As filed with the Securities and Exchange Commission on May 10,
1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933
CYPROS PHARMACEUTICAL CORPORATION
(Exact name of Registrant as specified in its charter)
California
(State or other jurisdiction of incorporation organization)
2714 Loker Avenue West, Carlsbad, California 92008 (619) 929-9500
(Address, including zip code , and telephone number, including
area code, of Registrant's principal executive offices)
33-0476164 (I.R.S. Employer Identification Number)
David W. Nassif
Vice President and Chief Financial Officer
CYPROS PHARMACEUTICAL CORPORATION
2714 Loker Avenue West
Carlsbad, California 92008
(619) 929-9500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
M. Wainwright Fishburn, Esq.
COOLEY GODWARD CASTRO HUDDLESON & TATUM
4365 Executive Drive, Suite 1200
San Diego, CA 92121
(619) 550-6000
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this
Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, 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.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Title of Amount to Proprosed Proposed Amount of
each class be maximum maximum registration
of registered offering aggregate fee
securities (1) price per offering
to be share (1) price (1)
registered
Common 200,000 $5.09 $1,018,000 $351.00
Stock, no shares
par value
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the
purpose of computing the amount of the registration fee based
on the average of the high and low prices of the Registrant's
Common Stock as reported on the NASDAQ National Market System
on May 8, 1996.
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 that
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.
SUBJECT TO COMPLETION, DATED May 10, 1996
P R O S P E C T U S
200,000 Shares
Cypros Pharmaceutical Corporation
Common Stock
This Prospectus relates to 200,000 shares (the "Shares") of
Common Stock, no par value per share (the "Common Stock"), of
Cypros Pharmaceutical Corporation (the "Company"). The Shares may
be offered by a shareholder of the Company (the "Selling
Shareholder") from time to time, as market conditions permit on
the NASDAQ National Market System, or otherwise, through ordinary
brokerage transactions, in negotiated transactions, at fixed
prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices
or at negotiated prices. The Selling Shareholder may effect such
transactions by selling the Shares to or through broker-dealers,
and all such broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the Selling
Shareholder and/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 as to a particular broker-
dealer might be in excess of customary commissions). See
"Selling Shareholders" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the
Selling Shareholder will be received by the Company. The Company
has agreed to bear certain expenses (other than fees and
expenses, if any, of counsel or other advisors to the Selling
Shareholders) in connection with the registration and sale of the
Shares being offered by the Selling Shareholder. The Company has
agreed to indemnify the Selling Shareholder against certain
liabilities, including certain liabilities under the Securities
Act of 1933, as amended.
The Common Stock of the Company is traded on the NASDAQ
National Market System under the symbol "CYPR." On May 8, 1996,
the last sale price for the Common Stock as reported by NASDAQ
was $4.93 per share.
The Common Stock offered hereby involves a high degree of risk.
See "Risk Factors" beginning on page 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SE
CURITIES 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 May , 1996
The information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective.
This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
THE COMPANY
The Company was founded in California in 1990 and is
engaged in the development and marketing of drug products for the
hospital market. It is currently marketing two injectable
products which determine glomerular filtration rates, Glofil and
Inulin, and is developing two small molecule therapeutic drugs,
CPC-111 and CPC-211 for the treatment of disorders, such as
stroke, traumatic head injury, congestive heart failure, cardiac
surgery, sickle cell crisis, and the acute complications of
angioplasty, all of which are characterized by ischemia (impaired
blood flow), which interrupts the delivery of both glucose and
oxygen to tissue. The Company's executive offices are located at
2714 Loker Avenue West, Carlsbad, California 92008, and its
telephone number is (619) 929-9500.
RISK FACTORS
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 here.
Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the following
risk factors as well as those discussed elsewhere in this
Prospectus and any documents incorporated herein by reference.
The following factors, in addition to those discussed
elsewhere in this Prospectus, or incorporated herein by
reference, should be carefully considered in evaluating the
Company and its business.
