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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1997
REGISTRATION NO. 333-31843
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SHAMAN PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 2834 94-3095806
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
213 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(415) 952-7070
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF THE
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
LISA A. CONTE
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
SHAMAN PHARMACEUTICALS, INC.
213 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(415) 952-7070
(NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
J. STEPHAN DOLEZALEK, ESQ. BRIAN W. PUSCH, ESQ.
BROBECK, PHLEGER & HARRISON LLP LAW OFFICES OF BRIAN W PUSCH
TWO EMBARCADERO PLACE PENTHOUSE SUITE
2200 GENG ROAD 29 WEST 57TH STREET
PALO ALTO, CA 94301 NEW YORK, NY 10019
(415) 424-0160 (212) 980-0408
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If 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. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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<PAGE> 2
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.
SUBJECT TO COMPLETION DATED AUGUST 27, 1997
PROSPECTUS
2,300,000 SHARES
SHAMAN PHARMACEUTICALS, INC.
COMMON STOCK
------------------------
This Prospectus relates to the offer and sale by certain persons listed
herein under "Selling Stockholders" (collectively, the "Selling Stockholders")
of (i) a maximum of 2,300,000 shares (collectively, the "Shares") of Common
Stock, par value $0.001 per share (the "Common Stock"), of Shaman
Pharmaceuticals, Inc. (the "Company") consisting of: (a) up to 1,985,000 shares
of Common Stock to be issued from time to time to the Selling Stockholders upon
conversion of the Company's Senior Subordinated Convertible Notes due August ,
2000 (the "Notes") and (b) up to 315,000 shares of Common Stock to be issued and
paid in lieu of cash, at the Company's option, as interest on the Notes and (ii)
in accordance with Rule 416 under the Securities Act of 1933, as amended (the
"Securities Act"), such presently indeterminate number of additional Shares as
may be issuable upon conversion of the Notes or payment of interest on the
Notes, based upon fluctuations in the conversion price of the Notes. All of the
Shares may be offered by the Selling Stockholders or by pledgees, donees,
transferees or other successors in interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer. The Notes and the
Common Stock issuable upon conversion thereof have been and will be issued in
transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof. See "Recent Developments," "Selling
Stockholders" and "Plan of Distribution." The Shares are being registered by the
Company pursuant to registration rights granted to the Selling Stockholders.
The Selling Stockholders have not advised the Company of any specific plans
for the distribution of the Shares covered by this Prospectus. It is
anticipated, however, that the Shares will be offered and sold by the Selling
Stockholders from time to time in transactions on The Nasdaq National Market, in
privately negotiated transactions, or by a combination of such methods of sale,
at such fixed prices as may be negotiated from time to time, 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). See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. 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 Company has agreed to indemnify the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act.
The Common Stock of the Company is traded on The Nasdaq National Market
tier of The Nasdaq Stock Market under the symbol "SHMN." On August 25, 1997, the
last sale price for the Common Stock as quoted on The Nasdaq National Market was
$6.25 per share.
------------------------
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" herein for a description of
agreements by the Company to indemnify the Selling Stockholders against certain
liabilities.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 5.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS AUGUST , 1997
<PAGE> 3
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company, any Selling
Stockholders or by any other person. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities other than the
shares of Common Stock offered hereby, nor does it constitute an offer to sell
or a solicitation of an offer to buy any of the shares offered hereby to any
person in any jurisdiction in which such offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that the information
contained herein is correct as of any date subsequent to the date hereof.
AVAILABLE INFORMATION
This Prospectus, which constitutes a part of a Registration Statement on
Form S-3 (the "Registration Statement") filed by the Company with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), omits certain of the information set forth in
the Registration Statement. For further information with respect to the Company
and the Common Stock offered hereby, reference is hereby made to such
Registration Statement, exhibits and schedules. Statements contained in this
Prospectus regarding the contents of any contract or other document are not
necessarily complete; with respect to each such contract or document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. A copy of the
Registration Statement, including the exhibits and schedules thereto, may be
inspected without charge at the public reference facilities of the Commission
described below, and copies of such material may be obtained from such office
upon payment of the fees prescribed by the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and the following regional offices of
the Commission: New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed rates.
Furthermore, the Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission. Such Web site is located at
http://www.sec.gov. The Company's Common Stock is quoted on The Nasdaq National
Market. Reports, proxy statements and other information concerning the Company
may be inspected at the National Association of Securities Dealers, Inc. at 1735
K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company (File
No. 0-21022) with the Commission are hereby incorporated herein by reference:
(a) the Company's Annual Report on Form 10-K for the year ended December 31,
1996, as amended; (b) Quarterly Report on Form 10-Q for the quarter ended March
31, 1997; (c) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997;
(d) Definitive Proxy Statement dated April 23, 1997, filed in connection with
the Company's 1997 Annual Meeting of Stockholders; and (e) the description of
the Company's Common Stock contained in its Registration Statement on Form 8-A,
as amended, filed with the Commission on December 18, 1992, including any
amendments or reports filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities remaining unsold, shall be
deemed
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to be incorporated by reference herein and to be a part hereof from the date of
filing of such reports and documents. Any statement contained in a document
incorporated by reference herein shall be deemed modified or superseded for
purposes of this Prospectus to the extent that a statement contained or
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been or may be incorporated by reference
in this Prospectus, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Such requests
should be directed to Shaman Pharmaceuticals, Inc., 213 East Grand Avenue, South
San Francisco, California 94080-4812, telephone (415) 952-7070, facsimile (415)
873-8367, Attn: Vice President, Corporate Communications.
------------------------
Provir(TM) and the Company's stylized logo are trademarks of the Company.
Shaman Pharmaceuticals(R) and Virend(R) are registered U.S. trademarks of the
Company.
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THE COMPANY
The following information is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing
elsewhere herein or incorporated by reference in this Prospectus. This
Prospectus contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual
results could differ materially from those projected in the forward-looking
statements as a result of certain of the risk factors set forth elsewhere in
this Prospectus. Investors should carefully consider the information set forth
under the heading "Risk Factors."
Shaman is a leader in the identification and development of novel
pharmaceutical products for the treatment of human diseases through the
isolation and optimization of active compounds found in tropical plants. The
Company believes that by focusing on drugs extracted from plants with a long
history of medicinal use, its drug discovery efforts will be quicker and more
likely to lead to safe and effective pharmaceuticals. Shaman has human clinical
trials under way for its three lead product candidates: Provir, Virend and
nikkomycin Z. Shaman has completed Phase II trials showing preliminary efficacy
for Provir for the treatment of watery diarrhea and Virend for the treatment of
recurrent genital herpes. An additional dose-optimizing Phase II trial, an
AIDS-related diarrhea Phase II trial for Provir and an additional trial using
Virend in combination with oral acyclovir commenced in the first quarter of
1997. Provir is an oral drug which acts as a specific inhibitor of fluid loss
via an antisecretory mechanism, and Virend is a topical agent which acts by an
antiviral mechanism of action; both products incorporate the same active drug
substance, SP-303. In addition, nikkomycin Z, an orally-active, in-licensed
product for the treatment of endemic mycoses and other systemic fungal
infections, is currently in Phase I trials in the U.K., and the Company expects
to file an IND in the United States with respect thereto in 1997. Shaman's
research and preclinical development is principally focused on the
identification and optimization of compounds to treat Type II (adult onset or
non-insulin dependent) diabetes, an effort that has led to the identification of
15 chemically distinct, orally-active compounds which have demonstrated glucose
lowering effects in preclinical testing. Significant funding, as well as
milestone payments for this program, are provided through collaborations with
Lipha, Lyonnaise Industrielle Pharmaceutique s.a., a wholly-owned subsidiary of
Merck KGaA, Darmstadt, Germany ("Lipha/Merck"), and Ono Pharmaceutical Co., Ltd.
("Ono").
RECENT DEVELOPMENTS
The Shares being registered represent shares underlying $10,400,000 of the
Notes being issued by the Registrant pursuant to and in connection with the
several Note Purchase Agreements dated as of June 30, 1997. The Notes are to be
sold at par, will mature in August 2000, and will bear interest at a rate of
5.5% per annum. Interest on the Notes, which is payable in arrears on the first
day of each November, February, May and August, may be paid in Common Stock or
in cash at the option of the Registrant. The Notes are convertible into Common
Stock of the Registrant as follows: (i) until November 7, 1997, the Notes are
convertible at the lowest trading price of the Common Stock during a specified
measurement period prior to each conversion, but in no event less than $5.50 per
share, (ii) thereafter the Notes are convertible at 90% of such trading price
during such measurement period prior to each conversion. The maximum number of
shares into which the Notes shall become convertible is limited at 19.9% of the
outstanding shares of Common Stock on July 9, 1997, with any excess to be
redeemed by the Registrant. The Registrant has the right, 18 months after the
date of issuance of the Notes, to redeem the then outstanding Notes for 130% of
the then outstanding principal balance on each Note plus accrued interest.
