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As filed with the Securities and Exchange Commission on May 1, 1998. Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ARIAD PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 22-3106987
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
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26 LANDSDOWNE STREET
CAMBRIDGE, MASSACHUSETTS 02139-4234
(617) 494-0400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JAY R. LAMARCHE
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
ARIAD PHARMACEUTICALS, INC.
26 LANDSDOWNE STREET
CAMBRIDGE, MASSACHUSETTS 02139-4234
(617) 494-0400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With a copy to:
JONATHAN L. KRAVETZ
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111
617-542-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practical after this Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 other than securities offered only in
connection with dividend or interest X reinvestment, check the
following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
Title of Each Class of Amount to be Proposed Maximum Aggregate Offering Amount of
Securities to be Registered Registered Offering Price per Share Price(1) Registration Fee
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Common Stock, $.001 par value 2,537,500 $4.40 $11,165,000 $3,294
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(1) The price of $4.40 per share, which was the average of the high and low
prices of the Common Stock reported by the Nasdaq Stock Market on April 27,
1998, is set forth solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTION AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 1, 1998
PROSPECTUS
2,537,500 SHARES
ARIAD PHARMACEUTICALS, INC.
COMMON STOCK
This Prospectus relates to the offer and sale of 2,537,500 shares (the
"Shares") of Common Stock $.001 par value per share (the "Common Stock"), of
ARIAD Pharmaceuticals, Inc. ("ARIAD" or the "Company"). The Shares may be
offered by certain stockholders of the Company identified herein and their
pledgees, donees, transferees or other successors in interest (the "Selling
Stockholders"). The Selling Stockholders have not advised the Company of any
specific plans for the distribution of the Shares covered by this Prospectus. It
is anticipated, however, that the Shares will be offered and sold by the Selling
Stockholders from time to time in transactions on the Nasdaq National Market, in
privately negotiated transactions, or by a combination of such methods of sale,
at fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the Shares for whom such broker-dealer
may act as agent or to whom they sell as principal or both (which compensation
to a particular broker-dealer might be in excess of customary commissions). See
"Selling Stockholders" and "Plan of Distribution". The Company will not receive
any of the proceeds from the sale of the Shares by the Selling Stockholders.
The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol "ARIA." On April 30, 1998, the last sale price for the Common
Stock as quoted on the Nasdaq National Market was $4.81 per share.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 6.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No underwriting commissions or discounts will be paid by the Company in
connection with this Offering. Expenses payable by the Company in connection
with this Offering are estimated to be $37,000. The aggregate proceeds to the
Selling Stockholders from the Common Stock will be the purchase price of the
Common Stock sold less the aggregate agents' commissions and underwriters'
discounts, if any, and other expenses of issuance and distribution not borne by
the Company. See "Plan of Distribution."
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act"), and any commissions received by them
and any profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" herein for a description of agreements by the Company to indemnify
the Selling Stockholders against certain liabilities. The Company has agreed to
indemnify the Selling Stockholders and certain other persons against certain
liabilities, including liabilities under the Securities Act.
THE DATE OF THIS PROSPECTUS IS ___________, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission") in Washington, D.C.
Such reports, proxy materials and other information concerning the Company filed
in accordance with the Exchange Act and the Registration Statement and exhibits
and schedules thereto may be inspected, without charge, at the public reference
facility maintained at the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and on request, at the Commission's
regional offices at 7 World Trade Center, 13th Floor, New York, New York 10048
and the Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained, at prescribed
rates, from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a web site (address:
http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants, including the Company, that file
electronically with the Commission.
This Prospectus constitutes a part of a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement"), filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement which the Company has filed with the
Commission under the Securities Act and to which reference is hereby made;
certain parts of this Prospectus have been omitted in accordance with the rules
and regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or any other document referred to are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed or incorporated by reference as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference. For further information with respect to the Company and the
shares offered hereby, reference is hereby made to the Registration Statement
and the exhibits and schedules thereto.
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
The information contained in this Prospectus as well as in the
documents incorporated herein by reference is qualified in its entirety by the
more detailed information and financial data, including "Risk Factors,"
appearing elsewhere in this Prospectus and in the documents incorporated herein
by reference. In addition to historical information contained herein, this
Prospectus contains forward-looking statements that involve risks and
uncertainties. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company's actual results may differ significantly from the results discussed in
the forward-looking statements. Factors that might cause such differences
include, but are not limited to, those discussed in "Risk Factors." Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company does not undertake any obligation
to publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1997, filed with the Commission on March 10, 1998;
2. The Company's Definitive Proxy Statement dated April 16, 1998, in
connection with the Company's 1998 Annual Meeting of Stockholders, filed with
the Commission on April 16, 1998;
3. The Company's Current Report on Form 8-K, filed with the Commission
on April 29, 1998; and
4. The description of the Company's Common Stock contained in its
Registration Statement on Form 10 filed with the Commission on June 25, 1993,
including any amendments or reports filed for the purpose of updating such
description.
In addition to the foregoing, all reports and other documents
subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act, after the date of this Prospectus and prior to the filing
of a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. Any statement contained in a
document incorporated by reference herein shall be deemed modified or superseded
for purposes of this Prospectus to the extent that a statement contained or
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been or may be incorporated by reference
in this Prospectus, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Such requests
should be directed to ARIAD Pharmaceuticals, Inc., 26 Landsdowne Street,
Cambridge, Massachusetts, 02139, telephone (617) 494-0400, Attn: Chief Financial
Officer.
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PROSPECTUS SUMMARY
The following is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus and
in the documents incorporated herein by reference. As used herein, unless the
context otherwise requires, references to the "Company" or "ARIAD" include ARIAD
Pharmaceuticals, Inc., a Delaware corporation, and its subsidiaries. An
investment in the Shares offered hereby involves a high degree of risk. This
Prospectus, including the documents incorporated herein by reference, contains
forward-looking statements that involve risks and uncertainties. Actual events
or results may differ materially from those discussed in such forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, the factors discussed under the heading "Risk Factors"
as well as those discussed elsewhere in this Prospectus and in the documents
incorporated herein by reference.
THE COMPANY
ARIAD Pharmaceuticals, Inc. ("ARIAD" or the "Company") is engaged in
the discovery and development of novel, orally administered pharmaceuticals
based on signal transduction technology. ARIAD's comprehensive and integrated
drug-discovery platform spans from target identification and validation
(functional genomics), to structure-based drug design and combinatorial
chemistry, to medicinal chemistry and pharmacology. This "gene-to-drug" research
and development capability forms the basis for multiple business opportunities,
each with a diversity of potential products. ARIAD is currently focusing its
drug discovery efforts on (i) the development of orally administered drugs to
block signal transduction pathways that play a critical role in major diseases
such as osteoporosis, immune-related diseases and allergy/asthma, and (ii) the
development of orally active therapeutic proteins based on a system that
controls signal transduction pathways in genetically engineered cells. These
drug discovery efforts are based on validated small-molecule drug targets and
known therapeutic proteins. ARIAD is further building its gene-to-drug drug
research and development capabilities by expanding its functional genomics
program. The Company employs functional genomics to identify new drug targets
for its signal transduction inhibitor program and novel proteins for its orally
active therapeutic protein program. In each area of drug discovery, as well as
in functional genomics, the Company has entered into a significant strategic
alliance with a collaborator to complement its gene and drug discovery
technologies or to support its commercialization efforts.
SIGNAL TRANSDUCTION INHIBITORS. ARIAD is designing drugs that inhibit
signal transduction pathways in cells responsible for osteoporosis,
allergy/asthma and immune-related diseases such as transplant rejection and
rheumatoid arthritis. In each of these programs, the Company has identified
intracellular signaling protein targets that it believes are critical to the
disease process. ARIAD scientists are employing the Company's advanced drug
discovery platform to design and develop small molecules that bind to these
proteins and block their ability to transmit signals within the cell. In the
case of osteoporosis, ARIAD is developing small molecules designed to bind to
Src, an intracellular signaling protein that the Company believes is critical to
the function of osteoclasts, the cells that resorb bone. By inhibiting the
function of Src, it may be possible to correct the imbalance between bone
resorption and bone formation that causes osteoporosis. In November 1995, ARIAD
entered into an agreement with Hoechst Marion Roussel ("HMR") (the "1995 HMR
Osteoporosis Agreement") to develop Src inhibitors for the treatment of
osteoporosis and related bone diseases. HMR agreed to invest up to $40 million
in cash, of which $10 million was paid upon closing and up to $30 million will
fund research at ARIAD over a five-year period, including $10 million to be paid
upon the achievement of certain research milestones. HMR also agreed to fund all
preclinical and clinical research activities of the program. ARIAD has developed
small-molecule drugs that bind selectively to Src and inhibit bone resorption in
cellular assays. The Company's lead compounds in the osteoporosis program are
currently being evaluated in in vivo animal models of osteoporosis.
ORALLY ACTIVE THERAPEUTIC PROTEINS. ARIAD regulated gene expression
technology ("ARGENT(TM)") is a novel and proprietary system designed to provide
a means to control cellular activities, such as protein production, using
small-molecule drugs. ARGENT(TM) can potentially be applied broadly in many
areas of drug
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discovery, in gene and cell therapy, in manufacturing of biological products and
in research. ARIAD's leading application of the technology is in the development
of orally active therapeutic proteins. Currently, proteins such as
erythropoietin (anemia), interferon alpha (hepatitis) or growth hormone
(pituitary disfunction) must be delivered by injection. This mode of
administration can be inconvenient and uncomfortable to the patient and can
result in circulating protein levels that fluctuate well above and below the
optimal therapeutic dose. In addition, some potentially useful protein therapies
are unavailable because they cannot be administered effectively by injection.
Using ARGENT(TM), it may be possible to genetically engineer a patient's cells
to produce a therapeutic protein of choice in vivo in response to a proprietary
small-molecule drug. This approach could provide physicians with the ability to
administer and control protein therapy in a manner consistent with conventional
pharmaceutical dosing (i.e., with a pill). It may also improve the ability to
maintain stable and effective levels of therapeutic protein in the body. ARIAD
is currently testing ARGENT(TM) orally activated protein therapy in animal
models. In vivo proof-of-concept studies have been completed using growth
hormone and erythropoietin. Further preclinical studies and manufacturing
scale-up efforts are under way.
FUNCTIONAL GENOMICS. In March 1997, ARIAD established a joint venture
with HMR to pursue functional genomics. The objective of the joint venture,
called the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center"), is to
identify genes that encode targets for small-molecule drug discovery and novel
therapeutic proteins through the development and integrated application of
advanced technologies in molecular and cellular genetics and bioinformatics.
Operating costs of the Genomics Center are shared equally by ARIAD and HMR, and
each company has the right to select for further development 50% of the genes
identified by the joint venture as potential sources of small-molecule drug
targets or therapeutic proteins. ARIAD and HMR have agreed to commit $85 million
to fund the operating expenses, capital expenditures and other costs of the
Genomics Center until March 2002. The Genomics Center currently is focusing on
identifying genes that play a critical role in osteoporosis, atherosclerosis,
cancer and osteoarthritis.
The Company's business strategy is to create multiple business
opportunities based on its expertise in signal transduction technology. The key
elements of this strategy include: (i) developing comprehensive and highly
integrated capabilities in multiple aspects of drug discovery and development;
(ii) seeking collaborations that will provide access to complementary
technologies and research capabilities or commercialization expertise; (iii)
pursuing drug discovery programs with the potential to create multiple product
candidates; and (iv) when possible, retaining defined clinical development and
commercialization rights and the flexibility to pursue product opportunities
independently.
All of ARIAD's compounds are currently in research or preclinical
development, and none has entered human clinical trials or has been submitted to
the U.S. Food and Drug Administration (the "FDA") or any other regulatory agency
for marketing approval.
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RISK FACTORS
An investment in the Common Stock offered hereby is speculative in
nature and involves a high degree of risk. In addition to the other information
included or incorporated by reference in this Prospectus, prospective investors
should consider carefully the following risk factors before purchasing the
Common Stock offered hereby. This Prospectus, including the documents
incorporated herein by reference, contains forward-looking statements that
involve risks and uncertainties Actual events or results may differ materially
from those discussed in such forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, the
factors discussed below as well as those discussed elsewhere in this Prospectus
and in the documents incorporated herein by reference.