Continuing Operating Losses
On August 9, 1995, the Company became an operating company
with the acquisition of two Glofil and Inulin, two injectable
products approved by the U.S. Food and Drug Administration (the
"FDA") and reported sales from those products during the six
months ended January 31, 1996 of $578,718. For that period, the
Company reported a net loss of $1,380,940 or $0.12 per share
compared to a loss of $1,462,475 or $0.17 per share for the prior
year period. The Company expects that it will continue to incur
operating losses as it increases expenditures for clinical
testing, Investigational New Drug Application and New Drug
Application filings and other regulatory activities, U.S. patent
prosecution, and sales and marketing activities. To achieve
profitable operations, the Company, alone or with others, must
successfully develop, obtain regulatory approval for, introduce,
acquire, market and sell additional products. There can be no
assurance that the Company's product acquisition and development
efforts will result in additional products, that required
regulatory approvals will be obtained with respect to all or any
of its products now under development or that any of these
products will be commercially successful.
Significant Capital Requirements; Need for Additional Financing
The development and commercialization of drugs requires the
commitment of significant capital expenditures. The Company
believes that existing capital resources and the cash flow from
its recently-acquired products will allow it to maintain its
current and planned operations for 21 months. In addition to
funds provided from exercises of its currently outstanding
Redeemable Class B Warrants (the "Warrants"), the Company is
seeking to obtain additional funds through public or private
equity financings, collaborative or other arrangements with
corporate partners or from other sources. There can be no
assurance that such additional financing can be obtained on
desirable terms or at all. If additional funds are not
available, the Company may be required to curtail significantly
or eliminate one or more of its research, discovery or
development programs or obtain funds through arrangements which
may require the Company to relinquish rights to certain of its
products.
Uncertainties Associated with Regulatory Approval
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 such 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
which could suspend or revoke regulatory approval of the
Company's products.
Unproven Products
In addition to its two approved drugs, the Company has other
products in various stages of development, which are subject to
the risks inherent in drug development, including unforeseen
problems, delays, expenses and complications frequently
encountered with the early phases of research, development and
commercialization of products, the dependence on and attempts to
apply new and rapidly changing technology and the competitive
environment of the pharmaceutical industry. Many of these
factors may be beyond the Company's control, such as
unanticipated development requirements, testing, regulatory
compliance and manufacturing, production, and marketing problems
and expenses. The Company does not anticipate being able to
complete the development of its proposed products for a number of
years, if at all. All of the Company's drugs are subject to
extensive regulation and those in development will require
approval from the FDA and other regulatory agencies prior to
commercial sales. The Company may not complete the testing and
regulatory approval process for any of its products in
development in the foreseeable future and, accordingly, is unable
to predict whether they will be commercially successful.
Further, there can be no assurance that the Company's drugs under
development will attain acceptance by providers, payors or
patients.
Patents, Proprietary Technology and Licenses
The Company's success is dependent in large measure upon its
ability to obtain patent protection for its drugs, maintain
confidentiality of its trade secrets and know-how and operate
without infringing upon the proprietary rights of third parties.
The Company has licensed rights to five U.S. patents from the
holders of the patents on CPC-111 and CPC-211, but each of these
licenses may be terminated in the event that the Company fails to
achieve certain milestones or accomplish certain other
contractual obligations. Upon any such termination, all of the
Company's rights would revert to the licensor. The termination of
the license covering CPC-111 or CPC-211 would have a material
adverse effect on the Company and would cause the Company to
focus its efforts on its remaining drug development programs
which are not as far advanced. There can be no assurance that the
Company will maintain the licenses in effect through the
successful development and commercialization of these drugs.
The U.S. patent position of pharmaceutical companies
involves many complex legal and technical issues and has recently
been the subject of much litigation. There is no clear policy
establishing the breadth of claims or the degree of protection
afforded under such patents. As a result, there can be no
assurance that any of the U.S. patent applications will be
approved, except where claims under an application have already
been examined and allowed, nor that the Company will develop
additional proprietary products that are patentable. There can
be no assurance that any U.S. patents issued to the Company or
its licensors will provide the Company with any competitive
advantages or will not be challenged by any third parties or that
patents issued to others will not have an adverse effect on the
ability of the Company to conduct its business.
