As filed with the Securities and Exchange Commission on January 21, 1998
Registration No. 333-35215
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
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
- --------------------------------------------------------------------------------
(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. KENNETH G. KASSES 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: [ ]
___________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed Maximum Proposed Maximium
Class of Securities Amount to Offering Price Aggregate Amount of
To Be Registered be Registered(1) per share(1) Offering Price (1) Registration Fee
- --------------------- ---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, 65,548,982 $1.625 $106,517,096 $32,278
$.001 par value
==============================================================================================================
</TABLE>
- ----------
(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.
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 January __, 1998
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) 227,025 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. 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 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 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 January 14,
1998, the last sales price of the Common Stock as reported on the Nasdaq
SmallCap Market was $0.75.
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.
The Company will not receive any proceeds from the sale of the
Registered Shares. Upon issuance to the Selling Stockholders of all of the
Common Stock underlying the Class D Warrants, the Initial Warrants and
<PAGE>
the Line of Credit Warrants, the Company could receive aggregate proceeds of
$3,887,296 (assuming per share exercise prices, which are subject to adjustment
in certain circumstances, of $.94375 for the Class D Warrants, $.471875 for the
Initial Warrants and $2.50 for the Line of Credit 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. 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.
---------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" COMMENCING ON PAGE 9.
--------------------
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 COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is _______, 1998.
<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. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended by Amendment No. 1 thereto on March
31, 1997.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, as amended by Amendment No. 1 thereto on September
5, 1997.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, as amended by Amendment No. 1 thereto on
November 19, 1997.
5. The Company's Proxy Statement on Schedule 14A, dated March 14,
1997.
6. The Company's Current Report on Form 8-K, dated January 28, 1997.
7. The Company's Current Report on Form 8-K, dated March 18, 1997.
8. The Company's Current Report on Form 8-K, dated April 15, 1997.
9. The Company's Current Report on Form 8-K, dated May 1, 1997.
10. The Company's Current Report on Form 8-K, dated June 30, 1997, as
amended by Amendment No. 1 thereto on September 5, 1997.
11. The Company's Current Report on Form 8-K, dated July 3, 1997.
-2-
<PAGE>
12. The Company's Current Report on Form 8-K, dated July 23, 1997.
13. The Company's Current Report on Form 8-K, dated August 13, 1997.
14. The Company's Current Report on Form 8-K, dated September 10,
1997.
15. The Company's Current Report on Form 8-K, dated September 22,
1997.
16. The Company's Current Report on Form 8-K, dated September 24,
1997.
17. The Company's Current Report on Form 8-K, dated November 14,
1997.
18. The Company's Current Report on Form 8-K, dated December 3, 1997.
19. 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.
-3-
<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 6, 11 and 12 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 being 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.
-4-
<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
------- ----------------------- ------------------
<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 and in the U.S. with
respect to prostate and possibly other
advanced solid tumor malignancies
(however, no patients have yet enrolled
in the U.S. trials)
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
Bioequivalent Generics o Various Abbreviated New Drug
Applications ("ANDAs") may be
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 can
-5-
<PAGE>
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 1997, a Phase I/IIa clinical trial was initiated in the
United States at Memorial Sloan-Kettering Cancer Center ("MSKCC") to evaluate
G3139, a lead compound of Genta's Anticode technology, against prostrate cancer.
The first part of this Phase I/IIa study is designed to define the maximum
tolerated dose or optimal biological dose with continuous intravenous infusion
and the second part is to determine the efficacy of the drug in advanced,
androgen independent prostate cancer. Patient recruitment is underway at MSKCC
in New York City and enrollment is expected to proceed in the near future.
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.
-6-
<PAGE>
In 1977, the Company expanded the IND to include the use of G3139 against
prostate cancer. In addition, the Company anticipates that it may expand this
IND to include 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 additional 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 first half of 1998. In
addition, the Company has had discussions with the National Cancer Institute
("NCI") regarding additional Phase I and II clinical trials. 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 pharmacokinetic 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
-7-
<PAGE>
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.
