As filed with the Securities and Exchange Commission on September 27, 1996
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------
INNOVIR LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3536290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
510 East 73rd Street
New York, New York 10021
(212) 249-4703
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
---------------
DR. ALLAN R. GOLDBERG
Innovir Laboratories, Inc.
510 East 73rd Street
New York, New York 10021
(212) 249-4703
(Name, address, including zip code and telephone number, including area code,
of agent for service)
---------------
Copy to:
MERRILL M. KRAINES, ESQ.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
(212) 318-3000
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest 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. [ ]
<PAGE>
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------
Title of each class Proposed Maximum Proposed Maximum
of securities to be Amount to be Offering Price Per Aggregate Offering Amount of
registered registered Security (1) Price (1) Registration Fee
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.013 12,465,437 $1.45 $18,074,884 $6,233
par value per share
===================================================================================================
</TABLE>
(1) Pursuant to Rule 457(c), the maximum offering price per security and
maximum aggregate offering price of the Common Stock have been calculated
on the basis of the average of the high and low sale prices of the Common
Stock, as reported by the Nasdaq SmallCap Market on September 23, 1996.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, 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>
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 of qualification under the securities laws of any such state.
Subject To Completion, Dated September 27, 1996
12,465,437 shares of Common Stock
INNOVIR LABORATORIES, INC.
This Prospectus relates to the resale of 12,465,437 shares (the "Shares")
of common stock, $.013 par value per share ("Common Stock"), of Innovir
Laboratories, Inc. (the "Company") from time to time for the account of certain
securityholders of the Company (the "Selling Securityholders"). Of such shares,
8,000,000 are issuable upon the exercise of certain warrants and unit purchase
options issued to The Aries Fund, A Cayman Island Trust, and The Aries Domestic
Fund, L.P.; 2,500 shares of Common Stock are subject to warrants issued to a
certain financing source; and 439,636 shares of Common Stock are subject to
warrants issued to certain consultants and their designees. See "Selling
Securityholders".
The distribution of the Common Stock by the Selling Securityholders may be
effected from time to time in one or more transactions for their own accounts
(which may include block transactions) on the Nasdaq SmallCap Market ("Nasdaq"),
or on any exchange on which the Common Stock may then be listed in negotiated
transactions, through the writing of options on shares (whether such options are
listed on an options exchange or otherwise), 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 such prevailing market prices or at
negotiated prices. The Selling Securityholders may effect such transactions by
selling Common Stock to or through broker-dealers, including broker-dealers who
may act as underwriters, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Securityholders
or the purchasers of Common Stock for whom such broker-dealers may act as agent
or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
Selling Securityholders may also sell Common Stock pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act"), or may
pledge Common Stock as collateral for margin accounts and such shares of Common
Stock could be resold pursuant to the terms of such accounts. The Selling
Securityholders, including Meyers Pollock Robbins Inc. and Swartz Investments,
L.L.C., and any other participating brokers and dealers may be deemed to be
"underwriters" as defined in the Act. See "Selling Securityholders" and "Plan of
Distribution."
The Common Stock of the Company is traded on Nasdaq under the symbol
"INVR." The last sale price for the Common Stock, as reported on Nasdaq on
September 23, 1996, was $1.47.
None of the proceeds from the sale of the Common Stock by the Selling
Securityholders will be received by the Company. The Company has agreed to bear
all expenses, other than selling commissions and fees, in connection with the
registration and sale of the Common Stock being offered by the Selling
Securityholders. See "Plan of Distribution."
See "Risk Factors," which appear on page 7 of this Prospectus, for certain
considerations relevant to an investment in the securities offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 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 , 1996
<PAGE>
No person is authorized in connection with the offering made hereby to
give any information or to make any representation not contained or incorporated
by reference in this Prospectus or a supplement to this Prospectus, and any
information or representation not contained or incorporated herein or in a
supplement to this Prospectus must not be relied upon as having been authorized
by the Company or the Selling Securityholders. This Prospectus or any supplement
to this Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy by any person in any jurisdiction in which it is unlawful for such
person to make such offer or solicitation. Neither the delivery of this
Prospectus or a supplement to this Prospectus at any time nor any sale made
hereunder or thereunder shall under any circumstance imply that the information
contained herein is correct as of any date subsequent to its date.
---------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at 75 Park Place, New York, New York 10007, and at 500 West
Madison Street, Northwestern Atrium Center, Suite 1400, Chicago, Illinois
60661-2511. Copies of these materials can also be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Company's securities are listed on Nasdaq, and
copies of these materials and other information concerning the Company may also
be obtained through The Nasdaq Stock Market, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission (http://www.sec.gov).
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Act, with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement, exhibits and schedules.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission (File No. 0-21972) pursuant to the Exchange Act are incorporated by
reference in this Prospectus:
(1) Current Report on Form 8-K as filed on September 18, 1996;
(2) Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1996;
(3) Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1996;
(4) Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1995;
(5) Annual Report on Form 10-K for the fiscal year ended September 30,
1995; and
(6) Registration Statement on Form 8-A as filed on June 22, 1993 and
amended on July 21, 1993 and August 3, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock hereunder shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
the filing of such reports and documents. The Company will provide a copy of any
or all of such documents (exclusive of exhibits unless such exhibits are
specifically incorporated by reference herein), without charge, to each person
to whom this Prospectus is delivered, upon written or oral request to: Innovir
Laboratories, Inc., 510 E. 73rd Street, New York, New York 10021, Attention:
Mr. Gary Pokrassa (telephone: (212) 249-4703).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
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<PAGE>
THE COMPANY
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere or incorporated by reference
in this Prospectus. Investors should carefully consider the information set
forth under the heading "Risk Factors."
Innovir Laboratories, Inc. (the "Company") is a biotechnology company
engaged in the research and development of a new class of biopharmaceutical
therapeutic agents for the treatment of a wide array of human diseases. The
Company believes that this new class of therapeutic agents, based upon the
Company's proprietary core technology, has the potential to be cost-effective
and highly specific to designated disease targets.
The Company's core technology is based upon the development of its
proprietary External Guide Sequence ("EGS") technology to direct a cellular
ribozyme to disease-causing RNA, so that the ribozyme will cleave the RNA and
thus render it inactive. An EGS is a small RNA segment that binds to the
disease-causing RNA to create a structure resembling a type of RNA naturally
cleaved by a specific ribozyme in cells. This cellular ribozyme, called RNase P,
has been harnessed to cleave such newly formed structures, thereby destroying
the disease-causing RNA molecules before they can be used to create
disease-causing proteins. The Company's EGS technology is based upon Nobel
Prize-winning research by Sidney Altman, Ph.D., Sterling Professor of Biology at
Yale University. The Company has an exclusive worldwide license from Yale
University to use the EGS technology, for which a United States Patent (No.
5,168,053) was issued in December 1992. Other related patent applications are
pending or allowed.
The Company believes that EGS technology may have application for a new
category of therapeutics with the potential to treat a wide range of diseases of
viral (e.g., hepatitis B and C virus, HTLV-I, HIV-I, human papillomavirus),
genetic (e.g., certain cancers and leukemias), microbial and metabolic origins.
The Company has chosen hepatitis B ("HBV") and bacterial infections caused by
drug-resistant microorganisms as the primary targets of its development
programs. These targets were chosen by the Company because each target has a
defined clinical end-point which will enable the Company to determine
objectively the clinical efficacy of its drugs, and each target has a
well-defined, easily identified and accessible patient population in the United
States. The Company has synthesized and tested several chemically substituted
EGS compounds targeted against messenger ribonucleic acid ("mRNA") present in
HBV-infected cells. On the basis of this work, the Company has selected several
EGSs that showed efficacy, and such EGSs are being further characterized for the
identification of a lead drug candidate. The Company has begun a series of
animal studies to determine appropriate formulation of the drugs,
biodistribution and efficacy.
The Company does not anticipate that any of its proposed products will be
available for commercial sale for several years, if at all. The Company's
current capital will be insufficient to enable the Company to complete the
development of any of its products. The Company will require additional capital
to finance the completion of the development of its proposed products, including
continuing research, and the rigorous testing, regulatory approval and marketing
phases of its product development. The Company will seek to obtain additional
funds from various sources, including additional public or private equity
financings and collaborative or other arrangements with corporate partners,
which may involve the licensing or spinning off of certain of the Company's
technologies. There can be no assurance that any such financing can be obtained
on terms satisfactory to the Company, if at all. If additional funds are not
obtained when needed, the Company will be required to curtail significantly its
activities or even to cease operations.
The Company's principal executive offices are located at 510 East 73rd
Street, New York, New York 10021, and its telephone number is (212) 249-4703.