Furthermore, because patent applications in the United
States are maintained in secrecy until issue, and because
publication of discoveries in the scientific and patent
literature often lag behind actual discoveries, the Company
cannot be certain that it was the first chronologically to make
the inventions covered by each of its pending patent applications
or that it was the first to file patent applications for such
inventions. In the event that a third party has also filed a
patent application for any of its inventions, the Company may
have to participate in interference proceedings declared by the
United States Patent and Trademark Office to determine priority
of the invention, which could result in substantial cost to the
Company, even if the eventual outcome is favorable to the
Company. In addition, there can be no assurance that the
Company's patents, including those of the licensors above, would
be held valid by a court of law of competent jurisdiction. If
patents are issued to other companies that contain competitive or
conflicting claims which ultimately may be determined to be
valid, there can be no assurance that the Company would be able
to obtain a license to any of these U.S. patents.
Under Title 35 of the United States Code, as amended by the
General Agreement on Tariffs and Trade implementing the Uruguay
Round Agreement Act of 1994 ("GATT"), patents that issue from
patent applications filed prior to June 8, 1995, will have a 17-
year period of enforceability as measured from the date of patent
issue while those that issue from applications filed on or after
June 8, 1995 will have a 20-year period of enforceability as
measured from the date the patent application was filed or the
first claimed priority date, whichever is earlier. Patents that
issue from applications filed on or after June 8, 1995, may be
extended under the term extension provisions of GATT for a period
up to five years to compensate for any period of enforceability
lost due to interference proceedings, government secrecy orders
or appeals to the Board of Patent Appeals or the Federal Circuit.
Under the Drug Price Competition and Patent Term Restoration
Act of 1984, including amendments implemented under GATT (the
"Patent Term Restoration Act"), the period of enforceability of a
first or basic product patent or use patent covering a drug may
be extended for up to five years to compensate the patent holder
for the time required for FDA regulatory review of the product.
This law also establishes a period of time following FDA approval
of certain drug applications during which the FDA may not accept
or approve applications for similar or identical drugs from other
sponsors. Any extension under the Patent Term Restoration Act and
any extension under GATT are cumulative. There can be no
assurance that the Company will be able to take advantage of such
patent term extensions or marketing exclusivity provisions of
these laws. While the Company cannot predict the effect that such
changes will have on its business, the adoption of such changes
could have a material adverse effect on the Company's ability to
protect its proprietary information and sustain the commercial
viability of its products. Furthermore, the possibility of
shorter terms of patent protection, combined with the lengthy FDA
review process and possibility of extensive delays in such
process, could effectively further reduce the term during which a
marketed product could be protected by patents.
The Company also relies on trade secrets and proprietary
know-how. The Company has been and will continue to be required
to disclose its trade secrets and proprietary know-how not only
to employees and consultants, but also to potential corporate
partners, collaborators and contract manufacturers. Although the
Company seeks to protect its trade secrets and proprietary know-
how, in part by entering into confidentiality agreements with
such persons or organizations, there can be no assurance that
these agreements will not be breached, that the Company would
have adequate remedies for any breach or that the Company's trade
secrets will not otherwise become known or be independently
discovered by competitors.
Dependence on Others for Manufacture
The Company currently does not have any capability to
manufacture products under current good manufacturing practices
("cGMP") as required by the FDA. It relies on third parties to
manufacture and formulate Glofil and Inulin and to manufacture
and formulate CPC-111 and CPC-211, its two drug candidates
currently in clinical trials. Although the Company believes that
it will be able to contract with alternative suppliers for its
products if its current suppliers are unable to supply the
Company with its needs for bulk and formulated drugs, there can
be no assurance that this will be the case or that the need to
contract with additional suppliers will not delay the Company's
ability to have its products manufactured. There can be no
assurance that these manufacturers will meet either the Company's
requirements for quality, quantity and timeliness or the FDA's
cGMP requirements or that the Company would be able to find a
substitute manufacturer for any of its products in the future.
In the event that the Company is unable to obtain or retain
contract manufacturers that can manufacture its products under
cGMP requirements, or to obtain manufacturing on commercially
acceptable terms, it may not be able to commercialize its
products as planned.