EARLY STAGE OF PRODUCT DEVELOPMENT; ABSENCE OF PRODUCTS. Since its
inception in 1991, the Company has dedicated substantially all of its resources
to the research and development of its technologies and related compounds. All
of ARIAD's compounds are currently in research or preclinical development, and
none has entered human clinical trials or has been submitted for regulatory
approval. Preclinical studies of product candidates may not predict and do not
ensure safety or efficacy in humans and are not necessarily indicative of the
results that may be achieved in human clinical trials. There can be no assurance
that any of the Company's compounds will enter human clinical trials on a timely
basis, if at all, or that the Company will develop any product candidates
suitable for commercialization. Prior to commercialization, any product
candidate will require significant additional research, development and
preclinical testing and extensive clinical investigation before submission of
any regulatory application for marketing approval. As a result of the limited
data available and other factors, preclinical and clinical trials relating to
gene-based therapeutics such as the Company's regulated gene expression
technologies may take longer to complete than trials involving more traditional
pharmaceuticals. Potential products that appear to be promising at early stages
of development may not reach the market for a number of reasons. Potential
products may be found ineffective or cause harmful side effects during
preclinical testing or clinical trials, fail to receive necessary regulatory
approvals, be difficult to manufacture on a large scale, be uneconomical to
produce, fail to achieve market acceptance or be precluded from
commercialization by proprietary rights of third parties. There can be no
assurance that the Company's or its collaborative partners' product development
efforts will be successfully completed, that required regulatory approvals will
be obtained or that any products, if introduced, will be successfully marketed
or achieve customer acceptance. Failure to identify and commercialize any
products would have a material adverse effect on the business, financial
condition and results of operations of the Company. See "History of Losses;
Uncertainty of Future Profitability."
UNCERTAINTY RELATED TO NOVEL TECHNOLOGIES. The Company has historically
been engaged in drug discovery and development based on signal transduction and
has more recently begun efforts in functional genomics as a separate program.
The technologies involved in each of these fields are relatively new and
unproven, and there can be no assurance that these technologies will lead to the
discovery of products or additional product candidates. The Company's drug
discovery strategy involves the application of multiple novel technologies to
create a product candidate. There can be no assurance that the application of
these technologies or any other technology utilized by the Company will result
in the successful development of therapeutic products. The Company's signal
transduction inhibitor program and regulated gene therapy program are based upon
the inhibition and control, respectively, of intracellular protein interactions,
approaches that are new and unproven. In addition, as is the case with the
Company's signal transduction inhibitor and gene therapy programs, functional
genomics is a new field, and there can be no assurance that the methods used in
the Company's functional genomics program will lead to the discovery or
development of novel therapeutic proteins or drug targets which are useful in
drug discovery. Generally, there is limited understanding of the roles of genes
in disease. While many approaches to gene-based therapeutics are being pursued
by pharmaceutical and biotechnology companies and academic institutions, the
Company is not aware of any gene therapy product that has received marketing
approval from the FDA or the regulatory bodies of other countries, and existing
preclinical and clinical data on the safety and efficacy of such products are
very limited. The failure of the Company to validate its technologies through
the identification of product candidates, the commencement of clinical trials or
the achievement of regulatory approval would have a material adverse effect on
the business,
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financial condition and results of operations of the Company. See
"Government Regulation and Product Approval; No Assurance of Regulatory
Approval."
UNCERTAINTY RELATED TO GENOMICS CENTER. The objective of the Genomics
Center is to identify genes that encode novel therapeutic proteins or targets
for small-molecule drug discovery. The Company has only recently begun
operations at the Genomics Center and many of the research and development
activities that are being and will be undertaken at the Genomics Center are
activities in which the Company and HMR have little or no experience. As a
result, the success of the Company in the field of functional genomics will
depend, in large part, upon the Company's ability to recruit, hire and retain
highly skilled scientific personnel, and to acquire or license new technologies,
and to integrate such personnel and technologies, together with the Company's
and HMR's existing technologies, into the Genomics Center. There can be no
assurance that the Genomics Center will be successful. Furthermore, ARIAD is
relying on HMR's obligation pursuant to the 1997 HMR Genomics Agreement (as
defined below) to fund HMR's share and to finance ARIAD's share of the costs
associated with the Genomics Center. In the likely event that funds in excess of
what is provided for in the 1997 HMR Genomics Agreement are required for the
costs associated with the Genomics Center, the 1997 HMR Genomics Agreement
provides that both ARIAD and HMR must approve of such additional costs. While
HMR has agreed to fund ARIAD's share of any such approved additional costs,
there can be no assurance that HMR would approve of costs at the Genomics Center
beyond what is required under the 1997 HMR Genomics Agreement, including costs
that are associated with activities or technologies that would be of significant
benefit to ARIAD or that, if not approved, could have a material adverse effect
on ARIAD's functional genomics program. The failure of HMR to approve of any
such costs could have a material adverse effect on the Company's business,
financial condition, and results of operations. See "Uncertainty Related to
Novel Technologies" and "Dependence on HMR."
DEPENDENCE ON HMR. The Company has received a substantial portion of
its revenues since inception from its alliances with HMR and expects to continue
to do so for the foreseeable future. The Company also relies on HMR to provide
funding in support of its research operations. As of December 31, 1997, the
Company had received an aggregate of $23.6 million in research funding and
milestone payments from HMR and had received an aggregate of $24 million in
proceeds from the sale of series B preferred stock to HMR. There can be no
assurance that the Company will continue to achieve the results required to
continue to receive research funding and milestone payments from HMR, that the
Company will be able to enter into new collaborations with HMR or other
partners, or that, upon the termination or expiration of the existing
collaborations with HMR, the Company will be able to find alternate
collaborative partners and sources of funding. See "Dependence on Others;
Collaborations."
In March 1997, the Company and HMR entered into a collaborative
agreement for the operations of and activities at the Genomics Center (the "1997
HMR Genomics Agreement") pursuant to which the Company and HMR have each
committed to provide 50% of the required funding for the operations of the
Genomics Center. ARIAD is relying, in large part, on HMR's obligation to
purchase series B preferred stock to finance the Company's share of such
expenses and other related costs for the next four years, which is expected to
exceed $34 million. The 1997 HMR Genomics Agreement does not provide for funding
beyond March 2002 and provides that, if the parties do not agree to additional
funding prior to such time, the 1997 HMR Genomics Agreement may be terminated.
The success of the Genomics Center also will depend, in large part, on the
ability and willingness of ARIAD and HMR to cooperate and coordinate with each
other in the field of functional genomics. In the event that HMR breaches its
obligation to provide such funding, or if the parties are unable to resolve
disagreements, the Company's business, financial condition and results of
operations would be adversely affected. The termination, cancellation or
material breach of the 1997 HMR Genomics Agreement would have a material adverse
effect on the Company's functional genomics program and could have a material
adverse effect on the Company's business, financial condition and results of
operations.
In November 1995, the Company entered into an agreement with HMR for
the research and development of osteoclast signal transduction inhibitors (the
"1995 HMR Osteoporosis Agreement"). The 1995 HMR Osteoporosis Agreement does not
provide for funding beyond November 2000, at which time, either party may
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terminate such agreement. In addition, the 1995 HMR Osteoporosis Agreement
provides that HMR may terminate such agreement and further payment obligations
if the Company does not achieve certain milestones by November 1998. There can
be no assurance that the Company will achieve such milestones by such time, or
that the Company will achieve the results required to receive other milestone
payments under the 1995 HMR Osteoporosis Agreement. The termination,
cancellation or material breach of the 1995 HMR Osteoporosis Agreement would
have a material adverse effect on the Company's osteoclast signal transduction
inhibitor program and could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, it is
likely that HMR is conducting multiple product development efforts within the
field of osteoporosis. The 1995 HMR Osteoporosis Agreement does not restrict HMR
from pursuing competing internal development efforts based on reasonable
commercial judgment and other factors. Any product candidate developed for the
treatment of osteoporosis, therefore, may be subject to competition with a
potential product under development by HMR.
The amount and timing of resources that HMR devotes to these
collaborations over and above its contractual obligations is not within the
control of the Company, and there can be no assurance that HMR will continue to
have the economic motivation to perform its duties under these agreements, nor
can there be any assurance as to the amount and timing of resources to be
devoted to these collaborations over and above the contractual obligations or
that any additional revenues will be derived from such collaborations. HMR's
performance under its collaborative agreements with the Company could be
materially adversely affected if HMR were involved in certain third-party
transactions such as a business combination, in the event that HMR had a
significant strategic shift in its business focus, or in the event that HMR's
business, financial condition and results of operations were to be materially
adversely affected. Furthermore, HMR has a large number of collaborative
partners and other affiliated and associated entities, each of whom may have
agreements or understandings with HMR that may be in conflict with the interests
or rights of ARIAD. There can be no assurance that any such conflicting
understandings or agreements do not exist and the existence of any such
conflicting understandings or agreements could have a material adverse effect on
the Company's business, financial condition and results of operations.
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY. The Company has
incurred significant operating losses in each year since its inception in 1991,
and has an accumulated deficit of approximately $66 million from its operations
through December 31, 1997. Losses have resulted principally from costs incurred
in research activities aimed at discovering and developing the Company's product
candidates, and from general and administrative costs associated with the
Company's operations, including expenses related to the Genomics Center. The
Company currently has no product revenue, and there can be no assurance that it
will ever be able to earn such revenue or that its operations will become
profitable, even if it is able to commercialize any products. The Company will
be required to conduct significant research, development, testing and regulatory
compliance activities that, together with projected general and administrative
expenses, are expected to result in substantial increasing operating losses for
at least the next several years. In the event that costs associated with the
Genomics Center were to increase beyond what is currently provided for in the
1997 HMR Genomics Agreement, and it is likely that they will, and the Company
finances its share of such costs through a loan from HMR, the Company's
outstanding indebtedness would increase. The Company's future profitability
depends, in part, on its collaborative partners obtaining regulatory approval
for products derived from its collaborative research efforts, the Company's
collaborative partners successfully producing and marketing products derived
from technology or rights licensed from the Company, and the Company's entering
into agreements for the development, commercialization, manufacture and
marketing of any products derived from the Company's internal proprietary
programs. There can be no assurance that the Company or its collaborative
partners will obtain required regulatory approvals, or successfully develop,
commercialize, manufacture and market product candidates or that the Company
will ever achieve product revenues or profitability. See "Early Stage of Product
Development; Absence of Products."
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING; FIXED
COMMITMENTS. The operations of the Company to date have consumed substantial
amounts of cash, and substantial additional funding will be necessary in order
to continue the Company's research and development programs, for preclinical
testing and
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clinical investigation of its product candidates, for the pursuit of regulatory
approvals, to establish manufacturing, marketing and sales capabilities, for
working capital and general corporate purposes, and for operating expenses. The
amounts and timing of the Company's expenditures and the Company's capital
requirements will depend on numerous factors, including the progress of its
research and development, the progress of preclinical testing and clinical
investigation, the time and costs involved in obtaining regulatory approvals,
the cost of filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights, competing technological and market
developments, changes in the Company's existing research and development
relationships, the ability of the Company to establish collaborative
arrangements, the development of commercialization arrangements and the
availability and cost of additional equipment and instrumentation. There is
considerable uncertainty associated with the Company's technologies and the
Company has a limited history of conducting preclinical studies and no history
of conducting clinical trials. As a result, the preclinical studies and clinical
trials (if any) conducted by the Company may take longer to complete than
studies or trials involving more traditional pharmaceuticals and, accordingly,
costs associated with such studies or trials may be substantially greater than
anticipated. The Company has substantial fixed commitments under various
research and licensing agreements, consulting and employment agreements, lease
agreements and long-term debt instruments. Such fixed commitments, excluding the
Company's funding obligations related to the Genomics Center, currently
aggregate in excess of $8 million per year and may increase. The Company's loan
agreements and equipment leases contain certain restrictive covenants that
require the Company to maintain minimum levels of working capital, net worth and
liquid assets. Based on its currently planned research and development programs,
the Company believes that its existing capital resources, plus interest income
and other sources of funding, will be adequate to satisfy its capital and
operating requirements for at least the next year. However, there can be no
assurance that changes in the Company's research and development plans or other
events affecting the Company's operating expenses will not result in the earlier
depletion of the Company's funds.
The Company intends to seek additional funding through public or
private financings or other arrangements with collaborative partners or from
other sources. There can be no assurance, however, that additional funding will
be available when needed from any of these sources or will be available on terms
acceptable to the Company. Insufficient funds may require the Company to delay,
scale back or eliminate one or more of its research and development programs or
to enter into license arrangements with third parties to commercialize products
or technologies that the Company would otherwise seek to develop itself without
relinquishing rights thereto. To the extent the Company raises additional
capital by issuing equity securities, dilution to the holders of Common Stock
may result.
