
years.
<TABLE>
<CAPTION>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Ain, Ross D. 22,192 63,576 22,192 0 *
Altschul Investment Group 110,960 317,881 110,960 0 *
Altschuler, Robert 27,740 79,470 27,740 0 *
Aries Domestic Fund, L.P.(1) 5,014,292 8,180,025 4,986,842 27,450 *
Armen Offshore Fund 110,960 317,881 110,960 0 *
Armen Partners L.P. 277,401 794,702 277,401 0 *
Arterio, Inc. 55,480 158,941 55,480 0 *
- ---------------------------
* Less than one percent
-20-
<PAGE>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
Banque SCS Alliance SA 221,921 635,761 221,921 0 *
Barness, Amnon & Caren 55,480 158,941 55,480 0 *
Bedzow, Benjamin 11,096 31,788 11,096 0 *
Benjamin Jesselson 4/8/71 Trust 221,921 635,761 221,921 0 *
[ ] 388,361 1,112,583 388,361 0 *
Brady, James W. 11,096 31,788 11,096 0 *
Brapo Associates 27,740 79,470 27,740 0 *
Broy, Anthony 55,480 158,941 55,480 0 *
BRT Partnership by Solomon A. 166,440 476,821 166,440 0 *
Weisgal Trustee/Partner
Burgess, Helene 55,480 158,941 55,480 0 *
Carlos Plancarte G.N. Leonor & 33,288 95,364 33,288 0 *
P. De Maravan
Cass & Co. - Magnum Capital 110,960 317,881 110,960 0 *
Growth Fund
Cerrone, Gabriel 55,480 158,941 55,480 0 *
Chasanoff, Ted 13,870 39,735 13,870 0 *
Comox Co. Ltd 110,960 317,881 110,960 0 *
Conrads, Robert J. 83,220 238,411 83,220 0 *
Cooperative Holding Corporation 27,740 79,470 27,740 0 *
Cox, Jr., Archibald 166,440 476,821 166,440 0 *
Davis, Mort 27,740 79,470 27,740 0 *
Dee, John F.(2) 27,740 79,470 27,740 0 *
de Ramirez, Elke R. 11,096 31,788 11,096 0 *
Diamond, Nathan P. & Lauren S. 27,740 79,470 27,740 0 *
DiFalco, Nicholas 55,480 158,941 55,480 0 *
[ ] 554,801 1,589,404 554,801 0 *
Domaco Venture Capital Fund 27,740 79,470 27,740 0 *
Drax Holdings, LP 277,401 794,702 277,401 0 *
Erica Jesselson 1994 CLAT 221,921 635,761 221,921 0 *
Erica Jesselson 6/2/89 Trust 443,841 1,271,523 443,841 0 *
- ---------------------------
* Less than one percent
-21-
<PAGE>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
Faisal Finance (Switzerland) S.A. 221,921 635,761 221,921 0 *
Falk, Robert I. 110,960 317,881 110,960 0 *
Farber, S. Edmond 27,740 79,470 27,740 0 *
Fatoullah, Elliot L. 13,870 39,735 13,870 0 *
Ronald A. Fatoullah Profit 13,870 39,735 13,870 0 *
Sharing Plan, Cowen & Co.
Custodian
Feshbach, Joseph 55,480 158,941 55,480 0 *
Finkelstein, Jerry 55,480 158,941 55,480 0 *
Fishbane, Jordan 16,664 47,682 16,664 0 *
Fried, Jr., Albert 110,960 317,881 110,960 0 *
Frolich, Craig 27,740 79,470 27,740 0 *
Frolich, Gerald & Gloria 27,740 79,470 27,740 0 *
Gala Trading Corp. 27,740 79,470 27,740 0 *
GHA Management Corporation 110,960 317,881 110,960 0 *
Giamanco, Joseph 55,480 158,941 55,480 0 *
Gibralt Holdings Ltd. 110,960 317,881 110,960 0 *
Gittis, Howard 110,960 317,881 110,960 0 *
Goldstein, Gilbert 27,740 79,470 27,740 0 *
H. Gittis Irrevocable Trust UIT 27,740 79,470 27,740 0 *
12/23/88, Gilbert Goldstein,
Trustee
Goodman, Frank 11,096 31,788 11,096 0 *
Gordon, Michael 13,870 39,735 13,870 0 *
Gross, John S. 13,870 39,735 13,870 0 *
Gross, Martin 27,740 79,470 27,740 0 *
Hambly, David C. 11,096 31,788 11,096 0 *
Highcloud Investment Corp. 110,960 317,881 110,960 0 *
Hight, Norton F. 27,740 79,470 27,740 0
Hikari Power 110,960 317,881 110,960 0 *
Horowitz Family Trust, Richard 27,740 79,470 27,740 0 *
M. Horowitz, Trustee
- ---------------------------
* Less than one percent
-22-
<PAGE>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
Ivan Kaufman Grantor Retained 221,921 635,761 221,921 0 *
Annuity Trust
Jackson Hole Investments 110,960 317,881 110,960 0 *
Acquisition, L.P.