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,
a potentially bioequivalent version of Covera-HS(R) (verapamil) is undergoing
additional formulation development and pilot pharmacokinetic studies. Genta Jago
intends to proceed with manufacturing scale-up on this product 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.
-8-
<PAGE>
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 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.
Subordination of Common Stock to Series A 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 the approximately $27.4 million preference of the 457,000
outstanding shares of Series A Preferred Stock and the approximately $37.4
million preference of 267,420 shares of Series D Preferred Stock (including
40,395 shares of Series D Preferred Stock issuable upon exercise of certain
warrants). Dividends may not be paid on the Common Stock unless full cumulative
dividends on the Series A and Series D Preferred Stock have been paid or funds
have been set aside for such preferred dividends by the Company.
The conversion rate of the Series A 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 7.26 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. 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
-9-
<PAGE>
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 "12 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 12 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.
Claims of Genta's Default Under Various Agreements. On May 7, 1997 Jago and
Jagotec gave Genta Jago formal notices of its assertion that Genta Jago is in
breach of the Restated GEOMATRIX(R) Services Agreement, the Restated
GEOMATRIX(R) Research and Development Agreement and the Restated GEOMATRIX(R)
License Agreement, 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. Each of these Agreements provides for
a cure period of 30 days, except that if the default is not capable of being
cured within this period and the defaulting party is diligently undertaking to
cure such default as soon as commercially feasible thereafter under the
circumstances, then the non-breaching party shall have no right to terminate the
Agreement. In addition each of these Agreements contains a provision providing
for the final resolution of any disputes, claims or controversies, whether
before or after termination of the Agreement, by arbitration in Paris, France.
After the 30 day cure period expired, Jago did not take action purporting to
terminate these Agreements but did not rescind the notices of default. Jago,
Jagotec and Jago Holding AG also gave formal notice of default under the
Restated Joint Venture and Shareholders Agreement, 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. There is no
specific cure period contained in the Restated Joint Venture and Shareholders
Agreement but rather a provision providing for resolution of disputes, claims or
controversies by arbitration in Paris, France. The Company recently met with
Jago and is attempting to resolve the situation without resort to arbitration.
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 to Genta
Jago 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). On May 15,
1997, Johns Hopkins sent Genta a letter stating that the Johns Hopkins Agreement
is terminated. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources" in the Form 10-Q
for the quarterly period ended September 30, 1997, as amended. In October of
1996, Genta Europe scaled back operations substantially. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" in the Form 10-Q for the quarterly period ended
September 30, 1997, as amended. There can be no assurance that the Company will
not incur material costs in relation to these terminations and/or assertions of
default.
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
-10-
<PAGE>
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 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 September 30, 1997, the Company has
incurred a cumulative net loss of $118.6 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.
-11-
<PAGE>
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 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. Sampling conducted at the JBL facility revealed the presence of
chloroform and perchloroethylenes ("PCEs") in the soil and groundwater at this
site. Six soil borings were drilled and groundwater wells were installed at
several locations around the site. Chloroform was detected below regulatory
action levels, and PCEs were detected slightly above regulatory action levels.
JBL has notified the appropriate regulatory agency of conditions at the site and
with the agency's approval, JBL is monitoring groundwater conditions at the site
on a quarterly basis. While current sampling results indicate that these
contaminants are not migrating off-site, there is the potential that these
contaminants may, in the future, impact off-site wells, one of which is used as
a drinking water source. The Company believes that any costs associated with
further investigating or remediating this contamination will not have a material
adverse effect on the business of the Company, although there can be no
assurance thereof. The Company believes that it is in material compliance with
Governmental Regulations, however 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
-12-
<PAGE>
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.