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<PAGE>
THE OFFERING
Securities offered by the Selling
Securityholders.......................... 12,465,437 shares of Common Stock,
including 8,442,136 shares
issuable upon the exercise of
warrants and unit purchase options
held by various individuals and
entities.
Common Stock to be outstanding
after the offering....................... 11,432,753 shares (1)
Nasdaq symbol.............................. INVR
Risk Factors............................... See "Risk Factors" for a
discussion of certain factors to
be considered by prospective
investors.
- ----------
(1) Does not include (i) 16,342,189 shares issuable pursuant to the exercise
of outstanding warrants and options, 8,442,136 shares of which are offered
hereunder or (ii) 751,286 shares issuable upon the conversion of
outstanding preferred stock, assuming certain conversion prices. See "Risk
Factors - Adverse Consequences Associated with Substantial Shares of
Common Stock Reserved for Issuance; Registration Rights."
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<PAGE>
RECENT DEVELOPMENTS
The Company has been advised that, on June 21, 1996, A.R. Baron ("A.R.
Baron"), the Company's principal market maker and the underwriter of the
Company's initial public offering in August 1993, ceased its market-making
operations and halted stock trading when it became unable to satisfy required
capitalization levels. The Company has been further advised that A.R. Baron has
filed for bankruptcy and continues to be the subject of certain SEC
investigations relating to its past business activities. See "Risk Factors --
Loss of Principal Market Maker."
On August 30, 1996, the Company and Yale University ("Yale") entered into
an agreement to amend (the "Second Amendment") certain provisions of the License
Agreement between the Company and Yale dated September 7, 1990, as amended
October 21, 1994 (the "License Agreement"). Pursuant to the terms of the License
Agreement, the Company has been granted the exclusive worldwide rights to Yale's
External Guide Sequence technology. The Second Amendment provides for reductions
in amounts of royalties paid to Yale by the Company by reducing the earned
royalty rates from net sales, as defined, and from sublicense income, as
defined. As consideration for Yale modifying these royalty obligations, the
Company issued to Yale a warrant to purchase 500,000 shares of Common Stock at
an exercise price equal to $1.50 per share, with an exercise date on or before
August 31, 2006.
On August 30, 1996, the Company completed a private placement with The
Aries Fund, A Cayman Island Trust, and The Aries Domestic Fund, L.P.
(collectively, the "Aries Funds"), two affiliated investment funds which
specialize in the biotechnology industry. In exchange for an aggregate purchase
price of $2,000,000, the Aries Funds received (i) 4,000,000 shares of Common
Stock, (ii) warrants ("Class C Warrants") to purchase an additional 4,000,000
shares of Common Stock at an exercise price equal to $0.50 per share and (iii)
unit purchase options to acquire, for an aggregate purchase price of $1,000,000,
units consisting of an aggregate of 2,000,000 shares of Common Stock and Class C
Warrants to purchase an additional 2,000,000 shares of Common Stock. See
"Selling Securityholders."
On September 5, 1996, in connection with the investment by the Aries
Funds, Joseph E. Edelman and Michael S. Weiss were elected as members of the
Company's Board of Directors. Mr. Edelman is affiliated with Paramount Capital
Asset Management, Inc., and Mr. Weiss is affiliated with Paramount Capital, Inc.
See "Selling Securityholders."
On September 5, 1996, Michael S. Ostrach and Dr. Hugh D. Robertson
resigned as members of the Company's Board of Directors.
The Company has recently initiated the development of a proprietary
delivery compound named InnoPhor(TM). InnoPhor(TM) and InnoPhor(TM)-like
compounds are a family of analogs of natural molecules, whose structure is well
understood, that are readily synthesized and relatively inexpensive and that
effectively deliver EGS to cells in culture and to certain tissues in animals.
In order for oligonucleotides such as EGSs to be used successfully as human
therapeutics, highly efficient delivery procedures and/or compounds must be
developed to facilitate the entry of such drugs into various tissues and organs.
However, there can be no assurance that InnoPhor(TM) will be successfully
developed as a delivery compound. The Company believes that its EGS and
InnoPhor(TM) technologies may have significant applications in the treatment of
bacterial infections caused by drug resistant microorganisms, including
antibiotic-resistant microorganisms. Accordingly, the Company has begun
conducting experiments intended to demonstrate that antibiotic resistance in
bacteria can be overcome by the administration of appropriately designed EGS
drug candidates administered via InnoPhor(TM). However, there can be no
assurance that the Company will be able to develop such drug candidates.
The Company has elected to discontinue its program regarding the treatment
of promyelocytic leukemia ("APL"). The Company has become aware of other
approaches for the treatment of APL that are at more advanced stages of
commercialization and may be more cost-effective than the therapeutic under
development by the Company. However, the Company's work to date in APL has
provided the Company with additional knowledge with respect to the chemistry of
EGS, which knowledge the Company believes will have important applications in
the development of therapeutics for other diseases.
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<PAGE>
RISK FACTORS
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual results could
differ materially from those projected in the forward-looking statements as a
result of certain of the risk factors set forth below and elsewhere in this
Prospectus.
An investment in the securities offered hereby involves a high degree of
risk, and such securities should not be purchased by persons who cannot afford
the loss of their entire investment. The following risk factors, in addition to
other matters referred to elsewhere in this Prospectus, should be carefully
considered in evaluating the Company and its business:
Development Stage Company; Accumulated Deficit; Continuing Losses;
Independent Accountant's Report. The Company is in the development stage and has
generated no operating revenues. Since its formation in 1989, the Company has
been principally engaged in organizational activities, research and development,
licensing and patent activities and financing arrangements. All of the Company's
proposed products are in the early stages of research and development, and the
Company does not expect to have products commercially available for a number of
years. The Company's operations are subject to numerous risks associated with
development stage businesses, including, but not limited to, unforeseen
problems, expenses, complications and delays frequently encountered in the early
phases of research and development, rapidly changing technology, exhaustive
regulatory scrutiny of such technology, difficulties in production and marketing
and the highly competitive environment in the biotechnology and pharmaceutical
industries. Many of these factors are beyond the Company's control. There can be
no assurance that the Company's research and development efforts will be
successful, that the Company will ever have commercially viable products or that
the Company will achieve significant sales of any such products. At June 30,
1996, the Company had an accumulated deficit of $23,040,604, and losses have
continued to date thus increasing the accumulated deficit. The Company does not
anticipate generating any product revenues for a number of years, if ever, and
will continue to incur losses as the Company increases expenditures for product
development, research studies and patent activities. Since its inception, the
Company has experienced negative cash flows from operations and expects such
condition to continue for the foreseeable future. Accordingly, the independent
accountant's report with respect to the Company's fiscal year 1995 financial
statements contains an explanatory paragraph addressing the substantial doubt
about the ability of the Company to continue as a going concern, and the Company
anticipates that the independent accountant's report with respect to the
Company's fiscal year 1996 financial statements will contain a similar
paragraph.
Significant Capital Requirements; Need for Additional Financing; Imminent
Exhaustion of Funds. The development of biotechnology-based pharmaceutical
products requires the commitment of significant capital. The Company will
require additional capital to finance the completion of the development of its
proposed products, including continuing research, and the rigorous testing,
regulatory approval and marketing phases of its product development. The Company
will seek to obtain additional funds from various sources, including additional
public or private equity financings and collaborative or other arrangements with
corporate partners, which may involve the licensing or spinning off of certain
of the Company's technologies. There can be no assurance that any such financing
can be obtained on terms satisfactory to the Company, if at all. If additional
funds are not obtained when needed, the Company will be required to curtail
significantly its activities or even to cease operations. At August 31, 1996,
the Company's cash and cash equivalents equaled approximately $2,271,000. Based
upon the current level of operations, and if the Company is unable to consummate
additional financings, the Company will exhaust its cash and cash equivalents
during December 1996. The Company has no established banking arrangements
through which it can obtain debt financing. In addition, the Company has been
named as a defendant in an action alleging that the Company wrongfully declined
to honor the plaintiff's notice of conversion with respect to the C Preferred
Stock held by the plaintiff. The plaintiff is seeking damages which the
plaintiff alleges may be in excess of $1,000,000. While the Company believes
that the litigation will ultimately be resolved without a materially adverse
effect on the Company's business or financial position, no assurances can be
given as to the ultimate outcome of or
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<PAGE>
the costs in defending this litigation. Such costs and monetary damages awarded
to the plaintiff, if any, would accelerate the exhaustion of the Company's cash
and cash equivalents.