Jensen, Peter L. 27,740 79,470 27,740 0 *
J.F. Shea & Co., Inc. as 332,881 953,642 332,881 0 *
Nominee 1997-32
Kane, Patrick M. 27,740 79,470 27,740 0 *
Kendall, Jr., Donald R. 83,220 238,411 83,220 0 *
Kessel, Lawrence & Shirley 27,740 79,470 27,740 0 *
Keys Foundation 277,401 794,702 277,401 0 *
Klein, Robert & Gluck, Myriam 55,480 158,941 55,480 0 *
Koch, David H. 110,960 317,881 110,960 0 *
Koppelman, Scott & Amy 27,740 79,470 27,740 0 *
Kotel, Ira L. 27,740 79,470 27,740 0 *
L & D Partnership 27,740 79,470 27,740 0 *
Laura Gold Galleries Ltd. Profit 27,740 79,470 27,740 0 *
Sharing Trust
Ronald M. Lazar IRA, Cowen & 27,740 79,470 27,740 0 *
Co. Custodian
Lenchner, Gregory & Domenica 27,740 79,470 27,740 0 *
Levitin, Eli 110,960 317,881 110,960 0 *
LGT Bank in Liechtenstein AG 110,960 317,881 110,960 0 *
Lieberman, Henry N. 27,740 79,470 27,740 0 *
Loeb Jr., John L. 27,740 79,470 27,740 0 *
Lorch, Ronald & Karen 27,740 79,470 27,740 0 *
Lydon, Jr., Harris R. L. 27,740 79,470 27,740 0 *
Maeda, Susumu 110,960 317,881 110,960 0 *
Managed Risk Trading, L.P. 110,960 317,881 110,960 0 *
Manus, Mark J. 27,740 79,470 27,740 0 *
Masada I Limited Partnership 55,480 158,941 55,480 0 *
McNiff, John P. 55,480 158,941 55,480 0 *
- ---------------------------
* Less than one percent
-23-
<PAGE>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
MDBC Capital Corp. 55,480 158,941 55,480 0 *
Michael G. Jesselson 4/8/71 Trust 221,921 635,761 221,921 0 *
Wolfe Model IRA, Cowen & Co. 13,870 39,735 13,870 0 *
Custodian
Moonlight International Ltd. 277,401 794,702 277,401 0 *
M.S.B. Research Inc. 55,480 158,941 55,480
Nagle, Arthur J. 27,740 79,470 27,740 0 *
John G. Nardi IRA, Morgan 22,192 63,576 22,192 0 *
Stanley Custodian
Natiello, Joseph A. 110,960 317,881 110,960 0 *
Negrin, Renato 110,960 317,881 110,960 0 *
Netter, Drew M. & Carin S. 27,740 79,470 27,740 0 *
Nikki Establishment for Fashion 55,480 158,941 55,480 0 *
and Market Research
Novick, Samuel & Esta 110,960 317,881 110,960 0 *
NU Twins, LLC 110,960 317,881 110,960 0 *
Olivera, Steven M. & Bernadette 166,440 476,821 166,440 0 *
Omicron Investment Corporation 55,480 158,941 55,480 0 *
Ostrovsky, Paul D. & Rebecca L. 24,411 69,934 24,411 0 *
Ostrovsky, Steven N. 83,220 238,411 83,20 0 *
Oxcal Venture Fund, L.P. 110,960 317,881 110,960 0 *
Oyler, John(2) 23,302 66,755 23,302 0 *
Palmetto Partners, Ltd. 221,921 635,761 221,921 0 *
Paramount Capital, Inc.(1) 4,482,240 12,840,795 4,482,240 0 *
Peterson, William & Catherine 27,740 79,470 27,740 0 *
Polak, Anthony G. 13,870 39,735 13,870 0 *
Anthony G. Polak IRA, Cowen & 27,740 79,470 27,740 0 *
Co. Custodian
Jack Polak Profit Sharing Plan, 27,740 79,470 27,740 0 *
Cowen & Co. Custodian
Pomper, Catherine M. 55,480 158,941 55,480 0 *
Ponzio, Nicholas 55,480 158,941 55,480 0 *
- ---------------------------
* Less than one percent
-24-
<PAGE>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
Porter Partners, LP 166,440 476,821 166,440 0 *
Prager, Tis 110,960 317,881 110,960 0 *
Reliance Insurance Company 1,109,603 3,178,808 1,109,603 0 *
Charles Re Profit Sharing Plan, 13,870 39,735 13,870 0 *
Cowen & Co. Custodian
RHL Associates L.P. 55,480 158,941 55,480 0 *
Rick Steiner Productions Inc. 33,288 95,364 33,288 0 *
RL Capital Partners 55,480 158,941 55,480 0 *