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
-13-
<PAGE>
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 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. In December of 1997, a
competitor of the Company, Elan Corporation, received approval of their ANDA for
a generic formulation of Oruvail(R) (ketoprophen), and another company, Mylan
Laboratories, Inc., has filed an ANDA for a generic formulation of Procardia
XL(R) (nifedipine). 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, in order to obtain oligonucleotides
sufficient to meet the volume and cost requirements needed for certain
commercial applications of Anticode products, Genta requires raw materials
currently provided by a single supplier which is itself a development stage
biotechnology company (and a competitor of the Company) and is subject to
uncertainties including the potential for a decision by such supplier to
discontinue production of such raw materials, the insolvency of such supplier or
the failure of such supplier to follow applicable regulatory guidelines.
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.
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
-14-
<PAGE>
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. 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.
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 $27.4 million. Furthermore, if the Company is required to redeem
the Series A Preferred Stock it would also be required (subject to certain
conditions) to offer to redeem the Series D Preferred Stock on a pari passu
basis with the Series A Preferred Stock and with the same type of consideration
paid in redemption of the Series A Preferred Stock; upon a Fundamental Change,
the Company could be required to pay the holders of Series D Preferred Stock
cash in the aggregate amount of approximately $31.8 million (not including an
additional $5.7 million that could be payable upon redemption of 40,395 shares
of Series D Preferred Stock issuable upon exercise of certain warrants).
"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 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
-15-
<PAGE>
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 December 31, 1997, the Company
had 5,697,067 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
Series A 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.
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
-16-
<PAGE>
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. In addition to the Aries Funds' investments in, and loans to,
the Company that are disclosed in the exhibits hereto, the Aries Funds also
engaged in the following transactions: on December 2, 1997, the Aries Funds
purchased an aggregate of 54,000 shares of Series A Preferred Stock; on December
29, 1997, warrants to purchase an aggregate of 1,000 shares of Series D
Preferred Stock and 5,000 Class D Warrants were allocated to the Aries Funds by
Paramount Capital, Inc., which warrants were received in connection with the
Private Placement; and on December 31, 1997, the Aries Funds converted the
outstanding principal of, and interest on, their respective Senior Secured
Convertible Bridge Notes of the Company into an aggregate of 52,445 shares of
Series D Preferred Stock. 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
deterring hostile takeover attempts. The stockholder
-17-
<PAGE>
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. Upon issuance to the Selling Stockholders of all of the
Common Stock underlying the Class D Warrants, the Initial Warrants and the Line
of Credit Warrants, the Company could receive aggregate proceeds of $3,887,296
(assuming per share exercise prices, which are subject to adjustment in certain
circumstances, of $.94375 for the Class D Warrants, $.471875 for the Initial
Warrants and $2.50 for the Line of Credit Warrants).
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.
-18-
<PAGE>
As of December 31, 1997, there were 5,697,067 shares of Common Stock,
457,100 shares of Series A Preferred Stock and 227,025 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 "12 Month Trading Price") is less
than 140% 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 12 Month Trading Price divided by
1.40, 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.
