<PAGE>
As filed with the Securities and Exchange Commission on August 8, 1997
Registration No. 33-85416-A
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
ON
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
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:
JEFFREY L. WADE
ANDREWS & KURTH L.L.P.
2170 BUCKTHORNE PLACE, SUITE 150
THE WOODLANDS, TEXAS 77380
(713) 220-4801
--------------------------
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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<PAGE>
PROSPECTUS
SUNPHARM CORPORATION
1,485,000 SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF WARRANTS AND UNIT PURCHASE OPTIONS
110,000 WARRANTS ISSUABLE UPON
EXERCISE OF UNIT PURCHASE OPTIONS
165,715 SHARES OF COMMON STOCK
OFFERED BY SELLING STOCKHOLDERS
This Prospectus relates to (A) the offering by SunPharm Corporation, a
Delaware corporation (the "Company" or "SunPharm"), of (i) up to 1,265,000
shares of its Common Stock, par value $.001 per share ("Common Stock"), issuable
upon the exercise of outstanding warrants to purchase Common Stock ("Warrants"),
(ii) 110,000 Units ("Units"), each consisting of one share of Common Stock and
one Warrant, issuable upon exercise of outstanding options to purchase such
Units ("Unit Purchase Options") and (iii) 110,000 shares of Common Stock that
may be issuable upon exercise of Warrants issuable upon exercise of Unit
Purchase Options; and (B) the resale by the Selling Stockholders of up to
165,715 shares of Common Stock issuable upon the exercise of certain outstanding
warrants (the "Selling Stockholder Warrants"). 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 such warrants. The Company's
Common Stock and Warrants are traded on The Nasdaq Small Cap Market under the
symbols "SUNP" and "SUNPW" respectively. On August 7, 1997, the last reported
sales price of the Common Stock was $2.72 per share and the last reported sales
price of the Warrants was $0.25.
Each Warrant entitles the holder to purchase one share of Common Stock at
$8.75 per share from the date of issuance through January 12, 1998. The
Warrants are subject to redemption by the Company commencing January 12, 1996 at
$.05 per Warrant upon 30 days' written notice, provided the closing bid price of
the Common Stock exceeds $12.25 per share for 20 consecutive trading days ending
within five days of the date of notice of redemption. Each Unit Purchase Option
entitles the holder thereof to purchase one Unit, consisting of one share of
Common Stock and one Warrant, at an exercise price of $11.20 per Unit at any
time after January 12, 1996 and before January 12, 2000.
The shares of Common Stock offered by the Selling Stockholders may be sold
from time to time in ordinary brokerage transactions in the over-the-counter
market or in privately negotiated transactions, through agents or directly to
one or more purchasers, at the prevailing market price, at prices related to
such prevailing market prices, at fixed prices which may be changed or at
negotiated prices. The Selling Stockholders may effect such transactions by
selling the shares of Common Stock offered hereby to or through agents,
underwriters or broker-dealers, and such persons may require compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or the purchaser of such shares of Common Stock. See "Plan of
Distribution."
All expenses of registration incurred in connection with the shares of
Common Stock offered hereby will be paid by the Company. All selling and other
expenses incurred by the Selling Stockholders will be paid by the Selling
Stockholders. The Company has agreed to indemnify the Selling Stockholders
against certain liabilities under the Securities Act of 1933, as amended.
--------------------
THESE ARE SPECULATIVE SECURITIES.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
COMMENCING ON PAGE 4 AND "DILUTION."
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is August 8, 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 in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities of the Commission at its principal offices located at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
following regional offices of the Commission: Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a site on
the World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
The Company has filed with the Commission a registration statement, as
amended, on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock and Warrants 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 hereafter 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 matters 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 are hereby
incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-KSB (File No. 0-27578) 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 Current Report on Form 8-K dated April 14, 1997.
4. 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 documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
to which this Prospectus relates shall be deemed to be incorporated by reference
into this Prospectus and to be a part of this Prospectus from the date of filing
thereof.
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 therein or in any other subsequently filed document that
is deemed to be 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 hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated into this Prospectus by reference,
other than exhibits to such documents unless such exhibits are specifically
incorporated by reference therein. Requests for such copies should be directed
to the Company at its principal executive offices: SunPharm Corporation, 4651
Salisbury Road, Suite 205, Jacksonville, Florida 32256, (904) 296-3320,
Attention: Stefan Borg.