At the date of issuance of the Notes, an allocation of a portion of the
proceeds of the Notes equal to the intrinsic value of the conversion feature
that is "in the money" will be reflected as a non-cash charge to interest
expense. Such charge will be reflected in the year ended December 31, 1997. The
Company believes this accounting treatment is consistent with that required by
the Commission.
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RISK FACTORS
The shares offered hereby involve a high degree of risk. The following risk
factors should be considered carefully in addition to the other information
contained or incorporated by reference in this Prospectus before purchasing the
shares of Common Stock offered hereby. In addition to the historical information
contained herein, the discussion in this Prospectus contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this Prospectus should be read as being applicable
to all related forward-looking statements wherever they appear in this
Prospectus. The Company's actual results could differ materially from those
discussed in this Prospectus. Factors that could cause or contribute to such
differences include those discussed below as well as those cautionary statements
and other factors set forth elsewhere herein.
Early Stage of Development; Technological Uncertainty. Shaman has not yet
completed the development of any products. The Company's products will require
significant additional clinical testing and investment prior to
commercialization. Products for therapeutic use in human healthcare must be
evaluated in extensive human clinical trials to determine their safety and
efficacy as part of a lengthy process to obtain government approval. The
Company's Provir, Virend and nikkomycin Z products are each in clinical
development. Positive results for any of these products in a clinical trial do
not necessarily assure that positive results will be obtained in future clinical
trials or that government approval to commercialize the products will be
obtained. Clinical trials may be terminated at any time for many reasons,
including toxicity or adverse event reporting. The Company's diabetes compounds
have not entered clinical trials. There can be no assurance that any of the
Company's products will be successfully developed, enter into human clinical
trials, prove to be safe and efficacious in clinical trials, meet applicable
regulatory standards, obtain required regulatory approvals, be capable of being
produced in commercial quantities at reasonable costs or be successfully
marketed or that the Company will not encounter problems in clinical trials that
will cause the Company to delay or suspend product development. Failure of any
of the Company's products to be commercialized could have a material adverse
effect on the Company's business, financial condition and results of operations.
History of Operating Losses; Products Still in Development; Future
Profitability Uncertain. Shaman was incorporated in 1989 and has experienced
significant operating losses in each of its fiscal years since operations began.
As of June 30, 1997, the Company's accumulated deficit was approximately $94.9
million. The Company has not generated any product revenues and expects to incur
substantial operating losses over the next several years. All of Shaman's
products and compounds are in research and development, which require
substantial expenditures of funds. In order to generate revenues or profits, the
Company, alone or with others, must successfully develop, test, obtain
regulatory approval for and market its potential products. No assurance can be
given that Shaman's product development efforts will be successful, that
required regulatory approvals will be obtained, or that the products, if
developed and introduced, will be successfully marketed or will achieve market
acceptance.
No Assurance of Successful Product Development. The Company's research and
development programs are at various stages of development, ranging from the
research stage to clinical trials. Substantial additional research and
development will be necessary in order for the Company to move its diabetes
product candidates into clinical testing, and there can be no assurance that any
of the Company's research and development efforts on these or other potential
products, including Provir, Virend and nikkomycin Z, will lead to development of
products that are shown to be safe and effective in clinical trials. In
addition, there can be no assurance that any such products will meet applicable
regulatory standards, be capable of being produced in commercial quantities at
acceptable costs, be eligible for third party reimbursement from governmental or
private insurers, be successfully marketed or achieve market acceptance.
Further, the Company's products may prove to have undesirable or unintended side
effects that may prevent or limit their commercial use. The Company may find, at
any stage of this complex product development process, that products that
appeared promising in preclinical studies or Phase I and Phase II clinical
trials do not demonstrate efficacy in larger-scale, Phase III clinical trials
and do not receive regulatory approvals. Accordingly, any product development
program undertaken by the Company may be curtailed, redirected or eliminated at
any time. In addition, there can be no assurance that the Company's testing and
development schedules will be met. Any failure to meet
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such schedules could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's clinical trials may
be delayed by many factors, including, but not limited to, slower than
anticipated patient enrollment, difficulty in finding a sufficient number of
patients fitting the appropriate trial profile or in the acquisition of
sufficient supplies of clinical trial materials or adverse events occurring
during the clinical trials. Completion of testing, studies and trials may take
several years, and the length of time varies substantially with the type,
complexity, novelty and intended use of the product. In addition, data obtained
from preclinical and clinical activities are susceptible to varying
interpretations, which could delay, limit or prevent regulatory approval. Delays
or rejections may be encountered based upon many factors, including changes in
regulatory policy during the period of product development and could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Future Capital Needs; Uncertainty of Additional Funding. The Company will
require substantial additional funds to conduct the development and testing of
its potential products and to manufacture and market any products that may be
developed. The Company's future capital requirements will depend on numerous
factors, including the progress of its research and development programs, the
progress of preclinical and clinical testing, the time and costs involved in
obtaining regulatory approvals, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, changes in the Company's existing
collaborative and licensing relationships, the ability of the Company to
establish additional collaborative relationships for the manufacture and
marketing of its potential products, and the purchase of additional capital
equipment. The Company will need to raise substantial additional capital to fund
its operations. The Company intends to seek such additional funding through
public or private financings, collaborative arrangements or from other sources.
If additional funds are raised by issuing equity securities, significant
dilution to existing stockholders may result. There can be no assurance that
additional financing will be available on acceptable terms or at all. If
adequate funds are not available, the Company may be required to delay, scale
back or eliminate one or more of its research, discovery or development
programs, which could have a material adverse effect on the Company's business,
financial condition and results of operations.
Uncertainties Associated with Clinical Trials. Shaman has conducted, and
plans to continue to conduct, extensive and costly clinical trials to assess the
safety and efficacy of its potential products. The rate of completion of the
Company's clinical trials is dependent upon, among other factors, the rate of
completion and approval of trial protocols, the availability of funds for trials
and the rate of patient enrollment. Patient enrollment is a function of many
factors, including the nature of the Company's clinical trial protocols,
existence of competing protocols, size of patient population, proximity of
patients to clinical sites and eligibility criteria for the study. Delays in
patient enrollment will result in increased costs and delays, which could have a
material adverse effect on the Company's ability to timely complete clinical
trials. The Company cannot assure that patients enrolled in its clinical trials
will respond to the Company's product candidates. Setbacks are to be expected in
conducting human clinical trials. Failure to comply with the U.S. Food and Drug
Administration ("FDA") regulations applicable to such testing can result in
delay, suspension or cancellation of such testing, and/or refusal by the FDA to
accept the results of such testing. One of the Company's clinical trials for
nikkomycin Z is being conducted in the United Kingdom not pursuant to an
Investigational New Drug application ("IND") filed with the FDA. Accordingly,
the data collected from such trial may not be accepted by the FDA, and for this
or other reasons, the Company may need to conduct additional Phase I trials
pursuant to an IND filed with the FDA. In addition, the FDA or the Company may
suspend clinical trials at any time if either of them concludes that any
patients participating in any such trial are being exposed to unacceptable
health risks. Further, there can be no assurance that human clinical testing
will demonstrate that any current or future product candidate is safe or
effective or that data derived from any such study will be suitable for
submission to the FDA or other regulatory authorities. Failure of the Company's
clinical trials to demonstrate safety or efficacy in humans could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Dependence on Collaborative Relationships. The Company's research and
development efforts in its diabetes program and, to a lesser extent, in its
other programs, is dependent upon its arrangements with Lipha/Merck and Ono and
the compliance of such partners with the terms and conditions of such
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collaborative agreements including, without limitation, providing funding for
research and development efforts and the achievement of milestones and assisting
the Company in its research and development efforts. These partners may develop
products that may compete with those of the Company. The amount and timing of
resources they allocate to these programs is not within the Company's control.