Rothschild, Jonathan 55,480 158,941 55,480 0 *
Ruttenberg, David W. 27,740 79,470 27,740 0 *
Schaefer, Rowland 110,960 317,881 110,960 0 *
Schonzeit, Andrew W. 55,480 158,941 55,480 0 *
Schubach, Clark 55,480 158,941 55,480 0 *
Selz, Bernard 277,401 794,702 277,401 0 *
Shaw, H.L. & D.M. 55,480 158,941 55,480 0 *
Simon, Ronald I. 13,870 39,735 13,870 0 *
Sirotkin, Martin 55,480 158,941 55,480 0 *
Slovin, Bruce 166,440 476,821 166,440 0 *
Smith, Richard A. 55,480 158,941 55,480 0 *
Sovereign Partners L.P. 221,921 635,761 221,921 0 *
Sternheim, Howard & Sharon 27,740 79,470 27,740 0 *
Stevens-Knox & Associates, Inc. 55,480 158,941 55,480 0 *
Strassman, Joseph & Barbara 110,960 317,881 110,960 0 *
Strassman, Richard 11,096 31,788 11,096 0 *
Strauss, Gary J. 27,740 79,470 27,740 0 *
Suan Investments Inc. 110,960 317,881 110,960 0 *
Superius Securities Group, Inc., 110,960 317,881 110,960 0 *
Money Purchase Plan, Inc.
Tarica, Michele 13,870 39,735 13,870 0 *
Tarragona Fund Inc. 277,401 794,702 277,401 0 *
- ---------------------------
* Less than one percent
-25-
<PAGE>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
Tauber, Herman 221,921 635,761 221,921 0 *
Taub, Hindy H. 55,480 158,941 55,480 0 *
Teitelbaum, Myron M. 83,220 238,411 83,220 0 *
The Alfred J. Anzalone Family 55,480 158,941 55,480 *
Limited Partnership
The Aries Trust(1) 9,326,082 14,463,575 9,262,032 64,050 *
The Century Trust, David & 55,480 158,941 55,480 0 *
Susan Wilstein,
Trustees
The Jerusalem Fund, Inc. 27,740 79,470 27,740 0 *
Trustee for The Osterweis 27,740 79,470 27,740 0 *
Revocable Trust U/A/ dated
9/13/93, John S. Osterweis
Toll, Bruce E. 55,480 158,941 55,480 0 *
Ts'o, Paul O.P.(3)
Tuppatsch, Raymond 55,480 158,941 55,480 0 *
United Congregation Mesora 1,109,603 3,178,808 1,109,603 0 *
Valori Associates Inc. 27,740 79,470 27,740 0 *
Walko, Mark & Lombardi, 27,740 79,470 27,740 0 *
Blanche
Warwinick Investments Ltd. 110,960 317,881 110,960 0 *
Webster, Sharon B.(3) 0 *
Weiss, Branco 554,801 1,589,404 554,801
Weiss, Melvyn 277,401 794,702 277,401 0 *
Weiss, Michael S.(1) 16,644 47,682 16,644 0 *
Whetten, Robert J. 83,220 238,411 83,220 0 *
Wise, Alan & Teri 27,740 79,470 27,740 0 *
Wolfson, Aaron 83,220 238,411 83,220 0 *
Wolfson, Abraham 55,480 158,941 55,480 0 *
Wolf, David A. 27,740 79,470 27,740 0 *
Yamazaki, Yoshimasa 110,960 317,881 110,960 0 *
-26-
<PAGE>
Shares of Common
Stock (Excluding
Contingent Shares)
Held or Issuable
Upon Conversion of the
Series D Preferred
Stock or Exercise of
the Class D Warrants, Contingent Shares
the Initial Warrants Issuable Upon Registered Shares of
or the Line of Credit Conversion of Shares Eligible Common Stock % of Common
Warrants, in each case Series D to be Sold as of To Be Held Stock To Be
Name as of September 9, 1997 Preferred Stock September 9, 1997 After Sale Held After Sale
- ---- ------------------------ --------------- ---------------- ----------- ---------------
Zapco Holdings, Inc. Deferred 55,480 158,941 55,480 0 *
Compensation Plan Trust
Zeff, Kal 221,921 635,761 221,921 0 *
Zucker, Uzi 110,960 317,881 110,960 0 *
</TABLE>
- --------------------
* Less than one percent
(1) Paramount Capital Asset Management, Inc. ("PCAM") is the investment manager
of The Aries Trust and the general partner of the Aries Domestic Fund, L.P.
