AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 21, 1997
REGISTRATION NO. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SUNPHARM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE F593097048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4651 SALISBURY ROAD, SUITE 205
JACKSONVILLE, FLORIDA 32256
(904) 296-3320
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
STEFAN BORG
PRESIDENT AND CHIEF EXECUTIVE OFFICER
4651 SALISBURY ROAD, SUITE 205
JACKSONVILLE, FLORIDA 32256
(904) 296-3320
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------------
Copies to:
ANDREWS & KURTH L.L.P.
2170 BUCKTHORNE PLACE, SUITE 150
THE WOODLANDS, TEXAS 77380
(713) 220-4801
ATTN: JEFFREY L. WADE
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF SHARES TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(2) PRICE PER SHARE(3) AGGREGATE OFFERING PRICE(3) FEE (3)
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<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share............. 58,920(1)(2) $5.57 $328,185 $100
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</TABLE>
(1) Consists of 56,920 shares that are issuable upon the exercise of certain
options and 2,000 shares that are issuable upon the exercise of certain
warrants.
(2) The Registrant registered the offer and sale of 1,478,246 shares of Common
Stock by certain Selling Stockholders pursuant to a Registration Statement
on Form S-3 (Registration No. 333-33253), in connection with which the
Registrant paid a registration fee of $1,218. Pursuant to Rule 429, the
Prospectus included in this Registration Statement relates to the offer and
sale of the 58,920 shares of Common Stock registered hereby and the
1,439,996 shares of Common Stock registered pursuant to such previous
Registration Statement that had not been sold pursuant thereto as of
November 20,1997.
(3) Pursuant to Rule 457(c), the registration fee is calculated based upon the
average of the high and low sale prices for the Common Stock reported by
the Nasdaq Small Cap Market on November 20, 1997.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT 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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<PAGE>
PROSPECTUS
SUNPHARM CORPORATION
1,498,916 SHARES OF
COMMON STOCK
This Prospectus relates to the offering of up to 1,498,916 shares (the
"Shares") of common stock, par value $.001 per share ("Common Stock") of
SunPharm Corporation ("SunPharm" or the "Company") by the selling stockholders
named herein (the "Selling Stockholders"). The Shares covered by this Prospectus
consist of (i) 816,010 shares of Common Stock that are issued and outstanding as
of the date of this Prospectus, (ii) 614,301 shares of Common Stock issuable
upon the exercise of certain outstanding warrants, and (iii) 68,605 shares of
Common Stock issuable upon the exercise of certain outstanding options. The
Company will not receive any of the proceeds from the sale of Common Stock by
the Selling Stockholders other than the applicable exercise price per share of
the such warrants and options. The Company's Common Stock is traded on The
Nasdaq Small Cap Market under the symbol "SUNP." On November 20, 1997, the last
reported sales price of the Common Stock was $5.625 per share.
All or part of the Shares may be offered by the Selling Stockholders
from time to time for their own account in transactions on The Nasdaq Small Cap
Market, in negotiated transactions or otherwise, 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 commission from
the Selling Stockholders or the purchasers of the Shares for whom such
broker-dealers 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).
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear
certain expenses in connection with the registration and sale of the Shares
being offered by the Selling Stockholders, and has agreed to indemnify the
Selling Stockholders against certain liabilities under the Securities Act of
1933, as amended (the "Securities Act"). The Selling Stockholders and any
broker-dealers participating in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any profit on
the sale of Shares by the Selling Stockholders and any commissions received by
any such broker-dealer may be deemed to be underwriting commissions under the
Securities Act. See "Plan of Distribution."
The Shares have not been registered for sale by the Selling
Stockholders under the securities laws of any state as of the date of this
Prospectus. Brokers or dealers effecting transactions in the Shares should
confirm registration thereof under the securities laws of the states in which
such transactions occur, or the existence of any exemption from registration.
---------------------------
THESE ARE SPECULATIVE SECURITIES.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" COMMENCING ON PAGE 5.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
The date of this Prospectus is November 21, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
accordingly, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission are available for
inspection and copying at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC
20549, and at the Commission's Regional Offices located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of such documents may
also be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, at prescribed
rates. The Commission maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy statements and other information
regarding registrants that file electronically with the Commission. In addition,
such materials and other information concerning the Company can be inspected at
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, DC 20006.
The Company has filed with the Commission a registration statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), on Form S-3 with respect to the securities offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved. The Registration Statement and any
amendments thereto, including exhibits filed or incorporated by reference as a
part thereof, are available for inspection and copying at the Commission's
offices as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant
to the Exchange Act (File No. 0- 27578) are hereby incorporated by reference
into this Prospectus:
1. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996;
2. The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1997;
3. The Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1997;
4. The Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1997;
5. The Company's Current Report on Form 8-K dated April 14, 1997; and
6. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the Commission on
January 18, 1996.
All reports and documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
respective date of filing of such documents. Any statement contained herein or
in a document all or a portion of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
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<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THE COMPANY HEREBY UNDERTAKES TO PROVIDE
WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF
THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN
OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS). SUCH REQUESTS FOR DOCUMENTS SHOULD BE DIRECTED TO SUNPHARM
CORPORATION, 4651 SALISBURY ROAD, SUITE 205, JACKSONVILLE, FLORIDA 32256,
ATTENTION: STEFAN BORG, TELEPHONE NUMBER (904) 296-3320.
No person is authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to purchase, any of the securities offered by this Prospectus, or the
solicitation of a proxy, in any jurisdiction in which, or to any person to whom,
it is unlawful to make such offer or solicitation of an offer or proxy
solicitation. Neither the delivery of this Prospectus nor any distribution of
the securities offered hereby shall, under any circumstances, create any
implication that the information contained herein is correct as of any time
subsequent to the date hereof or that there has been no change in the affairs of
the Company since the date hereof.
-3-
<PAGE>
THE COMPANY
THE FOLLOWING IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION INCLUDING "RISK FACTORS" APPEARING ELSEWHERE IN THIS PROSPECTUS AND
THE FINANCIAL STATEMENTS AND NOTES THERETO CONTAINED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996, INCORPORATED BY
REFERENCE HEREIN (THE "ANNUAL REPORT"). EXCEPT FOR THE HISTORICAL INFORMATION
CONTAINED HEREIN, THE DISCUSSION IN THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED
IN "RISK FACTORS" BEGINNING AT PAGE 5 OF THIS PROSPECTUS AND THOSE DISCUSSED IN
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS" CONTAINED IN THE ANNUAL REPORT, AS WELL THOSE
DISCUSSED ELSEWHERE IN THE PROSPECTUS, THE ANNUAL REPORT OR ANY OTHER DOCUMENT
INCORPORATED BY REFERENCE HEREIN PRIOR TO THE TERMINATION OF THE OFFERING.