Technological Uncertainty. The Company's product development programs are
at a very early stage and are subject to the risks inherent in the development
of products based on innovative technologies. The Company has demonstrated
inhibition of HBV replication in cell cultures using different EGS drug
candidates, and currently, the Company is testing efficacy of certain of these
EGS drug candidates in animals. Even if the Company's animal trial results are
favorable, there can be no assurance that its EGS technology will prove
efficacious with respect to humans, that the Company's proposed products will
not prove to have undesirable side effects, toxicity or other characteristics
that may prevent or limit their commercial viability and use, that the Company
will develop a safe and effective direct or viral vector delivery system, or
that the Company will develop the means to stabilize its therapeutics safely
and/or efficaciously. Moreover, there can be no assurance that the Company's
proposed EGS products will be more effective or beneficial for its target
diseases than other oligonucleotide-based therapeutics or other types of
potentially effective treatments which are being developed by other companies.
Several companies are testing products for the Company's target diseases that
are at more advanced stages of development than the Company's proposed products.
Dependence on Patents, Proprietary Technology and Licenses. The Company's
success is dependent in large measure upon its ability to obtain patent
protection for its products, to maintain confidentiality of its trade secrets
and know-how and to operate without infringing upon the proprietary rights of
third parties. To date, the Company licensed one United States Patent and four
United States Patent applications from Yale University along with corresponding
foreign applications, has obtained two United States Patents of its own and has
twelve pending patent applications in the United States, and counterparts of
certain of these applications pending or allowed in several foreign countries.
There can be no assurance that any of the Company's other pending patent
applications will be approved or that the Company will develop additional
proprietary products that are patentable. There can be no assurance that any
patents issued or licensed to the Company will provide the Company with any
competitive advantages or that any of such patents will not be challenged by any
third parties, or that patents issued to others will not have an adverse effect
on the ability of the Company to conduct its business. Furthermore, because
patent applications in the United States are maintained in secrecy until issue,
and because publication of discoveries in scientific and patent literature often
lags behind actual discoveries, the Company cannot be certain that it was the
first, chronologically, to develop the inventions covered by each of its pending
patent applications or that it was the first to file patent applications for
such inventions. In the event that a third party also has filed a patent
application for any of such third party's inventions, the Company may have to
participate in interference proceedings declared by the U.S. Patent and
Trademark Office to determine priority of invention, which could result in a
denial of the Company's patent, and, even if the eventual outcome is favorable
to the Company, substantial cost to the Company may be incurred. In addition,
there can be no assurance that any patents which are issued to the Company will
be held to be valid by a court of law reviewing any such patent. If patents are
issued to other companies which contain claims which are competitive with, or
conflict with, claims contained in the Company's patents or patent applications
and those claims are held valid, the Company may need to license technology
covered by such patents granted to others, and there can be no assurance that
the Company will be able to obtain such licenses at a reasonable cost, if at
all.
U.S. Patent No. 4,987,071, called the "Cech Patent," claims the use of
exogenously produced, or non-naturally occurring ribozymes. Corresponding
European and Japanese patent applications have been allowed and are being
opposed by the Company and other parties. The Cech Patent has been licensed to
Ribozyme Pharmaceuticals, Inc. ("RPI") of Boulder, Colorado. The Company
believes, based on the opinion of patent counsel, that the use of its EGS
technology (U.S. Patent No. 5,168,053) and related applications, for which it
has an exclusive license from Yale University, does not infringe the Cech Patent
because external guide sequences are not ribozymes. It is possible, however,
that an allegation could be made that the Company's other ribozyme-based
technology could be deemed to infringe the Cech Patent, if the broadest claims
of such Cech Patent were determined by a court of law to be valid. There can be
no assurance that infringement proceedings will not be brought against the
Company. One of the inventors of the technology covered by the Cech Patent, Dr.
Thomas Cech, was the co-recipient of the
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<PAGE>
Nobel Prize in Chemistry in 1989 with Dr. Sidney Altman for their independent
findings relating to ribozymes.
To date, no infringement action has been instituted regarding any patent,
and management is unaware of any intention of a party to file an action against
the Company or patent licensor.
Dependence on License. In 1990, the Company obtained rights with respect
to certain patented technology entitled "External Guide Sequences for an RNA
Enzyme," pursuant to a license granted to the Company by Yale University, and
upon which its EGS technology is based. This license was subsequently amended in
November 1994 and in August 1996. See "Recent Developments." The license may be
terminated in the event that the Company fails to implement a plan directed at
development and commercialization of products based on the licensed technology
or if the Company fails to satisfy certain other contractual obligations. Upon
termination, all of the Company's licensed rights would revert to Yale
University. The termination of the license would have a material adverse effect
on the business of the Company. Moreover, the Yale license requires payment by
the Company of royalties and other fees upon successful commercialization of the
Company's proposed products. If the Company fails to pay such fees in a timely
manner it could be deemed to be in breach of the license.
Competition and Technology Change. Certain domestic and foreign companies
are also pursuing the development of ribozyme-based therapeutics, some of which
may target the same diseases as the Company is targeting. Many of the Company's
competitors (both those utilizing oligonucleotide-based therapeutic technologies
and those utilizing other biotechnological or traditional drug development
methods) have substantially greater capital resources, research and development
staffs and facilities than the Company. In addition, many of these competitors
have extensive experience in preclinical testing and human clinical trials of
new drugs and in obtaining the regulatory approval of such drugs. These
companies may develop and introduce products and processes competitive with or
superior to those of the Company, and may represent significant long-term
competition for the Company. For the success of certain of the Company's
proposed products, an important factor may be the timing of market introduction
of these competitive products. This timing will be based on the effectiveness
with which the Company or the competition can complete drug development,
clinical trials and other regulatory approval processes and supply quantities of
these products to market. Competition among products approved for sale will be
based on, among other things, product efficacy, safety, reliability, price,
marketing capability and patent position.
The field of biotechnology in which the Company is engaged has undergone
rapid and significant technological changes. The Company expects that the
technologies associated with its research and development will continue to
evolve rapidly. There can be no assurance that the Company will be able to
establish itself in such fields or, if established, that it will be able to
maintain a viable competitive position. Further, there can be no assurance that
the development by others of new or improved ribozyme-based processes or
products or other novel therapeutic drugs will not make the Company's products
and processes, if any, less competitive or obsolete.
Government Regulation. The Company's manufacture and sale of its
pharmaceutical products will be subject to regulation by government authorities
in each jurisdiction where it intends to sell its products. In particular, new
drug products for human health are subject to rigorous preclinical and clinical
testing and other approval requirements by the Food and Drug Administration
("FDA") and by the comparable regulatory authorities of many foreign countries.
Biological drugs are regulated more pervasively than non-biological drugs. The
process for obtaining the required regulatory approvals from the FDA and other
regulatory authorities takes many years and is very expensive. To date, the
Company has limited experience in conducting and managing the preclinical and
clinical testing necessary to obtain regulatory approvals and in manufacturing
drugs for testing or commercial purposes. There can be no assurance that any
product developed by the Company will not be subject to regulation as a
biologic, nor that such product will meet all of the applicable standards to
receive marketing approval. There also can be no assurance that any such
approvals will be granted on a timely basis, if at all. Delays and costs
incurred in obtaining these approvals could adversely affect the Company's
ability to commercialize its products and its ability to generate sales revenue.
Even if regulatory approval of a product is obtained,
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such approval may involve restrictions and limitations on the use of the
product, and the product will continue to be subject to post-market review for
compliance with applicable federal, state and foreign countries' laws and
regulations.
Dependence on Key Personnel; Possible Conflicts of Interest. The Company
is dependent upon the services of Dr. Allan R. Goldberg, who serves as the
Company's Chairman of the Board and Chief Executive Officer. The loss to the
Company of the services of Dr. Goldberg would have a material adverse effect
upon the Company. Dr. Goldberg's employment agreement with the Company, which
was renewed in March 1996, expires March 31, 1998.
The Company is also dependent on the part-time services of two key
consultants, Dr. Sidney Altman, who is employed by Yale University, and Dr. Hugh
D. Robertson, who is employed by Cornell University and who also is Chairman of
the Company's Science Advisory Board ("SAB") and a former director of the
Company. The loss to the Company of the services of either Dr. Altman or Dr.
Robertson would have a material adverse effect on the Company. Dr. Altman's
consulting agreement, which was renewed in March 1994, expires in March 1998.
Dr. Robertson's consulting agreement, which was renewed in March 1996, expires
March 31, 2000.