There can be no assurance that these partners will perform their obligations as
expected or that any significant revenues will ultimately be derived from such
agreements. The Company's agreement with Ono may be terminated in the event Ono
determines further development of compounds is not warranted, provided certain
other conditions are met, and the Lipha/Merck agreement may be terminated in
September 1998 if no compound discovered under the collaboration has entered
human clinical trials. Termination of either agreement is subject to certain
surviving obligations. If one or more such partners elected to terminate their
relationships with the Company, or if the Company or its partners fail to
achieve targeted milestones, it could have a material adverse effect on the
Company's ability to fund such programs, or to develop any products on a
collaborative basis with such partners.
Rapid Technological Change and Substantial Competition. The pharmaceutical
industry is subject to rapid and substantial technological change. Technological
competition from pharmaceutical and biotechnology companies and universities is
intense. Many of these entities have significantly greater research and
development capabilities, as well as substantial marketing, manufacturing,
financial and managerial resources, and represent significant competition for
the Company. There can be no assurance that developments by others will not
render the Company's products or technologies noncompetitive or that the Company
will be able to keep pace with technological developments. Competitors have
developed or are in the process of developing technologies that are, or in the
future may be, the basis for competitive products. Some of these products may
have an entirely different approach or means of accomplishing the desired
therapeutic effect than products developed by the Company. These competing
products may be more effective and less costly than the products developed by
the Company. In addition, other forms of medical treatment may offer competition
to the Company's products. The development of competing compounds could have a
material adverse effect on the Company's business, financial condition or
results of operations.
Government Regulation; No Assurance of Regulatory Approvals. All new drugs,
including the Company's products under development, are subject to extensive and
rigorous regulation by the federal government, principally the FDA, and
comparable agencies in state and local jurisdictions and in foreign countries.
These authorities impose substantial requirements upon the preclinical and
clinical testing, manufacturing and marketing of pharmaceutical products. The
steps required before a drug may be approved for marketing in the United States
generally include (i) preclinical laboratory and animal tests, (ii) the
submission to the FDA of an IND for human clinical testing, (iii) adequate and
well controlled human clinical trials to establish the safety and efficacy of
the drug, (iv) submission to the FDA of a New Drug Application ("NDA") and (v)
satisfactory completion of an FDA inspection of the manufacturing facility or
facilities at which the drug is made to assess compliance with current Good
Manufacturing Practices ("cGMP"). Lengthy and detailed preclinical and clinical
testing, validation of manufacturing and quality control processes, and other
costly and time-consuming procedures are required. Satisfaction of these
requirements typically takes several years and the time needed to satisfy them
may vary substantially, based on the type, complexity and novelty of the
pharmaceutical product. The effect of government regulation may be to delay or
to prevent marketing of potential products for a considerable period of time and
to impose costly procedures upon the Company's activities. There can be no
assurance that the FDA or any other regulatory agency will grant approval for
any products developed by the Company on a timely basis, or at all. Success in
preclinical or early stage clinical trials does not assure success in later
stage clinical trials. Data obtained from preclinical and clinical activities
are susceptible to varying interpretations which could delay, limit or prevent
regulatory approval. If regulatory approval of a product is granted, such
approval may impose limitations on the indicated uses for which a product may be
marketed. Further, even if regulatory approval is obtained, later discovery of
previously unknown problems with a product may result in restrictions on the
product, including withdrawal of the product from the market. Any delay or
failure in obtaining regulatory approvals would have a material adverse effect
on the Company's business, financial condition and results of operation.
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Among the conditions for FDA approval of a pharmaceutical product is the
requirement that the manufacturer's (either the Company's own or a third-party
manufacturer) quality control and manufacturing procedures conform to current
cGMP, which must be followed at all times. The FDA strictly enforces cGMP
requirements through periodic unannounced inspections. There can be no assurance
that the FDA will determine that the facilities and manufacturing procedures of
the Company or any third-party manufacturer of the Company's planned products
will conform to cGMP requirements. Additionally, the Company or its third-party
manufacturer must pass a preapproval inspection of its manufacturing facilities
by the FDA before obtaining marketing approval. Failure to comply with
applicable regulatory requirements may result in penalties such as restrictions
on a product's marketing or withdrawal of a product from the market.
The FDA's policies may change and additional government regulations may be
promulgated which could prevent or delay regulatory approval of the Company's
potential products. Moreover, increased attention to the containment of
healthcare costs in the United States could result in new government regulations
which could have a material adverse effect on the Company's business. The
Company is unable to predict the likelihood of adverse governmental regulation
which might arise from future legislative or administrative action, either in
the United States or abroad.
Dependence on Sources of Supply. The Company currently imports all of the
plant materials from which its products are derived from countries in North,
Central and South America, Africa and Southeast Asia. To the extent that its
products cannot be economically synthesized or otherwise produced, the Company
will continue to be dependent upon a supply of raw plant material. The Company
does not have formal agreements in place with all of its suppliers. In addition,
a continued source of plant supply is subject to the risks inherent in
international trade. These risks include unexpected changes in regulatory
requirements, exchange rates, tariffs and barriers, difficulties in coordinating
and managing foreign operations, political instability and potentially adverse
tax consequences. Interruptions in supply or material increases in the cost of
supply could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, tropical rain forests, and
certain irreplaceable plant resources therein, are currently threatened with
destruction. In the event portions of the rain forests are destroyed which
contain the source material from which Shaman's current or future products are
derived, such destruction could have a material adverse effect on the Company's
business, financial condition and results of operations.
Limited Manufacturing and Marketing Experience and Capacity. The Company
currently produces products only in quantities necessary for clinical trials and
does not have the staff or facilities necessary to manufacture products in
commercial quantities. As a result, the Company must rely on collaborative
partners or third-party manufacturing facilities, which may not be available on
commercially acceptable terms adequate for Shaman's long-term needs. If the
Company should encounter delays or difficulties in establishing relationships
with qualified manufacturers to produce, package and distribute its finished
products, clinical trials, regulatory filings, market introduction and
subsequent sales of such products could be adversely affected.
Contract manufacturers must adhere to cGMP regulations strictly enforced by
the FDA on an ongoing basis through its facilities inspection program. Contract
manufacturing facilities must pass a pre-approval plant inspection before the
FDA will approve an NDA. Certain material manufacturing changes that occur after
approval are also subject to FDA review and clearance or approval. There can be
no assurance that the FDA or other regulatory agencies will approve the process
or the facilities by which any of the Company's products may be manufactured.
The Company's dependence on third parties for the manufacture of products may
adversely affect the Company's ability to develop and deliver products on a
timely and competitive basis. Should the Company be required to manufacture
products itself, the Company will be subject to the regulatory requirements
described above, to similar risks regarding delays or difficulties encountered
in manufacturing any such products and will require substantial additional
capital. There can be no assurance that the Company will be able to manufacture
any such products successfully or in a cost-effective manner.
The Company currently has no marketing or sales staff. To the extent that
the Company does not or is unable to enter into co-promotion agreements or to
arrange for third party distribution of its products, significant additional
resources will be required to develop a marketing and sales force. There can be
no
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<PAGE> 10
assurance that the Company will be able to enter into collaborative agreements
or establish a marketing and sales force.
Uncertainty Regarding Patents and Proprietary Rights. The Company's
success will depend in large part on its ability to obtain and maintain patents,
protect trade secrets and operate without infringing upon the proprietary rights
of others. Competitors may have filed patent applications, may have been issued
patents or may obtain additional patents and proprietary rights relating to
products or processes competitive with those of the Company. There can be no
assurance that the Company's patent applications will be approved, that the
Company will develop additional proprietary products that are patentable, that
any issued patents will provide the Company with adequate protection for its
inventions or will not be challenged by others, or that the patents of others
will not impair the ability of the Company to commercialize its products. The
patent position of firms in the pharmaceutical industry generally is highly
uncertain, involves complex legal and factual questions, and has recently been
the subject of much litigation. No consistent policy has emerged from the U.S.
Patent and Trademark Office or the courts regarding the breadth of claims
allowed or the degree of protection afforded under pharmaceutical patents. There
can be no assurance that others will not independently develop similar products,
duplicate any of the Company's products or design around any patents of the
Company.
A number of pharmaceutical companies and research and academic institutions
have developed technologies, filed patent applications or received patents on
various technologies that may be related to the Company's business. Some of
these technologies, applications or patents may conflict with the Company's
technologies or patent applications.