SunPharm Corporation ("SunPharm" or the "Company") is a development
stage company engaged in the development of small molecule pharmaceutical
products, consisting of novel polyamine analogues and other proprietary
compounds invented at the University of Florida and licensed exclusively
worldwide to the Company. The Company's drug development efforts are centered
around three main areas: (i) cancer, (ii) acquired immunodeficiency syndrome
("AIDS") and (iii) gastrointestinal disorders. The Company currently has 13
potential products in various stages of research or development.
Three of the Company's polyamine analogue products are in Phase I or II
human clinical trials. Diethylhomospermine ("DEHOP") is currently in Phase II
human clinical trials for the treatment of AIDS-related chronic diarrhea. DEHOP
is also in a Phase I clinical trial for cancer, commenced in September 1996
under the supervision of the University of Wisconsin through a federal grant
from the National Cancer Institute. Another of the Company's products,
diethylnorspermine ("DENSPM"), recently reached the maximum tolerated dose in a
Phase I human clinical trial for the treatment of refractory solid cancer. The
Investigational New Drug ("IND") application relating to DENSPM was transferred
to the Company's strategic alliance partner, Warner-Lambert Company
("Warner-Lambert"). Warner-Lambert is expected to commence Phase II clinical
trials of DENSPM in the second half of 1997.
The Company's strategy is to develop products both independently and
through strategic alliances, pursuant to which the Company will seek financial,
preclinical and clinical trial and marketing assistance from larger
pharmaceutical companies for drugs with broad market potential, while retaining
parallel manufacturing and/or marketing rights for all or part of those markets.
Consistent with this strategy, the Company sublicensed worldwide rights
(excluding Japan) to manufacture and market DENSPM for all cancer applications
to Warner-Lambert in May 1993 and sublicensed such rights in Japan to Nippon
Kayaku Co., Ltd. ("Nippon Kayaku") in February 1994. Warner-Lambert and Nippon
Kayaku have agreed to make staged payments to SunPharm for license fees and
research and development milestones, of which an aggregate of $2.85 million has
been paid to date, and to pay royalties for sales of products incorporating
DENSPM. In addition, Warner-Lambert and Nippon Kayaku have agreed to fund and
administer all further human clinical trials which may be conducted for DENSPM.
The Company was incorporated in Delaware in 1990 as Lexigen,
Incorporated and in 1991 changed its name to SunPharm Corporation. The Company's
principal executive offices are located at 4651 Salisbury Road, Suite 205,
Jacksonville, Florida 32256 (telephone number (904) 296-3320). SunPharm supports
a principal research facility at the University of Florida in Gainesville,
Florida.
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<PAGE>
RISK FACTORS
IN EVALUATING THE COMPANY AND ITS BUSINESS, PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, TOGETHER WITH THE
INFORMATION AND FINANCIAL DATA SET FORTH IN THE REPORTS AND DOCUMENTS
INCORPORATED BY REFERENCED HEREIN, PRIOR TO PURCHASING ANY SHARES OF COMMON
STOCK OFFERED HEREBY.
DEVELOPMENT STAGE COMPANY
The Company is in the development stage and has realized only limited
revenues, all of which have been derived from payments from Warner-Lambert and
Nippon Kayaku in connection with license fees and achieving identified research
milestones with respect to DENSPM. The Company has generated no revenues from
product sales, and it does not expect to generate revenue from product sales for
at least several years. The Company has incurred net losses since commencement
of its operations and it expects to continue to incur losses for the foreseeable
future. As of September 30, 1997, the Company had an accumulated deficit of
$14.5 million. Moreover, there can be no assurance that the Company will
successfully complete the transition from a development company to successful
operations and/or profitability.
NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT OR COMMERCIALIZATION
Since its inception, the Company has devoted its efforts exclusively to
the research and development of potential pharmaceutical products based
primarily upon its licensed polyamine analogue and metal chelator technologies.
While one of the Company's polyamine analogues, DEHOP, is presently in Phase II
human clinical trials, and another analogue, DENSPM, has competed Phase I human
clinical trials, such trials will not be sufficient to demonstrate their safety
or efficacy, and substantial further human clinical trials must be successfully
completed before such products may be approved for commercialization. There can
be no assurance that DEHOP or DENSPM, or any other potential product currently
in development or developed in the future, will prove to be safe or effective in
clinical trials, meet applicable regulatory standards, be capable of being
produced in commercial quantities at acceptable cost or be successfully
marketed.
NEED FOR ADDITIONAL FINANCING
The Company has experienced negative cash flows from operations since
its inception and has funded its activities to date primarily from equity
financings. The Company has expended and will continue to expend substantial
funds to continue the research and development of its products, conduct
preclinical and clinical trials, establish clinical and commercial scale
manufacturing in its own facilities or in the facilities of others and market
its products. The amount and timing of such expenditures are subject to a number
of factors. Based on its current operating plan, the Company anticipates that
its existing capital resources will be adequate to satisfy its capital needs
through the first quarter of 1999, but will not be sufficient to fund the
Company's operations to the point of introduction of a commercially successful
product. The Company's rights to receive payments from Warner-Lambert and Nippon
Kayaku are dependent upon the achievement of certain development and
commercialization milestones by Warner-Lambert and Nippon Kayaku, respectively,
and are not within the control of the Company. Further, the capability of
Warner-Lambert and Nippon Kayaku to achieve such milestones depends upon the
availability and/or prioritization of sufficient funding to support necessary
testing of DENSPM, the availability of trained and experienced staff for testing
and the results of such testing, among other factors. As a result, no assurance
can be made that such milestones will be achieved or that such payments will be
received by the Company.
The Company will require significant levels of additional capital,
which it intends to raise through additional equity or debt financing,
additional arrangements with corporate partners or from other sources. No
assurance can be given that the necessary funds will be available for the
Company to finance its development on acceptable terms or at all. If adequate
funds are not available, the Company may be required to curtail significantly
one or more of its research or development programs, or it may be required to
obtain funds through arrangements with future collaborative partners or others
that may require the Company to relinquish rights to some or all of its
technologies or products.