The Company's success also depends in large part on its ability to attract
and retain other qualified scientific and management personnel. The Company
faces competition for the services of such persons from other companies,
academic institutions, government entities and other organizations. There can be
no assurance that the Company will be successful in recruiting or retaining
other personnel of the requisite caliber or in adequate numbers to enable it to
conduct its business as proposed. Furthermore, the Company's expected expansion
into activities requiring additional expertise in clinical testing, regulatory
approval, manufacturing and marketing will place increased demands on the
Company's resources and management skills.
The Company's consultants and SAB members are employed by, or consult to,
others; they are expected to devote only a portion of their time to the Company.
In addition, such consultants and SAB members are not prohibited from having
consulting or other advisory arrangements with other entities which may conflict
or compete with their obligations to the Company.
Legal Proceedings. The Company has been named as a defendant in an action
captioned Mifal Klita v. Innovir Laboratories, Inc., Swartz Investments, LLC
f/k/a Swartz Investments, Inc., and Registrar and Transfer Company, filed on
February 28, 1996 in the Supreme Court of the State of New York in the County of
New York, alleging that the Company wrongfully refused to honor the plaintiff's
notice of conversion with respect to C Preferred Stock held by the plaintiff and
seeking damages which the plaintiff-investor alleges may be in excess of
$1,000,000. On February 1, 1996, the plaintiff, an investor in the Company's
private placement of C Preferred Stock, delivered to the Company a notice (the
"Notice of Conversion") requesting that the Company convert 60,000 shares of C
Preferred Stock into 147,594 shares of Common Stock, based upon the five-day
average closing bid price of the Common Stock immediately preceding the date of
the Notice of Conversion; at the Fixed Conversion Price, the plaintiff's C
Preferred Stock would be converted into 88,851 shares of Common Stock. The
Company declined to comply with the Notice of Conversion on the grounds, among
others, that the Company believed the plaintiff was seeking to deliver the
shares of Common Stock to be obtained upon such conversion to cover a short
position in direct violation of the subscription agreement with the Company
executed by the plaintiff at the time he acquired the C Preferred Stock. On
March 20, 1996, the Company and the plaintiff agreed that the Company would
honor the Notice of Conversion and a second notice of conversion for the
remaining 30,000 shares of C Preferred Stock held by the plaintiff and convert
all 90,000 shares of C Preferred Stock into 192,557 shares of Common Stock,
54,000 shares of which would be held in escrow pending further agreement between
the parties or a final adjudication of the plaintiff's claim. In accordance with
the stipulation and order entered by the court, the Company delivered to the
plaintiff 138,557 shares of Common Stock and delivered into escrow 54,000 shares
of Common Stock. On April 10, 1996, the Company filed an answer to the
plaintiff's complaint, denying liability, asserting affirmative defenses and
asserting a counterclaim for damages suffered as a result of plaintiff's
actions. On September 4, 1996, the court denied the plaintiffs motion for
summary judgment. The Company
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intends to vigorously defend against the claims asserted against it. While the
Company believes that the litigation will be resolved without a materially
adverse effect on the Company's business or financial position, no assurances
can be given as to the ultimate outcome of or the costs in defending this
litigation.
Potential Claims. Members of the SAB and certain consultants to the
Company who have developed technology used by the Company are employees of
universities, research hospitals or other institutions. The Company believes
that such institutions have no claim to any of the Company's inventions,
technology or future products. While no claim has been asserted by any such
institution, there can be no assurance that such institutions will not assert
claims to any or all of such inventions, technology or products or that if any
such institution does successfully assert such rights, the Company, if it so
desires, will be able to acquire the rights thereto from such institution at a
commercially practical cost, if at all.
Book Value Dilution. The historic net tangible book value per share of the
Company at June 30, 1996 was $0.13. Persons who receive Common Stock pursuant to
the exercise of their warrants at an exercise price which is higher than the
historic net tangible book value will experience immediate and substantial
dilution; this assumes conversion of all preferred stock then outstanding.
Control by Principal Stockholders. As of September 23, 1996, The Aries
Fund, A Cayman Island Trust, and The Aries Domestic Fund, L.P., two affiliated
investment funds and the two largest stockholders of the Company, owned an
aggregate of 4,000,000 shares of Common Stock, or approximately 35.0% of the
outstanding shares of Common Stock of the Company. In addition, these
stockholders have the right to purchase up to an aggregate of 8,000,000 shares
of Common Stock upon the exercise of certain warrants and unit purchase options;
upon such exercise, these stockholders would own approximately 61.8% of the
outstanding shares of the Company. Accordingly, these stockholders are in a
position to influence significantly, and, in the event they exercise their
warrants and unit purchase options, to control, the affairs of the Company and
matters requiring a stockholder vote, including the election of the Company's
directors, the amendment of the Company's charter documents, the merger or
dissolution of the Company and the sale of all or substantially all of the
Company's assets. See "Recent Developments" and "Selling Stockholders."
No Manufacturing Capability. The Company currently has no commercial
manufacturing capability. Should the Company determine to conduct its own
manufacturing, it would necessitate acquiring or developing the facilities,
personnel and techniques capable of meeting good manufacturing practice and
other commercial standards of the FDA and other federal and state regulatory
agencies. To do so would require significant capital expenditures.
Alternatively, the Company could seek to enter into contractual arrangements
with one or more third party manufacturers, including possibly collaborative
arrangements. There can be no assurance that any such third party manufacturer
can be identified or, if identified, would meet the Company's requirements for
quality, quantity or timeliness, or the requirements of the FDA and other
regulatory agencies on a continuing basis, if at all. If the Company is
unsuccessful in achieving or maintaining manufacturing capability, whether
in-house or otherwise, it will not be able to fulfill its commercialization
plans.
Use of Toxic and Hazardous Materials. The Company's research and
development activities involve the controlled use of toxic and hazardous
materials, including chemicals, viruses, and radioactive isotopes. 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 damage that results and such liability could have a material
adverse effect on the financial condition of the Company.
Product Liability Claims and Uninsured Risks. If the Company succeeds in
developing its proposed products, it may be exposed to liability resulting from
the investigational, clinical and commercial use of such products. Such
liability might result from claims made directly by patients, hospitals, clinics
or other consumers, or by pharmaceutical companies or others manufacturing such
products on behalf of the Company. The Company does not currently have product
liability insurance.
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There can be no assurance that the Company will be able to obtain or afford such
insurance, if applied for, or that any coverage, if obtained, will be adequate
to protect the Company against liability.
No Marketing and Sales Capability. The Company has no experience in
marketing, sales or distribution. To market any of its products directly, the
Company must develop a marketing and sales force with appropriate technical
expertise and supporting distribution capability. Alternatively, the Company may
seek to obtain the assistance of a pharmaceutical company with a large marketing
system and a large direct sales force. There can be no assurance that the
Company will be able to establish marketing and sales capabilities if and when
it has a product ready for marketing or be successful in gaining market
acceptance for its products or that it will be able to reach agreement with one
or more pharmaceutical companies to assist in or to undertake these efforts.
Uncertainty of Health Care Reimbursement and Potential Legislation. The
Company's ability to successfully commercialize its products will depend in part
on the extent to which reimbursement for the cost of such products and related
treatment will be available from government health administration authorities,
private health coverage insurers and other organizations. Significant
uncertainty exists as to the reimbursement status of newly approved health care
products, and from time to time legislation is proposed which, if adopted, could
further restrict the prices charged by and/or amounts reimbursable to
manufacturers of pharmaceutical products. The Company cannot predict what, if
any, legislation will ultimately be adopted or the impact of such legislation on
the Company. Reimbursement from government agencies may become more restricted
in the future. Furthermore, there can be no assurance that third party insurance
companies will allow the Company to charge and receive payments for its products
sufficient to realize an appropriate return on its investment in product
development. The Company's potential products represent a new mode of therapy,
and the Company expects that the costs associated with purchasing and
administering its products will be substantial. There can be no assurance that
the Company's proposed products, if successfully developed, will be considered
cost effective to third-party payors, that reimbursement will be available or,
if available, that the timing and amount of such payors' reimbursement will not
adversely affect the Company's ability to sell its products on a profitable
basis.
Loss of Principal Market Maker. The Company has been advised that, on June
21, 1996, A.R. Baron & Co., Inc. ("A.R. Baron"), the Company's principal market
maker and the underwriter of the Company's initial public offering in August
1993, ceased its market-making operations and halted stock trading when it
became unable to satisfy required capitalization levels. The Company has been
further advised that A.R. Baron has filed for bankruptcy and continues to be the
subject of certain SEC investigations relating to its past business activities.
The termination of A.R. Baron's operations has had a severe and adverse impact
on the value of the Company's securities.
The Company is actively seeking additional market makers for its
securities. However, there can be no assurance that the Company will be
successful in establishing such relationships.