Potential Claims
Certain members of the Company's Scientific Advisory Board
("SAB") and certain Scientific Advisors who have developed
technology used for the Company's products are employees of
universities, research hospitals or other institutions. The
Company believes that such institutions have no claim to any of
the Company's inventions, technology or products. While no claim
has been asserted by any such institution, there can be no
assurance that such institutions will not assert claims to any or
all of such inventions, technology or products or that, if any
such institution does assert such rights, the Company, if it so
desires, will be able to acquire the rights thereto from such
institution at a commercially practical cost or at all.
Government Regulation
The Company's development, manufacture and sale of drug
products are subject to extensive and rigorous regulation by
federal, state, local and foreign governmental authorities. In
particular, products for human health are subject to substantial
preclinical and clinical testing and other approval requirements
by the FDA and comparable foreign regulatory authorities. The
process for obtaining the required regulatory approvals from the
FDA and other regulatory authorities takes many years and is very
expensive. There can be no assurance that any drug developed by
the Company will prove to meet all of the applicable standards to
receive marketing approval. There can be no assurance that any
such approvals will be granted on a timely basis, if at all.
Delays in and costs of obtaining these approvals could adversely
affect the Company's ability to commercialize its drugs and to
generate significant sales revenues. If regulatory approval of a
drug is obtained, such approval may involve restrictions and
limitations on the use of the drug.
Other conditions for an approval are based on the drug's
manufacture and the quality control procedures in place, such as
cGMP. Failure to insure compliance with cGMP requirements could
result in delay or termination of clinical trials or withdrawal
of an approval. Following market approval, the drug will continue
to be subject to compliance with applicable federal, state, local
and foreign laws and regulations. There can be no assurance that
the FDA will grant approval of any of the Company's drugs in a
timely manner or at all.
Governmental Reforms
Health care reform is an area of increasing national and
international attention and a priority of many elected officials
in the United States. Several proposals to modify the current
health care system in the United States to improve access and
control costs are currently being considered by federal and state
governments. It is uncertain what legislation, if any, will be
adopted or what actions governmental or private payors for health
care goods and services may take in response to proposed or
actual legislation in the United States. The Company cannot
predict the outcome of health care reform proposals or the effect
such reforms may have on its business.
Clinical Trial and Product Liability Claims and Uninsured Risks
The Company may be exposed to liability resulting from the
conduct of its clinical trials or the commercial use, if any, of
its drugs. Such liability might result from claims made directly
by patients, hospitals, clinics or other consumers or by
pharmaceutical companies or others manufacturing such drugs on
behalf of the Company. The Company does not currently have
clinical trial or product liability insurance, and there can be
no assurance that the Company will be able to obtain or afford
such insurance, if applied for, or that any coverage, if
obtained, will be adequate to protect the Company against
liability.
Competition and Technological Change
The products that the Company is marketing and the drugs
that the Company is developing may compete for market share with
alternate therapies. A number of companies are pursuing the
development of novel pharmaceuticals which target the same
diseases as the Company is targeting. Many of these competitors
have substantially greater capital resources, research and
development staffs and facilities than the Company. They may
develop and introduce products and processes competitive with
those of the Company. They represent significant long-term
competition for the Company. For certain of the Company's drugs,
an important factor in competition may be the timing of market
introduction of these competitive products. This timing will be
based on the effectiveness with which the Company or the
competition can complete clinical trials and approval processes
and supply quantities of these products to market. Competition
among products approved for sale will be based on, among other
things, efficacy, safety, reliability, price, marketing
capability and patent position.
The pharmaceutical industry has undergone rapid and
significant technological changes. The Company expects that the
technologies associated with its research and development will
continue to develop rapidly. There can be no assurance that the
Company will be able to establish itself in such fields or, if
established, that it will be able to maintain a competitive
position. Further, there can be no assurance that the
development by others of new or improved processes or products
will not make the Company's products and processes, if any, less
competitive or obsolete.
Dependence on Key Personnel; Conflicts of Interest
The Company is dependent upon the active participation of
Paul J. Marangos, Ph.D., who serves as the Company's Chairman of
the Board, President and Chief Executive Officer. The loss to
the Company of the services of Dr. Marangos could have a material
adverse effect upon the Company's future operations. Dr.