-5-
<PAGE>
GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL
Research, preclinical development, clinical trials and the
manufacturing and marketing of therapeutic products under development by the
Company are subject to extensive regulation by government authorities in the
United States and other countries, including, but not limited to, the United
States Food and Drug Administration ("FDA"). In order to obtain approval to
commercialize a product, the Company must demonstrate to the satisfaction of the
FDA and comparable authorities in other countries that such product is safe and
effective for its intended uses and that the Company is capable of manufacturing
the product to the applicable standards. In the United States, this requires
that the product undergo extensive preclinical testing, that the Company file an
IND with the FDA prior to commencing human clinical trials and that the Company
file a New Drug Application requesting FDA approval for commercial marketing of
the product.
The approval process for the Company's product candidates is likely to
take at least several years and will involve significant expenditures for which
additional financing will be required. The cost to the Company of conducting
human clinical trials for any potential product can vary dramatically based on a
number of factors, including the order and timing of clinical indications
pursued and the extent of development and financial support, if any, from
corporate partners. Although Phase I and Phase II clinical trials of DENSPM and
DEHOP, respectively, are presently being conducted, further clinical trials,
including large, time-consuming and more costly Phase II and Phase III clinical
trials, will be required to demonstrate the safety and efficacy of DENSPM and
DEHOP. There can be no assurance that the Company will have sufficient resources
to complete the required regulatory review process or that the Company could
survive the inability to obtain, or delays in obtaining, such approvals.
Moreover, even if regulatory approval of a drug is granted, such approval may
entail limitations on the indicated uses for which it may be marketed.
Furthermore, a marketed drug, its manufacturer and its manufacturing facilities
are subject to continual review and periodic inspections, and later discovery of
previously unknown problems with a product, manufacturer or facility may result
in restrictions on the product or manufacturers, including a withdrawal of the
product from the market. Failure to comply with the applicable regulatory
requirements can, among other things, result in fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal prosecution.
Further, additional government regulation may be established that could prevent
or delay regulatory approval of the Company's products.
DEPENDENCE ON EXCLUSIVE LICENSE
All of the Company's development and commercialization rights for its
products are derived from its license agreement with the University of Florida
Research Foundation, Inc. (the "Foundation"). The Company's rights under the
license agreement are subject to early termination under certain circumstances,
including failure to pay royalties or other material breach by the Company,
bankruptcy of the Company or failure by the Company to carry on its business,
failure to commence marketing of a licensed product within six months of
approval in any specific market, and failure to comply with the terms of the
Company's sponsored research agreement with the University of Florida, among
others. In the event that the license agreement terminates for any reason, the
Company's rights to manufacture and market DEHOP and DENSPM and its other
products would terminate.
LIMITED PERSONNEL; RELIANCE ON STRATEGIC ALLIANCES; RELIANCE ON COLLABORATIVE
ARRANGEMENTS FOR RESEARCH AND DEVELOPMENT
SunPharm has only seven full-time employees and one part-time employee
and is substantially dependent on third parties, with all of the risks attendant
thereto, to conduct research and development, to conduct clinical trials of the
Company's potential products and to manufacture DEHOP, DENSPM and other
compounds for such research and development.
The Company is dependent upon the University of Florida and Dr. Raymond
Bergeron, the inventor of the Company's technology, with respect to all research
and most early preclinical development of its potential products. The Company
does not have, and has no immediate plans to construct, a laboratory facility.
The Company has no control over the facilities where the research and
development work is being performed or over the personnel
-6-
<PAGE>
performing such work. If the University of Florida breaches its obligations
under its agreement with the Company, the Company's remedies may be limited by
applicable law affecting actions against state agencies.
The Company benefits significantly from and is dependent upon
collaborative arrangements with the University of Florida and Dr. Bergeron.
Although the Company believes that its relationships with its collaborators are
good, there can be no assurance that the Company's relationships with such
institutions and individuals will continue. The loss of these relationships
would significantly increase the Company's expenses and could have a substantial
negative effect on the Company's ability to attain its long-range objectives.
The Company is dependent upon strategic alliances with Warner-Lambert
and Nippon Kayaku with respect to the development and commercialization of
DENSPM, and expects to rely upon future strategic alliances with other
pharmaceutical companies with respect to other potential products. Although the
Company believes that Warner-Lambert, Nippon Kayaku and any future strategic
alliance partners have or will have an economic motivation to develop and
commercialize such products, the amount and timing of resources to be devoted to
these activities are not within the control of the Company and will be subject
to the priorities of such strategic alliance partners in allocating these
resources, which may not be consistent with the best interests of the Company.
In addition, the Company's strategic alliance partners or their affiliates may
be pursuing alternative products or technologies which may compete with the
Company's products and technologies. No assurances can be given that the
Company's agreements with Warner-Lambert and Nippon Kayaku, or with any other
strategic alliances the Company may enter in the future, will result in the
successful development or commercialization of DENSPM or other potential
products, or that any such agreements will result in any significant revenues,
profits or cost savings to the Company. Furthermore, no assurances can be given
that the Company will be able to enter into future strategic alliance agreements
on favorable terms or at all. In addition, the Company's strategic alliance
partners or their affiliates may be pursuing alternative products or
technologies which may compete with the Company's products and technologies.
UNCERTAINTIES AS TO PATENTS AND PROPRIETARY TECHNOLOGIES
Subject to a nonexclusive statutory license to the United States
government, the Company is the exclusive licensee of more than 25 issued United
States and foreign patents and numerous pending patent applications. The Company
is required to meet specified milestone and diligence requirements in order to
retain its license to the patents and other proprietary rights licensed from the
Foundation. No assurance can be given that the Company will satisfy any of these
requirements.
The patent position of pharmaceutical companies generally is highly
uncertain and involves complex legal and factual questions. There can be no
assurance that the patents licensed from the Foundation will provide substantial
protection or commercial benefit to the Company, afford the Company adequate
protection from competing products, or not be challenged or declared invalid or
that additional related United States or foreign patents will be issued, the
occurrence of any of which could have a material adverse effect on the Company's
operations. The United States government could use its rights as licensee of the
Foundation's patents to increase the supply of products based on such patents or
to reduce the cost of treatment with such products.
Certain proprietary trade secrets and unpatented know-how are important
to the Company. There can be no assurance that others may not independently
develop the same or similar technologies. Although the Company has taken steps
to protect its trade secrets and unpatented know-how, third parties nonetheless
may gain access to such information.
There has been significant litigation in the biotechnology and
pharmaceutical industry regarding patents and other proprietary rights. If the
Company became involved in similar litigation regarding its intellectual
property rights, the cost of such litigation could be substantial.
The limited capital resources of the Company could significantly
adversely affect its ability to enforce or defend its intellectual property
rights, especially against companies which have substantially more resources.