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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 4 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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RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS IN EVALUATING AN INVESTMENT IN THE COMMON STOCK OR WARRANTS.
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 June 30, 1997, the Company had an
accumulated deficit of $13.5 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.
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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 five 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
performing such
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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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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 does not maintain product
liability insurance coverage other than $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 Phase I and Phase II human
clinical trials of DEHOP, and, prior to marketing any product, there can be
no assurance it will be able to obtain such insurance at a reasonable cost or
in an amount sufficient to 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
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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 six
months ended June 30, 1997, the Company incurred net losses of $2,159,001,
$4,369,653, $2,836,609 and $1,867,119, 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
5,667,471 shares of Common Stock outstanding as of July 31, 1997, (i)
3,839,185 shares 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) 1,828,286 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 July 31, 1997, 5,203,376 shares of Common Stock
(or 47.9% 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 1,564,045 shares has been registered under the
Securities Act. Additional shares may be issued upon the conversion of
preferred stock in the event that the Company issues any shares of preferred
stock. The existence of such warrants, options and convertible securities,
as well as certain registration rights, may adversely affect the terms on
which the Company may obtain additional equity financing.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS
Commencing January 12, 1996, the Warrants may be redeemed by the Company
at a redemption price of $.05 per Warrant upon 30 days' prior written notice
if the closing bid price per share of the Common Stock exceeds $12.25
(subject to adjustment) for 20 consecutive trading days ending within five
days of the notice of redemption. Redemption of the Warrants could force the
holders to exercise the Warrants and pay the exercise price therefor at a
time when it may be disadvantageous for the holders to do so, to sell the
Warrants at the then current market price when they might otherwise wish to
hold the Warrants, or to accept the redemption price, which, at the time the
Warrants are called for redemption, is likely to be substantially less than
the market value of the Warrants. See "Description of Securities--Warrants
Included in the Units."
-8-
<PAGE>
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS
Holders of Warrants will have the right to exercise the Warrants only if
(i) a current prospectus under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the securities underlying the Warrants is then in
effect and (ii) such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of Warrants reside. Although the Company has undertaken to use
its best efforts to maintain the effectiveness of a current prospectus covering
the securities underlying the Warrants, there can be no assurance that the
Company will be able to do so. The value of the Warrants may be greatly
reduced if a current prospectus covering the securities issuable upon the
exercise of the Warrants is not kept effective or if such securities are not
qualified, or exempt from qualification, in the states in which the holders of
Warrants reside. See "Description of Securities--Warrants Included in the
Units."
POSSIBLE RESTRICTIONS ON MARKET-MAKING ACTIVITIES IN THE COMPANY'S SECURITIES
In connection with this offering, certain Underwriters may engage in
passive market making transactions in the Common Stock on the Nasdaq Stock
Market in accordance with Rule 103 of Regulation M under the Securities Exchange
Act of 1934 (the "Exchange Act"). Passive market making consists of displaying
bids on the Nasdaq Stock Market limited by the bid prices of independent market
makers and making purchases limited by such prices and effected in response to
order flow. Net purchases by a passive market maker on each day are limited to
a specified percentage of the passive market maker's average daily trading
volume in the Common Stock during a specified period and must be discontinued
when such limit is reached. Passive market making may stabilize the market
price of the Common Stock at a level above that which might otherwise prevail
and, if commenced, may be discontinued at any time. Any temporary cessation of
such market-making activities could have a material adverse effect on the market
prices of the Company's securities.
CONCENTRATION OF STOCK OWNERSHIP; FACTORS INHIBITING TAKEOVER
As of July 31, 1997, the Company's executive officers and directors
beneficially owned approximately 40.7% of the outstanding 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.
-9-
<PAGE>
USE OF PROCEEDS
The Company intends to use the proceeds from the exercise of Warrants and
Unit Purchase 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.
DILUTION
The net tangible book value of the Common Stock of the Company as of June
30, 1997 was approximately $5,932,433 million, or approximately $1.05 per share.
Net tangible book value per share of Common Stock represents the total tangible
assets of the Company reduced by its total liabilities and divided by the number
of shares of Common Stock outstanding.
If the holders of all Warrants outstanding as of March 31, 1997 had
exercised such Warrants as of such date at the exercise price of $8.75 per
share, the adjusted pro forma net tangible book value of the Common Stock of the
Company as of June 30, 1997 would have been approximately $17.5 million or
approximately $2.50 per share. The increase in net tangible book value of $1.45
per share would be due solely to the purchase of the shares upon exercise of the
Warrants. Holders of Warrants would have immediately incurred a dilution of
$6.25 per share upon the exercise of the Warrants. "Dilution" is determined by
subtracting pro forma net tangible book value per share after the exercise of
all Warrants from the exercise price of the Warrants.