In the United States, on December 16, 1996, the Patent and Trademark Office
declared an Interference between the Company's issued patent covering SP-303,
its specific proanthocyanidin polymer composition, and a United States
application corresponding to a granted European patent of Leon Cariel and the
Institut des Substances Vegetales by Daniel Jean and Leon Cariel. The
Interference is to determine who is the first inventor of the subject matter of
one claim of the Company's patent and one claim of the third party Cariel et al.
patent application under the U.S. patent laws. The party Cariel et al. has
recently filed a Motion conceding priority of invention of the subject matter at
issue in the Interference to the Company and, on July 14, 1997, the Patent and
Trademark Office terminated the Interference by adverse judgment against the
party Cariel et al. and favorable judgment to the Company's patent.
Additionally, in connection with the Interference proceeding, the Company
has had an opportunity to review the claims and file history of the Daniel Jean
and Leon Cariel patent application which, under U.S. patent law, are kept
confidential. One broad claim, in particular, of the Daniel Jean and Leon Cariel
patent application, which was not involved in the Interference proceeding and
which has been indicated to be allowable, covers a large variety of
proanthocyanidin polymers. Based on opinion of counsel, the Company believes
that this broad claim is subject to attack as invalid in view of prior art. In
addition, based on opinion of counsel regarding inequitable conduct, uncovered
during the Interference proceeding by Daniel Jean and Leon Cariel in connection
with prosecution of their patent application, the Company believes that this
broad claim is subject to attack as unenforceable. Based on knowledge of the
Company's specific proanthocyanidin polymer composition, the Company believes
that the manufacture, use or sale of its specific proanthocyanidin polymer
composition would not constitute infringement of this broad claim, once it
issues. There can be no assurance, however, that the Company would prevail
should an action for infringement of such claim be commenced.
In addition, if patents that cover the Company's activities have been or
are issued to other companies, there can be no assurance that the Company would
be able to obtain licenses to these patents at a reasonable cost, or at all, or
be able to develop or obtain alternative technology. If the Company does not
obtain such licenses, it could encounter delays or be precluded from introducing
products to the market. Litigation may be necessary to defend against or assert
claims of infringement, to enforce patents issued to the Company or to protect
trade secrets or know-how owned by the Company. Additional interference
proceedings may be desired or necessary to determine issues of invention; such
litigation and/or interference proceedings could
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<PAGE> 11
result in substantial cost to and diversion of effort by, and may have a
material adverse effect on, the Company. In addition, there can be no assurance
that these efforts by the Company will be successful.
In countries foreign to the United States, the European Patent Office, the
French Patent Office and the German Patent Office, as well as the Australian
Patent Office, have each granted a patent containing broad claims to
proanthocyanidin polymer compositions (and methods of use of such compositions),
which are similar to the Company's specific proanthocyanidin polymer
composition, to Leon Cariel and the Institut des Substances Vegetales. The
effective filing date of these patents is prior to the effective filing date of
the Company's foreign filed pending patent application in Europe. The Company
has instituted an Opposition in the European Patent Office against the granted
European Patent No. 472531 owned by Leon Cariel and Institut des Substances
Vegetales. Based on opinions of foreign counsel, the Company believes that the
granted claims are invalid and intends to vigorously prosecute the Opposition.
There can be no assurances that the Company will be successful in having the
granted European patent revoked or the claims sufficiently narrowed so as not to
potentially cover the Company's proanthocyanidin polymer composition and methods
of use. There can be no assurance that Leon Cariel and the Institut des
Substances Vegetales will not assert claims relating to this patent against the
Company. There can be no assurance that the Company would be able to obtain a
license to this patent at all or at reasonable cost, or be able to develop or
obtain alternative technology to use in Europe or elsewhere.
The Company's competitive position is also dependent upon unpatented trade
secrets. There can be no assurance that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to the Company's trade secrets, that such trade secrets will not be
disclosed or that the Company can effectively protect its rights to unpatented
trade secrets. To the extent that the Company or its consultants or research
collaborators use intellectual property owned by others in their work for the
Company, disputes also may arise as to the rights in related or resulting
know-how and inventions.
Uncertainty of Product Pricing, Reimbursement and Related Matters. The
Company's business may be materially adversely affected by the continuing
efforts of governmental and third party payors to contain or reduce the costs of
healthcare through various means. For example, in certain foreign markets, the
pricing or profitability of healthcare products is subject to government
control. In the United States, there have been, and the Company expects there
will continue to be, a number of federal and state proposals to implement
similar government control. While the Company cannot predict whether any such
legislative or regulatory proposals or reforms will be adopted, the announcement
of such proposals or reforms could have a material adverse effect on the
Company's ability to raise capital or form collaborations, and the adoption of
such proposals or reforms could have a material adverse effect on the Company's
business, financial condition or results of operations.
In addition, in both the United States and elsewhere, sales of healthcare
products are dependent in part on the availability of reimbursement from third
party payors, such as government and private insurance plans. Significant
uncertainty exists as to the reimbursement status of newly approved healthcare
products, and third party payors are increasingly challenging the prices charged
for medical products and services. If the Company succeeds in bringing one or
more products to the market, there can be no assurance that reimbursement from
third party payors will be available or will be sufficient to allow the Company
to sell its products on a competitive or profitable basis.
Possible Volatility of Stock Price. From time to time, the stock market has
experienced significant price and volume fluctuations that may be unrelated to
the operating performance of particular companies or industries. In addition,
the market price of the Company's Common Stock, like the stock prices of many
publicly traded biotechnology and smaller pharmaceutical companies, has been and
may continue to be highly volatile. Announcements of technological innovations,
regulatory matters or new commercial products by the Company or its competitors,
developments or disputes concerning patent or proprietary rights, publicity
regarding actual or potential medical results relating to products under
development by the Company or its competitors, regulatory developments in both
the United States and foreign countries, public concern as to the safety of
pharmaceutical products, and economic and other external factors, as well as
period-to-period
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<PAGE> 12
fluctuations in financial results, may have a significant impact on the market
price of Shaman's Common Stock.
Environmental Regulation. In connection with its research and development
activities and manufacturing of clinical trial materials, the Company is subject
to federal, state and local laws, rules, regulations and policies governing the
use, generation, manufacture, storage, air emission, effluent discharge,
handling and disposal of certain materials and wastes. Although the Company
believes that it has complied with these laws and regulations in all material
respects and has not been required to take any action to correct any
noncompliance, there can be no assurance that the Company will not be required
to incur significant costs to comply with environmental and health and safety
regulations in the future. The Company's research and development activities
involve the controlled use of hazardous materials, chemicals, viruses and
various radioactive compounds. Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company could be held liable for any damages
that result and such liability could exceed the resources of the Company.
Anti-Takeover Effect of Delaware Law and Certain Charter and Bylaws
Provisions. Certain provisions of the Company's Certificate of Incorporation and
Bylaws may have the effect of making it more difficult for a third party to
acquire, or discouraging a third party from attempting to acquire, control of
the Company. Such provisions could limit the price that certain investors might
be willing to pay in the future for shares of the Company's Common Stock. The
Company's Board of Directors has the authority to issue up to 600,000 shares of
Preferred Stock and to determine the price, rights, preferences, privileges and
restrictions of those shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any Preferred Stock
that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock.
Certain provisions of Delaware law applicable to the Company could also delay or
make more difficult a merger, tender offer or proxy contest involving the
Company, including Section 203 of the Delaware General Corporation Law, which
prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years unless certain conditions
are met.
Product Liability Exposure; Limited Insurance Coverage. The Company's
business exposes it to potential product liability risks which are inherent in
the development, testing, manufacture, marketing and sale of pharmaceutical
products. Product liability insurance for the pharmaceutical industry generally
is expensive. There can be no assurance that the Company's present product
liability insurance coverage is adequate. Such existing coverage will not be
adequate as the Company further develops its products, and no assurance can be
given that adequate insurance coverage against all potential claims will be
available in sufficient amounts or at a reasonable cost.
Limitation of Liability and Indemnification. The Company's Certificate of
Incorporation limits, to the maximum extent permitted by Delaware Law, the
personal liability of directors for monetary damages for breach of their
fiduciary duties as a director. The Company's Bylaws provide that the Company
shall indemnify its officers and directors and may indemnify its employees and
other agents to the fullest extent permitted by law. The Company has entered
into indemnification agreements with its officers and directors containing
provisions which are in some respects broader than the specific indemnification
provisions contained in Delaware Law. The indemnification agreements may require
the Company, among other things, to indemnify such officers and directors
against certain liabilities that may arise by reason of their status or service
as directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance, if available on reasonable terms. Section
145 of the Delaware Law provides that a corporation may indemnify a director,
officer, employee or agent made or threatened to be made a party to an action by
reason of the fact that he was a director, officer, employee or
11
<PAGE> 13
agent of the corporation or was serving at the request of the corporation
against expenses actually and reasonably incurred in connection with such action
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Delaware Law does not permit a corporation to eliminate a
director's duty of care, and the provisions of the Company's Certificate of
Incorporation have no effect on the availability of equitable remedies, such as
injunction or rescission, for a director's breach of the duty of care.