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<PAGE>
UNCERTAINTY OF HEALTH CARE REFORM MEASURES; THIRD-PARTY REIMBURSEMENT
The Company's ability to successfully commercialize its products may
depend in part on the extent to which reimbursement for the costs of such
products and related treatments will be available from government health
administration authorities, private health coverage insurers and other
organizations. While the legislative and regulatory proposals of President
Clinton to reform the health care system have been tabled temporarily and while
the Company cannot predict whether any such future legislative or regulatory
proposals will be adopted, the pendency of such proposals could have a material
adverse effect on the Company's ability to raise capital. Any such reform
measures, if adopted, could adversely affect the pricing of therapeutic products
in the United States or the amount of reimbursement available from United States
governmental agencies or third party insurers and could materially adversely
affect the Company in general. Furthermore, the Company's ability to
commercialize its potential product portfolio may be adversely affected to the
extent that such proposals have a material adverse effect on the business,
financial condition and profitability of other companies that are prospective
collaborators for certain of the Company's proposed products.
In both domestic and foreign markets, sales of the Company's proposed
products will 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 the Company's proposed
products 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. Legislation and regulations affecting the pricing of
pharmaceuticals may change before any of the Company's proposed products are
approved for marketing. Adoption of such legislation or regulations could
further limit reimbursement for medical products and services.
COMPETITION; RAPID TECHNOLOGICAL CHANGE
The Company is engaged in pharmaceutical product development
characterized by extensive research efforts and rapid technological progress.
There are many pharmaceutical companies, biotechnology companies, public and
private universities, and research organizations actively engaged in research
and development of products that may be similar to, or seek to attack the same
targets as, SunPharm's products. Many of the Company's existing or potential
competitors have substantially greater financial, technical, and human resources
than the Company and may be better equipped to develop, manufacture, and market
products. These companies may develop and introduce products and processes
competitive with or superior to those of the Company. In addition, other
technologies or products may be developed that have an entirely different
approach or means of accomplishing the intended purposes of the Company's
products, which might render the Company's technology and products uncompetitive
or obsolete. There can be no assurance that the Company will be able to compete
successfully.
RELIANCE ON FOUNDER
The Company is highly dependent upon Stefan Borg, its founder,
President and Chief Executive Officer. The loss of Mr. Borg's services could
have a material adverse effect on the Company.
PRODUCT LIABILITY EXPOSURE; LIMITED INSURANCE COVERAGE
The testing, marketing and sale of pharmaceutical products entails a
risk of product liability claims by consumers and others and such claims may be
asserted against the Company. The Company maintains $1,000,000 of primary and
$1,000,000 of excess product liability coverage applicable only for DENSPM and
DEHOP for the Phase I human clinical trials of DENSPM and for the Phase I and
Phase II human clinical trials of DEHOP. There can be no assurance that the
amount of product liability insurance maintained by the Company would be
sufficient to cover the liabilities associated with claims that might be made in
connection with such clinical trials, or that the Company will be able to
maintain or obtain product liability insurance in the future at a reasonable
cost or in an amount sufficient to
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<PAGE>
cover all possible liabilities. In the event of a successful product liability
suit against the Company, lack or insufficiency of insurance coverage could have
a material adverse effect on the Company. Further, SunPharm is required to
indemnify the University of Florida and its trustees, officers, employees and
affiliates against claims resulting from the manufacture or sale of products
derived from its polyamine compounds and to have product liability coverage
naming the University of Florida as an additional insured for such risks.
LACK OF MANUFACTURING EXPERIENCE OR FACILITIES
The Company currently contracts with third parties for the production
of compounds in limited quantities for its preclinical and clinical trials and
currently does not possess the staff or facilities necessary to manufacture
products in commercial quantities. The Company has entered into an agreement,
however, for the production of clinical-scale quantities of its products by
third party contractors which it believes capable of supplying its short-term
requirements. There can be no assurance that the polyamine compounds or iron
chelators can be manufactured by the Company or its suppliers at a cost or in
quantities necessary to make such compounds commercially viable products. The
Company also may encounter significant delays in obtaining supplies from
third-party manufacturers or experience interruptions in its supplies. If the
Company is unable to obtain adequate supplies, its business would be materially
adversely affected.
VOLATILITY OF STOCK PRICE; LIQUIDATION PREFERENCE; LACK OF DIVIDENDS
The market prices for securities of biopharmaceutical companies
historically have been highly volatile. Announcements concerning the Company or
its competitors, including the results of testing and clinical trials,
technological innovations, or commercial products, government regulations,
developments concerning proprietary rights, including patents and litigation
matters, a change in status of a collaborative partner, public concern relating
to the commercial value or safety of the Company's products, and stock market
conditions in general may have a significant impact on the price of the Common
Stock.
The Company has not paid dividends on its Common Stock since its
inception and does not intend to pay any such dividends in the foreseeable
future. For the years ended December 31, 1994, 1995 and 1996, and the nine
months ended September 30, 1997, the Company incurred net losses of $2,159,001,
$4,369,653, $2,836,609 and $2,886,762, respectively.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market could adversely affect the market price of the Common Stock. Of the
5,732,471 shares of Common Stock outstanding as of September 30, 1997, (i)
3,724,185 shares (including the Shares offered hereby that are presently
outstanding) are eligible for sale without restriction under the Securities Act
(except for shares of Common Stock held by affiliates of the Company whose
shares may be sold subject to the volume limitations and certain other
requirements of Rule 144 under the Securities Act) or have been registered for
resale under the Securities Act and (ii) 1,948,286 shares are restricted
securities that may not be resold unless the resale is registered under the
Securities Act or it is made subject to the volume limitations and other
restrictions of Rule 144 or another exemption from registration under the
Securities Act. As of September 30, 1997, 5,560,885 shares of Common Stock (or
49.5% of the total number of shares outstanding on a fully diluted basis) were
issuable upon the exercise of outstanding options and warrants, of which the
issuance or resale of 2,333,621 shares (including the Shares offered hereby that
are issuable upon the exercise of warrants or options) has been registered under
the Securities Act. The existence of such warrants and options, as well as
certain registration rights, may adversely affect the terms on which the Company
may obtain additional equity financing.
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<PAGE>
CONCENTRATION OF STOCK OWNERSHIP; FACTORS INHIBITING TAKEOVER
As of September 30, 1997, the Company's executive officers and
directors beneficially owned approximately 45% of the Company's Common Stock. As
a result, such persons will have a substantial influence on the Company's
affairs and business. In addition, the Company's Board of Directors can, without
obtaining stockholder approval, issue shares of preferred stock having rights
that could adversely effect the voting power of holders of the Common Stock.