Marangos has entered into an employment agreement with the
Company which provides for his continued employment with the
Company through August 1997.
The Company's success also depends in large part on its
ability to attract and retain other qualified scientific and
management personnel. The Company faces competition for such
persons from other companies, academic institutions, government
entities and other organizations. There can be no assurance that
the Company will be successful in recruiting or retaining
personnel of the requisite caliber or in adequate numbers to
enable it to conduct its business as proposed. Furthermore, the
Company's expected expansion into activities requiring additional
expertise in manufacturing, sales and marketing will place
increased demands on the Company's resources and management
skills.
Limited Sales and Marketing Capability
The commercialization of products such as the Company's
drugs is an expensive and time-consuming enterprise. The Company
now has has no experience in sales, marketing or distributiotwo
sales representative for Glofil and Inulin and intends to hire
additional sales representatives as sales of those products
increase and/or other products are acquired by the Company. To
market any of its drugs directly, the Company expects to develop
a marketing and sales force with technical expertise and
supporting distribution capability. The Company believes that it
will be able to serve the hospital market in North America do so
with a 50 to 100 person sales and marketing staff. since its
drugs will be sold primarily to and administered in acute care
facilities rather than sold directly to physicians' offices or
retail drug stores. There can be no assurance that the Company
will be able to establish successfully sales and distribution
capabilities or be successful in gaining market acceptance for
its drugs or to obtain the assistance of any other pharmaceutical
company in these efforts if it should seek assistance.
Reimbursement
In both domestic and foreign markets, sales of the Company's
products will be dependent in part on the availability of
reimbursement from third party payors, such as government and
private insurance plans. Third party payors are increasingly
challenging the prices charged for medical products and services.
There can be no assurance that the Company's products will be
considered cost-effective, that reimbursement will be available
or, if available, that the payor's reimbursement policies will
not adversely affect the Company's ability to sell its products
profitably.
Outstanding Warrants and Options
There are currently outstanding 4,673,512 Class B Warrants.
Additional shares of Common Stock are issuable as follows: (i)
1,183,312 shares of Common Stock are reserved for issuance
pursuant to outstanding options under the Company's 1992 Stock
Option Plan and (ii) 138,500 shares are reserved for issuance
pursuant to outstanding options under the Company's 1993 Non-
Employee Directors' Stock Option Plan. Holders of warrants and
options are likely to exercise them when, in all likelihood, the
Company could obtain additional capital on terms more favorable
than those provided by the warrants and options. Further, while
the warrants and options are outstanding, they may adversely
affect the terms on which the Company could obtain additional
capital.
Potential Volatility of Stock Price
There has been significant volatility in the market price of
securities of biomedical companies in general. Announcements of
technological innovations or new commercial products by the
Company or its competitors, developments concerning proprietary
rights, clinical trial results, government policy or regulation,
relations with licensors or other corporate partners, general
market conditions or public concern as to the safety of
biomedical products and period to period fluctuations in revenues
and financial results may have a significant impact on the
Company's business and on the market price of the Company's
securities.
Dividends Not Likely
The Company has not paid any cash dividends on its Common
Stock. For the foreseeable future it is anticipated that
earnings, if any, which may be generated from the Company's
operations will be used to finance the growth of the Company and
that cash dividends will not be paid to holders of Common Stock.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding
the beneficial ownership of Common Stock of the Selling
Shareholder as of May 8, 1996 and as adjusted to give effect to
the sale of the Shares offered hereby. The Shares are being
registered to permit public secondary trading of the Shares, and
the Selling Shareholder may offer the Shares for resale from time
to time. See "Plan of Distribution."