Dependence on Key Personnel. The Company's ability to maintain its
competitive position depends in part upon the continued contributions of its key
senior management. The Company's future performance also depends on its ability
to attract and retain qualified management and scientific personnel. Competition
for such personnel is intense, and there can be no assurance that the Company
will be able to continue to attract, assimilate or retain other highly qualified
technical and management personnel in the future. The loss of key personnel or
the failure to recruit additional personnel or to develop needed expertise could
have a material adverse effect on the Company's business, financial condition
and results of operations.
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<PAGE> 14
SELLING STOCKHOLDERS
The following table sets forth certain information, as of the date hereof,
with respect to the number of shares of Common Stock beneficially owned by each
of the Selling Stockholders 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 Stockholders may offer the
Shares for resale from time to time. See "Plan of Distribution."
The Shares being offered hereby by the Selling Stockholders may be
acquired, from time to time, upon (i) the conversion of $10,400,000 aggregate
principal amount of the Notes, which were acquired by them from the Company in a
private placement transaction pursuant to those certain Note Purchase
Agreements, dated as of June 30, 1997 (the "Agreements"), and pursuant to an
Engagement Agreement, dated April 17, 1997, as amended on June 30, 1997, between
the Company and Diaz & Altschul Capital, LLC, as placement agent, and (ii) the
payment by the Company of interest on the Notes in the form of Common Stock in
lieu of cash, at the Company's option. This Prospectus covers the resale by the
Selling Stockholders of up to 2,300,000 Shares, plus, in accordance with Rule
416 under the Securities Act, such presently indeterminate number of additional
Shares as may be issuable upon conversion of the Notes or payment of interest on
the Notes, based upon fluctuations in the conversion price of the Notes. See
"Recent Developments."
Each Selling Stockholder that is party to an Agreement represented to the
Company that it will acquire the Shares for investment and with no present
intention of distributing the Shares. In lieu of granting the Selling
Stockholders demand registration rights, the Company has filed with the
Commission, under the Securities Act, a Registration Statement on Form S-3, of
which this Prospectus forms a part, with respect to the resale of the Shares
from time to time on The Nasdaq National Market or in privately-negotiated
transactions and has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep such Registration
Statement effective until the Shares are no longer required to be registered for
the sale thereof by the Selling Stockholders.
The Company has agreed to register a specified number of Shares for resale
by the Selling Stockholders. The number of Shares shown in the following table
as being offered by the Selling Stockholders does not include such presently
indeterminate number of shares of Common Stock as may be issuable upon
conversion of the Notes pursuant to the provisions thereof regarding
determination of the applicable conversion price but which shares are, in
accordance with Rule 416 under the Securities Act, included in the Registration
Statement of which this Prospectus forms as part. Such number also does not
include such presently indeterminate number of shares as may be issued to the
Selling Stockholders in payment of interest on the Notes, at the option of the
Company, in lieu of cash interest.
The Shares covered by this Prospectus may be offered from time to time by
the Selling Stockholders named below:
<TABLE>
<CAPTION>
OWNERSHIP
NUMBER OF AFTER OFFERING(1)
NUMBER OF SHARES ---------------------
NAMES OF SHARES OWNED BEING NUMBER OF
SELLING STOCKHOLDERS PRIOR TO OFFERING(1)(2) OFFERED(3) SHARES PERCENT
- ----------------------------------------- ----------------------- --------- --------- -------
<S> <C> <C> <C> <C>
Delta Opportunity Fund, Ltd.(4)(6)....... 590,909 590,909 0 0%
Nelson Partners(5)....................... 295,455 295,455 0 0%
Olympus Securities, Ltd.(5).............. 295,455 295,455 0 0%
Omicron Partners, LP..................... 454,545 454,545 0 0%
OTATO Limited Partnership(6)............. 109,091 109,091 0 0%
Overbrook Fund I, LLC(6)(7).............. 72,727 72,727 0 0%
Diaz & Altschul Group, LLC(4)(6)......... 72,727 72,727 0 0%
</TABLE>
- ---------------
(1) Percentage of beneficial ownership is calculated assuming 17,538,952 shares
of Common Stock were outstanding as of July 31, 1997. Beneficial ownership
is determined in accordance with the rules of the Commission and generally
includes voting or investment power with respect to securities. Shares of
Common Stock subject to options or warrants currently exercisable or
convertible, or exercisable or
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<PAGE> 15
convertible within 60 days of July 31, 1997, are deemed outstanding for
computing the percentage of the person holding such option or warrant but
are not deemed outstanding for computing the percentage of any other
person. Pursuant to the terms of the Notes, no Selling Stockholder can
convert any portion of such Selling Stockholder's Notes if such conversion
would increase such Selling Stockholder's beneficial ownership of the
Common Stock (other than shares so owned through ownership of the Notes) to
in excess of 4.9%. Except as indicated in the footnotes to this table and
pursuant to applicable community property laws, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned.
(2) Represents the number of shares of Common Stock issuable upon conversion of
the Notes calculated using an assumed conversion price of $5.50 with
respect to the face value of the Notes, based upon certain conversion
provisions of the Notes (which price could fluctuate from time to time on
and after November 8, 1997 based on changes in the market price of the
Common Stock).
(3) Represents the number of shares of Common Stock issuable upon conversion of
the Notes calculated using an assumed conversion price of $5.50 with
respect to the face value of the Notes, based upon certain conversion
provisions of the Notes (which price could fluctuate from time to time on
and after November 8, 1997 based on changes in the market price of the
Common Stock). Does not include up to 315,000 shares of Common Stock which
may be issued and paid in lieu of cash, at the Company's option, as
interest on the Notes. This Prospectus also covers the resale of such
presently indeterminate number of additional Shares as may be issuable upon
conversion of the Notes or payment of interest on the Notes, based upon
fluctuations in the conversion price of the Notes.
(4) Diaz & Altschul Advisors, LLC, a New York limited liability company ("D&A
Advisors"), serves as investment advisor to Delta Opportunity Fund, Ltd.
("Delta"), and may be deemed to share beneficial ownership of the Shares
beneficially owned by Delta by reason of shared power to dispose of the
Shares beneficially owned by Delta. D&A Advisors is controlled by Diaz &
Altschul Group, LLC ("D&A Group"). D&A Advisors and D&A Group disclaim
beneficial ownership of the Shares beneficially owned by Delta.
(5) Citadel Limited Partnership is the managing general partner of Nelson
Partners ("Nelson"), and the trading manager of Olympus Securities, Ltd.
("Olympus") and consequently has voting control and investment discretion
over securities held by both Nelson and Olympus. The ownership information
for Nelson does not include the Shares owned by Olympus and the ownership
information for Olympus does not include the Shares owned by Nelson.
(6) An affiliate of OTATO Limited Partnership serves as a trading consultant to
Delta, Overbrook Fund I, LLC ("Overbrook") and D&A Group and may be deemed
to share beneficial ownership of the Shares beneficially owned by such
Selling Stockholders by reason of shared power to dispose of the Shares
beneficially owned by such Selling Stockholders. Such affiliate disclaims
beneficial ownership of such Shares.
(7) Mr. Arthur G. Altschul, Jr., a managing member of D&A Group, also serves as
the managing member of Overbrook. Mr. Altschul may be deemed to share
beneficial ownership of all Shares beneficially owned by Overbrook by
reason of the power to dispose of the Shares beneficially owned by
Overbrook. Mr. Altschul disclaims such beneficial ownership.
PLAN OF DISTRIBUTION
The Company will receive no proceeds from this offering. The Shares offered
hereby may be sold by the Selling Stockholders or by pledgees, donees,
transferees or other successors in interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer. The Shares may be
sold from time to time in transactions in the over-the-counter market, in
negotiated transactions, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by
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<PAGE> 16
selling the Shares to or through broker-dealers, including block trades in which
brokers or dealers will attempt to sell the Shares as agent but may position and
resell the block as principal to facilitate the transaction, or in one or more
underwritten offerings on a firm commitment or best effort basis. Sales of
Selling Stockholders' Shares may also be made pursuant to Rule 144 under the
Securities Act, where applicable.