Also, Section 203 of the Delaware General Corporation Law restricts certain
business combinations with any "interested stockholder" as defined by such
statute. Any of the foregoing factors may delay, defer or prevent a change in
control of the Company. See "Description of Securities."
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus contains forward-looking statements. The words
"anticipate," "believe," "expect," "estimate," "project" and similar expressions
are intended to identify forward-looking statements. Such statements reflect the
Company's current views with respect to future events and financial performance
and are subject to certain risks, uncertainties and assumptions, including the
risk factors set forth above. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, believed, expected, estimated or
projected.
USE OF PROCEEDS
The Company intends to use the proceeds from the exercise of warrants
and options, if any are exercised, for human clinical trials of DEHOP and
DENSPM, research and development of other potential products and general
corporate purposes. The Company will not receive any proceeds from sales, if
any, of shares of Common Stock by the Selling Stockholders to the public.
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<PAGE>
SELLING STOCKHOLDERS
The Shares covered by this Prospectus consist of (i) 816,010 shares of
Common Stock that are issued and outstanding as of the date of this Prospectus,
(ii) 614,301 shares of Common Stock issuable upon the exercise of certain
outstanding warrants, and (iii) 68,605 shares of Common Stock issuable upon the
exercise of certain outstanding options.
During the year ended December 31, 1996, the Company completed the
private placement of 537,623 units pursuant to Section 4(2) of the Securities
Act of 1933 for $5.50 per unit. Each unit consisted of one share of the
Company's Common Stock and one redeemable Common Stock Purchase Warrant. The
warrants included in the units had an original expiration date of four years
from the date of issuance and original exercise prices of $5.50 per share until
the first anniversary date, $6.50 per share until the second anniversary date,
and $7.50 per share thereafter. The warrants are subject to redemption by the
Company at $0.01 per warrant, provided the Company's Common Stock closes at a
price (under the terms of such warrants as originally issued) of $8.50, $9.50 or
$10.50 per share for 20 consecutive days during the second, third or fourth
years, respectively, of the term of the warrant. Proceeds from the private
placement were approximately $2,636,000 net of placement agent and other costs
of approximately $321,000.
Also during 1996, the Company offered certain of its existing warrant
holders a 30% reduction in their applicable exercise price if they exercised
their warrants prior to December 31, 1996. Additionally, for each four warrants
exercised, participants were issued a warrant identical to the warrants issued
in the private placement. As a result of this warrant exchange offer, 236,721
outstanding warrants were exercised in exchange for 236,721 shares of Company
Stock and 59,178 new warrants. Proceeds from the warrant exchange were
approximately $459,000, net offering costs of approximately $34,000.
In April 1997, the Company offered to reduce the exercise price of the
warrants issued in the 1996 private placement and warrant exchange offer to
$3.00 per share, to extend the expiration date of the warrants to March 31,
2001, and to increase the price per share at which the Common Stock must trade
to permit the Company to redeem the warrants to $16.00, $20.00 and $24.00 for 20
consecutive days during the years ending March 31, 1999, 2000 or 2001,
respectively. The holders of warrants exercisable for an aggregate of 574,479
shares agreed to such modifications, in consideration for their consent and
waiver with respect to the Company's sale of Common Stock and warrants to
certain institutional investors in March 1997.
The Shares offered hereby include shares of Common Stock sold to the
Selling Stockholders in the Company's 1996 private placement and warrant
exchange offer, as well as shares issuable upon the exercise of warrants issued
in such transactions, pursuant to the Company's agreement to file a registration
statement covering the resale of such shares by such Selling Stockholders. In
addition, the Shares include certain shares of Common Stock issuable upon the
exercise of warrants and options issued prior to the Company's 1995 initial
public offering, pursuant to certain "piggyback" registration rights of the
holders of such options and warrants.
Certain shares of Common Stock owned by or issuable upon the exercise
of warrants held by SunPharm Investors, L.P. ("SunPharm Investors"), a limited
partnership of which Tioga Capital Corporation ("Tioga") is the general partner,
are covered by this Prospectus. George B. Schwartz, a director of the Company,
is the founder and President of Tioga. On July 19, 1996, the Company issued
159,842 shares of Common Stock and warrants to purchase 39,960 shares of Common
Stock to SunPharm Investors in consideration for the exercise by SunPharm
Investors of warrants to purchase 159,842 shares of Common Stock and the payment
of the $304,262 exercise price of such warrants. In April 1997, in connection
with the amendments to the terms of warrants issued in the Company's 1996
private placement and exchange offer, the Company agreed to reduce the exercise
price of the warrants issued in July 1996 to $3.00 per share, and extended the
expiration date of such warrants to March 31, 2001, on the same terms offered to
other holders of such warrants.
The following table sets forth the names of the Selling Stockholders,
the number of shares of Common Stock (including the shares issuable upon the
exercise of the warrants and options) beneficially owned by each of them as of
the date of this Prospectus, the number of shares covered by this Prospectus and
the amount of shares to be held by each of them after the offering covered by
this Prospectus (assuming that all shares subject to this Prospectus are sold).