Dr. Lindsay Rosenwald, the sole stockholder of Paramount Capital, Inc., a
Delaware corporation ("Paramount"), is the President and sole stockholder
of PCAM and may be deemed the beneficial owner of the voting securities of
the Company owned by The Aries Funds and Paramount. Paramount served as the
placement agent for the Company's June 1997 Private Placement. Michael S.
Weiss, Interim Chairman and Director of the Company, is a Senior Managing
Director of Paramount. David R. Walner, the Secretary of the Company, is an
Associate Director of Paramount and Secretary of PCAM. The Aries Funds have
the contractual right to appoint a majority of the members of the Board of
Directors of the Company.
(2) John F. Dee and John V. Oyler are serving as the Company's interim
management team while the Company seeks a full-time Chief Executive
Officer.
(3) Paul O.P. Ts'o and Sharon B. Webster are directors of the Company.
PLAN OF DISTRIBUTION
Pursuant to this Registration Statement, the Registered Shares may be
sold by the Selling Stockholders from time to time while this Registration
Statement is effective in the over-the-counter market at prices and terms
prevailing at the time of sale, in privately negotiated transactions or a
combination of these methods, without notice to the Company. Although the
Selling Stockholders have not advised the Company that they currently intend to
sell any of the Registered Shares, pursuant to this Registration Statement, the
Selling Stockholders may choose to sell all or a portion of the Registered
Shares from time to time in the manner described herein. There can be no
assurance that any of the Selling Stockholders will sell any or all of the
Registered Shares eligible to be sold by them. The methods by which the
Registered Shares may be sold by the Selling Stockholders in one or more of the
following transactions may include: (a) block trades in which the broker or
dealer so engaged will attempt to sell the securities 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) over-the-counter
distributions in accordance with the rules of the Nasdaq SmallCap Market, (d)
ordinary brokerage transactions in which the broker solicits purchasers and (e)
privately negotiated transactions. In effecting sales, brokers and dealers
engaged by Selling Stockholders may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from
Selling Stockholders in amounts to be negotiated (and, if such broker or dealer
acts as agent for the purchaser of such shares, from such purchaser). Broker or
dealers may agree with the Selling Stockholders to sell a specified number of
shares at a stipulated price per share, and, to the extent such a broker or
dealer is unable to do so acting as agent for a Selling Stockholder, to purchase
as principal any unsold shares at the
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<PAGE>
price required to fulfill such broker or dealer commitment to such Selling
Stockholder. Brokers or dealers who acquire shares as principals may thereafter
resell such shares from time to time in transactions (which may involve crosses
and book transactions and which may involve sales to and through other brokers
or dealers, including transactions, of the nature described above) in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices, and in connection
as described above.