To the extent required under the Securities Act, the aggregate amount of
Selling Stockholders' Shares being offered and the terms of the offering, the
names of any such agents, brokers, dealers or underwriters and any applicable
commission with respect to a particular offer will be set forth in an
accompanying Prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Shares may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from a Selling
Stockholder and/or purchasers of Selling Stockholders' Shares, for whom they may
act (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
From time to time, one or more of the Selling Stockholders may pledge,
hypothecate or grant a security interest in some or all of the Shares owned by
them, and the pledgees, secured parties or persons to whom such securities have
been hypothecated shall, upon foreclosure in the event of default, be deemed to
be Selling Stockholders hereunder. In addition, a Selling Stockholder may, from
time to time, sell short the Common Stock of the Company, and in such instances,
this Prospectus may be delivered in connection with such short sales and the
Shares offered hereby may be used to cover such short sales.
From time to time one or more of the Selling Stockholders may transfer,
pledge, donate or assign such Selling Stockholders' Shares to lenders or others
and each of such persons will be deemed to be a "Selling Stockholder" for
purposes of this Prospectus. The number of Selling Stockholders' Shares
beneficially owned by those Selling Stockholders who so transfer, pledge, donate
or assign Selling Stockholders' Shares will decrease as and when they take such
actions. The plan of distribution for Selling Stockholders' Shares sold
hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be Selling Stockholders hereunder.
A Selling Stockholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the Common
Stock in the course of hedging the positions they assume with such Selling
Stockholder, including, without limitation, in connection with distributions of
the Common Stock by such broker-dealers. A Selling Stockholder may also enter
into option or other transactions with broker-dealers that involve the delivery
of the Common Stock to the broker-dealers, who may then resell or otherwise
transfer such Common Stock. A Selling Stockholder may also loan or pledge the
Common Stock to a broker-dealer and the broker-dealer may sell the Common Stock
so loaned or upon a default may sell or otherwise transfer the pledged Common
Stock.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not bid for or purchase shares of
Common Stock during a period which commences one business day (5 business days,
if the Company's public float is less than $25 million or its average daily
trading volume is less than $100,000) prior to such person's participation in
the distribution, subject to exceptions for certain passive market making
activities. In addition and without limiting the foregoing, each Selling
Stockholder will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including, without limitation, Regulation M
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by such Selling Stockholder.
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<PAGE> 17
The Shares were originally issued to the Selling Stockholders pursuant to
an exemption from the registration requirements of the Securities Act provided
by Section 4(2) thereof. The Company agreed to register the Shares under the
Securities Act and to indemnify and hold the Selling Stockholders harmless
against certain liabilities under the Securities Act that could arise in
connection with the sale by the Selling Stockholders of the Shares. The Company
has agreed to pay all reasonable fees and expenses incident to the filing of
this Registration Statement.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, Palo Alto, California.
EXPERTS
The financial statements of the Company appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, as amended, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included 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.
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======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 4
Risk Factors.......................... 5
Selling Stockholders.................. 13
Plan of Distribution.................. 14
Legal Matters......................... 16
Experts............................... 16
</TABLE>
======================================================
======================================================
2,300,000 SHARES
SHAMAN
PHARMACEUTICALS,
INC.
COMMON STOCK
------------------------
PROSPECTUS
------------------------
AUGUST , 1997
======================================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses expected to be incurred
by the Registrant in connection with the sale and distribution of the securities
being registered hereby. All amounts are estimated except the Securities and
Exchange Commission registration fee and The Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC registration fee.................................... $ 3,811.55
NNM listing fees........................................ 17,500.00
Accounting fees and expenses............................ 10,000.00
Legal fees and expenses................................. 137,500.00
Printing and engraving expenses......................... 25,000.00
Miscellaneous fees and expenses......................... 5,000.00
----------
Total......................................... $198,811.55
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
actually and reasonably incurred in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
such other court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Restated Certificate of Incorporation provides that the
Registrant's directors shall not be liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except to the
extent that exculpation from liabilities is not permitted under the DGCL as in
effect at the time
II-1
<PAGE> 20
such liability is determined. The Registrant has entered into indemnification
agreements with all of its officers and directors, as permitted by the DGCL.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------------- -----------------------------------------------------------------------
<S> <C>
3.1** Restated Certificate of Incorporation, as filed with the Delaware
Secretary of State on June 3, 1997.
3.2(9) Amended and Restated By-Laws, as amended March 29, 1996.
4.1(9) Certificate of Designation of Preferences of Series A Preferred Stock
of the Registrant, as filed with the Delaware Secretary of State on
July 27, 1996.
5.1** Opinion of Brobeck, Phleger & Harrison LLP.
10.1(1)(13) 1990 Stock Option Plan, as amended.
10.2(1)(13) 401(k) Plan.
10.3(1)(13) Form of Stock Purchase Agreement.
10.4(1) Form of Confidentiality Agreement-Employees & Consultants.
10.5(1) Form of Confidentiality Agreement-Strategic Planning.
10.6(1) Form of Indemnification Agreement.
10.7(1)(13) Form of Employment Agreement.
10.8(1) Form of Agreement with Scientific Strategy Team Members.
10.9(1) Form of Proprietary Information and Inventions Agreement-Employees.
10.10(1) Form of Proprietary Information and Inventions Agreement-Consultants.
10.11(1) Letter Agreements dated December 8, 1989, May 30, 1990, June 21, 1990,
August 24, 1990 and July 22, 1991, between Shaman and National
Institute of Allergy and Infectious Diseases.
10.12(1)(12) License Agreement dated February 8, 1990, between Shaman and Dr.
Michael Tempesta.
10.13(1)(13) Stock Purchase Agreement dated June 15, 1990, between Shaman and Lisa
A. Conte.
10.14(1) Master Equipment Lease Agreement dated September 28, 1990, between
Shaman and MMC/GATX Partnership No. I, with related schedules.
10.15(1) Series B Preferred Stock Warrants dated September 28, 1990 and June 28,
1991, issued to MMC/GATX Partnership No. I.
10.16(1)(12) License Agreement dated December 5, 1990, as amended January 19, 1992,
between Shaman and the University of British Columbia.
10.17(1) Master Equipment Lease Agreement dated December 26, 1990, between
Shaman and Lease Management Services, Inc.
10.18(1) Master Equipment Lease Agreement dated April 22, 1991, between Shaman
and Industrial Way I Limited Partnership.
10.19(1)(12) Contract Services Agreement dated May 23, 1991, February 1, 1992,
February 4, 1992, September 23, 1992 and October 30, 1992, between
Shaman and New Drug Services, Inc.
</TABLE>
II-2
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------------- -----------------------------------------------------------------------
<S> <C>
10.20(1)(12) License Agreement dated September 25, 1991, between Shaman and Inverni
della Beffa SpA.
10.21(1)(12) Manufacturing Agreement dated September 25, 1991 between Shaman and
Indena SpA.
10.22(1)(12) Master Clinical Trial Agreement dated September 30, 1991 between Shaman
and International Drug Registration, Inc.
10.23(1) Series D Preferred Stock Warrant dated February 3, 1992, issued to
MMC/GATX Partnership No. I.
10.24(1)(12) Supply Agreement dated June 1, 1992.
10.25(1)(12) Supply Agreement dated June 1, 1992.
10.26(2) Screening Agreement dated August 31, 1992, as amended June 2, 1993,
between Shaman and Merck Research Laboratories.
10.27(1)(12) Agreement dated October 16, 1992, between Shaman and International
Medical Technical Consultants, Inc.
10.28(5)(12) Research Agreement dated October 21, 1992, as amended April 27, 1994,
between Shaman and Eli Lilly and Company.
10.29(1) Registration Rights Agreement dated October 22, 1992, as amended
December 14, 1992, between Shaman and certain holders of preferred
stock of Shaman.
10.30(1) Industrial Lease Agreement dated January 1, 1993, between Shaman and
Grand/Roebling Investment Company.
10.31(1) Three Party Agreement dated as of January 1, 1993, by and among Berlex
Laboratories, Inc., Shaman and Grand/Roebling Investment Company.
10.32(2)(12) Letter Agreement dated March 1, 1993, between Shaman and Lederle-Praxis
Biologicals, Division of American Cynamide Corporation.
10.33(4) Contract Service Agreements dated May 10, 1993, between Shaman and R.C.
Benson & Sons, Inc.
10.34(4)(12) Clinical Trial Agreement dated July 21, 1993, between Shaman and the
University of Rochester.
10.35(4)(12) Letter Agreement dated August 24, 1993, between Shaman and University
of Michigan.