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<TABLE>
<CAPTION>
SHARES OF COMMON STOCK COMMON STOCK
SHARES OF COVERED BY THIS PROSPECTUS BENEFICIALLY OWNED
COMMON STOCK ------------------------------------- AFTER THE OFFERING(1)
BENEFICIALLY OWNED ISSUABLE UPON ---------------------------
PRIOR TO EXERCISE OF NUMBER
NAME OF SELLING STOCKHOLDER THE OFFERING(1) OUTSTANDING WARRANTS/OPTIONS TOTAL OF SHARES PERCENTAGE
--------------------------- --------------- ----------- ---------------- ----- --------- ----------
<S> <C> <C> <C> <C>
Fred M. Cone, Jr.................... 5,000 2,500 2,500 5,000 -- *
Jerome Goldberg..................... 5,000 -- 5,000 5,000 -- *
Stanley and Lesley Berkovitz........ 7,000 3,500 3,500 7,000 -- *
Richard M. Lilly TTEE
Richard M. Lilly Revocable
Trust........................... 20,000 10,000 10,000 20,000 -- *
Michael Lilly....................... 10,000 5,000 5,000 10,000 -- *
Nicholas Lilly...................... 2,000 1,000 1,000 2,000 -- *
James Lilly......................... 2,000 1,000 1,000 2,000 -- *
David Zarchan....................... 27,272 13,636 13,636 27,272 -- *
Adolf Bohn.......................... 72,720 36,360 36,360 72,720 -- *
KG Associates....................... 13,500 6,750 6,750 13,500 -- *
Henri Zimmerli...................... 30,000 15,000 15,000 30,000 -- *
Tina D. Lilly IRA................... 6,000 3,000 3,000 6,000 -- *
Mary E. Stuart...................... 18,180 9,090 9,090 18,180 -- *
JWM Partners........................ 9,092 4,546 4,546 9,092 -- *
Universal Partners, L.P............. 2,857 -- 2,857 2,857 -- *
George F. Bowles,
Trustee Bowles Trust............. 28,571 22,857 5,714 28,571 -- *
Elliot S. Schlissel and
Lois Schlissel................... 14,286 11,429 2,857 14,286 -- *
Jacqueline Lesley Towell............ 14,286 11,429 2,857 14,286 -- *
Thomas Brazier and
Paulette Butler.................. 7,142 5,714 1,428 7,142 -- *
SunPharm Investors, L.P............. 307,820 159,842 39,960 199,802 108,018 1.9%
Julian J. D'Agostine................ 18,180 9,090 9,090 18,180 -- *
Hans Bergman........................ 10,000 5,000 5,000 10,000 -- *
Dr. Ben-Ami Feit and
Ora Feit JTWROS.................. 4,000 2,000 2,000 4,000 -- *
Ran Feit............................ 6,508 3,254 3,254 6,508 -- *
Moshe Malki......................... 6,000 3,000 3,000 6,000 -- *
Guy Perkins......................... 20,000 10,000 10,000 20,000 -- *
Dr. Thierry Waelli.................. 40,000 20,000 20,000 40,000 -- *
Isabelle Fischer.................... 40,000 20,000 20,000 40,000 -- *
Menachem Benbassat.................. 4,000 2,000 2,000 4,000 -- *
Gottfried Hofmann................... 80,000 40,000 40,000 80,000 -- *
Lewinger Family L.P................. 100,000 50,000 50,000 100,000 -- *
Peter Bollmann...................... 10,000 5,000 5,000 10,000 -- *
Earlsward Limited................... 80,000 40,000 40,000 80,000 -- *
Veldan Olten Inc.................... 80,000 40,000 40,000 80,000 -- *
Peter Waelli........................ 60,000 30,000 30,000 60,000 -- *
Henri Chalhoub...................... 20,000 10,000 10,000 20,000 -- *
Donald E. Kaplan.................... 6,000 3,000 3,000 6,000 -- *
Carl J. Domino...................... 20,000 10,000 10,000 20,000 -- *
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK COMMON STOCK
SHARES OF COVERED BY THIS PROSPECTUS BENEFICIALLY OWNED
COMMON STOCK ------------------------------------- AFTER THE OFFERING(1)
BENEFICIALLY OWNED ISSUABLE UPON ---------------------------
PRIOR TO EXERCISE OF NUMBER
NAME OF SELLING STOCKHOLDER THE OFFERING(1) OUTSTANDING WARRANTS/OPTIONS TOTAL OF SHARES PERCENTAGE
--------------------------- --------------- ----------- ---------------- ----- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
W. Richard and Lori J. Lueck........ 17,800 5,000 12,800 17,800 -- *
Miller Advisory Corp. Pension
Plan & Trust, Ronald L. Miller,
Trustee.......................... 10,000 5,000 5,000 10,000 -- *
Margaret M. Jordan.................. 2,000 1,000 1,000 2,000 -- *
Maurice and Stacy Gozlan
Tenants by the Entirety.......... 20,000 10,000 10,000 20,000 -- *
Deborah Christian................... 5,454 2,727 2,727 5,454 -- *
Josef Paradis and
Shelley Paradis.................. 36,360 18,180 18,180 36,360 -- *
Jeffrey H. Lerer.................... 5,000 2,500 2,500 5,000 -- *
Alan Gainsford...................... 15,000 7,500 7,500 15,000 -- *
Haim Shaked and
Ruth Shaked......................... 4,000 2,000 2,000 4,000 -- *
Richard N. Bernstein, as Trustee.... 20,000 10,000 10,000 20,000 -- *
Milton Susman Trustee
Milton Susman Trust
UAD-5-8-89 FOB Milton
Susman........................... 10,000 5,000 5,000 10,000 -- *
Michael Futerman.................... 36,000 18,000 18,000 36,000 -- *
Sanford B. Miot..................... 9,090 4,545 4,545 9,090 -- *
Rush & Co........................... 37,200 18,600 18,600 37,200 -- *
Martin Greenberg.................... 5,505 -- 5,505 5,505 -- *
Moty Hermon......................... 3,000 1,500 1,500 3,000 -- *
Forsyth Realty, Inc. P/S............ 9,090 4,545 4,545 9,090 -- *
Michael M. Rothkopf................. 15,500 5,000 10,500 15,500 -- *
Harry Z. Rosengart.................. 91,500 51,220 -- 51,220 40,280 *
Carmine C. Mascoli.................. 28,106(3) 18,696 -- 18,696 9,410 *
Gene Salkind, Trustee of the
Danielle Schwartz Trust.......... 52,718 -- 52,718(2) 52,718 -- *
Howard, Darby & Levin............... 5,843 -- 5,843(2) 5,843 -- *
Ronald T. Lyman..................... 3,970 -- 3,970(2) 3,970 -- *
John H. Friedman.................... 2,501 -- 2,501(2) 2,501 -- *
Russell B. Pyne..................... 2,501 -- 2,501(2) 2,501 -- *
Da H. Kim........................... 1,072 -- 1,072(2) 1,072 -- *
TOTAL 1,527,936 816,010 682,906 1,498,916 157,708 2.7%
- ---------------------------
</TABLE>
* Represents less than 1%
(1) The table reflects the shares of Common Stock beneficially owned by each
Selling Stockholder and includes the number of Shares being registered
hereunder that each Selling Shareholder would receive upon exercise of all
warrants and options, as well as the shares of Common Stock otherwise owned
by such Selling Stockholder. While the Selling Stockholders have not
expressed a specific intention as to the number of Shares to be sold, the
table shows the beneficial ownership that would result if all Shares
issuable upon exercise of the warrants and options were sold.
(2) Shares of Common Stock that are issuable upon exercise of certain options.
(3) Includes 7,010 shares of common stock in which Mr. Mascoli holds beneficial
interest through SunPharm Investors, L.P.