To the extent that the Company is unable to establish one or more
relationships with other market makers, the value of any of the Company's
securities held by an investor could be severely and adversely affected.
Broker-Dealer Sales of Company Common Stock. The Company's Common Stock is
covered by a SEC rule that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. This rule may affect the ability
of broker-dealers to sell the Company's securities and also may affect the
ability of holders of the Common Stock to sell their shares in the secondary
market.
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Trading Market. The Common Stock currently trades on the Nasdaq SmallCap
Market ("Nasdaq"). There can be no assurance that an active trading market for
the Company's securities will be sustained. The absence of an active trading
market would reduce the liquidity of one's investment in the Company's
securities.
Possible Delisting from Nasdaq and Market Illiquidity. While the Company's
securities meet the current listing requirements of Nasdaq, for continued
inclusion on Nasdaq, (i) the Company will have to maintain at least $2,000,000
in total assets and $1,000,000 in capital and surplus, (ii) the minimum bid
price of the Common Stock will have to be $1.00 per share, (iii) there must be
at least 100,000 shares in the public float, valued in the aggregate at $200,000
or more, (iv) the Common Stock must have at least two active market makers, and
(v) the Common Stock must be held by at least 300 holders.
If the Company is unable to satisfy Nasdaq's maintenance requirements, its
securities may be delisted from Nasdaq. In such event, trading, if any, in the
Company's securities would thereafter be conducted in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board."
Consequently, the liquidity of the Company's securities could be impaired, not
only in the number of securities which could be bought and sold at a given
price, but also through delays in the timing of transactions, reduction in
security analysts' and the news media's coverage of the Company, resulting in
lower prices for the Company's securities than might otherwise be attained and a
larger spread between the bid and asked prices for the Company's securities.
Potential Volatility of Stock Price. There has been significant volatility
in the market price of securities of biomedical companies in general.
Announcements of technological failures, innovations or new commercial products
by the Company or its competitors, developments concerning proprietary rights or
public concern as to the safety, efficacy or costs of biomedical products and
period to period fluctuations in financial results may have a significant impact
on the Company's business and on the market price of the Company's securities.
Preferred Stock. The Company's Certificate of Incorporation provides that
up to 15,000,000 shares of preferred stock may be issued by the Company from
time to time in one or more series. The Board of Directors is authorized to
determine the rights, preferences, privileges and restrictions granted to and
imposed upon any wholly unissued series of preferred stock and to fix the number
of shares of any series of preferred stock and the designation of any such
series, without any vote or action by the Company's stockholders. The Board of
Directors may authorize and issue preferred stock with voting or conversion
rights that could adversely affect the voting power or other rights of the
holders of Common Stock. In addition, the potential issuance of preferred stock
may have the effect of delaying, deferring or preventing a change in control of
the Company, may discourage bids for the Common Stock at a premium over the
market price of the Common Stock and may adversely affect the market price of
the Common Stock. As of September 23, 1996, 297,000 shares of the Company's
Class B Convertible Preferred Stock ("B Preferred Stock") and 60,000 shares of
the Company's Class C Convertible Preferred Stock ("C Preferred Stock") were
issued and outstanding. In accordance with its terms, such stock has superior
rights to the Common Stock in the event of, among other things, a liquidation of
the Company.
Adverse Consequences Associated with Substantial Shares of Common Stock
Reserved for Issuance; Registration Rights. As of September 23, 1996, the
Company has reserved an aggregate of 17,093,475 shares of Common Stock for
issuance upon the exercises of various warrants and options and the conversion
of outstanding B Preferred Stock and C Preferred Stock, including: (i) 679,636
shares of Common Stock for issuance upon exercise of the outstanding warrants
issued to certain consultants and their designees, (ii) a minimum of 40,000
shares of Common Stock issuable upon the exercise of a warrant held by the New
York State Science and Technology Foundation pursuant to a note, (iii) 19,166
shares and 2,526 shares of Common Stock issuable upon the exercise of warrants
issued in connection with equipment financings, (iv) 567,122 shares of Common
Stock for issuance upon exercise of the Class B Warrants issued in January 1995
resulting from the Bridge Warrant Exchange offer, (v) 680,608 shares of Common
Stock for issuance upon exercise of the Class B Warrants issued in April and May
1995 as part of a private placement, (vi) up to 1,656,625 shares issuable upon
the exercise of stock options, (vii) 456,923 shares for issuance upon conversion
of the B Preferred Stock, based on conversion at such date
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using the minimum price of $5.00 per share of Common Stock, (viii) 294,363
shares for issuance upon conversion of the C Preferred Stock, based on
conversion at such date using a conversion price of $1.50, (ix) 179,975 shares
of Common Stock issuable upon the exercise of certain Units contained in the
Unit Purchase Option issued to A.R. Baron, the underwriter of the Company's
initial public offering, and 359,950 shares of Common Stock issuable upon
exercise of the Underwriter Warrants contained in such Units, (x) 57,081 shares
of Common Stock issuable upon the exercise of certain Bridge Warrants, (xi)
3,599,500 shares issuable upon the exercise of Class A and Class B Warrants,
(xii) 500,000 shares issuable upon the exercise of warrants held by Yale
University and (xiii) an aggregate of 8,000,000 shares for issuance upon the
exercise by the Company's largest stockholder of Class C Warrants, unit purchase
options and the Class C Warrants contained therein. The C Preferred Stock
converts into Common Stock based upon a floating formula which, in the event the
price of the Company's Common Stock decreases, would increase the number of
shares held in reserve with respect to the C Preferred Stock. Holders of
convertible securities are likely to exercise them when, in all likelihood, the
Company could obtain additional capital on terms more favorable than those
provided by such convertible securities. Furthermore, while the convertible
securities are outstanding, they may adversely affect the terms on which the
Company could obtain additional capital. Should a significant portion of such
convertible securities be exercised, the resulting increase in the amount of the
Common Stock in the public market may have the effect of reducing the market
price thereof.
Potential Depressive Effect on Market Price Due to Future Sales of Common
Stock. 528,580 of the Company's shares of Common Stock currently outstanding are
"restricted securities," as that term is defined in Rule 144, promulgated under
the Act. Any substantial sale of restricted securities pursuant to Rule 144 may
have an adverse effect on the market price of the Common Stock.
Cash Dividends Not Likely. The Company has not paid any cash dividends on
its Common Stock. For the foreseeable future it is anticipated that earnings, if
any, which may be generated from the Company's operations will be used to
finance the growth of the Company and that cash dividends will not be paid to
holders of Common Stock.
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SELLING SECURITYHOLDERS
The following table sets forth as of September 23, 1996, except as
otherwise noted: (i) the name of each Selling Securityholder, (ii) the number of
shares of Common Stock owned beneficially or of record by such Selling
Securityholder and (iii) the number of shares of Common Stock offered by such
Selling Securityholder hereunder. No Selling Securityholder will beneficially
own more than one percent of the outstanding Common Stock upon consummation of
the offering contemplated hereby.
Number of Shares Number of Shares
of Common Stock of Common Stock
Selling Security Holder Beneficially Owned Registered Herein
----------------------- ------------------ -----------------
The Aries Domestic Fund, L.P.(1)(2) 3,600,000 3,600,000
The Aries Fund, A Cayman Island
Trust(2)(3) 8,400,000 8,400,000
Aberlyn Capital Management Limited
Partnership(4) 19,166 2,500
Cobra Construction 23,301 23,301
Steven Finkelstein(5)(6)(7) 171,000 81,000
Dave Ganz(5)(7) 36,000 36,000
Anthony Imbo(5)(7) 36,000 36,000
Salvatore Marasa(5)(7) 36,000 36,000
Meyers Pollock Robbins Inc.(5) 30,000 30,000
Howard Schwartz(5)(6)(7) 171,000 81,000
Swartz Investments, L.L.C.(8) 139,636 139,636
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(1) Includes 2,400,000 shares of Common Stock issuable upon the exercise of
certain warrants and a unit purchase option. See "Recent Developments."
(2) The investment manager of The Aries Fund, A Cayman Island Trust, is
Paramount Capital Asset Management, Inc., a Subchapter S corporation
("Paramount Capital") with a sole stockholder. The general partner of The
Aries Domestic Fund, L.P. is Paramount Capital. The sole stockholder of
Paramount Capital is Lindsay A. Rosenwald. See "Recent Developments."
(3) Includes 5,600,000 shares of Common Stock issuable upon the exercise of
certain warrants and a unit purchase option. See "Recent Developments."
(4) Number of Shares of Common Stock Registered Herein consists of shares
issuable upon exercise of a warrant to purchase Common Stock at an
exercise price of $2.00 per share.