75% of the Registered Shares underlying the Series D Preferred Stock
and Class D Warrants purchased in the Private Placement shall be subject to a
"lock-up" for the first three months following the effective date of this
Registration Statement (the "Effective Date"). Thereafter, 50% of such
Registered Shares will be subject to such a "lock-up" until six months following
the Effective Date and 25% of such Registered Shares will be "locked-up" until
the nine months following the Effective Date. 25% of such Registered Shares will
not be subject to any contractual lock-up. During such "lock-up" period, the
holders of such Series D Preferred Stock and Class D Warrants will be restricted
from exercising or converting, as the case may be, any such shares of Series D
Preferred Stock or Class D Warrants.
The Company is bearing the costs relating to this registration of the
Registered Shares, including, without limitation, registration fees,
qualification and filing fees, printing expenses, escrow fees, fees and expenses
of counsel for the Company, blue sky fees and expenses and the expense of any
special audits incident to or required by this registration (but excluding fees
of legal counsel for any Selling Stockholder). All discounts or commissions will
be borne by the Selling Stockholders. It is anticipated that usual and customary
brokerage fees will be paid by the Selling Stockholders in all open market
transactions. The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the distribution
of the Registered Shares may be determined to be "underwriters" within the
meaning of Section 2(11) of the Securities Act and any commissions received by
them and any profit on the resale of such securities purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
At the time a particular offer for Registered Shares is made as herein
contemplated, by or on behalf of a Selling Stockholder, to the extent required,
a Prospectus will be distributed by the Selling Stockholder which will set forth
the number of Registered Shares being offered and the terms of such offering,
including the name or names of any underwriters, dealers or agents, if any, and
to the extent that an underwriter is involved, the purchase price paid by any
underwriter for shares purchased from the Selling Stockholder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.
From time to time, this Prospectus will be supplemented and amended as
required by the Securities Act. During any time when a supplement or amendment
is so required, after notice from the Company, the Selling Stockholders are
required to cease sales until the Prospectus has been supplemented or amended.
The Company will inform the Selling Stockholders that the terms and
arrangements of any underwritten offering must be filed with the National
Association of Securities Dealers, Inc. (the "NASD") for its review pursuant to
Section 2710 of the NASD's Corporate Financing Rules.
The Company will inform the Selling Stockholders that the
anti-manipulation provisions of Regulation M may apply to the sales of the
Registered Shares. The Company will also advise the Selling Stockholders of the
requirement for delivery of this Prospectus in connection with any sale of the
Registered Shares.
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<PAGE>
Certain Selling Stockholders may from time to time purchase shares of
Common Stock in the open market. These Selling Stockholders will be notified
that they should not commence any distribution of Registered Shares unless they
have terminated their purchasing and bidding for Common Stock in the open market
as provided in applicable securities regulations, including, without limitation,
Regulation M.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities
offered hereby are being passed upon for the Company by Kramer, Levin, Naftalis
& Frankel, New York, New York.
EXPERTS
The consolidated financial statements of Genta Incorporated and the
financial statements of Genta Jago at December 31, 1996 and 1995, and for each
of the three years in the period ended December 31, 1996 appearing in Genta's
Annual Report (Form 10-K) for the year ended December 31, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon (the report on Genta Incorporated contains an emphasis paragraph
with respect to the Company's ability to continue as a going concern) included
therein and incorporated herein by reference in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
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<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offer made by this Prospectus and, if given or made, such
information or representation 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 any securities other than
the registered securities to which it relates, or an offer in any jurisdiction
to any person to whom it is unlawful to make such an offer in such jurisdiction.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that the information contained herein
is correct at any time subsequent to the date hereof.
----------------------
TABLE OF CONTENTS
Page
Available Information......................
Documents Incorporated by
Reference................................
Recent Developments........................
Business Summary...........................
Risk Factors...............................
Use of Proceeds............................
Capital Stock..............................
Income Tax Considerations..................
Selling Stockholders.......................
Plan of Distribution.......................
Legal Matters..............................
Experts....................................
65,548,982
Common Stock
GENTA
INCORPORATED
_________________________
PROSPECTUS
_________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with
the sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts are estimated except the SEC
registration fee and the Nasdaq SmallCap Market listing fee.
Amount
SEC registration fee................................... 32,278
Blue Sky fees and expenses...............................
Accounting fees and expenses............................ 10,000
Printing and engraving expenses.......................