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<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholders may offer the shares of Common Stock subject
to this Prospectus from time to time for their own account in transactions on
The Nasdaq Small Cap Market, in negotiated transactions or otherwise, 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-dealers 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). The methods by which the shares may be sold include (i)
a block trade (which may involve crosses) in which the broker or dealer so
engaged will attempt to sell the securities as agent but may position and resell
a portion of the block as principal to facilitate the transaction; (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its account pursuant to this Prospectus; (iii) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (iv)
privately negotiated transactions.
None of the proceeds from the sale of the shares of Common Stock
subject to this Prospectus by the Selling Stockholders will be received by the
Company. The Company has agreed to bear certain expenses in connection with the
registration and sale of the shares being offered by the Selling Stockholders,
and has agreed to indemnify the Selling Stockholders against certain liabilities
under the Securities Act. The Selling Stockholders and any broker-dealers
participating in the distribution of the shares of Common Stock subject to this
Prospectus may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profit on the sale of Shares by the Selling Stockholders
and any commissions received by any such broker-dealers may be deemed to be
underwriting commission under the Securities Act.
The shares of Common Stock subject to this Prospectus have not been
registered for sale by the Selling Stockholders under the securities laws of any
state as of the date of this Prospectus. Brokers or dealers effecting
transactions in the shares should confirm registration thereof under the
securities laws of the states in which such transactions occur, or the existence
of any exemption from registration.
If underwriters are used in any offering of shares of Common Stock, the
underwriter or underwriters with respect to such offering will be named in a
Prospectus Supplement. Only underwriters named in a Prospectus Supplement will
be deemed to be underwriters in connection with the shares of Common Stock
offered thereby. Firms not so named will have no direct or indirect
participation in the underwriting of such Common Stock, although such a firm may
participate in the distribution of such Common Stock under circumstances
entitling it to a dealer's commission. Unless otherwise set forth in the
Prospectus Supplement relating to such offering, any underwriting agreement
pertaining to any offering of shares of Common Stock will (i) entitle the
underwriters to indemnification by the Company and the Selling Stockholders
against certain civil liabilities under the Securities Act; (ii) provide that
the obligations of the underwriters will be subject to certain conditions
precedent; and (iii) provide that the underwriters will be obligated to purchase
all shares of such Common Stock so offered if any shares are purchased. If
underwriters are used in any offering of Common Stock, the names of such
underwriters, the anticipated date of delivery and other material terms of the
transaction will be set forth in the Prospectus Supplement relating to such
offering.
Underwriters, brokers and dealers may engage in transactions with or
perform services for the Company in the ordinary course of business.
Offers to purchase Common Stock may be solicited, and sales thereof may
be made, by the Selling Stockholders directly to one or more purchasers in fixed
price offerings, in negotiated transactions, at market prices prevailing at the
time of sale or at prices related to such market prices. Certain of such
purchasers may be deemed to be underwriters with respect to any resale by them
of Common Stock so acquired. This Prospectus may be delivered by any such
purchaser in connection with any such resales. Such resales may be through
underwriters, brokers or dealers, or directly to one or more purchasers, all in
the manner described above.
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<PAGE>
NEW JERSEY INVESTORS: The Securities offered by the Selling
Stockholders may be sold in New Jersey only through a registered broker-dealer
or in reliance upon an exemption from registration under the Securities Act.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company has authorized 25,000,000 shares of Common Stock, par value
$.0001 per share. As of September 30, 1997, 5,732,471 shares of Common Stock
were issued and outstanding and held by approximately 130 holders of record.
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to which stockholders may vote, including the
election of directors. The holders of Common Stock are entitled to share ratably
on a share for share basis with respect to any dividends when, as and if
declared by the Board of Directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, holders of
the Common Stock are entitled to share ratably in all assets remaining after
payment of liabilities and the liquidation preference of any then outstanding
Preferred Stock. Holders of Common Stock have no preemptive rights and no right
to convert their Common Stock into any other securities. There are no redemption
or sinking fund provisions applicable to the Common Stock. All outstanding
shares of Common Stock are, and all shares of Common Stock included in the Units
offered hereby will be, fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to 2,500,000 shares of Preferred Stock, par value
$.001 per share, in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the designation
of such series. The issuance of Preferred Stock could adversely affect the
voting power of the holders of Common Stock and the likelihood that such holders
will receive dividend payments and payments upon liquidation and could have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company has no present plan to issue any shares of Preferred Stock.
OUTSTANDING OPTIONS AND WARRANTS
At September 30, 1997, the Company had an aggregate of 928,827 shares
of Common Stock reserved for issuance pursuant to outstanding options and
521,620 additional shares available for the grant of options under the Company's
1994 Stock Option Plan and 1995 Nonemployee Directors' Stock Option Plan. At
September 30, 1997, the Company had outstanding warrants to purchase an
aggregate of 4,632,058 shares of Common Stock.
TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer & Trust Company in New York, New York, is
the transfer agent for the Common Stock.
REGISTRATION RIGHTS
Pursuant to agreements between the Company and the holders of 634,100
outstanding shares of Common Stock and of warrants exercisable for an additional
524,618 shares of Common Stock, such holders have the right to require the
Company to register the sale of such shares of Common Stock (the "Registrable
Securities") under the Securities Act under certain circumstances. See "Risk
Factors--Shares Eligible for Future Sale." Subject to certain exceptions, the
holders of 50% of the Registrable Securities may require the Company to register
the Registrable Securities held by them for public resale at the Company's
expense, less underwriters' commissions. This right may be exercised twice, so
long as at least 90% of the Registrable Securities requested to be registered
were in fact registered and sold. In
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<PAGE>
addition, if at any time following this offering the Company proposes to
register any of its securities under the Securities Act, holders of Registrable
Securities and holders of an additional 1,698,171 shares of Common Stock
(including 712,736 shares which may be acquired upon exercise of outstanding
options and warrants) are entitled, subject to certain restrictions, to include
their Registrable Securities in such registration. Finally, the Company has
agreed to file and use its best efforts to cause the effectiveness of a
registration statement on or before March 28, 1998 with respect to the resale of
the 1,948,286 shares of Common Stock and 1,948,286 additional shares of Common
Stock issuable upon the exercise of the warrants that were issued in the
Company's 1997 private placement of units consisting of Common Stock and
warrants. The Company is required to bear all registration and selling expenses
other than underwriters' commissions in connection with the registration of
Registrable Securities for the two required registrations and for all
Company-initiated registrations.
DELAWARE BUSINESS COMBINATION STATUTE
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, the statute prohibits
a publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. For purposes of Section
203, a "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities
offered hereby have been passed upon for the Company by Andrews & Kurth L.L.P.,
Houston, Texas.