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<CAPTION>
Beneficial Ownership
Number of After Offering
Number of Shares Shares __________________
_________________ Number of Shares Shares
Name and Address Beneficially Owned Being Number of
Selling Shareholders Prior to Offering Offered Shares Percent
_________________ _________________ _______ _________ ______
<S> <C> <C> <C> <C>
Baron Financial Services 200,000 200,000 0 0
Citicorp Center
153 East 53rd Street
New York, NY 10022
</TABLE>
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholder
may sell Shares from time to time, as market conditions permit on
the NASDAQ National Market System, or otherwise, through ordinary
brokerage transactions, in negotiated transactions, at fixed
prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices
or at negotiated prices. The Selling Shareholder may effect such
transactions by selling the Shares to or through broker-dealers,
and all such broker-dealers may receive compensation in the form
of discounts, concessions or commiswions from the Selling
Shareholder and/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 as to a particular broker-
dealer might be in excess of customary commissions). The
aforementioned methods of sale may not be all-inclusive.
Any broker-dealer acquiring the Shares in the over-the-
counter market from the holder may sell the Shares either
directly, in its normal market-making activities, through or to
other brokers on a principal or agency basis or to its customers.
Any such sales may be at prices then prevailing in the over-ther-
counter market, at prices related to such prevailing market
prices or at negotiated prices to its customers or a combination
of such methods. The Selling Shareholder and any broker-dealers
that act in connection with the sale of Shares hereunder may be
deemed to be "underwriters" within the meaning of Section 2(11)
of the Securities Act; any commissions received by them and
profits on any resale of the Shares as principal might be deemed
to be underwriting discounts and commissions under the Securities
Act. Any such commissions, as well as other expenses of the
Selling Shareholder and applicable transfer taxes, are payable by
such parties, as the case may be.
The Company has agreed to indemnify the Selling Shareholder
against certain liabilities, including certain liabilities under
the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby
have been passed upon for the Company by Cooley Godward Castro
Huddleson & Tatum, 4365 Executive Drive, San Diego, California
92121. As of the date of this Prospectus, M. Wainwright
Fishburn, Jr., a partner of Cooley, holds 45,625 shares of Common
Stock and options to purchase 37,500 shares of Common Stock.
EXPERTS
The financial statements of Cypros Pharmaceutical
Corporation incorporated by reference in Cypros Pharmaceutical
Corporation's Annual Report on Form 10-K for the year ended July
31, 1995, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by
reference therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, and in accordance therewith
files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information
filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
and at the Commission's following Regional Offices: Chicago
Regional Office, Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and New York
Regional Office, 7 World Trade Center, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act, with respect to
the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock
offered hereby, reference is made to the Registration Statement
and the exhibits and schedules thereto, which may be inspected
without charge at, and copies thereof may be obtained at
prescribed rates from, the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year end
ed July 31, 1995, the Company's Form 8-K dated August 24, 1995,
Form 8-K/A dated October 23, 1995 and Form 10-Q for the quarters
ended October 31, 1995 and January 31, 1996 filed with the
Securities and Exchange Commission (the "Commission") are hereby
incorporated by reference in this Prospectus except as superseded
or modified herein. The description of the Common Stock which is
contained in the Registration Statement on Form S-1 (No. 33-
51682), effective November 3, 1992, as filed with the Commission
under the Act, including any amendment or reports filed for the
purpose of updating such description, is hereby incorporated by
reference into this Prospectus and shall be deemed to be a part
hereof. All documents filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") after the date of this
Prospectus and prior to the termination of the offering shall be
deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents.
Any statement contained in any document 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 which 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 modified or superseded, to constitute a
part of this Prospectus.
The Company will provide without charge to each person,
including any beneficial owner, to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of
any and all of the documents that have been or may be
incorporated by reference herein (other than exhibits to such
documents which are not specifically incorporated by reference
into such documents). Such requests should be directed to the
Vice President and Chief Financial Officer at the Company's
principal executive offices at 2714 Loker Avenue West, Carlsbad,
California 92008.
No person is authorized in connection with any offering made
hereby to give any information or to make any representation not
contained or incorporated by reference in this Prospectus, and
any information or representation not contained or incorporated
herein must not be relied upon as having been authorized by the
Company or the Selling Shareholders. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to
buy, by any person in any jurisdiction in which it is unlawful
for such person to make such offer or solicitation. Neither the
delivery of this Prospectus at any time nor any sale made
hereunder shall, under any circumstances, imply that the
information herein is correct as of any date subsequent to the
date hereof.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses 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.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration fee $351.00
NASDAQ NMS listing application fee $4,000.00
Legal fees and expenses $4,000.00
Accounting fees and expenses $2,000.00
Total $10,351.00
</TABLE>
Item 15. Indemnification of Officers and Directors.