10.36(4)(12) Laboratory Services Agreement dated September 1, 1993, between Shaman
and Hazelton Washington, Inc.
10.37(4) Loan and Security Agreement dated September 27, 1993, between Shaman
and Household Commercial of California.
10.38(4) Master Equipment Lease Agreement dated September 30, 1993, between
Shaman and MMC/GATX Partnership No. I, with related schedules.
10.39(4) Common Stock Warrant dated September 30, 1993, issued to MMC/GATX
Partnership No. I.
10.40(4) Common Stock Warrant dated October 5, 1993, issued to Meier Mitchell &
Co.
10.41(6)(12) Joint Research and Product Development Agreement, dated May 24, 1995,
by and between Ono Pharmaceutical Co., Ltd. and Registrant.
10.41(a)(10) Amendment Agreement, dated December 4, 1996, to the Joint Research and
Product Development Agreement by and between Ono Pharmaceutical Co.,
Ltd. and Registrant.
</TABLE>
II-3
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------------- -----------------------------------------------------------------------
<S> <C>
10.42(6)(12) License Agreement, dated June 8, 1995, by and between Bayer AG and
Registrant.
10.43(7)(12) Development Agreement, dated January 11, 1996, by and between Abbott
Laboratories and Registrant.
10.44(7) Loan Agreement, dated October 20, 1995, by and between The Daiwa Bank,
Limited and Registrant.
10.45(7) Assignment and Assumption, dated February 2, 1996, between The Daiwa
Bank, Limited and The Sumitomo Bank, Limited.
10.46(8) Letter dated March 29, 1996 from The Sumitomo Bank, Limited to the
Registrant amending the Loan Agreement dated October 20, 1995.
10.47(9)(12) Subscription Agreement dated July 25, 1996 by and between the
Registrant and Fletcher International Limited.
10.48(10)(12) Joint Research and Product Development and Commercialization Agreement
dated September 23, 1996, by and between Lipha, Lyonnaise Industrielle
Pharmaceutique s.a. and the Registrant.
10.49(10)(12) Stock Purchase Agreement dated September 23, 1996, by and between
Lipha, Lyonnaise Industrielle Pharmaceutique s.a. and the Registrant.
10.50(11)(13) Shaman Pharmaceuticals, Inc. 1992 Stock Option Plan (as Amended and
Restated on February 14, 1997).
10.51(3)(13) Form of Notice of Grant with Stock Option Agreement.
10.52(3)(13) Form of Addendum to Stock Option Agreement (Special Tax Elections).
10.53(3)(13) Form of Addendum to Stock Option Agreement (Limited Stock Appreciation
Rights).
10.54(11)(13) Form of Non-Employee Director Automatic Stock Option Agreement.
10.55** Masopracol License Agreement, dated as of March 19, 1997, by and
between Access Pharmaceuticals, Inc. and the Registrant.
10.56**+ Amended and Restated Masopracol License Agreement, dated as of April
, 1997, by and between Access Pharmaceuticals, Inc. and the
Registrant.
10.57** Loan and Security Agreement, dated as of May 7, 1997, between MMC/GATX
Partnership I and Registrant.
10.57A** First Amendment to Loan and Security Agreement, dated as of June 30,
1997, by and between Registrant and MMC/GATX Partnership No. I.
10.58** Secured Promissory Note, dated May 16, 1997, issued in favor of
MMC/GATX Partnership No. I.
10.59** Warrant, granted May 7, 1997, in favor of MMC/GATX Partnership No. I.
10.60** Amendment to Warrants, dated May 7, 1997, MMC/GATX Partnership No. I
and Registrant.
10.61** Engagement Agreement, dated April 17, 1997, by and between Registrant
and Diaz & Altschul Capital, LLC.
10.62** Amendment to Engagement Agreement, dated June 30, 1997, by and between
Registrant and Diaz & Altschul Capital, LLC.
10.63** Form of Note Purchase Agreement, dated as of June 30, 1997, by and
between Registrant and certain investors.
23.1* Consent of Ernst & Young LLP, Independent Auditors.
</TABLE>
II-4
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------------- -----------------------------------------------------------------------
<S> <C>
23.2** Consent of Brobeck, Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5.1).
24.1** Power of Attorney (included in Part II of this Registration Statement
under the caption "Signatures").
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
+ Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by an
asterisk and has been filed separately with the Commission pursuant to Rule
406 under the Securities Act of 1933, as amended, pursuant to an
application for confidential treatment.
(1) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1, File No. 33-55892 which was declared
effective January 26, 1993.
(2) Incorporated by reference to exhibits filed with the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993.
(3) Incorporated by reference to exhibits filed on July 23, 1993 with
Registrant's Registration Statement on Form S-8, File No. 33-66450.
(4) Incorporated by reference to exhibits filed on November 10, 1993 with
Registrant's Registration Statement on Form S-1, File No. 33-71506.
(5) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994.
(6) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995, as amended.
(7) Incorporated by reference to exhibits filed with Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995.
(8) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996.
(9) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996, as amended.
(10) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996, as amended.
(11) Incorporated by reference to exhibits filed on June 30, 1997 with
Registrant's Registration Statement on Form S-8, File No. 333-30365.
(12) Confidential treatment has been granted with respect to certain portions of
these agreements.
(13) Management contract or compensation plan.
(b) Financial Statement Schedules
No financial statement schedules are included because they are not required
or the required information is included in the financial statements or notes
thereto.
II-5
<PAGE> 24
ITEM 17. UNDERTAKINGS
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; (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; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that (i) and (ii)
do not apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by (i) and
(ii) is contained in periodic reports filed with or furnished to the Commission
by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) 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.
(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.
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 to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned 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.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a 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 this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 South San Francisco, State of California, on the 27th
day of August, 1997.
SHAMAN PHARMACEUTICALS, INC.
By: /s/ LISA A. CONTE
------------------------------------
Lisa A. Conte
President, Chief Executive Officer
and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the persons whose signatures
appear below, which persons have signed such Registration Statement in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
- --------------------------------------------- ------------------------------- ----------------
<C> <S> <C>
/s/ LISA A. CONTE Director, President, Chief August 27, 1997
- --------------------------------------------- Executive Officer and Chief
Lisa A. Conte Financial Officer (Principal
Executive and Financial
Officer)
* Chairman of the Board August 27, 1997
- ---------------------------------------------
G. Kirk Raab
* Director August 27, 1997
- ---------------------------------------------
Herbert H. McDade, Jr.
* Director August 27, 1997
- ---------------------------------------------
M. David Titus
* Director August 27, 1997
- ---------------------------------------------
John A. Young
*By: /s/ LISA A. CONTE
- ---------------------------------------------
Lisa A. Conte
(Attorney-in-fact)
</TABLE>
II-7
<PAGE> 26
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------------- ------------------------------------------------------------------- ------------
<S> <C> <C>
3.1** Restated Certificate of Incorporation, as filed with the Delaware
Secretary of State on June 3, 1997.................................
3.2(9) Amended and Restated By-Laws, as amended March 29, 1996............
4.1(9) Certificate of Designation of Preferences of Series A Preferred
Stock of the Registrant, as filed with the Delaware Secretary of
State on July 27, 1996.............................................
5.1** Opinion of Brobeck, Phleger & Harrison LLP.........................
10.1(1)(13) 1990 Stock Option Plan, as amended.................................
10.2(1)(13) 401(k) Plan........................................................
10.3(1)(13) Form of Stock Purchase Agreement...................................
10.4(1) Form of Confidentiality Agreement-Employees & Consultants..........
10.5(1) Form of Confidentiality Agreement-Strategic Planning...............
10.6(1) Form of Indemnification Agreement..................................
10.7(1)(13) Form of Employment Agreement.......................................
10.8(1) Form of Agreement with Scientific Strategy Team Members............
10.9(1) Form of Proprietary Information and Inventions
Agreement-Employees................................................
10.10(1) Form of Proprietary Information and Inventions
Agreement-Consultants..............................................
10.11(1) Letter Agreements dated December 8, 1989, May 30, 1990, June 21,
1990, August 24, 1990 and July 22, 1991, between Shaman and
National Institute of Allergy and Infectious Diseases..............
10.12(1)(12) License Agreement dated February 8, 1990, between Shaman and Dr.
Michael Tempesta...................................................
10.13(1)(13) Stock Purchase Agreement dated June 15, 1990, between Shaman and
Lisa A. Conte......................................................
10.14(1) Master Equipment Lease Agreement dated September 28, 1990, between
Shaman and MMC/GATX Partnership No. I, with related schedules......