DEPENDENCE ON GENOVO. The Company's ability to commercialize its orally
activated protein therapy products will depend, in part, upon the ability of
Genovo, Inc. ("Genovo") to develop, or acquire from the Trustees of the
University of Pennsylvania ("Penn"), gene transfer technology, or the Company's
ability to acquire such gene transfer technology elsewhere. ARIAD is relying on
Genovo's obligation pursuant to the joint venture agreement with Genovo (the
"Genovo Agreement") to fund the costs associated with the development of gene
transfer technology for the intramuscular and subcutaneous delivery of its
orally activated protein therapy products. The pace of Genovo's development
efforts at Penn will be determined, in part, by the amount and timing of
Genovo's funding contributions to Penn, which will be dependent, in part, upon
Genovo's access to capital. Most of the funding Genovo has received to date has
been provided by a strategic partner that is a competitor of ARIAD, that holds a
significant minority interest in Genovo, and that has the ability to influence
certain actions taken by Genovo, including actions which may be adverse to the
Company's joint venture with Genovo (the "Genovo Joint Venture"). There can be
no assurance that a conflict of interest will not arise between this competitor
and the Genovo Joint Venture, or that Genovo will fund costs to the extent
required to successfully develop this gene transfer technology, or that the
development efforts of Genovo or Penn will be successful, or that Genovo will be
successful in securing from Penn all rights necessary to commercialize this gene
transfer technology. The Company's ability to commercialize its regulated gene
therapy products could be materially adversely affected in the event that Genovo
fails to perform its obligations to provide funding and to secure rights as
necessary for gene transfer technology development and commercialization.
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DEPENDENCE ON OTHERS; COLLABORATIONS. A key element of the Company's
strategy is to enhance certain of its drug discovery and development programs
and to fund its capital requirements, in part, by entering into multiple
collaborative arrangements with major pharmaceutical or biotechnology companies,
as well as various arrangements with academic institutions, licensors, licensees
and others. In November 1995, the Company entered into the 1995 HMR Osteoporosis
Agreement for the research and development of osteoclast signal transduction
inhibitors; in February 1997, the Company, through a subsidiary, entered into
the Genovo Agreement to develop and commercialize gene therapy products for the
therapeutic protein market; in March 1997, the Company entered into the 1997 HMR
Genomics Agreement for the pursuit of functional genomics; and in March 1997 the
Company entered into a collaborative agreement with Incyte Pharmaceuticals, Inc.
("Incyte") in bioinformatics (the "Incyte Agreement"). There can be no assurance
that these collaborations will be successful. The success of the Company in each
of these collaborations will depend not only upon the willingness and ability of
these outside parties to perform their duties under the respective agreements,
but also upon the continued dedication and motivation of these partners to the
programs that are the subject of the various collaborations. The amount and
timing of resources that the Company's collaborative partners devote to these
activities will not be within the control of the Company, and there can be no
assurance that these partners will continue to have the economic motivation to
perform their respective duties under these agreements, nor can there be any
assurance as to the amount and timing of resources to be devoted to these
collaborations over and above the contractual obligations or that any additional
revenues will be derived from such collaborations. A collaborative partner's
performance under its collaborative agreement with the Company could be
materially adversely affected if such partner were involved in certain
third-party transactions such as a business combination or in the event that the
partner had a significant strategic shift in its business focus. Each of the
collaborative agreements provide that the Company's collaborative partners may
terminate the respective collaboration at the end of a fixed term. Also, if a
collaborative partner were to materially breach its obligations under a
collaborative agreement, the Company may be compelled to terminate such
agreement. The termination, cancellation or material breach of any of these
collaborative arrangements could have a material adverse effect on the business,
financial condition and results of operations of the Company. See "Dependence on
HMR," "Dependence on Genovo" and "Dependence on Licenses."
The Company will seek to enter into other collaborations in the future,
including collaborations for the development and commercialization of its
product candidates and the manufacture of any products it may develop. There can
be no assurance that the Company will be successful in entering into any such
future collaborations, or that these collaborations, if entered into, will be on
terms favorable to the Company or will be successful. If the Company is unable
to enter into future collaborations with capable partners and on commercially
reasonable terms, the development and commercialization of future product
candidates would be delayed and possibly postponed indefinitely.
There can be no assurance that the Company will successfully manage
multiple collaborative programs. Failure by the Company to manage existing and
future strategic alliances, maintain confidentiality among strategic partners or
prevent the occurrence of conflicts among strategic partners could lead to
disputes that result in, among other things, a significant strain on management
resources, legal claims involving significant time, expense and loss of
reputation, loss of capital or a loss of revenues, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations. Furthermore, the Company's strategic partners have a
large number of other partners and affiliated and associated entities, each of
whom may be competitors of the Company and may have agreements or understandings
with the Company's partners that may be in conflict with the interests or rights
of ARIAD. There can be no assurance that any such conflicting understandings or
agreements do not exist and the existence of any such conflicting understandings
or agreements could have a material adverse effect on the Company's business,
financial condition and results of operations.
DEPENDENCE ON LICENSES. A number of the gene sequences or proteins
encoded by those sequences that the Company and its collaborative partners are
investigating or may use to develop products are or may become patented by
others. As a result, the Company or its collaborative partners may be required
to obtain licenses to such gene sequences or other technology in order to use or
market such products. In addition, some of the
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Company's product programs may require the use of multiple proprietary
technologies. Consequently, the Company or its collaborative partners may be
required to make cumulative royalty payments to several third-parties. Such
cumulative royalties could reduce amounts paid to the Company or be commercially
prohibitive. In connection with the Company's efforts to obtain rights to
proprietary technology, the Company may find it necessary to convey rights to
its technology to others. There can be no assurance that the Company or its
collaborative partners will be able to obtain required licenses on commercially
reasonable terms or at all. Failure by the Company or a collaborative partner to
obtain a license to any technology required to develop or commercialize its
products could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company has entered into license arrangements with various research
institutions and universities pursuant to which the Company is the licensee of
certain technologies upon which the Company's current and future product
candidates and technologies are based, including certain patents associated
therewith. The Company, through one of its subsidiaries, has an exclusive
license agreement with Stanford University and Harvard University which relates
to a series of patents involving regulated gene expression that the Company
believes are important to its regulated gene expression programs. The Company
has a nonexclusive license with Incyte, providing the Company with access to
Incyte's gene sequence and expression database (with an option for exclusive
rights to any promising gene sequences identified by ARIAD or by the Genomics
Center) that the Company believes is important to its functional genomics
program. The Company has a nonexclusive license with Mochida Pharmaceutical Co.,
Ltd. ("Mochida") for patents covering the Fas gene that the Company believes is
important to the Company's inducible apoptosis program. In addition, the Company
has various other licenses, and options to acquire licenses, for technology that
the Company believes is or will be important to its research and development
programs. Each of the Company's licenses provides that the Company is obligated
to exercise diligence in bringing product candidates to market and to make
certain milestone payments, which in some instances may be substantial. These
license agreements also provide for royalties which can be significant. In some
instances, the Company is responsible for the costs of filing and prosecuting
patent applications. The licenses generally expire upon the earlier of a fixed
term of years after the date of the license or the expiration of the applicable
patents, if any. Each license is terminable by either party, upon notice, if the
other party defaults in the performance of its material obligations. The loss or
termination of any of the Company's licenses could have a material adverse
effect on the Company's research programs, which in turn could have a material
adverse effect on the Company's business, financial condition and results of
operations. In particular, the loss or termination of the license with Stanford
University and Harvard University, the license with Incyte or the license with
Mochida, would have a material adverse effect on the Company's business,
financial condition and results of operations.
GOVERNMENT REGULATION AND PRODUCT APPROVAL; NO ASSURANCE OF REGULATORY
APPROVAL. In the event that the Company were to develop any product candidates
that it deemed suitable for commercialization, such product candidates would be
subject to an extensive and lengthy governmental regulatory approval process in
the United States and in other countries. Prior to marketing in the United
States, any drug or biologic developed by the Company would be required to
undergo rigorous preclinical and clinical testing and extensive regulatory
review implemented by the FDA under the federal Food, Drug and Cosmetic Act.
Satisfaction of such regulatory requirements, which includes satisfying the FDA
that the product is both safe and effective, typically takes several years or
more depending upon the type, complexity and novelty of the product and requires
the expenditure of substantial resources. Preclinical studies must be conducted
in conformance with the FDA's good laboratory practice ("GLP") regulations.
Before commencing clinical trials in the United States, the Company would be
required to submit to and receive clearance from the FDA of an Investigational
New Drug application ("IND"). There can be no assurance that submission of an
IND would result in FDA clearance to commence clinical trials. Clinical testing
must meet requirements for independent institutional review board oversight,
informed consent and good clinical practice requirements and is subject to
continuing FDA oversight. The Company has a limited history conducting
preclinical studies and has no history of conducting and managing the clinical
testing necessary to obtain regulatory approval and expects to utilize contract
research institutions and collaborative partners to conduct a portion of its
preclinical studies and clinical trials. To date, the Company has not submitted
an IND for any product candidate, and none of its product candidates has been
approved for
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commercialization in the United States or elsewhere. There can be no assurance
that the preclinical studies currently being conducted by the Company will lead
to the INDs required to commence clinical trials, that the Company will be able
to identify collaborative partners willing and able to conduct such trials or
that the Company or its partners would be successful in conducting such trials.
Failure by the Company to enter into satisfactory collaborations that provide
for preclinical studies and clinical testing or to otherwise successfully
complete preclinical studies and clinical trials would have a material adverse
effect on the Company's business, financial condition and results of operations.
Furthermore, the Company or the FDA may suspend clinical trials at any time if
they believe that the subjects participating in such trials are being exposed to
unacceptable risks or if the FDA finds deficiencies in the conduct of the
trials.
Before receiving FDA clearance to market a product, the Company will
have to demonstrate that the product is safe and effective on the patient
population that will be treated. Data obtained from preclinical and clinical
activities are susceptible to varying interpretations which could delay, limit
or prevent regulatory clearances. The regulatory requirements governing
gene-based therapeutics are uncertain. This uncertainty may result in excessive
costs or extensive delays in the regulatory approval process, adding to the
already lengthy review process for human therapeutic products in general. In
addition, delays or rejections may be encountered based upon additional
government regulation from future legislation or administrative action or
changes in FDA policy during the period of product development, clinical trials
and FDA regulatory review. Similar delays also may be encountered in foreign
countries. There can be no assurance that even after such time and expenditures,
regulatory approval will be obtained for any products developed by the Company.
If regulatory approval of a product is granted, such approval will be limited to
those disease states and conditions for which the product is proven useful, as
demonstrated by clinical trials. Furthermore, regulatory approval may entail
ongoing requirements for postmarketing studies. Even if such regulatory approval
is obtained, a marketed product, its manufacturing process and the facilities in
which it is manufactured are subject to continual review and periodic
inspections by the FDA. Discovery of previously unknown problems with a product,
its manufacturing process or the facility in which it is manufactured may result
in restrictions on such product or manufacturer, including costly recalls or
even withdrawal of the product from the market. There can be no assurance that
any product candidate developed by the Company alone or in conjunction with
others will prove to be safe and effective in clinical trials and will meet all
of the applicable regulatory requirements needed to receive marketing clearance.
Failure to obtain regulatory approval for products developed by the Company, if
any, or to meet continuing postmarketing requirements, would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Outside the United States, the Company's ability to market a product is
contingent upon receiving a marketing authorization from the appropriate
regulatory authorities. The requirements governing the conduct of clinical
trials, marketing authorization, pricing and reimbursement vary widely from
country to country. At present, foreign marketing authorizations are applied for
at a national level, although within the European Community ("EC") certain
registration procedures are available to companies wishing to market a product
in more than one EC member state. If the regulatory authority is satisfied that
adequate evidence of safety, quality and efficacy has been presented, a
marketing authorization will be granted. This foreign regulatory approval
process includes all of the risks associated with FDA approval set forth above.
INTENSE COMPETITION AND RISK OF TECHNOLOGICAL OBSOLESCENCE. The Company
is engaged in the biopharmaceutical field, which is characterized by extensive
research efforts and rapid technological change. The competition in this field
is intense and is likely to increase. Many companies, both public and private,
including well-known pharmaceutical companies, chemical companies and
specialized biotechnology companies, as well as academic and research
institutions and government agencies, are engaged in developing pharmaceutical
and therapeutic products. Some of these companies are engaged in research and
development of products based on signal transduction. The Company is also aware
of several pharmaceutical and biotechnology companies which are exploring the
field of gene therapy, and others which are pursuing functional genomics. As
competitors develop their technologies, they may develop proprietary positions
in certain aspects of gene-based therapeutics which may prevent or make it more
difficult or expensive for the Company to commercialize its own technologies. In
addition, new developments in molecular cell biology, pharmacology, genomics,
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recombinant DNA technology and other pharmaceutical research processes are
expected to continue at a rapid pace in both industry and academia and to
compete directly with the types of products that the Company is seeking to
develop. There can be no assurance that any of these competing technologies will
not render some or all of the Company's programs or future products
noncompetitive or obsolete or that the Company will be able to make the
enhancements to its technology necessary to compete successfully with newly
emerging technologies. Many of the Company's competitors and potential
competitors have substantially greater capital, research and development
capabilities, human resources and experience than the Company and represent
significant long-term competition for the Company. In addition, many of these
competitors have significantly greater experience than the Company in
undertaking preclinical testing and clinical investigation of new pharmaceutical
products and obtaining approval from the FDA and from other regulatory
authorities. With respect to the Company's drug discovery programs, other
companies are conducting research and development programs for the treatment of
all the disease areas in which the Company is focused, and have drug candidates
in clinical trials or drug candidates that are in further advanced preclinical
studies than the Company's drug candidates, which may result in effective,
commercially successful products. Even if the Company and its collaborative
partners are successful in developing effective drugs, there can be no assurance
that the Company's products will compete effectively with such products.