-20-
<PAGE>
<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 Contingent Shares
Warrants, the Initial Warrants Issuable Upon Registered Shares Shares of
or the Line of Credit Warrants, Conversion of Eligible to be Sold Common Stock % of Common
in each case as of Series D as of To Be Held Stock To Be
Name January 21, 1998 Preferred Stock January 21, 1998 After Sale Held After Sale
- ---- ------------------- --------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Abeshouse, Mark(5) 3,496 9,346 3,496 0 *
Ain, Ross D. 22,192 62,576 22,192 0 *
Altschul Investment Group 110,960 312,881 110,960 0 *
Altschuler, Robert 27,740 78,220 27,740 0 *
Aries Domestic Fund, L.P.(1) 5,053,220 6,815,815 5,025,770 27,450 *
Armen Offshore Fund 110,960 312,881 110,960 0 *
Armen Partners L.P. 277,401 782,202 277,401 0 *
Arterio, Inc. 55,480 156,441 55,480 0 *
Banque SCS Alliance SA 221,921 625,761 221,921 0 *
Barness, Amnon & Caren 55,480 156,441 55,480 0 *
Bedzow, Benjamin 11,096 31,288 11,096 0 *
Benjamin Jesselson 4/8/71 Trust 221,921 625,761 221,921 0 *
Bercuvitz, Mark 388,361 1,095,083 388,361 0 *
Bluestone Capital Partners(6) 3,467 9,268 3,467 0 *
Brady, James W. 11,096 31,288 11,096 0 *
Brapo Associates 27,740 78,220 27,740 0 *
Broy, Anthony 55,480 156,441 55,480 0 *
BRT Partnership by Solomon A. 166,440 469,322 166,440 0 *
Weisgal Trustee/Partner
Burgess, Helene 55,480 156,441 55,480 0 *
Carlos Plancarte G.N. Leonor & 33,288 93,864 33,288 0 *
P. De Maravan
Cass & Co. - Magnum Capital 110,960 312,881 110,960 0 *
Growth Fund
Cerrone, Gabriel 55,480 156,441 55,480 0 *
Chasanoff, Ted 13,870 39,110 13,870 0 *
Comox Co. Ltd 110,960 312,881 110,960 0 *
Conrads, Robert J. 83,220 234,661 83,220 0 *
Cooperative Holding Corporation 27,740 78,220 27,740 0 *
Cox, Jr., Archibald 166,440 469,322 166,440 0 *
Davis, Mort 27,740 78,220 27,740 0 *
Dee, John F. (2) 27,740 78,220 27,740 0 *
de Ramirez, Elke R. 11,096 31,288 11,096 0 *
Diamond, Nathan P. & Lauren S. 27,740 78,220 27,740 0 *
DiFalco, Nicholas 55,480 156,441 55,480 0 *
-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 Contingent Shares
Warrants, the Initial Warrants Issuable Upon Registered Shares Shares of
or the Line of Credit Warrants, Conversion of Eligible to be Sold Common Stock % of Common
in each case as of Series D as of To Be Held Stock To Be
Name January 21, 1998 Preferred Stock January 21, 1998 After Sale Held After Sale
- ---- ------------------- --------------- ----------------- ----------- ---------------
Diversified Fund, Ltd. 554,801 1,564,404 554,801 0 *
Domaco Venture Capital Fund 27,740 78,220 27,740 0 *
Drax Holdings, LP 277,401 784,202 277,401 0 *
Edelman, Joe(4) 20,921 55,928 20,921 0 *
Erica Jesselson 1994 CLAT 221,921 625,761 221,921 0 *
Erica Jesselson 6/2/89 Trust 443,841 1,251,523 443,841 0 *
Faisal Finance (Switzerland) S.A. 221,921 625,761 221,921 0 *
Falk, Robert I. 110,960 312,881 110,960 0 *
Farber, S. Edmond(6) 31,207 83,426 31,207 0 *
Fatoullah, Elliot L. 13,870 39,110 13,870 0 *
Ronald A. Fatoullah Profit 13,870 39,110 13,870 0 *
Sharing Plan, Cowen & Co.