(5) Number of Shares of Common Stock Registered Herein consists of shares
issuable upon exercise of warrants to purchase Common Stock at exercise
prices of $0.05 and $5.00 per share.
(6) Number of Shares of Common Stock Beneficially Owned includes shares
issuable upon exercise of a warrant to purchase Common Stock at an
exercise price of $3.00 per share.
(7) The Selling Securityholder is a registered broker with Meyers Pollock
Robbins Inc., a Selling Securityholder.
(8) Number of Shares of Common Stock Registered Herein consists of shares
issuable upon exercise of a warrant to purchase Common Stock at an
exercise price of $3.78 per share.
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PLAN OF DISTRIBUTION
The distribution of the Common Stock by the Selling Securityholders may be
effected from time to time in one or more transactions for their own accounts
(which may include block transactions) on Nasdaq or any exchange on which the
Common Stock may then be listed, in negotiated transactions, through the writing
of options on shares (whether such options are listed on an options exchange or
otherwise), 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 such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling shares of Common Stock
to or through broker-dealers, including broker-dealers who may act as
underwriters, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders and/or
the purchasers of shares of Common Stock for whom such broker-dealers may act as
agent or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
Selling Securityholders may also sell Common Stock pursuant to Rule 144
promulgated under the Act or pledge shares of Common Stock as collateral for
margin accounts, and such shares of Common Stock could be resold pursuant to the
terms of such accounts. The Selling Securityholders and any participating
brokers and dealers may be deemed to be "underwriters" as defined in the
Securities Act.
In order to comply with certain state securities laws, if applicable, the
Common Stock will not be sold in a particular state unless such securities have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with.
The Company has agreed to bear all expenses, other than selling
commissions and fees, in connection with the registration and sale of the shares
of Common Stock being offered by the Selling Securityholders.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common
Stock being offered hereby. The proceeds from the exercise of warrants, if any,
will be received by the Company and will be used for general corporate purposes.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Fulbright & Jaworski L.L.P., New York, New York.
EXPERTS
The financial statements and financial statement schedule of the Company
as of September 30, 1995 and 1994 and for each of the three years in the period
ended September 30, 1995 and for the period from September 1, 1989 (inception)
to September 30, 1995, incorporated by reference in this registration statement,
have been incorporated herein in reliance on the report, which includes an
explanatory paragraph discussing the substantial doubt about the ability of the
Company to continue as a going concern, of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
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PART II
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with this offering are:
SEC registration fee........................... $ 6,233
Legal fees and expenses........................ 15,000
Blue Sky fees and expenses..................... 15,000
Accounting..................................... 12,000
Miscellaneous.................................. 6,767
-------
Total ....................................... $55,000
=======
The Company has agreed to bear all expenses, other than selling
commissions and fees, in connection with the registration and sale of the shares
of Common Stock being offered by the Selling Securityholders in this offering.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law permits
indemnification of directors, officers and employees of a corporation under
certain conditions and subject to certain limitations. Reference is also made to
Section 8 of the Company's Certificate of Incorporation, and Article 8 of the
Company's By-Laws, filed as Exhibits 3.1 and 3.2, respectively, to the
Registration Statement on Form S-1 (Registration Number 33-63142), as filed with
the Commission and declared effective on August 12, 1993, which are hereby
incorporated by reference.
Item 16. Exhibits.
5 Opinion of Fulbright & Jaworski L.L.P.
10.1 Form of Second Amendment to License Agreement, dated as of August 29,
1996, by and between the Registrant and Yale University.*
10.2 Form of Common Stock and Warrant Purchase Agreement, dated as of August
30, 1996, by and among the Registrant, The Aries Fund, A Cayman Island
Trust and The Aries Domestic Fund, L.P.*
10.3 Consulting Agreement, dated as of July 2, 1996, between the Registrant and
Meyers Pollock Robbins Inc.
10.4 Form of Research Agreement, dated July 2, 1996, between the Registrant and
Istituto di Ricerche di Biologia Molecolare P. Angeletti.
23.1 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P.
25 Power of Attorney (included on page II-3).
27 Financial Data Schedule.
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* Incorporated by reference to the Registrant's Current Report on Form 8-K
as filed September 18, 1996.
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<PAGE>
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment of this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement of
any material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) of Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) The Registrant hereby undertakes that, insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 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 of 1933 and will be governed by the
final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all 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 New York, State of New York on the 27th day of
September, 1996.
INNOVIR LABORATORIES, INC.
By:/s/ Allan R. Goldberg
---------------------
Allan R. Goldberg
Chairman of the Board, Chief
Executive Officer and Director
(Principal Executive Officer)
By:/s/ Gary Pokrassa
-----------------
Gary Pokrassa
Vice President, Finance
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Allan R. Goldberg and Gary Pokrassa, or
either of them, his true and lawful attorney-in-fact and agent with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as full to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
_________________________ Director
Joseph E. Edelman
/s/ Allan R. Goldberg Director September 27, 1996
- -------------------------
Allan R. Goldberg
II-3
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Maurice R. Hilleman Director September 27, 1996
- -------------------------
Maurice R. Hilleman
/s/ William T. McCaffrey Director September 27, 1996
- -------------------------
William T. McCaffrey
/s/ Michael S. Weiss Director September 27, 1996
- -------------------------
Michael S. Weiss
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page
- ----------- ------- ----
5 Opinion of Fulbright & Jaworski L.L.P.
regarding legality.
10.1 Form of Second Amendment to License
Agreement, dated as of August 29, 1996,
by and between the Registrant and Yale
University.*
10.2 Form of Common Stock and Warrant
Purchase Agreement, dated as of August
30, 1996, by and among the Registrant,
The Aries Fund, A Cayman Island Trust
and The Aries Domestic Fund, L.P.*
10.3 Consulting Agreement, dated as of July
2, 1996, between the Registrant and
Meyers Pollock Robbins Inc.
10.4 Form of Research Agreement, dated July
2, 1996, between the Registrant and
Istituto di Ricerche di Biologia
Molecolare P. Angeletti.
23.1 Consent of Fulbright & Jaworski L.L.P.
(included in Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule.
* Incorporated by reference to the Registrant's Current Report on Form 8-K as
filed September 18, 1996.
II-5
[FULBRIGHT & JAWORSKI L.L.P. LETTERHEAD]
September 26, 1996
Innovir Laboratories, Inc.
510 East 73 Street
New York, NY 10021
Dear Sirs:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement"), to be filed by Innovir Laboratories, Inc. (the "Company") on behalf
of certain selling securityholders (the "Selling Securityholders") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to 12,465,437 shares of the Company's Common Stock, $.013 par value
(the "Common Stock"). Of these shares, 4,023,301 shares (the "Issued Shares")
are issued and outstanding as of the date hereof, and 8,442,136 shares (the
"Issuable Shares") are issuable upon the exercise of certain outstanding
warrants and options.
As counsel for the Company, we have examined such corporate records,
documents and such questions of law as we have considered necessary or
appropriate for the purposes of this opinion and, upon the basis of such
examination, advise you that, in our opinion, the Issued Shares have been duly
and validly authorized and are legally issued, fully paid and nonassessable and
the Issuable Shares have been duly and validly authorized and, assuming payment
of the exercise price by the Selling Securityholders therefor, will be legally
issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and the reference to this firm under the caption "Legal Matters" in
the prospectus contained therein and elsewhere in the Registration Statement and
prospectus. This consent is not to be construed as an admission that we are a
party whose consent is required to be filed with the Registration Statement
under the provisions of the Securities Act of 1933, as amended.
Very truly yours,
FULBRIGHT & JAWORSKI L.L.P.
CONSULTING AGREEMENT
This Agreement is made as of this 2nd day of July, 1996 by and between
INNOVIR LABORATORIES, INC., with principal offices at 510 East 73rd Street, New
York, New York 10021 (the "Company") and MEYERS POLLOCK ROBBINS INC. with
offices at 33 Walt Whitman Road, Suite 200A, Huntington Station, New York 11746
(the "Consultant").
W I T N E S S E T H:
WHEREAS, the Company desires to retain the Consultant, and the Consultant
desires to be retained by the Company, pursuant to the terms and conditions
hereinafter set forth;
1. Retention: The Company hereby retains the Consultant to perform
non-exclusive consulting services related to corporate finance and other
matters, and the Consultant hereby accepts such retention and shall undertake
reasonable efforts to perform for the Company the duties described herein. In
this regard, subject to paragraph 7 hereof, the Consultant shall devote such
time and attention to the business of the Company, as shall be determined by the
Consultant, subject to the direction of the Chairman of the Company.