Furthermore, if the Company develops any product and is permitted to commence
commercial sales thereof, it also will be competing with companies that have
greater resources and experience in manufacturing, marketing and sales. The
Company has no history of performance in these areas. The Company's competitors
may succeed in developing technologies or products that are more effective or
less costly than any that may be developed by the Company and may also prove to
be more successful than the Company in manufacturing, marketing and sales.
UNCERTAINTY OF PROTECTION OF PATENTS AND PROPRIETARY RIGHTS. The
Company's success depends in part on its ability to obtain patent protection for
its products or processes both in the United States and other countries, to
protect trade secrets, to operate without infringing upon the proprietary rights
of others and to prevent others from infringing on the proprietary rights of the
Company. The patent position of biopharmaceutical firms generally is highly
uncertain and involves complex legal and factual questions. To date, there has
not emerged from the U.S. Patent and Trademark Office a consistent policy
regarding the breadth of claims allowable in biotechnology patents. There can be
no assurance that the Company's or its licensor's patent applications will ever
issue as patents or that the claims of any issued patents will afford meaningful
protection for the Company's technologies or products. In addition, there can be
no assurance that any patents issued to the Company or its licensors will not be
challenged and subsequently narrowed, invalidated or circumvented. Litigation,
interference proceedings or other governmental proceedings that the Company may
become involved in with respect to its proprietary technologies or the
proprietary technology of others could result in substantial cost to the
Company.
A number of pharmaceutical and biotechnology companies and research and
academic institutions have developed technologies, filed patent applications or
obtained patents on various technologies that are related to the Company's
business. Some of these patent applications or patents may contain claims that
cover or conflict with the Company's technologies or patent applications. Such
conflicts could limit the scope of the patents, if any, that the Company may be
able to obtain or may result in the denial of the Company's patent applications.
In addition, if patents having claims that cover the Company's activities are
issued to other parties, there can be no assurance that the Company would be
able to obtain licenses to the rights contained under these patents at a
reasonable cost or be able to develop or obtain alternative technologies. If the
Company does not obtain such licenses, it could encounter delays in product
market introductions, or could find that opportunities for the development,
manufacture or sale of products requiring such licenses could be limited or
prevented. In addition, the Company believes that certain technologies utilized
in its research and development programs are in the public domain. Accordingly,
the Company does not believe that patent or other protection is available for
these technologies. If a third-party were to obtain patent or other proprietary
protection for any of these technologies, the Company may be required to
challenge such protections, obtain a license for such technologies or terminate
or modify its programs that rely on such technologies.
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NO HISTORY OF MANUFACTURING, MARKETING OR SALES. The Company has no
history of manufacturing, marketing or product sales and has not invested in
manufacturing, marketing or product sales resources. If the Company succeeds in
developing pharmaceutical products that it chooses to commercialize itself, it
will need to hire additional personnel skilled in manufacturing, marketing and
product sales. There can be no assurance, however, that it will be able to
acquire such resources or personnel at an acceptable cost to the Company, if at
all. To the extent that the Company arranges with third-parties to manufacture
or market its products, if any, the success of such products may depend on the
efforts of such third-parties. There can be no assurance that the Company will
be able to enter into any necessary third-party manufacturing arrangements on
acceptable terms, if at all. The Company's potential dependence upon
third-parties for the manufacture of its products may adversely affect the
Company's profit margins and its ability to develop and deliver such products on
a timely and competitive basis. Should the Company decide to manufacture its own
products, the Company will be subject to the risks and delays or difficulties
inherent in the manufacturing process and would require substantial additional
capital. If the Company successfully develops any products, the failure to
commercialize such products independently or the failure to enter into
satisfactory collaborations for such commercialization would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Dependence on Others; Collaborations" and "Need to Attract and
Retain Key Officers, Employees and Consultants."
NEED TO ATTRACT AND RETAIN KEY OFFICERS, EMPLOYEES AND CONSULTANTS.
Because of the specialized scientific nature of the Company's business, the
Company is highly dependent on key members of its scientific and management
staff, the loss of whose services might significantly delay or prevent the
achievement of research, development and business objectives. While the Company
has entered into employment agreements with certain of its key employees, there
can be no assurance that such employees will remain with the Company.
The Company is currently recruiting additional qualified scientific and
technical personnel. In connection with the Genomics Center, the Company is
obligated to recruit and retain a substantial number of highly qualified
scientists over the next four years. There is intense competition for qualified
personnel in the areas of the Company's activities, and there can be no
assurance that the Company will be able to continue to attract and retain
qualified personnel necessary for the development of its business. The Company's
planned activities will require additional expertise in areas such as research,
development, preclinical studies, clinical trials and regulatory affairs. Such
activities will require the addition of new personnel, including management, and
the development of additional expertise by existing personnel. Loss of the
services of or failure to recruit additional key scientific and technical
personnel would be detrimental to the Company's research and development
programs and business.
The Company is also dependent upon consultants, including its
scientific advisors, to assist in formulating its research and development
strategy. All of the members of the Company's Board of Scientific and Medical
Advisors are employed on a full-time basis by entities other than the Company,
primarily by academic or research institutions, and may have commitments to or
consulting or advisory contracts with other entities that may limit their
availability to the Company. Accordingly, such advisors generally devote only a
limited portion of their time to the Company. Any inventions or processes
discovered independently by any such advisor may not become the property of the
Company and could remain the property of such person or of such person's
employer.
RISK OF PRODUCT LIABILITY; EXPOSURE AND INSURANCE. The Company's
business exposes it to potential product liability risks inherent in the
testing, manufacturing and marketing of human therapeutic products, and there
can be no assurance that the Company will be able to avoid significant product
liability exposure. The Company does not currently have any product liability
insurance, and there can be no assurance that it will be able to obtain or
maintain such insurance on acceptable terms or that any insurance obtained will
provide adequate coverage against potential liabilities. An inability to obtain
sufficient insurance coverage at an acceptable cost or otherwise to protect
against potential product liability claims could prevent or limit the
commercialization of any products developed by the Company. Furthermore, a
product liability-related claim or
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recall could have a material adverse effect on the business, financial condition
and results of operations of the Company.
HAZARDOUS AND RADIOACTIVE MATERIALS; ENVIRONMENTAL MATTERS. The
Company's research and development activities involve the controlled use of
hazardous and radioactive materials, such as toxins, chemicals, viruses and
various 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 federal, state and local regulations,
the risk of accidental contamination or injury from these materials cannot be
eliminated completely. In the event of such an accident, the Company could 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
incur environmental liabilities in connection with its operations or will not be
required to incur significant costs to comply with environmental laws and
regulations in the future, or any assurance that the business, financial
condition or results of operations of the Company will not be materially
adversely affected by current or future environmental laws or regulations.
UNCERTAINTY OF PHARMACEUTICAL PRICING AND REIMBURSEMENT. The business
and financial condition of pharmaceutical and biotechnology companies will
continue to be affected by the efforts of governmental and third-party payors to
contain or reduce the costs of health care. In certain foreign markets, pricing
or profitability of prescription pharmaceuticals is subject to governmental
control. In the United States, there have been, and the Company expects there
will continue to be, a number of federal and state proposals to implement
similar governmental control. In addition, an increasing emphasis on managed
care in the United States has increased and will continue to increase the
pressure on pharmaceutical pricing. The announcement of such proposals or
efforts could have a material adverse effect on the Company's ability to raise
capital, and the adoption or implementation of any such proposals or efforts
could have a material adverse effect on the Company's business, financial
condition and results of operations. Further, to the extent that such proposals
or efforts have a material adverse effect on other pharmaceutical companies that
are current or prospective collaborative partners of the Company, the Company's
current collaborations or its ability to establish new collaborations may be
adversely affected. In addition, in both domestic and foreign markets, sales of
any products which may be developed by the Company would depend in part on the
availability of reimbursement from third-party payors such as government health
administration authorities, private health insurers and other organizations.
Third-party payors are increasingly challenging the price and cost-effectiveness
of medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. There can be no
assurance that, if approved, the Company's products, if any, will be considered
cost effective or that adequate third-party reimbursement will be available to
enable the Company to maintain price levels sufficient to realize an appropriate
return on its investment in product development.
CONCENTRATION OF COMMON STOCK OWNERSHIP. The directors and officers of
the Company and certain principal stockholders and their affiliates beneficially
own in the aggregate, shares representing approximately 32.3% of the outstanding
shares of Common Stock and series B preferred stock. As a result, these
stockholders, acting together, will be able to influence significantly and
possibly control most matters requiring approval by the stockholders of the
Company, including approvals of amendments to the Company's Certificate of
Incorporation, mergers, a sale of all or substantially all of the assets of the
Company, going private transactions and other fundamental transactions. In
addition, the Company's Certificate of Incorporation does not provide for
cumulative voting with respect to the election of directors. Consequently, the
present executive officers, directors and affiliated individuals and entities
may be able to control the election of the members of the Board of Directors of
the Company. Such a concentration of ownership could affect the liquidity of the
Company's Common Stock and have an adverse effect on the price of the Common
Stock, and may have the effect of delaying or preventing a change in control of
the Company, including transactions in which stockholders might otherwise
receive a premium for their shares over then current market prices.
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SUBSTANTIAL DILUTION; MINORITY INTEREST IN SUBSIDIARY. Purchasers of
Common Stock in this Offering will experience immediate substantial dilution in
net tangible book value per share, and, to the extent that currently outstanding
options and warrants are exercised, such dilution will increase. Furthermore, if
all of the outstanding options for ARIAD Gene Therapeutics, Inc. ("AGTI"), the
Company's subsidiary in which its regulated gene therapy program is being
conducted, are exercised, the minority interest in AGTI would be 22%. Should the
Company acquire such minority interest in AGTI, such acquisition would likely
result in a dilutive issuance of equity securities, reduction in cash reserves,
the incurrence of additional debt and additional charges to research and
development expense.
VOLATILITY OF STOCK PRICE. The market price of the Common Stock, like
that of the securities of many other biopharmaceutical companies, is likely to
be highly volatile, and the market has experienced significant price and volume
fluctuations that are often unrelated to the operating performance of particular
companies. Factors contributing to such volatility include results of
preclinical studies and clinical trials by the Company or its competitors, other
evidence of the safety or efficacy of pharmaceutical products of the Company or
its competitors, announcements of new collaborations, announcements of
technological innovations or new therapeutic products by the Company or its
competitors, governmental regulation, healthcare legislation and 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 biotechnology stocks in general could have a significant impact
on the volatility of the market price for the Common Stock and on the future
price of the Common Stock.
ANTI-TAKEOVER PROVISIONS. The Company's Certificate of Incorporation
and Bylaws require that any action required or permitted to be taken by the
stockholders of the Company must be taken at a duly called annual or special
meeting of the stockholders. Special meetings of the stockholders of the Company
may only be called by the Board of Directors, the Chairman of the Board or the
Chief Executive Officer of the Company. The Certificate of Incorporation also
provides for staggered elections of the Company's Board of Directors. The
Company is also subject to Section 203 of the Delaware General Corporation Law,
which prohibits the Company from engaging in a business combination with a
person owning 15% or more of the Common Stock (an "interested person") for a
period of three years after the date of the transaction in which the person
became an interested person, unless the business combination is approved in a
prescribed manner. The Board of Directors also has the authority, without any
action of the stockholders, to fix the rights, preferences and privileges of and
issue shares of preferred stock. In addition, the Company's stockholder rights
plan (commonly known as a "poison pill") and the 1997 HMR Genomics Agreement
each contain certain provisions which have anti-takeover effects. The foregoing
charter document provisions, Section 203 of the Delaware General Corporation
Law, the ability to issue preferred stock, the stockholder rights plan and the
1997 HMR Genomics Agreement may have the effect of delaying or preventing
transactions involving a change in control of the Company or its management,
including transactions in which the stockholders of the Company would otherwise
receive a premium for their shares over then current market prices, and may
limit the ability of stockholders to remove current management of the Company or
approve transactions that stockholders may deem to be in their best interests
and, therefore, could adversely affect the price of the Company's Common Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders in the Offering.
DIVIDEND POLICY
The Company has not declared or paid dividends in the past and does not
intend to declare or pay dividends in the foreseeable future. The Company's
current long-term debt agreements prohibit the payment of cash dividends.