Custodian
Feshbach, Joseph 55,480 156,441 55,480 0 *
Finkelstein, Jerry 55,480 156,441 55,480 0 *
Fishbane, Jordan 16,664 46,932 16,664 0 *
Florin, Marc(4) 19,973 53,394 19,973 0 *
Fried, Jr., Albert 110,960 312,881 110,960 0 *
Frolich, Craig 27,740 78,220 27,740 0 *
Frolich, Gerald & Gloria 27,740 78,220 27,740 0 *
Gala Trading Corp. 27,740 78,220 27,740 0 *
GHA Management Corporation 110,960 312,881 110,960 0 *
Giamanco, Joseph 55,480 156,441 55,480 0 *
Gibralt Holdings Ltd. 110,960 312,881 110,960 0 *
Gittis, Howard 110,960 312,881 110,960 0 *
Goldstein, Gilbert 27,740 78,220 27,740 0 *
H. Gittis Irrevocable Trust UIT 27,740 78,220 27,740 0 *
12/23/88, Gilbert Goldstein,
Trustee
Goodman, Frank 11,096 31,288 11,096 0 *
Gordon, Michael 13,870 39,110 13,870 0 *
Gross, John S. 13,870 39,110 13,870 0 *
Gross, Martin 27,740 78,220 27,740 0 *
Hambly, David C. 11,096 31,288 11,096 0 *
Highcloud Investment Corp. 110,960 312,881 110,960 0 *
Hight, Norton F. 27,740 78,220 27,740 0
-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 Contingent Shares
Warrants, the Initial Warrants Issuable Upon Registered Shares Shares of
or the Line of Credit Warrants, Conversion of Eligible to be Sold Common Stock % of Common
in each case as of Series D as of To Be Held Stock To Be
Name January 21, 1998 Preferred Stock January 21, 1998 After Sale Held After Sale
- ---- ------------------- --------------- ----------------- ----------- ---------------
Hikari Power 110,960 312,881 110,960 0 *
Horowitz Family Trust, Richard 27,740 78,220 27,740 0 *
M. Horowitz, Trustee
Ivan Kaufman Grantor Retained 221,921 625,761 221,921 0 *
Annuity Trust
Jackson Hole Investments 110,960 312,881 110,960 0 *
Acquisition, L.P.
Jensen, Peter L. 27,740 78,220 27,740 0 *
J.F. Shea & Co., Inc. as 332,881 938,642 332,881 0 *
Nominee 1997-32
Kane, Patrick M. 27,740 78,220 27,740 0 *
Kash, Peter(4) 216,733 579,393 216,733 0 *
Katzmann, Scott(4) 97,978 261,925 97,978 0 *
Kendall, Jr., Donald R. 83,220 234,661 83,220 0 *
Kessel, Lawrence & Shirley 27,740 78,220 27,740 0 *
Keys Foundation 277,401 782,202 277,401 0 *
Klein, Robert & Gluck, Myriam 55,480 156,411 55,480 0 *
Knox, John(4) 4,162 11,126 4,162 0 *
Koch, David H. 110,960 312,881 110,960 0 *
Koppelman, Scott & Amy 27,740 78,220 27,740 0 *
Kotel, Ira L. 27,740 78,220 27,740 0 *
Kratchman, Martin(4) 38,836 103,820 38,836 0 *
L & D Partnership 27,740 78,220 27,740 0 *
Lazar, Ronald(6) 3,467 9,268 3,467 0 *
Laura Gold Galleries Ltd. Profit 27,740 78,220 27,740 0 *
Sharing Trust
Ronald M. Lazar IRA, Cowen & 27,740 78,220 27,740 0 *
Co. Custodian
Lenchner, Gregory & Domenica 27,740 78,220 27,740 0 *
Levine, Jeff(4) 11,096 29,663 11,096 0 *
Levitin, Eli 110,960 312,881 110,960 0 *
LGT Bank in Liechtenstein AG 110,960 312,881 110,960 0 *
Lieberman, Henry N. 27,740 78,220 27,740 0 *
Loeb Jr., John L. 27,740 78,220 27,740 0 *
Lorch, Ronald & Karen 27,740 78,220 27,740 0 *
Lydon, Jr., Harris R. L. 27,740 78,220 27,740 0 *
Maeda, Susumu 110,960 312,881 110,960 0 *
Managed Risk Trading, L.P. 110,960 312,881 110,960 0 *
Manus, Mark J. 27,740 78,220 27,740 0 *
Masada I Limited Partnership 55,480 156,441 55,480 0 *
McInerney, Tim(4) 91,182 243,757 91,182 0 *
McNiff, John P. 55,480 156,441 55,480 0 *
-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 Contingent Shares
Warrants, the Initial Warrants Issuable Upon Registered Shares Shares of