EXPERTS
The financial statements incorporated in this prospectus by reference
from the Company's Annual Report on Form 10-KSB for the year ended December 31,
1996 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their report, which is incorporated herein by reference (which report
expresses an unqualified opinion and includes an explanatory paragraph referring
to recurring losses incurred by the Company from inception and to an uncertainty
surrounding the Company's ability to obtain sufficient financing in 1997 which
raises substantial doubt about the Company's ability to continue as a going
concern), and have been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
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<PAGE>
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THESE
SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVER OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL AT ANY TIME IMPLY THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------------------
TABLE OF CONTENTS
PAGE
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Available Information.......................................................2
Incorporation of Certain Documents
by Reference.............................................................2
The Company.................................................................4
Risk Factors................................................................5
Use of Proceeds............................................................10
Selling Stockholders.......................................................11
Plan of Distribution.......................................................14
Description of Securities..................................................15
Legal Matters..............................................................16
Experts....................................................................16
================================================================================
================================================================================
SUNPHARM CORPORATION
1,498,916 SHARES OF COMMON STOCK
------------------
PROSPECTUS
------------------
NOVEMBER 21, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee.
SEC registration fee........................................ $ 100
Blue Sky fees and expenses.................................. --
Legal fees and expenses..................................... 5,000
Accounting fees and expenses................................ 5,000
Miscellaneous fees and expenses............................. 4,900
-----------
TOTAL $ 15,000
===========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Reference is made to Article VII of the By-Laws of the Company (filed
as Exhibit 3.2) to the Company's Annual Report on Form 10-KSB for the fiscal
ended December 31, 1996 and to Section 145 of the Delaware General Corporation
Law, which, among other things and subject to certain conditions, authorize the
Company to indemnify each of its officers and directors against certain
liabilities and expenses incurred by such persons in connection with claims made
by reason of their being such officers or directors. Reference is further made
to the Company's 1995 underwriting agreement (filed as Exhibit 1.1) to the
Registration Statement on Form SB-2 (No. 33-85416-A) as filed on January 10,
1995, which contains provisions for the indemnification of directors, officers
and controlling persons of the Company under certain circumstances.
ITEM 16. EXHIBITS
Exhibit No. Description
----------- -----------
*5.1 Opinion of Andrews & Kurth L.L.P.
*23.1 Consent of Deloitte & Touche LLP
*23.2 Consent of Andrews & Kurth L.L.P. (included in opinion
filed as Exhibit 5.1).
*24.1 Power of Attorney (Included on signature page).
- --------------
*Filed Herewith
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) 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, as amended (the
"Securities Act");
II-1
<PAGE>
(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;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (a)(i) and (a)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the Registrant pursuant to Section 13 or Section 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act")
that are incorporated by reference in the Registration Statement.
(b) That, for the purpose of determining any liability under
the Securities Act, 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.
(c) 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.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d)
of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act 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 Securities 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 a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida on November 20, 1997.
SUNPHARM CORPORATION
By: /s/ STEFAN BORG
---------------------------------
Stefan Borg
PRESIDENT AND CHIEF EXECUTIVE OFFICER
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stefan Borg his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place, and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute, 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 BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ STEFAN BORG President, Director and Chief November 20, 1997
------------------------------- Executive Officer (PRINCIPAL
Stefan Borg EXECUTIVE AND ACCOUNTING OFFICER)
/S/ PHILIP R. TRACY Chairman of the Board November 20, 1997
------------------------------- of Directors
Philip R. Tracy
/S/ CHARLES DIMMLER, III Director November 20, 1997
-------------------------------
Charles Dimmler, III
/S/ JERRY T. JACKSON Director November 20, 1997
-------------------------------
Jerry T. Jackson
/S/ ROBERT S. JANICKI Director November 20, 1997
-------------------------------
Robert S. Janicki
Director November __, 1997
-------------------------------
Jacques F. Rejeange
/S/ NORMAN H. LIPOFF Director November 20, 1997
-------------------------------
Norman H. Lipoff
/S/ ROBERT A. SCHOELLHORN Director November 20, 1997
-------------------------------
Robert A. Schoellhorn
/S/ GEORGE B. SCHWARTZ Director November 20, 1997
-------------------------------
George B. Schwartz
</TABLE>
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
*5.1 Opinion of Andrews & Kurth L.L.P.
*23.1 Consent of Deloitte & Touche LLP
*23.2 Consent of Andrews & Kurth L.L.P. (included in opinion
filed as Exhibit 5.1).
*24.1 Power of Attorney (included on signature page).
- ---------------------------
* Filed herewith.
Exhibit 5.1
November 20, 1997
Board of Directors
SunPharm Corporation
4651 Salisbury Road, Suite 205
Jacksonville, Florida 32256
Gentlemen:
We have acted as counsel to SunPharm Corporation (the "Company") in
connection with the Company's Registration Statement on Form S-3 (the
"Registration Statement") relating to the registration under the Securities Act
of 1993, as amended (the "Securities Act"), of the offer and sale by the Selling
Stockholders identified in the Registration Statement of up to 56,920 shares of
the Common Stock, par value $.001 per share ("Common Stock"), of the Company are
issuable upon the exercise of certain outstanding options (the "Option Shares")
and up to 2,000 shares of Common Stock issuable upon the exercise of certain
outstanding warrants ("Warrant Shares").
As the basis for the opinions hereinafter expressed, we have
examined such statutes, regulations, corporate records and documents,
certificates of corporate and public officials, and other instruments as we have
deemed necessary or advisable. In such examination we have assumed the
authenticity of all documents submitted to us as originals and the conformity
with the original documents of all documents submitted to us as copies.
Based on the foregoing and on such legal considerations as we deem
relevant, we are of the opinion that the Option Shares and Warrant Shares have
been duly and validly authorized, and when issued upon the exercise of such
options and warrants in accordance with the terms thereof, will be validly
issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and reference to our firm under the caption "Legal
Matters" in the Prospectus included therein.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
-----------------------------
Andrews & Kurth L.L.P.
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of SunPharm Corporation (the "Company") on Form S-3 of our report
dated March 14, 1997 (which report expresses an unqualified opinion and includes
an explanatory paragraph referring to recurring losses incurred by the Company
from inception and to an uncertainty surrounding the Company's ability to obtain
sufficient financing in 1997 which raises substantial doubt about the Company's
ability to continue as a going concern), appearing in the Annual Report on Form
10-KSB of SunPharm Corporation for the year ended December 31, 1996, and to the
reference to us under the heading "Experts" in the Prospectus, which is a part
of this Registration Statement.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
November 20, 1997