If the holders of all Unit Purchase Options outstanding as of June 30, 1997
had exercised such Unit Purchase Options as of such date at the exercise price
of $11.20 per Unit, the adjusted pro forma net tangible book value of the Common
Stock of the Company as of June 30, 1997 would have been approximately $7.2
million or approximately $1.24 per share. The increase in net tangible book
value of $0.19 per share would be due solely to the purchase of the shares of
Common Stock included in the Units. Holders of Unit Purchase Options would have
immediately incurred a dilution of $9.96 per share upon the exercise of the Unit
Purchase Options.
-10-
<PAGE>
SELLING STOCKHOLDERS
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 Selling Stockholder Warrants) 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).
<TABLE>
AMOUNT TO BE HELD
AFTER OFFERING (1)(2)
NUMBER OF NUMBER OF -----------------------------
SHARES OF SHARES OF NUMBER OF
COMMON STOCK COMMON STOCK SHARES OF
HELD BEFORE COVERED BY COMMON
SELLING STOCKHOLDERS OFFERING THIS PROSPECTUS STOCK PERCENTAGE
- -------------------- ------------- --------------- --------- -----------
<S> <C> <C> <C> <C>
Richard Lander M.D. . . . . . . . . . . . . . . . . . 2,857 2,857 -- *
Alfred G. Scheid Revocable Trust. . . . . . . . . . . 5,714 5,714 -- *
John L. Crary . . . . . . . . . . . . . . . . . . . . 11,429 11,429 -- *
Steven M. Gottlieb. . . . . . . . . . . . . . . . . . 11,429 11,429 -- *
Travis Green. . . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Gary I. Birnbaum. . . . . . . . . . . . . . . . . . . 11,429 11,429 -- *
Marc and Kim Schwartz . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Gerald Kaplan . . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Bruce Alan Crown Grantors Trust . . . . . . . . . . . 11,429 11,429 -- *
Ray Ferraro . . . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Stephen Gorenstein. . . . . . . . . . . . . . . . . . 11,429 11,429 -- *
Michael L. Lowry. . . . . . . . . . . . . . . . . . . 11,429 11,429 -- *
Sterling Investment Corporation . . . . . . . . . . . 11,429 11,429 -- *
Robert M. Jacobs. . . . . . . . . . . . . . . . . . . 11,429 11,429 -- *
Ronald Kassover . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Richard Lander M.D. Individual Retirement Account . . 2,857 2,857 -- *
Susan Knors . . . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Steven Siegel . . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Jack Tufano . . . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
William Ossola. . . . . . . . . . . . . . . . . . . . 5,714 5,714 -- *
Kenneth Solomon . . . . . . . . . . . . . . . . . . . 11,429 11,429 -- *
</TABLE>
- ------------------------
* Less than 1%
(1) Includes shares of Common Stock issuable upon exercise of the warrants
issued in connection with a bridge financing conducted by the Company in
1994.
(2) Assumes all shares covered by this Prospectus are sold.
-11-
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company has authorized 25,000,000 shares of Common Stock, par value
$.0001 per share. As of July 31, 1997, 5,667,471 shares of Common Stock were
issued and outstanding and held by 131 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.
WARRANTS
The Warrants were issued pursuant to a Warrant Agreement among the
Company, the Representative and Continental Stock Transfer & Trust Company,
as warrant agent (the "Warrant Agent"), and are in registered form. Each of
the Warrants entitles the registered holder thereof to purchase one share of
Common Stock at a price of $8.75 per share at any time from the date of
thereof to purchase one share of Common Stock at a price of $8.75 per share
at any time from the date of issuance and prior to the close of business on
January 12, 1998. The Warrants are subject to redemption by the Company
commencing January 12, 1996 at $.05 per Warrant upon 30 days' written notice,
provided that the closing bid price of the Common Stock exceeds $12.25 per
share for 20 consecutive trading days ending within five days of the notice
of redemption.