or the Line of Credit Warrants, Conversion of Eligible to be Sold Common Stock % of Common
in each case as of Series D as of To Be Held Stock To Be
Name January 21, 1998 Preferred Stock January 21, 1998 After Sale Held After Sale
- ---- ------------------- --------------- ----------------- ----------- ---------------
MDBC Capital Corp. 55,480 156,441 55,480 0 *
Michael G. Jesselson 4/8/71 Trust 221,921 625,761 221,921 0 *
Wolfe Model IRA, Cowen & Co. 13,870 39,110 13,870 0 *
Custodian
Moonlight International Ltd. 277,401 782,202 277,401 0 *
M.S.B. Research Inc. 55,480 156,441 55,480
Nagle, Arthur J. 27,740 78,220 27,740 0 *
John G. Nardi IRA, Morgan 22,192 62,576 22,192 0 *
Stanley Custodian
Natiello, Joseph A. 110,960 312,881 110,960 0 *
Negrin, Renato 110,960 312,881 110,960 0 *
Netter, Drew M. & Carin S. 27,740 78,220 27,740 0 *
Nikki Establishment for Fashion 55,480 156,441 55,480 0 *
and Market Research
Novick, Samuel & Esta 110,960 312,881 110,960 0 *
NU Twins, LLC 110,960 312,881 110,960 0 *
Olivera, Steven M. & Bernadette 166,440 469,322 166,440 0 *
Omicron Investment Corporation 55,480 156,441 55,480 0 *
Ostrovsky, Paul D. & Rebecca L. 24,411 68,834 24,411 0 *
Ostrovsky, Steven N. 83,220 234,661 83,220 0 *
Oxcal Venture Fund, L.P. 110,960 312,881 110,960 0 *
Oyler, John V. (2) 23,302 65,705 23,302 0 *
Palmetto Partners, Ltd. 221,921 625,761 221,921 0 *
Paramount Capital, Inc.(1) 4,482,240 12,840,795 4,482,240 0 *
Peterson, William & Catherine 27,740 78,220 27,740 0 *
Polak, Anthony G.(6) 17,337 46,347 17,337 0 *
Anthony G.Polak IRA, Cowen & 27,740 78,220 27,740 0 *
Co. Custodian
Jack Polak Profit Sharing Plan, 27,740 78,220 27,740 0 *
Cowen & Co. Custodian
Pomper, Catherine M. 55,480 156,441 55,480 0 *
Ponzio, Nicholas 55,480 156,441 55,480 0 *
Porter Partners, LP 166,440 469,322 166,440 0 *
Prager, Tis 110,960 312,881 110,960 0 *
-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 Contingent Shares
Warrants, the Initial Warrants Issuable Upon Registered Shares Shares of
or the Line of Credit Warrants, Conversion of Eligible to be Sold Common Stock % of Common
in each case as of Series D as of To Be Held Stock To Be
Name January 21, 1998 Preferred Stock January 21, 1998 After Sale Held After Sale
- ---- ------------------- --------------- ----------------- ----------- ---------------
Reliance Insurance Company 1,109,603 3,128,808 1,109,603 0 *
Charles Re Profit Sharing Plan, 13,870 39,110 13,870 0 *
Cowen & Co. Custodian
RHL Associates L.P. 55,480 156,441 55,480 0 *
Rick Steiner Productions Inc. 33,288 93,864 33,288 0 *
RL Capital Partners 55,480 156,441 55,480 0 *
Rosenwald, Lindsay A. (1)(4) 2,866,393 7,662,732 2,866,393 0 *
Rothschild, Jonathan 55,480 156,441 55,480 0 *
Rubin, Wayne L.(4) 130,213 348,099 130,213 0 *
Ruggeberg, Karl(4) 23,967 64,071 23,967 0 *
Ruttenberg, David W. 27,740 78,220 27,740 0 *
Schaefer, Rowland 110,960 312,881 110,960 0 *
Schonzeit, Andrew W. 55,480 156,441 55,480 0 *
Schubach, Clark 55,480 156,441 55,480 0 *
Selz, Bernard 277,401 782,202 277,401 0 *
Shaw, H.L. & D.M. 55,480 156,441 55,480 0 *
Simon, Ronald I. 13,870 39,110 13,870 0 *
Sirotkin, Martin 55,480 156,441 55,480 0 *
Slovin, Bruce 166,440 469,322 166,440 0 *
Smith, Richard A. 55,480 156,441 55,480 0 *
Solomon, Deborah(4) 13,038 34,855 13,038 0 *