16
<PAGE> 18
SELLING STOCKHOLDERS
The following table sets forth the names of the Selling Stockholders
and certain information with respect to the number of shares of Common Stock
beneficially owned by each of the Selling Stockholders as of April 27, 1998 and
as adjusted to give effect to the sale of all of the Shares offered hereby. This
information is based upon information provided by the Selling Stockholders. The
Selling Stockholders may sell all, some or none of their Shares in this
Offering. See "Plan of Distribution."
<TABLE>
<CAPTION>
Number of Shares Shares Beneficially
Names Owned Prior to Offering Number Owned After Offering(3)
of Selling ----------------------- of Shares -----------------------
Stockholders(1) Number Percent(2) Being Offered Number Percent(2)
--------------- --------- ---------- ------------- ------- ----------
<S> <C> <C> <C> <C> <C>
Lombard Odier & Cie 1,000,000 4.57% 1,000,000 0 0
Aries Trust 525,000 2.40% 525,000 0 0
Aries Domestic Fund, L.P. 225,000 1.03% 225,000 0 0
Hypo-Invest 250,000 1.14% 250,000 0 0
EGS Private Healthcare
Partnership, L.P. 172,000 * 172,000 0 0
EGS Private Healthcare
Counterpart, L.P. 28,000 * 28,000 0 0
Framlington Investment
Management 125,000 * 125,000 0 0
Framlington Munder
Healthcare GM2F 25,000 * 25,000 0 0
JALAA Equities, L.P. 287,000 1.31% 100,000 187,000 *
Clarion Capital Corporation 62,500 * 62,500 0 0
American Health Care
Fund, L.P. 25,000 * 25,000 0 0
</TABLE>
* Less than one percent.
(1) Except as otherwise indicated, each Selling Stockholder acquired its
Shares from the Company in private placement transactions pursuant to
Stock Purchase Agreements, dated as of April 27, 1998, at a purchase
price per Share of $4.00.
(2) Applicable percentage of ownership is based on 21,877,732 shares of
Common Stock outstanding on April 27, 1998.
(3) Assumes the sale of all Shares offered hereby.
17
<PAGE> 19
PLAN OF DISTRIBUTION
The Shares being offered hereby by the Selling Stockholders were
acquired by them from the Company in private placement transactions, pursuant
to those certain Stock Purchase Agreements, dated as of April 27, 1998 (the
"Purchase Agreements"), and pursuant to a Placement Agent's Agreement, dated as
of April 27, 1998, between the Company and BancAmerica Robertson Stephens, as
placement agent. This Prospectus covers the resale by the Selling Stockholders
of 2,537,500 Shares.
In accordance with registration rights granted to the Selling
Stockholders in connection with the Purchase Agreements, the Company has filed
with the Commission, under the Securities Act, a Registration Statement on Form
S-3, of which this Prospectus forms a part, with respect to the resale of the
Shares from time to time on the Nasdaq National Market or in
privately-negotiated transactions and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep such Registration Statement effective until the Shares are no longer
required to be registered for the sale thereof by the Selling Stockholders.
The Company will receive no proceeds from this Offering. The Shares
offered hereby may be sold by the Selling Stockholders or by pledgees, donees
transferees or other successors in interest that receive such Shares as a gift,
partnership distribution or other non-sale related transfer. The Shares may be
sold from time to time in transactions on the Nasdaq National Market, in the
over-the-counter market, in negotiated transactions, or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at negotiated prices. The Selling Stockholders may effect such transactions by
selling the Shares to or through broker-dealers, including block trades in which
brokers or dealers will attempt to sell the Shares as agent but may position and
resell the block as principal to facilitate the transaction, or in one or more
underwritten offerings on a firm commitment or best efforts basis. Sales of
Selling Stockholders' Shares may also be made pursuant to Rule 144 under the
Securities Act, where applicable.
To the extent required under the Securities Act, the aggregate amount
of Selling Stockholders' Shares being offered and the terms of the offering, the
names of any such agents, brokers, dealers or underwriters and any applicable
commission with respect to a particular offer will be set forth in an
accompanying Prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Shares may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from a Selling
Stockholder and/or purchasers of Selling Stockholders' Shares, for whom they may
act (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
From time to time, one or more of the Selling Stockholders may pledge,
hypothecate or grant a security interest in some or all of the Shares owned by
them, and the pledgees, secured parties or persons to whom such securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be Selling Stockholders hereunder. In addition, a Selling Stockholder may, from
time to time, sell short the Common Stock of the Company, and in such instances,
this Prospectus may be delivered in connection with such short sales and the
Shares offered hereby may be used to cover such short sales.
From time to time one or more of the Selling Stockholders may transfer,
pledge, donate or assign such Selling Stockholders' Shares to lenders or others
and each of such persons will be deemed to be a "Selling Stockholder" for
purposes of this Prospectus. The number of Selling Stockholders' Shares
beneficially owned by those Selling Stockholders who so transfer, pledge, donate
or assign Selling Stockholders' Shares will decrease as and when they take such
actions. The plan of distribution for Selling Stockholders' Shares sold
hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be Selling Stockholders hereunder.
18
<PAGE> 20
A Selling Stockholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Stock in the course of hedging the positions they assume with such Selling
Stockholder, including, without limitation, in connection with distributions of
the Common Stock by such broker-dealers. A Selling Stockholder may also enter
into option or other transactions with broker-dealers that involve the delivery
of the Common Stock to the broker-dealers, who may then resell or otherwise
transfer such Common Stock. A Selling Stockholder may also loan or pledge the
Common Stock to a broker-dealer and the broker-dealer may sell the Common Stock
so loaned or upon a default may sell or otherwise transfer the pledged Common
Stock.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commission or discounts under
the Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not bid for or purchase
shares of Common Stock during a period which commences one business day (5
business days, if the Company's public float is less than $25 million or its
average daily trading volume is less than $100,000) prior to such person's
participation in the distribution, subject to exceptions for certain passive
market making activities. In addition and without limiting the foregoing, each
Selling Stockholder will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including, without limitation,
Regulation M, which may limit the timing of purchases and sales of shares of the
Company's Common Stock by such Selling Stockholder.
The Shares were originally issued to the Selling Stockholders pursuant
to an exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof. The Company agreed to register the Shares
under the Securities Act and to indemnify and hold the Selling Stockholders
harmless against certain liabilities under the Securities Act that could arise
in connection with the sale by the Selling Stockholders of the Shares. The
Company has agreed to pay all reasonable fees and expenses incident to the
filing of this Registration Statement.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered by
the Company hereby will be passed upon for the Company by Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
19
<PAGE> 21
<TABLE>
<S> <C>
=================================================== ===================================================
No dealer, salesperson or other person has
been authorized to give any information or to make
any representations other than those contained in
this Prospectus and, if given or made, such 2,537,500 SHARES
information or representations must not be relied
upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell or ARIAD PHARMACEUTICALS, INC.
a solicitation of an offer to buy to any person in
any jurisdiction in which such offer or
solicitation would be unlawful or to any person to COMMON STOCK
whom it is unlawful. Neither the delivery of this (PAR VALUE, $.001 PER SHARE)
Prospectus nor any offer or sale made hereunder
shall, under any circumstances, create any
implication that there has been no change in the ________________
affairs of the Company or that the information
contained herein is correct as of any time PROSPECTUS
subsequent to the date hereof. ________________
TABLE OF CONTENTS
PAGE
Available Information......................... 2
Safe Harbor Statement......................... 2
Incorporation of Documents by Reference ...... 3
Prospectus Summary............................ 4
The Company................................... 4
Risk Factors.................................. 6
Use of Proceeds............................... 16
Dividend Policy............................... 16
Selling Stockholders.......................... 17
Plan of Distribution.......................... 18
Legal Matters................................. 19
Experts....................................... 19
Until ___________, 1998 (25 days after the
date of this Prospectus), all dealers effecting
transactions in the Common Stock, whether or not
participating in this distribution, may be required
to deliver a Prospectus. This is in ________, 1998
addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with ________, 1998
respect to their unsold allotments or
subscriptions.
=================================================== ===================================================
</TABLE>
<PAGE> 22
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the Company's estimates (other than the
SEC and Nasdaq registration fees) of the expenses in connection with the
issuance and distribution of the shares of Common Stock being registered. None
of the following expenses are being paid by the Selling Stockholders.
ITEM AMOUNT
---- ----------
SEC registration fee ...................... $ 3,294.00
Nasdaq listing fee ........................ 17,500.00
Legal fees and expenses ................... 10,000.00
Accounting fees and expenses .............. 5,000.00
Miscellaneous fees and expenses ........... 1,000.00
----------
Total ..................................... $36,794.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the General Corporation Law of the State of Delaware
provides that a Delaware corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no cause to believe his conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability, such person is fairly and
reasonably entitled to be indemnified for such expenses which the court shall
deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under such Section 145.
The Certificate of Incorporation, as amended, and By-laws of the
Company provide for indemnification of the Company's directors and officers to
the fullest extent permitted by law. The By-laws also permit the Board of
Directors to authorize the Company to purchase and maintain insurance against
any liability asserted against
II-1
<PAGE> 23
any director, officer, employee or agent of the Company arising out of his
capacity as such. Insofar as indemnification for liabilities under the
Securities Act may be permitted to directors, officers, or controlling persons
of the Company pursuant to the Company's Certificate of Incorporation, as
amended, its By-laws and the Delaware General Corporation Law, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, the Company's Certificate of Incorporation, as amended, provides that
directors of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, relating to prohibited
dividends or distributions or the repurchase or redemption of stock or (iv) for
any transaction from which the director derives an improper personal benefit. As
a result of this provision, the Company and its stockholders may be unable to
obtain monetary damages from a director for breach of his or her duty of care.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. regarding legality.
10.42 Stock Purchase Agreement, dated as of April 27, 1998.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. (see Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or any
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
derivation from the low end or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than 20% change in the maximum aggregate offering price set forth the
"Calculation of Registration Fee" table in the effective registration statement;
and
<PAGE> 24
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned Registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Cambridge
and Commonwealth of Massachusetts on the 30th of April, 1998.
ARIAD PHARMACEUTICALS, INC.
By: /s/Jay R. LaMarche
-----------------------------
Jay R. LaMarche
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
The registrant and each person whose signature appears below
constitutes and appoints Harvey J. Berger, M.D. and Jay R. LaMarche and each of
them singly, his, her or its true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him, her or it and in his,
her or its name, place and stead, in any and all capacities, to sign and file
(i) any and all amendments (including post-effective amendments) to this
Registration Statement, with all exhibits thereto, and other documents in
connection therewith, and (ii) a registration statement, and any and all
amendments thereto, relating to the offering covered hereby filed pursuant to
Rule 462(b) under the Securities Act of 1933, 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 or necessary to be done in and about the premises, as fully to all
intents and purposes as he, she, or it might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons and in the
capacities indicated on the 30th of April, 1998.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Harvey J. Berger Chairman of the Board of Directors, President
- -------------------------- and Chief Executive Officer (Principal Executive
Harvey J. Berger, M.D. Officer) April 30, 1998
/s/ Jay R. LaMarche Executive Vice President, Chief Financial Officer,
- -------------------------- Treasurer and Director (Principal Financial and
Jay R. LaMarche Accounting Officer) April 30, 1998
/s/ Joan S. Brugge
- --------------------------
Joan S. Brugge, Ph.D. Director April 30, 1998
/s/ Vaughn D. Bryson
- --------------------------
Vaughn D. Bryson Director April 30, 1998
/s/ Philip Felig
- --------------------------
Philip Felig, M.D. Director April 30, 1998
/s/ John M. Deutch
- --------------------------
John M. Deutch, Ph.D. Director April 30, 1998
/s/ Peter T. Joseph
- --------------------------
Peter T. Joseph Director April 30, 1998
/s/ Joel S. Marcus
- --------------------------
Joel S. Marcus Director April 30, 1998
/s/ Sandford D. Smith
- --------------------------
Sandford D. Smith Director April 30, 1998
/s/ Raymond S. Troubh
- --------------------------
Raymond S. Troubh Director April 30, 1998
</TABLE>
<PAGE> 26
EXHIBITS INDEX
Exhibit
Number Exhibit
- ------ -------
5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
regarding legality.
10.42 Stock Purchase Agreement, dated as of April 27, 1998.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (see
Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
<PAGE> 1
EXHIBIT 5.1
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
701 Pennsylvania Avenue, N.W. Telephone: 617/542-6000
Washington, D.C. 20004 Fax: 617/542-2241
Telephone: 202/434-7300 www.mintz.com
Fax: 202/434-7400
April 30, 1998
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by ARIAD Pharmaceuticals, Inc. (the "Company")
of a Registration Statement on Form S-3 on or about May 1, 1998 (the
"Registration Statement") with the Securities and Exchange Commission
covering the offering of Two Million Five Hundred Thirty Seven Thousand
Five Hundred (2,537,500) shares of the Company's Common Stock, $.001 par
value (the "Shares").