Under Section 317 of the California Corporations Code, the
Registrant is authorized to indemnify its directors, officers,
employees and other agents against liabilities they may incur in
such capacities, including liabilities under the Act. The
Registrant's Bylaws provide that the Registrant will indemnify
its directors and executive officers and may indemnify its other
officers, employees and other agents to the full extent permitted
by law. The Bylaws further provide that rights, conferred under
such Bylaws shall not be deemed to be exclusive of any other
rights such persons may have or acquire under any statute, any
provisions of the Registrant's Restated Articles of Incorporation
or Bylaws, or any agreement, vote of the shareholders or
disinterested directors or otherwise.
In addition, the Registrant's Restated Articles of
Incorporation provide that to the fullest extent permitted by
California law, the Company's directors will not be personally
liable for monetary damages for breach of the directors'
fiduciary duty of care to the Company and its shareholders. This
provision in the Restated Articles of Incorporation does not
eliminate the duty of care, and in appropriate circumstances
equitable remedies such as an injunction or other forms of non-
monetary relief would remain available under California law.
Each director will continue to be subject to liability for breach
of the director's duty of loyalty to the Registrant, for acts or
omissions not in good faith or involving intentional misconduct
for knowing violations of law, for actions leading to improper
personal benefit, for acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of
the director's duty to the Registrant or its shareholders and for
payment of dividends, approvals of stock repurchases or
redemptions or loans or guarantees that are unlawful under
California law. This provisions does not affect a director's
responsibilities under any other laws, such as the federal
securities laws or the state or federal environmental laws.
There is no pending material litigation or proceeding
involving a director, officer, employee or other agent of the
Registrant as to which indemnification is being sought, nor is
the Registrant aware of any pending or threatened material
litigation that may result in claims for indemnification by any
director, officer, employee or other agent.
Item 16. Exhibits.
Exhibit
Number Description of Document
2.1* Pharmaceutical Products Purchase and Distribution Support
Agreement as of August 9, 1995 by and among Iso-Tex Diagnostics,
Inc., Cypros Pharmaceutical Corporation and Thomas J. Maloney.**
2.2* Glofil Contract Manufacturing and Royalty Agreement as of
August 9,1995 by and among Iso-Tex Diagnostics, Inc., Cypros
Pharmaceutical Corporation and Thomas J. Maloney.**
2.3* Merger Agreement as of August 9, 1995 among Cypros
PharmaceuticalCorporation, Iso-Tex Diagnostics "B", Inc. and Jean
and Thomas Maloney.**
3.1 Amendment to Restated Articles of Incorporation.
5.1 Opinion of Cooley Godward Castro Huddleson & Tatum.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward Castro Huddleson & Tatum.
Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page 18.
*Filed as an exhibit to the Registrant's Form 8-K dated August
10, 1995 and incorporated herein by reference.
**Certain confidential portions deleted pursuant to an Order
Granting Confidential Treatment Under Section 24 of the
Securities Exchange Act of 1934 and Rule 24b-2 Promulgated
Thereunder Respecting Confidential Treatment.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers,
and controlling persons of the Registrant pursuant to the
provisions described in Item 15 or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the
Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviaiton from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) to include any material information with respect to the
plan of distribution not prreviously disclosed in the
registration statement or any material change to such information
in the registration statement; rovided however, that clauses (i)
and (ii) do not apply if the information required to be included
in a post-effective amendment by these clauses is contained in
periodic reports filed by the Registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement; (2)
that, for the purpose of determining any liability under the
Securities Act, each 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; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes: (1) for
purpose of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed
as part of the registration statement in reliance upon Rule 430A
and contained in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of the registration statement as
of the time it was declared effective; (2) for the purpose of
determining any liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and (3) for purposes of determining any liability under
the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, County of San Diego, State
of California, on the 8th day of May, 1996.
CYPROS PHARMACEUTICAL CORPORATION
By Paul J. Marangos
(Signature)
Chairman of the Board,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Paul J.