Sovereign Partners L.P. 221,921 625,761 221,921 0 *
Sparx Asset Management(6) 24,966 66,742 24,966 0 *
Sternheim, Howard & Sharon 27,740 78,220 27,740 0 *
Stevens-Knox & Associates, Inc. 55,480 156,441 55,480 0 *
Strassman, Joseph & Barbara 110,960 312,881 110,960 0 *
Strassman, Richard(4) 13,038 34,855 13,038 0 *
Strauss, Gary J. 27,740 78,220 27,740 0 *
Suan Investments Inc. 110,960 312,881 110,960 0 *
Superius Securities Group, Inc., 110,960 312,881 110,960 0 *
Money Purchase Plan, Inc.
Tarica, Michele 13,870 39,110 13,870 0 *
Tarragona Fund Inc. 277,401 782,202 277,401 0 *
Tauber, Herman 221,921 625,761 221,921 0 *
Taub, Hindy H. 55,480 156,441 55,480 0 *
Teitelbaum, Myron M. 83,220 234,661 83,220 0 *
The Alfred J. Anzalone Family 55,480 156,441 55,480 *
Limited Partnership
-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 Contingent Shares
Warrants, the Initial Warrants Issuable Upon Registered Shares Shares of
or the Line of Credit Warrants, Conversion of Eligible to be Sold Common Stock % of Common
in each case as of Series D as of To Be Held Stock To Be
Name January 21, 1998 Preferred Stock January 21, 1998 After Sale Held After Sale
- ---- ------------------- --------------- ----------------- ----------- ---------------
The Aries Trust(1) 9,416,276 12,657,942 9,352,226 64,050 *
The Century Trust, David & 55,480 156,441 55,480 0 *
Susan Wilstein,
Trustees
The Jerusalem Fund, Inc. 27,740 78,220 27,740 0 *
Trustee for The Osterweis 27,740 78,220 27,740 0 *
Revocable Trust U/A/ dated
9/13/93, John S. Osterweis
Toll, Bruce E. 55,480 156,441 55,480 0 *
Ts'o, Paul O.P.(3) 0 *
Tuppatsch, Raymond 55,480 156,441 55,480
United Congregation Mesora 1,109,603 3,128,808 1,109,603 0 *
Valori Associates Inc. 27,740 78,220 27,740 0 *
Walko, Mark & Lombardi, 27,740 78,220 27,740 0 *
Blanche
Walner, David R. (1)(4) 102,358 273,634 102,358 0 *
Warwinick Investments Ltd. 110,960 312,881 110,960 0 *
Webster, Sharon B.(3) 0 *
Weiss, Branco 554,801 1,564,404 554,801
Weiss, Melvyn 277,401 782,202 277,401 0 *
Weiss, Michael S.(1)(4) 148,327 396,523 148,327 0 *
Whetten, Robert J. 83,220 234,661 83,220 0 *
Wise, Alan & Teri 27,740 78,220 27,740 0 *
Wolfson, Aaron 83,220 234,661 83,220 0 *
Wolfson, Abraham 55,480 156,441 55,480 0 *
Wolf, David A. 27,740 78,220 27,740 0 *
Yamazaki, Yoshimasa 110,960 312,881 110,960 0 *
Youner, Lauren(4) 31,738 84,845 31,738 0 *
Zapco Holdings, Inc. Deferred 55,480 156,441 55,480 0 *
Compensation Plan Trust
-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 Contingent Shares
Warrants, the Initial Warrants Issuable Upon Registered Shares Shares of
or the Line of Credit Warrants, Conversion of Eligible to be Sold Common Stock % of Common
in each case as of Series D as of To Be Held Stock To Be
Name January 21, 1998 Preferred Stock January 21, 1998 After Sale Held After Sale
- ---- ------------------- --------------- ----------------- ----------- ---------------
Zeff, Kal 221,921 625,761 221,921 0 *
Zucker, Uzi 110,960 312,881 110,960 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 President and Chairman of Paramount Capital,
Inc., a Delaware corporation ("Paramount"), is the President and Chairman
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, Vice 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 served as the Company's interim management
team from May 6, 1997 until September 30, 1997.