In connection with this opinion, we have examined the Registration
Statement, the Offering Memorandum (referred to in the Registration
Statement), and such other documents, records, certificates, memoranda
and other instruments as we deem necessary as a basis for this opinion.
We have assumed the genuineness and authenticity of all documents
submitted to us as originals, and conformity to originals of all
documents submitted to us as copies thereof, and the due execution and
delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of
the opinion that the Shares, when sold in accordance with the Registration
Statement will be validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
-----------------------------------
MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C.
<PAGE> 1
EXHIBIT 10.42
-------------
STOCK PURCHASE AGREEMENT
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139
Ladies & Gentlemen:
The undersigned, ________________________ (the "Investor"), hereby
confirms its agreement with you as follows:
1. This Stock Purchase Agreement (the "Agreement") is made as of
___________, 1998 between ARIAD Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and the Investor.
2. The Company has authorized the sale and issuance of up to
2,500,000 shares (the "Shares") of Common Stock of the Company, $.001 par value
per share (the "Common Stock"), subject to adjustment by the Company's Board of
Directors, to certain investors in a private placement conditioned upon
registration of the Shares for resale (the "Offering").
3. The Company and the Investor agree that the Investor will
purchase from the Company and the Company will sell to the Investors, for a
purchase price of $___________ per share, or an aggregate purchase price of
$_______________, ______________ Shares pursuant to the Terms and Conditions for
Purchase of Shares attached hereto as Annex I and incorporated herein by
reference as if fully set forth herein. Unless otherwise requested by the
Investor, certificates representing the shares purchased by the Investor will be
registered in the Investor's name and address as set forth below.
4. The Investor represents that, except as set forth below, (a)
it has had no position, office or other material relationship within the past
three years with the Company or its affiliates, (b) neither it, nor any group of
which it is a member or to which it is related, beneficially owns (including the
right to acquire or vote) any securities of the Company and (c) it has no direct
or indirect affiliation or association with any NASD member. Exceptions:
________________________________________________________________________________
________________________________________________________________________________
(If no exceptions, write "none." If left blank, response will be deemed to be
"none.")
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
INVESTOR
By: ________________________________________
Print Name: ________________________________
Title: _____________________________________
Address: ___________________________________
____________________________________________
Tax ID No.: ________________________________
Contact name: ______________________________
Telephone: _________________________________
Name in which shares should be
registered (if different): _________________
<PAGE> 2
2
AGREED AND ACCEPTED:
- -------------------------------------------
ARIAD PHARMACEUTICALS, INC.
- -------------------------------------------
By: Harvey J. Berger, M.D.
Title: Chairman of the Board,
President and Chief Executive Officer
<PAGE> 3
3
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SHARES
1. AUTHORIZATION AND SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of up to
2,500,000 Shares. The Company reserves the right to increase or decrease this
number.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES; SUBSCRIPTION DATE.
2.1 At the Closing (as defined in Section 3), the Company
will sell to the Investor, and the Investor will purchase from the Company, upon
the terms and conditions hereinafter set forth, the number of Shares set forth
on the signature page hereto at the purchase price set forth on such signature
page.
2.2 The Company proposes to enter into this same form of
Stock Purchase Agreement with certain other investors (the "Other Investors")
and expects to complete sales of Shares to them. (The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the "Investors,"
and this Agreement and the Stock Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
"Agreements.") The Company will accept executed Agreements from Investors for
the purchase of Shares commencing upon the date on which the Company provides
the Investors with the proposed purchase price per Share and concluding upon the
date (the "Subscription Date") on which the Company has (i) executed Agreements
with Investors for the purchase of at least 2,000,000 Shares, and (ii) notified
BancAmerica Robertson Stephens (the "Placement Agent") in writing that it is no
longer accepting Agreements from Investors for the purchase of Shares. The
Company may not enter into any Agreements after the Subscription Date.
3. DELIVERY OF THE SHARES AT CLOSING. The completion of the
purchase and sale of the Shares (the "Closing") shall occur at a place and time
(the "Closing Date") to be specified by the Company and the Placement Agent, not
later than 90 days after the date the Registration Statement (as hereinafter
defined) is filed with the Securities and Exchange Commission (the "SEC") and of
which the Investors will be notified in advance by the Placement Agent. At the
Closing, the Company shall deliver to the Investor one or more stock
certificates representing the number of Shares set forth on the signature page
hereto, each such certificate to be registered in the name of the Investor or,
if so indicated on the signature page hereto, in the name of a nominee
designated by the Investor.
The Company's obligation to issue the Shares to the Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of a certified or official bank check or
wire transfer of funds in the full amount of the purchase price for the Shares
being purchased hereunder; (b) completion of the purchases and sales under the
Agreements with the Other Investors; and (c) the accuracy of the representations
and warranties made by the Investors and the fulfillment of those undertakings
of the Investors to be fulfilled prior to the Closing.
The Investor's obligation to purchase the Shares shall be subject to
the following conditions, any one or more of which may be waived by the
Investor: (a) Investors shall have executed Agreements for the purchase of at
least 2,000,000 Shares; (b) the Company shall have (i) filed a registration
statement (the "Registration Statement") within five (5) business days after the
Subscription Date, (ii) received an
<PAGE> 4
4
indication from the SEC that it has no further comments with respect to the
Registration Statement, and (iii) submitted an acceleration request providing
for the Registration Statement to be declared effective at a time immediately
following the Closing and on or prior to the 90th day after the date of its
filing; and (c) satisfaction of all of the conditions set forth in Section 6(b)
of the Placement Agency Agreement dated as of ________, 1998 between the Company
and the Placement Agent. The Investor's obligations hereunder are expressly not
conditioned on the purchase by any or all of the Other Investors of the Shares
that they have agreed to purchase from the Company.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents and warrants to, and covenants with, the Investor, as
follows:
4.1. ORGANIZATION. Each of the Company and its
Subsidiaries (as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act")), is duly organized and validly existing in good
standing under the laws of the jurisdiction of its organization. Each of the
Company and its Subsidiaries has full power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and as
described in the private placement memorandum, dated __, 1998 distributed in
connection with the sale of the Shares (including the documents incorporated by
reference therein, the "Placement Memorandum") and is registered or qualified to
do business and in good standing in each jurisdiction listed on Schedule 4.1,
which schedule includes each jurisdiction in which it owns or leases property or
transacts business and where the failure to be so qualified would have a
material adverse effect upon the business, financial condition, properties or
operations of the Company and its Subsidiaries, considered as one enterprise,
and no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification. The Company does not have any Subsidiaries nor does
it control, directly or indirectly, or own, directly or indirectly, any shares
of stock or any other equity interest of any corporation, partnership or limited
liability company, other than as disclosed in the Placement Memorandum.
4.2. DUE AUTHORIZATION. The Company has all requisite
power and authority to execute, deliver and perform its obligations under the
Agreements, and the Agreements have been duly authorized and validly executed
and delivered by the Company and constitute legal, valid and binding agreements
of the Company enforceable against the Company in accordance with their terms,
except as rights to indemnity and contribution may be limited by state or
federal securities laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3. NON-CONTRAVENTION. The execution and delivery of the
Agreements, the issuance and sale of the Shares to be sold by the Company under
the Agreements, the fulfillment of the terms of the Agreements and the
consummation of the transactions contemplated thereby will not (A) conflict with
or constitute a violation of, or default (with the passage of time or otherwise)
under, (i) any material bond, debenture, note or other evidence of indebtedness,
or under any material lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the Company
or any Subsidiary is a party or by which it or any of its Subsidiaries or their
respective properties are bound, (ii) the charter, by-laws or other
organizational documents of the Company or any Subsidiary, or (iii) any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties, or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or any
Subsidiary or an
<PAGE> 5
5
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company or any Subsidiary is a party or by
which any of them is bound or to which any of the property or assets of the
Company or any Subsidiary is subject. No consent, approval, authorization or
other order of, or registration, qualification or filing with, any regulatory
body, administrative agency, or other governmental body in the United States is
required for the execution and delivery of the Agreements and the valid issuance
and sale of the Shares to be sold pursuant to the Agreements, other than such as
have been made or obtained, and except for any securities filings required to be
made after the Closing under federal or state securities laws.
4.4. CAPITALIZATION. The capitalization of the Company as
of January 31, 1998 is as set forth in the Placement Memorandum. The Company has
not issued any capital stock since that date other than pursuant to (i)
outstanding warrants or options disclosed in the Placement Memorandum, (ii)
pursuant to employee benefit plans disclosed in the Placement Memorandum, or
(iii) pursuant to the 1997 HMR Genomics Agreement (as defined in the Placement
Memorandum). The Shares to be sold pursuant to the Agreements have been duly
authorized, and when issued and paid for in accordance with the terms of the
Agreements will be duly and validly issued, fully paid and nonassessable. The
outstanding shares of capital stock of the Company have been duly and validly
issued and are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, and were not issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities.
Except as set forth in or contemplated by the Placement Memorandum, there are no
outstanding rights (including, without limitation, preemptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
unissued shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement
of any kind to which the Company is a party or of which the Company has
knowledge and relating to the issuance or sale of any capital stock of the
Company or any Subsidiary, any such convertible or exchangeable securities or
any such rights, warrants or options. The Company holds no shares of capital
stock in its Treasury. Without limiting the foregoing, no preemptive right,
co-sale right, registration right, right of first refusal or other similar right
exists with respect to the Shares or the issuance and sale thereof. No further
approval or authorization of any stockholder, the Board of Directors of the
Company or others is required for the issuance and sale of the Shares. The
Company owns the entire equity interest in each of its Subsidiaries, free and
clear of any pledge, lien, security interest, encumbrance, claim or equitable
interest, other than as described in the Placement Memorandum. Except as
disclosed in the Placement Memorandum, there are no stockholders agreements,
voting agreements or other similar agreements with respect to the Common Stock
or Series B Preferred Stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company's stockholders.
4.5. LEGAL PROCEEDINGS. There is no material legal or
governmental proceeding pending or, to the knowledge of the Company, threatened
or contemplated to which the Company or any Subsidiary is or may be a party or
of which the business or property of the Company or any Subsidiary is or may be
subject that is not disclosed in the Placement Memorandum.
4.6. NO VIOLATIONS. Neither the Company nor any Subsidiary
is in violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, which violation, individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the business or financial
condition of the Company and its Subsidiaries, considered as one enterprise, or
is in default in any material respect in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of
<PAGE> 6
6
indebtedness in any indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or by which the properties of the Company or
any Subsidiary are bound or affected, and there exists no condition which, with
the passage of time or otherwise, would constitute a material default under any
such document or instrument or result in the imposition of any material penalty
or the acceleration of any material indebtedness.
4.7. GOVERNMENTAL PERMITS, ETC. With the exception of the
matters which are dealt with separately in Section 4.1, 4.13, 4.14 and 4.21,
each of the Company and its Subsidiaries has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries
as currently conducted and as described in the Placement Memorandum except where
the failure to currently possess could not reasonably be expected to have a
material adverse effect.
4.8. INTELLECTUAL PROPERTY. Subject to the matters
discussed under "Risk Factors" in the Placement Memorandum (i) each of the
Company and its Subsidiaries owns or possesses sufficient rights to use all
material patents, patent rights, trademarks, copyrights, licenses, inventions,
trade secrets, trade names and know-how (collectively, "Intellectual Property")
described or referred to in the Placement Memorandum as owned or used by it or
that are necessary for the conduct of its business as now conducted or (to the
Company's knowledge based on the current stage of development of the Company's
products) as proposed to be conducted as described in the Placement Memorandum
except where the failure to currently own or possess could not reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its Subsidiaries considered as one enterprise, (ii) neither the Company nor
any of its Subsidiaries has received any notice of, or has any knowledge of, any
infringement of or conflict with asserted rights of the Company or any of its
Subsidiaries by others with respect to any Intellectual Property, except as
described in the Placement Memorandum and except as could not reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its Subsidiaries considered as one enterprise, (iii) neither the Company nor
any of its Subsidiaries has received any notice of, or has any knowledge of, any
infringement of or conflict with asserted rights of a third party with respect
to any Intellectual Property that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business of the Company and its
Subsidiaries considered as one enterprise.
4.9. FINANCIAL STATEMENTS. The financial statements of the
Company and the related notes contained in the Placement Memorandum present
fairly, in accordance with generally accepted accounting principles, the
financial position of the Company and its Subsidiaries as of the dates
indicated, and the results of its operations and cash flows for the periods
therein specified. Such financial statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods therein specified, except
as disclosed in the Placement Memorandum. The other financial information
contained in the Placement Memorandum has been prepared on a basis consistent
with the financial statements of the Company.