Marangos, Ph.D., and David W. Nassif, and each of them, as his
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in his
name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to the
Registration Statement and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact
and agents, each acting alone, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Paul J. Marangos
(Signature)
May 8, 1996
(Date)
Chairman of the Board and Chief Executive Officer (Principal
Executive Officer)
David W. Nassif
(Signature)
May 8, 1996
(Date)
Vice President, Chief Financial Officer and Secretary (Principal
financial and accounting officer)
Digby W. Barrios
(Signature)
May 8, 1996
(Date)
Director
Bernard B. Levine
(Signature)
May 8, 1996
(Date)
Director
Virgil Thompson
(Signature)
May 8, 1996
(Date)
Director
Robert A. Vukovich
(Signature)
May 8, 1996
(Date)
Director
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
<S> <C> <C>
Sequentially
Exhibit Numbered
Number Description Page
3.1 Amendment to Restated Articles 20
of Incorporation
5.1 Opinion of Cooley Godward Castro 22
Huddleson & Tatum
23.1 Consent of Ernst & Young LLP, 24
Independent Auditors
</TABLE>
Exhibit 3.1
CYPROS PHARMACEUTICAL CORPORATION
CERTIFICATE OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
David W. Nassif certifies that:
1. He is a Vice President and Secretary of Cypros
Pharmaceutical Corporation (the "Corporation"), a California
corporation.
2. In his above capacity as Secretary he has access to the
corporate records of said Corporation;
3. The following resolution was duly moved, seconded and
adopted by a unanimous written consent of the Board of
Directors of the Corporation dated November 6, 1995, and that
subsequently the following resolution was duly moved, seconded
and adopted by a majority of the 11,404,373 outstanding shares of
Common Stock of the Corporation entitled to vote at its Annual
Meeting of Shareholders held at the executive offices of the
Corporation on January 22, 1996 (the "Annual Meeting")in
accordance with Section 903 (a) (1) of the General Corporation
Law of the State of California;
RESOLVED, that Article III of the Restated Articles of
Incorporation of the Company, as amended,is amended to read in
its entirety as follows:
III.
This Corporation is authorized to issue two classes of shares
designated "Common Stock" and "Preferred Stock," respectively.
The number of shares of Common Stock authorized to be issued is
thirty million (30,000,000) and the number of shares of
Preferred Stock authorized to be issued is one million
(1,000,000), which Preferred Stock may be issued in one or more
series. "
4. On the date of the Annual Meeting, there were no shares
of Preferred Stock of the Corporation outstanding.
I further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this
certificate are true and correct of my own knowledge.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of
February, 1996.
David W. Nassif
(Signature)
Vice President and Secretary
Exhibit 5.1
May 8, 1996
Cypros Pharmaceutical Corporation
2714 Loker Avenue West
Carlsbad, California 92008
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by Cypros Pharmaceutical Corporation
(the "Company") of a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange
Commission covering the offer and sale of up to two hundred
thousand (200,000) shares of the Company's Common Stock, no par
value, by a certain shareholder, as described in the Registration
Statement (the "Shares").
In connection with this opinion, we have examined the
Registration Statement and related Prospectus, your Restated
Articles of Incorporation, as amended, your Bylaws, as amended
and such other documents, records, certificates, memoranda and
other instruments as we deem necessary as a basis for this
opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness
thereof.
On the basis of the foregoing, and in reliance thereon, we are of
the opinion that the Shares are validly issued, fully paid, and
nonassessable.
We consent to the reference to our firm under the caption "Legal
Matters" in the Prospectus included in the Registration Statement
and to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
COOLEY GODWARD CASTRO
HUDDLESON & TATUM
By: M. Wainwright Fishburn, Jr.
(Signature)
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3) and related
Prospectus of Cypros Pharmaceutical Corporation for the
registration of shares of its common stock and to the
incorporation by reference therein of our report dated September
15, 1995, with respect to the financial statements of Cypros
Pharmaceutical Corporation included in its Annual Report (Form
10-K) for the year ended July 31, 1995, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
(Signature)
San Diego, California
May 7, 1996