The exercise price of the Warrants and the number and kind of shares of
Common Stock or other securities and property issuable upon exercise of the
Warrants are subject to adjustment in certain circumstances, including a
stock split of, stock dividend on, or a subdivision, combination or
recapitalization of, the Common Stock or the sale of Common Stock at less
than the market price of the Common Stock other than upon exercise of options
or warrants outstanding prior to the date of this Prospectus or stock options
thereafter granted under the Company's stock option plans. Additionally, an
adjustment will be made upon the sale of all or substantially all of the
assets of the Company in order to enable holders of Warrants to purchase the
kind and number of shares of stock or other securities or property (including
cash) receivable in such event by a holder of the number of shares of Common
Stock that might otherwise have been purchased upon exercise of the Warrant.
No adjustment for previously paid cash dividends, if any, will be made upon
exercise of the Warrants.
The Warrants do not confer upon the holder any voting or any other rights
of a stockholder of the Company. Upon notice to the Warrantholders, the
Company has the right to reduce the exercise price or extend the expiration
date of the Warrants.
-12-
<PAGE>
OUTSTANDING OPTIONS AND WARRANTS
At July 31, 1997, the Company had an aggregate of 3,093,618 shares of
Common Stock reserved for issuance pursuant to outstanding options and
warrants and options issued and available under the Company's 1994 Stock
Option Plan and 1995 Nonemployee Directors' Stock Option Plan. The Company
had outstanding options and warrants to purchase an aggregate of 5,203,376
shares of Common Stock, expiring at various period through April 2004.
TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer & Trust Company in New York, New York, is the
transfer agent for the Common Stock and warrant agent for its Warrants.
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
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.
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.
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.
-13-
<PAGE>
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. 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.
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.
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.
-14-
<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
----
Available Information .................................................... 2
Incorporation of Certain Documents
by Reference .......................................................... 2
The Company .............................................................. 3
Risk Factors ............................................................. 4
Use of Proceeds .......................................................... 10
Dilution ................................................................. 10
Selling Stockholders ..................................................... 11
Description of Securities ................................................ 12
Plan of Distribution ..................................................... 13
Legal Matters ............................................................ 14
Experts .................................................................. 14
SUNPHARM CORPORATION
1,485,000 SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF WARRANTS AND
UNIT PURCHASE OPTIONS
110,000 WARRANTS ISSUABLE UPON
EXERCISE OF UNIT PURCHASE OPTIONS
165,715 SHARES OF COMMON STOCK
OFFERED BY SELLING STOCKHOLDERS
-----------
PROSPECTUS
-----------
August 8, 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 . . . . . . . . . . . . . . . . . . . $ --(1)
Printing and engraving expenses. . . . . . . . . . . . . . 1,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . --
Legal fees and expenses. . . . . . . . . . . . . . . . . . 15,000
Accounting fees and expenses . . . . . . . . . . . . . . . 5,000
Miscellaneous fees and expenses. . . . . . . . . . . . . . 3,000
-------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . $25,000
-------
-------
- -------------------
(1) Previously paid in connection with the filing of the Company's
Registration Statement on Form SB-2 to which this post-effective
amendment relates.
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).
* Previously filed
II-1
<PAGE>
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) 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 August 7, 1997.
SUNPHARM CORPORATION
Date: August 7, 1997 By:
-------------------------------
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Stefan Borg President, Director and Chief August 7, 1997
- ------------------------------ Executive Officer (PRINCIPAL
Stefan Borg EXECUTIVE AND ACCOUNTING OFFICER)
/s/ Philip R. Tracy Chairman of the Board August 7, 1997
- ------------------------------ of Directors
Philip R. Tracy
/s/ Charles Dimmler, III Chairman of the Board August 7, 1997
- ------------------------------ of Directors
Charles Dimmler, III
/s/ Jerry T. Jackson Director August 7, 1997
- ------------------------------
Jerry T. Jackson
/s/ Robert S. Janicki Director August 7, 1997
- ------------------------------
Robert S. Janicki
/s/ Norman H. Lipoff Director August 7, 1997
- ------------------------------
Norman H. Lipoff
/s/ Jacques F. Rejeange Director August 7, 1997
- ------------------------------
Jacques F. Rejeange
/s/ Robert A. Schoellhorn Director August 7, 1997
- ------------------------------
Robert A. Schoellhorn
/s/ George B. Schwartz Director August 7, 1997
- ------------------------------
George B. Schwartz
II-3
<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).
- -------------------
* Previously filed.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective
Amendment No. 1 to Registration Statement No. 33-85416-A of SunPharm
Corporation (the "Company") to Form SB-2 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
August 7, 1997