4.10. NO MATERIAL ADVERSE CHANGE. Except as disclosed in
the Placement Memorandum, since December 31, 1997, there has not been (i) any
material adverse change in the financial condition or earnings of the Company
and its Subsidiaries considered as one enterprise nor has any material adverse
event occurred to the Company or its Subsidiaries, (ii) any material adverse
event affecting the
<PAGE> 7
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Company, (iii) any obligation, direct or contingent, that is material to the
Company and its Subsidiaries considered as one enterprise, incurred by the
Company, except obligations incurred in the ordinary course of business, (iv)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company or any of its Subsidiaries, or (v) any loss or damage
(whether or not insured) to the physical property of the Company or any of its
Subsidiaries which has been sustained which has a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its Subsidiaries considered as one enterprise.
4.11. DISCLOSURE. The information contained in the
Placement Memorandum as of the date of such information, did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.12 EXISTING AGREEMENTS AND PHYSICAL PROPERTY. Except as
set forth in the Placement Memorandum, the agreements to which the Company or
any of its Subsidiaries is a party and which are described in the Placement
Memorandum are valid agreements, enforceable by the Company, and its Subsidiary
(as applicable) except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and, to the best of the Company's knowledge, the other contracting
party or parties thereto are not in material breach or material default under
any of such agreements. Except as set forth in the Placement Memorandum, the
Company owns or leases all such physical properties as are necessary to its
operations as now conducted.
4.13 REGULATORY COMPLIANCE. Except as described in the
Placement Memorandum and subject to the matters described under "Risk Factors"
in the Placement Memorandum, (i) the Company and its Subsidiaries have operated
and currently operate their businesses in conformity with all applicable laws,
rules and regulations of each jurisdiction in which they are conducting
business, including, without limitation, the United States Food and Drug
Administration (the "FDA"), except where the failure to be so in compliance
would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its Subsidiaries considered as one enterprise, (ii) the Company and its
Subsidiaries have all licenses, certificates, authorizations, approvals,
permits, franchises, orders and consents from all state, federal and other
governmental or regulatory authorities including, without limitation, the FDA,
which are necessary to the current conduct of their businesses, except where the
failure to be so in compliance would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company and its Subsidiaries considered as one enterprise,
(iii) all of such licenses, certificates, authorizations, approvals, permits,
franchises, orders and consents are valid and in full force and effect, (iv) the
Company and its Subsidiaries have fulfilled and performed, and will fulfill and
perform, all of their obligations with respect to, and are operating in
compliance with, all such licenses, certificates, authorizations, approvals,
permits, franchises, orders and consents and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or result in any impairment of the rights of the holder thereof, except to the
extent that any such revocation, termination or impairment would not have a
material adverse effect on the financial condition, results of operations,
business or business prospects of the Company and its Subsidiaries considered as
one enterprise, (v) no such licenses, certificates, authorizations, approvals,
permits, franchises, orders or consents contain any restrictions that have or
could reasonably be expected to have a material adverse effect on the financial
condition, results of operations, business or business prospects of the Company
and its Subsidiaries considered as one enterprise, and (vi) the Company is not
aware of any existing or imminent matter which could reasonably be expected to
have an adverse impact on the current operations or business of the Company or
its Subsidiaries.
<PAGE> 8
8
4.14 NASDAQ COMPLIANCE. The Company's Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and is listed on The
Nasdaq Stock Market, Inc. National Market (the "Nasdaq National Market"), and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
de-listing the Common Stock from the Nasdaq National Market, nor has the Company
received any notification that the SEC or the National Association of Securities
Dealers, Inc. ("NASD") is contemplating terminating such registration or
listing.
4.15 FOREIGN CORRUPT PRACTICES. Neither the Company nor
any of its Subsidiaries, nor, to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any of its
Subsidiaries, have (i) directly or indirectly, used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity; (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; (iii) failed to disclose
fully any contribution made by the Company or made by any person acting on its
behalf and of which the Company is aware in violation of law; (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended; or (v) made any unlawful bribe, rebate, payoff, influence, kick-back
or other unlawful payment.
4.16 NO MANIPULATION OF STOCK. The Company has not taken
and will not take, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
4.17 OSHA. The operations of the Company and its
Subsidiaries with respect to any real property currently leased, owned or by any
means controlled by the Company or any of its Subsidiaries (the "Real Property")
are in compliance with all federal, state, and local laws, ordinances, rules,
and regulations relating to occupational health and safety and the environment
except where failure to be in such compliance could not reasonably be expected
to have a material adverse effect; the Company and its Subsidiaries maintain all
licenses, permits and authorizations necessary to operate under all such laws
applicable to the Company and its Subsidiaries except where the failure to so
possess could not reasonably be expected to have a material adverse effect.
4.18 LOCK-UP AGREEMENTS. Lock-up Agreements or similar
agreement with the Placement Agent have been executed by each of the Company and
the Company's executive officers and directors providing that, subject to
certain exceptions, such entity or individual will not sell, offer, contract to
sell, pledge, grant any option to purchase or otherwise dispose of any shares of
the Company's Common Stock for a period ending 90 days after the Registration
Statement is declared effective.
4.19 ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
<PAGE> 9
9
4.20 LOANS TO DIRECTORS OR OFFICERS. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business or except in documents that in the aggregate are not
material) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of the members of the
families of any of them, except as disclosed in the Placement Memorandum.
4.21 COMPLIANCE WITH FLORIDA STATUTES. The Company has
complied with all provisions of Florida Statutes Section 517.075, and the
regulations thereunder, relating to doing business with the Government of Cuba
or with any person or affiliate located in Cuba.
4.22. REPORTING STATUS. The Company has filed in a timely
manner all documents that the Company was required to file under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") during the 12 months
preceding the date of this Agreement. The following documents complied in all
material respects with the SEC's requirements as of their respective filing
dates, and the information contained therein as of the date thereof did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under where they were made not misleading:
(a) The Company's Annual Report on Form 10-K for the year
ended December 31, 1997;
(b) The Company's proxy statement in connection with its
1997 Annual Meeting of Stockholders;
(c) all other documents, if any, filed by the Company
with the SEC since December 31, 1997 pursuant to the
reporting requirements of the Exchange Act.
4.23 LISTING. The Company shall comply with all
requirements of the National Association of Securities Dealers, Inc. with
respect to the issuance of the Shares and the listing thereof on the Nasdaq
National Market.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
5.1 The Investor represents and warrants to, and
covenants with, the Company that: (i) the Investor is an "accredited investor"
as defined in Regulation D under the Securities Act and the Investor is also
knowledgeable, sophisticated and experienced in making, and is qualified to make
decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments
in securities issued by the Company and investments in comparable companies, and
has requested, received, reviewed and considered all information it deemed
relevant in making an informed decision to purchase the Shares; (ii) the
Investor is acquiring the number of Shares set forth on the signature page
hereto in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such Shares
or any arrangement or understanding with any other persons regarding the
distribution of such Shares; (iii) the Investor will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Shares except in compliance with the Securities Act, applicable state securities
laws and the respective rules and regulations promulgated thereunder; (iv) the
Investor has answered all questions on the signature page hereto for use in
preparation of the Registration Statement and the answers thereto are true and
correct as of the date hereof and will be
<PAGE> 10
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true and correct as of the Closing Date; (v) the Investor will notify the
Company immediately of any change in any of such information until such time as
the Investor has sold all of its Shares or until the Company is no longer
required to keep the Registration Statement effective; and (vi) the Investor
has, in connection with its decision to purchase the number of Shares set forth
on the signature page hereto, relied only upon the Placement Memorandum and the
representations and warranties of the Company contained herein. Investor
understands that its acquisition of the Shares has not been registered under the
Securities Act or registered or qualified under any state securities law in
reliance on specific exemptions therefrom, which exemptions may depend upon,
among other things, the bona fide nature of the Investor's, investment intent as
expressed herein. Investor has completed or caused to be completed and delivered
to the Company the Purchaser Questionnaire attached as Exhibit D to the
Placement Memorandum, which questionnaire is true and correct in all material
respects.
5.2 The Investor acknowledges, represents and agrees that
no action has been or will be taken in any jurisdiction outside the Untied
States by the Company or the Placement Agent that would permit an offering of
the Shares, or possession or distribution of offering materials in connection
with the issue of the Shares, in any jurisdiction outside the United States
where action for that purpose is required. Each Investor outside the United
States will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Shares or has in
its possession or distributes any offering material, in all cases at its own
expense. The Placement Agent is not authorized to make any representation or use
any information in connection with the issue, placement, purchase and sale of
the Shares other than as contained in the Placement Memorandum.
5.3 The Investor hereby covenants with the Company not to
make any sale of the Shares without complying with the provisions of this
Agreement, including Section 7.2 hereof, and without effectively causing the
prospectus delivery requirement under the Securities Act to be satisfied, and
the Investor acknowledges that the certificates evidencing the Shares will be
imprinted with a legend that prohibits their transfer except in accordance
therewith. The Investor acknowledges that there may occasionally be times when
the Company, based on the advice of its counsel, determines that it must suspend
the use of the Prospectus forming a part of the Registration Statement until
such time as an amendment to the Registration Statement has been filed by the
Company and declared effective by the SEC or until the Company has amended or
supplemented such Prospectus.
5.4 The Investor further represents and warrants to, and
covenants with, the Company that (i) the Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.
5.5 Investor will not, prior to the effectiveness of the
Registration Statement, sell, offer to sell, solicit offers to buy, dispose of,
loan, pledge or grant any right with respect to (collectively, a "Disposition"),
the Common Stock of the Company, nor will Investor engage in any hedging or
other transaction which is designed to or could reasonably be expected to lead
to or result in a Disposition of Common Stock of the Company by the Investor or
any other person or entity. Such prohibited hedging or other transactions would
include without limitation effecting any short sale or having in effect any
short
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position (whether or not such sale or position is against the box and regardless
of when such position was entered into) or any purchase, sale or grant of any
right (including without limitation any put or call option) with respect to the
Common Stock of the Company or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any
significant part of its value from the Common Stock of the Company.
5.6 The Investor understands that nothing in the
Placement Memorandum, this Agreement or any other materials presented to the
Investor in connection with the purchase and sale of the Shares constitutes
legal, tax or investment advice. The Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of Shares.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Investor herein shall survive the execution of this
Agreement, the delivery to the Investor of the Shares being purchased and the
payment therefor.
7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
7.1 REGISTRATION PROCEDURES AND EXPENSES. The Company
shall:
(a) subject to receipt of necessary information
from the Investors, prepare and file with the SEC, within five (5) business days
after the Subscription Date, the Registration Statement to enable the resale of
the Shares by the Investors from time to time through the automated quotation
system of the Nasdaq National Market or in privately-negotiated transactions;
(b) use its best efforts, subject to receipt of
necessary information from the Investors, to cause the Registration Statement to
become effective within 90 days after the Registration Statement is filed by the
Company;
(c) prepare and file with the SEC such amendments
and supplements to the Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep the Registration Statement
current and effective for a period not exceeding, with respect to each
Investor's Shares purchased hereunder, the earlier of (i) the second anniversary
of the Closing Date, (ii) the date on which the Investor may sell all Shares
then held by the Investor without restriction by the volume limitations of Rule
144(e) of the Securities Act, or (iii) such time as all Shares purchased by such
Investor in this Offering have been sold pursuant to a registration statement.
(d) furnish to the Placement Agent and to the
Investor with respect to the Shares registered under the Registration Statement
such number of copies of Prospectuses and Preliminary Prospectuses in conformity
with the requirements of the Securities Act and such other documents as the
Investor may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Shares by the Investor, provided, however, that
the obligation of the Company to deliver copies of Prospectuses or Preliminary
Prospectuses to the Investor shall be subject to the receipt by the Company of
reasonable assurances from the Investor that the Investor will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such Prospectuses or
Preliminary Prospectuses;
<PAGE> 12
12
(e) file documents required of the Company for
normal blue sky clearance in states specified in writing by the Investor,
provided, however, that the Company shall not be required to qualify to do
business or consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented;
(f) bear all expenses in connection with the
procedures in paragraph (a) through (e) of this Section 7.1 and the registration
of the Shares pursuant to the Registration Statement; and
(g) advise the Investors, promptly after it shall
receive notice or obtain knowledge of the issuance of any stop order by the SEC
delaying or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
The Company understands that the Investor disclaims being an
underwriter, but the Investor being deemed an underwriter by the SEC shall not
relieve the Company of any obligations it has hereunder, PROVIDED, HOWEVER that
if the Company receives notification from the SEC that the Investor is deemed an
underwriter, then the period by which the Company is obligated to submit an
acceleration request to the SEC shall be extended to the earlier of (i) the 90th
day after such SEC notification, or (ii) 120 days after the initial filing of
the Registration Statement with the SEC.