(a) The Consultant agrees, to the extent reasonably required in the
conduct of the business of the Company, and at the Company's request, to place
at the disposal of the Company its judgement and experience and to provide
business development services to the Company, including, without limitation, the
following:
(i) To assist in potential financing requirements;
(ii) To assist in potential mergers and acquisitions;
(iii) To provide advice on investor relations and marketing
strategies;
(iv) To provide advice with respect to corporate finance
matters including, without limitation, changes in
capitalization and corporate structure; and
(v) To assist in strategic development.
(b) At the Consultant's request, the Company will provide "due
diligence" packages to registered representatives of the Consultant and other
brokerage firms.
2. Term: The Consultant's retention hereunder shall be for a term of two
(2) years commencing on the date of this Agreement. This Agreement may be
terminated by either party upon sixty (60) days prior written notice at any time
after January 1, 1997.
<PAGE>
3. Compensation: As full compensation for the consulting services
hereunder, the Company shall grant to the Consultant warrants (the "Warrants")
to purchase an aggregate of 300,000 shares of the Company's common stock, $.013
par value per share ("Common Stock"), exercisable for a period of five (5) years
from the date hereof, as follows:
(a) Warrants to purchase 200,000 shares at an exercise price equal
to $0.05 per share (the "$0.05 Warrants"); and
(b) Warrants to purchase 100,000 shares at an exercise price equal
to $5.00 per share (the "$5.00 Warrants").
The Company shall grant to the Consultant certain demand and "piggyback"
registration rights to include the shares of Common Stock issuable upon exercise
of the Warrants in any registration statement filed by the Company under the
Securities Act of 1933, as amended.
The Warrants shall have certain anti-dilution provisions for stock
dividends, splits, mergers, sale of substantially all of the Company's assets,
and for other unusual events (other than employee benefit and stock option plans
for employees and advisors of the Company).
Vesting of the Warrants shall be as follows and will depend upon the
Consultant's continued performance under the terms of this Agreement:
(i) 50% of each of the $0.05 Warrants and the $5.00 Warrants
(for the purchase of 100,000 shares and 50,000 shares,
respectively) are vested immediately; and
(ii) 50% of each of the $0.05 Warrants and the $5.00 Warrants
(for the purchase of 100,000 shares and 50,000 shares,
respectively) are vested at the end of six (6) months
(January 2, 1997).
4. Expenses: The Company agrees to reimburse the Consultant for reasonable
expenses incurred by the Consultant in connection with the services rendered
hereunder. Any such expenses shall require the prior written approval of the
Company.
5. Indemnification: The Company agrees to indemnify and hold harmless the
Consultant and its affiliates, the respective directors, officers, partners,
agents and employees and each other person, if any, controlling the Consultant
or any of its affiliates (collectively the "Consultant Parties"), to the full
extent lawful, from and against all losses, claims, damages, liabilities and
expenses incurred by them (including attorney's fees and disbursements) that
result from actions taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company, its agents
or employees. The Consultant will indemnify and hold
-2-
<PAGE>
harmless the Company and the respective director, officers, agents and employees
of the Company (the "Company Parties") from and against all losses, claims,
damages, liabilities and expenses that result from bad faith, negligence or
unauthorized representations of the Consultant. Each person or entity seeking
indemnification hereunder shall promptly notify in writing the Company or the
Consultant, as applicable, of any loss, claim, damage or expense for which the
Company or the Consultant, as applicable, may become liable pursuant to this
paragraph, shall not pay, settle or acknowledge liability under any such claim
without consent of the party liable for such indemnification and shall permit
the Company or the Consultant, as applicable, a reasonable opportunity to cure
any underlying situation and/or to mitigate any actual or potential damages. The
scope of this indemnification between the Consultant and the Company shall be
limited to, and pertain only to, those certain transactions contemplated or
entered into pursuant to this Agreement.
The Company or the Consultant, as applicable, shall have the opportunity
to defend any claim for which it may be liable hereunder, provided it notifies
the party claiming the right to indemnification within fifteen (15) days of
notice of the claim.
The rights stated pursuant to the preceding two paragraphs shall be in
addition to any rights that the Consultant or the Company or any other person
entitled to indemnification may have under common law or otherwise, including,
without limitation, any right to contribution.
6. Status of Consultant: The Consultant shall be deemed to be an
independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the Company.
7. Other Activities of Consultant: The Company recognizes that the
Consultant now renders and may continue to render financial consulting and other
investment banking services to other companies which may or may not conduct
business and activities similar to those of the Company. The Consultant shall
not be required to devote its full time and attention to the performance of its
duties under this Agreement but shall devote only so much of its time and
attention as it deems reasonable for such purposes, subject to the direction of
the Chairman of the Company.
8. Control: Nothing contained herein shall be deemed to require the
Company to take any action contrary to its Certificate of Incorporation or
By-Laws, as each may be amended from time to time, or any applicable statue or
regulation, or to deprive its Board of Directors of their responsibility for any
control of the conduct of the affairs of the Company.
9. Notices: Any notices hereunder shall be sent to the Company and the
Consultant at their respective addresses above set forth. Any notice shall be
given by registered or certified mail, postage prepaid, and shall be deemed to
have been given when deposited in the United States mail. Either party may
designate any other address to which, or manner in which, notice shall be given,
by giving written notice to the other of such change of address in the manner
herein provided.
-3-
<PAGE>
10. Governing Law: This Agreement has been made in the State of New York
and shall be construed and governed in accordance with the laws thereof without
regard to conflict of laws.
11. Entire Agreement: This Agreement contains the entire agreement between
the parties, may not be altered or modified, except in writing and signed by the
party to be charged thereby and supersedes any and all previous agreements
between the parties.
12. Binding Effect; Assignment: This Agreement shall be binding upon the
parties hereto and their respective heirs, administrators, successors, and
assigns; provided, however, that this Agreement, and the rights and obligations
sereunder, may not be assigned by either party hereto without the prior written
consent of the other party.
13. Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
INNOVIR LABORATORIES, INC. MEYERS POLLOCK ROBBINS INC.
By:/s/ALLAN R. GOLDBERG By:/s/HOWARD SCWHARTZ
-------------------- ------------------
Title: Title:
-4-
RESEARCH AGREEMENT
Effective on this 2nd day of July, 1996 (the "Effective Date"),
ISTITUTO DI RICERCHE DI BIOLOGIA MOLECOLARE P. ANGELETTI, IRBM Via Pontina
km. 30.600-00040 Pomezia, Rome, Italy, an Italian institute (hereinafter "IRBM")
and
INNOVIR LABORATORIES, INC., a Delaware corporation having its principal
place of business at 510 East 73rd Street, New York, New York U.S.A. 10021
(hereinafter "Innovir"),
in consideration of the mutual covenants contained herein, AGREE AS
FOLLOWS:
Article 1
Background and Definitions
1.1 Both IRBM and Innovir possess proprietary materials, know-how, information
and expertise regarding the Research and wish Innovir to perform research
services related to the Research; and
1.2 The parties wish to collaborate in a program of Research under terms and
conditions of this agreement.
Article 2
Description of the Research
2.1 The Research to be conducted hereunder is fully described in Schedule and
relates to determining whether EGSs are capable of inducing cleavage of
target RNA by RNaseP in the cytoplasm of the cell.
Article 3
Innovir Staff and Facilities
3.1 The Research shall be carried out by Innovir.
3.2 Depending on the technical nature and source of material the Research will
be performed at either Innovir or IRBM. Innovir will be responsible for
guidance necessary to carry out the Research.
-1-
<PAGE>
3.3 Upon successful completion of the experiments, one or more of the Innovir
scientists will replicate such experiments at IRBM and at IRBM's cost.
Article 4
Reports
4.1 Each party shall keep the other party informed of the progress of the
research it conducts hereunder.
4.2 Innovir shall have the right to use the results of the Research as it sees
fit.
Article 5
Confidential Information
5.1 All proprietary information and data supplied or generated under this
Agreement (including biological materials) by either party which is marked
"Confidential" shall be considered confidential (hereinafter "Confidential
Information") and, for a period of three (3) years from the Effective
Date, shall not be disclosed or given by the recipient to any third party
without the prior approval of the disclosing party. The foregoing shall
not apply when and to the extent the Confidential Information disclosed:
(a) becomes generally available to the public through no fault of
the receiving party;
(b) was already known to the receiving party at the time of
disclosure as evidenced by written records in the possession
of the receiving party prior to such time or;
(c) is subsequently received by the receiving party in good faith
from a third party without breaching any confidential
obligation between the third party and the disclosing party;
(d) is required to be disclosed by the receiving party to comply
with judicial, statutory or regulatory requirements; provided
that the receiving party provides prior written notice of such
disclosure to the disclosing party and takes reasonable and
lawful actions to avoid or minimize the degree of such
disclosure;
(e) is inherent in any product which is sold by Innovir; or
(f) is developed independently by employees of the receiving party
who do not have access to the Confidential Information.