Legal fees and expenses................................
Transfer agent's fees....................................
Nasdaq SmallCap Market listing fee.......................
Miscellaneous fees and expenses..........................
--------
Total............................................
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "Delaware
GCL") permits the Company's board of directors to indemnify any person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with any
threatened pending or completed action, suit or proceeding in which such person
is made a party by reason of his being or having been a director, officer,
employee or agent of the Company, in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The
Delaware GCL provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-laws, agreement, vote of stockholders or disinterested directors,
or otherwise.
Article VIII of the Company's Restated Certificate of Incorporation and
Article VII, Section 6 of the Company's By-laws provide for indemnification of
the Company's directors, officers, employees and other agents to the maximum
extent permitted by law.
As permitted by Sections 102 and 145 of the Delaware GCL, the Company's
Restated Certificate of Incorporation eliminates a director's personal liability
for monetary damages to the Company and its stockholders arising from a breach
or alleged breach of such director's fiduciary duty, except for liability under
Section 174 of the Delaware GCL or liability for any breach of the director's
duty of loyalty to the Company or its stockholders, for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of law
or for any transaction which the director derived an improper personal benefit.
In addition, the Company has entered into separate indemnification
agreements with its directors and officers that will require the Company, among
other things, to indemnify them against
II-1
<PAGE>
certain liabilities that may arise by reason of their status or service as
directors or officers to the fullest extent not prohibited by law.
The registration rights provisions of the Company's Subscription
Agreements entered into by the Company and its Series D Preferred Stock
investors, including the Selling Stockholders, provide for cross-indemnification
of the Selling Stockholders and of the Company, its officers, directors and
agents for certain liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
4.1* Form of Subscription Agreement entered into between the
Company and certain purchasers of Series D Convertible
Preferred Stock and Class D Warrants
4.2* Restated Certificate of Incorporation of the Company, as
amended
5.1* Opinion of Kramer, Levin, Naftalis & Frankel
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2* Consent of Kramer, Levin, Naftalis & Frankel (included in its
opinion filed as Exhibit 5.1 to this Registration Statement)
24.1 Power of Attorney (included on the signature page hereof)
- ----------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company 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 Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Company 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; (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 this
II-2
<PAGE>
Registration Statement; and (iii) to include any material information with
respect to the plan of distribution not previous disclosed in this Registration
Statement or any material change to such information in this Registration
Statement; provided, however, that paragraphs (i) and (ii) do not apply if 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 Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Luis Obispo, State of California, on
September 9, 1997.
GENTA INCORPORATED
/s/ Robert E. Klem, Ph.D.
------------------------------
Robert E. Klem, Ph.D.
Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert E. Klem his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this Registration
Statement and any registration statement related to this Registration Statement
and filed pursuant to Rule 462 under the Securities Act of 1933, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act, and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that each of said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C> <C>
/s/ Robert E. Klem Principal Executive Officer,
--------------------- Acting Chief Financial Officer, September 9, 1997
Robert E. Klem Vice President and Director
/s/ Michael S. Weiss
--------------------- Interim Chairman and Director September 9, 1997
Michael S. Weiss
/s/ Paul O.P. Ts'o
--------------------- Director August 27. 1997
Paul O.P. Ts'o
/s/ Sharon B. Webster
--------------------- Director September 5, 1997
Sharon B. Webster
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
<S> <C> <C> <C>
4.1* Form of Subscription Agreement entered into between
the Company and certain purchasers of Series D
Preferred Stock and Class D Warrants
4.2* Restated Certificate of Incorporation of the Company,
as amended
5.1* Opinion of Kramer, Levin, Naftalis & Frankel
23.1* Consent of Ernst & Young LLP, independent auditors
23.2* Consent of Kramer, Levin, Naftalis & Frankel
(included in its opinion filed as Exhibit 5.1 to this
Registration Statement)
24.1(1) Power of Attorney (included on the signature page
of the Registration Statement)
</TABLE>
- ------------------
* To be filed by amendment.
II-5
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of our reports dated February 28, 1997, with respect to the
consolidated financial statements of Genta Incorporated and the financial
statements of Genta Jago Technologies B.V., included in the Genta Incorporated
Annual report (Form 10-K) for the year ended December 31, 1996.
ERNST & YOUNG LLP
San Diego, California
September 9, 1997