7.2 TRANSFER OF SHARES AFTER REGISTRATION; SUSPENSION.
(a) The Investor agrees that it will not effect
any disposition of the Shares or its right to purchase the Shares that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Section 7.1 and as
described below, and that it will promptly notify the Company of any changes in
the information set forth in the Registration Statement regarding the Investor
or its Plan of Distribution.
(b) Except in the event that paragraph (c) below
applies, the Company shall (i) if deemed necessary by the Company, prepare and
file from time to time with the SEC a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or a supplement
or amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Shares being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (ii) provide the Investor copies of any documents
filed pursuant to Section 7.2(b)(i); and (iii) inform each Investor that the
Company has complied with its obligations in Section 7.2(b)(i) (or that, if the
Company has filed a post-effective amendment to the Registration Statement which
has not yet been declared effective, the Company will notify the Investor to
that effect, will use its best efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Investor pursuant to Section 7.2(b)(i) hereof when the amendment has become
effective).
(c) Subject to paragraph (d) below, in the event
(i) of any request by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to a Registration Statement or related Prospectus or
for
<PAGE> 13
13
additional information; (ii) of the issuance by the SEC or any other federal
or state governmental authority of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose; (iii) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; or (iv) of any event or circumstance which
necessitates the making of any changes in the Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the Registration Statement, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; then
the Company shall deliver a certificate in writing to the Investor (the
"Suspension Notice") to the effect of the foregoing and, upon receipt of such
Suspension Notice, the Investor will refrain from selling any Shares pursuant to
the Registration Statement (a "Suspension") until the Investor's receipt of
copies of a supplemented or amended Prospectus prepared and filed by the
Company, or until it is advised in writing by the Company that the current
Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such Prospectus. In the event of any Suspension, the Company will use its
best efforts to cause the use of the Prospectus so suspended to be resumed as
soon as reasonably practicable within ten (10) business days after the delivery
of a Suspension Notice to the Investor. In addition to and without limiting any
other remedies (including, without limitation, at law or at equity), available
to the Investor, the Investor shall be entitled to specific performance in the
event that the Company fails to comply with the provisions of this Section
7.2(c).
(d) Notwithstanding the foregoing paragraphs of
this Section 7.2, the Investor shall not be prohibited from selling Shares under
the Registration Statement as a result of Suspensions on more than three (3)
occasions of not more than thirty (30) days each in any twelve month period,
unless, in the good faith judgment of the Company's Board of Directors, upon
advice of counsel, the sale of Shares under the Registration Statement in
reliance on this paragraph 7.2(d) would be reasonably likely to cause a
violation of the Securities Act or the Exchange Act and result in potential
liability to the Company.
(e) Provided that a Suspension is not then in
effect, the Investor may sell Shares under the Registration Statement, provided
that it arranges for delivery of a current Prospectus to the transferee of such
Shares. Upon receipt of a request therefor, the Company has agreed to provide an
adequate number of current Prospectuses to the Investor and to supply copies to
any other parties requiring such Prospectuses.
(f) In the event of a sale of Shares by the
Investor, the Investor must also deliver to the Company's transfer agent, with a
copy to the Company, a Certificate of Subsequent Sale substantially in the form
attached hereto as EXHIBIT A, so that the shares may be properly transferred.
7.3 INDEMNIFICATION. For the purpose of this Section 7.3:
(i) the term "Selling Stockholder" shall include the
Investor and any affiliate of such Investor;
(ii) the term "Registration Statement" shall include any
final Prospectus, exhibit, supplement or amendment included in or relating to
the Registration Statement referred to in Section 7.1; and
<PAGE> 14
14
(iii) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(a) The Company agrees to indemnify and hold
harmless each Selling Stockholder from and against any losses, claims, damages
or liabilities to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon (i) any untrue statement of a material fact contained in the
Registration Statement, or (ii) any failure by the Company to fulfill any
undertaking included in the Registration Statement, and the Company will
reimburse such Selling Stockholder for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim, or preparing to defend any such action, proceeding
or claim, PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement or the failure of such Selling
Stockholder to comply with its covenants and agreements contained in Sections
5.3 or 7.2 hereof respecting sale of the Shares or any statement or omission in
any Prospectus that is corrected in any subsequent Prospectus that was delivered
to the Investor prior to the pertinent sale or sales by the Investor.
(b) The Investor agrees to indemnify and hold
harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of the Company who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, (i) any failure to comply with the covenants and agreements
contained in Section 5.3 or 7.2 hereof respecting sale of the Shares, or (ii)
any untrue statement of a material fact contained in the Registration Statement
if such untrue statement was made in reliance upon and in conformity with
written information furnished by or on behalf of the Investor specifically for
use in preparation of the Registration Statement, and the Investor will
reimburse the Company (or such officer, director or controlling person), as the
case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim.
(c) Promptly after receipt by any indemnified
person of a notice of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant to this
Section 7.3, such indemnified person shall notify the indemnifying person in
writing of such claim or of the commencement of such action, but the omission to
so notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party under this Section 7.3 (except to the extent
that such omission materially and adversely affects the indemnifying party's
ability to defend such action) or from any liability otherwise than under this
Section 7.3. Subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person, the indemnifying person
shall be entitled to participate therein, and, to the extent that it shall elect
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified person of
its election to assume the defense
<PAGE> 15
15
thereof, such indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, PROVIDED, HOWEVER, that if there exists or
shall exist a conflict of interest that would make it inappropriate, in the
opinion of counsel to the indemnified person, for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person; provided, however, that no
indemnifying person shall be responsible for the fees and expenses of more than
one separate counsel (together with appropriate local counsel) for all
indemnified parties. In no event shall any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
person shall have approved the terms of such settlement; PROVIDED that such
consent shall not be unreasonably withheld. No indemnifying person shall,
without the prior written consent of the indemnified person, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such settlement
includes an unconditional release of such indemnified person from all liability
on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in this
Section 7.3 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investors
on the other in connection with the statements or omissions or other matters
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, in the
case of an untrue statement, whether the untrue statement relates to information
supplied by the Company on the one hand or an Investor on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement. The Company and the Investors agree
that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Investors
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Investor
shall be required to contribute any amount in excess of the amount by which the
net amount received by the Investor from the sale of the Shares to which such
loss relates exceeds the amount of any damages which such Investor has otherwise
been required to pay by reason of such untrue statement. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Investors' obligations in this
subsection to contribute are several in proportion to their sales of Shares to
which such loss relates and not joint.
(e) The parties to this Agreement hereby
acknowledge that they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7.3, and are fully informed
regarding said provisions. They further acknowledge that the provisions of this
Section 7.3 fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure that adequate
disclosure is made in the Registration Statement as required by the Act and the
Exchange
<PAGE> 16
16
Act. The parties are advised that federal or state public policy as interpreted
by the courts in certain jurisdictions, may be contrary to certain of the
provisions of this Section 7.3, and the parties hereto hereby expressly waive
and relinquish any right or ability to assert such public policy as a defense to
a claim under this Section 7.3 and further agree not to attempt to assert any
such defense.
7.5 TERMINATION OF CONDITIONS AND OBLIGATIONS. The
conditions precedent imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares when such Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
7.6 INFORMATION AVAILABLE. So long as the Registration
Statement is effective covering the resale of Shares owned by the Investor, the
Company will furnish to the Investor:
(a) as soon as practicable after available, one
copy of (i) its Annual Reports to Stockholders (which Annual Reports shall
contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants), (ii)
if not included in substance in the Annual Reports to Stockholders, its Annual
Reports on Form 10-K, (iii) its Quarterly Reports on Form 10-Q, and (iv) a full
copy of the particular Registration Statement covering the Shares (the
foregoing, in each case, excluding exhibits);
(b) upon the reasonable request of the Investor,
all exhibits excluded by the parenthetical to subparagraph (a)(iv) of this
Section 7.6 as filed with the SEC and all other information that is made
available to stockholders; and
(c) upon the reasonable request of the Investor,
an adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses; and the Company, upon the reasonable request of the
Investor, will meet with the Investor or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Shares and will otherwise cooperate with any
Investor conducting an investigation for the purpose of reducing or eliminating
such Investor's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters; provided,
that the Company shall not be required to disclose any confidential information
to or meet at its headquarters with any Investor until and unless the Investor
shall have entered into a confidentiality agreement in form and substance
reasonably satisfactory to the Company with the Company with respect thereto.
8. PLACEMENT AGENT'S FEE. The Investor acknowledges that the
Company intends to pay to the Placement Agent a fee in respect of the sale of
the Shares to the Investor.
9. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed (A) if within
domestic United States by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International
Federal Express or facsimile, and shall be deemed given (i) if delivered by
first class registered or certified mail domestic, three business days after so
mailed, (ii) if delivered by nationally recognized overnight carrier, one
business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed, (iv) if delivered by facsimile, upon
electric confirmation of receipt and shall be delivered as addressed as follows:
<PAGE> 17
17
(a) if to the Company, to:
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139
Attn: Jay R. LaMarche
Phone: 617-494-0400
Telecopy: 617-225-2860
(b) with a copy mailed to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.
One Financial Center
Boston, MA 02111
Attn: Jonathan L. Kravetz or Jeffrey M. Wiesen
Phone: 617-542-6000
Telecopy: 617-542-2241
(c) if to the Investor, at its address on the signature
page hereto, or at such other address or addresses as
may have been furnished to the Company in writing.
10. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
11. HEADINGS. The headings of the various section of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
12. SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
13. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of California,
without giving effect to the principles of conflicts of law.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
<PAGE> 18
18
EXHIBIT A
CERTIFICATE OF SUBSEQUENT SALE
[NAME OF TRANSFER AGENT]
[ADDRESS OF TRANSFER AGENT]
[CONTACT PERSON AT TRANSFER AGENT]
RE: Sale of Shares of Common Stock of ARIAD Pharmaceuticals,
Inc. (the "Company") pursuant to the Company's
Prospectus dated ___________ , 1998 (the "Prospectus")
--------------------------------------------------------
Dear Sir/Madam:
The undersigned hereby certifies, in connection with the sale of shares
of Common Stock of the Company included in the table of Selling Stockholders in
the Prospectus, that the undersigned has sold the Shares pursuant to the
Prospectus and in a manner described under the caption "Plan of Distribution" in
the Prospectus and that such sale complies with all applicable securities laws,
including, without limitation, the Prospectus delivery requirements of the
Securities Act of 1933, as amended.
Selling Stockholder (the beneficial owner): ____________________________________
Record Holder (e.g., if held in name of nominee): ______________________________
Restricted Stock Certificate No.(s): ___________________________________________
Number of Shares Sold: _________________________________________________________
Date of Sale: __________________________________________________________________
In the event that you receive a stock certificate(s) representing more
shares of Common Stock than have been sold by the undersigned, then you should
return to the undersigned a newly issued certificate for such excess shares in
the name of the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you
should place a stop transfer on your records with regard to such certificate.
Very truly yours,
Dated: ______________________________ ________________________________________
By: ____________________________________
Print Name: ____________________________
Title: _________________________________
cc: Jay R. LaMarche
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139
Telecopy: (617) 225-2860
<PAGE> 19
INSTRUCTION SHEET FOR INVESTOR
(to be read in conjunction with the entire Stock Purchase Agreement)
A. Complete the following items in the Stock Purchase Agreement:
1. Provide the information regarding the Investor requested on
the signature page (page 1). The Agreement must be executed by
an individual authorized to bind the Investor.
2. Return the signed Stock Purchase Agreement to:
Clark N. Callander
BancAmerica Robertson Stephen s
555 California Street, Suite 2600
San Francisco, CA 94104
Telephone: (415) 781-9700
Facsimile: (415) 693-3393
An executed original Purchase Agreement or a telecopy thereof
must be received by 5:00 p.m. California time on a date to be determined and
distributed to the Investor at a later date.
B. Instructions regarding the transfer of funds for the purchase of Shares
will be telecopied to the Investor by the Placement Agent at a later
date.
C. To resell the Shares after the Registration Statement covering the
Shares is effective:
(i) Provided that a Suspension of the Registration
Statement is not then in effect pursuant to the terms of the Stock Purchase
Agreement, the investor may sell Shares under the Registration Statement,
provided that it arranges for delivery of a current Prospectus to the
transferee. Upon receipt of a request therefor, the Company has agreed to
provide an adequate number of current Prospectuses to each investor and to
supply copies to any other parties requiring such Prospectuses.
(ii) The Investor must also deliver to the Company's
transfer agent, with a copy to the Company, a Certificate of Subsequent Sale in
the form attached as Exhibit A to the Stock Purchase Agreement, so that the
shares may be properly transferred.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of ARIAD Pharmaceuticals, Inc. on Form S-3 of our report dated
January 30, 1998, appearing in the Annual Report on Form 10-K of ARIAD
Pharmaceuticals, Inc. for the year ended December 31, 1997 and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 30, 1998