(3) Paul O.P. Ts'o and Sharon B. Webster resigned as directors of the Company
on September 11, 1997.
(4) Employees, salespersons or other affiliates of Paramount.
(5) Formerly employed by, and/or associated with, Paramount.
(6) Is associated with, or acted as, a selected dealer in the Private
Placement.
<PAGE>
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 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
-27-
<PAGE>
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.
-28-
<PAGE>
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.
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 on Form 10-K/A (Amendment No. 2) 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.
-29-
<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.................. 65,548,982
Documents Incorporated by
Reference............................ Common Stock
Recent Developments....................
Business Summary.......................
Risk Factors...........................
Use of Proceeds........................
Capital Stock..........................
Income Tax Considerations..............
Selling Stockholders...................
Plan of Distribution................... GENTA
Legal Matters.......................... INCORPORATED
Experts................................
--------------
PROSPECTUS
--------------
January __, 1998
- ------------------------------------ ---------------------------------------
-30-
<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 certain
II-1
<PAGE>
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
II-2
<PAGE>
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 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 Lexington, State of Massachusetts, on January
__, 1998.
GENTA INCORPORATED
/s/ Kenneth G. Kasses, Ph.D.
------------------------------
Kenneth G. Kasses, Ph.D.
President, Principal Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth G. Kasses and Robert E. Klem
jointly, and each of them severally 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>
President, Principal Executive January 19, 1998
/s/Kenneth G. Kasses, Ph.D. Officer and Director
--------------------------
Kenneth G. Kasses, Ph.D.
Principal Accounting Officer, January 18, 1998
/s/Robert E. Klem, Ph.D. Vice President and Director
--------------------------
Robert E. Klem, Ph.D.
Director January 19, 1998
/s/Glenn L. Cooper, M.D.
--------------------------
Glenn L. Cooper, M.D.
Director January 19, 1998
/s/Donald G. Drapkin
--------------------------
Donald G. Drapkin
Director January 18, 1998
/s/Lawrence J. Kessel, M.D.
--------------------------
Lawrence J. Kessel, M.D.
Director January 19, 1998
/s/Peter Salomon, M.D.
--------------------------
Peter Salomon, M.D.
II-4
<PAGE>
Director January 19, 1998
/s/Bobby W. Sandage, Jr., Ph.D.
------------------------------
Bobby W. Sandage, Jr., Ph.D.
Director January 19, 1998
/s/Andrew J. Stein
-------------------------------
/s/Andrew J. Stein
Director January 20, 1998
/s/Harlan J. Wakoff
-------------------------------
Harlan J. Wakoff
Director January 19, 1998
/s/Michael S. Weiss
-------------------------------
Michael S. Weiss
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Exhibit Numbered Page
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 Power of Attorney (included on the signature page of
the Registration Statement)
- ------------------
* To be filed by amendment.
II-6
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-35215) for the
registration of shares of its common stock and to the incorporation by reference
therein 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, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
January ___, 1998
II-1