5.2 Except as expressly provided in this Agreement, no rights are provided to
either party under any patents, patent applications, trade secrets or
other proprietary rights of the other party. In particular, no rights are
provided to use the materials or modifications or any related patents of
the other party for profit making or commercial purposes, such as sale of
the materials or modifications
-2-
<PAGE>
used in manufacturing, provision of a service to a third party in exchange
for consideration, or use in research or consulting for a for-profit or
non-profit entity under which the entity obtains rights to research
results.
Article 6
Publication
6.1 Innovir shall have the right to publish the results of the Research;
provided, however, if a publication does result from Research, authorship
shall be jointly decided by Innovir and IRBM based on accepted scientific
practice.
6.2 Innovir shall have the right to use the data generated in the Research in
filing patent applications, in filing for regulatory approvals and for
other commercial purposes.
Article 7
Inventions
7.1 Intellectual Property shall mean any discoveries, inventions, improvements
and/or commercially useful products or processes, whether patentable or
not, developed or made under this agreement.
7.2 Results of the Research shall be owned as follows:
(a) If all inventors are employees of Innovir, by Innovir.
(b) If all inventors are employees of IRBM, by IRBM.
(c) If Intellectual Property is invented jointly by at least one
person employed by Innovir and at least one person employed by
IRBM, jointly by both Innovir and IRBM.
7.3 If Intellectual Property is jointly owned by IRBM and Innovir, Section and
Innovir directs that a patent application or other intellectual property
protection be filed, Innovir shall promptly take action to have prepared,
filed, and prosecuted such U.S. and foreign application. Innovir and IRBM
shall each pay one-half of all costs incurred in connection with such
preparation, filing, prosecution and maintenance of U.S. and foreign
application(s) directed to said Intellectual Property. Innovir shall
cooperate with IRBM to assure that such application(s) will cover, to the
best of their combined knowledge, all items of commercial interest and
importance. While Innovir shall be responsible for making decisions
regarding scope and content of application(s) to be filed and prosecution
thereof, IRBM shall be given an opportunity to review and provide input
thereto. Innovir shall keep IRBM advised as to all developments with
respect to such application(s) and shall promptly supply to IRBM copies of
all papers received and filed in connection with the prosecution thereof
in sufficient
-3-
<PAGE>
time for IRBM to comment thereon. Further, Innovir shall promptly notify
IRBM in writing of any matter which has been patented under this Section .
Each party shall have an undivided right to patents under this section
provided they have paid the share of the expenses under this section.
Article 8
Representation
8.1 Each party represents that it does not have obligations or commitments
which are inconsistent with the research to be conducted hereunder.
Nothing in this Agreement shall prevent either party from entering any
other research collaboration with any third party.
Article 9
Compensation
9.1 In support of the Research to be conducted by Innovir, IRBM shall pay
Innovir according to the amounts specified and under the terms shown in
Schedule
Article 10
Term and Termination
10.1 This Agreement shall commence on the Effective Date and shall continue for
a one year period (the Term).
10.2 In the event that the parties determine that they have an interest in
continuing the Research beyond the end of the Term, the parties hereto
agree to negotiate in good faith to reach a new agreement covering future
research Such agreement shall contain terms on the level of funding, scope
of research and the scope of rights.
10.3 Either party may terminate this Agreement by giving at least sixty (60)
days prior notice in writing to the other party.
10.4 Articles 4, 5, 6, 7 and shall survive the termination of this Agreement.
-4-
<PAGE>
Article 11
Return of Documents and Materials
11.1 Upon termination of this Agreement, or at any time during the course of
this Agreement, either party may request the return of all papers, records
and other documents including any materials such as reagents, that it
supplied to the other party, which are then in the possession of the other
party, except:
(a) each party may retain one copy for archival purposes; and
(b) each party may retain materials required for government approval.
Article 12
General Provisions
12.1 Both parties shall, at all times during the performance of this Agreement,
remain as independent contractors and the Agreement shall not make the
parties partners, joint venturers, or agents of one another. No party to
this Agreement shall have the power to bind or obligate the other party.
12.2 None of the materials supplied under this Agreement by either party to the
other, shall be used in human subjects without obtaining appropriate
government approvals.
12.3 Neither party assumes responsibility or liability for the nature, conduct,
or results of any research, testing or other work performed by the other
party.
12.4 This Agreement may not be assigned by either party without the prior
written consent of the other party.
12.5 Any notice, report or communication to be given under this Agreement may
be delivered personally, sent by registered or certified mail, return
receipt requested, or transmitted by facsimile copy or electronic mail to
the parties at the addresses given below or such other addresses may be
notified from time to time. Any notice, report or communication so sent
shall not be deemed to have been given until it has been received by the
party to whom it has been addressed.
IRBM
Via Pontina km. 30.600-00040
Pomezia, Rome, Italy
Attention:________________
Telephone_________________
Facsimile_________________
-5-
<PAGE>
Innovir Laboratories, Inc.
510 East 73rd Street
New York, NY U.S.A. 10021
Attention: Allan R. Goldberg, Ph.D.
Telephone 212-249-4703
Facsimile 212-249-4513
12.6 The terms and conditions herein contained constitute the entire agreement
between the parties and supersede all previous communications, whether
oral or written, between the parties hereto with respect to the subject
matters hereof, and no previous agreement or understanding varying or
extending the same shall be binding upon either party hereto.
12.7 No amendment or modification of this Agreement shall be effective unless
it is in writing and signed by duly authorized representatives of all
parties.
12.8 The parties covenant and agree that, if either party fails or neglects for
any reason to take advantage of any of the terms provided for the
termination of this Agreement, or if either party, having the right to
declare this Agreement terminated shall fail to do so, any such failure or
neglect by either party shall not be a waiver or be deemed or be construed
to be a waiver of any cause for the termination of this Agreement
subsequently arising or as a waiver of any of the terms, covenants or
conditions of this Agreement, or the performance thereof. None of the
terms, covenants or conditions of this Agreement may be waived by either
party except by its written consent.
12.9 All parties hereby especially agree and contract that neither party
intends to violate any public policy, statutory or common law, rule or
regulation, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries; if any
word, sentence, paragraph or clause or combination thereof of this
Agreement is found, by a court or executive body with judicial powers
having jurisdiction over this Agreement or any of its parties hereto, in a
final unappealed order to be in violation of any such provision in any
country or community or association of countries, such words, sentences,
paragraphs or clauses or combination shall be inoperative in such country
or community or association of countries and the remainder of this
Agreement shall remain binding upon the parties hereto.
12.10 Neither party shall be liable for delays caused by bona fide labor
disputes, war, civil or military disturbances, acts or lack of action of
governments or governmental authorities, accidents, fires, explosions,
epidemics, forces of nature, acts of God or other causes reasonably beyond
its control, but each party shall use all reasonable efforts to avoid such
delays and to minimize the extent of any delays that do occur.
-6-
<PAGE>
12.11 This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and
permitted assigns.
12.12 This Agreement shall be deemed to have been made under, and shall be
construed and interpreted in accordance with the laws of the State of New
York, U.S.A.
IN WITNESS WHEREOF, IRBM and Innovir have caused this Agreement to be
executed in duplicate by their respective duly authorized officers.
INNOVIR LABORATORIES, INC. ISTITUTO DI RICERCHE DI BIOLOGIA
MOLECOLARE P. ANGELETTI
By:__________________________ By:_____________________________
Allan R. Goldberg, Ph.D _____________________________
Chairman and CEO _____________________________
Date:________________________ Date:___________________________
-7-
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------
We consent to the incorporation by reference in this registration statement of
Innovir Laboratories, Inc. (the "Company") on Form S-3 of our report, which
includes an explanatory paragraph discussing the substantial doubt about the
ability of the Company to continue as a going concern, dated November 14, 1995,
except for the ninth paragraph of Note 12 and Note 14, as to which the dates are
November 20, 1995 and December 5, 1995, respectively, on our audits of the
financial statements and financial statement schedule of the Company as of
September 30, 1995 and 1994, and for each of the three years in the period ended
September 30, 1995, and for the period from September 1, 1989 (inception) to
September 30, 1995 which report is included in the Company's Annual Report on
Form 10-K for the year ended September 30, 1995. We also consent to the
reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
New York, New York
September 25, 1996
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<CASH> 1,013,056
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