10.15(1) Series B Preferred Stock Warrants dated September 28, 1990 and June
28, 1991, issued to MMC/GATX Partnership No. I.....................
10.16(1)(12) License Agreement dated December 5, 1990, as amended January 19,
1992, between Shaman and the University of British Columbia........
10.17(1) Master Equipment Lease Agreement dated December 26, 1990, between
Shaman and Lease Management Services, Inc. ........................
10.18(1) Master Equipment Lease Agreement dated April 22, 1991, between
Shaman and Industrial Way I Limited Partnership....................
10.19(1)(12) Contract Services Agreement dated May 23, 1991, February 1, 1992,
February 4, 1992, September 23, 1992 and October 30, 1992, between
Shaman and New Drug Services, Inc. ................................
10.20(1)(12) License Agreement dated September 25, 1991, between Shaman and
Inverni della Beffa SpA............................................
10.21(1)(12) Manufacturing Agreement dated September 25, 1991 between Shaman and
Indena SpA.........................................................
10.22(1)(12) Master Clinical Trial Agreement dated September 30, 1991 between
Shaman and International Drug Registration, Inc. ..................
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------------- ------------------------------------------------------------------- ------------
<S> <C> <C>
10.23(1) Series D Preferred Stock Warrant dated February 3, 1992, issued to
MMC/GATX Partnership No. I.........................................
10.24(1)(12) Supply Agreement dated June 1, 1992................................
10.25(1)(12) Supply Agreement dated June 1, 1992................................
10.26(2) Screening Agreement dated August 31, 1992, as amended June 2, 1993,
between Shaman and Merck Research Laboratories.....................
10.27(1)(12) Agreement dated October 16, 1992, between Shaman and International
Medical Technical Consultants, Inc. ...............................
10.28(5)(12) Research Agreement dated October 21, 1992, as amended April 27,
1994, between Shaman and Eli Lilly and Company.....................
10.29(1) Registration Rights Agreement dated October 22, 1992, as amended
December 14, 1992, between Shaman and certain holders of preferred
stock of Shaman....................................................
10.30(1) Industrial Lease Agreement dated January 1, 1993, between Shaman
and Grand/Roebling Investment Company..............................
10.31(1) Three Party Agreement dated as of January 1, 1993, by and among
Berlex Laboratories, Inc., Shaman and Grand/Roebling Investment
Company............................................................
10.32(2)(12) Letter Agreement dated March 1, 1993, between Shaman and
Lederle-Praxis Biologicals, Division of American Cynamide
Corporation........................................................
10.33(4) Contract Service Agreements dated May 10, 1993, between Shaman and
R.C. Benson & Sons, Inc. ..........................................
10.34(4)(12) Clinical Trial Agreement dated July 21, 1993, between Shaman and
the University of Rochester........................................
10.35(4)(12) Letter Agreement dated August 24, 1993, between Shaman and
University of Michigan.............................................
10.36(4)(12) Laboratory Services Agreement dated September 1, 1993, between
Shaman and Hazelton Washington, Inc. ..............................
10.37(4) Loan and Security Agreement dated September 27, 1993, between
Shaman and Household Commercial of California......................
10.38(4) Master Equipment Lease Agreement dated September 30, 1993, between
Shaman and MMC/GATX Partnership No. I, with related schedules......
10.39(4) Common Stock Warrant dated September 30, 1993, issued to MMC/GATX
Partnership No. I..................................................
10.40(4) Common Stock Warrant dated October 5, 1993, issued to Meier
Mitchell & Co......................................................
10.41(6)(12) Joint Research and Product Development Agreement, dated May 24,
1995, by and between Ono Pharmaceutical Co., Ltd. and Registrant...
10.41(a)(10) Amendment Agreement, dated December 4, 1996, to the Joint Research
and Product Development Agreement by and between Ono Pharmaceutical
Co., Ltd. and Registrant...........................................
10.42(6)(12) License Agreement, dated June 8, 1995, by and between Bayer AG and
Registrant.........................................................
10.43(7)(12) Development Agreement, dated January 11, 1996, by and between
Abbott Laboratories and Registrant.................................
10.44(7) Loan Agreement, dated October 20, 1995, by and between The Daiwa
Bank, Limited and Registrant.......................................
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- -------------- ------------------------------------------------------------------- ------------
<S> <C> <C>
10.45(7) Assignment and Assumption, dated February 2, 1996, between The
Daiwa Bank, Limited and The Sumitomo Bank, Limited.................
10.46(8) Letter dated March 29, 1996 from The Sumitomo Bank, Limited to the
Registrant amending the Loan Agreement dated October 20, 1995......
10.47(9)(12) Subscription Agreement dated July 25, 1996 by and between the
Registrant and Fletcher International Limited......................
10.48(10)(12) Joint Research and Product Development and Commercialization
Agreement dated September 23, 1996, by and between Lipha, Lyonnaise
Industrielle Pharmaceutique s.a. and the Registrant................
10.49(10)(12) Stock Purchase Agreement dated September 23, 1996, by and between
Lipha, Lyonnaise Industrielle Pharmaceutique s.a. and the
Registrant.........................................................
10.50(11)(13) Shaman Pharmaceuticals, Inc. 1992 Stock Option Plan (as Amended and
Restated on February 14, 1997).....................................
10.51(3)(13) Form of Notice of Grant with Stock Option Agreement................
10.52(3)(13) Form of Addendum to Stock Option Agreement (Special Tax
Elections).........................................................
10.53(3)(13) Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Rights)...............................................
10.54(11)(13) Form of Non-Employee Director Automatic Stock Option Agreement.....
10.55** Masopracol License Agreement, dated as of March 19, 1997, by and
between Access Pharmaceuticals, Inc. and the Registrant............
10.56**+ Amended and Restated Masopracol License Agreement, dated as of
April , 1997, by and between Access Pharmaceuticals, Inc. and the
Registrant.........................................................
10.57** Loan and Security Agreement, dated as of May 7, 1997, between
MMC/GATX Partnership I and Registrant..............................
10.57A** First Amendment to Loan and Security Agreement, dated as of June
30, 1997, by and between Registrant and MMC/GATX Partnership No.
I..................................................................
10.58** Secured Promissory Note, dated May 16, 1997, issued in favor of
MMC/GATX Partnership No. I.........................................
10.59** Warrant, granted May 7, 1997, in favor of MMC/GATX Partnership No.
I..................................................................
10.60** Amendment to Warrants, dated May 7, 1997, MMC/GATX Partnership No.
I and Registrant...................................................
10.61** Engagement Agreement, dated April 17, 1997, by and between
Registrant and Diaz & Altschul Capital, LLC........................
10.62** Amendment to Engagement Agreement, dated June 30, 1997, by and
between Registrant and Diaz & Altschul Capital, LLC................
10.63** Form of Note Purchase Agreement, dated as of June 30, 1997, by and
between Registrant and certain investors...........................
23.1* Consent of Ernst & Young LLP, Independent Auditors.................
23.2** Consent of Brobeck, Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5.1)..............................................
24.1** Power of Attorney (included in Part II of this Registration
Statement under the caption "Signatures")..........................
</TABLE>
<PAGE> 29
- ---------------
* Filed herewith.
** Previously filed.
+Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by an
asterisk and has been filed separately with the Commission pursuant to Rule 406
under the Securities Act of 1933, as amended, pursuant to an application for
confidential treatment.
(1) Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form S-1, File No. 33-55892 which was declared
effective January 26, 1993.
(2) Incorporated by reference to exhibits filed with the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993.
(3) Incorporated by reference to exhibits filed on July 23, 1993 with
Registrant's Registration Statement on Form S-8, File No. 33-66450.
(4) Incorporated by reference to exhibits filed on November 10, 1993 with
Registrant's Registration Statement on Form S-1, File No. 33-71506.
(5) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994.
(6) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995, as amended.
(7) Incorporated by reference to exhibits filed with Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995.
(8) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996.
(9) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996, as amended.
(10) Incorporated by reference to exhibits filed with Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996, as amended.
(11) Incorporated by reference to exhibits filed on June 30, 1997 with
Registrant's Registration Statement on Form S-8, File No. 333-30365.
(12) Confidential treatment has been granted with respect to certain portions of
these agreements.
(13) Management contract or compensation plan.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3) and related prospectus
of Shaman Pharmaceuticals, Inc. for the registration of 2,300,000 shares of its
common stock and to the incorporation by reference therein of our report dated
January 20, 1997, with respect to the financial statements of Shaman
Pharmaceuticals, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
August 26, 1997
Palo Alto, California
